Legalectric

WOW! 3,781 words, and Senators up for re-election “signed” on to this. They may think they’re doing the right thing, but I hear Micheletti talking. They know from being “author” and “co-authors” of the original bill that it’s bait & switch. And they certainly wouldn’t be so defensive in writing this! Not only that, but in my humble legal opinion, it’s an unmitigated load of crap! I’ll work on a few evidentiary links, to be posted soon. 3,781 words, who needs more evidence…

This was in Sunday’s Hibbing Daily Tribune, a “Guest Editorial”

Sen. David Tomassoni is a chief author of the legislation that has enabled the Mesaba Energy Project to be developed on the Iron Range. Sen. Tom Saxhaug and Sen. Tom Bakk
co-authored the legislation.

The Mesaba Energy Project (Unit One ) is a 606 megawatt IGCC (Integrated Gasification Combined-Cycle) power plant under development on a site already zoned industrial near Bovey. All Iron Range/Arrowhead legislators have scrutinized the details of this project and support it because it will bring significant economic development and environmental benefits to the Range while supplying critically needed new power generating capacity for Minnesota.

There have recently been articles and letters in some Range papers that have contained false and misleading information. While there are always pros and cons to any proposed new development on the Iron Range, we would like to make sure that our constituents are fully informed about the Mesaba Project and allowed to form their own views based on true facts.

The project is an important component of national energy security plans. Rapid adoption of the IGCC technology is a national energy security priority that has broad, bipartisan support in Congress. IGCC is one of few means we have at our disposal to reduce reliance on foreign energy imports. The technology provides a means to use coal, our nationâ??s most abundant fuel, while protecting our environment. The Mesaba Project was selected for funding in a competitive solicitation by the U.S. Department of Energy, as the culmination of a two decade program to develop and commercialize coal gasification. According to the DOE, the Mesaba Energy Project is a stepping stone to the FutureGen plant, which will be the worldâ??s first coal power plant to have near-zero emissions.

Minnesota policy makers, by passing enabling legislation for the project, secured the right to have a groundbreaking national showcase located on Minnesotaâ??s Iron Range. We certainly need the jobs and investment the Mesaba Project will bring, and our workforce has the skills to construct and operate clean base load power plants to meet our regionâ??s every-growing electric supply needs. The electricity blackouts and brownouts recently on both coasts, and the energy supply warnings from our own Midwest grid operator, should be ample warning to us all about the need to plan for capacity to meet our needs.
The project supplies Minnesota with needed power generation that will be stably priced and avoid putting pressure on natural gas supplies. Minnesota has a need for 3000-6000 megawatts of new base load power generation in the next 15 years, after maximizing all feasible new renewable power generation additions and conservation. This need equals 10 Mesaba projects! If the State does not find a way to use coal to meet this growing demand, consumers will pay for very expensive electric power generated from natural gas-fired power plants. Homeowners and businesses are already experiencing the increasing and volatile costs for natural gas they use for home heating and commercial production. If new coal facilities are not built, Xcel Energyâ??s demand for natural gas will increase from 2 percent of statewide demand in 2004 to approximately 20 percent of statewide demand in 2011. Range consumers will feel the results in their pocket books as we compete for scarce natural gas supplies to keep our homes warm, our grocery stores open and our taconite plants operating.

The project will change how coal is used for power generation, with an advanced process that cuts emissions by 2/3 or more. The IGCC technology reduces emissions by 2/3 from those of the next best clean coal technology on the market. Its emissions are 1/1000 of the emissions of some existing coal plants in Minnesota. It will be the first coal plant in the country to remove at least 90 percent of all mercury from the coal. Sulfur in the coal is removed in 99.9 percent pure form that can be marketed for fertilizer production rather than producing scrubber sludge which must be landfilled. Instead of producing ash that must be landfilled, the IGCC process produces a marketable aggregate substitute that can be used in road construction. Other environmental benefits include a much smaller plant footprint and greatly reduced water consumption from the process. The project is readily adaptable to a retrofit that will avoid emitting carbon dioxide, through a planthat can be implemented in the event that greenhouse gas limits are imposed by Congress in the future.

Excelsior Energy, the sponsor of the project, has recently filed more than 2,000 pages of detailed information about the project in its application for environmental permits. Those filings are on file in every public library on the Iron Range. In addition, Excelsior held a public meeting a few weeks back in Marble, at which a dozen representatives of Excelsior were on hand to answer residentsâ?? questions about the project. Many additional meetings will be held to obtain public input in the permitting process, and a citizensâ?? advisory committee has been formed that includes many local residents.

These efforts will help to fully inform citizens about the facts concerning the project so that each form their own, informed view on the project. Below are corrections to somerecent factual mischaracterizations of the project.

