Lights Out #7 – Mesaba “Two Lobbyists and a Wife” Power Plant

Boon-dog-gle a wasteful or impractical project or activity often involving graft. Merriam-Webster’s Collegiate Dictionary, 10th Ed.(2000), p. 132.

The editorial in the St. Paul Pioneer Press put it well:

What oinks and has its head on backward?

No, this isn’t about feedlots and H.F. 1202. In this case, the St.PPP was referring to the federal energy bill, but it applies to Excelsior Energy’s Mesaba plant and the state legislation approving it.

What’s wrong with Mesaba? We must attempt to be clear about this as the cost and impact on the future of energy in Minnesota is huge.

First, let’s be careful about how the legislation passed this year is characterized — it APPROVED the Mesaba plant. Although Rep. Ray Cox, co-author of H.F. 964, repeatedly states it deserves “consideration,” but this wasn’t legislation to determine “if such plants make sense.” The legislature didn’t act to “consider” the merits of coal gasification, it didn’t act to “consider” whether 2,000MW was needed, it didn’t act to “consider” whether eminent domain was proper for a private company, it didn’t act to “consider” whether transmission lines were needed, it didn’t act to “consider” whether Excelsior should be given $10 million dollars in public money. This isn’t “consideration,” and it isn’t a “study bill.” This is an irretrievable commitment to a billion dollar project and infrastructure with a life of from 30-50 years. If we decide later that we don’t like it, we can’t just return it and get our money back.

The legislature:
* Approved Mesaba by exempting it from the Certificate of Need process.
* Approved future upgrades without a Certificate of Need
* Approved any transmission associated with the project with a Certificate of Need
* For the first time in history, granted eminent domain to a private company that is not a public service corporation engaged in supplying essential services to the public
* For the first time in history, mandated a purchase contract with a utility (Xcel).
* Gave Excelsior $10 million dollars of our public money.

The state legislature bought into this boondoggle, hook, line and sinker, and committed Minnesota to a large central station coal-gasification technology, and the transmission to support it, for 30-50 years. The power plant alone will cost over $1 billion dollars to build. Each of the points above represents a significant departure from established energy policy, and extreme firsts in the history of utility regulation in Minnesota. The Legislature, on your behalf, gave up the PUC’s power to regulate – Xcel doesn’t give away it’s power – why should you? The Legislature, on your behalf, also gave a private corporation the power of eminent domain to take land, whether the landowner agrees or not, for whatever transmission it decides is necessary. On top of that, we as ratepayers are forced to pay for this through the mandated sale of electricity to Xcel, and we are forced to pay for the $10 million grant through our tax dollars.

Let’s look at the bill: click here

1. Mesaba is “exempted from the requirements for a certificate of need,” not just the power plant(s) but any transmission “associated” with it too!

This is where the legislature gave up the power of the PUC by granting an exemption from a Certificate of Need. Before this law was passed, a Certificate of Need was required for all power plants and transmission lines above certain thresholds. Typically, to build a power plant, an applicant must prove that the facilities are needed to serve local load and demonstrate that there is a market for the electricity generated. An applicant must also demonstrate that there is not a better way to secure the electricity needed through renewable energy or conservation. In this case, the legislature threw the standard demonstration of need right out the window at a time when we don’t need electricity and have no reason to build this plant. There is no economic review of this project or future upgrades. None! Ever!

2. Mesaba “is eligible to increase the capacity of the associated transmission facilities without additional state review.” Not only is there no economic review through the Certificate of Need process that applies to all other power plants and transmission lines of this capacity, but there is no environmental or any other sort of state review for increased capacity due to this law.

3. Mesaba “shall be entitled to enter into a contract with a public utility that owns a nuclear generation facility in the state to provide 450 megawatts of baseload capacity and energy under a long term contract.” Xcel is the only nuclear utility in the state. So although there is an excess capacity of electricity in the area, Xcel must purchase 450 MW, and yet although that amount is the equivalent of one of the nuclear reactors at Prairie Island, Xcel was not required to shut down the reactor. How does this make sense? We have legislatively mandated the equivalent of replacement power for one reactor, we give Xcel additional nuclear storage and yet we don’t shut down one of the reactors?

4. Mesaba “shall be eligible for a grant from the renewable development account, subject to the approval of the entity administering that account, of $2,000,000 a year for five years for development and engineering costs.” Why is Mesaba receiving this corporate welfare? Why are we giving them $10 million when we have a budget crisis? Even part of the IRRRB’s grant to Mesaba was tied to proof of private investors – but this $10 million is an out and out gift from the legislature. What is the business track record of the two lobbyists and a wife? The lobbyists have no entrepreneurial energy experience, and the wife’s situation is worse – she worked for NRG, which almost bankrupted Xcel. And why is this grant taken from the renewable development account?” Further, what’s renewable about coal?

5. The legislature gave Mesaba priority over any other fossil-fuel-fired generation, and “prior to the approval by the commission” Mesaba must be considered as the source of power for any electricity need, for example, even over the other proposed coal gasification plant in Rosemount. Does this make sense? Where is the “competition” and the level playing field that the free market devotees require? If the market has decided, and there’s no need for the electricity, and there’s no market so they have to mandate the purchase, doesn’t that mean that the market has decided and it’s not a workable idea?

In his October 13 blog, Ray Cox, asks readers to contact him with your thoughts. I urge you to do so! He claims that “locating the plant at Hoyt Lakes where we already have some demand for power and some rail lines for coal seems to make sense.” Someone ought to tell him that there is no need for power in Hoyt Lakes. Perhaps someone could send a copy of the Mid-Continent Area Power Pool’s Load and Capability Report and NERC’s Reliability Assessment (again). And as far as availability of coal trains, someone ought to tell him about the DM&E rail line issue! I heard a story on MPR.

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Next: Who are these “Two Lobbyists and a Wife?”

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