Legalectric

By a 3-2 vote, the commission approved Excelsior’s request to exempt transmission infrastructure for the project from a certificate of need

Normally, utilities must convince the commission that there’s a need for a project they propose. But, under a 2003 law, the Mesaba Energy Project won’t require a certificate of need if it qualifies as an innovative energy project — and the commission has already ruled that it does.

The commission’s ruling Thursday extends the exemption from a certificate of need a step further — to the equipment that would transmit the power the Mesaba plant produces. Minnesota Power, rather than Excelsior, might have to build or own some of that transmission equipment.

The utilities commission, meeting in St. Paul, ruled against Excelsior on a second issue. The company’s chief executive called that issue the less important of the two, but the co-chair of a group that opposes the Mesaba project disagreed.

The adverse ruling dealt with a two-phase negotiating process that is supposed to fulfill a legislative mandate. The Legislature has said that, if Excelsior meets the innovative energy project standard, it is entitled to a power purchase agreement with Xcel Energy, a giant utility with more than 3 million customers in eight states.

Last August, the utilities commission declined to sign off on a first-phase agreement, which would have obliged Xcel to buy the 603-megawatt output of the first power production unit that Excelsior wants to build. Xcel filed an appeal, but the state Court of Appeals ruled it premature.

Phase two negotiations would be aimed at requiring Xcel to buy still more power from Excelsior. Excelsior had asked for an indefinite stay of that phase, but on Thursday the commission denied that request on a 5-0 vote.

“It went very well,” Excelsior CEO Tom Micheletti said of Thursday’s hearing in a telephone interview. He said the transmission issue was the more important of his company’s two petitions.

But Charlotte Neigh, co-chair of Citizens Against the Mesaba Project (CAMP), said the hangup on a power purchase agreement stymies Excelsior’s progress toward construction of a power plant near Taconite, the company’s preferred site.

Excelsior needs an agreement on power sales to Xcel “because that gives them a captive customer, which is what they absolutely must have,” Neigh said. She said she didn’t think “that winning the transmission thing was significant at all.”

Micheletti voiced disdain for Minnesota Power, which asked the commission to delay a decision on transmission infrastructure until final action on the power purchase agreement has been taken.

“They (Minnesota Power) are taking frivolous and unwarranted positions on state law,” Micheletti said. “I have a new name for them: ARP — anti-Range power.”

Excelsior Energy contended that the law regarding certificates of need and transmission infrastructure for an innovative energy project was very clear and the certificate was not needed. Margaret Hodnik, vice president of regulatory and legislative affairs for Minnesota Power, said her company held a different view.

“We feel it (state law) wasn’t clear enough,” Hodnik said. “We wanted clarification.”

Excelsior and Minnesota Power have an agreement about connecting the proposed coal gasification plant near Taconite to a sub-station near Blackberry that is owned by the power company.

Neigh said statements made by the commission chairman, LeRoy Koppendrayer, during Thursday’s meeting gave reason to believe he does not want the Mesaba project to go forward. A transcript of the meeting is not yet available.

The commission will hold further discussions later on power purchase negotiations.

Excelsior Energy seeking to delay power purchase ruling
By Marshall Helmberger

Excelsior Energy is asking the state’s Public Utilities Commission to put an indefinite hold on its request for consideration of a power purchase agreement, or PPA, for the second phase of its proposed coal gasification plant on the iron Range.

The PUC is set to hear Excelsior’s request at its April 10 meeting in St. Paul.

The company’s request for delay comes in the wake of last fall’s decision by the PUC to deny Excelsior’s request for a PPA with Xcel Energy on the first phase of its proposed Mesaba Energy project. The PUC, back in September, ordered Excelsior and Xcel, along with Minnesota Power, to continue negotiating over the terms of a PPA, but those talks have yet to produce a deal and no further action on the original PPA request is scheduled at this time.

Excelsior principal Tom Micheletti expressed optimism about the progress so far, but he expressed some frustration at the reluctance of the state’s utilities to accept the Mesaba Project and the coal gasification technology it entails. “The PPA is taking way too long,” he said. “It is unfortunate, that all the Minnesota utilities are not with us in helping to solve these problems, instead of just stonewalling the project and stonewalling the technology,” he said.

The lack of a PPA is key at this point, since all parties involved agree that without it, the project won’t move forward. Utilities like Xcel have argued they don’t need the power from the Mesaba plant and they say the technology can’t provide power at an affordable price in any case.

Janet Gonzalez, a staff analyst with the state’s PUC, said no one has a clear idea of the cost of power from the Mesaba plant at this point. She said preliminary cost estimates aren’t reliable since a number of factors haven’t been adequately defined. She acknowledged, however, that power produced by the plant will be more costly than from existing sources. “But that’s generally true with a new plant,” she said.

While Excelsior is seeking a delay on the second phase PPA at this point, Minnesota Power is asking the PUC to decide the matter now. According to Gonzalez, that’s because Minnesota Power wants to challenge a ruling made by the PUC last year, that determined that the Mesaba Project does qualify as an “Innovative Energy Project,” which gives it special regulatory exemptions under state law. Minnesota Power’s earlier attempt to challenge that decision was put on hold by the judge pending a decision on the second PPA.