LATEST NEWS
IMPORTANT READ:
The Journal of the American Medical Association coming forward with important information about Carbon Capture and Sequestration. Health and Safety Risks of Carbon Capture and Storage - 52 KB pdfJournal of the American Medical Association [JAMA] (pg. 67) January 6, 2010; By John Fogarty, MD, MPH and Michael McCally, MD, PhD
FINAL EIS Comments
Comments submitted by the CAMP volunteers can be found here: FEIS CommentsClick on the links below to view comments submitted by the Minnesota Pollution Control Agency, Minnesota Department of Natural Resources and the Fond du Lac Band of Lake Superior Chippewa.
Comments by MPCA
Comments by DNR
Comments by Fond du Lac
FINAL EIS RELEASED
The following files are large documents and have been made available to the public. The files can also be found at: http://www.gc.energy.gov/NEPA/1167.htm.The volumes have been broken down into smaller pdf files for download. Please see the Take Action page.
Volume 1 - 24 MB pdf
Volume 2 - 117 MB pdf
Volume 3 - 57 MB pdf
EIS Delays
Sometime in November 2009October 2009
September 2009
August 2009
July 2009
June 2009
April 2009
February 2009
August 2008
March 2008
The current scheduled release can be found on the Department of Energy's website - http://www.eh.doe.gov/nepa/
CLEAN COAL EXPOSED BY REALITY CAMPAIGN
Please check out the TV ads on "Clean Coal" by the Reality Campaign. CAMP is pleased to finally see a national campaign on the myth of "clean coal". The link provided brings you to the Reality Campaign's website where you can view video clips of their ads, the latest being an air freshener with the name of "Clean Coal Clean"Clean Coal Ads
MINNESOTA PUBLIC UTILITIES COMMISSION MAKES TWO RULINGS FAVORABLE TO CAMP
Correcting Errors in Previous OrderAt its meeting on June 12th, the PUC unanimously granted CAMP's petition to correct erroneous information in a previous PUC order (Docket No. 07-1640). The corrections make it clear that: the DOE funding of the Mesaba Energy Project is a loan rather than a grant; and the MEP has not yet been awarded any federal loan guarantees.
Denying Excelsior's Request To Delay PUC's Final Decision on Power Purchase Agreement
In April the PUC denied Excelsior's request to indefinitely delay consideration of Phase 2 of the PPA (Docket No. 05-1993). Excelsior then filed a Petition for Reconsideration of this decision. At its meeting on June 12th, without discussion, the PUC unanimously refused to reconsider its earlier decision.
Now we are waiting for the PUC to again (3rd time's the charm?) schedule a hearing where it will decide: whether to grant Excelsior's position under Phase 2 of the PPA; and whether to set a deadline on negotiations between Excelsior and Xcel regarding Phase 1 of the PPA.
Excelsior Concedes to CAMP's Corrections in PUC's Order
In response to CAMP's Petition, Excelsior's Attorney has notified the PUC that the Order should be corrected as CAMP requested.Starns 5/23/08 letter
CAMP seeks correction of errors in PUC Order regarding Mesaba's financial status.
CAMP has submitted a petition to the PUC to correct misstatements concerning the Mesaba Energy Project's financial postition. Below is a link to the petition.Petition to PUC - 88 KB pdf
A Letter to Governor Pawlenty from Dr. James Hansen, NASA Goddard Institute and Columbia University Earth Institute
"There is no such thing as 'clean coal'."CAMP is posting this most extraordinary letter that concerns global warming, coal, power plants and CO2.
Letter to Governor Pawlenty - 128 KB pdf
INTERESTING READING - MORE DEFICIENCIES IN MESABA'S DEIS
CAMP has just discovered that the Minnesota Dept. of Commerce failed to timely and properly post comments received on the Draft EIS from the Army Corps of Engineers and the Environmental Protection Agency. The EPA has "environmental objections to the proposed project" and also states that "additional information needs to be provided to support the impact analysis". The ACoE states that there continue to be several NEPA deficiencies in specified areas.Comments from both agencies are provided at these links to the respective pdf documents. They can also be found with the Resource Materials:
Army Corps of Engineers comments - 704 KB pdf
US EPA comments - 408 KB pdf
CAMP Comments to ALJ
CAMP submitted comments to Administrative Law Judge Steve M. Mihalchick regarding the Joint Permit Application: Plant Site, HVTL Route and Natural Gas Pipeline Route for the Mesaba Energy Project.The comments can be found at this link.
The four volumes of the transcript of the public hearings on the Mesaba siting docket are available at the Grand Rapids Area Library.
Vol. I is from the first day of hearing, at Taconite.
Vol. II is from the evening session at Taconite.
Vol. III is from the day session at Hoyt Lakes.
Vol. IV is from the evening session at Hoyt Lakes.
Vols I and IV contain interesting questions that were put to the witnesses and some revealing answers.
Agency Draft EIS Comments
There were several governmental agencies that submitted comments for the draft evironmental impact statement. CAMP has posted all agency pdf documents on the Resource Materials page for your convenience. CAMP encourages you to read through them as many are substantive and important to the comprehensive culmination of data on the draft EIS.Page Links on CAMP Action
Letter to Legislators
CAMP Comments to ALJ
DEIS Comments Page One
DEIS Comments Page Two
Please contact the Webmaster if you experience any problems with our website.
CAMP UPDATES
CAMP UPDATE
August 21, 2010
IRR WRITES OFF $ MILLIONS OWED BY EXCELSIOR ENERGY
By failing to declare Excelsior Energy in default, which would put an end to the Mesaba Energy Project, the Iron Range Resources Board is enabling Excelsior to draw down the remaining $2.3 million of Department of Energy funding, which can continue to provide handsome salaries for Tom Micheletti and his wife and co-president, Julie Jorgensen.
In April 2007 Excelsior Energy defaulted on its $952,376 interest payment on loans from IRR and it hasn't paid any interest yet. Since then interest has been accruing on $9.5 million at the rate of 20% per year and the annual payments should be about $2 million. In addition, Excelsior was supposed to pay $800,000 per year on the principal, starting in December 2009, which it also failed to do. After repeated extensions of the due date, payment was supposed to be made by December 2010.
However, at a non-public meeting on August 10th, an IRR committee discussed Tom Micheletti's proposed changes to the terms of the loans and the IRR Board rubber-stamped these amendments at its meeting on August 19th. From the limited information available, it can be determined that: the annual principal payment will start in December 2010 and will be reduced from $800,000 to $100,000; the interest will be calculated at the reduced rate of 5% instead of 20% and annual payments are not required; and if Excelsior pays off the entire principal by 12/31/17, the interest rate will be recalculated at 3% per year. This amounts to a loss of revenue to IRR well in excess of $10 million, in addition to the $9.5 million that probably never will be repaid.
The high initial interest rate reflected the risk level of the Mesaba Energy Project, which has been borne out by Excelsior's failure to attract investors or customers. This is despite having spent nearly 40 million public dollars, including approximately $20 million from the federal Department of Energy and $10 million from Minnesota's Renewable Development Fund, in addition to IRR's $9.5 million. Tom Micheletti did not offer the IRR Board any revised plan for making this project succeed. When the remaining $2.3 million is gone, Excelsior can declare bankruptcy without assets to repay its creditors, and its co-presidents can walk away.
Micheletti touts the accomplishment of a final environmental impact statement but that process has not been finished because it still lacks a Record of Decision by the DOE. Micheletti touts the accomplishment of having the site approved by the Public Utilities Commission but fails to mention that the project cannot proceed without required regulatory permits. The air permitting has been delayed since 2006 and is problematic because this project is competing with mining operations that can't be located elsewhere for scarce space for more pollutants in the airshed.
Sensible people must wonder why the IRR Board would do this, or why it would have funded this project in the first place, or why it would have waived the requirement for matching funds, or why it would have extended the due date for payments while it continued throwing good money after bad. A likely factor is the generosity of Excelsior insiders at campaign fundraisers for some of these legislators the week before the committee meeting and over recent years.
FEIS NOT ACTUALLY "FINAL": AIR AND WATER PERMITS LACKING
The final step for the environmental impact statement (issued in November 2009) is a "record of decision" (ROD) prepared within the DOE, vouchsafing that all has been done thoroughly and properly and the project should be allowed to proceed with DOE support. However, the ROD has been delayed and the monthly reports indicate "schedule uncertain". We don't know all of the reasons for this but they may include concerns previously raised by the EPA, the Army Corps of Engineers and the federal land managers. One of the known reasons is Excelsior's failure to acquire the necessary air and water permits from the Minnesota Pollution Control Agency (MPCA). Apparently Excelsior continues to qualify for cost-sharing contributions from the $22 million DOE fund ($2.3 million remaining) while it pursues these permits.
Excelsior is not actively pursuing water permits at the MPCA; if there have been any changes since the June 2006 applications, revised applications will be required. In late spring Excelsior contacted the MPCA regarding the air permits and work is currently underway to determine what updates to the 2006 applications will be required. It appears that no draft permit will be issued in the foreseeable future and if one ever is, it can be appealed to the EPA, a process that could take 18 months.
We will keep CAMPers posted on any developments about the permits.
WHO WOULD BUY MEP'S OUTPUT?
There was no appeal from the decision of the Court of Appeals that upheld the PUC's denial of the power purchase agreement with Xcel Energy, and so that decision is final.
ln April 2009 we reported that Excelsior was trying to entice municipal utilities to invest in the Mesaba Project. We sent information to many of them warning of the pitfalls. Now some investor-owned and municipal utilities, including Nashwauk, Elk River, Willmar and communities in Wisconsin, have formed a Resource Planning Coalition. They are looking to supply an aggregated "need" of up to 700 MWs over 30 years, including both long-term purchases and project-owning opportunities. Nashwauk's need is driven primarily by its desire to service the Essar taconite plant and steel mill, which initially was to come from existing sources but a supplemental EIS is in progress, which may reflect changes in that plan.
The search for new long-term sources has been spurred by the demise of the Big Stone II project, which involved some of these same utilities. BS II and Mesaba were the only two projects exempted from the moratorium on new coal plants enacted by the Minnesota legislature, so it is not likely these utilities will discover any inexpensive power source for their future needs.
CAMP will reach out to educate this group of utilities about the perils of the MEP.
FutureGen CANCELLED - MEP'S COAL-GASIFICATION TECHNOLOGY OBSOLETE?
The MEP was touted as a step in the direction of generating electricity from "clean coal". The next step was to be the FutureGen project in Mattoon, Illinois, which was to use IGCC technology and actually capture and sequester the CO2. However, it has stalled repeatedly despite the influence of Senator Durbin and former Illinois Senator, now President, Obama because of escalating costs.
Earlier this month DOE Secretary Chu announced $1 billion funding for "FutureGen 2.0", which substitutes "a clean coal repowering program and CO2 storage network" for the original project. The plan is to convert a dormant oil-burning power plant in Meredosia, Illinois to one that uses a mixture of oxygen and CO2 to combust coal ("oxy-combustion"), to make capturing CO2 easier. Our expert tells us this old idea was rejected years ago because it is not efficient. However, it has a lower capital cost than IGCC with CCS and can be spun as a "clean" way of retrofitting existing coal plants, thus preserving the financial health of Big Coal while protecting politicians from difficult choices.
The claim is to capture 90% of the CO2, which was the original target of FutureGen that had to be reduced to 60% last year. The plan includes a regional CO2 pipeline network, starting with transporting CO2 170 miles to the former FutureGen site in Mattoon for storage. A glitch occurred however, when within one week of this announcement the local development group rejected the use of the site for this purpose. This caused Senator Durbin to proclaim that a number of other Illinois communities were very interested in replacing Mattoon's role in this project. We expect that when residents near any other targeted site learn about the risks, this interest may disappear.
With the announcement of FutureGen 2.0, Senator Durbin characterized it as "innovative technology that can serve as a model for the nation", while staying "true to the original goal of dramatically reducing pollution". This seems to be political-speak for abandoning coal gasification with CCS as the favored "clean coal" technology but until further clarification from DOE we can't be certain.
We will continue to keep CAMPers informed of developments.
CAMP UPDATE
May 20, 2010
COURT OF APPEALS UPHOLDS PUC DECISIONS
Click here for the full report released by the Court of Appeals. (164 KB pdf)
No PPA with Xcel
On May 18th a three-judge panel of the Minnesota Court of Appeals ruled that the PUC "did not err in concluding that Excelsior's proposed power purchase agreement with Xcel is not in the public interest". This means that Excelsior still doesn't have a customer for the power it wants to produce, and so the project is not attractive to investors.
Qualifies as an IEP
The court also ruled that there is substantial evidence to support the PUC's finding that Mesaba is an "innovative energy project" and therefore qualifies for the special legislative incentives.
The Final Word?
There is some reason to expect Excelsior to appeal this decision to the Minnesota Supreme Court. We'll know within 30 days.
OTHER DEVELOPMENTS
Updated Air Permit Application
Excelsior is in the process of updating its air permit application submitted in June 2006. The Minnesota Pollution Control Agency (MPCA) expects to receive the revised application in June 2010.
The MPCA is likely to find it problematic to accommodate Mesaba's emissions (in addition to those anticipated from Essar's mining-to-steel project and Keetac's expansion) within the federal standards for pollution in the airshed.
Carbon Dioxide Counts Too
The federal Environmental Protection Agency has announced that, effective January 2011, permits for facilities such as the Mesaba Project will be required to include greenhouse gas (GHG) emissions along with other pollutants covered by the Clean Air Act. The project will be required to determine the Best Available Control Technology (BACT) for GHG emissions. The rule addresses six GHGs: carbon dioxide; methane; nitrous oxide; hydrofluorocarbons; perfluorocarbons; and sulfur hexafluoride.
CAMP UPDATE
March 4, 2010
MPUC - Permits for West Range Site and Routes for Natural Gas Pipeline and HVTL
At its regular meeting on March 4th the Minnesota Public Utilities Commission decided the following issues in the affirmative:
- Should the Commission find that the Environmental Impact Statement and the record adequately address the issues identified in the Scoping Decision?
- Should the Commission issue a LEPGP site permit, and corresponding HVTL and Pipeline Route Permits, identifying a specific site and permit conditions for the proposed Mesaba IGCC Power Station project?
CAMP's reaction
Given that this decision was limited to the question of whether the issues in the Scoping Decision were adequately addressed by the EIS and the record, the outcome is no surprise. The Scoping process and the EIS were carefully controlled and manipulated by the federal Department of Energy and the state Department of Commerce to avoid addressing the serious problems and concerns identified by a well-informed public and some government agencies.
Despite this development, the iffiness of building this Project remains great because it cannot find a customer for its output and so is not commercially viable or attractive to investors.
Additional hurdles include many permits from state and federal agencies, including:
- MPCA - Air Emission Facility Permit
- MDNR - Water Appropriation Permits
- MDNR - License to Cross Public Lands and Waters
- MDNR & USACE - Wetlands Permit
- MDNR - Work in Public Waters Permit
- USACE - Work in Navigable Waters and Wetland Permit
- USACE - Discharge of Dredged or Fill Material to Waters of the U.S.
