Legalectric

Released yesterday by National Institute for Science, Law, and Public Policy (NISLAPP) (never heard of it before, need to do some checking):

Green Electricity or Green Money?

Why is this a question?  We know it’s a problem. But this report focuses on things like “Smart Meters” and doesn’t dig into the the even worse toadying for coal gasification and other harebrained promotional schemes of these orgs.

Here in Minnesota, the money goes to Minnesota Center for Environmental Advocacy, Fresh Energy f/k/a ME3, Izaak Walton League and its former program now independent 501(c)(3) Wind on the Wires (conveniently separate since just after election, when Bill Grant was appointed Deputy Commissioner of Commerce in charge of all things energy)(oh, and Nancy Lange appointed to Public Utilities Commission).  And then there’s RE-AMP.  There’s so much money flying around for promotion of transmission and coal gasification.

Bill Clinton toadying for transmission

WOW’s devil we know… ummm… WOW!!!

Walton’s Bill Grant – Deputy Commissioner of Energy?

Wind up to ELPC Transmission Strategy Meeting

AAAAAAAAAAAAARGH… back to work…

Dying the death of a thousand cuts, here’s one more paper cut for our good friends at Excelsior Energy.

Excelsior Energy’s Mesaba Project, the creme-de-la-creme of vaporware projects, was slashed again by a Midwest Independent System Operator filing with FERC that the project had breached its transmission interconnection agreement and was in default.  MISO has asked FERC to terminate the agreement:

ER13-1049 Notice of Termination Filing

The state has been unreasonably and inexplicably reluctant to kill this non-project.  Maybe the feds are willing?

The  Hyperion project, an 800 pound gorilla, an oil refinery PLUS a coal gasification (IGCC) plant (it morphed quite a bit over the years), proposed for agricultural land west of Sioux Falls, South Dakota, has been looming for a long time, but there’s evidence that the stakes through it’s slimy heart are having an impact.

In the Argus Leader:

Hyperion declines to renew options with Union County landowners

The stake in Hyperion’s slimy heart is that there’s no money:

“I don’t know why people are opposing Hyperion, but it’s not going to be built because they’ll never get financing,” he said. “Nobody’s going to put up that money. … Just because you have the piece of land and a state that will let you put it there doesn’t mean it makes sense.”

There’s no money to build Hyperion, no investors, another vaperware project sounding a lot like the AWA Goodhue wind project here in Goodhue Count, or Excelsior Energy’s Mesaba Project, coal gasification on the Iron Range.  It’s the lack of money that’s the real news:

Industry analysts question Hyperion

Two industry analysts are casting doubt on the viability of the proposed Hyperion oil refinery in Union County, though a company spokesman questioned the impartiality of their criticisms.

In an Aug. 20 article in the trade paper Platts Oilgram News, Malcom Turner, chairman of the firm Turner, Mason and Co. of Dallas, said financing will continue to be a problem for large projects such as Hyperion.

“Nobody would finance it,” he told Platts. “It would take forever to build.”

Dallas-based Hyperion Refining has proposed to build a $10 billion refinery in Union County to process 400,000 barrels of heavy Canadian crude daily into various refined products. The company first applied for a Prevention of Significant Deterioration air quality permit from the state — the first of about a dozen permits it needs to collect before it can start up — in 2007.

In an interview with the Argus Leader, Turner said South Dakota is not a good fit for a large refinery because the Midwestern market won’t support any additional refined product.

“I don’t know why people are opposing Hyperion, but it’s not going to be built because they’ll never get financing,” he said. “Nobody’s going to put up that money. … Just because you have the piece of land and a state that will let you put it there doesn’t mean it makes sense.”

Via email, Hyperion spokesman Eric Williams disputed Turner’s assessment, saying that there is plenty of demand for refined product in the Midwest and that existing refining capacity is “old, outdated and inefficient.”

