Legalectric

More acts of desperation… a blatant attempt to promote Mesaba, to influence a decision headed south, a public flaunting of ex parte restrictions by promoting coal gasification and raising material issues in the Mesaba docket with PUC Chair present. How dense can they be? The Itasca Economic Development Corporation went overboard with promotion of coal gasification in its “Electricity 2020 Forum” yesterday at the Sawmill Inn in Grand Rapids. Peter McDermott really screwed up.

From the IDEC site, on Mesaba:

The IEDC board approved taking a public position in support of the Mesaba Energy project. The primary reason for taking the position in support of Mesaba Energy was due to the controversy surrounding the project and to emphasize the very significant positive economic impact of the project on the Itasca area.

IEDC has indeed been a vocal promoter of Excelsior’s Mesaba Project, going so far as to try to get help from the Minnesota Chamber in slapping down local opposition — ummmm… hello, the Minnesota Chamber of Commerce is not supporting the project because of their valid concerns about the potential impact of Mesaba related rate increases on their members. It’s too bad that McDermott isn’t reading the pleadings that the Chamber has submitted in the Mesaba docket. It’s too bad that the Chamber didn’t send someone yesterday!
When I saw this “Electricity 2020 Forum” sponsored by IEDC, I expected more cheerleading for Mesaba, but was suprised to find that the Chair of the PUC was one of the featured speakers!!! The Mesaba Project is before the PUC right now, the ALJ decision is due on Monday, this docket is active — it’s not appropriate to bring in the Chair of the PUC to an area where this project would be located and where the project would obviously be discussed. I raised these ex parte concerns with the Asst. A.G. assigned to ex parte issues, with various staff and brought it to Mike Bull’s attention. Before the fact, that’s really all I can do. You’d think with that warning, they’d be on their best behavior, but NOOOOOOOOOO…

Mike Bull was first, and didn’t belabor IGCC. Bill Grant was next, and as the IGCC toady that he is (Bill Grant – October 24 2006 presentation “Transition to Sustainable  Energy…”), he did his job well, presenting on “Conservation” and spending half the time telling us how coal gasification works (missing the many ways it doesn’t work) and how we need it. He also said that demand is increasing by 2% annually. He knows better. One would think that someone charged with speaking on “Conservation” and coming into the Mesaba Project territory with Chair Koppendrayer present, he would have no need to bring up Mesaba, and would know better, but NOOOOOOOOO… he went on and on and on. Next was Mike Jones from EERC and PCOR at NDU, recipient of the $21 million from DOE via Excelsior grant for carbon capture and sequestration, and mid-presentation he said, “I’ve been asked to talk about coal gasification” and proceeded to spend the rest of his presentation giving a pitch for coal gasification!!!

During Question & Answer time, it got to be too much. We couldn’t ask questions directly, and had to submit them on cards, but Moderator Rick Lemonds brought Mesaba into a generic question, and the second time he did it, prefacing the question with “Here’s another one about Mesaba” and asking about comparison of emissions of IGCC and regular coal. I objected from the back of the room, saying it was ex parte contact because the issues being discussed were material issues in the Mesaba docket. Chair Koppendrayer agreed, he confirmed that it was a valid concern, and that he thought he should not be present — and he got up and left the room!! (he also did that later) I think he handled it well. IEDC, however, should have known better. In our chat a week or so before the presentation, the Asst. A.G. assured me that they knew of the ex parte limitations. And IEDC screwed up. Peter McDermott was joking in the buffet line about open meeting requirements and clearly doesn’t get it or doesn’t care and doesn’t appreciate what this violation does to his credibility. It’s one thing to be an obvious Excelsior toady, but to violate ex parte restrictions, he and Rick Lemonds showed poor judgment at best.

Here’s the PUC’s Ex Parte page.

Here’s the ex parte rules, Minn. R. ch 7845.

I’ve ordered the DVD of the presentations, and will post it ASAP.

