Remember, U.S. Steel deals in the folding money

Just a friendly reminder, the biggest investor of new capital into the Iron Range economy this year will not be Essar Global, Excelsior Energy, Wal-Mart or even the Pabst brewing company. No, the most new money will come from U.S. Steel, which is dropping a smooth $350 million to restart an old line at Keewatin Taconite. It's worth pointing out the things that are real and the things that are proposed or even imaginary.

Furthermore, U.S. Steel will pay full taconite taxes on the pellets they ship off this new line, creating more revenue for local communities. They didn't need fancy new tax breaks to make this expansion happen. They simply needed the ore in the ground and the permits required to mine it. What's the lesson? Healthy economies involve private companies making financially sound decisions (yes, with government assistance and common sense regulation) but not government financing or policies that sell out people who do the actual work and live in the actual towns. I'm not trying to be a booster for U.S. Steel, just pointing out some basic economic facts that seem to elude people around here. We've got to figure out a way to spend our economic development dollars in a way that kick starts independent, diversified growth because we just can't afford to try to build massive "jobs factories" into the distant future.

Midnight in the halls of Iron Range power

I didn't think Excelsior Energy could go a whole legislative session without deploying its vast lobbying force for something. Recently, in the tax bill conference committee, State. Sen. Tom Bakk inserted language that extends the property tax exemptions from 2010 to 2012 for everyone's favorite black hole of government giveaways and special favors. Excelsior is the company proposing the Mesaba Energy Project, a coal gas power plant intended for the Iron Range. The project enjoys great political support from most elected officials, is deeply misunderstood by the population at large, and will almost certainly break the hearts of the people of the Iron Range at some point in the next decade.

I'm tired of talking about carbon sequestration, private financing, lobbyists and lawyers and all the other things I rail about when I post about Excelsior. Let me try to explain why I care about this.

The first problem I have with this project is that it exists only because, starting in 2002, a group of lobbyist/lawyers succeeded in getting officials in Minnesota (and the Iron Range in particular) to give them vast amounts of money and favors. There was little debate, very little questioning of this so-called company. There was certainly no discussion about whether the tens of millions of state and Iron Range dollars and hundreds of millions of federal dollars could be better spent in other ways. We were told this was simply a "jobs" project, and that's all Range lawmakers needed to hear in 2002 when it looked like the whole mining industry was falling apart. We were told 1,000 jobs would come from this, when anyone in the power industry could have told them that only about 100-200 permanent jobs could ever come from such a project. In short, the project was built on desperation and deception.

My second problem with this is related to a much larger issue. Who is in charge on the Iron Range? Are the people and their elected representatives in charge? Or is it developers, lobbyists and consultants? Because the Range is doomed if it's the latter. We will only survive this fast-changing transition to the global economy if our elected leaders use judgment in defending the interests and resources of the people ahead of the interests of those who offer lofty promises in exchange for free rein over laws and public coffers. The leaders of Excelsior Energy walked onto the Iron Range pretending to be a group of native Rangers interested in "saving" the region. But their business model has been to clearly and forcibly shift risk from their ledgers onto that of the taxpayers, to promise more jobs than they could deliver and to mischaracterize the nature of the technology they tout, making a science experiment seem like a sure thing.

Meantime, the $9.5 million that the Iron Range gave this company (ostensibly as a loan, but the language clearly implies that we'll never see that money again) could have built a new school. It could have almost met the state match on the federal highway money that could have finally -- after FIFTY years -- finished the cross-Range Highway 169. City sewers. Rural broadband. Streets and roads. All of these real needs were put behind the needs of lobbyists.

Excelsior Energy has acted as though it owns the Iron Range and is entitled to its mineral monies and special treatment. As long as the status quo continues, Excelsior and any half-rate pack of wolves that comes along DOES own the Range. They WILL extract our resources and push our local, county and state officials around like cattle. Every midnight conference committee will contain favorable language for developers at the expense of the regular Iron Range people who mined the ore that funded the whole enterprise. And when the money's gone, the wolves will be gone. No jobs. And people like me and my kids will be sitting around wondering what to do next.

So I will talk about this as often as is necessary. I will post commentaries like this every week, every day if necessary until this company and any like it is driven from the halls of Iron Range power. I don't need votes. I don't need money. I've got no personal stake in this except that I want to see the right thing done and the people put first.

So if I go on and on, now you know why. Believe me, I'd MUCH rather be talking about something else.

Great news! The Range is getting shafted by lobbyists!

Maybe you heard on the TV the great, fantastic super duper news that lobbyist-run Excelsior Energy got a gabildyzillion dollars in tax credits for their boondoggle Mesaba Energy Project. Wow! That's great! Except that the tax credits apply only if they build the plant, a prospect that requires private investment and a customer willing to buy the overpriced, unreliable power. Also they need to figure out how to make the vast granite shelf below the Iron Range part like the Red Sea so they can bury their carbon like they promised. I'll buy it when Moses registers as a lobbyist for Excelsior.