“There are many people in the investment community who recognize that fact and see the opportunity for building a new refinery that’s state-of-the-art both in terms of the environment and operating efficiency,” he wrote.

He also said siting the refinery in Union County would reduce pipeline tariffs as compared with those paid by Gulf refineries to ship refined products to the Midwest.

“From the beginning we’ve had doubters, and there are certainly some in the industry who don’t want to see our project built,” he wrote. “But we’ve invested scores of millions of dollars and are in it for the long haul.”

Rough road

The Platts article also quoted a friend of Turner’s, Glenn McGinnis, an industry consultant and CEO of Arizona Clean Fuels Yuma, which has had a $4.5 billion refinery in the works since the late 1990s.

“It doesn’t make sense to build a monster refinery on the prairie” because the area lacks the infrastructure to connect refined products to end markets, McGinnis told Platts.

Speaking Monday to the Argus Leader, McGinnis said his own experience trying to get a refinery financed and permitted are an indication that Hyperion has a tough road ahead.

“The technology selection is good, the opportunity for providing jobs and financial benefits is good and likely supported by a lot of folks,” he said of Hyperion’s proposal. “But to me, the infrastructure issues, and the ability to finance the project, are really going to make it difficult.”

Plans for his own refinery are tentatively on hold, McGinnis said, though it has an active air quality permit from the state. That project would pipe its crude from Mexico.

Part of the problem is that Arizona Clean Fuels, like other downstream projects, has had trouble securing financing in a down economy, despite not having drawn legal challenges as Hyperion has, McGinnis said.

The Sierra Club, Save Union County and Citizens Opposed to Oil Pollution have challenged Hyperion’s PSD air quality permit, a case that will be heard by the South Dakota Supreme Court Oct. 3 in Sioux Falls.

Williams, for his part, said McGinnis and Turner lack credibility because they are Hyperion’s competitors: McGinnis as CEO of a company that’s also trying to build a refinery, and Turner as an analyst who represents competing refiners.

“We’re not terribly concerned about what analysts say about our financing,” Williams said. “As a private company we don’t discuss those details. It’s like me requesting that upper management at the Argus to release their paystubs.”

Building pipeline

Phillips also told Platts the company recently spoke with the Canadian pipeline companies TransCanada and Enbridge about building a pipeline to carry crude from Hardisty, Alberta, to the refinery. Or Hyperion might build the line itself.

Williams declined to discuss details of these discussions “given the proprietary nature of these talks.”

TransCanada spokesman Shawn Howard said via email that the company is “always looking for opportunities to connect supply to markets” but that he could not discuss specific proposals.

An Enbridge spokeswoman did not return messages.

Excelsior Energy’s Mesaba Project, the coal gasification plant that will not die, is returning to the Minnesota Public Utilities Commission on August 14, 2012.

Notice – August 14, 2012 PUC Meeting

At that time, they’ll address whether the original project’s permits apply to this project, and whether this one, under Minn. Stat. 216B. 1694, requires additional environmental review:

**6.     E6472/GS-06-668 Excelsior Energy, Inc.
In the Matter of the Joint LEPGP Site Permit, HVTL Route Permit and Pipeline (Partial
Exemption) Route Permit Application for the Mesaba Energy Project in Itasca County.
Should the Commission find, pursuant to Minnesota Statutes 216B. 1694 subdivision 3, that the
site and route permits issued on March 12, 2010 for the Mesaba Energy Project are deemed valid
for a natural gas fired plant located at the same site and that no additional environmental review
is required under applicable state rules?

This docket has been one of the longest strangest trips ever, a coal gasification plant that wasn’t needed yet fed by state and federal money, using CO2 capture and storage that does not, can not, and will not exist.  Here’s some history:

Health Benefits of Coal (ya gotta read this one, HILARIOUS!)

