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NOTICE:
Item #6, Oral Argument and Deliberations on Excelsior-Phase 2, Docket E-6472/M-05-1993 (see details below) has been pulled from the Minnesota Public Utilities Commission agenda of May 8, 2008.
It will be rescheduled at an as yet unspecified date after the period for reconsideration has run out, or the Commission takes action on any petitions for reconsideration that may be filed, of its April 23, 2008 ORDER DENYING REQUEST FOR INDEFINITE STAY in this docket.
ORAL ARGUMENT/DELIBERATION ITEM
E-6472/M-05-1993 - Phase II Excelsior Energy
In the Matter of a Petition by Excelsior Energy Inc. for Approval of a Power Purchase Agreement Under Minn. Stat. 216B.1694 and Determination of Least Cost Technology and Establishment of a Clean Energy Technology Minimum under Minn. Stat. 216B.1693.
1. Does the Mesaba Project incorporate a "clean energy technology" that "is or is likely to be a least-cost resource, including the cost of ancillary services and other generation and transmission upgrades necessary" and is therefore entitled to supply Xcel with at least thirteen percent of the electric energy that Xcel Energy provides to its retail customers.
2. Should the Commission place a deadline on negotiations between Excelsior and Xcel. (PUC: Briefing Papers/Attachment - Fournier, Gonzales, Mackenzie)
PUC UNANIMOUSLY DENIES DELAY REQUESTED BY EXCELSIOR ON PPA
On April 10th, the PUC, without discussion, voted 5 to 0 to deny Excelsior Energy's request for an indefinite stay of the proceeding regarding Phase 2 of the Power Purchase Agreement Docket.
This means that the PUC "Staff will bring the complete Phase 2 issue back to the Commission in a timely manner". The problem is what is considered timely, considering that the ALJ's report on Phase 2 was issued in mid-September. Excelsior already achieved a significant delay by filing the request for a stay in mid-February, resulting in this procedural hearing on April 10th.
The PUC's regular meetings are on Thursdays. So far the agendas have not been posted for dates subsequent to April 17th. CAMP will be watching the PUC calendar and will alert CAMPers when this matter is scheduled. That hearing is likely to result in a final denial of the PPA, leaving the Mesaba Energy Project unable to attract the investors needed to move the Project forward.
PUC GRANTS EXCELSIOR'S PETITION REGARDING TRANSMISSION
On a vote of 3 (Reha, O'Brien & Pugh) to 2 (Koppendrayer and Boyd), the PUC found that "all transmission infrastructure associated with the Mesaba Project" is exempt from the requirements of a certificate of need (CoN), regardless of which entity builds and owns it. Minnesota Power, which may have to build and/or own it, is concerned that this may become a legal issue in the future if it is challenged by affected landowners after the route is determined.
Discussion indicated that some Commissioners were influenced to grant Excelsior's seemingly premature request by deadlines in the Interconnection Agreement among Excelsior, Minnesota Power and the Midwest Independent System Operator (MISO).
Commissioner Reha suggested that Excelsior was putting the cart before the horse, given that the Project may never be built because of serious issues with the PPA and costs. However, she agreed that Excelsior's position was supported by the statutory language that exempts an Innovative Energy Project (IEP) from a CoN.
MINNESOTA CLIMATE CHANGE ADVISORY GROUP (MCCAG) RECOMMENDS EXEMPTING MESABA FROM CO2 EMISSION STANDARDS
The public response to the recommendation by MCCAG to EXEMPT Mesaba from CO2 Emission Standards was outstanding. Thank you to everyone who took the time to become educated on the issues and to provide your comments on this and all of the opportunites for public comment relating to the Mesaba project.
Click here to read the MCCAG Public Comments (1,908Kb PDF File)
Background Information
The MCCAG Report to the Minnesota Legislature is intended to guide legislation to control emissions of carbon dioxide, among other greenhouse gases (GHG). The exemption for Mesaba (and also for Big Stone 2) was one of the most controversial decisions and had a high number of objections by MCCAG members.
Comments from the MCCAG meeting summary:
"...exempting the proposed new Mesaba and Big Stone 2 coal plants will result in an additional 4.7 MMtCO2 when they come on line in 2013. However, the application of the GPS to these coal units would result in GHG reductions of 4.7 MMtCO2 in 2015 and 4.8 MMtCO2 in 2025 (a cumulative reduction of 61.8 MMtCO2 ), with a net present value (NPV) of -$7.4 billion/MMtCO2 , and a cost-effectiveness of -$120/MMtCO2."