Literally at the same time Excelsior was sending out this press release they were ducking out of a scheduled PUC meeting that may well have put a stake through the heart of their entire project by closing off a mandated power purchase agreement they need to survive. At some point, the people of the Iron Range will grow tired of this insulting P.R. strategy and figure these people out for the hacks they are. May that day come soon.

Excelsior petitions for delay in PUC ruling on Mesaba project

Excelsior Energy's Mesaba Energy Project will not be on the docket for Thursday's Public Utilities Commission meeting. The PUC had been expected to rule on two key aspects of the proposed coal gas plant, but Excelsior asked for and received a delay.

Why? Some mumbo jumbo about an appeal to a previous administrative decision.

The truth? Either ...

1) Excelsior has reason to believe that a more favorable decision for them can be achieved in the future through political gamesmanship.

2) They are in deep trouble and know that a devastating decision will come down the next time the PUC rules.

Maybe it's both, but I forecast a battle Royal over this wasteful boondoggle (a project that, in the end, will not produce jobs or power) this summer. The amount that the public doesn't know about this company and its project is vast. When we answer some of the questions, as I and others seek to do, I don't think this project can or should proceed.

Anzelc speaks truth on Mesaba boondoggle

In this Mike Jennings story rescued from last Saturday's edition of the Hibbing Daily Tribune, my friend and colleague Tom Anzelc becomes the highest level public official to acknowledge the foolishness of the Mesaba Energy Project:

Efforts to sort out the legal and administrative tangle that has ensnared Excelsior Energy will continue next week, but Rep. Tom Anzelc says the right outcome is clear: It’s time to drop the idea of building a coal-gasification power plant on the Iron Range.

“I am more convinced than ever that this project is not in the public interest, that it does not have a willing purchaser of the power, that its location is suspect, and it flies in the face of the discussion in the country and in the world, frankly, of sequestering carbon,” Anzelc said Friday.

Backed by legislation meant to encourage innovative energy projects and funded by an array of government grants and loans, Excelsior’s proposed Mesaba Energy Project has run into opposition both locally and with the commission.

One telling blow came last August, when the commisson ruled that Excelsior’s proposed terms for selling the initial 603-megawatt output of its power plant to Xcel Energy would be counter to the public interest. The commission dealt Excelsior another defeat last month when it denied the company’s request for an indefinite stay on negotiations with Xcel aimed at persuading the giant utility to buy still more power from Xcel.On Thursday, May 8, the commission is scheduled to consider whether to place a deadline on further negotiations between Excelsior and Xcel. It will also take up a more complex question — whether based on its “clean energy” credentials and overall costs, Excelsior should be entitled to sell Xcel at least 13 percent of the electricity that Xcel provides its retail customers.

Read the whole story here. It includes State Sen. Tom Saxhaug repeating the old line on why people should go along with the project (Because electricity is important and stuff). Interestingly, Excelsior Energy's Tom Micheletti did not return calls for this story. After his desperate-sounding letter to the editor from last week, I wonder why not?

May 8 PUC meeting could reveal fate of Mesaba boondoggle

The Minnesota Public Utilities Commission will revisit the second phase of the Mesaba Energy Project Power Purchase Agreement (PPA) with Xcel at its May 8 meeting. Two major questions are to be answered. Will the PUC recognize Excelsior Energy's proposed coal-gas power plant as a "least cost" innovative project AND will they set a deadline for negotiations between Xcel and Excelsior to set prices?

An Administrative Law Judge, in an advisory ruling, told the PUC last fall that the Mesaba project is far too expensive to be in the public's interest. And Xcel doesn't need or want Excelsior's power. Unless the state PUC mandates that Xcel buy this overpriced power from this boondoggle yet-to-be-built power plant, there can be no project. This May 8 PUC meeting might be the beginning of the long overdue end of this economic development farce. Let's hope so, because if Excelsior gains new life through political dealings then Mesaba becomes an election issue that badly muddies the U.S. Senate race. I prefer not to think about that until May 8.

BS Factory will stop at nothing

Now that Excelsior Energy's boondoggle Mesaba Energy Project is hitting the hard wall of reality (that its overpriced coal gas plant won't have a customer because of the vast expense of the technology) its leaders are lashing out at opponents. I joked in an previous post about Excelsior co-CEO Tom Micheletti's reference to Minnesota Power as "Anti-Range Power" because of MP's longstanding and increasingly effective opposition to his project. Well, that wasn't just an offhanded remark. That's his new PR strategy. Read Micheletti's letter to the editor from Wednesday's Hibbing Daily Tribune entitled "Anti-Range Power will stop at nothing."