Quick before I drop, from the conference, here’s my presentation. Included are the cost comparisons of the Mesaba Project with alternatives, and the MPCA emissions modeling results:

IGCC: Pipedreams of Clean and Green

Here’s Mary Jo Stueve’s:

Coal: It’s time to pass the baton

The rest of them will be posted soon at www.ratepayersunited.org, and I’ll post them here too.

As I’m sitting here waiting for the hosts with the mosts, here’s the article in the Denver Post. A very hearty thanks to Nancy LaPlaca and Andy Bardwell for opening their home and hosting a welcome potluck — you know how it is in these things, the food is to die for (where did those photos go?). THANKS!!!

“Clean coal” captures notice at dual seminars

By Steve Raabe
Denver Post Staff Writer
Denver Post
Article Last Updated:02/11/2007 06:25:27 PM MST

“Clean coal” power plants: environmental epiphany or junk science?

The debate rages today in an ironic setting, nearby conference rooms booked by two disparate groups at the Marriott City Center in Denver.

The irony is intentional, said Nancy LaPlaca of environmental advocacy group Ratepayers United of Colorado.

Once her group heard that a utility consulting firm was holding a clean-coal seminar, she knew that hers had to be there to balance the pros with the cons.

Or at least pose some tough questions.

“We’re not necessarily opposed,” she said. “But we’re not sure it works.”

Denver-based Electric Utility Consultants Inc. will be charging a walk-in registration fee of $1,395 to industry insiders.

Ratepayers United, playing to budget-minded activists, will charge nothing for its seminar.

Xcel Energy is proposing a test plant in Colorado to assess a new technology, known as integrated gasification combined cycle, or IGCC. It will cost at least $500 million and possibly $1 billion or more.

The plants, instead of burning pulverized coal, convert coal to a hydrogen gas. The gas is then burned to create steam and spin electricity-producing turbines.

Pollutants such as sulfur dioxide, nitrogen oxides and carbon dioxide can more easily be removed from gas than from coal.

So far, so good.

But then the big question: What to do with the CO2?

In theory – but not yet in practice – IGCC plants can capture the carbon dioxide and pump it into spent oil and gas wells or vacated mines in a process known as sequestration.

Industry analysts and some environmental groups say that could be the key to reducing carbon emissions and their suspected link to global warming.

Yet no American power plant has successfully captured and sequestered carbon dioxide, even though a handful are classified as “capture ready.”

“Sequestration is an integral part of the puzzle,” said Perry Fontana, a vice president of utility consultant and engineering firm URS Corp. “We’re excited about the technology.”

Fontana will be one of the speakers at today’s utility and industry conference.

But officials of Ratepayers United – a group formed to oppose coal-burning power plants in Colorado – aren’t yet convinced that sequestration will work.

“Carbon capture and sequestration is not ready for prime time,” said LaPlaca, chairwoman of the group. “The technology is still 10 years away. It is so expensive and so unproven, why don’t we put more money into (conservation) and renewables?”

Speakers from the environmental group will push the idea of solar thermal power – using the sun’s heat for utility-scale power plants – which they say are clean, renewable and workable now at only slightly more cost than IGCC.

Xcel Energy, however, believes the clean-coal technology will work.

“Carbon sequestration is being done around the world – from Canada, to Algeria to Norway,” said Xcel spokeswoman Ethnie Groves. “Through our demonstration project, we’ll bring that technology to Colorado and more effectively capture carbon-dioxide emissions.”

Staff writer Steve Raabe can be reached at 303-954-1948 or sraabe@denverpost.com.

(Greetings from Grand Island, NE, half-way through Nebraska.  It’s changed so much here, there are irrigation systems all over that were not here when I was here a couple times a month blasting through to one coast or the other.  Another thing that wasn’t around then — sit down… BOSSELMAN TRUCK STOP HAS HUGE SOLAR PANELS, HOT WATER SOLAR.  Like WOW!!!  I’ve got a photo but can’t download in here, will post tonight.)

