Iron Range energy project dealt another setback

by Bob Kelleher, Minnesota Public Radio

Duluth, Minn. — The Minnesota Public Utilities Commission has dealt an Iron Range power project a setback. The PUC ruling means Excelsior Energy still lacks a customer for the electricity it would produce.

The commission has determined that Excelsior Energy is unlikely to produce low-cost electricity from its proposed Mesaba Energy project.

The coal gasification project would be built in two phases on the Iron Range. Thursday's ruling affects the second phase, although the commission made the same determination a year ago about the first phase.

The PUC's ruling means the project does not qualify under state law to force Minneapolis-based Xcel Energy to purchase a portion of the plant's electric power.

The commission left Excelsior one lifeline, which will allow it to continue negotiating a potential power purchase agreement with Xcel. A deadline on those negotiations is set for May 2009.