Lights Out #5 – Mesaba

“Two Lobbyists and a Wife” Coal Plant – Now it’s a Federal Issue!

Mesaba’s corporate welfare is in the news again, but this time, it’s gone from a $10 million grant from the state to a whopping $800 million loan guarantee from the federal government!

EVELETH – In the heart of Democratic-Farmer-Labor country, a rare political occurrence took place Wednesday on the Iron Range.

Republican Sen. Norm Coleman’s senior policy adviser and Iron Range Democrats sat at the same table and broke bread in bipartisan support of a proposed power plant that would bring about 600 jobs to the Iron Range and provide a new source of electricity for the Twin Cities. Click here to read more


“This is the environmental technology of the future. This is the way to produce significant amounts of electricity in a very environmentally friendly manner,” says Micheletti.

Some environmental activists disagree. Michael Noble is the executive director of Minnesotans for an Energy Efficient Economy. He says such a plant would produce huge volumes of carbon dioxide, which, he says, would contribute to global warming.

“There’s nothing about this coal plant that would qualify as to call it clean coal,” says Noble. “This would be the largest, or the second-largest, contributor to global warming of any industrial facility in Minnesota.” Read more.

When we’re spending so much time and money cleaning up old coal plants and converting coal plants to natural gas, why would we want to build a coal plant twice the size of Minnesota’s biggest generating plant (Prairie Island)? If we’re so concerned about mercury particulate emissions and greenhouse gasses, why would we build this big coal plant? If we’ve got an energy glut, why would we build a big coal plant? If we’ve got a budget crisis, why would “Two Lobbyists and a Wife” with no assets and no experience operating a power plant get $10 million of your hard earned tax dollars to build a big coal plant? I sure don’t know – this bill makes no sense at all.

I always tell my students that in order to understand the present, we have to understand the past and if we move ahead without understanding, we could commit ourselves to an unfortunate future – we could do something really stupid!. Of course, if we remain ignorant, we don’t know what alternatives are available, and we don’t bother to think about the consequences of our actions. What was the state of the state energy policy prior to this legislative session? And how did the Mesaba bill commit us to 30-50 years of wrong headedness in policy and infrastructure commitments?

For decades, legislative, energy policy groups like ME3 or ilsr, citizen groups representing host communities, grassroots groups like Cleanwater, Sierra Club, state agency, and utility interactions have been moving in slow and not always willing concert towards new and cleaner generation and discouraging infrastructure investments that have limited, if any, public purpose. The overall result is that we have been moving towards generation sited closer to load — distributed generation. This has happened through several simultaneous circumstances that have an impact each other:

* Deregulation of wholesale generation which has produced thousands of megawatts of new generation from Independent Power Producers, in MAPP and even more so in the MAIN region, where Minnesota generators typically export energy..

* Transmission line additions and upgrades have met strenuous community opposition, and new transmission lines have been delayed due to health concerns, or because intervenors, including those communities effected that claim the transmission lines are not needed for a public purpose, that they do not serve local load and the utility’s native service territory, and that justification for the line is not sufficient to permit taking land through eminent domain, which would force a community to live with line a line and charge ratepayers for a line from which they do not benefit.

Is it silly to believe that this one part of just one bill could change Minnesota energy policy in one fell swoop? Let’s take a closer look.

Sep. 30, 2003
by Tim Huber
Pioneer Press

If U.S. Sen. Norm Coleman succeeds in getting up to $800 million in federal loan guarantees for a new power plant in Hoyt Lakes, Minn., the money would help finance a tiny and little-known company called Excelsior Energy Inc. that is little more than a husband-and-wife team with political savvy and a big dream…(But)…So-called merchant power generators have found financing impossible to come by since the collapse of Enron and the California energy crisis.

Noble doesn’t believe the plant is necessary. It would produce up to 2,000 megawatts of power from burning coal-based gases and another 1,000 megawatts from wind power, but Minnesota needs are growing far more slowly, meaning the plant would have to rely on selling power, Noble said. Minnesota currently requires about 15,000 megawatts per year and demand is growing by about 150 megawatts annually, he said. Excelsior would have to sell the excess into a soft market for electricity with too much supply and too little demand.

“It’s just too risky — it’s what Enron was,” Noble said.

Indeed, excess supply has led to a marked decline in construction of new plants, said Jaffray. “People aren’t building much of anything right now,” he said. “We are in a surplus position right now.”

What did Legislators and lobbyists propose – what did they get? The Mesaba bill, last session’s H.F. 964, was co-authored by 25b Rep. Ray Cox. In Tuesday’s Pioneer Press article above, League of Conservation Voters, which endorsed Ray Cox in the 2002 election, says of the corporate welfare in the federal version of his bill:

“They’re talking about $800 million in federal loan guarantees for a pork project that’s got two people in it,” said Lisa Doerr, executive director of Minnesota League of Conservation Voters. “That’s pretty stunning.”

