March 19, 2007

VIA EMAIL: Richard.Fristik@wdc.usda.gov

Richard Fristik

USDA Rural Development

Utilities Program

1400 Independence Ave. SW

Mail Stop 1571, Room 2237

Washington, D.C. 29250-1571

Re: Final Environmental Impact Statement

Southern Montana Electric Generation & Transmission Coop., Inc. Highwood Generating Station

Dear Mr. Fristik.:

Thank you for the opportunity to comment on the Final Environmental Impact Statement for the Highwood Generating Station. I urge that you prepare a supplemental EIS to address the following issues:

▪ The FEIS does not contain the rigorously objective analysis of alternatives required by NEPA. The public has not been afforded the required opportunity to challenge the expert’s analysis as the EIS eliminated all reasonable alternatives to its proposal to build a coal plant before scoping commenced.

▪ What are the effects of the significant increases (44% and climbing) in estimated construction costs on the ability of SME to repay its loan and on the price it can offer per megawatt hour?

▪ After completion of the FEIS, SME indicated it would install carbon capture capability. Assuming this technology exists, what will be the costs of installation, and its effects on the ability of SME to repay its loan, and on the per megawatt price it can offer its customers.

▪ The EIS has assumed an SME customer base of 120,000. This estimate includes 50,000+ residential customers from the City of Great Falls. The FEIS did not discuss the probability that that almost no residential customers from Great Falls will either be allowed to, or will choose to, be served by SME. What will be the effects of a customer base reduced to 67,000 on the ability of SME to repay its loan and on the price per megawatt hour it will be able to offer?

▪ What will be the effects on SME’s ability to finance the HGS without the participation of Great Falls if, as seems increasingly likely, Great Falls will not be able to sell the bonds necessary to finance its share of construction costs?

▪ A carbon tax is about as foreseeable as the sunrise at this point. The FEIS failed to discuss the effects of a carbon tax on the HGS’s projected emissions of 3,000,000 tons of CO2, including the effect on SME’s ability to repay its obligation to the U.S. taxpayers, and on the per megawatt price it can offer its customers?

▪ Extended delays in construction are foreseeable due to the controversial nature of the project. The FEIS needs to discuss the effects that inevitable delays related to administrative appeals and extended litigation in the federal courts will have on construction costs, SME’s ability to repay its loan, and on the cost per megawatt hour it is able to offer its customers?

▪ The FEIS failed to discuss the cost of transporting coal to the HGS. SME will be a captive customer of Burlington Northern Santa Fe, whose aggressive business practices are well known. What will the effects of the transportation costs be on total construction costs, SME’s ability to repay its loan, and on the price per megawatt it can offer its customers?

▪ Massive amounts of water are essential to the operation of the HGS. SME hopes to obtain that water from the Marony Reservoir under a water reservation held by the City of Great Falls. The City’s reservation has a priority date of 1985. The FEIS failed to discuss the fact that PPL holds a prior right (1928) of over 8,000 cfs, and that in an average year, PPLs right encompasses the entire flow of the river during every month but May and June. PPL has objected to the City’s application to divert water from the reservoir. What are the effects on the HGS project if no water is available from the Marony Reservoir (or from any other reservoir in the Great Falls area)? What are the effects on construction costs, SME’s ability to repay its loan, and on the cost per megawatt hour SME is able to offer its customers if SME or the City is forced to purchase its required 5000+ acre feet from PPL?

▪ Considering the cumulative effects of the factors discussed above, what are the chances that the HGS can be financed, that SME can repay its loan if the project is financed, and that SME can provide the affordable, long-term power that is the purpose of the proposed project?

Thank you for considering these comments.

Sincerely,

Dan Bennett

cc: Governor Brian Schweitzer

Senator Max Baucus

Senator Jon Tester

Citizens for Clean Energy