Mesaba – Extend the Hearing! (the hearing was a farce)

And why are we here on the 14th?  The PUC granted a Site Permit to the project f/k/a Mesaba Project, the coal gasification plant:

ALJ Recommendation – Mesaba Site Permit

PUC Order and Site Permit – March 2010

Then it starts getting complicated, Excelsior sends PUC letter saying it wants confirmation that the permits issued for the Mesaba Project coal gasification plant are valid for a natural gas plant, and that it would require no further environmental review:

Excelsior Energy Request – May 31, 2012

Notice of Comment Period

Comment – mncoalgasplant.com

Commerce CommentsSierra Club Comment

And then Excelsior chimes again disclosing not much of anything about their “plan” for this gas plant:

Excelsior’s Response to Commerce IRs June 26, 2012

And then the Comment period is extended and we get another bite:

MCGP Reply Comment

And now we’re off to the races…

In the Duluth News Tribune:

Feds say no more money for Iron Range Excelsior Power Plant

For years and years, I represented mncoalgasplant.com opposing this wretched boondoggle of a pipe-dream of “clean” and “green.”

IGCC – Pipedreams of Green and Clean

The project lingers on, on life-support, and pulling the plug is long overdue.

The good news is that the Duluth News Tribune is finally paying attention, and looking into the financial irregularities.  Duluth News articles are here, and next will be some responses.

It started with an article in Duluth News Tribune, first in a series, the second below:

Published August 21, 2011, 09:40 AM

 

Millions in public money spent, but Iron Range power plant still just a dream

DNT investigation, part 1 of 2: When Excelsior Energy launched its ambitious, clean energy project in 2001, the company touted it as a way to bring much-needed jobs and investment to the Iron Range. But after nearly a decade and receiving more than $40 million in public money, Excelsior has little to show.

By: Peter Passi, Duluth News Tribune

When Excelsior Energy launched its ambitious, clean energy project in 2001, the company touted it as a way to bring much-needed jobs and investment to the Iron Range at a time when local residents were still stinging from the closure of LTV Steel Mining Co. The innovative, state-of-the-art coal gasification plant also would enable the nation to more effectively tap domestic coal reserves with minimal harm to the environment.

But after nearly a decade and receiving more than $40 million in public money, Excelsior has little to show. While significant work has gone into developing site plans and engineering work and garnering permits, the company has yet to move a shovelful of dirt to build its would-be 2,000-megawatt, $2.1 billion power plant.

And despite receiving virtually all of its backing from the public trough, the company’s spending records, including its officers’ paychecks, remain under wraps.

“At the end of the day, this is a project that has not hired one full-time worker on the Iron Range. Only lawyers, lobbyists and professional meeting attenders have gotten jobs,” said Rep. Tom Anzelc, D-Balsam Township, the only Iron Range legislator who has opposed the project. “And it has all been financed by the public.”

Behind the delay

Heading Excelsior are two seasoned energy professionals: Tom Micheletti, a Hibbing native and former Northern States Power executive, and his wife, Julie Jorgensen, former CEO of CogenAmerica and VP of NRG Energy Inc.

Supporting them is another Iron Range legislator, Sen. Tom Bakk, D-Cook, who argues that cleaner ways of turning abundant domestic supplies of coal into electricity are greatly needed.

Bakk blames the development’s delay on Xcel Energy’s refusal to do business with Excelsior, with the established energy company intimating that power from the new plant could be too expensive and could drive up customer rates.

“There was clear legislative intent that Xcel would purchase their power, but Xcel has been unwilling to enter an agreement,” Bakk said. “Without an out-take agreement, the project has not been bankable.”

Excelsior has made repeated efforts to persuade the Minnesota Public Utilities Commission to compel Xcel to buy its power, but has so far been unsuccessful.

Micheletti, who serves jointly with his wife as Excelsior Energy’s president and CEO, also said the project has suffered from unfortunate timing and the effects of a recession.

“Hardly anything is being built right now,” said Micheletti. “Load growth has come to a standstill, so there’s not a great deal of need for new facilities right now.”

