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16 April 2007 - Excelsior Energy hit a major roadblock in its effort to build a 603 MW advanced coal-fired power plant in northern Minnesota when judges recommended that state regulators reject a proposed power purchase agreement (PPA) related to the plant.
According to report by Platts, Excelsior, an independent power producer based in Minnetonka, Minnesota, needs the PPA with Xcel Energy for the 603 MW integrated gasification combined cycle (IGGC) project to move ahead. Minneapolis-based Xcel opposes the PPA in part because it believes it is too expensive.
Excelsior's Meseba Energy Project got a boost from the Minnesota Legislature in 2003 when it passed a bill that requires Xcel to enter into a long-term contract from the project for 450 MW plus at least 2 per cent of its retail energy needs, if the PUC determines it is in the public's interest.
According to the judges' recommended order, the project is not in the public interest. "The final PPA should not be approved, primarily because of its unreasonable cost to Xcel Energy and its ratepayers, the likelihood that its cost will increase, not decrease over time," they said.
An analyst for the Minnesota Commerce Department found that the Mesaba project would be at least 30 per cent more expensive than comparable, non-IGCC power plants, saying that the proposed PPA, including transmission, would cost $98.62/MWh on average, more than $20 more than two other options.
Adding equipment to capture and sequester carbon dioxide at the plant would increase costs by about $50/MWh, the analyst estimated.
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