Nov. 10, 2003
Minnesota’s Excelsior Energy to Receive $800 Million Loan Guarantee in Energy Bill
Congress Should Reject Corporate Giveaways, Vote “No” on Energy Bill
WASHINGTON, D.C. – A two-year-old company whose top brass had ties to companies fined for energy market manipulation arranged to have language inserted into the pending energy bill that would provide the company with $800 million in federal loan guarantees to build a polluting coal gasification power plant in Minnesota, according to a report released today by Public Citizen.
The company, Wayzata, Minn.-based Excelsior Energy, was created by lobbyists and executives with ties to NRG Energy, a company that filed for a $9.2 billion bankruptcy in May and whose subsidies and affiliates have been fined $25 million for manipulating energy markets. Excelsior arranged to have the language inserted during the conference committee process, without a vote being taken by the U.S. House of Representatives or the U.S. Senate, according to news reports.
Under the terms of the loan agreement, Excelsior would build a 1,000-megawatt, $1 billion power plant in Hoyt Lakes in northeastern Minnesota. It would be the largest U.S. facility of its kind.
The plant would use new technologies that reduce many of the harmful pollutants typically emitted by conventional coal-fired power plants. But it would reduce carbon dioxide emissions by only 10 percent compared to a conventional coal-fired power plant. Since carbon dioxide is the primary source of global warming emissions, the loan guarantee would provide substantial federal assistance to a company that would become one of the largest emitters of greenhouse gasses in Minnesota. Further, the federal loan guarantee does not require Excelsior to meet any concrete job creation goals or standards.
The subsidy is yet another special favor tucked into the energy bill. While most of the bill’s special interest provisions benefit entire corporate energy sectors, such as oil companies and the nuclear industry, this giveaway stands out because it benefits a single company.
Since January 2002, Excelsior executives have given more than $15,000 to candidates for Congress. Nearly two-thirds (over $9,500) have gone to Republicans, with the vast majority of that amount (over $7,000) going to Sen. Norm Coleman (R-Minn.). Excelsior employs at least 13 lobbyists, who together have contributed $44,000 to federal candidates since January 2002.
“This huge loan guarantee commits U.S. taxpayers to a risky investment in a merchant power industry that is currently experiencing severe volatility and a wave of bankruptcies,” said Wenonah Hauter, director of Public Citizen’s Critical Mass Energy and Environment Program. “If Excelsior follows the odds and goes into default, it will be Wall Street investment banks—not workers or any other entity in the Minnesota economy—that will benefit from the $800 million loan guarantee.”
Further, a legal dispute involving Excelsior has arisen over whether a recent state law guarantees there will be a market for the power, providing even more uncertainty about the plan.
Public Citizen’s report focuses on the corporate backgrounds of the executives associated with Excelsior Energy. While none of the executives have been implicated in any scandal, they have been involved in companies that were fined $25 million for manipulation of California’s energy market.
This marks the second year in a row that the energy conference committee has, under questionable circumstances, inserted language without a vote providing special treatment to a single company. Last year, congressional energy conferees made an unsuccessful attempt to exempt Kansas-based Westar Energy from crucial Securities and Exchange Commission oversight. Internal Westar memos described a plan for the company to “get a seat at the table” by contributing nearly $60,000 to key conferees and their congressional allies.
“Considering the appearance of a cash-for-access deal in the Westar Energy scandal, one would think that energy bill conferees would have bent over backwards this year to ensure that sweetheart deals were not bestowed upon companies,” said Hauter. “This backroom Excelsior Energy deal provides just one more reason why this special interest-laden energy bill should be defeated.”
Although dozens of fossil fuel power plants are built throughout the country without federal assistance, this loan guarantee would be atop tax breaks and government incentives that Excelsior could receive. For instance, the company has received $500,000 from the state of Minnesota, will qualify for another $1 million in state money if the company secures $4.9 million in private capital, and may be eligible for $10 million over the next five years from the state’s renewable development account, as well as tens of millions in tax breaks from a state job building program.
Click here to read the report.