Legalectric

Mesaba Energy public hearings are this week
Residents get opportunity to comment on proposed power purchase agreement
Than Tibbetts
Grand Rapids Herald-Review

Monday, December 18th, 2006 12:18:54 PM

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Charlotte Neigh, co-chair of Citizens Against the Mesaba Project speaks at ICC on Tuesday during CAMPâ??s informational presentation.

Members of the public have one more chance to offer comments at a hearing that will help determine whether Excelsior Energy has a customer for the power its Mesaba Energy Project might someday produce.

Excelsior Energy is seeking to build a $2 billion power plant north of Taconite that would use a relatively unproven technology to produce lower emissions than a traditional coal-fired plant.

The technology, integrated gasification combined cycle, or IGCC, works by converting coal into a synthetic gas, which can then be cleaned of potential pollutants before it is burned. Most emissions control technologies today work by removed pollutants after the fuel is burned.

While Excelsior claims that its IGCC-powered plant would offer significantly reduced emissions than a traditional coal-fired power plant, opponents say the potential benefits would not outweigh the financial and environmental costs of the project.

State laws passed in 2003 gave Excelsior the right to a power purchase agreement with Xcel Energy if a couple of conditions were met. The public hearings being held in Hoyt Lakes on Dec. 19 and Taconite on Dec. 20 will allow the public to comment on record whether the project would be in the public interest and whether the Mesaba project would likely be a â??least cost resource.â? Sessions are being held at 1 p.m. and 5 p.m. at both locations.

Here is a brief look at the Mesaba Energy Project and some of the issues surrounding the power purchase agreement.

Excelsior Energy was founded by the husband-and-wife team of Thomas Micheletti and Julie Jorgensen. After originally proposing a power plant on the former LTV steel site in Hoyt Lakes, Excelsior choose the Taconite site as its â??preferredâ? site. The project would be built in two phases, each capable of producing approximately 600 megawatts of power. The Mesaba project would be the largest implementation of an IGCC power plant.

Excelsior has received several boosts from legislative action. In 2003, it was given the definition of an â??innovative energy projectâ? and exempted from a certificate of need, a process that would usually be carried out before the Minnesota Public Utilities Commission as to whether the power produced was need in the state. Without trudging into too much detail, a deal was made that would allow Excelsior to have its provisions in exchange for allowing Xcel Energy to store spent nuclear fuel at its Prairie Island nuclear power plant. (Ironically, Xcel Energy has now taken a position against Excelsior Energy in the current proceedings before the commission.)

Excelsior has also benefited from $9.5 million in convertible loans from Iron Range Resources, $36 million from a Department of Energy initiative and $800 million in loan guarantees from the federal government.

At the hearings this week, several key factors will likely receive attention.

Economic benefits:

Construction of the power plant would require approximately 1,000 full-time equivalent jobs, according to Excelsior. Approximately 100 jobs would be required to operate Phase 1 of the plant when it was completed. In addition, many more indirect jobs and economic activity would be created in order to offer services to the plant and its new employees.

Opponents of the project concede that no matter what, the project will have some positive economic benefits to the region. But, they contend, the cost of those jobs to the environment and possibly to the rest of the state would outweigh any potential benefits. Xcel Energy has said it expects its ratepayers to seen substantial increases if Xcel is forced to purchase power from Excelsior.

The environment:

Excelsior Energy officials have said that the IGCC process will result in the Mesaba Energy Project being the cleanest coal-fired power plant in the world. Department of Energy officials have said they believe IGCC is the next step forward toward a goal of a zero-emissions coal-fired power plant. Excelsior officials tout the Mesaba project as being â??capture ready.â? In other words, it will have a capability to install technology needed to capture carbon dioxide, a greenhouse gas and a likely target for regulation in the near future.

Regardless of potentially lower emissions, opponents have said, building a power plant will produce more emissions that if one was never built. The addition of mercury to the environment could further increase concentrations of the toxic metal in fish, which could affect tourism in the area. Opponents of the project have also said that the cost of capturing carbon dioxide would be too expensive, possibly to the point of prohibiting the projectâ??s construction at the outset.

Infrastructure:

Excelsior touts the Taconite site as being in the immediate proximity of transmission lines, rail lines and major roadways. Itasca County has committed about $55 million to the infrastructure related to the project. The proximity will give the Mesaba project a competitive advantage, Excelsior officials have said.

Opponents say the burden on the public is already too great. Because Excelsior is seeking to sell the power to Xcel Energy in the Twin Cities, transmission lines will need to be built and substations will have to be upgraded.

Whether for good or for worse, the Mesaba project has certainly driven debate in and around Itasca County.

For more information about the Mesaba Energy Project or coal gasification technology:

www.excelsiorenergy.com

www.gasification.org

For more information from opponents to the project:

www.camp-site.info

www.legalectric.org

Public hearings:

St. Paul:
Monday, Dec. 18
Time: 1 p.m. and 6 p.m.
Metro Square Building,
Third Floor, Large
Heaing Room
121 – 7th Place East
St. Paul, Minnesota

Hoyt Lakes:
Tuesday, December 19th,
Time: 1 p.m. and 5 p.m.
Hoyt Lakes Arena
102 Kennedy Memorial Drive
Hoyt Lakes, Minnesota

Taconite:
Wednesday, Dec. 20
Time: 1 p.m. and 5 p.m.
Taconite Community Center
26 Haynes Street
Taconite, Minnesota