- MPCA - NPDES Stormwater Program
- EPA - Acid Rain Permit
- National Pollutant Discharge Elimination System/State Disposal System (NPDES) Permit
We will demand that the government agencies charged with protecting the environment do their duty when they evaluate the appropriateness of granting these needed air and water permits.
Court of Appeals - PPA & IEP
A three-judge panel of the Court of Appeals heard oral arguments on February 23rd. Excelsior Energy is appealing the MPUC's denial of the Power Purchase Agreement with Xcel Energy, and Minnesota Power is appealing the PUC's determination that the Mesaba Energy Project qualifies for special regulatory and financial incentives because it is an Innovative Energy Project. Arguments were made by attorneys for Excelsior, Xcel, Minnesota Power and the MPUC. The judges' questions revealed that they had studied the case and were zeroing in on the key issues. They have up to 90 days to issue a decision.
CAMP UPDATE
February 12, 2010
MESABA ENERGY PROJECT: RECENT DEVELOPMENTS AND CURRENT STATUS
ORAL ARGUMENTS: PPA & IEP
Excelsior Energy's appeal of the PUC's denial of the Power Purchase Agreement with Xcel Energy will be argued before a panel of the Minnesota Court of Appeals:
Tuesday, February 23, 2010 at 11:30 a.m.
Courtroom 200, Minnesota Judicial Center, St. Paul
Judges: Francis J. Connolly, Matthew E. Johnson, Natalie E. Hudson
In addition to the PPA issue, the court will decide Minnesota Power's claim that the Mesaba Energy Project does not qualify as an Innovative Energy Project. The PUC rejected the ALJs' finding that it was not an IEP. This designation is the basis for the special incentives granted in the 2003 legislation, including: eminent domain authority; a power purchase agreement with Xcel Energy; and $10 million from the Renewable Development Fund. A determination that the Project does not qualify as an IEP would be a significant blow on both the state and federal levels. The panel has up to 90 days to render a decision.
ANY CAMPERS WHO ARE ABLE TO ATTEND THIS HEARING ARE REQUESTED TO LET US KNOW HOW IT GOES.
PUC: SITING AND ROUTING PERMITS
Minnesota's Office of Energy Security in the Department of Commerce has joined with the ALJ in recommending that pemits be granted tor the Scenic Highway site and the preferred routes for the natural gas pipeline and HVTL.
The PUC may decide this at its meeting on March 4, 2010. Given that the only party to this case is Excelsior Energy, we expect the PUC to grant these permits. However, the Project still needs air and water permits, which are more problematic, and most problematic, it needs a customer committed to purchasing its output.
EXCELSIOR FUNDING: RDF $10 MILLION
The administrator of the Renewable Development Fund has notified the PUC that the final $731,007.22 will be paid to Excelsior Energy by early March, exhausting the total $10 million grant.
Given that Excelsior has already used up the $9.5 million from Iron Range Resources, and phase one of the DOE's $22 million in funding has expired, no other funding source for the Project can be identified.
TELL YOUR ELECTED STATE AND FEDERAL REPRESENTATIVES THAT NO MORE MONEY OR FAVORS SHOULD BE WASTED ON THIS BOONDOGGLE.
CAMP UPDATE
December 30, 2009
ADMINISTRATIVE LAW JUDGE RECOMMENDS PERMITS FOR MESABA PROJECT AT SCENIC HIGHWAY SITE
In an 80-page report filed on December 28th, the ALJ recommended that the PUC grant Excelsior Energy's application for a Large Electric Power Generating Plant site permit, a High Voltage Transmission Line route permit, and a Natural Gas Pipeline route permit for the West Range Site. The final decision will be made by the Minnesota Public Utilities Commission.
You can download the report here: 12-28-09 ALJ Report
THE MEP STILL NEEDS AIR & WATER PERMITS AND A CUSTOMER
Even if the PUC grants the site and route permits as recommended, the Project still has the major problem of no one to buy its output. Without a committed customer, construction cannot be funded. The MPUC has denied Excelsior's attempts to force Xcel Energy or other utilities to buy its power. In coming months the court of appeals will be reviewing that decision as well as the issue of whether Mesaba qualifies as an Innovative Energy Project. A ruling that it is not an IEP would negate the special legislative, regulatory and funding benefits that have carried it this far.
The ALJ noted that "important considerations remain for the permitting agencies such as the MPCA, DNR, and the Army Corps of Engineers, which must determine the conditions to be imposed on the necessary environmental permits." As the ALJ states, "other issues must be resolved for the project to go forward" and his recommendations have meaning only if it is built.
SELECTING THE WEST SITE
The ALJ acknowledged that the site alternatives were severely limited because of the special legislation that required the Project to be within the Taconite Relief Area. He reasoned that the West Range site is a better option than the East Range site because:
- Costs of construction and operations are less
- HVTL losses are smaller
- It impacts fewer local residents
- It has a smaller effect on visibility in Class I areas
- It may mitigate flooding in the Canisteo and Hill-Annex Mine Pits
- The HVTL and NGP corridors are shorter
- It offers access to two rail carriers
- The pipeline to transport carbon dioxide to North Dakota will be approximately 100 miles shorter
- More people appeared at the evidentiary hearings to support the construction of the Project on the West Range Site
CAMP POINTS OUT THAT:
- There is already a plan and funding to reduce the water in the Canisteo and the DNR has not approved any plan by Excelsior Energy to use that water;
- Even the DOE has acknowledged in the FEIS that capture and sequestration of the CO2 at this site is not "feasible"; and
- More people appeared at the evidentiary hearings to OPPOSE the construction of the Project on the West Site.
NOT A DONE DEAL
As always, CAMP will continue to monitor developments and keep CAMPers informed. We will be watching for developments at the PUC, the court of appeals, and environmental agencies.
We will especially be alert for any new efforts to salvage this boondoggle during the upcoming legislative session and we wil let CAMPers know if they need to act.
Guest Commentary: Grand Rapids Herald Review
November 19, 2009
Mesaba Energy Project's Future Remains Grim Guest Commentary
Excelsior Energy's recent press release on the Final Environmental Impact Statement (FEIS) for the Mesaba Energy Project contains its typical optimistic spin, but as usual, Excelsior's position and reality are quite different. Excelsior's continued claims that the project is in the interest of national security and will have a beneficial impact on climate change are so ludicrous as to be in the realm of fantasy.Despite this, and contrary to Tom Micheletti's public optimism in the Herald Review this week, the Mesaba Project's future continues to look grim at best. This project is in serious financial jeopardy and has been determined to not be significantly cleaner than other coal plants with state of the art emissions control technology. The FEIS also states quite clearly that Carbon Capture and Sequestration (CCS) is not feasible for this plant, so the DOE would allow Mesaba to spew 5 million tons/year of carbon dioxide into the atmosphere.
Public comment on the initial Joint Permit Application and Draft Environmental Impact Statement was supposed to ensure that the FEIS is complete, and to identify areas of local concern. Instead, it appears that the DOE spent almost 2 years whitewashing the problems. Although this is disappointing, it is not surprising as the DOE has been openly and publicly supportive of the project. It seems the overall objective of this document is to minimize the adverse environmental impacts and push a federal policy for "clean coal". Having the DOE be the lead agency on the FEIS is very much like allowing the fox to guard the henhouse.
Even with a boost from this sham of an environmental impact statement, Excelsior will still need to deal with obtaining the numerous permits required to build and operate this plant. Comments from agencies such as the Army Corps of Engineers and the Minnesota Pollution Control Agency show that Excelsior still faces significant problems in moving forward. Excelsior Energy has done a poor job of anticipating permitting needs from the start, beginning with the initial site selection on the East Range. It changed the "preferred site" to the West Range to avoid implementing expensive pollution control measures for discharged water, and because it finally realized air permits would be difficult if not impossible to obtain on the East Range. Since then, Excelsior has been forced to use the same expensive control technology at the West Range, and permitting is still problematic.
Even if Excelsior is somehow able to solve the permitting problems, it still needs investors. This project needs dollars to move forward; BILLIONS of dollars. The Public Utilities Commission has denied Excelsior a mandated buyer. Excelsior's recent appeal of the PUC decision does nothing more than allow them to stay alive just a bit longer and eat up more public dollars in the process. Excelsior also has a multi-million dollar interest payment to Iron Range Resources due next month, and this amount is increasing at over a million dollars per year.
Excelsior Energy has repeatedly shown an inability to anticipate basic environmental problems and permitting requirements. The reason for such lack of judgment and foresight is unclear, but likely is related to the fact that the principal players are lobbyists, not engineers. They succeeded in obtaining legislative favors, public start up dollars, and numerous other perks several years ago. However, they've shown time and again that they struggle outside the political arena and are unable to properly design, site, market, and fund this project. Lobbying may be their strength, but execution of a plan and realization of this project is another matter altogether.
Ed Anderson, Co-Chair
Citizens Against the Mesaba Project
CAMP UPDATE
November 18, 2009
Citizens Against the Mesaba Project Action Group
The Final Environmental Impact Statement (FEIS) for the Mesaba Energy Project has been released after repeated delays.
It consists of 3 volumes totaling about 2100 pages. Segmented volumes can be found on the links below and from the Take Action page. The volumes in their entirety can be downloaded from the links to the left and on the DOE website: http://www.gc.energy.gov/NEPA/1167.htm.
Volume 1
Volume 2
Volume 3
The Administrative Law Judge in the Siting Docket is accepting comments regarding the adequacy and impact of the FEIS.
Information for submitting comments from Bill Storm of the DOC: The public will also have until Wednesday, December 2, 2009, to submit written comments to the ALJ on the adequacy of the FEIS.
Written comments should be mailed to:
Steve M. Mihalchick, Administrative Law Judge
Minnesota Office of Administrative Hearings
PO Box 64620
St. Paul, Minnesota 55164-0620.
Comments may also be emailed directly to Judge Mihalchick at steve.mihalchick@state.mn.us
Judge Mihalchick has informed us that comments must be received by 4:30 pm December 2nd, 2009.
CAMP is in the process of reviewing and commenting on the FEIS. Anyone willing to help will be greatly appreciated. If you would like further help or guidance in preparing comments please contact us at camp@arvig.net
CAMP UPDATE
September 18, 2009
FEIS DELAYED AGAIN
Despite rumblings from DOE that Mesaba's Final Environmental Impact Statement would likely be released in September, the latest schedule says October. CAMP's team for review and comment was on standby and can now stand down at least until October. We are not holding our breath.
MINNESOTA POWER CHALLENGES MESABA'S STATUS AS AN IEP
The Minnesota Court of Appeals has an additional issue to consider as it reviews the PUC's denial of Excelsior's power purchase agreement with Xcel. In order to qualify for the special incentives in the 2003 legislation, Excelsior needs to be an "innovative energy project". The Administrative Law Judges found that Excelsior did not qualify as an IEP. The Public Utilities Commission disagreed and ruled that Excelsior did qualify as an IEP. Minnesota Power took exception then and now has raised this issue in the case to be decided by the appellate court.
The court has scheduled principal and reply briefs to filed by late November. After that the case will be scheduled for oral argument.
CAMP UPDATE
August 9, 2009
EXCELSIOR FILES APPEAL FROM PUC'S DENIAL OF PPA
Excelsior Energy is asking the Minnesota Court of Appeals to overturn the Minnesota Public Utilities Commission's rejection of Excelsior's attempt to force a power purchase agreement on Xcel Energy.
Excelsior is making lots of legal arguments that boil down to a claim that the PUC: should have approved the PPA as the special 2003 legislation intended; and should not have considered whether the project is needed, or is in the public interest, or is in the wrong location. Hard row to hoe?
It will be interesting to see whether Minnesota Power will raise the issue of whether Mesaba qualifies as an innovative energy project. If the court determines that Mesaba is not an IEP, it would not be entitled to all of the special incentives granted by the 2003 legislation. These included the PPA with Xcel, an exemption from a certificate of need, and $10 million from the Renewable Development Fund.
You can download a pdf file of the court documents here: Excelsior Appeal-500 KB pdf
FEIS DELAYED AGAIN
DOE now says the final environmental impact statement will not be released before mid to late September. That makes it one and one-half years later than the original target of March 2008. Insurmountable problems?
CAMP UPDATE
July 18, 2009
SENATOR FRANKEN NEEDS TO HEAR FROM CAMPers
At recent parades across the Iron Range, Sen. Al Franken was lobbied by at least one Iron Range legislator on behalf of Excelsior Energy's Mesaba Project. The Project probably is hoping for a new lifeline of funding from the federal government. This likely would be related to developing and demonstrating carbon capture and sequestration (CCS), which is what allegedly makes coal "clean".
The previous federal incentives obtained by Excelsior were largely due to the efforts of Sen. Coleman. Sen. Franken seems to think that the possibility of reducing carbon emissions through IGCC technology and CCS should be explored. However, he has publicly stated that the Mesaba Project is in the wrong place for CCS.
Sen. Franken needs to be encouraged in his view that Mesaba is not suitable for demonstrating the viability of IGCC with CCS, and reminded that there is significant and well-founded opposition among area residents for various reasons. Pick your favorite one(s) and tell Sen. Franken:
Sen. Al Franken
320 Hart Senate Office Bldg
Washington, DC 20510
(202) 224-5641
E-mail: info@franken.senate.gov
While you're at it, please tell Sen. Amy Klobuchar:
Sen. Amy Klobuchar
Olcott Plaza, Suite 105
820 9th St N
Virginia, MN 55792
main: (218) 741-9690
fax (218) 741-3692
or
302 Hart Senate Office Bldg
Washington, DC 20510
main (202) 224-3244
fax (202 228-2186
toll free (888) 224-9043
E-mail via her website: http://klobuchar.senate.gov/emailamy.cfm
NEED A FRESH CAMP LAWN SIGN?
Some of those CAMP signs around the county are looking a little worse for wear so we're providing new signs to people who would like them. Please email us at info@camp-site.info or at camp@northlc.com and we'll arrange a delivery or pick-up. Any ideas for recycling those old signs would be appreciated.
MORPHING MESABA PROJECT & BACKROOM DEALS
For reasons not yet revealed, Excelsior Energy is interested in building 100 MW natural gas plants instead of the fabulous, "clean"-coal gasification plant it has been touting for eight years. This is the purpose of an amendment that was passed surreptitiously in the last legislative session. The following letter was published in the Grand Rapids Herald Review and an abbreviated version was broadcast on KAXE.
We will continue trying to figure out what Excelsior is up to now. In the meantime, be sure to ask Senators Bakk and Saxhaug why they did this secretly.
CAMP LETTER TO THE EDITOR
In the recent legislative session Senators Saxhaug and Bakk did a favor for Excelsior Energy while ignoring local interests. Instead of following the usual transparent procedure, they quietly slipped in a provision at the last minute to give Excelsior a tax break.
Excelsior Energy doesn't want to pay personal property tax on its attached machinery, transformers, turbines and other equipment for the Mesaba Energy Project. If the plant is built at Excelsior's preferred site, this tax would be revenue for Itasca County, Taconite, and Greenway School District, and would likely be many times greater than Mesaba's real estate tax.
