Article published Jul 20, 2007

City to set aside $1.4 million to guarantee electricity payments

By RICHARD ECKE

Tribune Staff Writer

When residential customers sign up to buy electricity or gas heat, they may be required to give the utility a deposit up front.

In a somewhat similar fashion, city commissioners voted without dissent Tuesday night to set aside $1.4 million in scattered city funds. The money guarantees electricity payments to PPL Montana through Southern Montana Electric Generation & Transmission Cooperative.

The co-op purchases power from PPL Montana on behalf of Great Falls. Electric City Power, Great Falls' electric utility arm, then sells power to various government agencies and commercial customers.

In this situation, the city is "not requiring deposits from our customers," City Manager John Lawton said. Since they were not asked for deposit money up front, the city did not think it would be fair to ask customers for a deposit after the fact, he added.

Lawton said the city required its out-of-area customer, talc-mining firm Barrett Minerals of Dillon, to post a letter of credit because it is not as well known to the city.

Future customers might be required to post a deposit, but they will be evaluated individually, Lawton said.

SME, which is hoping to build a coal-fired power plant near Great Falls, has "fluctuating" needs for cash, Lawton said, and decided to quit covering the security deposits itself.

Several speakers at the meeting questioned the change.

Carol Fisher of Great Falls said $1.4 million "isn't that much money to SME," and she questioned "why they need to come to us for $1.4 million."

Lawton said Wednesday he didn't think SME was having financial worries, calling that "an invention" by critics.

"Businesses need cash sometimes," Lawton said.

He said the city will fund the deposit through spare cash on hand, and added that the city receives interest on the money. He said Electric City Power's customer list is full of reputable companies that pay their bills, but if one dropped out another customer could be found promptly to replace it.

Lawton said the city's budget will not be affected, although cash that is set aside won't be available for other purposes. He added the city has enough money to cover all its needs.