Micheletti is trying to rip MP's recent environmental upgrades as insignificant because MP was mandated to clean up their plants by new anti-carbon regulations.

Well, duh.

Excelsior is only proposing a coal gasification plant on the Range because they deduced that they could get vast amounts of government financing and political support for it ... all related to regulatory trends in the energy business and loyal political friends in the region. What he fails to acknowledge is that Minnesota Power has merely figured out a more practical, certainly more profitable solution to the short term problems of converting to cleaner energy. A plant like Micheletti's needs to be near the coal and the energy demand in order to be financially viable. This one isn't and people are finally starting to figure that out.

Remember, Micheletti and most of his colleagues have been around the legal and political side of the energy business for decades. I encourage any journalist to review their career paths, especially the energy projects that immediately preceded this one. I haven't had the time to dig in (this is not my day job), but there are so many unanswered questions that it would be simply foolish to take this company at its word.

Coal gas boondoggle circling the drain

There hasn't been much coverage about the Minnesota Public Utilities Commission meeting from this past Thursday. Two decisions regarding my least favorite Iron Range economic development project emerged from that meeting. As you may know, Excelsior Energy is proposing the Mesaba Energy Project, a coal-gas power plant for the Iron Range. The project enjoys a good deal of support from the elected officials on the Iron Range but has also attracted well-organized citizen opposition. I continue to repeat and repeat and repeat that this project is a boondoggle that will never produce jobs or electricity.

Anyway, here's the dispatch from a fellow Itasca County resident and MinnesotaBrown reader who was at the meeting:

1) The PUC ruled that transmission infrastructure for the Mesaba Energy Project IS exempt from a Certificate of Need as is stated in Minn. Stat. § 216B.1694, but Excelsior Energy still has to have routing and environmental permitting reviews completed on the route(s). This allows EE to move forward with preliminary design, but no construction. (If they have the money to do so, which is a big question mark.)It is possible that Minnesota Power will take this to the courts.

2) The PUC denied Excelsior Energy's petition for an unlimited stay on the (Power Purchase Agreement) for Phase II. This means that the PUC will address the PPA for Phase II and hopefully soon!

For the uninitiated, the "power purchase agreement" has to do with a 2003 state law in which several local legislators tried to mandate that Xcel Energy buy power from Excelsior, which was then (and remains) essentially a collection of lobbyists and consultants raising money off the government. The cost of this unique kind of "clean coal" plant is enormous and Excelsior would be unable to gain financing without a guaranteed customer.

Anyway, Thursday's meeting means that the PUC will decide relatively soon on this power purchase agreement. Anti-Mesaba comments from several members of the PUC indicate that the jig is up. If the current PUC is to vote on this issue they are likely to deny the PPA and effectively kill this lousy excuse for a "jobs" project.

UPDATE: Sunday's Grand Rapids Herald-Review reports on the PUC meeting. Relying solely on an interview with Excelsior's co-CEO Tom Micheletti and a confounded Minnesota Power PR rep, the story misses the point. Micheletti and Excelsior have thrived up here because so few local media types understand the energy business or the nature of this project. Anyway, here is Micheletti's desperate spin on Thursday:

“It went very well,” said Excelsior Energy CEO Tom Micheletti by phone about the hearing in St. Paul after it was completed.

Micheletti felt the transmission issue was the more important of the two petitions before the MPUC. He also did not have any qualms about expressing his disdain for Minnesota Power, which asked the MPUC to delay a decision on transmission infrastructure until final action on the power purchase agreement has been taken.

“They (Minnesota Power) are taking frivolous and unwarranted positions on state law,” Micheletti said. “I have a new name for them. ARP. Anti Range Power. And you can quote me on that.”

Ha Ha! They DID quote him! Of course, Minnesota Power has been making power on the Iron Range for almost 100 damn years. Excelsior never will. So, you know. I have a new name for them. BSF. The first word is "Bull" and the last one is "Factory." I'll let you figure out that middle word.

Snow Day Roundup

Schools are closed across Northeastern Minnesota today, including the college where I work. I get another day (two in one week!) to catch up my ungodly to-do list.

• One item on my to-do list is to compile the results of the Dylan Days Creative Writing contest. We should be announcing winners soon. We run five categories (open and student fiction, open and student poetry and one-act plays) and got about 750 entries from all over the world. The quality of the entries this year was excellent. Stay tuned. (And check out Dylan Days, May 22-25 in Hibbing).
  
• The PUC was supposed to meet yesterday to render a couple somewhat important decisions about Excelsior Energy's Mesaba Energy Project. I'm trying to find out what happened.
  