To avoid this tax, in 2006 Senator Saxhaug introduced a bill to give Excelsior an exemption. When the county commissioners found out about this attempt to deprive local government of tax revenue, they requested that the bill be amended to require negotiated payments in lieu of the tax. Senator Saxhaug amended his bill to do this. The commissioners passed a resolution in support of that bill but failed to hold a public hearing so that property taxpayers could voice their opinions about paying a greater share of the levy so that Excelsior can enjoy more profits.
In 2009 Excelsior wanted to amend this law so that the tax exemption would apply to changes in the project. Excelsior president Tom Micheletti says that he spoke with Senator Saxhaug about this. Excelsior lobbyist Kathi Micheletti says that she "talked multiple times to Saxhaug" about the changes Excelsior wanted. Despite the legal requirement that the exemption must be approved by the county board, nobody consulted the county before the amendment was passed. Senator Saxhaug did not even inform the county when he presented a report to the commissioners after the end of the session.
Normally, such changes are made by introducing a bill, which gives notice to the public. The bill is presented in committee hearings for open discussion and response to any questions or concerns. In this instance, no such bill was introduced and no hearings were held. In the rush and confusion during the last week of the session, Senator Bakk used his position as chair of the tax committee to bury 23 lines in a 198-page bill he presented on the floor of the Senate, achieving Excelsior's desired result.
Excelsior's lobbyist says that she also talked to Senator Tomassoni and Representatives Dill and Rukavina before the amendment passed. Notably missing from those who were informed is Representative Anzelc, whose district includes the preferred site for the project, and who has raised serious concerns about it.
Why such secrecy? Did Excelsior fear that its new scheme could not get enough votes? What is the effect of this amendment on the project, local government, and taxpayers? Why such special favors for a profit-seeking corporation from a Senator who is supposed to be representing the interests of Itasca County and another who wants to be our Governor?
MESABA FEIS DELAYED AGAIN
Latest word from DOE: Mid to late August, at the earliest. We'll keep you posted.
CAMP UPDATE
June 26, 2009
A TRIBUTE TO BOB NORGORD: 1942 - 2009
CAMP UPDATE
May 28, 2009
EXCELSIOR ENERGY'S ATTEMPT TO FORCE PPA ON XCEL DISMISSED BY PUC!
It took twenty minutes on May 28th for the Minnesota Public Utilities Commission to vote unanimously to finally deny Excelsior's proposed power purchase agreement with Xcel and to close the case. This triggers the start of the time for filing an appeal with the courts, which Excelsior has vowed to do.
Excelsior's final efforts included motions to suspend the docket indefinitely and to supplement the record by providing more evidence. Excelsior's previous petition for reconsideration of the denial of Phase 2 of the PPA was also on the agenda.
In unanimously voting against Excelsior on all three issues, two Commissioners made interesting comments, hoping that Mesaba will survive this blow:
Commissioner Pugh
- EE still has the statute that entitles it to a PPA if it can propose terms the PUC can approve - he assumes the quest will continue;
- This technology is endorsed by state and federal governments, although Mesaba may need to add carbon capture and sequestration;
- He worked to keep the docket suspended along the way - like the Williams family trying to do something with Ted's body - and the project can still come to pass;
- He hopes the parties are not wasting funds on an appeal that could be better spent on resolving differences.
- Plant can still be built - only issue is who to sell the power to and suspending or supplementing won't change that fact;
- PUC correctly determined Xcel doesn't need that high-cost power now;
- All are focused on renewable energy;
- This new technology has lots of promise and hopefully federal policy will provide more incentives to make Mesaba a demonstration project, so this is not necessarily a death knell.
- Try to convince the PUC that it should be considered as a resource when utilities seek approval of their Integrated Resource Plans;
- Try to sell its power in Xcel's market; and
- Try to sell its power elsewhere in the country.
Tom Micheletti says an appeal will be taken to the courts to show that the PUC misinterpreted the statutes that entitled Excelsior to a PPA with Xcel. Another likely issue will be whether Mesaba qualifies as an Independent Energy Project (IEP), which is what entitles it to special treatment. The ALJ s said no, the PUC said yes, and Minnesota Power has preserved this issue for appeal. Another likely issue will be whether the statute that requires Xcel to purchase 2% of its power from Mesaba expires at the end of 2011; the ALJ and the PUC said it does and Excelsior preserved that issue for appeal.
SITING DOCKET - FINAL ENVIRONMENTAL IMPACT STATEMENT
The DOE still has Mesaba's FEIS scheduled for release in June. Our contact at the DOE says it won't be before late June and that he will know better by mid-June whether it will be released in late June.
CAMPers will have to swing into action to provide comments to the ALJ on the FEIS in the docket that will decide on siting and routing permits. The volunteers who performed so well on the Draft EIS will be notified when the time comes.
CAMP UPDATE
April 22, 2009
Citizens Against the Mesaba Project Action Group:
Excelsior Courting MN's Municipal Utilities: Recently, Excelsior Energy launched a campaign to entice municipal electric utilities to invest in the Mesaba Project. Excelsior's negotiations for a Power Purchase Agreement with Xcel Energy have failed, so this is a plan B approach. While it seems doubtful that the municipalities will take the bait, CAMP has prepared and sent an informational bulletin of its own to alert these organizations of the Mesaba Project's risk. The following letter went out to over 300 email addresses across the state. We invite you to take a look at it. CAMP also issued a News Release which can be read under the News Releases Tab.
FEIS update: the FEIS (Final Environmental Impact Statement) for the Mesaba Project has been delayed from April until June.
CAMP's Letter to MN's Municipal Utilities:
TO: PERSONS RESPONSIBLE FOR MUNICIPAL UTILITIES
FROM: CITIZENS AGAINST THE MESABA PROJECT*
RE: EXCELSIOR ENERGY'S SALES CAMPAIGN
Excelsior Energy has been providing questionable information to municipal electric utilities to entice them to purchase an ownership interest in Mesaba Unit I - a coal gasification power plant proposed to be built on the Iron Range. Excelsior is turning to the municipals after its attempt to force a power purchase agreement with Xcel Energy failed because of its excessive risks and costs. Municipals seeking new sources of baseload power should carefully examine Excelsior's claims in light of findings made by the MPUC and the administrative law judges (notes below), and in the context of likely limits on greenhouse gas emissions and reluctant financial markets.
*CAMP is a grassroots organization of volunteers who have studied the Mesaba Project and provided information to the DOE, MPUC and the public since spring 2006. More information can be found throughout this website.
FEDERAL LOAN GUARANTEES
Although Excelsior's sales pitch suggests that 73% of the total Project cost will be covered by loans guaranteed by the federal government, it should be noted that:
- Excelsior Energy has not yet been awarded any loan guarantees. It is one of eleven final applicants to share in a pool of $4 billion. Excelsior admits that its negotiations with DOE will continue throughout 2009.
- DOE has stated that projects relying upon a smaller guarantee percentage will be given greater weight.
- A key requirement for qualifying is an assurance of revenues to be generated from sale of the product.
- Other obstacles for Excelsior are DOE requirements for: credit assessment without a loan guarantee; approval of environmental and other permits; reduced greenhouse gases; and relative amount of cash contributed by the principals.
Municipal utilities should carefully assess the likelihood that any loan guarantees at all will be awarded for the Mesaba Project.
More information and analysis about the federal loan guarantees can be found by scrolling down to the CAMP Update: October 8, 2007 entry.
COSTS & RISKS
- Cost Unknown - 2005 estimated total cost - $2.156 billion; Army Corps of Engineers estimates ten percent increases every year; front-end engineering & design (FEED) not done.
- Costs not included - carbon tax/fees; carbon capture and sequestration; zero liquid discharge and waste disposal; transmission interconnections; land acquisition around Canisteo Pit.
- Carbon Capture & Sequestration - more than $1 billion for equipment and pipeline; reduce plant's efficiency 10-30% to capture 30% CO2; technology not available to capture higher percentage; questionable feasibility of safe storage and liability issues (see GAO report on feasibility - CAMP Update: October 10, 2008 entry (scroll down).
- Technology - DOE: demonstration with a "financial risk . . . too high for the private sector . . . in the absence of strong incentives"; design based on 262 MW Wabash River plant (which had extended shutdowns) incorporating "numerous design improvements" based on nearly "1600 design and operational lessons learned", as yet untested.
- Financial Risk - Standard & Poor's: next generation coal gasification power plants remain unproven and a "clear risk" to investors. (see below - The News Journal 5/16/07)
- Greenhouse Gas Penalties - "Businesses must not sink money into high-carbon infrastructure unless they are willing to lose their investments within a few years, the US lead negotiator on climate change has warned." (Financial Times 4/8/09 interview with Todd Stern, State Dept. Special Envoy for Climate Change)
PERMITTING
- Final Environmental Impact Statement (FEIS) originally scheduled for March 2008 has been delayed repeatedly; currently scheduled for June 2009.
- The EPA and the Army Corps of Engineers have expressed serious concerns about air and water impacts.
NOTES (Italics added)
PUC ORDER 8/30/07 - Docket No. 05-1993: http://www.puc.state.mn.us/PUC/index.html
"The overriding reason that the Commission cannot find the terms and conditions of the proposed contract to be in the public interest is that the terms and conditions as to price impose excessive risks, and are likely to impose excessive costs, on Xcel and its ratepayers". (p. 14)
"The rate is totally dependent upon costs that are not yet known and that will be incurred to design and install a developing technology that is still commercially untested and has no long-term track record upon which the Commission can rely. . . credible evidence that rates will be 30% higher than rates for a comparable product (supercritical plants) . . . " (p. 16)
". . . (I)ncluding carbon dioxide in the emissions considered required a finding that the plant had 'little or no quantifiable advantage at this time over other coal burning plants and no advantage over baseload generators operating on renewables' (ALJ Finding 152). The Commission concurs that the plant has little advantage over the solid fuel baseload technologies likely to be deployed today." (p. 23)
ADMINISTRATIVE LAW JUDGES FINDINGS & RECOMMENDATIONS - 4/12/07
Finding 78. ". . . (C)apacity price . . . is based largely on the Engineering, Procurement, and Construction (EPC) contract cost. . . . It is likely to be larger by some unknown amount when it is fixed."
Finding 86. "Excelsior Energy has no coal or petroleum coke supply or transportation commitments at this time to hedge against future cost increases, nor does it anticipate beginning to negotiate any for another three to four years."
Finding 87. "When Excelsior Energy does start negotiating its agreements, it may have problems developing long-term commitments with fuel suppliers . . . (that) will need to expand to meet (increasing demand) and will not rush to provide low prices. Likewise, there is projected to be a continuing shortage of rail capacity for the delivery of coal for the foreseeable future. The large coal producers and railroads have large market power . . . . Excelsior Energy may have considerable difficulty obtaining fuel at favorable prices."
Finding 115. ". . . Xcel's ratepayers will have to bear rate increases totaling between $250 million to $365 million during the Project's first year of operation, resulting in electric rate increases for Xcel customers in the range of 5.9 to 9.6 percent . . . A representative commercial or industrial customer would experience increases ranging from approximately $2,700 to $3,900 per month."
Finding 116. "There will be transmission service network upgrade costs that will be required for interconnection of the Project to Xcel's system."
Finding 152. ". . . (T)here is some evidence that CO2 capture will be more possible with the IGCC technology used by the Project. The capture will theoretically be less difficult because it can be done in the syngas coming from the combustion of the coal in the gasifier. But there is some evidence that a similar process can be used on the flue gas coming from a CFB combustor, so IGCC may have no great advantage in this regard. More importantly, Excelsior Energy does not plan to install this technology on the Project until it is required by law to do so. If and when it is, Excelsior Energy plans to install a system that removes 30% of the CO2, and, if it is ever feasible, one that removes 90%. It is not known how those reduction levels will compare to retrofitted or other new coal-fired plants. Thus, the Project has little or no quantifiable advantage at this time over other coal burning plants and no advantage over baseload generators operating on renewables.
Finding 169. "Excelsior's cost estimates for the TECC (target EPC contract cost) were made using third-quarter 2005 data. The costs for coal power plants have risen since that time. Big Stone II updated their third-quarter 2005 cost estimate for plant construction based on 2006 data and found an increased plant cost of approximately 25% per MWh. It is likely that the Project's EPC cost will increase significantly."
Finding 183. "The levelized costs calculated by Dr. Amit (MN Dept of Commerce expert) . . . demonstrate that a PPA for the Project's preferred West Site would cost Xcel Energy and its ratepayers about 30 percent more than capacity and electricity from other comparable sources."
Finding 185. " . . . (T)he cost of equipment needed to capture some CO2 at the Project is approximately $472.3 million in 2011 dollars. The cost of a pipeline necessary to transport captured CO2 from the plant to the depleted petroleum wells in Alberta, Canada . . . is approximately $635.4 million in 2011 dollars . . estimated levelized cost . . . additional $50.02 MWh . . .
STANDARD & POOR'S
Investors warned against coal-to-gas power plants
By JEFF MONTGOMERY, The News Journal
Posted Wednesday, May 16, 2007
A proposal to build a coal-to-gas power plant in Delaware was dealt another blow Tuesday, this time by Wall Street.
One of the world's top credit rating agencies cautioned that next generation coal gasification power plants remain unproven and a "clear risk" to investors, a position that could raise questions about the financial viability of a proposed coal-to-gas plant here.
The warnings were part of a wide-ranging report by Standard & Poor's on the financial risk that climate change poses to financial markets, investors and industries. . . .
"The risk is immediate and clear, in the sense that the technology is unproven and it's not clear how well they would run three years from today," said Swami Venkatraman, a utility analyst with Standard & Poor's. Gasification developers are likely to have trouble even getting firm construction prices from builders, Venkatraman said. . . .
"We are more confident that climate change is happening, and we are more confident that it will be of significant cost, but the cost of remediation remains very uncertain because we don't have the technology yet,"said Standard & Poor's Chief Economist David Wyss. . . .
Standard & Poor's assigns companies a credit rating based on their financial outlook and an assessment of risk they face. A lower credit rating raises a company's cost of borrowing money for a project.
A news release was sent to media outlets. You can find it under the News Releases Tab or download a copy in pdf format here.
CAMP UPDATE
March 3, 2009
"CLEAN" COAL PITCH TO GRAND RAPIDS CHAMBER OF COMMERCE
Partners for Affordable Energy - http://poweringourlives.com/
Using the pretext of promoting a "balance" of reliable, affordable and clean energy from a variety of sources, Partners for Affordable Energy (PAE) is part of a national campaign to convince state and federal government NOT to impose any restrictions on greenhouse gases.
PAE reported lobbying expenditures in Minnesota at least as early as 2002, doubling in 2006, and increasing six-fold to $240,000 in 2007. The total for 2008 is not yet available but PAE currently has two registered lobbyists, including a new Executive Director for Minnesota rather than continuing to operate out of the office of the Lignite Energy Council in North Dakota. Its current "Task Force Members", as listed in lobbying reports, are representatives of coal-burning utilities in Minnesota and North Dakota, and coal companies in North Dakota and Colorado.
PAE and a "coalition of Minnesota trade associations and organizations" commissioned an economic analysis of the impact of Minnesota's carbon reduction policies. Assuming unlikely and extreme changes in Minnesota law, the report (available on PAE's website) concludes "significant negative economic consequences for Minnesota's economy, industries and workers". PAE is using this report to alarm Minnesotans so that they will contact state legislators and object to mandatory greenhouse gas reductions and a cap and trade system.