Myth: The project poses unacceptable operating risks that will somehow harm taxpayers, ratepayers or the environment.

Fact: Three large companies with extensive experience in the IGCC industry will construct and guarantee the operating and environmental performance of the plant. Fluor is one of the worldâ??s largest publicly owned engineering, procurement, construction and maintenance services companies serving the power industry. In recent years, Fluor has built coal-fired and natural gas-fired power plants with a total capacity of more than 12,000 MW. Siemens Power Generation is one of the worldâ??s largest companies serving the power industry. It manufactures a wide array of power generating equipment and develops, constructs and operates power plants for utility and industrial customers. ConocoPhillips, the licenser of the IGCC technology for the project, is one of the worldâ??s largest energy companies. The Wabash River plant is the prototype for the facility, and has demonstrated the reliability and environmental performance of the technology to the satisfaction of the U.S. Department of Energy. Under the power purchase agreement, consumers only pay for electricity that is actually produced by the plant.

Myth: The project has received hundreds of millions of dollars in subsidies, which is somehow an indication that it is a bad idea for Minnesota.

Fact: The project has secured $36 million in loans from the U.S. Department of Energy by being selected in a competition that included some 20 proposed projects from throughout the country. The projects were analyzed by a score of energy experts at the DOE. In fact, Minnesota Power also submitted a request for funding of a coal gasification project, but the Excelsior proposal won out. Excelsior has also secured a total of $9.5 million in loans from Iron Range Resources, which accrue interest at 20% annually. Both of these sources will be repaid at start of construction. In addition, the project was selected by the state Public Utilities Commission to receive $2 million per year for five years from the renewable development account, for which the legislation we worked to enact made it eligible. All of these funds help pay the significant up front engineering, permitting and development costs associated with a clean coal technology project. These costs are one of the key barriers to entry of the IGCC technology and the project will pave the way for other similar facilities around the country and the world, which will displace pollutingconventional coal plants.

In addition, the Mesaba Project was made specifically eligible for a federal loan guarantee under the Energy Policy Act of 2005, which was supported by our two United States senators and Congressman Oberstar. This guarantee will reduce the cost paid by consumers for advanced clean coal power so that it is the same as the cost of power from a conventional coal plant. Minnesota and the Iron Range in particular, are fortunate that Congress has specifically identified the project to receive this important benefit thatwill allow Minnesota to be the national leader in deploying advanced coal technology.

Myth: The project will not have a market for its output, which is expensive.

Fact: Even though the project uses advanced technology that would normally be somewhat more expensive than a conventional coal plant, the cost of power from the project will be the same as the cost from a new, traditional coal plant with much higher emissions. This is because of the projectâ??s selection for the very federal subsidies that critics of the project donâ??t like. The Minnesota Legislature and the governor enacted legislation in 2003 that entitles the project to a long-term power sales contract with Xcel Energy, and requires that it be considered as an alternative to all fossil fuel power plants proposed by Minnesota utilities. The Minnesota legislature and the federal government have repeatedly enacted such mandates when utilities have been slow or unwilling to support innovation. Without such mandates, we would not have any wind or biomass projects, such as the cities of Hibbing and Virginia are developing. Similarly, without mandates, the Blandin/UPM papermill and Boiseâ??s mill in the Falls would not have been able to build their cogeneration plants which provide them with lower cost steam and electricity. Similarly, replacing proposed natural gas and conventional coal fired generation with IGCC will provide cleaner, cheaper and more stably priced electricity for consumers. The proposed power purchase agreement is pending for approval at the Minnesota PUC. In support of this approval, Excelsior has filed the most detailed project description andcost analysis ever undertaken in connection with such a proceeding.

Myth: The projectâ??s unique capability to be adapted to capture and store carbon dioxide, rather than emitting it into the atmosphere, is a drawback.

Fact: Detractors who criticize the carbon dioxide emissions of the plant are missing the point. The project and IGCC are integral parts of the solution to the global climate change problems of greenhouse gas emissions from power generation â?? the global warming problem we are hearing so much about these days. All coal and natural gas-fired power plants emit carbon dioxide, but the IGCC technology is the only one with an identified means to avoid carbon dioxide emissions. Professor Daniel P. Schrag, a nationally acclaimed Ph.D. geologist and professor in the earth and planetary sciences department at Harvard who heads up Harvard Universityâ??s interdisciplinary Center for the Environment, has filed testimony at the Minnesota Public Utilities Commission in support of the Mesaba Project that details the critical role the Mesaba Project and IGCC must play in anymeaningful solution to greenhouse gas emissions from power generation.

Myth: The project has the ability to exercise eminent domain without state oversight and
the cabins of the landowners who object to the project will be condemned.

