Legalectric

Yes, I admit it, I’m obsessed with the $2,155,680,783 cost of Excelsior Energy’s Mesaba Project. This is a cost docket after all. And I’m as obsessed with how difficult it is to get that number out into the public. So you’ll hear it and hear it until when you google “Excelsior Energy” or “Mesaba Project” or “boondoggle” or “crock of shit” you’ll get “$2,155,680,783” as the result!

Yes, Virginia, it’s $2,155,680,783, and NOT $1.2 billion.

Going the other way, a google of “$2,155,680,783” produces two DOE reports, one of which is dated Jume 2006, so will someone please explain what happened to Excelsior’s “continuing obligation” to update information material to their PUC Petition?

Project Facts: Mesaba Project
DOE, November 2006

And from last June:

Clean Coal Technology Programs:
Program Update 2006
DOE, June 2006

So as of last June, it was public information. Why wasn’t this voluntarily entered into the record by Excelsior? Why wasn’t the Dept. of Commerce notified of this cost BEFORE they submitted all their cost analysis based on bogus construction cost of this boondoggle? The “why” is obvious, if we knew what it cost, it’s dead in the water. if we knew what it cost, well, Amit’s analysis would be even more damning than it already is. If we knew what it cost, there’s no way to justify permitting this project. But for all of us to expend all that effort on numbers that aren’t worth the paper they’re printed on, Excelsior, gassify that!

Overland, get over it, yeah, I know, but the problem is I have to write this brief, there are reams of testimony, and it’s all essentially worthless because the numbers are so far off. Works for Excelsior, but I sure don’t want to waste my time pouring over it when it’s unmitigated bullshit. I’m struggling with words suitable for a brief, “UFB” doesn’t quite do it. Sure, I should make a recommendation of what the ALJs and Commission should do with the numbers presented, but that’s another issue of publishable nomenclature… You’d think a B.A. in writing and an “Esq.” after my name would help…
Sometimes it’s hard to be a dog…

$2,155,680,783. GOT IT?

$2,155,680,783.

There will be a test.

================

We’re getting there! Google that number under “News” and there’s a start too!

Would coal gasification project fit into Pawlenty’s plan (now archived)
but you can find it here:
https://legalectric.org/weblog/1083/

That’s the one where Pawlenty said he’d grandfather it in if they do CO2 legislation — proving that it doesn’t do anything about CO2, DUH!

BusinessNorth Exclusives
Mesaba Energy proposal gets mixed reviews

12/22/2006
by Beth Bily

TACONITEâ?? Public comment on a power purchase agreement for the Mesaba Energy Project in Taconite Wednesday evening was civil. But it was obvious that proponents for and opponents against building the $2 billion power plant in Itasca County have passions that run deeply.

The Dec. 20 public hearing held by the Minnesota Public Utilities Commission was one of six it scheduled around the state this week (two in St. Paul Monday and two in Hoyt Lakes on Tuesday). The purpose was to gather public comment on whether the regulatory agency should require Minneapolis-based Xcel Energy to buy the power produced from the proposed coal gasification plant. As proposed, the projectâ??s first phase would be built with 600 megawatts of generating capacity.

The gasification technology would first turn the coal into a synthetic gas before it is burned to produce electricity. Tom Micheletti, co-chief executive of Excelsior Energy, the Mesaba projectâ??s parent company, said gasification will reduce mercury emissions by at least 90 percent compared to conventional coal-fired plants, and remove a very high percentage of sulfur prior to the synthetic gas burning process. If it moves forward, the project is expected to bring about 100 permanent jobs and 1,000 construction jobs during a three-year construction phase. A purchase power agreement, or dedicated buyer of the electricity produced, however, is needed if the project is to proceed.

About 200 people turned out for the Wednesday evening hearing, following the afternoon session that drew another 100. The majority of the public comment was against the project. The technology can â??sequesterâ? or capture carbon dioxide (CO2), the biggest contributor to global warming among the so-called â??greenhouseâ? gases.