• For national political junkies, I am now of the opinion that Barack Obama supporters need to brace for a Pennsylvania disappointment. I still think Obama is likely to win North Carolina and has a good shot at Indiana, but I am getting a big time "Ohio" vibe from the Pennsylvania tracking polls. Clinton's numbers, even during bad news cycles, remain rock solid at 48-50 percent. The only real chance at knocking her out of the race will come in the first week of May with N.C. and Indiana. After that comes a string of Appalachian primaries where the Clintons are revered like Hillbilly royalty. She can run the table and would still likely lose the nomination, but oh how the press will chatter. I am an Obama fan but my desire to end this primary "contest" has more to do with party well-being and the potential stomach ulcers that come from watching too much cable news these days.

All this and more shoveling today ...

Coal Hacks Are Making Propaganda (CHAMP!)

There's an ad in this week's Scenic Range News (a weekly newspaper on the western Mesabi Range) promoting a new group, CHAMP, or Citizens Happy About the Mesaba Project.

This is an obvious turn on CAMP, Citizens Against the Mesaba Project, a large well-organized citizen group that has held the line against Excelsior Energy's Mesaba Energy Project, a boondoggle coal gas plant proposed by well-connected lobbyist lawyers. I'm not a member of CAMP but I share the group's desire to relegate this project to the dust bin of bad economic development decisions on the Iron Range.

It will be interesting to see who is forming CHAMP, who joins and who ultimately funds its activities. That is, presuming CHAMP ever ends up being anything more than an ad in a weekly newspaper to create the appearance of public support for the project. Excelsior Energy spent more than $450,000 on lobbying expenses in 2007. Their entire existence depends upon public opinion, so I remain skeptical of something like CHAMP. (I mean, come on ... using a same sounding acronym? A little obvious, me thinks).

We're going to build a steel plant near Nashwauk, something that didn't require a group called CHISEL (Citizens Happy In Seeing Essar Locate).

UPDATE: Corrected spelling in headline. That's what I get for trying to post in the few minutes I get before morning classes.

Range power boondoggle, despite 80 percent backing from feds, remains likely to fail

I've written and blogged plenty about the Mesaba Energy Project (notably here, and most recently here). This boondoggle proposal is built on a foundation of lofty economic and environmental promises that can't be fulfilled without a realignment of the universe. So I'll just point out this interesting MPR story from last week that shows the financial hurdles this coal burner will face and gently remind readers to tell their legislators that this project should receive no further special treatment.

Project opponents have criticized the Kelliher MPR piece as a puff piece for the company, but I still think it shows the immense difficulty Excelsior Energy will face in actually doing what they say they're going to do. Nevertheless, we should all be appalled that the government is underwriting 80 percent of $2 billion start up company that consists entirely of lobbyists and coal power insiders.

Damning comments about Mesaba boondoggle covered up; project faces new criticism from key federal agencies

The federal Environmental Protection Agency and the U.S. Army Corps of Engineers issued comments last month in the matter of Excelsior Energy's Mesaba Energy Project, a coal-gas power plant proposed for the Iron Range. I've declared this project a boondoggle that will produce neither electricity nor jobs before its "owners" walk away with bags of money. (OK, perhaps it won't be literally in bags, but copious amounts of state and federal loans and grants are in the pockets of this so-called company).

Well, those comments were withheld from public view until late last week for no good reason, except that they are bad news for the project. Carol Overland, an attorney arguing against the project, issues a complete report on her blog, which I recommend you read.



In short, the EPA issued a statement that the project plan leaves numerous questions -- both environmental and functional -- and should not be approved unless those concerns are addressed (the company has refused to answer these questions because it would force them to discuss publicly that they have no customer and that the power they would produce would be prohibitively expensive).



The Army Corps of Engineers issued similar concerns about a lack of information about the practical operation of the plant. For specifics, see Carol's blog. In summary, these comments were withheld from the public by the MN Dept. of Commerce -- which works for Gov. Tim Pawlenty, a project supporter -- and by the Bush U.S. Dept. of Energy, which is trying desperately to funnel money to coal projects at the behest of the president and U.S. Sen. Norm Coleman. And before you think I'm just writing this to attack Republicans, let me remind Range readers that many (though not all) DFL Range lawmakers have been willing or complacent conspirators in this terrible public policy.


This thing is finally unraveling and it's time for our public officials to break away now while we can still preserve some of our funds and dignity.

Cliffs looks to another good year

WDIO reported last night (sorry, no direct link available) that Cleveland Cliffs is anticipating a return to pre-2001 production levels at its Minnesota taconite operations, including HibTac and UTac, in the near future. The company is also considering building a biomass power plant to cover some of the power needs for this revived taconite production. The fuel used would be primarily some kind of wood pulp also grown and processed in northern Minnesota.

Isn't it interesting that these big companies are predicting growth on the Iron Range and yet acknowledge that new coal-fired electricity probably won't be an logistically or financially feasible option? I think that's interesting. Kind of makes you wonder about certain boondoggle energy projects doomed to fail but that enjoy widespread political support. Kind of makes you want it to go away, like the guy you invited to the party because you thought he was cool but who drank all the beer in the first two hours and is starting to creep out the girls.