Read what the state’s Legislative Analyst says about the bill in the House Research Summary: click here

In the process sometimes compared to making sausage, mid-session this bill was incorporated into “the
Prairie Island bill” which allowed additional nuclear waste storage.

What’s wrong with Mesaba? What’s wrong with giving 2 Lobbyists and a Wife $10 million in state money and $800 million in a federal loan guarantee? How do we hold those supporting this unprecedented circumvention of state regulatory process accountable? We’ll look at that in future ‘Lights Out!’ installments.

What oinks and has its head on backward? The federal energy bill emerging from plutocrat-manipulated conference dirty dealing to reconcile two bad bills to make a worse one. As conference leaders, Sen. Pete Domenici, R-N.M., and Rep. Billy Tauzin, R-La., have been abusing the conference system, picking and choosing items to exclude – and more outrageous – to include in this pulled pork feast of subsidies and regulatory sidesteps for the fossil-fuel industries.

The acid test of venality in these dealings is the fact that permission to drill for oil in the Arctic National Wildlife Refuge remains in the conference version despite the Senate’s emphatic “no” to this folly in its bill. Now, with a filibuster threat hanging over this exercise on behalf of the extractors and public-lands foes, Domenici is dipping into that old pork barrel to heap more state-specific projects into a bill that already hands out $18 billion in subsidies, tilted heavily toward fossil-fuel interests.

One of those handouts is $800 million in federal loan guarantees to build a coal-gasification power plant in Hoyt Lakes, Minn. The offer to Sen. Norm Coleman, one of the few Republicans who opposes drilling in ANWR, apparently is a tempting one to sway his vote for the whole bill, although on Monday his spokesman said Coleman still considers the issue of ANWR a distraction from the central tasks of energy policy-setting. Similar enticements for senators of other states are appearing in the last-minute grub for votes to make the whole energy bill filibuster-proof in a reluctant Senate. And at a billion here and a billion there, pretty soon the already $500 billion deficit gets substantially larger and the energy policy future more problematic – except for the fossil-fuel guys who make a killing.

There are parts of this energy bill that meet the need for a forward-looking approach, supporting renewable fuels, conservation and technology innovation. In the Upper Midwest, cold and at the mercy of others for oil and gas, the conservation and alternatives tactics are of utmost importance. All the senators in the region know that and have been keen backers of increasing homegrown fuels.

The federal energy bill, a greased pig waddling to the finish line, stinks. It is too much to hope that it won’t pass. At least the Senate should retain its good sense and say no to drilling in ANWR and ordinary citizens should remember the energy bill fiasco, say, when filling the tank in the family van or paying the heating bills.

Michael Noble suggests writing a letter to Senator Coleman by visiting the Senator’s website.

In an e-mail he sent, he included a sample letter to Coleman, authored by former Clinton DOE undersecretary for renewables and efficiency, and ME3 policy committee member, Karl Rabago.

Dear Senator Coleman,

I read with great disappointment quotes attributed to you regarding your willingness to agree to both drilling in ANWR AND federal loan guarantees for a boondoggle coal gasification plant in Minnesota.

Sir, you have the equation exactly wrong. The coal gasification plant is a bad idea. It demonstrates no new technology, it consumes valuable federal loan guarantees for an established industry that does not need federal subsidization, and it significantly increases state exposure to the risks associated with unattenuated carbon dioxide emissions. It is the LAST project you should be willing to use as an argument for breaking your word on ANWR.

Please, sir, adopt a conservative approach – don’t “spend” market distorting loan guarantees to provide corporate welfare for this coal gasification idiocy. This corporate welfare coal plant is NOT worth it by itself. It is certainly not also good enough to justify going along with the truly stupid and insidious House proposal to spread 2000 acres of environmental devastation across the Arctic wilderness for oil that we don’t need to develop. The coal gasification plant should make it in the marketplace on its own terms or not at all. The oil in ANWR is not worth drilling for under any principled economic, much less environmental, analysis. Together they do not represent a better idea; together they are just two bad ideas coupled with an unprincipled reversal of your previous, correct position on ANWR.

If you want to create jobs in Minnesota, please focus your attention on renewable energy. Supporting renewables generates far more jobs per dollar than fossil technologies. Please use your power as a US Senator to do something positive for the future, rather than merely subsidizing the continuation of yesteryear’s mistakes.

Please abide by truly conservative principles – conserve scarce loan guarantee dollars for innovative and deserving technology, conserve the atmosphere for future generations, and conserve the integrity of political decision making by not creating a disappointing argument to vote for twice as many mistakes.

Karl Rabago

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