Fact: The project has very limited eminent domain rights, only for sites and routes selected by the Minnesota PUC as those that minimize societal and environmental impacts.
These impacts are detailed in more than 2,000 pages of information filed with the PUC as part of the projectâ??s environmental permitting effort. The project as proposed will not need to condemn any cabins or homes.

Myth: State and federal regulators are not adequately regulating the project.

Fact: The Mesaba Project must obtain approximately a dozen material preconstruction site and federal permits and prove that it can satisfy extremely rigid emission and discharge criteria. Excelsior Energy must obtain numerous other state and local permits in connection with the construction and operation of the project. As part of this permitting process, the project has filed more than 2,000 pages of detailed analysis about projectimpacts, prepared through more than two years of engineering and environmental analysis.

Its application for those permits, which is pending before the federal agencies, the Minnesota PUC, Pollution Control Agency, DNR and other review authorities, is a one year process with many public hearings and opportunities for input. The U.S. Department of Energyâ??s National Energy Technology Laboratory is also conducting a federal Environmental Impact Statement process that also provides opportunities for public input.

Myth: The projectâ??s exemption from certificate of need gives it a free pass and the power is not needed.

Fact: All regulators and utilities in Minnesota acknowledge that there is a critical need for new base load power generation facilities in the range of 3000-6000 megawatts in the next 10-15 years. In recognition of the fact that Minnesota utilities were being slow to act and were not offering innovative solutions to meet our needs, the Legislature in 2003 recognized the urgent need to get on with a solution to our growing power needs and a cleaner way to produce electricity, and provided the Mesaba Project with some regulatory incentives to build the project on the Iron Range. If the project does not come online in a timely manner, Minnesota will use massive amounts of natural gas for power generation, exposing ratepayers to the volatile and rising costs of this limited resource. Burying ourheads in the sand and ignoring this need will not keep the lights on.

Myth: Wind energy can meet all of Minnesotaâ??s future energy needs.

Fact: Wind and other renewables should and will play a key role in Minnesotaâ??s energy needs; but it is not the only solution. A diverse combination of renewables, conservation and coal-based technologies will be needed to meet the stateâ??s growing energy needs. The integrated gasification combined cycle (IGCC) technology of the Mesaba Energy Projectoffers an excellent way to use coal with greatly-improved environmental performance.

Myth: The project has been relocated from the East Range to the West Range in violation of the legislation that enabled the project to be developed.

Fact: The legislation specifically provides that the project can be located on up to three sites on the Iron Range and does not specify where those sites must be located. Excelsior has proposed a site on the West Range and a site on the East Range, but recommends the West Range site for the initial plant facilities. The ultimate site selection is made by the Minnesota PUC. Minnesota officials specifically requested that Excelsior give up its original proposed site on the former LTV mining site so that its ore processing facilities â?? which are not useful to the project â?? could be used by the Mesaba Nugget and Polymet copper-nickel projects. The West Range site, which is zoned industrial and is amid taconite tailing dumps visible in all directions, has access to two rail lines, a transmission corridor, water resources and a natural gas pipeline, making it extremely suitable for the project with relatively minimal interconnection and upgrade expenditures.

Myth: Itasca County, Nashwauk and Taconite are spending county and city taxpayer dollars on ill-advised infrastructure investments to support development of the project, and the project will end up costing the Range money.

Fact: The idea that a project that will bring more than $1.5 billion of investment to the region will be a drain on the local government coffers probably doesnâ??t require too much of a response. All Range legislators worked hard to get the funds that are about to be expended by Itasca County and the cities of Nashwauk and Taconite included in last yearâ??s bonding bill by the State of Minnesota to support common infrastructure needs of the project and the Minnesota Steel Project. Itasca County will decide how those funds will be spent, and the cities and Itasca County do not have to repay those funds. $4 million may be expended for engineering and planning purposes prior to start of construction of either of the projects. The remaining funds will be expended only when private industry commits to spend more than $1 billion, in the case of Minnesota Steel, and more than $1.5 billion,in the case of the Mesaba Project.

The project is likely to provide more than $1 million per year in real estate taxes to Itasca County, in addition to the new tax base that will be created as result of the projectâ??s construction and operation. This fact is borne out in a comprehensive economicimpact analysis completed by the UMD Business School.

Myth: The project has significant impacts on the environment near the site.

Fact: Nearly all pollution deposited in Minnesota comes from out of state sources. This includes mercury. The project represents a huge improvement in environmental impacts from using coal for power generation, as coal is not burned in the projectâ??s IGCC process. Instead, the coal is converted to a gas, from which nearly all impurities are cleaned prior to using the gas as fuel to generate electricity. The project will lead the way in ensuring that future power plants nationwide do not use older polluting technologies â?? which is the only meaningful way to improve Minnesotaâ??s natural environment. The project will be the first in the world to remove nearly all mercury from the coal, as well as virtually all sulfur and particulate emissions that are associated with respiratory and other health problems, and these benefits will be multiplied by future plants in Minnesota and elsewhere. If the project is not built, conventional coal plants will be built (probably on sites outside of Minnesota) to meet demand and the adverse human health impacts identified by the projectâ??s opponents will be much greater than if the project is built.