But opponents noted Excelsior Energy has no immediate plan to contain CO2, and cited concerns about other emissions, as well. They also expressed skepticism about the potential economic benefits from the project versus the price of construction, estimated at $2 billion. Several also noted the 2003 state law providing significant project incentives was enacted with the assumption a plant would be located on the East Range near Hoyt Lakes at the former LTV Steel Mining site.

Although mercury was a topic of discussion, much of the environmental concerns centered on carbon dioxide emissions and Excelsiorâ??s openness of late to capture CO2 emissions and send them by pipeline to underground storage points in North Dakota. The costs of such disposal are not estimated in the project proposal, said Ross Hammond, representing mncoalgasplant.com, a Web site long critical of the project.

Many other critics have surfaced in recent months, testament to increasingly organized opposition led by CAMP (Citizens Against the Mesaba Project), formed in Itasca County earlier this year.

Though not discussed much at the hearings in Taconite, there has been significant criticism of the 2003 state law favoring the siting of a coal-gasification project on the Iron Range. Among its provisions: the right of eminent domain for new transmission lines to provide service to Xcel, and an exemption from a certificate of need normally required for new power generation plants.

Project advocates also turned out to tout the economic benefits for an area with above average poverty â?? about 10 percent countywide â?? and a dire need for economic development.

Mike Andrews, a local resident and business development specialist for Itasca Economic Development Corp., countered criticism that the shift in preferred location from Hoyt Lakes in August 2005 to just north of Taconite represents a move from a brownfield to Greenfield site.

â??The land around this (Taconite) site is mostly owned by mining companies, this is not a pristine wilderness,â? said Andrews. â??Times have changed, weâ??re now in bad timesâ?¦we need a better quality of life.â?

The Mesaba Energy project has received major support from local and federal governments, as well as the state. With help from U.S. Sen. Norm Coleman, Excelsior Energy secured $800 million in federal loan guarantees and a $36 million â??clean coalâ? grant in the last federal energy bill. The Itasca County Board, Itasca Economic Development Corp. and the Range Association of Municipalities and Schools all have publicly endorsed the project.

Meanwhile, it also would benefit from $55 million in state infrastructure bonds approved by the 2006 Minnesota Legislature for this project, and the planned Minnesota Steel plant nearby.

But Excelsior Energy also faces opposition from some of the stateâ??s biggest business heavy hitters. Xcel Energy, the Minnesota State Chamber of Commerce and Minnesota Power are criticizing the project, citing potential costs to ratepayers. The city council in Cohasset, home of Minnesota Powerâ??s Clay Boswell plant, has remained neutral.

In the end, the Minnesota PUC hearings this week were focused on the power purchase agreement that Xcel itself supported as the 2003 state legislation was enacted, not the entire gambit of issues that surround the project. That decision likely will come down to how the PUC interprets the 2003 law.

Micheletti said the legislation clearly requires Xcel to negotiate a power purchase agreement.

The statute stipulates that a commission designate a â??clean energy technology,â? defined as â??a technology utilizing coal as a primary fuel in a highly efficient combined-cycle configuration with significantly reduced sulfur dioxide, nitrogen oxide, particulate and mercury emissions from those of traditional technologies.â? Further, it declares â??the utility that owns a nuclear generating facility shall supply two percent of the electric energy provided to retail customers from clean energy technology.â?

Xcel owns all three nuclear generators located in Minnesota, according to the U.S Department of Energy.

â??The outcome is gong to be favorable, all youâ??ve got to do is read the (2003) statute,â? said Micheletti, adding he believes any fifth grader would interpret the law in his favor.

But, other provisions in the law offer considerable room for interpretation.

It grants the Public Utilities Commission authority to waive the power purchase requirement if â??the commission finds doing so contrary to the public interest.â?

Other restrictive wording requiring the finding that the â??clean energy technology is or is likely to be a least-cost resourceâ? also could give Xcel an out on a power purchase agreement.

At the Taconite hearing, Xcel representative Chris Clark said the Mesaba Energy Project â??doesnâ??t satisfy the requirements from the legislationâ? as a least-cost resource.