Anyway, I digress. In the midst of all the potential of big ticket new projects, let's not forget that U.S. Steel, Cleveland-Cliffs and their power broker, Minnesota Power, are all having damn fine years and will have a license to print money next year, too.

Excelsior's new strategy?

Excelsior Energy is running large, color ads in the Mesabi Daily News thanking the Iron Range for all its support for their boondoggle coal gas power plant called the Mesaba Energy Project. Of course, the lobbyist-run company's most important supporters are the ones on their political contributions list, but I suppose the sentiment is nice. The ad I saw reminds us that projects like Minnesota Steel, Polymet, U.S. Steel's KeeTac expansion and others will require electricity, not unlike the overpriced electricity they propose to sell.

Damn, they've got a point! Those things WILL require electricity.

Small problem. The electricity that would be produced by Excelsior Energy, if they get permits and private funding (a long shot), will cost twice market rates and be available only when the plant is functioning properly, something they can't promise with their experimental technology. Which means that any company relying on Mesaba's power will operate at a competitive disadvantage and be more likely to fail.

Let me put this bluntly. Excelsior Energy has moved beyond just being a bad idea that has sucked and will continue to suck countless millions of state and federal taxpayer dollars away from other more worthy uses. Now its leaders are trying to attach themselves -- no doubt through yet unknown legislation -- to other projects likely to be permitted and built. This means that if this boondoggle ever gets built it will threaten the economic viability of EVERY NEW ECONOMIC DEVELOPMENT PROJECT on the Range. Oh, and also ALL THE MINES. (When mines must choose between overpaying for power and closing, they always close). People want jobs? Really? Then this project needs to have "an accident" and never be heard from again. Then we Iron Rangers start fresh with better ideas and real innovation.

Franken questions coal gas plant in the Bemidji Pioneer

Al Franken, DFL U.S. Senate candidate from Minnesota, gave an interesting interview to the Bemidji Pioneer. (No, Bemidji is not on the Iron Range but many of our people go to college and drink a lot of beer there, so it is a city of note).

Essentially, Franken was stressing his support of basic northern Minnesota issues like gun ownership rights, our natural resource economy and energy.

My favorite part of the story:

He's been asked about the Iron Range's current build-up and the need for more energy, with a "clean-coal" coal gasification plant proposed to generate power. While it seems Franken may oppose the plant, he says he supports the technology but is unsure if it's appropriate for that place at this time.

"The idea of coal gasification where you can sequester the CO2 is a technology that we ought to develop," Franken said. "I'm just not sure at that plant is the best project. We want to get the most bang for the buck, and you want to make sure it's sequestered properly."

The technology is needed, he said, as China and India put up a coal-fired plant once a week. It does no good for the United States to seek a zero-carbon footprint when the other two nations continue unabated with carbon emissions.

Yes, Al Franken actually recognizes the difference between a good "jobs" project and a bad "jobs" project. He is not drinking the Kool Aid on Excelsior Energy's boondoggle Mesaba Energy Project.

Coleman KAXE interview reveals northern strategy, foretells battle over coal gas boondoggle

U.S. Sen. Norm Coleman gave an interview to Scott Hall on the KAXE morning show today in which he covered a broad range of issues. KAXE is a unique and popular independent public radio station serving most of northern Minnesota. The most interesting details came near the end after Scott asked his final question, and Coleman's statements foretell many interesting developments.

First, here are the things that did not surprise me about Coleman's interview:

1) When it comes to a recession and people losing their houses, he's against it.

2) John McCain is A-OK.

3) He's not going for any sort of universal system that involves hurting the private insurance industry. Something, something, something ... rationing of care England and Canada. (Can I just add something: I have good insurance and my wife and I spent two hours in a clinic waiting room with two babies last week despite having an appointment ... OK, sorry for the editorializing).

But then there were a few things that DID surprise me about Coleman's interview:

1) When I first turned on the car radio, I caught the interview just after it had started. My first thought was, "Why is Mitt Romney on KAXE?" Then it hit me ... IT WAS NORM. I can't believe it took me that long to make the comparison.

2) Scott's last question was about universal health care, because he said it has been the dominant topic of all of Coleman's opponents seeking the DFL endorsement. Sen. Coleman didn't even answer the question until pressed later.

3) Instead of talking about health care, Coleman changed the topic to ensure that he got to talk about energy before the interview was over. Coleman said that energy needs were important, he would continue to support Excelsior Energy's Mesaba Energy Project, that Franken opposed the project and was wrong to do so, and that he was working on federal legislation to pay for pipelines to sequester carbon.