"At some point, Minnesota has to stop increasing its GHG emissions from the power supply sector."
The entire Report can be found and downloaded in sections at -
http://www.mnclimatechange.us/MCCAG.cfm
Sections pertinent to the issue include:
Executive Summary
Chapter 4 - Energy Supply
Appendix G - Energy Supply Policy Recommendations
Summary of MCCAG Meeting # 8 (Energy Supply, page 13)
A portion of Appendix G, Energy Supply - Policy Recommendations
ES-1. Generation Performance Standard
Note: At its last meeting, the MCCAG decided that this option would not apply to the planned Big Stone 2 and Mesaba. Therefore, no benefits or costs are ascribed to this option. Hence, the results presented here-reflecting deliberations about the analysis by the ES Technical Work Group that took place over the course of the process-are for information purposes only.
Policy Description
A generation performance standard (GPS) is a mandate that requires entities that deliver electricity (load-serving entities [LSEs]) to acquire electricity, or power plant developers to build and operate new base-load generation, with a per-unit emission rate below a specified mandatory standard.
Policy Design
Goals:
The general goal of the policy is to prevent utilities from making long-term investments in high-carbon-generation technology. In particular, the GPS would prevent utilities from making a long-term financial commitment to base-load generation plants with carbon dioxide (CO2) emissions in excess of 1,100 pounds of CO2 per megawatt-hour (MWh).
A long-term financial commitment would be defined to include either a new ownership investment in base-load generation or a new contract with a term of 5 or more years that includes procurement of base-load generation.
The GPS would be designed to harmonize with policies that seek to reduce greenhouse gas (GHG) emissions by promoting greater use of biomass and combined heat and power (CHP). For purposes of compliance with the GPS, the CO2 emissions attributed to biomass energy would be net emissions based on a full fuel-cycle analysis. For base-load projects that are part of a CHP project, the GPS would be raised to 1,300 pounds of CO2/MWh.
Timing:
Two alternative onset dates for the GPS: (1) an immediate onset date that would apply to all base-load projects not already in operation, and (2) a delayed onset date that would exclude base-load facilities currently under consideration in proceedings before the Minnesota Public Utilities Commission (MPUC). The ongoing need for a GPS would be reviewed after the implementation of a cap-and-trade system.
Two Federal Agencies Say Draft EIS for Mesaba Energy is Deficient
March 21, 2008
Renee Passal, WDIO-TV
Two federal agencies say that there are deficiencies in Mesaba Energy's Draft Environmental Impact Statement. The Army Corp. of Engineers and Environmental Protection Agency have concerns about the coal-gasification plant, as proposed. The two agencies say they have environmental concerns that need to be addressed, and more information is needed in the EIS. Excelsior Energy is planning on building the $2 billion dollar project, in Taconite. The final EIS is due out, sometime later this year.
PRESS RELEASE
Federal environmental agencies slam draft Impact Statement for Mesaba Project
Pawlenty’s Commerce Dept. concealed comments critical of their environmental review
The Comments of the federal agencies charged with reviewing the Draft Environmental Impact Statement for Excelsior Energy’s Mesaba Project were sharply critical and clear – the Environmental Protection Agency and the U.S. Army Corps of Engineers say that the DEIS does not meet federal requirements. The EPA Comments were filed on January 11, 2008, and the U.S. Army Corps of Engineers Comments were filed on January 31, 2008. These Comments, unlike all the others, were not posted on the MN Dept. of Commerce Facility Permitting page and Commerce did not file them in the Public Utilities Commission’s eDocket, 06-668. Participants and the public were not notified of these Comments, and they were not entered into the record of the siting hearing. Well, we’ve discovered them.
Charlotte Neigh, Co-Chair of Citizens Against the Mesaba Project ( www.camp-site.info ) discovered the Corps of Engineers Comment and then learned through the Federal Register that an EPA Comment was also missing. mncoalgasplant.com’s Overland got a copy of the EPA Comment, and then posted both to the PUC’s eDockets. (https://www.edockets.state.mn.us/EFiling/search.jsp and search for docket 06-668). Finally, it’s public information.