Clark also said a power purchase agreement would require Xcel customers to pay an additional $1.5 billion in higher rates. According to the St. Pioneer Press, Xcel estimated those costs at the Monday hearings in St. Paul as equivalent to an 8 to 12 percent rate increase.

Micheletti said his project wonâ??t die if the PUC fails to approve a power purchase agreement with Xcel. In that case, he said he would pursue a second power purchase agreement.

An administrative law judge will combine the public comment gathered this week as well as written testimony on the power purchase agreement and make a recommendation to the Minnesota Public Utilities Commission in February 2007. The PUC will make a determination from there.

Meanwhile the draft Environmental Impact Statement for the Mesaba Energy project is scheduled for release in February.

If the project clears the power purchase agreement in addition to a number of other regulatory hurdles, current timelines have construction of the first phase of the project starting in the first quarter of 2008, and electricity production commencing in 2011.

Plans also call for a second plant in operation by 2013.

Beth Bily is a freelance writer based in southern Itasca County.

It’s time for the public hearings on Excelsior’s Mesaba coal gasification project, and it’s tired out and tomorrow is Hoyt Lakes. Don’t expect much for awhile! But one interesting tidbit:

John Derus was testifying for Excelsior, and introduced himself implying he was speaking for the Metro Counties Energy Task Force, waxing on and on in a way that lent apparent authority, but it didn’t feel right, and when he was finished, I asked him specifically if he was representing them, oh my, somebody who’s a lobbyist should know better than to respond like that!  It took a while, but finally it was clear he was NOT speaking for them.. sigh… and he’s got his hat in the ring for U of M Regent…

Given all the AP articles this last weekend citing the cost of Excelsior’s Mesaba coal gasification (IGCC) project as $1.2 billion, and the Bill Hanna article using that same incorrect number, I figure that even though the Mesaba Daily News article coming up will supposedly state it’s “around $2 billion” or some such, let’s go over this one more time with cites and links and circles and arrows, and then we can all sit on the “Group W” bench together!!!

While full construction cost is typically an issue in a utility owned plant, the Excelsior Mesaba docket is a Power Purchase Agreement docket, so logically, we’re looking at the bottom line cost per kilowatt hour, sort of, for the most part, but that’s not all, because this is a weird case…

This project has a different review than any other — it’s a legislative mandate and includes a least cost review plus a public interest determination that looks at economic development benefits which logically also includes economic development costs.

The least cost language, from Minn. Stat. 216B.1693:

(a) If the commission finds that a clean energy technology is or is likely to be a least cost resource, including the costs of ancillary services and other generation and transmission upgrades necessary, the utility that owns a nuclear generating facility shall supply at least two percent of the electricenergy provided to retail customers from clean energy technology.

And the public interest determination of Minn. Stat. 216B.1694 requires:

(7) shall be entitled to enter into a contract with a public utility that owns a nuclear generation facility in the state to provide 450 megawatts of baseload capacity and energy under a long-term contract, subject to the approval of the terms and conditions of the contract by the commission. The commission may approve, disapprove, amend, or modify the contract in making its public interest determination, taking into consideration the project’s economic development benefits to the state; the use of abundant domestic fuel sources; the stability of the price of the output from the project; the project’s potential to contribute to a transition to hydrogen as a fuel resource; and the emission reductions achieved compared to other solid fuel baseload technologies;

Back to cost.

The cost of power from the Mesaba Project in cents per kilowatt hour is: 6.38 (fn. 1)

The construction cost of the Mesaba project is $2,155,680,783 (fn. 2)

Project Definition and Preliminary Design Phase
$44,491,010 (50/50 split DOE/Mesaba)

Final Design and Construction Phase
$2,054,826,915 (100% Mesaba)

Deomonstration/Operation Phase
$56,362,858 (24.5% DOE, 75.5% Mesaba)

Total Estimated Cost
DOE Share: $ 36,000,000 (1.7%)
Mesaba: $2,119,680,783 (98.3%)