Regulatory uncertainties facing the power industry have further complicated the plant’s outlook, Micheletti said, though he added that tougher regulation could help the project if it leads to the shutdown of older, dirtier coal-burning power plants or a shift away from nuclear energy.

Yet Micheletti said he’s stopped making predictions as to when Excelsior will build its first plant.

“It bothers me that, given the current economic situation, we’re not where we thought we’d be,” he said. “By now, 3,000 people would be working on the site if things had gone the way we thought.”

Public funding

From the start, Excelsior has relied primarily on public support, according to a 2008 audit by the Minnesota Office of the Legislative Auditor. The agency noted that excluding a small sum of private seed money, “the company initially relied mainly on Iron Range Resources loans for many basic costs it needed to operate, such as office space, desks and computers.”

In 2001, Excelsior borrowed $1.5 million from the Iron Range Resources and Rehabilitation Board. Additional loans have brought that company’s IRRRB debt to $9.5 million

In August 2010, Excelsior was to begin repayment of its IRRRB loans, but the agency extended the timeline to 2017, in light of project delays.

The company also received $10 million in state aid through the Minnesota Public Utility Commission’s Renewable Development Fund, despite objections from environmental groups about spending such funds on a plant designed to run on fossil fuel.

The U.S. Department of Energy contributed another $22 million, intended to cover half of the preliminary design costs.

The only public record of private equity in Excelsior occurred at its inception, when Micheletti and Jorgensen made a combined investment of $60,000.

Shuttered windows

Tracing where all Excelsior’s public money went and how it has been used is not easily accomplished, particularly after state lawmakers voted to restrict public access to Excelsior’s financial statements. Before 2008, reports the company is required to submit to the IRRRB as part of its loan agreement had been publicly available.

But that year, the Minnesota Legislature changed the state law, with a conference committee inserting language into an omnibus tax bill to classify financial disclosures made to the IRRRB.

Bakk, a member of that committee and also of the IRRRB’s board of directors, told the News Tribune he had no recollection of inserting the language and suggested the IRRRB itself may have requested the change.

Sheryl Kochevar, an IRRRB spokeswoman, confirmed that, justifying it to say the agency’s aid recipients should have “privacy protections that are similar to those a business would expect and receive when it is dealing with a bank.”

Kochevar said the IRRRB must approve all its loans and investments in a public meeting. After that, however, she said the agency will not disclose “nonpublic data about the business that it uses to monitor and protect its loan to or investment in the business.”

Bakk defended the IRRRB’s rationale, saying that if the agency required total transparency of the companies it assists, some might shun its aid, causing the Range to miss out on potential economic development opportunities.

But there is nothing stopping Excelsior itself from disclosing what it does with the public money it receives. Micheletti, however, refused to release that information.

“We do not and have never disclosed confidential private financial information, so that subject is off limits,” he told the News Tribune.

Charlotte Neigh, co-chair of Citizens Against the Mesaba Project, a group opposed to the plant, said the Legislature’s secrecy provision came on the heels of a complaint her group made about some of Excelsior’s uses of IRRRB funds that touched off an examination by the Office of the Legislative Auditor.

The auditors found Excelsior had indeed used some IRRRB loan funds for inappropriate purposes, including lobbying. The company subsequently was required to repay $40,161.

Anzelc contends that any entity that has received so much public assistance ought to be more forthright about how it has spent taxpayer money.

“I believe they should tell us exactly what they’ve done with all the public dollars they have secured,” he said.

Limited view

Even when Excelsior’s financial reports to the IRRRB were still public, they sometimes provided scant detail.

A 2004 letter to the IRRRB Board of Directors from Freeberg & Freeberg Certified Public Accountants acknowledged gaps in Excelsior’s reporting.

“Management has elected to omit substantially all of the disclosures and the statements of cash flows and retained earnings required by generally accepted accounting principles,” the report said.

