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Charlotte Neigh, co-chair, Citizens Against the Mesaba Project (CAMP) Bovey, MN 5/5/2009 4:09:05 PM |
Mesaba Energy claims disputed
It is not correct to say the federal government would back 73 percent of the total cost, or the federal government has “pledged” $800 million in loan guarantees, or municipal utilities would have to raise only 27 percent of the project costs to secure ownership of Unit 1 of the Mesaba Project (“No customer for controversial energy project,” April 2008).
Excelsior Energy has not yet been awarded any loan guarantees. It is one of 11 final applicants to share in a pool of $4 billion. Excelsior admits its negotiations with the U.S. Department of Energy will continue throughout 2009. DOE stated in October 2007 that projects relying upon a smaller guarantee percentage will be given greater weight. Despite this statement, Excelsior repeatedly has misled the media and even the Minnesota Public Utilities Commission about the status of the loan guarantees, suggesting the federal agency would cover 80 percent of the project costs.
Apparently Excelsior is now seeking 73 percent, but this is a long way from becoming reality. A key requirement for qualifying is to have an assurance of revenues to be generated from sale of the product. This means a long-term commitment from a customer to purchase the energy. This is why the failure to achieve a PPA (power purchase agreement) with Xcel Energy is critical. Other obstacles are DOE requirements for: credit assessment without a loan guarantee; approval of environmental and other permits; reduced greenhouse gases; and relative amount of cash contributed by the principals.
Now Excelsior is trying to entice municipal utilities into purchasing ownership interests by suggesting that 100 percent ownership can be obtained by raising 27 percent of the costs. Municipal utilities should carefully assess the likelihood that this amount or any loan guarantees at all will be awarded for the Mesaba Project before issuing bonds to finance such a purchase.
More information and analysis about the federal loan guarantees is available by scrolling down to the Oct. 8, 2007 entry on the CAMP Web site.
Previous Letters To The Editor:
- Charlotte Neigh, co-chair, Citizens Against the Mesaba Project (CAMP) -5/5/2009 4:09:05 PM
- PENNIE TURCOTT -4/23/2009 2:29:43 PM
- Don Mitchel -12/19/2008 8:09:59 AM
- Ken Fischman -12/5/2008 2:46:41 PM
- Jeff Monaghan -10/7/2008 4:10:43 PM