American Coalition for Clean Coal Electricity - http://www.cleancoalusa.org/
A significant exception in PAE's membership roster of Minnesota entities is ACCCE. This national organization of 48 coal and utility companies spent at least $45 million in advertising in 2008 to convince us that "clean" coal is the solution to global warming. ACCCE also spent $125 million in nine months of 2008 lobbying congress to delay mandatory CO2 reductions until "clean" coal technology is available.
Center for American Progress Report
http://www.americanprogress.org/issues/2008/12/clean_coal.html
In December 2008 the Center for American Progress (CAP) issued a report - "The Clean Coal Smoke Screen", including the following points:
- ACCCE admits that widespread use of C&S technology is 10 to 15 years away.
- ACCCE opposes mandatory CO2 reductions until widespread C&S is feasible.
- ACCCE members had a combined profit of $57 billion in 2007.
- ACCCE members' 18 projects involving C&S research over a period of several years have a total cost of $5.7 billion, which is 1/17 of their combined profits in only one year.
BOTTOM LINE FOR CAMPers
Be aware that this hard drive by Big Coal is a sign that they are increasingly desperate because the problems caused by coal-based electricity have been widely exposed and the mantra of "reliable, affordable and clean" does not stand up to informed scrutiny. Numerous states have rejected new coal plants and are working on lowering CO2 emissions. Momentum is building at the federal level for limiting CO2 emissions and making them expensive.
What To Do:
- Continue to encourage state and federal legislators who are working to reduce greenhouse gas emissions so that they are not cowed by the tactics of ACCCE and Partners for Affordable Energy.
- Write letters to your local newspaper exposing this shameful campaign.
- Enjoy and share this latest video by the Coen brothers for the Reality Coalition, demonstrating the desirability of "Clean Coal Clean" air-freshening spray. http://action.thisisreality.org/page/s/coenbrothers
ACTION ITEM:
February 25, 2009
Luncheon speaker for Grand Rapids Chamber of Commerce - Christina Pierson, Executive Director, Partners for Affordable Energy.
Sounds reasonable but it is an organization to promote continuing use of coal to generate electricity. Its website - http://www.powerofcoal.com
A big turnout of CAMPers would send the message that such clandestine tactics are not fooling us and the Chamber's support for the Mesaba Energy Project is not shared by the community.
Sawmill Inn
Monday, March 2 @ 11:45 a.m.
$11.00 at the door, no reservations required
MESABA FEIS DELAYED AGAIN
The final environmental impact statement that was originally scheduled for March 2008 has been delayed from February to April 2009. No one is revealing the problem(s), so we can only speculate that the serious water and air issues raised by the Army Corps of Engineers and the Environmental Protection Agency have not been adequately addressed.
We'll see if the report is released in April or delayed even further. It is a necessary step in the Minnesota process for permiting the site and the routes for the power lines and the gas line.
EXCELSIOR ENERGY LOOKING ELSEWHERE FOR CUSTOMERS
Without saying so, Excelsior apparently has abandoned hope of getting a power purchase agreement with Xcel Energy. Excelsior's people have been touting the Mesaba Project to municipal utilities in regional meetings organized by the Minnesota Municipal Utilities Association. The pitch is to get the Munis to buy a part ownership interest in the Project and to receive some MWs to distribute to their customers. It's hard to figure how a Project that the MPUC found to be too costly and too risky for Xcel's ratepayers could be a good deal for municipal customers.
Also, Excelsior reportedly has used its influence with a few Iron Range senators to get a meeting with Essar Steel Minnesota, presumably to convince Essar to use Mesaba's output and probably share in the cost of developing the Project. The Nashwauk PUC is supposed to soon be revealing which supplier(s) it is going to use for the power needed by Essar and CAMPers will be paying attention.
CAMP UPDATE:
December 18, 2008
We've summarized the latest events and suggest an action at the bottom of the update.
IRON RANGE RESOURCES
- Collected $40,161 from Excelsior Energy for duplicate, unallowable and undocumented costs identified by Office of Legislative Auditor, and denied Excelsior's request to make this amount available for future project costs.
- Postponed interest payments on $9.5 million to 12/31/10.
- Did not grant other concessions requested by Excelsior, including stopping accrual of interest on $9.5 million.
- Set 5/1/09 deadline for end of PPA case between Excelsior & Xcel and start of period for appeal to the courts.
- Excelsior and Xcel reported that their negotiations have not produced any developments.
- Loan Guarantees - Full application due 11/16/08; 11 applicants - not identified.
- CCPI Funding - Demonstrate capture and sequestration of C02; 50/50 cost sharing; applications due 1/15/09.
- Final Environmental Impact Statement - still scheduled for February 2009.
- Abandoned two proposed "midnight" regulations relaxing air-pollution standards for power plants, which would have allowed increased emissions and lowered standards for Class I areas such as Voyageurs and BWCA that would be affected by Mesaba.
- "The question is not whether you support it or oppose it. The question is whether it exists."
- Reality Coalition of five major environmental organizations launched national TV ad: "THERE'S NO SUCH THING AS 'CLEAN' COAL". (http://action.thisisreality.org/)
- American Coalition for Clean Coal Electricity (ACCCE) shut down its website using cute lumps of coal decked out in hats and scarves and caroling "Frosty the Coal Man" and "Clean Coal Night" (to the tune of "Silent Night" - we are not making this up) after five days of outraged protests.
- Senate Committe on Energy, Utilities, Technology and Communications (Sen. Solon), held "stakeholder" meeting to discuss ideas for legislation to achieve state greenhouse gas reduction goals, including recommendations of Minnesota Climate Change Advisory Group. (http://www.mnclimatechange.us/MCCAG.cfm)
- Minnesota Center for Environmental Advocacy (MCEA) files with Court of Appeals to force DNR to consider global warming pollution in its environmental impact statement for the Essar Minnesota Steel plant (4.9 million tons/year).
GOOD NEWS
- Cabinet appointments suggest strong push for measures to combat global warming and programs for energy innovation: Steven Chu, Nobel Prize-winning physicist - Energy Secretary; Carol M. Browner, headed EPA in Clinton administration - new White House post ("Energy Czar") overseeing energy, environmental and climate policies; Lisa P. Jackson, former head of N.J. Dept. of Environmental Protections - EPA Administrator; and Nancy Sutley, L.A. Deputy Mayor for energy and environment - Chair, White House Council on Environmental Quality.
- Energy plan issued during campaign includes developing and deploying clean coal technology by providing "incentives to accelerate private sector investment in commercial scale zero-carbon coal facilities. . . . will instruct DOE to enter into public private partnerships to develop 5 'first-of-a-kind' commercial scale coal-fired plants with carbon capture and sequestration."
CAMP UPDATE: "CLEAN" COAL DEMYTHOLOGIZED
October 21, 2008
CAMPers are not alone in questioning the feasibility of capturing and storing carbon dioxide that would be emitted by the Mesaba Energy Project.
Coal-fired power plants are one of the largest sources of CO2 emissions in the United States. In reaction to the growing concern about climate change, the U.S. Government Accountability Office (GAO) has examined the feasibility of CCS - CO2 capture and storage - from large-scale power plants.
The 71-page report is available for download. - 2.4 MB pdf
GAO REPORT - September 2008
CCS includes:
- Capturing and compressing CO2
- Transporting it to a storage location
- Injecting it into a geologic formation
- Monitoring that it is staying in place
Key Barriers To CCS Deployment:
- Absence of national strategy to control/limit emissions
- Lack of experience in capturing significant amounts of CO2
- Significant cost of capturing
- Safely transporting CO2 to storage locations
- Long-term liability for CO2 storage and leakage
" . . . (I)t is likely that thousands or tens of thousands of injection wells would need to be developed and permitted in the United States." (page 40)
". . . DOE has worked . . . to evaluate the potential for CO2 geologic sequestration across the United States. However, knowledgeable authorities agree that a more detailed evaluation of these sites' actual capacity is needed. . . . (to) determine whether these potential sites are actually appropriate for long-term CO2 sequestration. For example, it is currently not known whether the caprock overlying these geologic formations is sufficient to contain stored CO2." (page 46).
DOE's Focus on IGCC Technology Questioned
" . . . National Academy of Sciences and international organizations have raised questions about how the (DOE's) focus on IGCC technology may have affected the broader effort to substantially reduce CO2 emissions from coal-based electricity generation because (1) the outlook for widespread deployment of IGCC technology is questionable and (2) the agency's funding related to IGCC technology has substantially exceeded funding for technologies more applicable to reducing emissions from existing coal-fired power plants." (page 31)
" . . . (N)umber of compelling factors, such as the relative cost of IGCC plant construction and the limited operational experience worldwide with this relatively new technology, which may limit commercial deployment of IGCC technology. Several industry stakeholders . . . expressed concerns about using IGCC technology for electricity generation, including the cost of constructing IGCC plants and possible reliability concerns. For example, officials from one electric power company . . . thought high levels of CO2 capture at IGCC plants would necessitate the use of a turbine, which has not yet been commercially demonstrated." (page 33)
Potential Public Opposition Arising from Health Concerns
In addition to possible changes in groundwater flow and/or contamination of drinking water by arsenic, lead and other compounds, the report notes:
". . . (I)mproperly operated injection activities or ineffective long-term storage could result in release of injected CO2 to the atmosphere, resulting in the potential to impact human health. . . . One concern is . . . at very high concentrations and with prolonged exposure, CO2 can lead to suffocation. Concerns have also been raised that . . . (it) could raise the pressure in a geologic formation, and . . . could trigger seismic events, such as earthquakes." (page 48)
Two ways to read Tim Montague's summary:
1) CAMP link: CCS page
2) Download: RACHEL'S DEMOCRACY & HEALTH NEWS - October 16, 2008 - 60 KB pdf
CAMP UPDATE: OFFICE OF THE LEGISLATIVE AUDITOR HAS RELEASED THEIR FINDINGS
September 25, 2008
ACTION NEEDED BY CAMPERS
Excelsior is due to pay more than $1 million in interest to the IRR in December 2008. Under the terms of the loan agreement, it was due in April 2007. Commissioner Layman has granted two extensions. No additional time should be granted.
The Mesaba Project is in trouble on all fronts: PPA denied; EIS delayed; no private investors.
TELL IRON RANGE LEGISLATORS WHAT YOU THINK ABOUT ANY MORE FINANCIAL OR LEGISLATIVE SUPPORT FOR THE MESABA ENERGY PROJECT
Use the following links:
Rep. Loren Solberg
Senator Tom Saxhaug
Senator David Tomassoni
Rep. David Dill
Rep. Tony Sertich
Rep. Tom Rukavina
Use this mail form on Senator Tom Bakk's website.
LEGISLATIVE AUDITOR: IRR DID NOT ADEQUATELY OVERSEE EXCELSIOR ENERGY'S USE OF LOAN PROCEEDS
As we reported in late May (see 5/28 entry), the Office of the Legislative Auditor (OLA) has been investigating the $9.5 million in unsecured loans provided by Iron Range Resources to Excelsior Energy for the Mesaba Project. This resulted from a request by CAMP that OLA investigate questionable items that CAMP had discovered. Here's the news release that CAMP has sent to the media.
OLA's REPORT
OLA concludes that IRR:
- Did not adequately oversee Excelsior Energy's use of loan proceeds to ensure that the company complied with certain loan provisions.
- Did not clearly define prohibited lobbying costs.
- Did not adequately review documentation that Excelsior Energy submitted to support use of loan proceeds.
- Did not set limits or constraints on certain travel costs.
- Had no basis to judge the reasonableness of amounts submitted and paid some costs that exceeded a reasonable use of public funds.
As a result:
- Excelsior was reimbursed $40,161 for some inappropriate, duplicate or unsupported costs.
- Excelsior "used loan funds for some expenses that appear to be related to lobbying activities."
The excessive reimbursements of $40,161 include:
- $15,822 for costs previously reimbursed;
- $3,513 for inappropriate uses of public resources, such as alcohol, lobbying registration and membership fees, flowers, food, golf outing and office party;
- $1,439 for employee payroll taxes; and
- $20,826 for which Excelsior had no or insuffiicent evidence to support the legitimacy, including estimated travel costs.
Regarding lobbying:
- IRR reimbursed Excelsior for $126,480 for payments to a law firm that may have been for lobbying but this can't be determined because IRR subsequently discarded the records.
- IRR failed to consider whether some of Excelsior's personnel whose salaries were reimbursed were actually performing lobbying activities.
- IRR did not increase oversight of the loan after concerns were raised about lobbying.
OLA noted that although in the fall of 2007 IRR requested Excelsior to conduct a comprehensive review of all submitted invoices to verify their eligibility for reimbursement, IRR did not follow up on this request. OLA is recommending that IRR:
- Recover $40,161 from Excelsior;
- Clarify types of lobbying activities ineligible for reimbursement;
- Clarify criteria for mileage and meal reimbursements, and documentation required to support them; and
- Review reimbursements for salaries, legal fees, mileage and meal costs and recover any that did not meet the criteria.
The report is available at: Office of the Legislator Auditor
CAMP'S REACTION
If IRR follows OLA's recommendations about 1) identifying what types of lobbying activities are ineligible for reimbursement and 2) reviewing law firm invoices reimbursed to Excelsior, it might recover large sums. Excelsior has reported $1.12 million in Minnesota lobbying disbursements through 2007. It received IRR reimbursement for hundreds of thousands of dollars for invoices from multiple law firms. It is likely that a close examination of those invoices would reveal that a significant amount was for "public affairs" activities that should be included in any reasonable definition of lobbying. Unfortunately, the copies of the invoices that IRR provided to CAMP were redacted so that the nature of the services was concealed. In the instance cited by OLA where the reimbursement records were discarded, IRR could request Excelsior and the law firm in question to provide copies of the law firm's invoices from that time.
In addition to the inadequate oversight found by OLA, documents obtained by CAMP from IRR reveal that it has repeatedly excused Excelsior from performing as required by the loan agreements. The initial requirement for $4.9 million in matching private money was waived in 2004. In 2007 IRR Commissioner Layman granted two extensions for Excelsior's first interest payment, which is now due at the end of 2008 unless Excelsior obtains either a $100 million equity investment from a third party or a power purchase agreement (PPA).
Despite its efforts since 2001, Excelsior apparently has failed to obtain any private investment beyond the initial $60,000 stock purchase by its two shareholders, Tom Micheletti and Julie Jorgensen. After a long and costly proceeding, the Minnesota Public Utilities Commission (MPUC) denied Excelsior's petition to order Xcel Energy to purchase Mesaba's power, finding it not in the public interest because it is too expensive and risky. Without a PPA the project is financially untenable. Mesaba's final environmental impact statement, essential to obtaining siting, routing, air and water permits, has been significantly delayed, partly due to a faulty site selection process. Without these permits the project cannot be built.