Now my opposition to Excelsior is well documented (columns from Aug. 12, 2007 and Feb. 3, 2008). The half dozen or so lobbyist-lawyers and their additional hired lobbyists (I shall call them meta-lobbyists) who comprise Excelsior tout it as a jobs project that would provide clean coal energy. However, the technology is prohibitively expensive and no one will buy the power at the extremely high prices unless forced to by the government. As recently as a week and a half ago I would have considered the project to be near death for these reasons. However, Coleman indicates that he will go to all known lengths to breathe life into this boondoggle.

One of the big stumbling blocks for Excelsior has been the unfortunate reality that, while the Range is the perfect place to find government funding for just about anything, it is physically located over a large, impenetrable sheet of granite. This "clean" technology requires the carbon to be buried beneath this geological formation, which is not practical or commercially viable. Thus the only way to make this a true carbon-capture plant is to pipe the carbon to Canada or North Dakota to bury it. The cost of this is yet unknown, but a billion dollars is probably where we start on that -- and that's not even included in the current Mesaba price tag of $2.15 billion. So guys like me have always assumed that Excelsior would get stopped at the permit stage because it can't bury the carbon as promised and can't afford to pipe it away.

Well, this morning Coleman said that he is supporting a bill that would pay for pipelines to remove carbon from "clean coal" plants. In other words, that billion-dollar plus price tag will be picked up by you and me, the people whose power bills will go up if this boondoggle gets built. When you further consider the fact that Excelsior's current operating budget is funded mostly by federal grants and a Iron Range Resources loan that will never be paid back, you see some unbelievable math.

Plant cost: $2.15 billion -- more than half of which will be covered by federal grants and guaranteed loans; in other words, if the plant fails taxpayers absorb the risk.

Pipeline cost: $1 billion, probably more -- again, funded by the taxpayers under Norm Coleman's plan.

Further parsing this short KAXE interview, we see that Norm Coleman intends to use Excelsior, a project that somehow combines the worst elements of socialism and capitalism, to win votes from Al Franken in northern Minnesota. Franken, who is very realistic on energy policy, says rightfully he needs to learn more about the technology and project before he lends it support. He would prefer other alternatives to coal explored first, which is reasonable given the many problems with clean coal technology. Norm is going to say that Al opposes jobs for northeastern Minnesota and tout Excelsior as an example.

People, it would be cheaper, cleaner and better for our northern economy to just give 150 random Iron Rangers $60,000 a year for the next 30 years, and 1,000 more $60,000 for just one year than to build this awful excuse for an economic development project.

I'm hoping that Coleman's weak answer on health care is all Iron Rangers need to hear to vote him out in favor of some truly innovative thinking.

PS: To all the DFLers who gave life to this project, thanks a billion. Actually, 2.15 billion. You've given a weak Republican incumbent who sits in Paul Wellstone's seat a chance to steal votes in the 8th CD for a project that will help no one but the wealthy lawyers who begat it.

Iron Range stands at modern crossroads

This is my weekly column for the Hibbing Daily Tribune published Sunday, Feb. 3, 2008.

Iron Range stands at modern crossroads
By Aaron J. Brown

Modern life hums with information and responsibilities, sometimes real and sometimes imagined. Every day I update the blog, prepare classes, and blaze a trail through the woods while connected wirelessly to the whole world. But as I confront my weekly responsibility of writing this column, something strikes me. In story after story, current events will shape the next several decades on the Iron Range.

At the top of most lists stands the proposed Minnesota Steel plant near Nashwauk. Officials from India-based Essar Global recently told local leaders they expect financial close for their $1.6 billion investment in the project sometime in March, followed by construction. With hundreds of jobs and a lasting economic impact, this huge project is as close to reality as ever.

Meantime, just a few miles to the east, U.S. Steel announced a major expansion and environmental upgrade at their Keewatin Taconite plant Friday. Previously, the company had announced that their Iron Range taconite production was up in the last quarter of 2007, but down slightly for the year. A week earlier, news reports detailed a fine against U.S. Steel for environmental violations. It would seem that U.S. Steel is making an aggressive move to address both concerns.

Then, further east, companies like Polymet and Franconia Minerals propose mining precious minerals on the East Range, a subject splashed across state headlines after a legislative hearing last week.

These are important stories not just because of the possible infusion of jobs, but because foreign and domestic companies are investing in the long-range future of mining in Northern Minnesota. Thus, our region could keep a continued economic base to finally achieve lasting diversification. However, this may be the last “up” cycle in the steel market for the Iron Range to truly modernize our economy and communities. To waste these good times could set us up for disaster during the next down cycle. This is no time for complacency or to allow poor judgment to cloud our real desire for jobs and prosperity.