The Army Corps and EPA say that the project’s "purpose" is mischaracterized, and based on that, the alternatives reviewed were overly limited – alternatives such as building only Phase I or putting it somewhere else were not considered. They have many other very specific and serious concerns. Ultimately, the EPA rated the EIS as "EO-2" which means that the agency has environmental objections and needs additional information to support the analysis in the EIS. The Army Corps sums up its objections to the EIS:
The Corps also believes that there continue to be several NEPA deficiencies in the DEIS. These are 1) not addressing the alternative of a stand alone Phase I project; 2) not all direct actions are disclosed (e.g., not all wetland impacts appear to be disclosed in the impact tables); 3) not all impacts of connected actions are disclosed (e.g. need for additional high voltage transmission lines beyond the nearest substation); 4) not all impacts due to plant operations are disclosed (e.g., no evaluation of train and truck emissions over the 20 year life of the plant); and 5) an unresolved issue regarding the DOE’s ability to evaluate alternatives to the applicant’s proposed project.
Please read these reports for yourself – federal agency reports are rarely this strongly worded:
U.S. Army Corps of Engineers: http://legalectric.org/f/2008/03/usarmycoecomments.pdf
U.S. Environmental Protection Agency: http://legalectric.org/f/2008/03/epa_ltr_011108comment.pdf
Why is the public left in the dark? Who’s protecting Minnesotans? Contact:
Richard Hargis, DOE NETL: (412) 386-6065
Governor Pawlenty, the boss of Dept. of Commerce: (651) 296-3391 or 800-657-3717
Commerce Commissioner Glenn Wilson: (651) 296-6025
Commerce’s Project Manager Bill Storm: (651) 296-9535
Public Utility Commission Staff Bob Cupit: (651) 201-2255
EPA – Alan Walts or Anna Miller, Office of Enforcement and Compliance Assurance (312) 886-7060
U.S. Army Corps of Engineers, Bemidji Field Office, Kelly Urbanek (218) 444-6381
U.S. Army Corps of Engineers, Richard J. Whiting, Chief, Regulatory Branch (651) 290-5500
Excelsior Energy (952) 847-2360 Excelsior’s Coleraine office: (218) 245-1205
For more information:
Carol Overland, Attorney for mncoalgasplant.com
Intervenor in Excelsior Energy’s Mesaba Project PPA
(612) 227-8638 overland@redwing.net
Draft EIS News and Updates:
DEIS Available Online
MESABA'S DRAFT ENVIRONMENTAL IMPACT STATEMENT
Mesaba's draft EIS is critical to whether its permits and siting applications will be approved. It is being conducted jointly by the federal Department of Energy and the Minnesota Department of Commerce.
The draft EIS has now been released. There are two links where you can access pdf files of the extensive document.
The Department of Energy link is:
http://www.netl.doe.gov/technologies/coalpower/cctc/EIS/eis_mesaba.html
The Minnesota Public Utilities Commission link is:
http://energyfacilities.puc.state.mn.us/Docket.html?Id=16573
You will need to scroll down to the File Register section and click on the November 5, document details link to get you to the pdf files on the PUC site.
Public Comments will be taken into consideration during the preparation of the Final EIS by the Federal Department of Energy and the Minnesota Department of Commerce, which will then determine whether the Mesaba Project permits and siting applications will be approved.
Power Purchase Agreement News and Updates:
MPUC SUPPORT FOR MESABA FADES
At its meeting on 11/1/07 the Minnesota Public Utilities Commission considered requests from the parties regarding its 8/30/07 Order denying Excelsior Energy's effort to force a power purchase agreement on Xcel Energy.
Excelsior, Xcel and Minnesota Power had all filed petitions for reconsideration and/or clarification. The only request granted by the MPUC was to issue an erratum notice to correct legal citations in the initial order.
The Commission added an Issue not presented by the parties:
"Should the Commission Reconsider its August 30, 2007 Order On Its Own Motion with Respect to the Party Negotiations of a Final Power Purchase Agreement?"
The Commission came close to terminating the negotiations and putting an end to Excelsior's quest for a forced PPA with Xcel. In the course of the discussion the Commissioners indicated that no utilities need or want Mesaba's energy because it uses coal and is too expensive. They noted that plans for coal-gasification plants have recently been delayed or canceled in three other states.
Chair Koppendrayer said "This dog won't hunt" and told Excelsior it needs a new plan. Commissioner Reha said it's apparent that the PPA "isn't going to fly" at the present time.