"The only one benefiting from the IRR loans was Excelsior Energy, which leveraged them into another $36 million of taxpayers' money from the Department of Energy and $10 million from the state's Renewable Development Fund", said Dr. Ed Anderson, CAMP Co-Chair. "Excelsior has wasted tens of millions on lobbyists, lawyers, consultants, executive salaries, and expert witnesses for the PPA case it lost at the MPUC and the permitting case that is foundering. Excelsior's principals should not be given more time to pay themselves hundreds of thousands from public dollars for this failed project. IRR should not grant any further extensions for payments owed by Excelsior Energy."
CAMP UPDATE: MESABA'S FINAL ENVIRONMENTAL IMPACT STATEMENT DELAYED AGAIN!
August 20, 2008
After the public hearings on the Draft EIS early in 2008, the Mesaba FEIS was scheduled to be released in March 2008. It has been repeatedly postponed - DOE's July schedule had it for September. NEWLY POSTED SCHEDULE SAYS FEBRUARY 2009!
WHAT'S UP?
DOE says: "It has taken longer than we had anticipated to prepare responses to comments received on the Draft EIS."
We'll let CAMPers know as more information becomes available regarding the FEIS.
CAMP UPDATE: MESABA STRIKES OUT AT PUC
August 15, 2008
At a hearing on August 14th the Public Utilitiy Commissioners unanimously:
- Denied three motions by Excelsior Energy that would have delayed a final decision on its faltering attempt to force Xcel Energy to purchase the output of Mesaba Units I and II.
- Adopted the recommendation of the Administrative Law Judge and denied Phase 2 of the proposed power purchase agreement (PPA).
- Set a deadline of May 1, 2009 for mandatory negotiations on Phase 1 of the PPA.
Speaking on behalf of the the Department of Commerce's Office of Energy Security, Dr. Eilon Amit told the Commissioners he hadn't prepared any remarks because he thought they'd already heard enough.
His comments:
- It's simple - the ALJ and the record say it is not likely to be a least cost resource and so is not in the public interest.
- This is a proposal for a very expensive coal plant with the potential to capture and sequester CO2, which it is not proposing to do.
- If the cost of capturing and sequestering CO2 are included, it is an extremely expensive coal plant.
- Capturing and sequestering CO2 is not clearly technically feasible.
- The PUC should make the same decision in Phase 2 as it did in Phase 1 - not least cost and not public interest.
PHASE 2 - DONE
This was Excelsior's effort to force Xcel to purchase the output of Unit 2 in addition to Unit 1. By determining that it is not likely to be a least cost resource for Xcel, the PUC put an end to this part of the PPA.
PHASE 1 - DEADLINE 5/1/09
The output of Unit 1 (603 MWs) was determined in August 2007 not likely to be a least cost resource. However, the PUC ordered Xcel to continue negotiating with Excelsior to try to achieve a mutually acceptable PPA.
The PUC acknowledged no progress in the negotiations and set a deadline of May 1, 2009. This is to allow the parties a few months to negotiate using new information that is expected by the end of the year: a report from the Office of Energy Security assessing Minnesota's foreseeable need for additional generation; and final approval of Xcel''s pending Integrated Resource Plan.
Chairperson Boyd stated that if there is no PPA or joint request to extend the deadline, Xcel will have no obligation to continue bargaining after 5/1/09.
After that, the parties may choose to appeal the PUC's decisions in court.
Not Necessarily Over
It is still possible under the 2003 legislation for Excelsior to propose a new PPA with different terms that resolve the issues identified in the current PPA. Xcel would be obliged to negotiate and the PUC could be petitioned to force it. This is not likely to succeed unless Excelsior can find a way to significantly lower the costs of Mesaba's power and to capture and sequester its CO2 emissions.
CAMP UPDATE: MESABA HEARINGS AUGUST 14TH AT PUC
August 9, 2008
Excelsior Energy's contrived delays of a PUC final decision on the Power Purchase Agreement may have come to an end.
Three Motions
Excelsior's most recent attempt consists of three motions filed on July 3rd. The PUC's Staff Briefing Paper, (36 KB pdf), recommends denying all of the motions. If the PUC votes accordingly, it can then proceed to the basic question regarding the PPA.
PPA - Phase 2
We've been waiting for the PUC to address this issue since the Administrative Law Judge issued his report and recommendations on 9/14/07. The ALJ recommended against approval. It is almost certain that the PUC will follow the ALJ's recommendation. For more information, see CAMP's 4/27/08 Update and the Staff Briefing Paper.
PPA - Phase 1
Although the PUC ruled in August 2007 that the PPA was not in the public interest, it also ordered Xcel Energy to keep negotiating with Excelsior. Those negotiations have not been fruitful and the PUC likely will set a deadline to end its mandate for continuing negotiations. We hope that deadline will be soon. At that point the PUC can finalize its order denying the PPA and the parties can proceed to appeal to the courts if they choose to. For more information, see CAMP's 4/27/08 Update and the Staff Briefing Paper - 204 KB pdf.
PUC Members
Chair Koppendrayer retired at the end of June and Betsy Wergin has been appointed to the remaining 1 1/2 years of his term. Wergin has resigned her seat as a state senator (Republican) to take the PUC position. She has no discernible relevant background; she is Koppendrayer's sister.
The Governor designated David Boyd, whom he appointed to the PUC in 2007, as chairperson.
OTHER FRONTS
Investigation by the Office of the Legislative Auditor - Report Due
OLA's report on its "preliminary assessment" of CAMP's complaint about the management and use of the $9.5 million in IRR funding for Mesaba is scheduled for release in the latter half of August. Prior to that time the report will be made available to IRR management and its comments will be included in the release. For more information see CAMP's 5/28/08 Update.
Siting Docket and Final Environmental Impact Statement
The Department of Energy has repeatedly delayed the release of the FEIS since March. It is now scheduled for September. If and when that occurs, the public will have ten business days to submit comments to the ALJ. We will alert CAMPers at the proper time.
CAMP UPDATE: AUDITOR EXAMINES IRR LOANS TO EXCELSIOR ENERGY
May 28, 2008
The Office of the Legislative Auditor (OLA) has been examining Iron Range Resources (IRR) records regarding its $9.5 million in unsecured loans to Excelsior Energy for the Mesaba Project. Brad White, Audit Manager, has now confirmed that OLA is conducting an assessment of a complaint, to determine whether a formal audit should be conducted. This is the result of a request by CAMP that OLA investigate questionable items that CAMP had discovered.
Digging Through Files
Last fall a team of CAMPers went to the IRR office, dug through piles of loan-related documents, and photocopied many of them. After studying the information retrieved, we concluded that there were serious questions about IRR's management of the loans and Excelsior's use of the funds.
Referral to OLA
We explained our concerns and submitted back-up documentation to the Office of the Legislative Auditor, which has authority to investigate alleged misuse of state money or resources. The Audit Manager replied that the Office planned to "examine Iron Range Resources actions and management of the Excelsior Energy loan. That audit will take place this spring/summer . . . ". Although we are disappointed to learn that OLA is not yet conducting a formal audit, we expect that it will decide to do so after the initial assessment.
Areas of Concern
- IRR's failure to hold Excelsior to the requirement in the first $1.5 million loan that Excelsior must receive additional equity investments from other investors of $1.7 million before the second $500,000 would be disbursed and another $3.2 million before the last $500,000 would be disbursed.
- IRR's approving another $8 million loan before ever seeing any audited Excelsior financials.
- Where did Excelsior get the more than $1 million it spent on lobbying, given that the IRR and DOE loan documents prohibit lobbying expenditures?
- Excelsior's requesting $6 million from DOE, based on many of the same invoices reimbursed by IRR.
- IRR's reimbursing undocumented claims for expenses, including travel, meals and cell phones.
- Excelsior's classifying workers as independent contractors and consultants rather than employees.
- IRR Commissioner's extensions of the due date for Excelsior's first interest payment, without a vote by the Board.
It did not seem appropriate to make this information public until recently when rumors of OLA's activities at IRR leaked out. CAMP is issuing a News Release so that CAMPers and the general public can know the nature of our concerns and some of the questions raised.
CAMPers are encouraged to download the News Release by clicking here and send it to anybody who would or should be interested.
CAMP UPDATE: SPIN, SMOKE & MIRRORS FOOL THE MEDIA BUT NOT CAMPers
May 9, 2008
Investment Tax Credits
Excelsior Energy has issued a news release, crowing about $133.5 million in federal investment tax credits for the Mesaba Project. Newspapers across the Range have relied on this release to spread Excelsior's portrayal of the Project as alive and well. However, they all missed the significance of the statement that the IRS has "allocated" this amount. The IRS notice of "allocation" is a preliminary step and significant hurdles remain before the tax credits are finalized.
Basic research into this incentive program reveals significant points not included in the news reports:
- To qualify for certification, Excelsior has two years to submit evidence that it has obtained all federal and state environmental authorizations necessary to begin construction. (Final Environmental Impact Statement and air, water, siting and routing permits are having significant problems and delays.)
- If the Project is certified, Excelsior will have five years to place the Project in service or the certification is void. The tax credits are not applicable until the Project is constructed and put into service
- An acceptance, allocation or certification by the IRS is not a determination that the project satisfies the requirements of Section 48A of the tax code. The IRS may, upon examination (and consultation with DOE), determine that a project does not qualify for Section 48A tax credits.
In the same news release Excelsior again gave the false impression that it has also received federal loan guarantees. Similar misleading statements were repeated by Tom Micheletti to the Hibbing and Virginia newspapers.
The Project has not received or yet qualified for any federal loan guarantees. The most recent public information was DOE's announcement in October 2007 that the Project was one of sixteen pre-applicants selected to submit full applications. These competing projects will be ranked by specified criteria. Twenty-nine detailed requirements are listed for submitting a full application, several of which are likely to present obstacles for the Mesaba Project, particularly the lack of a PPA and insufficient private equity. Greater weight will be given to applications that rely upon a smaller guarantee percentage; this conflicts with Excelsior's stated expectation of receiving the maximum of 80%.
PUC To Decide Whether Ratepayers Protected
Micheletti also reportedly stated that this means that the government and investors will bear all financial risks associated with the the Project and so "Minnesota consumers are protected".
If Micheletti's claim is true, all he needs to do is revise his proposed PPA with Xcel Energy and get the PUC to reconsider its prior decision that Mesaba's financial and operational risks are too great to be imposed on Xcel's ratepayers.
CAMPers should not hold their breath until this happens.
CAMP UPDATE: MESABA HEARING FOR MAY 8th POSTPONED
May 6, 2008
On May 6th Excelsior Energy requested that the PUC postpone the hearing scheduled for May 8th on Phase 2 of the Power Purchase Agreement that Excelsior is trying to force on Xcel Energy.
Excelsior's stated reason is that it has not had the 20 days that the rules allow for filing a Petition for Reconsideration of the PUC's 4/23/08 order. That order denied Excelsior's request for an indefinite delay of the Phase 2 hearing.
Excelsior says that it "is currently drafting its Petition for filing no later than May 14, 2008, and will endeavor to file its Petition early". CAMPers know that Excelsior's attorneys could have filed such a petition quickly if they wanted to, and they have known that their request was denied since the hearing on April 10th.
Excelsior is succeeding in delaying a final PUC decision on the PPA by making repeated requests for stays and continuances, which take time to process even if they are ultimately denied. Excelsior apparently agrees with CAMPers that the final PUC decision will mark the end of the Mesaba Project.
PUC staff say that this matter will be rescheduled "at an as now unknown date in the future after reconsideration requests are dealt with."
We'll let CAMPers know when it is rescheduled.
CAMP Update - PUC SCHEDULES HEARING ON PHASE 2 OF MESABA PPA
April 27, 2008
THURSDAY, MAY 8, 2008 (#6 and last on the agenda) This could lead to the final blow for the Mesaba Energy Project. CAMPers have been eagerly anticipating this date since the Administrative Law Judge's report was issued last September.
Want to be there? We will try to find out what time this docket is likely to be reached on May 8th and let you know.
Anyone interested in carpooling to attend the hearing should respond to CAMP.
The PUC will consider two questions:
- Does the Mesaba Project incorporate a "clean energy technology" that "is or is likely to be a least-cost resource, including the cost of ancillary services and other generation and transmission upgrades necessary" and is therefore entitled to supply Xcel with at least thirteen percent of the electric energy that Xcel Energy provides to its retail customers?
- Should the Commission place a deadline on negotiations between Excelsior and Xcel?
Past Decisions Predict Outcome
The PUC decided in Phase 1 of the PPA that the Project was not likely to be a least-cost resource, and that was the conclusion of the ALJ in Phase 2. We expect that the PUC will again reach the same conclusion, and again rule that Excelsior Energy's proposed power purchase agreement (PPA) should not be imposed on Xcel Energy.
Fruitless Negotiations Should End
In August 2007 the PUC rejected Phase 1 of the requested PPA but ordered negotiations to continue between Excelsior and Xcel. The PUC subsequently ordered 60-day reports on the status of the negotiations, which show that they have not been successful. The PUC has noted that similarly, Excelsior has been unable to report success in negotiations with other utilities for the purchase of its output. The PUC will likely set a deadline on the negotiations, and when that arrives, finally deny the PPA.
The End?
This will leave Excelsior without the long-term customer that it needs in order to finance and build the Project. Absent some heroic life-saving infusions of money by the state or federal government, that should toll the death knell for the Mesaba Project.
CAMPers WILL BE INVITED TO THE WAKE!
CAMP Update on PUC Hearing Held April 10, 2008
April 12, 2008
PUC UNANIMOUSLY DENIES DELAY REQUESTED BY EXCELSIOR ON PPA
On April 10th, the PUC, without discussion, voted 5 to 0 to deny Excelsior Energy's request for an indefinite stay of the proceeding regarding Phase 2 of the Power Purchase Agreement Docket.
This means that the PUC "Staff will bring the complete Phase 2 issue back to the Commission in a timely manner". The problem is what is considered timely, considering that the ALJ's report on Phase 2 was issued in mid-September. Excelsior already achieved a significant delay by filing the request for a stay in mid-February, resulting in this procedural hearing on April 10th.
The PUC's regular meetings are on Thursdays. So far the agendas have not been posted for dates subsequent to April 17th. CAMP will be watching the PUC calendar and will alert CAMPers when this matter is scheduled. That hearing is likely to result in a final denial of the PPA, leaving the Mesaba Energy Project unable to attract the investors needed to move the Project forward.
PUC GRANTS EXCELSIOR'S PETITION REGARDING TRANSMISSION
(but it doesn't solve the Project's fundamental problems)
On a vote of 3 (Reha, O'Brien & Pugh) to 2 (Koppendrayer and Boyd), the PUC found that "all transmission infrastructure associated with the Mesaba Project" is exempt from the requirements of a certificate of need (CoN), regardless of which entity builds and owns it. Minnesota Power, which may have to build and/or own it, is concerned that this may become a legal issue in the future if it is challenged by affected landowners after the route is determined.
Discussion indicated that some Commissioners were influenced to grant Excelsior's seemingly premature request by deadlines in the Interconnection Agreement among Excelsior, Minnesota Power and the Midwest Independent System Operator (MISO).
Commissioner Reha suggested that Excelsior was putting the cart before the horse, given that the Project may never be built because of serious issues with the PPA and costs. However, she agreed that Excelsior's position was supported by the statutory language that exempts an Innovative Energy Project (IEP) from a CoN.