Myth: The project will not provide meaningful jobs to local residents.

Fact: According to the University of Minnesota – Duluth, the project will provide over 1,000 high-paying jobs at the peak of construction and almost 3,000 full-time, part-time and temporary jobs for each unit of the project (two units are being permitted, which alone would entail a 6-8 year construction period). During the 30 years or more of operation, about 110 permanent, full-time equivalent, direct jobs will be required to operate the first unit of the project, and an additional 80-90 permanent jobs when the second unit becomes operational. UMDâ??s economic impact study further confirmed a largenumber of additional indirect jobs associated with the construction and operation of the plants.
Myth: The project will diminish property values in the region.

Fact: The direct investment in the project will stimulate the local economy. Each unit of the project will bring more than $1.5 billion of private industry investment to the Iron Range. Common sense alone would indicate that property values increase in the vicinity of major power plant developments. Take a look at Grand Rapids and Bass Brook Township when Boswell Unit 4 was built. Or ask the residents of the city of Becker, Minn., when NSPâ??s Sherco unit was built in the mid-1980s. Residents of these areas will confirm the huge economic boost brought by these projects. The Mesaba Projectâ??s clean profile will add to these benefits. The projectâ??s IGCC technology will make the region a showcase for this important technology. The UMD study forecasts that in addition to the direct spending to build the first unit of the project, the project will entail $300 million indirect spending on operations during a typical year and a recurring $60 million in increased indirect spending across the Arrowhead region and $91 million throughout the state during the operating life of the project.

Myth: The projectâ??s operations will reduce wind power generation and negatively affect the stateâ??s transmission resources.

Fact: This is just plain false. The state needs new base load power plants even after we max out on development of wind resources, because the wind is not always blowing, particularly on the hot days off summer, when our power resources are stretched to the limit. Upgrades to existing transmission lines will be required for any new power generation resource in the Upper Midwest region, as the existing power grid is out of date and inadequate to meet the need for new power resources in Minnesota. The upgrades being planned by the regional grid authority (MISO) in conjunction with the project and other power projects will be cost effective and provide significant stability and other benefitsto the regional grid.

Myth: The projectâ??s use of Canisteo Mine Pit water is a negative.

Fact: The projectâ??s use of Canisteo pit water, which is close to overflowing, addresses a significant flooding risk for the town of Bovey. Further, because of similar flood problems, the state is currently paying to pump water out of the Hill Annex State Park pits, water that will also be pumped and used by the Mesaba Project. The cost of managing the rising pit water levels in the future will be covered by the project instead of state or local taxpayers.

Myth: Excelsior is just a â??small group of lobbyists.â?

Fact: Excelsiorâ??s senior management team is comprised of eight senior power industry executives that have more than 150 years of combined experience in developing, financing, constructing and operating power plants.

Tom Micheletti, one of the co-CEOs of Excelsior (whose family has deep ties to the Iron Range), has significant experience as a utility industry senior executive at MinnesotaPower, NSP and Southern California Edison.

Julie Jorgensen, the other co-CEO, has considerable experience developing and operating power plants, most recently in the role of CEO of CogenAmerica, a successfully, publicly-traded company that provided power and steam to utilities and industrial customers throughout the U.S.

Both Tom and Julie are respected leaders in the power industry and have proven records of high integrity, community involvement and an interest in making things better on the Iron Range.

While Tom and Julie are indeed registered as lobbyists in the State of Minnesota (as is anyone who spends any time on legislative, permitting or regulatory matters), what is so bad about talented people advocating for job creation and economic development on the Iron Range? And whatâ??s so bad about people who would lobby for a cleaner environment and propose an innovative solution to our electricity needs?

Now that weâ??re getting close to the approvals for the project and the start of construction, it is probably typical for detractors who have been unsuccessful over the past five years in drumming up opposition on the merits to pull out the stops, put a twist on good things, and say they are bad and play loose with the facts. But in the end, we know that citizens of the Arrowhead region will see through all the myths and false statements, and will support a project that we and all other Arrowhead legislators have worked so hard to make a reality over the past five years. If you have concerns about the project, we urge you to get the facts, and you will come to the same conclusion that we and many others have reached: The Mesaba Energy Project, especially once all three of its sites are developed, will be a major contributor to a cleaner environment and a better life for us all in Northeastern Minnesota.

Sen. David Tomassoni
Sen. Tom Bakk
Sen. Tom Saxhaug