Story available at http://billingsgazette.net/articles/2008/09/28/news/state/25-coop.txt
Published on Sunday, September 28, 2008. Last modified on 9/28/2008 at 12:53 am
Power co-op expects rate hikes
By LINDA HALSTEAD- Of The Gazette Staff
ROBERTS - For Montana's energy consumers, hindsight is not only 20-20, it's more than a little aggravating.
A decade ago, PPL Montana paid roughly $800 million for the hydroelectric facilities across Montana, said John Prinkki, board president of Beartooth Electric Co-op, during an interview earlier this week. Today, the co-op's board of directors is looking forward to breaking ground - possibly this fall - on the Highwood Generation Station in Great Falls. The coal-fired plant, too, will cost about $800 million by current estimates, but it will produce only about one-tenth the power of PPL's hydroelectric facilities, Prinkki said.
The Highwood Generation Station, rate increases and net metering were all addressed Saturday when a record crowd packed the Roberts High School gym for the annual meeting of the Beartooth Electric Co-op.
Mary Anderson, interim general manager for the co-op, explained why members should expect to see rate increases in January 2009. A recently completed cost-of-service study and a revenue requirements analysis revealed that, to maintain present margins, the rates must be increased by 16 percent per kilowatt-hour and 6 percent for the base rate. Those increases come on the heels of increases in July 2007 and February 2008 that totaled 16 percent.
According to Anderson, the need to raise rates again can be attributed to ever-higher costs of materials and even to the co-op's growing number of residential members.
"I realize it is difficult for people with fixed incomes," she said. "It is our duty to see our co-op survives these times of increased expenses and growing pains."
Meanwhile, net metering - whereby a customer with alternative energy sources can benefit from the net difference between the power he generates and the power he consumes - remains a costly venture that will not be subsidized by the co-op, said Thad Moseman, who provided the engineering report at Saturday's meeting.
Individuals wanting to net-meter can do so but are required to cover all of their costs, including potentially hundreds of dollars in fees to meet safety standards during power outages. Moseman said the co-op figures the break-even point is 30 to 40 years out.
"Net metering will be a big part of the energy future, but right now it seems to be an answer for the wealthier consumers," he said. "I believe conservation in different forms is a cheaper and easier way to accomplish the same goals."
The Highwood Generation Station, touted as a future source of power as the co-op's current contracts phase out, was not listed on the agenda but was addressed in response to a question during a limited question-and-comment period. Despite Yellowstone Valley Co-op's decision to opt out of the project, the board of the Beartooth Electric Co-op stands steadfastly behind it.
Prinkki said delays - due to lawsuits, financing snafus and government policy - have pushed Highwood's cost up from early estimates of just under $500 million to today's $800 million.
"The project delay has just killed us," he said, noting that the difference will cost every customer more than $26 a month for the next 35 years.
Tim Gregori is CEO and manager of Southern Montana Electric, which represents the four co-ops presently backing Highwood. He said Beartooth Electric has invested roughly $2 million toward the project to date. Regarding the loss of Yellowstone Valley's support, he said the financial impact to Beartooth customers "will be zero."
Gregori reported that SME is close to finalizing a deal for private financing of Highwood. Prinkki said they hope to have the short-term financing in line to begin construction before Nov. 30, when the air quality permit expires.
In other business, the co-op membership re-elected incumbents Curt Peters, Lance Million and Fred Weiler to the board. Prinkki also announced that the co-op has hired Ron Roodell as its new manager, effective Dec. 1. Roodell has been managing a co-op in Wisconsin and had formerly managed the Lincoln Electric Co-op in Eureka.