So I come to another news-grabbing project on the Range. Excelsior Energy, a startup company run by lobbyists, proposes the $2.3 billion Mesaba Energy Project, a coal gasification plant to be built near Taconite. Project backers cite the plant as an innovative form of clean coal technology and another source of much-needed jobs on the Iron Range. And while this company continues to show masterful skill in spin, public relations and back room deals, it has continually failed to show exactly how it can build this plant or sell the resulting electricity.

Consider this: Mesaba can only be built if it has a customer and permits. Last summer and again in the fall, the state Public Utilities Commission denied a move to
mandate Xcel to buy power from the yet nonexistent Mesaba plant, thus forcing Excelsior to find another customer. The power from Mesaba, even if produced at lowball estimates, would be too expensive to sell without additional subsidy. Existing power companies like Minnesota Power and Xcel plan to provide all the state’s electricity, including for new projects, without any additional coal plants.

Meantime, because of federal haze standards, permits are limited for projects near national parks like Voyageurs and the Boundary Waters. Many of the aforementioned mining projects are well ahead of Excelsior in the permit process. When Minnesota Steel and U.S. Steel get their permits officials estimate we will meet the maximum for the federal haze standard. That means that Excelsior might only get permits if they get federal laws changed.

In other words, Excelsior is “news” only because of massive federal and state handouts that feed their day-to-day operation. The Mesaba Energy Project can only be built with unprecedented regulatory shortcuts. Other coal gas plants have required government bailouts to survive which is why similar projects across the nation and world, including ones that ran experimental pilot plants, are being cancelled or suspended. When you consider the distant locations of coal, the equally distant locations for carbon sequestration, the limited markets for the power and the proximity of two major national parks, the Iron Range is among the worst possible locations for a power plant like this. The real reason the project was proposed here is our available government funds and willing minions from both political parties who carry literally every bill Excelsior asks them to carry, despite the project’s many
problems.

So I am not interested in Excelsior officials’ bravado regarding pipeline permits or their paltry offers for public wastewater upgrades. Their promises ring hollow and their business plan exploits the sincere hopes of our people.

Meantime rural broadband internet is dismissed. Our health care system is inadequate. Our schools struggle to pay the bills even in good times. Why waste more time and money when real problems need solving?

Yes, there are many possibilities out there, but we Iron Rangers must consider the merits of each separately. So much of our children’s futures will be determined in the next few years, perhaps even the next few months on the Iron Range. Our economy, our health, our environment, our culture will all be shaped by our actions. We must not be passive witnesses to this important chapter in Iron Range history. We must grab hold of our own fate, encouraging development while defending the interests of Iron Range citizens – our schools, our roads and infrastructure, our tax dollars and the mining revenue dedicated to improving our corner of the world. An Iron Range that thrives in the future must be filled with people who make their own history,
with feet planted in reality and hands reaching for opportunity.

Real opportunity.

Aaron J. Brown is a columnist for the Hibbing Daily Tribune. Contact him and read more at www.minnesotabrown.com.

Pipeline? You wish.

So yesterday Excelsior Energy's Mesaba Energy Project got into another news cycle with their environmental hearing regarding the pipeline for their proposed coal gas plant near Taconite. This was a hearing about just the pipeline, which is step 18 of a 50-step process that will never get past the first step of getting the money and customers needed to actually build the plant.

Here are some factors to consider:

* Electricity is the lifeblood of the economy, thus its cost is very important to how large employers on the Iron Range function. The power that would be sold by Excelsior IF it builds Mesaba would be vastly more expensive than current market rates. They propose that the government mandate that all power customers absorb that cost so that they can become very wealthy.

* The reason the cost is so high is because Excelsior would be buying coal at market rates from a place more than a thousand miles away. When they get the coal, they propose gasifying it in an "innovative" way. The technology allows them to bury the carbon deep beneath the earth's surface. The problem is that you can't do that on the Iron Range because of the geology. You have to pipe it (here we are with a pipeline again) to another place thousands of miles away to bury it, at a great cost. This cost isn't even calculated in their current estimates because Excelsior Energy is run by weasels. Without carbon sequestration, Mesaba is just a coal plant that isn't even as clean as some of the plants run much more cost-effectively by Minnesota Power, a company that actually exists.

* In northern Minnesota we are subject something called the federal haze standard. That means that permits are handed out based on how various emissions will affect the nearby Voyageurs and Boundary Waters national parks. We have a whole lot of taconite mines that emit various nasties and we want to build more mining plants and a steel plant. Those plants are in the process of actually getting their permits. When they do, and they will, we will be at the maximum for the federal haze standard. Which means that Excelsior can only get their permits if they get federal laws changed under a Democratic Congress with a possible Democratic president. That's a long shot at best.

