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The Minnesota Legislature enacted the Innovative Energy Project ("IEP") Statute and the Clean Energy Technology ("CET") Statute in 2003 with the aim of providing the State with a path forward to resolve critical energy issues.  Certain market conditions that prompted the Legislature to proactively foster the construction of IGCC facilities in Northeastern Minnesota included:

• Rising natural gas prices and proposals to significantly increase reliance on gas-based generation
• The average price for natural gas had risen to the level of $4.54 to $5.25 per thousand cubic feet
• No new base load facilities were on the drawing board in the State of Minnesota
• Concerns over exported jobs and imported pollution from high emission, out-of-state conventional coal plants
• Air emission limits appeared likely to tighten which could force older, less efficient power plants to shut down
• Deteriorating economic conditions in Northeastern Minnesota—the Iron Range had lost an additional 2,000 jobs with the closure of LTV Mining, bringing the total to more than 10,000 in the then-preceding decade

Given these concerns, the benefits that IGCC generation facilities on the Iron Range could deliver to the State were clear.

"The Mesaba Project, and the many IGCC plants that will follow its lead, will put Americans to work, protect our natural environment, reduce pressure on natural gas resources and further our Nation's energy independence and national security goals."

U.S. Senator Norn Coleman

Since passage of the legislation, the market conditions that were the foundation for the enactment of the Statutes have only become more pronounced, underscoring the importance of the Project to a balanced, hedged energy portfolio for Minnesota.

Recent developments worth noting:

• Natural gas prices have nearly tripled from the price levels Minnesota had experienced during the period leading up to the enactment of the Statutes
• Xcel Energy's preferred plan advocates approval of an additional 349–562 MW of natural gas-fired generation to come online by 2012 and up to 960 MW of new natural gas-fired generation on its system through 2015
• Conventional coal plants have been announced in the Dakotas and Iowa, each of which would contribute materially to pollution in Minnesota while exporting hundreds of jobs and billions of dollars of economic activity
• No new transmission resources have been added to transfer power to or within Xcel's system, and the transition to MISO's new regulatory regime has complicated the situation
• New, more stringent emission limits have been passed and carbon constraints are starting to take shape on the horizon
• Oil prices have risen to and have remained at record levels, raising concerns that a fundamental shift is occurring in the pricing of energy imports
• Domestic supplies of natural gas have been depleted at much higher rates than expected in 2003
• The Iron Range continues to experience much higher unemployment than the rest of the State