PatMichelettiXplntFair Use from STrib

In today’s STrib:

Micheletti recovering from transplant after brother donates kidney

Says he was in severe pain and thought he had hip issues… whoa… and then went to Mayo to get checked out:

Doctors believe Pat Micheletti’s kidneys were failing because of years of taking the over-the-counter pain reliever, Motrin (ibuprofen), to deal with discomfort stemming from his hockey-playing career. Alex said his dad plans to start making hockey players aware of the dangers of taking too much ibuprofen.

I’ve not dealt with Pat since Excelsior Energy Mesaba Project days, what a protracted sticky and very painful mess that was.  He’s probably very glad to be out of that… I remember when he was caught in the midst of an ex parte contact blitz:

Excelsior’s indirect ex parte contact

July 26th, 2007

I will never forget the packed standing-room-only hearing in Taconite when one of the public commenters drifted up the aisle in flowing clothing and brought a sculpture/collage/birdcage(?) as an exhibit to present to the judge, representing the Mesaba Project and what it meant to her, the devastation it would create, and she said she made it especially for Pat (it might have been his birthday that evening).  He was sitting near the back, on the center aisle, head in hands, shaking his head in disbelief at this odd presentation.  The judge was visibly afraid/concerned, he held his hands up, “stay back” or some such, did not want her to approach with that “exhibit.”  It was one of the most hilarious parts of that long mess.


A couple of days ago, a little birdie sent me an uplifting article, and what I like most about it is the use of the term “boondoggle,” which is the definition of Minnesota’s “own” Mesaba Project:

For Carbon Capture, DOE Moves Oxycombustion Ahead of IGCC

If IEEE’s Spectrum is using that term, the rest of the world can’t be far behind!

We’ve been having quite a few go-rounds about Mesaba lately, since Iron Range Resources unilaterally decided to significantly and substantively alter the “contract” for the $9.5 million in funding.   I’d started a post on that and can’t find it for the life of me, so here we go… Now remember, this is not including the state’s Renewable Development Fund money or the DOE’s money thrown at this project, this is “only” the state IRR’s money, $9.5 million, and the interest on that “loan” is 20%:

MCGP Exhibit 5023 – IRR & Excelsior Convertible Debenture Agreement

You’ll find that interest rate on p. 12, 20% simple interest per annum on the outstanding principal.  Since they’ve paid nothing on it except the $40k that they were found to have spent improperly (with many other issues not addressed because the IRR had “destroyed” documentation… yeah, right…), 20% simple interest per annum on a “loan” from 2004 means that there’s another $8,000,000 due now.  And this does NOT take into account the initial $1.5 million from IRR, it’s just the agreement above.

And as noted above,  a couple of weeks ago, it seems the IRR unilaterally decided to significantly and substantively alter the “contract” … based on exactly what???

Here’s how Commissioner Sandy Layman characterized the predicament:

The principal balance owed by Excelsior Energy, Inc. to Iron Range Resources under the
existing loan documents is $9,454,962.

No mention is made of the more than $10 million in interest.   Nada…

Here are two of Aaron Brown’s posts:

Excelsior Energy to seek huge break from Iron Range Resources

… and …

This Iron Range blogger is done apologizing for Iron Range cronyism

Here’s Charlotte Neigh’s editorial, published in the Grand Rapids Herald-Review and on the Citizens Against the Mesaba Project site:


By failing to declare Excelsior Energy in default, which would put an end to the Mesaba Energy Project, the Iron Range Resources Board is enabling Excelsior to draw down the remaining $2.3 million of Department of Energy funding, which can continue to provide handsome salaries for Tom Micheletti and his wife and co-president, Julie Jorgensen.

In April 2007 Excelsior Energy defaulted on its $952,376 interest payment on loans from IRR and it hasn’t paid any interest yet. Since then interest has been accruing on $9.5 million at the rate of 20% per year and the annual payments should be about $2 million. In addition, Excelsior was supposed to pay $800,000 per year on the principal, starting in December 2009, which it also failed to do. After repeated extensions of the due date, payment was supposed to be made by December 2010.

However, at a non-public meeting on August 10th, an IRR committee discussed Tom Micheletti’s proposed changes to the terms of the loans and the IRR Board rubber-stamped these amendments at its meeting on August 19th. From the limited information available, it can be determined that: the annual principal payment will start in December 2010 and will be reduced from $800,000 to $100,000; the interest will be calculated at the reduced rate of 5% instead of 20% and annual payments are not required; and if Excelsior pays off the entire principal by 12/31/17, the interest rate will be recalculated at 3% per year. This amounts to a loss of revenue to IRR well in excess of $10 million, in addition to the $9.5 million that probably never will be repaid.

The high initial interest rate reflected the risk level of the Mesaba Energy Project, which has been borne out by Excelsior’s failure to attract investors or customers. This is despite having spent nearly 40 million public dollars, including approximately $20 million from the federal Department of Energy and $10 million from Minnesota’s Renewable Development Fund, in addition to IRR’s $9.5 million. Tom Micheletti did not offer the IRR Board any revised plan for making this project succeed. When the remaining $2.3 million is gone, Excelsior can declare bankruptcy without assets to repay its creditors, and its co-presidents can walk away.

