Mesaba to Hoyt Lakes now?

July 16th, 2007

Buy? Option to buy? Lease? Who knows…

Note the article says that “The former LTV Mining location is being considered as a possible site by the Minnesota Public Utilities Commission for the first unit of the Mesaba Energy project…” and that isn’t true — it’s a Hoyt Lakes site under consideration, but it’s NOT the LTV site. The LTV site was the one promoted at the legislature, but it’s NOT the one the PUC and Commerce have evaluated — it’s completely separate!

On the other hand, NOTE THAT BILL HANNA GOT THE PRICE RIGHT!  $2.1-2.3 billion!  Congrats!  It’s about time this reality sinks in!
Excelsior Energy — Lease option OK’d for Hoyt Lakes site

Bill Hanna
Last updated: Saturday, July 14th, 2007 08:51:50 PM

HOYT LAKES — Excelsior Energy, the company that wants to build coal gasification plants across the Iron Range, has struck a deal with Cliffs Erie for an option to buy about 1,400 acres of land in Hoyt Lakes where one of the utility units could be built.

It was an agreement more than five years in the making.

“This is very good news. We’ve been working on this almost since we started the project,” Tom Micheletti, co-president and co-CEO of Excelsior, said in a telephone interview Friday night.

Excelsior will also be announcing Monday two large generator interconnection agreements for the project to secure access to the Midwest electric transmission system.

The double shot of good news for the project is welcome indeed, especially following a disappointing ruling in April by an administrative law judge that recommended the Minnesota Public Utilities Commission deny approval of a power purchase agreement with Xcel Energy — an agreement authorized by the Legislature in 2003 and signed into law by Gov. Tim Pawlenty and an agreement critical to getting the initiative online. It was a ruling Micheletti found offensive, but environmental groups cheered. “The bias in the ruling against us was obvious. It should have been a no-brainer,” he said.

However, Micheletti is hopeful the MPUC will look much more favorably on the project when it meets July 31 for a hearing on it.

The former LTV Mining location is being considered as a possible site by the Minnesota Public Utilities Commission for the first unit of the Mesaba Energy project, a 603 megawatt facility. A site near Taconite, however, is the preferred site with the Hoyt Lakes location the alternate.

“We have invested significant time and effort to locate and study the Cliffs Erie site and have concluded it represents a suitable option for development of the project,” Micheletti said. “We very much appreciate Cliffs Erie’s work and cooperation in making this agreement possible.”

Excelsior officials say the $2.1 billion to $2.3 billion project would make energy from a clean-coal process that includes a carbon capture and sequestration plan, the first in the country, to substantially reduce carbon dioxide emissions. They say it also would provide low mercury emissions.

“No one can touch us on mercury. We are by far the cleanest … 90 percent-plus removal,” Micheletti said.

Excelsior officials estimate that each unit would provide hundreds of jobs and 1 million man hours of construction work. The project has received state and Iron Range Resources Board funds and also federal tax credits that are a key incentive for investors. Micheletti said there are investors, including Conoco-Phillips, quite interested in the project.

The two generator interconnection agreements would be for both the Taconite and Hoyt Lakes sites. They were reached after 32 months of work with the Midwest Independent System Operator. The studies confirmed that the system upgrades will ensure reliable delivery of electricity from the Mesaba Project throughout the MISO region.

“The interconnection agreements are an important milestone,” said Dick Stone, Excelsior’s senior vice president of development and engineering, in a news release. “Under the agreements, the Mesaba Project will fund and Minnesota Power will undertake upgrades to the transmission system that MISO estimates will cost $81.5 million, a figure very close to that estimated by Excelsior and its consultants several years ago.”

Under the agreements, the Mesaba Project will pay the full cost of the transmission upgrades, with MISO reimbursing 50 percent of the costs to reflect a portion of the system-wide benefits.

MISO is the Federal Energy Regulator Commission-approved entity responsible for planning and open access to the regional transmission grid for a region covering 15 states in the Midwest and the Canadian province of Manitoba, involving more than 94,000 miles of transmission lines.


Bill Hanna can be reached at To read this story online and comment on it go to

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