The PPA proceeding was divided into two phases. In August the MPUC ruled on Phase 1 - that it was not in the public interest because it shifted too much of the cost and risk to Xcel ratepayers. An Administrative Law Judge has issued a report finding the same problems with Phase 2, which will be considered by the MPUC in the near future.
At that time the Commission will consider whether or not to put a time deadline on negotiations or TERMINATE THE NEGOTIATIONS, which now appears likely to be the outcome. That would let Xcel off the hook and leave Excelsior with little prospect of finding a customer for Mesaba's output. That should put an end to the Mesaba Project.
Major Setback for Mesaba Energy Plant
Renee Passal, WDIO-TV
November 2, 2007
The Minnesota Public Utilities Commission has ruled that they are not going to order Xcel Energy or any public utility to purchase power from the Mesaba Energy Plant. The plant, which is a $2 billion dollar coal gasification project planned for the Taconite area, has faced many challenges. The MPUC ruled in August that it was an innovative energy project, but now said parent company Excelsior Energy is on its own for any power purchase agreements. Excelsior officials said they are not giving up.
PUC rejects Iron Range power-plant project
Pioneer Press
November 1, 2007
The Minnesota Public Utilities Commission said Thursday it will not make Xcel Energy buy power from a $2.1 billion, 600 megawatt coal-fired power plant proposed for the Iron Range. Minneapolis-based Xcel has said it doesn't need the power. Wayzata-based Excelsior Energy had planned to build a plant near Taconite, Minn., using a technology that turns coal into a gas, a process that dramatically reduces pollutants like sulfur dioxide. The PUC had ruled in August that the project merited consideration, but ultimately rejected it as a bad deal for Xcel ratepayers because of its cost. "This dog won't hunt," PUC Chairman LeRoy Koppendrayer said. "You've got to think of something else." Excelsior Co-CEO Julie Jorgensen said her company has not given up, but the commission told Excelsior it was on its own if it wanted to continue to try to negotiate agreements from Xcel or other Minnesota power companies to use power from its proposed plant.
PUC cools to idea of 'clean coal’ plant on Iron Range
Commissioners sounded pessimistic on the proposed Iron Range facility but didn't ax it.
By H.J. Cummins, Star Tribune
November 1, 2007
Minnesota regulators Thursday came close to scrapping a plan to compel the state's energy companies to buy from a proposed $2 billion "clean coal" plant.
Citing growing disillusionment with coal, and assurances from several utilities that they have their energy needs covered, the Minnesota Public Utilities Commission nearly rescinded its Aug. 30 directive to the state's utility companies: that they try to buy from the proposed coal gasification plant when they go shopping for new power sources for the next 10 to 20 years.
The commission stopped short -- for now -- but only after a series of pessimistic prognoses for the Excelsior Energy plant proposed for Minnesota's Iron Range.
"We have a whole paradigm shift now," said commission Chairman Leroy Koppendrayer, pointing to news accounts that coal gasification plants have been delayed or canceled in Colorado, Florida and Arizona.
"We don't ever want to foreclose on the future," Commissioner Phyllis Reha said, "but I think we're all in agreement that what we have in front of us isn't going to fly."
It was the latest setback in a two-year process for Excelsior, including an administrative law judges' advisory ruling in April that the project is "not in the public interest."
Still, Excelsior is not without some victories. It received a $36 million clean-energy grant last spring, and it heard last month that it's on a short list for possible loan guarantees from the U.S. Department of Energy.
Coal and carbon dioxide
The 600-megawatt Excelsior plant would produce electricity through a new process called coal gasification. Unlike traditional coal-burning plants, it has the potential to capture carbon dioxide, the most problematic greenhouse gas.
The Excelsior plant, as proposed, will not initially capture that CO2 because it's expensive and because the plant has no place to store or send it. Developers say that will be a relatively easy retrofit; opponents say that until that happens, it is little better than traditional plants.
Xcel Energy has long maintained that it won't need any energy from Excelsior in 2011, when the plant would open. And on Wednesday, Minnesota Power said it can meet its energy demands with renewable energy sources through 2020.
A chief executive of Excelsior Energy challenged the utilities' projections after the hearing.
"The commission took at face value the utilities' assertion that there will be no need for fossil [fuel] generation," Julie Jorgensen said.
But there will be shortages, Jorgensen said: "Then they will want to switch to natural gas generation, and it's bad policy to consume massive quantities of natural gas to generate power when consumers can't afford to heat their homes as it is."
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