Legalectric

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