Perhaps it’s the reality, or NON-reality, of carbon capture and sequestration of coal gasification’s CO2 that’s giving Excelsior’s Tom Micheletti indigestion:

BusinessNorth Exclusives
Mesaba Energy faces uphill fight

2/10/2007
by Beth Bily

Mesaba Energy, one of the most hotly debated and contested initiatives in recent Northeastern Minnesota history, faces a new obstacle.

A Jan. 5 letter from the Minnesota Department of Commerce asserts the project should be modified to fall within the scope of public interest, a stance signaling the agency is lining up with other business interests against the project.

The letter surfaced in the public comment period following a series of hearings around the state in December to take public testimony whether Minneapolis-based Xcel Energy should be required to buy power to be produced at Mesaba Energy.

A special 2003 state law commits Xcel to a power purchase agreement to buy 450 megawatts of generating capacity from Mesaba Energy. An agreement with a dedicated buyer is critical for the project to proceed.

Project developer Excelsior Energy already is encountering stiff opposition from business interests to its plan to build the Upper Midwest’s first coal gasification electric generating plant at a site north of Taconite in northern Itasca County. The developer has identified a location near Hoyt Lakes as a secondary choice.

Some of the state’s biggest business heavy hitters — the Minnesota State Chamber of Commerce and Minnesota Power, as well as Xcel — are criticizing the project, citing potential costs to ratepayers.

Meanwhile, project advocates tout the economic benefits for a host community with above average poverty and a dire need for economic development. Excelsior is proposing Mesaba One— the first of as many as six coal gasification generating plants it wants to build — as a 600-megawatt operation. With Mesaba One would come about 100 permanent jobs and 1,000 construction jobs during a three-year construction phase.

In his letter to the two administrative law judges who conducted the public hearings, deputy commerce commissioner Edward Garvey, who heads its Energy and Telecommunications Division, suggests three major modifications to the power purchase agreement required by the 2003 project legislation. The law judges are charged with recommending terms of the agreement to the Minnesota Public Utilities Commission, which has final regulatory authority.

In his letter, Garvey proposes:

• Limiting Xcel’s purchase requirement to 450 megawatts as is written in 2003 legislation.

• A fixed “all-inclusive” annual price that Xcel will pay at $110 per megawatt-hour, and a requirement that the project capture or “sequester” 90 percent of the plant’s carbon emissions.

• Additional terms protecting ratepayers from “any performance failures” of the Mesaba project.

The gasification technology proposed would turn coal into a synthetic gas before it is burned to produce electricity. Tom Micheletti, co-chief executive of Excelsior Energy, has said gasification will reduce mercury emissions by at least 90 percent compared to conventional coal-fired plants, and remove a very high percentage of sulfur prior to the synthetic gas burning process.

Charlotte Neigh, co-chair of CAMP (Citizens Against the Mesaba Project), which was formally organized in Itasca County in 2006 in opposition to the project, views the Department of Commerce position as “huge.

“This (project) is not going to happen. The Minnesota Department of Commerce is withdrawing its support without directly saying so,” she said.

In a telephone interview, Micheletti said he was a bit surprised by Garvey’s position, adding his stipulated modifications — particularly the 90 percent sequestration, or capture of carbon dioxide — are not reasonable.

“To suggest that we do something that no one else has ever done (90 percent carbon capture) and cap the costs, seemed a little over the edge,” Micheletti said. “Our project is no different than any other project, you don’t know exactly what the costs will be until the (engineering) work is done.”

Opposition is gaining momentum as the project moves through the permitting and review process. Opponents charge the proposed gasification technology hasn’t proved itself, leaving both ratepayers and the environment at risk.

The project also has staunch supporters. The federal government is offering up to $800 million in loan guarantees, and the U.S. Department of Energy has awarded a $36 million “clean coal” technology grant.

The state of Minnesota also is supporting the project with $12 million in bond financing to Itasca County for infrastructure improvements for both the Minnesota Steel and Mesaba Energy projects. In addition, Iron Range Resources, a state agency, has approved a $10 million loan for start-up costs to move the project forward.