Still, the reports provided a limited view into how the company was spending its funds. As of the end of 2006 — the last year for which financial reports are public — Excelsior had spent $9.6 million on engineering and site development, $8.2 million on permits and regulatory work, $6.9 million on commercial, financial and administrative services and $7.9 million on in-house staff and consulting expenses since the project’s inception.

Some of these expenses were in the form of unpaid bills to be settled at a later date. A significant portion of that debt was owed to the husband-and-wife team at Excelsior’s core.

State funds from the IRRRB and the Renewable Development Fund could not be used to compensate Micheletti and Jorgensen. Even though they could not collect paychecks for the first several years of Excelsior’s existence, Micheletti’s and Jorgensen’s salaries were carried on the company’s books with the understanding that payments would be made when appropriate funds became available.

According to records, in 2001, the two drew a combined $125,000 in deferred pay. In August 2002, the deferred annual salary of each was increased to $250,000, or $500,000 for the pair. In 2003, they each received another $50,000 raise, bringing their combined annual pay to $600,000, where it remained through 2006, at the last time of public disclosure.

The first indication that Excelsior actually cut paychecks for Micheletti and Jorgensen can be found in 2006, when Department of Energy funds became available for the project. As of 2005, Excelsior owed the pair $2.49 million jointly. In 2006, that debt was reduced by $600,000.

Micheletti’s and Jorgensen’s deferred annual salaries totaled $600,000 each of the previous three years. And unless the co-presidents took a cut, Excelsior actually would have had to pay them $1.2 million in 2006 to reduce their total deferred pay by $600,000 in a single year.

How much more pay Micheletti and Jorgensen have received since 2006 has not been publicly disclosed.

Micheletti refused the News Tribune’s request to disclose how much Excelsior has paid its officers, saying, “As I have indicated to you many times before, our company, like all others, does not disclose confidential information, including confidential financial information.”

 

Part II of the Duluth News Tribune series on Excelsior Energy:

Published August 22, 2011, 12:30 AM

Iron Range energy project seeks lifeline in more funding, new fuel source

Despite receiving more than $40 million in federal and state government money, Excelsior Energy risks running out of gas if it cannot attract additional investment from the public or private sector soon.

By: Peter Passi, Duluth News Tribune

* EARLIER: Millions in public money spent, but Iron Range power plant still just a dream

Despite receiving more than $40 million in federal and state government money, Excelsior Energy risks running out of gas if it cannot attract additional investment from the public or private sector soon.

Gone are state funds, including:

# About $9.5 million in loans it received from the Iron Range Resources and Rehabilitation Board, and

# $10 million from the Minnesota Renewable Development Fund.

Soon, Excelsior will burn through the more than $22 million in federal funding the Department of Energy earmarked to help develop its clean coal project on the Iron Range, according to financial records obtained through the Freedom of Information Act and analyzed by the News Tribune.

Those records show that as of Sept. 30, 2010, Excelsior had only about $1.9 million in unobligated DOE funds still available. The company had already spent more than 90 percent of the federal funding approved for project development.

And at what was then the company’s expenditure rate — consuming an average of $418,000 in grant funding per quarter in 2010 — Excelsior would exhaust the last of its federal aid before the end of this calendar year.

Tom Micheletti, Excelsior’s co-president and CEO, refused to discuss how much money the company has left or where it will turn next. Yet his confidence remained intact.

“We’ve got staying power to see our way through this,” he said.

Rep. Tom Anzelc, D-Balsam Township, said he expects Excelsior will turn again to the IRRRB for more support. But IRRRB Commissioner Tony Sertich said there have been no discussions about providing aid to Excelsior beyond the loans that it already has received.

“I don’t anticipate any further request from them,” he said. “We’re watching to see what happens next, just like everyone else.”

Refueling

Unable to move ahead with plans to build a $2.1 billion power plant that would run on gasified coal, Excelsior received authorization from the Minnesota Legislature this past session to proceed initially with a plant fueled by natural gas.

