6-2500-15869-2 IP-6345/CN-03-1884

 

STATE OF MINNESOTA

OFFICE OF ADMINISTRATIVE HEARINGS

FOR THE PUBLIC UTILITIES COMMISSION

 

 

In the Matter of the Application of Mankato Energy Center, LLC, a wholly owned subsidiary of Calpine Corporation[1], for a Certificate of Need for a Large Electric Generating Facility

ORDER ON MOTION FOR INTERVENTION

 

 

On June 7, 2004, a Motion to Intervene on behalf of Excelsior Energy, Inc., was filed in this matter by Christopher K. Sandberg, Lockridge, Grindal, Nauen, PLLP, 100 Washington Avenue South, Suite 2200, Minneapolis, MN 55401-2138.

 

On June 14, 2004, an Objection to Intervention on behalf of Mankato Energy Center, LLC, was filed by B. Andrew Brown of the firm of Dorsey & Whitney.  No other filings were received on the Motion to Intervene.

 

Based on the filings received on this Motion, the Administrative Law Judge makes the following:

 

ORDER

 

Excelsior Energy, Inc. has not demonstrated that it has rights, duties, or privileges that are determined or interests that are affected by a contested case proceeding within the meaning of Minn. R. 1400.6200, subp. 1.  Therefore, Excelsior’s Motion to Intervene is DENIED.

 

 

Dated this

22nd

day of

June

2004.

 

 

                                                                

/s/ Allan W. Klein

ALLAN W. KLEIN

Administrative Law Judge

 

 

 

MEMORANDUM

 

 

1.               Project Background

 

Mankato Energy Center, LLC (Mankato Energy), has proposed constructing a large electrical generating facility in Blue Earth County, Minnesota.  A request for proposal (RFP) that was approved by the Public Utilities Commission established a competitive bidding process for electricity needed by Xcel Energy.[2] A part of Mankato Energy’s proposed facility (the RFP Project) will supply electricity to Xcel Energy under the terms arrived at through the bidding process.

 

In addition to the RFP Project, Mankato Energy proposes to construct electrical generating capacity to sell electricity to wholesale customers.  This additional capacity will be provided by one natural-gas fired combustion turbine generator (CTG) and one heat recovery steam generator (HRSG) which will share other equipment with the RFP Project.  This additional capacity is being proposed to meet anticipated demand beginning in 2006-2007.[3] The additional capacity of 355 megawatts (MW) in winter and 325 MW in summer is the subject of Mankato Energy’s Certificate of Need Application (CON Application).  Mankato Energy intends to sell on the wholesale market the electricity generated by this additional capacity.  Only the additional CTG and HRSG (collectively “the CON Project”) are at issue in his proceeding.  Mankato Energy has discussed power sales with Great river Emergy, Southern Minnesota unicipal Power Authority, the City of Rochester, and Minnesta Power.  However, no power purchase agreements have been finalized.[4]

 

2.       Motion to Intervene

 

The deadline for filing a Petition to Intervene with the ALJ was established in the first prehearing order in this matter as June 7, 2004.  On June 7, 2004, a Motion to Intervene was filed by Excelsior Energy, Inc. (Excelsior).  Mankato Energy filed an objection to Excelsior’s Motion on June 14, 2004.

 

3.       Excelsior

 

Excelsior is constructing an “innovative, clean-coal electric generating facility [which] is scheduled to become operational in 2010 and its initial phase is expected to provide approximately 532 MW of baseload generating capacity.”[5]  Excelsior asserts that its legal rights, duties, or privileges will be affected by this proceeding.  The essence of Excelsior’s argument relies on the application of Minn. Stat. § 216B.1694 (“the innovative energy project statute” or “the statute”) to the Commission’s consideration of Mankato Energy’s CON application.