While expressing support as a “worthy and important project, the Garvey letter seems to weigh in with the gathering economic-based opposition: “…the Department concludes that the current price, terms and conditions of the Power Purchase Agreement (PPA) as filed by Excelsior with the Minnesota Public Utilities Commission on Dec. 27, 2005 are not reasonable. The direct PPA costs payable by ratepayers are not yet balanced by ratepayer benefits. Plus, the indirect financial risks to ratepayers are too high. For these reasons, the proposed PPA is not yet in the public interest.”

The Commerce Department will not directly decide the fate of the proposed PPA, but is charged with ensuring the purchase agreement meets the requirements of state statute.

The administrative law judges will file a recommendation with the state Public Utilities Commission on the proposed power purchase agreement by the end of February. The regulatory agency, which has final authority in the matter, is expected to make its decision sometime this spring.

Beth Billy is a freelance writer in Itasca County.

Here’s the Garvey policy statement that they’re referring to, and it wasn’t part of the Public Comment section, it was attached to the Brief, and is not part of the evidentiary record in the PPA docket:

Garvey Policy Statement attached to Initial Brief

When even the Dept. of Commerce analysis determines it’s not in the public interest, when the big Minnesota Power ratepayers are very concerned about the impact on their businesses, and they are the big employers in the area, when Xcel the utility Excelsior wants to force into this PPA objects, perhaps there’s a rational reason for those objections, those beliefs. Excelsior doesn’t offer the benefits claimed, it’s one big detriment to the area, to the public, the ratepayers, to taxpayers…

The Business North story goes on with some background:

Mesa Energy history, details

The technology Excelsior proposes was developed by ConocoPhillips and would convert coal into synthetic gas with many pollutants removed prior to burning, according to the developer.

Excelsior executives assert the process reduces many emissions by about two-thirds compared with other coal-fired technologies, and removes more than 90 percent of mercury.

In 2003, the Minnesota Legislature passed a statute providing significant incentives for the so-called clean coal technology as well as the requirement that Xcel purchase such power, subject to Minnesota Public Utilities Commission approval.

Two administrative judges will make a recommendation on the PPA based on information gathered at public hearings to the Minnesota PUC, which will have the final say on the PPA as is was proposed by Excelsior in December of 2005.

Two items in that 2003 legislation will allow for significant interpretation by the judges and the PUC are: that the project is a “least-cost resource” and is in the “public interest.” That proposed PPA, if approved by the PUC, would provide the needed dedicated buyer for the energy produced – without that, the project will not move forward.

Economic impact

Itasca Economic Development Corp., the Itasca County Board of Commissioners and the Range Association of Municipalities and Schools, all endorse the project. Supporters argue construction and operation of the Mesaba plant would have profound economic impact on an area of the state badly in need.

Iron Range Resources Commissioner Sandy Layman said the state agency was an early supporter of sorts, providing funding for start up work with its $10 million loan.

“The potential for significant economic investment like Excelsior merits our attention. And, participating in the deployment of alternative energy is an exciting prospect,” she said. “It is from both of those angles that Iron Range Resources is interested in this project.”

Peter McDermott, president of Itasca Economic Development Corp., long has noted the county’s high poverty rate and need for better paying jobs. His group commissioned a study by the University of Minnesota Duluth Labovitz School of Business and Economics’ Bureau of Business and Economic Research assess the project’s impact on Itasca County.

Released in April 2006, the study concluded the Mesaba project would generate a $1.4 billion economic impact — $1.0 billion during the three-year construction phase.

Once in operation, the plant would create 107 permanent jobs and support another 137 jobs indirectly through vendor purchases and retail expenditures by those plant employees.

Criticism of the project during the December public hearings in St. Paul, Hoyt Lakes and Taconite focused on the economic costs as well as benefits.

Neigh and other CAMP members charge the development corporation’s inquiry didn’t go far enough because it failed to identify project costs.

“It’s not a cost-benefit analysis,” said Neigh. “We think the burden alone should be on Excelsior to show the benefits.”