Micheletti touts the accomplishment of a final environmental impact statement but that process has not been finished because it still lacks a Record of Decision by the DOE. Micheletti touts the accomplishment of having the site approved by the Public Utilities Commission but fails to mention that the project cannot proceed without required regulatory permits. The air permitting has been delayed since 2006 and is problematic because this project is competing with mining operations that can’t be located elsewhere for scarce space for more pollutants in the airshed.

Sensible people must wonder why the IRR Board would do this, or why it would have funded this project in the first place, or why it would have waived the requirement for matching funds, or why it would have extended the due date for payments while it continued throwing good money after bad. A likely factor is the generosity of Excelsior insiders at campaign fundraisers for some of these legislators the week before the committee meeting and over recent years.


The final step for the environmental impact statement (issued in November 2009) is a “record of decision” (ROD) prepared within the DOE, vouchsafing that all has been done thoroughly and properly and the project should be allowed to proceed with DOE support. However, the ROD has been delayed and the monthly reports indicate “schedule uncertain”. We don’t know all of the reasons for this but they may include concerns previously raised by the EPA, the Army Corps of Engineers and the federal land managers. One of the known reasons is Excelsior’s failure to acquire the necessary air and water permits from the Minnesota Pollution Control Agency (MPCA). Apparently Excelsior continues to qualify for cost-sharing contributions from the $22 million DOE fund ($2.3 million remaining) while it pursues these permits.

Excelsior is not actively pursuing water permits at the MPCA; if there have been any changes since the June 2006 applications, revised applications will be required. In late spring Excelsior contacted the MPCA regarding the air permits and work is currently underway to determine what updates to the 2006 applications will be required. It appears that no draft permit will be issued in the foreseeable future and if one ever is, it can be appealed to the EPA, a process that could take 18 months.


THE MESABA PROJECT IS DEAD, DEAD, DEAD!  Coal gasification is not happening.  IGCC ist zu ende!  How many silver stakes through its slimy heart will it take?

Once more with feeling:


IGCC doesn’t provide any significant environmental benefit!

IGCC is not in the public interest!

This is from Charlotte Neigh, Co-Chair of Citizens Against the Mesaba Project, who, having reviewed the recent spin-doctoring of Excelsior Energy, and their tentacle-reach toward Minnesota Municipal Utilities — they’re trying to make it look like they’ve got something they haven’t got:

It is not correct to say that the federal government would back 73 percent of the total cost, or that the federal government has “pledged” $800 million in loan guarantees, or that municipal utilities would have to raise only 27 percent of the project costs to secure ownership of Unit 1 of the Mesaba Project.

Excelsior Energy has not yet been awarded any loan guarantees. It is one of eleven final applicants to share in a pool of $4 billion. Excelsior admits that its negotiations with DOE will continue throughout 2009. DOE stated in October 2007 that projects relying upon a smaller guarantee percentage will be given greater weight. Despite this statement, Excelsior repeatedly misled the media and even the PUC about the status of the loan guarantees, suggesting that they would cover 80 percent of the project costs.

Apparently Excelsior is now seeking 73 percent but this is a long way from becoming reality. A key requirement for qualifying is to have an assurance of revenues to be generated from sale of the product. This means a long-term commitment from a customer to purchase the energy. This is why the failure to achieve a PPA with Xcel Energy is critical. Other obstacles are DOE requirements for: credit assessment without a loan guarantee; approval of environmental and other permits; reduced greenhouse gases; and relative amount of cash contributed by the principals.

Now Excelsior is trying to entice municipal utilities into purchasing ownership interests by suggesting that 100 percent ownership can be obtained by raising 27 percent of the costs. Municipal utilities should carefully assess the likelihood that this amount or any loan guarantees at all will be awarded for the Mesaba Project before issuing bonds to finance such a purchase.

More information and analysis about the federal loan guarantees can be found by scrolling down to the October 8, 2007 entry on the CAMP website:

Charlotte Neigh, Co-Chair
Citizens Against the Mesaba Project

Here’s an example of the bogus spin, from Business North — note she can’t even get the announcement time-frame right… Excelsior announced Mesaba in December, 2001, that’s EIGHT years ago:

No customer for controversial energy project

Excelsior Energy targets municipal PUCs in search for a buyer as key May 1 deadline looms.

by Beth Bily

About six years ago in the wake of the permanent closing of LTV Steel Mining in Hoyt Lakes, momentum began to develop behind a project concept, one since celebrated and renounced.

That proposed Mesaba Energy project with a price estimated at $2 billion has moved through various phases of public review to a potentially new location further west. Along the way it has become one of the most vigorously debated economic development initiatives proposed for Minnesota’s Iron Range.

Meanwhile, an important deadline looms that could make or break the project. The Minnesota Public Utilities Commission had ordered talks between Mesaba’s parent, Excelsior Energy, and power giant, Twin Cities-based Xcel Energy. The two sides were directed to negotiate a Power Purchase Agreement (PPA) for the approximate 600 megawatts of electricity Mesaba’s proposed Unit One would produce. That ordered negotiation period ends on May 1 and there is no evidence an agreement will be reached.

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