In other words, Excelsior is news only because of federal and state handouts. It can only be built with regulatory shortcuts. If built, it will likely require a bailout within its first five years (which is what happened to a similar plant in Indiana). But perhaps more importantly -- considering the locations of the coal, the markets for the power, the locations for the carbon sequestration and the proximity of two major national parks -- the Iron Range is the WORST POSSIBLE LOCATION for a plant of this kind in North America. Except, of course, for the available state and federal dollars and willing minions like U.S. Sen. Norm Coleman and State Sen. David Tomassoni who have carried all the legislation Excelsior has ever asked them to carry.

So did I see the story about the pipeline hearing? Sure, but that's not the real story.

The WDIO story:

Contested Case Hearing for Mesaba Energy Project

On Tuesday, almost two dozen people testified on behalf of the Mesaba Energy Project at a contested case hearing in Taconite. An administrative law judge listened to the testimony, and the public was allowed to ask the panel questions. The judge will take all of the testimony, and make a recommendation to the Department of Commerce on the site permit, the transmission line permit, and the pipeline permit. Then the Department of Commerce will present their findings to the
Minnesota Public Utilities Commission. That agency has the final say on the project, the permits, and the adequacy of the Environmental Impact Statement. Their decision is expected in the spring.

Union representatives and local leaders support the coal gasification plant, which is planned for Taconite. There is an opposition movement to the project, called Citizens Against the Mesaba Project. Attorneys for that group and other members were in attendance, and testified as well.

Another hearing is scheduled for Wednesday in Hoyt Lakes, which is the alternative site for the project.

Oh, what the heck, one more log on the fire

Excelsior Energy continues to get news coverage for their plan to add $20 million in environmental upgrades to their vast $2.3 billion proposed Iron Range coal-gas plant while paying for $500,000 worth of improvements to Taconite, Bovey and Coleraine's wastewater plants.

This unproven new company, using taxpayer grants and loans, is buying the support of local and state officials with lofty promises they can't guarantee. This project has almost no chance of being built unless it is heavily and continually subsidized with government funds. If built it will be cursed as the greatest mistake made by this generation of political leaders on the Iron Range. If you want to see some public officials who deserve special rebuke, read who's quoted in this one-sided Mesabi Daily News story.

JUST. SAY. NO.

Spin, baby, spin

Remember that scene in "Monty Python's Holy Grail" where King Arthur is dueling with the Black Knight and keeps cutting off the knight's arms, then legs. Each time he cuts off a limb the knight refuses to admit defeat, saying things like "Oh, it's just a scratch."

Yeah, Excelsior Energy and their boondoggle Mesaba Energy Project (a proposed coal gas plant on the Iron Range) is down two arms and a leg right now but they're still spinning. In a way it's a lesson for future students of public relations of how to keep in the media cycle by pressing puffy stories on media venues that lack the time or knowledge to question the source.

Here's WDIO Channel 10's "story," taken directly from the Excelsior press release and seen by half the Iron Range's TV viewing audience:

Excelsior Energy Undertakes Major Water Quality Improvement Program

Excelsior Energy is planning on building Mesaba Energy, a coal-gasification plant, near Taconite. On Monday, they announced an agreement with local leaders, to recycle all of the water used in the plant. This is instead of discharging it into the Mississippi watershed. There was some concern about that discharge. Excelsior has also agreed to make significant investment, into the combined wastewater treatment facilities in Coleraine, Bovey, and Taconite, when construction begins. Local mayors and legislators say they are pleased with this outcome, and that it shows Excelsior has the new culture of environmental awareness.

And here's the AP version that originated with the Duluth News-Tribune. (slightly better)

Proposed power plant changes its water plans
Associated Press - January 21, 2008

DULUTH, Minn. (AP) - Excelsior Energy says it has abandoned plans to discharge coolant water from a proposed Iron Range power plant.

Instead, Excelsior says it has agreed to install a closed-loop "zero liquid discharge system."

Excelsior CEO Tom Micheletti says the change will add about $20 million to the cost of the $2 billion project.

The company has also agreed to give up to $500,000 to upgrade wasterwater treatment facilities serving the towns of Coleraine, Bovey and Taconite.

Excelsior had sought to pump water from its cooling towers into surface waters just north of Taconite, where it wants to build a new coal-fired power plant.

Those plans have stirred environmental concerns because cooling water from the plant would probably contain heightened levels of mercury. The plant has also faced serious setbacks from state regulators.

A key observation that neither story covered is that these improvements add to the already ballooning cost of the proposed project, a cost that is the single biggest reason the PUC has not and will not grant the crucial power purchase agreement to Excelsior. This is a cyclical news bounce for Excelsior, but in reality only shows that this project has so many problems it can't possibly be built. But by offering a token amount of money to local towns for wastewater improvements (and, incidentally, not nearly enough to ACTUALLY modernize the involved treatment plans) Excelsior's overlords are hoping to gain political support for more kickbacks at the legislature and in Congress.

Again, nice P.R. work -- but the reckoning will still come for this ugly boondoggle.