The UMD study’s several disclaimers include a recommendation that policymakers address the project’s broader impacts. “Readers are encouraged to remember that the (bureau) was asked to supply an economic impact analysis only. Any subsequent policy recommendations should be based on the ‘big picture’ of total impact. A cost-benefit analysis would be needed to assess the environmental, social and government impacts.”

Big business opponents have seized upon that lack of big picture analysis, particularly the project’s statewide impact.

At the public hearings, Xcel executives testified requiring the power purchase agreement could result in an 8 to 12 percent increase for ratepayers. Minnesota Power also has objected, contending transmission lines and other infrastructure for moving the power to Xcel could cost its ratepayers, as well.

Whether the Public Utilities Commission will include Garvey’s recommendations in a power purchase agreement isn’t clear.

While the 2003 state law stipulates 450 megawatts, it also authorizes the commission to modify that number, said Tom Micheletti of Excelsior Energy, the project developer. He maintains engineering work completed for Excelsior concluded 600 megawatts is the most efficient number for operation. He also noted the 450 megawatt figure was selected as a 2003 baseline when the law was written, based upon Xcel’s actual need in 2003, included in its 2010 projections.

While costs for 90 percent carbon capture are unknown, they will be very expensive, he said. A document filed with the commission by Xcel estimates that cost in excess of $800 million.

The 2003 law does not stipulate 90 percent capture, but that Excelsior, “make a good faith effort to secure funding from the United States Department of Energy and the United States Department of Agriculture to conduct a demonstration project at the facility for either geologic or terrestrial carbon sequestration projects to achieve reductions in facility emissions or carbon dioxide.”

Micheletti said Excelsior has submitted a plan to capture 30 percent of carbon dioxide. But he concedes further limits were coming.

“In a sense, we agree (with Garvey) we just don’t know how fast we can get there,” he said.

Despite the increased scrutiny, Micheletti remains optimistic a power purchase agreement will be approved.

“I’ll take (Garvey) at his word that he wants to move this forward,” said Micheletti, interpreting the suggested modifications as a beginning point for further negotiations.

IRR’s Layman also believes the proposed Commerce Department modifications aren’t insurmountable obstacles.

“Minnesota has a rigorous regulatory process and (this is) evidence of that process,” she said. “We leave it to the regulatory agencies who have a role in protecting the public’s interest.”

… and won’t be anytime soon. And FINALLY they’re starting to talk about it, to recognize that pretty damn basic fact! And just in time for the sequestration hearing at the legislature:

TUESDAY, February 13, 2007
4:00 PM
Joint Committee: Environment and Natural Resources & Energy Policy and
Finance
Room: 5 State Office Building
Chairs: Rep. Kent Eken, Rep. Bill Hilty
Agenda: Biofuels & Terrestrial Carbon Sequestration Presentations

Remember that great DOE Addendum on Sequestration? Here it is again, one of those reports I just can’t get enough of:

DOE – Supplement to DEIS on Sequestration

And now, for today’s report on sequestration:

ENVIRONMENT:
Recapturing Carbon Won’t Come Cheap

Stephen Leahy

BROOKLIN, Canada, Feb 9 (IPS) – Putting climate-altering greenhouse gases back in the ground where they came from is an essential part of any global plan to avoid catastrophic climate change, scientists say.

Capturing carbon dioxide emissions from coal-fired power plants and pumping the global warming gas deep underground or under the sea “may well be the most critical challenge we face, at least for the next 100 years,” writes Daniel Schrag, director of Harvard University’s Centre for the Environment, in the journal Science Friday.

Coal is, and will continue to be, a major source of the world’s energy and emissions of carbon dioxide (CO2), writes Schrag in the report “Preparing to Capture Carbon”.

“By the end of the century, coal could account for more than 80 percent” of all CO2 emissions — double the present level — he writes.

Coal produces nearly twice as many emissions as natural gas, but coal is cheaper, and vast quantities are available and in the right places. The enormous and growing energy needs of the United States, India and China are matched by their even larger reserves of coal. It seems inevitable that thousands of new coal-fired power plants will be built.

