Legalectric

Citizens voice opinions on gasification plant

Melissa Cox
The Daily Tribune

Thursday, December 21st, 2006 10:33:21 AM

TACONITE â?? The proposed coal-fired gasification plant was once again the topic of debate this week.

Six public hearings regarding Excelsior Energyâ??s proposed power purchase agreement (PPA), which would require Xcel Energy to purchase power from a base load power generating facility to be located near Taconite or Hoyt Lakes, were held in St. Paul, Hoyt Lakes and Taconite this week.

The hearings allowed the public to voice comments and concerns on the Mesaba Energy Project. The comments will be placed on record and taken into consideration by administrative law judges from the state Office of Administrative Hearings.

After the record is closed, the parties involved will file briefs and replies, and then the administrative law judges will make reports to the Minnesota PUC. The Minnesota PUC makes the final decision regarding the PPA.

Story Continues Below

Story Content

The proposed coal-fed Integrated Gasification Combined Cycle (IGCC) power generation facility would be constructed in two phases. Each phase would have the capability of producing approximately 600 megawatts of base load power. Construction of the proposed project would begin in 2008 with the expected serve date of 2011. There would be approximately 1,000 construction jobs and about 100 people employed during operation. Excelsior Energy would construct and operate the facility.

Two public hearings were held at the Taconite Community Center regarding the PPA Wednesday. The community center was packed for the 1 p.m. hearing.

Bruce Johnson, administrative law judge, facilitated the hearing, which lasted more than two hours.

â??We will be forwarding all your written comments as well as this oral testimony on to the Public Utilities Commission for the commissionâ??s consideration when it receives our report,â? Johnson told attendees.

After Johnson explained the process, representatives from Excelsior Energy, Xcel Energy, Citizens Against the Mesaba Project, Minnesota Department of Commerce and Minnesota Center for Environmental Advocacy had a chance to speak. Then, the floor was open to the public with more than 30 people commenting. People spoke both for and against the project.

â?¢ â?¢ â?¢

Those in favor of the project focused on economic benefits to the region including high-paying jobs.

Peter McDermott, president of Itasca Economic Development Corporation, a nonprofit corporation for helping create quality jobs in Itasca County, discussed the economic needs of Itasca County. He pointed out the county has high poverty levels, and this project would create jobs both directly and indirectly in the county.

Fred Tanner of Bovey said the schools have lost many children over the years and any type of economic improvement in the area would help the district and tax base. Tanner also pointed out that an advantage of the project would be using the water from Canisteo Pit, which could help with ongoing overflow issues.

Mark Mandich, Itasca County commissioner, said he is on record of supporting the project dependent on state permitting that is required in order for the plant to move forward.

Darrell Godvoug of a local ironworkers union said he supports the project because of the economic impact it would have.

Paul Dulong of Pengilly said economic development is required to keep this area going, to keep the school districts growing and to provide opportunity for people that are raising young families.

He said he was fortunate to have the opportunity to find a good-paying job in the area, but many of his classmates did not.

â??Generally, when you go to college you move on,â? he said. â??Thereâ??s no place to come back to. I was a displaced worker at Blandin. I went through the cutbacks of the forest industry. I watched the mining industry struggle. We have to diversify.

â??I heard people say, â??This is 100 jobs. What is 100 jobs?â?? Well, economic development spurs economic development and you have to take that step.â?

Being as strong on environmental standards as the state is, Dulong asserted that if this project passes those requirements, there is no doubt it needs to move forward to help the area grow.

Bob Schwartz noted as a small-business owner it is difficult to talk on record about the project. He said creation of 107 jobs is significant. He said he ran an ad for two full-time permanent positions with benefits for one day in the newspaper and received 197 applications, which is an indication that the area needs jobs.

Also, as a local football coach he has seen a lot of kids graduate and move away. He estimated that 90 to 95 percent would love to come back to the area and have good-paying jobs.

â??Those are the type of quality people we need to bring back,â? he said.

Schwartz said if it isnâ??t the power plant, then everyone in the room should band together for economic development.

Other supporters placed letters of supports from their organizations on record and talked about how they would like this area to be a place for future generations to live and work.

