Correcting that AP article

December 19th, 2006

Here’s one LTE printed in the Winona Daily News about that AP article on Dec. 9 around the state that misstated the construction cost of the Mesaba coal gasification (IGCC) project as $1.2 billion. Haven’t heard from AP, so haven’t a clue if they’re doing anything about it.

Mesaba Project not what you think

By Carol A. Overland, Red Wing, Minn.

Excelsiorâ??s Mesaba Project isnâ??t as presented. The tax credit is not only for Mesaba, and your article about the tax credits for the project left an important unanswered question. First, the Mesaba project will cost at least $2.15 billion, almost twice the $1.2 billion reported. Secondly, and as important, Excelsiorâ??s â??preferred siteâ? is nowhere near the Hoyt Lakes brownfield originally proposed â?? itâ??s in the woods near Taconite, Minn., where the only infrastructure is pine roots and granite. Excelsior is shifting the infrastructure costs to local government, and to bring the forested site to specs for this industrial project is an expensive proposition. Third, Excelsior co-presidents Tom Micheletti and Julie Jorgensen did not both work for NSP; instead they both worked for NRG, â??Minnesotaâ??s Enron,â? the independent power producer and NSP spin-off that went bankrupt and almost took down Xcel.

The costs to the public are tremendous, from $10 million from the Renewable Development Fund, $9.5 million from the IRR, $36 million from the DOE, whatever millions that state and local governments pay out for dedicated Mesaba infrastructure, and DOE federally guaranteed loans because the project is deemed too risky for private investment. Excelsior is trying to force Xcel to buy the power produced by this plant â?? power Xcel does not need or want. To do this, Excelsior has filed a petition with the Public Utilities Commission, and the PUC is evaluating whether it is a least-cost resource and whether the proposed agreement is in the public interest. This public interest determination that the PUC will make takes into account factors such as weighing the costs and benefits of economic development in the state and whether the project offers a stable price. Given the criteria, itâ??s hard to imagine any scenario where the PUC would regard the project in the public interest. The question related to the power purchase agreement that the article did not answer is this: If Excelsior does receive a DOE tax credit, will it be incorporated into the proposed power purchase agreement and credited to ratepayers, or does it go to the company, shareholders and investors?

Overland is the attorney for landowners affected by Excelsiorâ??s Mesaba Project

And as far as costs go, I forgot to add in that $21 million from the DOE… I knew there was more...

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