What does that include? Good question. More on that soon…

The Amit Rebuttal compares the cost of Mesaba with the cost of Big Stone II, that is, the REVISED cost after the BS owners announced a 60% cost increase, from $1 billion up to $1.6 billion or more. So it is comparing apples to apples — I’ve heard talk that IGCC cost comparisons are comparing updated IGCC costs with old SCPC costs and that’s not happening here.
1. Slide 16, Excelsior Energy presentation to Metro Counties Energy Task Force, October 5, 2006. (I’ll scan this in and post later)

2. p. 1-3, DOE Notice of Financial Assisstance Award

In the Duluth News Tribune and the Grand Rapids Herald there are two more letters about Excelsior’s Mesaba coal gasification (IGCC) Project:

Consider all the costs of power purchase arrangement

Public hearings are coming up (Hoyt Lakes, Dec. 19 and Taconite Dec. 20) regarding a proposed power purchase agreement, through which Excelsior Energy will try to force Excel Energy, or NSP, to purchase power from Excelsiorâ??s proposed Mesaba Project at Taconite.

Excelsior Energy must show it is the least-cost power solution for Minnesota. In addition to its power causing NSP to raise rates, the Mesaba Project plant may cause a reduction in land values, a loss in tourism and related jobs due to pollution, and a halt to the influx of retirees into the area. Check what happened to West Virginia when the coal mines provided good-paying jobs for that state. Experts say drinking water there is being polluted to the point where areas of the state are nearly uninhabitable. It could happen here. What will be the cost? What of the added health-care costs? All costs should be considered when making this least-cost decision.

Lee Ann Norgord

Bovey

Local leaders should consider all information when making resolutions regarding Mesaba Energy

Grand Rapids Herald-Review
Thursday, December 14th, 2006 11:59:22 AM

Editor:

The Itasca County Commissioners and the Itasca Economic Development Corporation recently passed resolutions of support for the controversial Mesaba Energy Project. Important aspects of this project have not been adequately and accurately presented to the public, and apparently were not considered prior to these resolutions.

The commissionersâ?? letter said that they were, â??pleased that these economic development benefits do not come at the expense of the environment.â? There is alarming information in the permit application and the scoping documents for the Environmental Impact Statement regarding environmental damage and, we believe, it is irresponsible to make such a statement prior to the release of the draft EIS in February, 2007. CAMP (Citizens Against the Mesaba Project) supports appropriate economic development but this project would negatively affect the county and its residents.

Excelsior Energy has provided â??talking pointsâ? for proponents to use in supporting the project, which do not stand up to informed scrutiny, in our opinion. We believe there is already more than enough baseload generation in the planning stages to meet the projected need for our region. Experts have concluded that this project is not likely to provide cost-competitive energy and also question its reliability. The Minnesota Pollution Control Agency recently concluded that the emissions of IGCC technology are not significantly less than those of supercritical pulverized coal plants, except for sulfur dioxide. The main benefit claimed for IGCC is capture and sequestration of carbon dioxide but, we have found, this cannot be done on the Iron Range and the cost of piping it elsewhere is prohibitive.

The projected economic impact has been grossly inflated based on a study that cautions that it is not a cost-benefit analysis and should not be used to determine policy or make decisions. The Minnesota Chamber of Commerce has concluded that the net economic impact to the state is likely to be negative. The economic impact of this project is questionable at best, in our opinion, and will come at significant cost to the environment, public health, real estate values, tourism and recreation.

The IEDC 2005 Community Report lists five major goals, including â??Natural Environment: People in the Itasca Area will conserve and protect our natural resources to give future generations a healthy environment and a strong economy.â? This project would annual emit more than 5,000 tons of pollutants. This includes 54 pounds of mercury, which would adversely affect hundreds of lakes and hundreds of thousands of fish harvested each year. The emissions would cause illness for people with lung and heart disease, asthma for children, heart attacks and strokes, premature deaths, and sickness for otherwise healthy people. The project plans to close the Canisteo to recreational use and ruin it as a fishery with contaminated discharge water. This project is not compatible with protecting natural resources or creating a healthy environment.

Local leaders should carefully consider all of the available information. Understanding the true costs of this project inevitably leads to the conclusion that it would not benefit our community.

Ed Anderson, M.D., and Charlotte Neigh

CAMP co-chairs