Schrag is just one of a host of scientists, politicians, business leaders and even environmental groups who want to lower the amounts of CO2 going into the atmosphere by capturing and storing it.

“We cannot stabilise the global climate without India and China reducing their future emissions,” says Robert Watson, chief scientist and director of Sustainable Development at the World Bank.

The industrialised countries will have to work with India and China on carbon capture and storage technologies, Watson said at a press conference Thursday.

Mary Griffiths, senior policy analyst at the Pembina Institute, an environmental group in Calgary, Alberta, adds, however, that “Carbon capture and storage is not our first choice for reducing emissions.”

Carbon capture and storage (CCS) doesn’t even come in second or third. Caps on CO2 emissions, energy efficiency, renewable energy and conservation are better ways to tackle the problem, she said.

“Avoiding dangerous climate change is a major challenge and therefore we need to use all the tools that are available,” Griffiths told IPS.

And one of those tools is the much-touted — and much-maligned — “clean” coal technology.

Capturing CO2 from coal plants requires special processing of the coal with chemicals or through a gasification process. Both processes require extra energy and boost costs by as much as 50 percent, according to Schrag. Then the CO2 has to be pressurised, transported and pumped into a deep underground location.

Studies show there is potentially enough underground storage capacity, but there is limited data on whether such sites would leak and by how much. Schrag estimates that millions and eventually as much as 10 billion tonnes of CO2 per year will need to stay where they are put for “the next few millennia”.

One leak-proof storage option is injecting CO2 below the sea floor but that would be very expensive.

There are no commercial-scale CCS examples but there are a few test sites demonstrating that it is technically feasible. One such site is in Norway, where about one million tonnes of CO2 is pumped into saline aquifers a kilometre below the bed of the North Sea.

The world’s largest existing project has pumped five million tonnes of CO2 over four years into an old oil field in Weyburn, Saskatchewan in Canada to help pump put out more oil. The CO2 comes from a North Dakota coal gasification plant 325 kilometres away. This is a 40-million-dollar research effort funded by Canada, Europe, Japan and the United States.

There are also safety issues. CO2 is heavier than air and a large gas cloud could be lethal, as happened in a natural catastrophe at Lake Nyos in Cameroon in 1986 that killed 1,700 people.

Aside from the many environmental impacts of the coal industry as a whole, the most controversial aspect of CCS for coal power is who is going to pay for the development and additional ongoing costs.

“Governments shouldn’t be making major investments in CCS, companies should be doing it,” Griffiths argued.

Governments should put CO2 emissions caps in place, and that would create a market for investing in CCS, she said.

At the moment there are no such emissions caps in North America. In Europe, caps are in place, but the price of CO2 is well below the per tonne costs of CCS. That, plus uncertainty about future caps and liability regarding leaks, means companies are unlikely to make the long-term investments that are needed, notes Schrag.

FutureGen is the George W. Bush administration’s much promoted effort to build the first commercial-scale near-emission-free coal power technology. Announced in 2003, the billion-dollar, public-private project has yet to find a site to build the plant.

SaskPower, a government power utility in Canada, could beat FutureGen as the world’s first near-emission-free coal power plant. The 300-megawatt plant — more than enough to supply a city of 200,000 — could begin construction as early as this year.

However, none of these projects are guaranteed to work. Indeed energy experts still think CO2-free coal plants, if feasible at all, are well into the future.

Coal will not become carbon-free for another one or two decades, Wulf Bernotat, chief executive of the major German utility E.ON, told Reuters this week. E.ON is involved in several CCS projects around the world, but Bernotat said there are additional energy and financial requirements, as well as technical and legal problems to be overcome.

Europe’s coal plants are investing in efficiency improvements first. But those five and 10 percent improvements won’t be enough to avoid catastrophic climate change. The U.S. needs to encourage and sponsor 10 to 20 full-scale CCS efforts so that there will be a number of documented and verifiable CCS options available, writes Schrag.

“The United States and the world need carbon sequestration — not right now, but soon and at an enormous scale,” he said. (END/2007)