A cruel joke on the people of the Range

History’s stage is both wide and deep. No entity with tendrils reaching as far into Iron Range political networks as Excelsior Energy can be expected to exit this stage quietly. The only question is whether the play itself is a comedy or a tragedy. I haven’t decided.

This week saw two important developments regarding Excelsior Energy, which had proposed building a coal gasification power plant on the Iron Range but has encountered numerous problems along the way, most of them existential.

Excelsior had received $9.5 million from the people of the Iron Range in 2001 and 2003, many millions more since from the state and federal governments, and sweetheart legislation mandating purchase of its proposed electricity. None of that has lead to anything but more proposals, including new ones this week. The company itself is a collection of current and former energy industry lobbyists, lawyers and other speculators. They have yet to produce a job, a kilowatt or a clear path toward doing either, but they lumber on, living off political patronage which seems to know no bounds.

The first development is legislative. Sen. David Tomassoni and others have authored a bipartisan bill (SF 417) further relaxing some of the language from an earlier Excelsior-friendly bill. Rep. David Dill and others are carrying a similar bipartisan bill (HR 618) in the House. Essentially, the changes would allow Excelsior to build a cheaper natural gas power plant and still be considered “innovative” and, thus, deserving of all the favored status it has received thus far and is due to receive into the future.

The second development, tangentially related, is that the IRRRB in its first meeting of the year authorized the transfer of Hibbing land next to the Kitzville location to Excelsior for one of its three proposed Range plant sites (the primary site has been near Taconite in Itasca County, its secondary sit was considered Hoyt Lakes). At the meeting company officials declared that they’d like to build at least two natural gas plants at two of these three sites and convert to clean coal when costs would allow. Each plant would produce 600 mW of power, 1,200 in total. That’s a substantial amount of electricity. No customer is yet identified. The costs of “clean coal” will be prohibitive for a decade at least, if not forever.

Almost eight years ago the state legislature gave Excelsior its life breath by mandating that Xcel Energy purchase energy from an “innovative energy project” that would use “clean coal” to be located on the Iron Range. This was put through after Excelsior had proposed the Mesaba Energy Project, a clean coal initiative, using loans from the people of the Iron Range to draw up the legislation and the most expensive colorful drawings you can imagine. After a patrol of Excelsior lobbyists flooded the chambers of the House and Senate in one year the bill passed and Gov. Tim Pawlenty signed it.

What this new bill would do is allow Excelsior to retain its power of eminent domain at any of these sites, without a certificate of need and with its preferential treatment in energy negotiations. This even though natural gas is, by most standards, a fairly traditional method of producing electricity.

In other words, if the company manages to use its highly prized federal loan credits as leverage to partner with an existing company, the people of the Iron Range would have essentially built a significant portion of the project without retaining any ownership. Ideally, the IRRRB loans would be paid back, but only if the rosiest of scenarios were to befall Excelsior, probably involving a buy-out. Half the time loans like that are forgiven, regardless of the amount. If anything goes wrong, and that is the statistical likelihood, the company will declare bankruptcy after drawing down millions from the people. Yes, there might be jobs … maybe, probably not … but if so they will have been created at astronomical cost-per-job. It would have been better to drop the money from a plane flying along the iron formation.

The architect of this project’s legislative goals is Sen. David Tomassoni (DFL-Chisholm). Without Tomassoni this project might not have received the original IRRRB loans, certainly could not have passed the legislation in 2004 and 2005, and wouldn’t even be in consideration now. He’s twisted the arms of state officials and his Iron Range legislative colleagues. This project appears to have been Tomassoni’s legislative priority for almost a decade. His continued deference to the whims of one single private developer is damning political behavior that I cannot abide, nor should his constituents. Several others have helped, most notably Sens. Tom Bakk and Tom Saxhaug. Rep. Dill has carried the most water in the House, but he had help or at least non-intervention from others as well. Only my friend Rep. Tom Anzelc has raised public opposition and questions (full disclosure: I run his campaigns and, yes, that’s partly why). Former lawmakers and lobbyists continue working backstage to prop this thing up. All of this must end for us to move on to more fruitful endeavors.

You have to understand that this project only exists because some were too polite, ignorant or misinformed at the beginning to ask questions. As a 21-year-old reporter I didn’t understand it myself. Once it was underway no one knew how to stop it. Now this company owes the people so much money no one knows what to do. I don’t normally like to criticize unless I can offer an alternative. In this case I just don’t know the right play. It would appear Commissioner Sertich at the IRRRB doesn’t either. Stop giving them time and money is the best I’ve got, and it isn’t enough.

With each passing year I develop more inner-peace. This project doesn’t keep me up at night or cause me to go on spitting rants the way it once did. I don’t take the wasted time and money as personally as I have in the past. But one aspect of this project is very personal to me and I’ll share it with you.

Right now, in Taconite, in Coleraine, in Hibbing, in Nashwauk, in Hoyt Lakes and other places, there are good, hard working people who read the papers this morning and are hoping that this project saves their schools, preserving their towns as they know them for a new generation. They are hoping beyond hope, grasping for the only product Excelsior Energy makes in any quantity: promises.

At the same time I know there are professionals in the energy industry, others in the inner workings of the real power structure, a network that includes some on the Range and many beyond its borders. These people know in their hearts that this project is a ridiculous joke that will go nowhere. They know that Excelsior is an opportunistic speculation company, waiting for any reason to actually exist, with only a gambler’s chance of delivering what it proposes.

The powerful are laughing at us. We are the joke. David Tomasoni is the guy who walks into a bar. Tom Saxhaug and Tom Bakk are the guys who walk in with him. The Range media is typing away to the tune of “Hey, Hey, the Gang’s All Here.” Most of the Iron Range DFL delegation and some in the Republican leadership in the House and Senate are spinning plates in the background. The failure of the Iron Range is the punchline.

I’m not laughing. It’s not funny.


  1. It hurts me to read this, almost as much as it must’ve hurt you to write it. Pulling the plug now is an alternative, even if it feels like defeat. Inflection points are often hard to see, except in retrospect. But that’s not the case here. It’s time to stop the bleeding, or today will look like the good old days when we’d “only” wasted a few million here and a few million there.
    Toni Wilcox

  2. Thanks for telling it like it is.

  3. What are you thoughts on small business incubators or “economic gardening” as possibility for economic development on the Range?

  4. Thanks for the update, and bare honesty of your opinion on the subject.

    I have some similar concerns about the solar plant that is proposed for the north (Silicon Energy in Mt Iron) when I read it was owned by Canadian VC that supposedly specializes in picking up up gov’t grants (Newport Solutions). But maybe the IRRRB has learned something from its mistakes in the Excelsior Energy deal and structured this deal better. There is hope.

    And at least this new venture is green, and all jobs and skills gained will be transferable if theis venture should fail.

    But wouldn’t this venture have a better chance of succeeding if the IRRRB supported the installations across the range with low interest loans to citizens? Maybe even no interest if the entire installation–equipment, installer, FIT back to the grid was 100% local?

    Can’t they do something like this?

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