HGS Real Costs

Wind, Water, Solar, Biofuels... Future "LENR"


Courtesy of Také Uda, Great Falls Tribune
Cartoon inspired by Monty Python piece on Utube: http://www.youtube.com/watch?v=leEsz9ci5XE&feature=related

SME pushes full steam ahead toward that cliff to nowhere. They and the city of Great Falls have failed on projection cost analysis for the proposed Highwood Generation Coal-Fired Plant proposed just east of Great Falls. When they inevitably come to realize this financial fact, the other leg will be gone and the taxpayers of great falls will be millions in the hole!

We offer here a fairly simplistic spreadsheet analysis of the HGS costs using currently known figures. These figures were acquired from consultant reports (RW Beck), Powder River coal cost from the US Energy Information Center currently $14.50 per ton on Oct 3, 2008, and estimates for coal delivery from the Powder River mines by BNSF rail to Great Falls. We even give low ball financing at 6% interest over thirty years on the total principal being borrowed with no down payment.

The current $900,000,000 plant cost is derived from SME attorney testimony in court on 10/2/08 during the preliminary hearing to dismiss the landowners zoning lawsuit.

Carbon penalties for coal plants may run anywhere from $10-$50 per ton of CO2 which has been discussed in Congress and the industry lately.

Further BNSF has stated, on their website, that delivery time will run 3-4 days. With SME's current proposed acquisition of 220 coal cars, they may not be able to meet the turnaround/delivery requirements of BNSF with this few cars. This will drive the current proposal up again. This additional cost is not included in our spreadsheet analysis as we wanted to keep with what is currently proposed by SME to show that even with their low ball figures, HGS does not add up to a competitive energy producer in todays market.

Another unknown factor is that the Montana Department of Revenue could choose to assess the HGS project at a 6% tax rate if they determine that it is a merchant plant and not just for the benefit of the cooperative partners. We have in this analyses used the low ball figure of a 3% tax rate until it is determined otherwise.

The bottom line is power from this proposed HGS, even under the most favorable of conditions, will run greater than $83/MW at todays costs without even considering CO2 future penalties and costs.

SME better get out their bid sheets as power from Northwestern Energy and the upcoming wind farms is a much, much cheaper predictable option. Unfortunately this has been recognized by most outsiders for quite some time. Why do they (SME, partner the city of GF, and ECP) not see the cliff they have been going full steam towards? They were certainly warned, but ignored competent advise many times over the past two years to save themselves, their customers, and the taxpayers!

So now take a look at the telling numbers and bottom line for cost to SME customers, lets hope they finally get it:

Click on "HGS Costs" to view the spreadsheet:

Gregori finally admits HGS power costs greater than 7 cents per kilowatt which are in agreement with our spreadsheet analysis: His old line of less than 5.5 cents per kilowatt has gone out the window as we have predicted for some time.