Sen. Tom Bakk, D-Cook, supported Excelsior’s request.

“I think that if we allow Excelsior to start as a natural gas plant, it substantially increases the chance that it (the coal plant) will be built,” he said.

Bakk noted that a natural gas-fueled plant would rely on pre-existing rather than relatively untested technology.

“There’s much less risk from an investor standpoint,” he said.

Anzelc was the only Iron Range legislator to oppose the idea of allowing Excelsior to shift gears and build a natural gas plant instead of one running on gasified coal. He sees the change of plans as a last-ditch effort to throw Excelsior a lifeline.

“The majority of the Range delegation and the governor believe that this is the only way to get any of the $9.5 million in IRRRB funds back. You need to have an actual project that has permits and is constructed. You need a real company that makes a profit,” he said.

Nevertheless, as hard as it may be to accept the loss, Anzelc contends that walking away from Excelsior is the responsible thing to do.

At present, natural gas prices are comparatively low, making it a competitive fuel for power generation, said Julie Jorgensen, Excelsior’s co-president and CEO. Still, Excelsior needs to consider the long-term price outlook for both gas and coal, and Micheletti said the company is weighing its options.

“Do we go slow on one and faster with the other or vice-versa?” he asked. “Or do we proceed with both at once?”

Micheletti estimates a couple of 600-megawatt natural gas-powered units could be built for about $900 million. That’s less than half the anticipated cost of Excelsior’s proposed gasified coal plant. Also, permits for natural gas-fired generators are typically easier to obtain than for coal-burning plants.

One roadblock is that Department of Energy money earmarked for “clean coal” technology probably could not be used to help develop a natural gas plant, Micheletti said. Regardless, he said, Excelsior is in a unique position to push a power plant along quickly.

“Right now, we have the only viable new site for an energy plant in the Midwest because of all the work we’ve done,” he said.

But Anzelc said Excelsior still lacks one essential: a customer.

“To my knowledge, no on in the power business is supportive of this project,” he said.

Search for customers

While Micheletti said he could not discuss specifics because of confidentiality concerns, he said Excelsior is in active talks with potential customers. He said the company will push ahead with a project only when markets justify the investment.

“A lot of companies went bankrupt building on spec. We’re not going to build without a customer,” he said.

Pat Mullen, Minnesota Power’s vice president of marketing and public affairs, isn’t surprised that Excelsior is looking at alternatives to its plan for a gasified coal plant.

“Their original project was way too expensive, and it didn’t get any traction,” he said. “We didn’t want it and neither did Xcel.”

Xcel and Minnesota Power objected to the project, warning that it would drive up their customers’ rates.

Excelsior sought to compel Xcel to buy power from its plant through a power purchase agreement, but the Public Utilities Commission refused.

Even the revamped natural gas plant plan could be a tough sell, however.

Minnesota Power spokeswoman Amy Rutledge said her company has been diversifying its energy portfolio to meet a state mandate that 25 percent of its power come from renewable sources by 2025. The company recently signed a deal to purchase another 250 megawatts of power from Manitoba Hydro in 2020. But new fossil fuel energy is not in Minnesota Power’s plans.

“We’ve looked at the energy needs of our customers,” Rutledge said, “and it is clear we have no need for additional power from Excelsior.”

Xcel Energy has plans to retire two coal-burning units at its Black Dog plant in Burnsville, Minn., and replace them with natural gas units. To obtain permits for that project, the company was required to seek alternative proposals to supply 435 megawatts of power by 2016 or 2017.

But the July deadline has come and gone, and Patti Nystuen, an Xcel spokeswoman, said Excelsior did not submit a proposal and Xcel anticipates no need for additional generation.

Minnesota Power’s Mullen described what he considers “a flat market” for power generation,

But he’s not counting Excelsior out.

“You have to give them credit for their tenacity,” Mullen said.