Legalectric

Excelsior Energy’s Mesaba Project, coal gasification for the Iron Range, had yet another bad day at the PUC. PHEW!!! GOOD!

It’s not done yet, EEEEEUW, BAD, but it’s one slow step closer. Excelsior lost big — all its motions were tossed out. But the life support was extended until May 1, 2008. Issues:

1. Make finding that it’s an Innovative Energy Project a “Final Decision.” Separate this out from all the other issues in this mess and let it be FInal. PUC said no.
2. Let Excelsior Energy enter more Exceptions. MORE! Haven’t we heard enough on this, and over and over and over and over… and the PUC said ENOUGH, no, no more!
3. Require that an Independent Consultant be hired a la Big Stone II, another docket where the PUC hasn’t the balls to say yes to the ALJ Recommendation and say no to the project. PUC said we don’t need an expert, we’ve got enough information.
4. They gave Excelsior Energy and Xcel another 9 months to fart around, with reports due every 90 days, and if they don’t come up with a PPA by then or both come to PUC asking for an extension, it will be considered closed.  Yes, it’s good to have some likely finality, but that’s a long way out, a lot can happen in nine months!

I think it was Commissioner Wergin’s first meeting, for sure it was one of the first, and she made a good debut. She challenged Tom Osteraas’ characterization of legislative intent — GOOD — it helps that somebody was there who remembers. She also spoke up about all that they’d submitted, stating that she’d been reading through the piles of crap submitted (well, she didn’t put it quite that way) and had the issue of entering additional Exceptions, and she felt they had plenty of opportunities and didn’t need another round.

From Aaron Brown:

Excelsior dealt serious blow at PUC

Here’s the article from Hibbing Daily News (thanks to a little birdie for this!):

MPUC rules against Excelsior

But Micheletti sees silver lining

by Mike Jennings, Editor

Published: Friday, August 15, 2008 6:12 AM CDT

ST. PAUL — Excelsior Energy suffered a major setback Thursday in its bid to build a coal gasification power plant on the Iron Range, but the company’s founder says he still has reason to hope for long-term success.

The Minnesota Public Utilities Commission endorsed an administrative law judge’s findings that Excelsior did not qualify to be guaranteed a buyer for massive amounts of power. In a September 2007 report, the administrative law judge found that Excelsior fell short of the required standard — that it employ a “clean energy technology” that also promises low overall costs.

The commission’s ruling on Thursday ends, at least for the time being, the prospect that Xcel Energy, the state’s largest utility, could be forced to buy up to 13 percent of the power it distributes to its retail customers from Excelsior. The Legislature created a framework in which that could happen, but only if Excelsior met stringent standards of cleanliness and cost. The commission put off another key decision point by settting next May 1 as the end date for negotiations between Excelsior and Xcel on a possible power purchase agreement. The commission ruled last August that Excelsior’s proposed terms for selling the 603-megawatt output of its initial generating unit to Xcel would be counter to the public interest, but it allowed the two companies to continue discussions aimed at a purchase agreement.

Burl Haar, the commission’s executive secretary, said Thursday that he didn’t think the commission was likely to grant any extension of negotiations beyond next May 1.

“My sense is that this is meant to be a deadline, and that if nothing is brought forward by that time I don’t know that the commission would be inclined to consider further proposals,” he said.

The commission also voted Thursday against three motions by Excelsior, clearing the way for the key votes on the cleanliness and cost question and the deadline for negotiations. The five commissioners voted unanimously on all questions related to Excelsior, according to Tom Micheletti, Excelsior’s founder and co-chief executive officer.

Micheletti said Thursday that he found reason for hope in the deadline extension and in comments that some commissioners made during the meeting. By next May, Micheletti said, Excelsior might be able to prove its power would be cheaper than Big Stone 2, a traditional coal-fired power plant proposed for construction near Milbank, S.D., that would supply power to the Minnesota grid.

Micheletti said commissioners seemed interested to hear that Excelsior was discussing possible power sales with utilities other than Xcel. Some commissioners had been concerned that Xcel might be forced to accept Excelsior’s entire output, he said.

The commission “clearly does not want us to go away,” Micheletti said.

He accused Minnesota Power Co. of working “arm in arm and hand in hand” with Xcel to kill Excelsior’s proposed Mesaba Energy Project, which is estimated to cost over $2 billion.

“We have bent over backwards to try to be cooperative with Minnesota Power,” even offering the utility part-ownership in the Mesaba project, Micheletti said. “But they have a different agenda.”

Excelsior’s plans for the project include the construction of two power-generating units, either near Taconite, the company’s preferred site, or near Hoyt Lakes.

The Mesaba project would employ integrated gasification combined cycle technology, a process in which coal is converted to a gas high in hydrogen through a process called gasification. The gas is then used as a primary fuel for a gas turbine.

Excelsior claims its process would reduce carbon emissions by 60 percent, compared to the next-best coal technology, and would cut mercury emissions by 90 percent.

Micheletti also says the Mesaba plant would also be well suited for the capture of more carbon, which could be shipped by pipeline to a site where it could be injected deep underground. The company has not yet offered a detailed plan for carbon sequestration, however.

Mike Jennings can be reached at mike.jennings@mx3.com. To read this story and comment on it online go to www.hibbingmn.com.

Micheletti’s right about one thing, that the Commission “clearly does not want us to go away.” They just won’t pull the plug, drive in the silver stake, they just don’t have the balls to do it. WHY? I think there’s an interesting story there.

Meanwhile, the Office of the Legislative Auditor about the IRR’s Mesaba Project expenditures should be out soon. Now this should be good — going through Excelsior Energy’s Mesaba Project documentation to the IRR and finding the $1,200 in golf balls, a trip to a candidate fundraiser, big buck hotel in Washington and “movies,” and a trip to Italy was choice, and this will probably go a lot further than those juicy discoveries!