â?¢ â?¢ â?¢

Many concerns were raised from those who spoke in opposition to the project with a focus on environmental, health, economic and financial issues.

Jim Merhar, tribal chairman for White Earth Reservation on the Iron Range, said they are building an assisted living facility about a mile and a half from the plant. He said they have big concerns with the project including mercury, pollution, carbon, wetlands and water quality.

â??As native people, we really want clean water and clean air,â? he said. â??I donâ??t believe the taxpayers of this county should spend one dime building a railroad for this company …â?

LouAnne Hansen of Grand Rapids agreed that poverty is a huge problem in the area.

â??But, 100 jobs is such a small payment for the added financial responsibility for people living in the area to help pay for the infrastructure projects and the possible extra financial burden of Xcel customers,â? she said.

She noted that the economic ripple can go the other way with loss of tourism and other concerns, which she added is too big a price to pay.

Susan Backe of Grand Rapids said that a plant that offers 100 jobs will not eliminate poverty in Itasca County.

â??I would as a human being rather be poor and live in a clean house, than be rich and live in a dirty house, which is what is going happen to our lakes when the emissions from this proposed plant starts up,â? she said. â??I donâ??t feel this plant is beneficial for the citizens of northern Minnesota.â?

A concern raised by Charles Grant was that the technology needed to pull the carbon from the coal to keep it out of area lakes and peopleâ??s lungs isnâ??t there. Which in turn could cause health problems and environmental concerns.

Elmer Pederson said he supports the idea of having jobs in this area, but cannot support the project. He said the power isnâ??t being distributed in this area of the state, and residents shouldnâ??t have to deal with the contamination.

Murray Mills, of the Itasca Citizens for Responsible Government, opposed the project.

â??I think the key here this afternoon is the word responsible and we believe this project is irresponsible,â? he said.

Other concerns raised and questions asked include effect of carbon sequestration on reservoirs, mercury omission, effect on stock in Xcel Energy and Minnesota Power, too many uncertainties, effect on well water, cost of the project, potential of acid rain, who the project is going to benefit, and effect on property value.

Comments voiced at the meeting and other written statements filed before Friday will be placed on record and considered in the proceedings.

Written comments regarding the power purchase agreement can be mailed to Office of Administrative Hearings, 100 Washington Square, Suite 1700, Minneapolis, MN 55401-2138, emailed to bruce.johnson@state.mn.us or faxed to 1-612-349-2665. Comments have to be submitted by 4:30 p.m. Friday in order to be included as part of public record.

Notice they’re not running OVER opposition! Yup, that’s as it should be!

And there goes Micheletti again, “They are not to be believed.” Uh-huh! Right…

Excelsior Energy runs into opposition

Peter Passi
Duluth News Tribune – 12/20/2006

Excelsior Energy Inc.â??s plans to build an Iron Range power plant burning gasified coal have received a chilly reception from Minnesotaâ??s two largest investor-owned utility companies.

Both Minnesota Power and Xcel Energy Inc. view the project as unneeded and warn that its construction could drive their customersâ?? electric rates higher.

Tom Micheletti, Excelsiorâ??s co-president, contends the incumbent power companies are distorting the facts and resorting to scare tactics in an effort to stifle new and innovative competition.

â??They are not to be believed,â? Micheletti said. â??They want to block competition and stop innovation, and theyâ??re especially fearful of someone with a better, lower-cost product. Theyâ??re simply not being truthful about the costs.â?

But Margaret Hodnik, Minnesota Powerâ??s director of regulatory and public affairs, said the development of Excelsiorâ??s project would have an indisputably negative effect on her companyâ??s customers, including large industrial clients. She said Minnesota Power would be compelled to pick up about $80 million of the projected $250 million tab associated with new electrical transmission to support Excelsior. Minnesota Power, in turn, would have little choice but to pass along the cost to customers, resulting in nearly a 3 percent jump in rates.

The cost of transmission improvements are borne by all utilities that regulators deem beneficiaries of the work. But Hodnik said Minnesota Power already has a robust electrical grid and added, â??If we needed those improvements in our system, we would make them ourselves.â?