Although the PUC previously determined that Mesaba qualifies as an IEP, Minnesota Power has indicated that it may challenge that in court. So this is likely not the final word on this issue.
Chair Koppendrayer Voices Lack of Support for Project
During this discussion, Chair Koppendrayer said (according to hurried notes):
- I don't believe that plant will be built. I believe there is going to be cleaner ways to use coal. That plant on that site won't ever be built. Why would I in good conscience ever do anything to hold out hope for that process, why would I ever do that?
- It's not by the coal mine and it's not by the power demand. To put it in this particular spot, it makes no sense. This plant was a good idea as a way of using coal, at this point in time this plant is a bad idea, and I'm not going to do anything to encourage it.
- Nobody has come forward to say we need this power, can afford it, and it would fit in our generation portfolio. I can't imagine you'd find any Independent Power Producer who could find capital for a project that no one needs.
UPDATE ON PUC HEARING - APRIL 10, 2008
The PUC has scheduled hearings on two of the Mesaba Energy Dockets.
Docket No. 05-1993 - Power Purchase Agreement - Phase 2
In September 2007 Administrative Law Judge Bruce H. Johnson issued a report and recommendations regarding Phase 2 of the PPA proceeding. The issue was whether Xcel Energy should be required to purchase at least 13% of the energy it provides to its retail customers from Mesaba. (In Phase 1 the PUC decided not to require Xcel to purchase 2%). The ALJ's conclusion in Phase 2 was the same as in Phase 1: the Mesaba Project is not likely to be a least-cost resource and so Xcel should not be forced to purchase its output.
CAMP has been watching for months for the hearing on Phase 2 to be scheduled, expecting that the PUC would finally deny Excelsior's attempt to force a PPA on Xcel Energy. Apparently Excelsior feared that would be the result and so on 2/14/08 Excelsior requested that a decision on Phase 2 be postponed indefinitely. Minnesota Power and Xcel both filed objections and the issue to be addressed on 4/10/08 is: Whether the PUC should grant the request for an indefinite stay of Phase 2.
Docket No. 07-1640 - Certificate of Need for Transmission Infrastructure
The other issue to be considered on 4/10/08 is: Whether the PUC should dismiss or grant Excelsior's petition regarding transmission infrastructure. (It is remarkable that the option of conducting a contested case proceeding is not being considered.)
Excelsior has requested a finding that all transmission infrastructure associated with the Mesaba Project is exempt from the requirements of a certificate of need, regardless of whether the Mesaba Project or some other entity actually permits, owns, constructs, or oversees the construction of this infrastructure. Minnesota Power has objected to this, arguing that no decision should be made until both phases of the PPA are complete and the parties have time to appeal the PUC's final decision. Xcel agreed with this position and also pointed out that the Siting and Routing Docket and necessary permits should be finalized before the transmission issues are addressed.
More Information
The parties' filings and the notice of hearing can be found by going to - www.edockets.state.mn.us/EFiling/DocumentSearch.do - and entering the docket number.
Carpooling to St. Paul
Any CAMPers who are interested in sharing vehicles and costs to attend the hearing should reply to CAMP - camp@northlc.com
Please state the number of travellers in your party and whether you have a vehicle that could be used and how many people it can comfortably accommodate.
There are other items on the PUC's calendar for the same day and we are trying to estimate the likely start time for the Excelsior issues. We'll let you know when we have more information.
UPDATE ON SITING AND ROUTES DOCKET
This proceeding leads up to the PUC's decision on permits for Mesaba's plant site and routes for its natural gas pipeline and HVTLs. These decisions are supposed to be based on Excelsior's Joint Permit Application and Environmental Supplement, filed in June 2006. Excelsior also filed written testimony from more than twenty "expert witnesses" (well-paid consultants) in January 2007. The last-minute surprise was a supplemental filing on January 28, 2008, abandoning the plan to discharge Mesaba's cooling tower blowdown water, and announcing an enhanced Zero Liquid Discharge system. (see article below for Ed Anderson's 1/25/08 response to Excelsior's self-congratulatory press release).The PUC is also supposed to consider the Environmental Impact Statement and the opinions of the DNR, MPCA, and Health Department regarding whether the Project will qualify for necessary air, water, and waste permits. Although these agencies have filed extensive comments in response to the Draft EIS, they were not represented at the hearings. We hope that their comments will be taken into consideration in the Final EIS. The PUC will have to determine that the FEIS is adequate before it decides on the permits.
Administrative Law Judge Steve Mihalchick conducted public hearings in Taconite on January 29th, and in Hoyt Lakes on January 30th to allow Excelsior Energy to present its 20 expert witnesses and formally offer their prefiled written testimony from a year earlier. Technically, Excelsior is the only party in this proceeding but the ALJ chose to treat the Department of Commerce and its attorney, Karen Hammell, like a party. This meant that she was given the "right" to question the witnesses, which she chose to do only sparingly. The ALJ also had the "right" to question the witnesses, which he also did sparingly.
Under the rules the public has a right to question the witnesses but the ALJ has discretion over timing and duration of this questioning. On the first day, in Taconite, well-informed questions hit their marks. They were asked by: Ross Hammond (Fresh Energy), Carol Overland and Alan Muller (Mncoalgasplant.com/MCGP), Ron Rich (Swan Lake Association), and Andy David. They challenged: the estimated economic impact for the region; dangers from escaping carbon monoxide; validity of emission estimates; handling of heavy metals in the slag; disposal of captured mercury; disposal of hazardous solid waste from the ZLD system; best available control technologies (BACT); and problems that occurred at the Wabash, Indiana plant, which is the model for Mesaba. Excelsior got through only two of its witnesses in the morning session and two more in the afternoon session.
In addition to a good turnout of CAMPers, the evening session was crowded with local elected officials and union members, speaking of the need for jobs and economic development. CAMPers, raised more substantive concerns and important questions but the ALJ was busy doing his paperwork and not paying attention. At 8:30 p.m. he said how much he enjoys and appreciates having people pour their hearts out and adjourned the meeting.
On the second day of hearing, in Hoyt Lakes, the rules were changed to prohibit the public from asking questions until Excelsior had finished presenting the testimony of all of its witnesses. This meant that no questioning was permitted until after the dinner break and after the public comments were heard. The effect was that only Carol Overland and Alan Muller got the opportunity to question the witnesses and then for only about one and one-half hours before the ALJ shut it down. CAMP and MCGP are filing a protest over the failure to allow sufficient time for public questioning and input, and requesting additional time.
The ALJ has revised the schedule for this docket, allowing Excelsior to file supplemental materials until February 6th (we're still looking for them), and allowing the public until February 29th to file comments. CAMPers will be hearing more about this soon. One problem with the schedule is that it allows only one week between the anticipated publication date of the FEIS and comments on its adequacy. CAMP is going to try to rectify this situation.
PUBLIC INTEREST OR EXCELSIOR'S INTERESTS?
February 3, 2008
CAMP Co-chair Charlotte Neigh
Imagine your investment club decided to lend a lot of money to a business venture under certain terms and conditions. Later you found out that the borrower missed the contractual deadline for the first interest payment but the club's treasurer gave an extension of time for the payment and also gave the borrower more of the club's money. When the new deadline arrived, although the borrower failed to meet the specified milestones, the treasurer gave the borrower another year to make the first payment, based on the borrower's rosy promises. Would you feel that your money and that of your coinvestors was being managed properly?
This is what happened with $9.5 million of IRR funds that were loaned to Excelsior Energy for the Mesaba Project. In the spring of 2007 Tom Micheletti asked for an extension beyond April 23rd to make the first interest payment of about $1 million. The deadline passed without an extension being granted and IRR could have declared Excelsior to be in default under the loan agreement. This was the status on May 31, 2007, when Excelsior asked IRR to give it another $2.75 million - the balance of the $9.5 million, which IRR did.
Then on July 23rd IRR Commissioner Sandy Layman, without a vote of the IRR Board, granted an extension to December 31, 2007, for the interest payment; and on that date she granted another extension to December 31, 2008, again without a vote of the Board. The Commissioner's letter noted that Excelsior had failed to meet the required milestones, but she granted the additional extension anyway. Where does she get the authority to make such decisions about risking the public's money without the oversight of the Board? Have the Board members decided that ceding their authority to the Commissioner is preferable to a public meeting where their votes might be questioned?
IRR knows that the Mesaba Project has not been able to achieve the power purchase agreement that it needs with Xcel Energy. The Minnesota Public Utilities Commission denied Excelsior's attempt to force the PPA, declaring it to be not in the public interest. Tom Micheletti minimized this as a "delay", and Commissioner Layman chose to act as if she believes this, even though a cursory investigation would show that the PUC likely will soon finalize its decision disapproving the PPA.
The legislative session starts on February 12th, and Excelsior will be seeking additional assistance for its troubled Project, after already having spent more than $700,000 on lobbying. We need to be vigilant because Excelsior will be courting our District 3 legislators, as well as other members of the Iron Range delegation, for more special favors. Tell your Senator and Representative that no more benefits for Excelsior should be on the legislative agenda.
Excelsior Energy: Environmental Consciousness or Desperation?
January 25, 2008
CAMP Co-chair Ed Anderson
Excelsior Energy has announced a "major water quality improvement program" whereby they pledge to eliminate discharge of cooling water by a process called Zero Liquid Discharge (ZLD). The announcement also describes upgrading the Coleraine/Bovey/Taconite wastewater treatment facility (WWTF) in order to improve water quality in Trout Lake and the Mississippi River watershed. The press release is an interesting development, but not entirely unexpected. Excelsior is unable to obtain water discharge permits with their current proposal. Completely eliminating water discharge is the only way they can proceed. If Excelsior Energy really had intentions of being environmental stewards and wanted to "mitigate environmental impacts", measures such as ZLD and carbon dioxide capture and sequestration would have been in the plan from the beginning.
Senator Saxhaug was quoted in Excelsior's press release as saying "Excelsior didn't have to do this to get licenses, but they have agreed to do all they could to demonstrate they intend to be good environmental stewards. This is a very promising development." Obviously Senator Saxhaug has been influenced by Excelsior's spin, and apparently he hasn't been following this issue closely. Excelsior has fought hard to avoid eliminating water discharge and has repeatedly shown us that the focus is on dollars, not environmental stewardship. ZLD is extremely expensive to implement, and will mean a loss of efficiency with regard to power output. A major reason Excelsior changed their preferred site to the West Range was because the East Range site required ZLD due to the more stringent mercury criteria of the Lake Superior watershed.
Excelsior's Joint Permit Application clearly shows that under the original plan, the Mesaba Energy plant would cause the Canisteo Mine Pit to exceed water quality standards for hardness and dissolved solids. Mercury levels in the pit would rise sharply, the lake trout fishery would be ruined, and the polluted Canisteo water would put local municipal drinking aquifers at risk of contamination. Water was also proposed to be discharged into the already impaired Swan River system. CAMP has advocated for elimination of water discharge all along, so we see this announcement is a positive development.
The problems with this announcement are that:
- The ZLD plan is vague. This "plan" as proposed is not adequate or specific, similar to but not as far-fetched as their "plan" for carbon capture and sequestration.
- A ZLD agreement with "local officials" is of no significance. Right now the Joint Permit Application and Draft Environmental Impact Statement mention West Site ZLD as a last option with little detail. Unless the proposal is on record in the Final EIS it carries no weight as local officials have no say as to water discharge permitting. Excelsior needs to show the permitting agency that their water discharge plan is viable. Complete elimination of discharge water is the only plan that potentially has a chance to succeed.
- ZLD does not necessarily mean that the Canisteo would remain open to recreational use. Its surface water levels will need to be maintained within a narrow range to ensure safe recreation and a viable ongoing trout fishery.
- The WWTF can not handle the wastewater from Mesaba without major upgrades. This is also something that Excelsior knows they need to address, and the plan as written in the press release may get them off the hook quite inexpensively. This proposal could be a way to minimize Excelsior's contribution to the required upgrade. The plan specifies $250,000 to strengthen grant funding (for a $1 million dollar piece of equipment) for 2009, and says "those funds would be conditioned on the start of construction of Mesaba One." Tom Micheletti is quoted as saying they will contribute up to half a million dollars to upgrade the WWTF. This is a company that has no buyer for its power, and can't even make its interest payment on IRR loans.
This announcement is important in that Excelsior appears to be finally dealing with the reality of discharge water permitting, and if the plant is ever funded and built, there would be less environmental impact. Excelsior's newest water discharge plan is not about environmental stewardship; it's a necessity. Excelsior is desperately fighting to stay alive, and now we're seeing major concessions so that the project might remain viable.
MPUC SUPPORT FOR MESABA FADES
November 1, 2007
At its meeting on 11/1/07 the Minnesota Public Utilities Commission considered requests from the parties regarding its 8/30/07 Order denying Excelsior Energy's effort to force a power purchase agreement on Xcel Energy.
Excelsior, Xcel and Minnesota Power had all filed petitions for reconsideration and/or clarification (see CAMP's 9/27/07 Update). The only request granted by the MPUC was to issue an erratum notice to correct legal citations in the initial order.
The Commission added an Issue not presented by the parties:
"Should the Commission Reconsider its August 30, 2007 Order On Its Own Motion with Respect to the Party Negotiations of a Final Power Purchase Agreement?"
The Commission came close to terminating the negotiations and putting an end to Excelsior's quest for a forced PPA with Xcel. In the course of the discussion the Commissioners indicated that no utilities need or want Mesaba's energy because it uses coal and is too expensive. They noted that plans for coal-gasification plants have recently been delayed or canceled in three other states.
Chair Koppendrayer said "This dog won't hunt" and told Excelsior it needs a new plan. Commissioner Reha said it's apparent that the PPA "isn't going to fly" at the present time.
The PPA proceeding was divided into two phases. In August the MPUC ruled on Phase 1 - that it was not in the public interest because it shifted too much of the cost and risk to Xcel ratepayers. An Administrative Law Judge has issued a report finding the same problems with Phase 2, which will be considered by the MPUC in the near future.
At that time the Commission will consider whether or not to put a time deadline on negotiations or TERMINATE THE NEGOTIATIONS, which now appears likely to be the outcome. That would let Xcel off the hook and leave Excelsior with little prospect of finding a customer for Mesaba's output. That should put an end to the Mesaba Project.
CAMP'S Response to Rolf Westgard & Duluth News Tribune
October 17, 2007
Recently an opinion piece by Rolf Westgard was published in the Duluth News Tribune, advocating for Excelsior Energy's Mesaba Project - a power plant proposed to be built near the Scenic Highway in Itasca County.
"Clean" Coal
Mr. Westgard's premise that it is possible to use coal "cleanly" echoes the Bush administration's "clean coal initiative", an oxymoron and myth designed to obscure coal's problems and enhance the financial interests of the coal industry. People are tempted by the promise of "clean coal" because it is abundant in the U.S. and has a relatively low direct cost. Federal policy and incentives enable promoters of IGCC technology to mislead the public about claimed benefits.