 

 

4.       Innovative Energy Project Statute

 

The innovative energy project statute was enacted on May 30, 2003.[6]  The statute identifies a proposed electrical generating facility which will be located in the taconite tax relief area of northern Minnesota.  The statute provides this facility with significant regulatory exemptions and advantages over other fossil-fuel-fired electricity generating facilities.  An innovative energy project is exempt from the certificate of need process.[7]  Associated transmission capacity can be increased without State review and eminent domain can be exercised by the facility.[8]  The statute authorizes the facility to sell 450 MW of baseload capacity to Xcel, and a related statute mandates that Xcel supply at least two percent of retail electricity sales from the facility.[9]  But most importantly for this case, the statute also provides that an innovative energy project:

 

(5) shall, prior to the approval by the commission of any arrangement to build or expand a fossil-fuel-fired generation facility, or to enter into an agreement to purchase capacity or energy from such a facility for a term exceeding five years, be considered as a supply option for the generation facility, and the commission shall ensure such consideration and take any action with respect to such supply proposal that it deems to be in the best interest of ratepayers … .[10]

 

This subdivision of the innovative energy project statute also contains an exemption from the application of the statute (“safe harbor provision”).  This safe harbor provision states:

 

(b) This subdivision does not apply to nor affect a proposal to add utility-owned resources that is pending on May 29, 2003, before the Public Utilities Commission or to competitive bid solicitations to provide capacity or energy that is scheduled to be on line by December 31, 2006.[11]

 

5.       Excelsior’s Assertion of Right or Interest

 

Intervention is appropriate where the petitioner shows rights, duties, or privileges are determined or interests are affected by a contested case proceeding.[12]  Excelsior maintains that the statute creates a right or interest that is potentially impaired by this proceeding.  This potential impairment, according to Excelsior, arises where additional baseload electricity generation capacity for meeting Xcel Energy’s future purchases is established.  Excelsior also asserts that the safe harbor provision is inapplicable to the CON Project, since the proposal to add those generating facilities was not pending on May 29, 2003.

 

6.       Mankato Energy’s Position

 

Mankato Energy maintains that there is no right or interest asserted by Excelsior that supports intervention.  The required “supply option” consideration in the statute is asserted as applicable only at the time of power purchases, not in the construction phase of the CON project.[13]

 

7.       Analysis

 

It is important to distinguish between the RFP Project (sales to Xcel pursuant to the RFP – not subject to this proceeding) on the one hand, and the CON Project (sales to unknown buyers – subject to this proceeding) on the other hand. 

 

The RFP Project falls within the safe harbor provision of Minn. Stat. § 216B.1694, subd. 2(b) because it is a competitive bid solicitation that is scheduled to be online by December 31, 2006.  Therefore, this proceeding is not the appropriate place for Excelsior to assert its statutory entitlement to PUC consideration as an alternative to Mankato Energy.

 

The CON Project is not part of a competitive bidding process, nor was the application pending before the Commission by May 23, 2003.  Therefore, the CON Project is not exempt from the innovative energy project statute by virtue of the safe harbor provision.

 

The CON Project is an “arrangement to build or expand a fossil-fuel-fired generation facility” within the meaning of the statute.[14]  Since the safe harbor provision is inapplicable, Excelsior’s facility must “be considered as a supply option for the generation facility … .”[15]

 

Mankato Energy forecasts a capacity deficit beginning in 2006 and generally worsening through 2012.[16]  But Excelsior is not scheduled to become operational until 2010.[17]  Mankato Energy’s CON Application is intended to meet a need forecasted to occur well before Excelsior can provide a supply of electricity.  Under these circumstances, Excelsior has not demonstrated any right or interest that would be impaired so as to support granting intervention to this proceeding as a party.

 

Excelsior is entitled to participate in the public comment portion of this proceeding, and the Administrative Law Judge has invited it to schedule a time certain for its presentation if (as expected) it will be a lengthy one.  At that time, Excelsior can submit its evidence regarding the forecasted need for additional electricity generating capacity and evidence on the construction status of its facility, and any other facts it desires to have considered in this proceeding.

 

 

A.W.K.