Xcel Energyâ??s customers could see even steeper rate hikes. Judy Poferl, Xcelâ??s director of regulatory administration, said her companyâ??s computer models project an 8 percent to12 percent increase in rates would be necessary to cover expenses related to Excelsior, if it is built.

Micheletti questions those numbers, however. He said Xcel has refused to subject its computer modeling to proper scrutiny, calling its software proprietary. He said the modeling can easily be manipulated to achieve a desired outcome.

Tom Osteraas, an attorney for Excelsior, also contends Excel has considerably understated the alternative costs of building a modern, conventional coal plant. In reality, he said gasified-coal technology is quite cost-competitive.

The Minnesota Public Utilities Commission must decide whether Xcel should be compelled to buy power from Excelsior via a purchase agreement. An administrative judge is considering the matter and is expected to issue a recommendation in February. That recommendation will then go before the full commission for final action.

Excelsior probably wonâ??t be built unless it wins a purchase agreement with Xcel. The proposed plant would employ an estimated 1,000 people during its construction and about 100 people on a permanent basis when it begins to operate.

Poferl said getting a handle on the probable costs of doing business with Excelsior has been challenging.

â??Because of substantial uncertainties in the proposed contract and their filings, we have argued that the commission should find they havenâ??t proven this project is in the public interest,â? Poferl said.

She noted that Excelsior lacks any long-term contracts with a coal producer or a railroad to supply its facility with fuel, making its operating costs difficult to forecast.

Micheletti said Excelsior would be foolish to lock itself into a single supplier, because the flexibility of its proposed power plant to use multiple fuels â?? including eastern and western coal as well as petroleum coke â?? is one of its competitive advantages.

Excelsior wants to build a $1.5 billion, 600-megawatt power plant on the outskirts of Taconite and have it operating by 2011. Excelsior also proposes to bring a second 600-megawatt unit online by 2013.

But Xcel predicts it will only need 511 megawatts of additional power generation by 2015.

Hodnik said it would be bad policy for the Public Utilities Commission to disregard Xcelâ??s resource plan and force excess capacity upon the company.

But Micheletti claims Xcel is deliberately lowballing its energy needs to block the Excelsior development. He said the companyâ??s behavior fits a pattern of obstruction.

Micheletti cited recent testimony by Jim Chen, the University of Minnesota Law Schoolâ??s associate dean, before the PUC.

â??Incumbent utility companies and their shareholders have an overwhelming incentive to maintain their monopolistic grip on all aspects of the electrical industry, including the structurally competitive generation sector,â? Chen said. â??Like any other incumbent, Xcel Energy will stop at nothing to prevent new baseload from being provided by an independent power company.â?

Although the gasified-coal plant Excelsior has proposed compares favorably to conventional power plants when it comes to emissions, the projectâ??s opponents have raised pollution as a concern, too.

Hodnik pointed out that several large industrial projects for the Northland are in the works, such as the proposed Minnesota Steel mill in Itasca County, the Polymet copper mine near Hoyt Lakes and the Blandin mill expansion in Grand Rapids

â??Only so much air increment is available for permitting,â? said Hodnik, noting, â??Other projects may be more naturally suited to be built in northern Minnesota, because they would use ore or wood from the area, rather than coal from 1,000 miles away.â?

Micheletti said he finds it hypocritical for Minnesota Power to level environmental criticism, calling the company â??the biggest polluter in northeast Minnesota.â?

Micheletti said he believes Excelsior eventually will be able to capture and sequester virtually all its emissions. He said plans are being developed to pipe the plantâ??s gases to places where it can be stored underground, such as North Dakota. Such a feat initially was estimated to cost about $1 billion, but Micheletti now believes it might be done for considerably less.

I’m at that age where I cannot operate a keyboard, or should not be allowed to operate one, when I’m “out of hours.” There’s a lot to post, great coverage all over the state, let’s see, Duluth News Tribune will be first. The camera is in the car, so no photos of the hearing for a while, oh, duh, and I can’t upload at this computer. And it’s just too weird that I’m having all these electrical problems…

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