Under these circumstances, Mr. Westgard may be correct in saying that coal's share of electric energy generation in the U.S. is projected to increase to 57% by 2030. That does not mean that it's a good thing or that thoughtful citizens shouldn't work to avoid it. Even though some reduction in SO2 emissions is achieved by IGCC technology, it is still dirty and contributes to all of the health and environmental problems known to be caused by coal mining, transport and combustion.
In the contested case proceeding the administrative law judges (ALJs), relying on an analysis by the Minnesota Pollution Control Agency (MPCA), compared IGCC technology to supercritical (SCPC) and ultrasupercritical (USC) pulverized coal plants. They found that although the Project is expected to significantly outperform future SO2 emission reductions of the other technologies, it is expected to only slightly outperform them in reducing particulate matter emissions, and to slightly underperform them in reducing NOx emissions. The ALJs also found that IGCC technology is not inherently better at controlling mercury emissions.
Efficiency
A plant with higher heat efficiency produces fewer emissions for each unit of electricity produced. Mr. Westgard claims that the Mesaba Project would be one of the world's most efficient coal plants. The MPCA and the ALJs concluded that, operating on subbituminous coal, Mesaba's thermal efficiency would be 36.3%. This is lower than the EPA would expect from a "generic" IGCC plant (40%), SCPC plants (37.9%), and USC plants (41.9%).
Capture and Sequestration of Carbon Dioxide
Mr. Westgard ignores the problems of capturing and sequestering CO2. Excelsior has no intention of capturing CO2 until it is required to do so. It admits that currently available technology would enable it to capture only 30% of Mesaba's five million annual tons. This would also increase the cost for electricity that already costs 30% more than electricity available from other sources, including renewables. This is one of the reasons why the MPUC found Mesaba's proposed power purchase agreement not to be in the public interest.
The Mesaba Project is planned for a site that is about as far as it could be from potential sequestration sites. Piping the CO2 to western North Dakota or Canada would cost hundreds of millions of dollars, and it would reduce the efficiency of the plant by 10%. The feasibility of large-scale and/or long-term sequestration has not yet been proven. There are known environmental and health dangers from migrating and escaping CO2. A new coal-powered plant built today can be expected to operate for fifty years. We must not allow such proliferation of greenhouse gases.
Excelsior Energy has already received about $40 million in public subsidies to promote and develop the Mesaba Project. It is counting on between $800 million and $1.6 billion in federal loan guarantees and $130 million in federal tax credits. Such sums of money could better be spent on research and development of alternative and renewable sources of energy and improved distribution systems to replace dirty coal as the mainstay of our electric energy generation.
CAMP Update: IGCC Woes
October 14, 2007
While CAMP supporters are watching and waiting for Excelsior Energy's next moves on the Mesaba Energy Project, there is more bad news regarding IGCC project financing.
Excelsior already has an uphill climb to revise its proposed power purchase agreement to satisfy the Minnesota Public Utilities Commission. Now an industry report says that IGCC costs have escalated between 30% and 50% since the beginning of 2006, and as much as 100% since 2004.
An energy industry research and analysis group (Emerging Energy Research) issued a report on October 5, 2007, saying that much of the momentum behind IGCC has waned because of rising capital costs, stabilizing natural gas prices, and an uncertain outlook for carbon policy.
On 9/18/07 a major Dutch utility (Nuon - "perhaps the world's biggest utility proponent of IGCC") after two years of deliberation and project evaluation, tabled its proposed 1,200 MW IGCC project in the Netherlands.
On 10/4/07 TECO (regional Florida utility Tampa Electric) announced that it is shelving its plans for a 630 MW IGCC project, even though in 2006 it was awarded over $130 million in federal tax credits to build the project.
"These cancellations are a very clear indication of the widespread challenges facing IGCC over the next two to five years."
More detail is available in the three-page pdf version:
IGCC Cancellations-EER.pdf
CAMP UPDATE:
Federal Loan Guarantees and Mesaba Energy Project
October 8, 2007
Excelsior Energy used an announcement by the U.S. Department of Energy regarding its Loan Guarantee Program to get positive media coverage for its Mesaba Project. The two media sources checked on Saturday (Channel 13 in Duluth and MPR) both noted the problems with the power purchase agreement. However, the MPR report on Sunday let Julie Jorgensen's questionable claims go unchallenged and the Grand Rapids Herald Review published Excelsior's News Release unfiltered.
Excelsior's News Release is conveniently oversimplified. It says: "the Mesaba Energy Project has been selected from 143 applicants to begin the final review process for its loan guarantee program". The DOE's News Release says that 16 project sponsors, who submitted pre-applications in the fall of 2006, have been "invited . . . to submit full applications for loan guarantees", which "will undergo disciplined and rigorous reviews". Mesaba and others have until October 30, 2007 to notify DOE that they plan to submit a full application.
Given the federal government's infatuation with the myth of "clean coal" and the IGCC technology, it is not surprising that Mesaba is among the projects selected to submit final applications. However, even the DOE's description of Mesaba states only that it "would allot space in its design for CO2 capture and storage". This should ultimately be found inadequate to meet the standards set forth in the regulations.
Excelsior's News Release also quoted Jorgensen as claiming that "the loan guarantee offers Minnesota consumers unparalleled protection from the risks of . . . innovative technologies". This ignores the determination by the Minnesota Public Utilities Commission that Excelsior's proposed power purchase agreement was too risky financially and operationally, even though the PPA already factored in the benefit of federal loan guarantee.
The Mesaba Project is a long way from achieving a federal loan guarantee. The rigors of the application and screening process will be a significant challenge. There are also monetary hurdles: in submitted comments, TXU said that the costs of securing a guarantee could be hundreds of millions of dollars; applicants must pay fees to cover DOE's administrative costs of processing the application; and before a Loan Guarantee Agreement can be finalized, applicants must pay a substantial Credit Subsidy Cost.
The DOE's News Release and a link to the regulations can be found at:
http://www.doe.gov/news/5568.htm
THE PROGRAM
The loan guarantee program was authorized by Title XVII of the Energy Policy Act of 2005, for up to 80% of the cost of projects that employ new or significantly improved technologies as compared to commercial technologies that are in service in the United States when guarantees are issued. The fact that Mesaba might be eligible for such a guarantee was noted in DOE's publications in the fall of 2005. The loan program could not begin to operate until the DOE established regulations to govern it, which have just been finalized. The total amount made available for the loan guarantees in 2007 was $4 billion. Congress is currently considering DOE's request for $9 billion for fiscal 2008. There likely will not be enough money to fund all of the projects that have been invited to submit full applications. The DOE will score and rank the applications by criteria set out in the new regulations, which are found in Part 609 of of Title 10 of the Code of Federal Regulations.
SELECTED REGULATIONS
Section 609.6 lists twenty-nine detailed requirements for submitting an application, including:
(12) An analysis of the market for any product to be produced by the project, including relevant economics justifying the analysis, and copies of any contractual agreements for the sale of these products or assurance of the revenues to be generated from sale of these products.
Problem: No Power Purchase Agreement.
(21) A preliminary credit assessment for the project without a loan guarantee from a nationally recognized rating agency for projects where the estimated total Project Costs exceed $25 million. . .
Problem: Standard and Poors has determined that IGCC projects should be assigned a risk premium unless at least five such projects are in operation with a satisfactory record.
(22) A list showing the status of and estimated completion date of Applicant's required project-related applications or approvals for Federal, state, and local permits and authorizations to site, construct, and operate the project;
Problem: The release of the draft EIS has been delayed repeatedly and, if released, likely will point out serious impediments to the required permits.
Section 609.7 lists the factors that will be weighed in deciding which applications should receive loan guarantees. It states that greater weight will be given to applications that rely upon a smaller guarantee percentage, all else being equal.
Problem: Excelsior has always assumed, and Jorgensen is still talking about, the maximum permissible 80%.
Among the sixteen criteria to be evaluated by the DOE:
(1) To what measurable extent the project avoids, reduces, or sequesters air pollutants or antrhopogenic emissions of greenhouse gases;
Problem: The Minnesota Pollution Control Agency has concluded that Mesaba will not significantly reduce air pollutants compared to other state-of-the-art coal technologies. Mesaba has no current intention of capturing and sequestering CO2 and admits that currently available technology would enable capture of only 30% of its CO2. This would have a prohibitive cost and reduce efficiency. Sequestration would likely increase the cost significantly and has not yet been proven feasible on a large scale or over a long time.
(7) The amount of equity commitment to the project by the Applicant and other principals involved in the project;
(9) Whether and to what extent the Applicant will rely upon other governmental assistance to support the financing . . . of the project . . . ;
Problem: Equity is defined as cash contributed by the Borrowers and other principals, not including proceeds from loans or the value of government assistance or support. The amount invested and risked by Excelsior's principals has always been questionable and kept secret. Its known financing to date is about $40 million in public funds.
(10) The feasibility of the project and likelihood that the project will produce sufficient revenues to service the project's debt obligations over the life of the loan guarantee and assure timely repayment of Guaranteed Obligations;
Problem: No Power Purchase Agreement.
(12) The Applicant's capacity and expertise to successfully operate the project, based on factors such as financial soundness, management organization, and the nature and extent of corporate and personal experience;
Problem: Excelsior Energy has no corporate experience; Mesaba I is its first project. Nearly all of its executives were employed at NRG, which declared bankruptcy in 2003.
(14) The levels of market, regulatory, legal, financial, technological, and other risks associated with the project and their appropriateness for a loan guarantee provided by DOE;
Problem: The MPUC determined that the financial and operational risks were reasons not to approve Mesaba's proposed PPA.
CAMP UPDATE: Nobody Likes PPA Order
September 27, 2007
CAMPers weren't the only ones who had problems with the PUC's 8/30/07 order regarding Excelsior Energy's petition to require Xcel Energy to purchase Mesaba's output under a long-term power purchase agreement (PPA). The parties had until September 19th to file a petition for rehearing. This is a mandatory step before a party may appeal a PUC decision to the courts. Petitions were filed by Minnesota Power, Xcel Energy, and Excelsior Energy.
The documents are summarized below. They can be found at:
http://search.state.mn.us/puc/query.html
Enter Docket No. 05-1993
MINNESOTA POWER
MP has requested a rehearing and reconsideration of the determination that the Mesaba Project is an Innovative Energy Project (IEP). This was the PUC's crucial finding (reversing the ALJs) that entitles Mesaba to "substantial and extraordinary" incentives in the 2003 statute, such as exemption from certificate of need, eminent domain powers, $10 million from the Renewable Development Fund, and more.
MP reasserts that Mesaba does not meet the standards required in the legislation because it:
• Does not deliver significant emission reductions compared to traditional technologies; and
• Is not capable of offering a long-term supply contract at a hedged, predictable cost.
MP also argues that the PUC should not have relied on its 2/23/05 order approving $10 million in RDF funding for Mesaba, but should have reviewed the statutory definition of an IEP and the evidence that shows Mesaba does not qualify.
The issue of whether Mesaba qualifies as an IEP is fundamental and of great interest to CAMPers. If MP pursues this issue to the court of appeals, it will be trying to show that this finding by the PUC is not supported by substantial evidence in view of the entire record as submitted. MP's case should be helped by the fact that the ALJs made extensive findings contrary to the PUC's opinion.
XCEL ENERGY
Xcel filed a Request for Clarification or Modification, seeking more guidance from the PUC regarding its requirement that Xcel and Excelsior continue negotiating a PPA. Xcel offers a non-exclusive list of issues "that may prove to be significant challenges":
• Relationship of timing of the PPA to Xcel's need;
• Carbon capture and sequestration;
• Impact on Xcel's financial health;
• Pricing certainty and operational risks; and
• Whether other utilities should participate in the negotiations.
Could Xcel's "respectful request" be a diplomatic way of warning the PUC that this is not doable?
EXCELSIOR ENERGY
Not surprisingly, Excelsior's filing was the lengthiest and contained the most requests and issues. Apparently they still have enough money for extensive legal services.
EXCELSIOR ENERGY'S REQUEST FOR APPOINTMENT OF AN INDEPENDENT EXPERT EVALUATION FIRM, REQUEST FOR CORRECTION AND CLARIFICATION OF THE AUGUST 30, 2007 COMMISSION ORDER, PROTECTIVE PETITION FOR RECONSIDERATION AND REHEARING OF THE AUGUST 30, 2007 COMMISSION ORDER, AND REQUEST FOR DEFERRAL OF DECISION ON THE MERITS
1. Appointment of independent third-party expert evaluation firm to work with Xcel and EE to identify and present to the Commission the optimal terms and conditions for the PPA (who pays?)
2. Correct four typographical errors that give wrong numbers for statutory citations.
3. Reconsider and rehear specific issues:
• The PUC exceeded its authority by considering need and other public interest factors;
• The PUC applied an erroneous "least cost" standard;
• Evidence in the record does not support the PUC's:
• Findings on comparative costs;
• Findings on cost certainty;
• Findings on carbon dioxide; and
• Determinations that PPA not in the public interest.
Aside from these minor points, EE liked the order just fine.
4. EE suggests that perhaps the PUC's 8/30/07 order was interim rather than final, and if so, the PUC should defer any rehearing and reconsideration until after the independent evaluation process is complete and the PUC determines statewide need and allocation of the project's output. EE notes that this could potentially limit any possible appeals in the meantime.
CAMPers should note that this could be an attempt to keep the Mesaba Project in limbo and alive long enough to try to come up with some more public subsidies and legislated benefits. Wonder how MP feels about having its right to appeal delayed? We'll find out soon because the parties' replies are due within a few days.
PUC ACTION
Minn. Rule 7829.3000 provides that the PUC shall decide these petitions with or without a hearing or oral argument.
Minn. Stat. 216B.27 provides that:
• The PUC has sixty days to decide whether to grant a rehearing or the application is deemed denied;
• If the PUC determines that the original order was unlawful or unreasonable, it can change it; and
• No order of the PUC shall become effective while an application for a rehearing or a rehearing is pending.
If the PUC uses up the entire 60 days, it could be months before we know whether the PPA order will be appealed to the courts. Meanwhile, it looks like the 8/30/07 order is ineffective. Does this mean Xcel doesn't have to negotiate with Excelsior until this is resolved?
OTHER INTERESTING STATEMENTS
Recently discovered e-mail by Janet Gonzalez, Energy Unit Manager at the PUC:
"This is one of the most controversial cases the Commission has had to deal with in a number of years."
It's reassuring to know it's not just our opinion.
CONOCO PHILLIPS' SPIN ON THE PUC'S DENIAL OF THE PPA
See Conoco Phillips' 8/3/07 report on all of its gasification projects at:
http://www.gasification.org/Docs/News/2007/COALGEN/ConocoPhillips%20COALGEN%2007.pdf
The report includes the PUC's determination that the Mesaba PPA is "not in the public interest" and then explains Mesaba's problems:
"Mesaba Energy Project Status - What happened?"
Nationally:
- Capital cost escalation
- Drive for Coal Plants to capture carbon NOW
Locally:
- Xcel has reduced its load forecast to 325 MW and proposed wind and hydro to fill need.
- Strong local opposition - NIMBY groups masquerading and fundraising as environmentalists.
- State may have retreated from position of supporting economic development for Iron Range Area".
Now environmentalists are the good guys? But what are those NIMBY groups really up to behind their masks?
