Excelsior Energy’s Mesaba Energy Project Update for the NM-SPG August 16, 2006

Current Project Parameters Two 606MW IGCC units ISDs 2011 and 2013 Primary Site- West Range POI---Blackberry 230kV Sub Near Taconite, MN in Itasca County Alternate Site- East Range POI---Forbes 230kV Sub Near Hoyt Lake, MN in St. Louis County Designated as an Innovative Energy Project under special MN Legislation

MISO LGIP Current Status

Transmission Progress to Date Transmission Concept Screening Study July 2003 East Range GO Analysis August 2004 East Range GI Request to MISO October 2004 Queue # 38280-01, Project G477 First Unit 531/552MW ISD 2010 Network Resource Service G477 Feasibility Study Report March 2005 6 months West Range GO Analysis May 2005 West Range GI Request May 2005 Queue # 38491-01, Project G519 First Unit 600MW ISD 2010

Transmission Progress to Date G519 ‘Out of Queue’ Study Agreement August 2005 West & East Range Preliminary GO Facilities Engineering Designs December 2005 West & East Range GO Analyses Updates December 2005 G519 Feasibility Study Results December 2005 8 months G477 & 519 System Impact Study Results April 2006 11 and 19 months G477 & 519 restudy of short circuit results July 2006 Second unit GI request submitted January 2006 Designated G597

Transmission Progress to Date G597 Feasibility Study Report July 2006 G477&519 Facilities Studies underway July 2006 MP has contracted to perform G597 SIS Agreement Executed August 2006 Note: Between July 2004 and December 2005 Excelsior performed six series of powerflow studies to evaluate GO facilities and network reinforcements

MISO Study Results Project G477 SIS (Forbes POI) Powerflow : No problems identified Short Circuit : Several pre-existing over-dutied breakers but no new ones caused by G477 Stability : All simulations are stable and within damping criteria. No transient low voltage violations. Deliverability Analysis: Failed Awaiting MISO study proposal to continue NRIS process TSR submitted by Xcel for NITS (local capacity resource)

MISO Study Results Project G519 SIS (Blackberry POI) Powerflow : Some issues identified during contingencies. Resolved with the addition of a new Boswell-Riverton 230kV line. Short Circuit : Several pre-existing over-dutied breakers delete [plus four new 115kV breakers at Nashwauk Sub due to G519] Stability : All simulations are stable and within damping criteria. No transient low voltage violations. New Boswell-Riverton 230kV line was included in these studies. Deliverability Analysis: Failed Awaiting MISO study proposal to continue NRIS process TSR submitted by Xcel for NITS (local capacity resource

MISO Study Results Project G597 Feasibilty Study (Blackberry POI) Powerflow: numerous local contingency violations identified Not unexpected with both MEP II and new 800MW NE MN unit included without any network upgrades Short Circuit: four Nashwauk 115kV breakers overdutied Note: Modeling didn’t include proposed Minnesota Steel Plant or CAPX 2020 Projects

Other Mesaba Energy Project Progress Filing made 12/23/05 with MPUC for a PPA with Xcel Energy under Innovative Energy Project Legislation Joint Siting/Routing Application made 6/16/06 for both units, all GO facilities, and gas pipeline. Application accepted as complete 7/6/06.

Proposed GO Facilities G519: 9 mile double circuit 345kV steel pole structures, operated 230kV for MEP I G477: Two 345/115kV steel pole lines replacing existing 115kV structures for most of their 34 and 37 mile routings, with 345kV side operated 230kV for MEP I

West Range GO Facilities

West Range GO Routings

East Range GO Facilities

East Range GO Routings

Questions??