CAMPers could take pride in such recognition by Conoco Phillips, but it appears that we are being used in its campaign to portray failure of the Mesaba Project as separate and unrelated to its wonderful and promising gasification technology.
CAMP UPDATE:
ALJ RE: Phase II of PPA - PUC Should Deny Excelsior's Petiton
September 17, 2007
On September 14, 2007, an ALJ recommended that the Public Utilities Commission deny Excelsior Energy's request that Xcel Energy be required to purchase 13% of its energy from Mesaba Units 1 and 2 by 2013.
BACKGROUND
Excelsior Energy filed a Petition with the PUC in December 2005 to force Xcel Energy to purchase Mesaba's output pursuant to two statutes passed in 2003. In April 2006 the PUC said it would address three issues:
1) Whether to approve the PPA (Minn. Stat. 216B.1694);
2) Whether Xcel would be obliged to use Mesaba's output for at least 2% of its energy (Minn. Stat. 216B.1693); and
3) Whether at least 13% of Xcel's retail energy should come from Mesaba by 2013.
Decisions on the first two issues were recommended by two Administrative Law Judges in a 4/12/07 report. In its August order the PUC chose not to approve the PPA proposed by Excelsior (see our earlier report for more detail). The PUC did not act on issue #2, although the ALJs had recommended against requiring Xcel to purchase the 2%.
ISSUE #3 - MUST AT LEAST 13% OF XCEL'S RETAIL ENERGY COME FROM MESABA BY 2013?
ALJ Bruce H. Johnson's short answer is "NO" because Mesaba's energy is not likely to be a least-cost resource. However, it's not that simple, as evidenced by the fact that the report numbers 39 pages. Find the report by going to:
http://search.state.mn.us/puc/query.html
Enter docket no. 05-1993.
The decision will be made by the PUC at a public hearing some time after the parties have had 30 days to file their objections and replies.
FINDINGS OF FACT
The ALJ noted that the PUC had already concluded in its August order regarding the PPA that the power from Mesaba Unit 1 would cost Xcel Energy about 30% more than other comparable sources. He found that in order to require Xcel to purchase 13% of its power from Mesaba, the PUC would have to:
• First find that the Project qualifies for the 2% minimum; and then
• Conclude that it is likely to be the least-cost resource for 13% of Xcel's need; and
• Find that this would not be contrary to the public interest.
The ALJ noted: in Phase 1 the ALJs found that Mesaba was not likely to be a least-cost resource to provide 2% of Xcel's energy; and it is even less likely to be a least-cost resource to supply 13%.
CONCLUSIONS OF LAW
The ALJ concluded that the Mesaba Project and its technology do not satisfy the requirements of Minn. Stat. 216B.1693 because it is not likely to be a least-cost resource and that it would be contrary to the public interest for it to supply 13% of Xcel's retail load starting in 2012.
IS THE CLOCK RUNNING OUT?
A significant finding by the ALJ is that the opportunity to require Xcel to purchase at least 2% of its energy from Mesaba EXPIRES ON JANUARY 1, 2012, and the power won't be available to Xcel until 2014, according to a realistic timetable.
The ALJ notes that: Excelsior Energy disputes this interpretation of the statute; and the PUC may consider the expiration date to be 12/31/13.
CAMPers: STAY TUNED
The PUC's DECISIONS on ISSUES #2 and #3 and could be vital to the survival of the Mesaba Project.
Mesaba's problems could also lead to new attempts for MORE SPECIAL LEGISLATION.
Meanwhile, we still have the PUC's NON-DECISION ON THE PPA - requiring that Xcel continue negotiating with Excelsior and that other utiltities consider Mesaba as a source in their upcoming resource plans.
And we're still waiting for the federal Dept. of Energy to release the DRAFT ENVIRONMENTAL IMPACT STATEMENT.
WE'LL BE WATCHING ON ALL FRONTS.
CAMP UPDATE: PUC Issues PPA Order
September 4, 2007
CAMPers:
The Minnesota Public Utilities Commission issued its Order on August 30th, "Disapproving" the Power Purchase Agreement between Excelsior Energy and Xcel Energy. The 24-page document can be found at:
http://www.puc.state.mn.us/docs/orders/07-0130.pdf
The Order amplifies the PUC's earlier statement, which we sent on August 4th and we discussed further on August 21st. It contains two provisions designed to keep open the possibility that Mesaba's output might find a buyer.
PROVISIONS IN PUC'S ORDER & CAMP'S REACTION
"Excelsior and Xcel shall resume their negotiations toward a final power purchase agreement, with the assistance of the Department of Commerce and in light of the guidance provided by the Commission in this case."
It is hard to see how renewed negotiations can be productive, given the fundamental cost and risk problems that the PUC acknowledges as "legitimate barriers" that are "likely to impose unreasonable and excessive costs on Xcel's ratepayers".
"The Commission will explore the potential for a statewide market for the innovative energy project's power . . . both in the context of upcoming resource plan proceedings and in other cases in which the Commission reviews (a) requests to build or expand fossil-fuel-fired generation facilities or (b) requests to enter into power purchase agreements with those facilities for terms longer than five years."
This refers to the statutory requirement that other utilities consider Mesaba as a supply option. The PUC explains it as "spreading the . . . challenges of cost, pricing, and rates . . . among more than one set of ratepayers (to) make those challenges more manageable." The PUC promises to "explore that possibility in the months ahead".
This requirement could also be applied in the case involving new transmission facilities in Minnesota for the output of Big Stone II, a 630 MW coal-fired plant planned in South Dakota. The Administrative Law Judges recently found that the energy is needed by several Minnesota utiltites and recommended that the route permits be granted. However, the ALJs also found that the utilities requesting the new lines did not adequately consider using Mesaba's output as a supply option. This case will be decided by the PUC, which could make Mesaba a serious issue.
CAMP will be watching developments in the BS II case and in the upcoming IRP proceedings at the PUC, which are referenced as follows:
"Resource plan filings are imminent from Xcel, Minnesota Power, and Great River Energy, three of the state's largest generators of electricity and purchasers of wholesale power. These resource plan proceedings should provide a good starting point for examining how Mesaba might contribute to meeting the state's intermediate and long-term power needs and how that contribution would affect rates, reliability, and other public-interest concerns."
KEY QUESTIONS & CAMP'S RESPONSES
Can a PPA be successfully negotiated that meets Excelsior's needs and overcomes Xcel's objections and the deficiencies identified by the PUC?
Highly unlikely, given the PPA's fundamental flaws and the failed efforts over the past three years.
Can the PUC force the other utilities in the state to incorporate Mesaba's output as they plan to meet their needs for new baseload generation?
Not likely, if the PUC applies a true public interest test (need, cost and risk) and takes into account Mesaba's lack of a meaningful plan to capture and sequester CO2.
How long can Excelsior Energy survive without new cash infusions?
That probably depends on how much of the $22 million in DOE funding has not yet been spent and whether the DOE is willing to continue funding in light of the disapproved PPA.
Private investments aren't likely in the absence of an approved PPA.
We expect that no additional public funds will be provided. WE'LL BE ON THE LOOKOUT FOR THAT, TOO.
CAMP UPDATE:
Mesaba's Power Purchase Agreement at the Public Utilities Commission
August 21, 2007
The Minnesota Public Utilities Commission did not approve the power purchase agreement that the Mesaba Project needs with Xcel Energy because it "is not in the public interest as currently drafted".
However, rather than finally denying the PPA, the PUC "requested" that Excelsior, Xcel, and the Department of Commerce continue negotiating.
The PUC identified deficiencies in the proposed PPA to include: the absence of a fixed price at a reasonable level; inadequate ratepayer protections from operational and financial risks; and the need to further develop plans to capture and sequester carbon. These deficiencies are fundamental and will be difficult, if not impossible, to overcome.
We will need to see the PUC's order and detailed findings of fact before we can know exactly what it's doing and that may take a few more weeks. In the meantime, here's our analysis of the Project's status.
PUC'S FINDING THAT MESABA IS AN INNOVATIVE ENERGY PROJECT
The PUC's finding that Mesaba is an Innovative Energy Project reversed the ALJs' recommendations and keeps Mesaba entitled to the special benefits listed in the 2003 legislation.
One of these benefits is of increased significance because the PUC could use its authority over all new generation facilities to pressure all of the state's utilities to use Mesaba's output. However, the test would be whether that is in the best interest of ratepayers and the PUC also unanimously agreed that Mesaba's power would be too costly. It is hard to imagine what benefits the PUC might find sufficient to counterbalance this cost issue.
It is expected that as the various utilities present their Integrated Resource Plans to the PUC, they will be required to show that they "considered" Mesaba as a supply option, and to show why it is not suitable. IRPs from Xcel, Minnesota Power, and Great River Energy are due in November and December of this year. We will be watching for developments on that front.
The Hearings
The PUC met on July 31st and August 2nd to hear arguments from the parties. On the first day 40 CAMPers rode our chartered bus to St. Paul and several more met us there to create a significant presence in the room. Co-Chair Ed Anderson ably presented CAMP's perspective to the PUC. We all agreed that Excelsior's Mesaba Project did not fare well that day and its proponents appeared to be disconcerted.
By Thursday morning the Excelsior team had regrouped and was encouraging the PUC to approve the PPA in some form, even by modifying it to 450 MWs (vs. 603 MWs proposed), and delaying the production date. Excelsior emphasized that it needed some favorable word on the PPA to support its application for $130 million in federal tax credits, which must be filed by October 1st. Without these tax credits, the costs of Mesaba's power could increase by another 10%. Nevertheless, the PUC did not set any deadline for results from negotiations with Xcel or for identifying how Mesaba's output could be marketed to all of Minnesota's utilities. This may leave the Project with a critical timing problem.
Time and Money>
Since the hearing we have learned that, in addition to the deadline for applying for the federal tax credits, Excelsior had another reason for needing a 450 MW PPA. Its first interest payment on its first "loan" from Iron Range Resources was due in May 2007. Tom Micheletti requested an extension and in late July Commissioner Sandy Layman granted one until the end of 2007. She also said that an extension to the end of 2009 would be granted if, by the end of 2007, Excelsior achieved: either an approved PPA for 450 MWs; or a third-party equity investment of $100 million. These two conditions are so interdependent that it is unlikely that Excelsior will get one without the other.
Is Excelsior running out of money and therefore time to continue promoting the Mesaba Project? Apparently the entire $9.5 million from IRR has been spent. We don't know how much of the initial $22 million from the Department of Energy has been spent but we do know that in order for the Agreement with DOE to continue, Excelsior needs a PPA or some other suitable agreement for selling its output. At least three-fourths of this year's $2 million installment from the state's Renewable Development Fund in addition to two previous installments have been spent. Even though the PUC did not pronounce a death sentence for the Project, it may not survive much more delay.
The World and Micheletti Keep On Spinning
Nevertheless, Tom Micheletti continues to spin the Project as alive and doing well, as shown by his "update" to the Itasca County Commissioners on August 14th. He claimed that: the PUC is going to "force" utilities to participate in a PPA with Mesaba; the PUC wants to spread Mesaba's "benefits" statewide; Mesaba would provide baseload "desperately" needed locally; and the Project would be a low-cost alternative for the region. All this despite: Excelsior's fight to prevent the PUC from considering the need for Mesaba; and the PUC's unanimous finding that the power in the proposed PPA was too costly and the risks were too great to impose on Xcel's ratepayers.
CAMP UPDATE: MPUC Update
August 3, 2007
MINNESOTA PUC DECIDES NOT TO DECIDE ON POWER PURCHASE AGREEMENT (PPA)
About 50 CAMPers attended the session for oral arguments at the Minnesota Public Utilities Commission in St. Paul on July 31st. All were impressed with the quality of the case put on by Xcel Energy and other parties in opposition to Excelsior Energy's proposed PPA. A smaller number attended the second day of arguments and the PUC's deliberations on August 2nd.
The key question before the Public Utilities Commission was whether to force Xcel into a long-term contract to purchase the output of Mesaba I. This is critical to Excelsior's ability to: receive additional federal financial support; and attract private funding.
The PUC unanimously decided not to approve the terms of the PPA as currently proposed. However, the PUC left open the possibility that somehow a mutually acceptable PPA might yet be negotiated. They did not establish any particular time for the end of negotiations.
Time is a serious concern for Excelsior, particularly the deadline of October 1, 2007, for applying for at least $100 million in federal tax credits. Its chances of being awarded these credits will be lower if it doesn't have an approved PPA. Without the credits, the cost of its power will increase significantly, making the Project even more untenable.
The PUC decision has not yet been put in writing, so it is difficult to say how they expect the parties to overcome the obstacles to a mutually agreeable PPA (Xcel says it doesn't need the power and it is too costly). The PUC is expected to issue a statement soon. It should also issue a detailed order with findings in a few weeks.
We'll keep you informed of this and other developments - the draft environmental impact statement is now expected to be released in mid-August.
The bottom line is that five Commissioners found:
1. Excelsior Energy's Mesaba Unit I meets the statutory definition of an Innovative Energy Project.
(This reverses the findings of the Administrative Law Judges and allows Mesaba to continue to claim the special privileges in the 2003 statute such as: entitlement to a PPA; exemption from a Certificate of Need; eminent domain power; $10 million from the Renewable Development Fund.)
2. The PPA as currently drafted is not in the public interest but Excelsior, Xcel and the Department of Commerce are requested to continue to negotiate toward a final PPA.
3. The Mesaba Project is not a least cost resource for Xcel and so Xcel is not required to purchase at least 2% of its retail energy from the Project.
CAMPers all hoped that this PUC decision would put an end to the Mesaba Project. That may eventually be the result but in the meantime we have to continue our opposition.
AND WE WILL!
Wall Street Journal deals major blow for Excelsior Energy
July 25, 2007
This is a major blow for Excelsior Energy! The PUC and potential investors can't ignore the numbers below. Read on...
The following is an excerpt from the Wall Street Journal's recent article entitled: "Coal's Doubters Block New Wave of Power Plants" by Rebecca Smith
Even proposals to build so-called “clean coal” plants have been met with skepticism. This new technology, which primarily involves converting coal into a combustible gas for electricity generation, has been touted as a solution to coal’s global-warming problems.
A hearing judge at the Minnesota Public Utilities Commission is urging commissioners to reject a plan for Northern States Power Co., a unit of Xcel Energy Inc., Minneapolis, to buy about 8% of its electricity from a coal-gasification power plant that was proposed by Excelsior Energy Inc., Minnetonka, Minn. The judge concluded the 600-megawatt Excelsior plant wouldn’t be a good deal for consumers.
The judge concluded it would cost an extra $472.3 million, in 2011 dollars, to make the power plant capable of capturing about 30% of its carbon dioxide emissions, and another $635.4 million to build a pipeline to move the greenhouse gas to the nearest deep geologic storage in Alberta, Canada. Thus, $1.1 billion in pollution controls had the potential to inflate the cost of power coming from the plant by $50 a megawatt hour, making electricity from Excelsior twice as costly as power from many older coal-fired plants that simply vent their carbon dioxide. The recommendation will be considered by the commission on Aug. 2.
To see the complete article, go to www.legalectric.org