PSC member says answers needed on coal plant

By BOB RANEY

As a Public Service Commissioner I have dedicated the last two years on the

job to investigating Montana's energy needs and the methods available to

meet those needs. During this time the debate has raged on whether Great

Falls should become a partner in the High-wood generation plant. I can't

help but wonder if the citizens of Great Falls have asked the right

questions and if they are satisfied with the answers they have received.

Since this decision is one that could obligate some electricity consumers of

the Great Falls area to pay for the Highwood plant for about 60 years, a

decision on moving forward should not be made before all the complex factors

are considered.

At present, Northwestern Energy supplies about 330,000 customers (including

Great Falls residents) with electricity it purchases for the "default

supply" created by deregulation. This supply includes base load, peaking

power, load following and many other services to ensure the reliability of

the system and to ensure you have electricity when you flip the switch.

The supply comes from a wide variety of generators from many different

places to help ensure reliability. In addition, the load is distributed over

a wide area helping to level out demand on the system. Then, NWE sells it to

you for exactly what they pay for it - that's the law.

NorthWestern Energy transmits and distributes that energy to you and bills

you for , doing so no matter where or by whom the electricity is produced

(including Highwood).

Fast forward to the proposed plan for Great Falls to supply its own

electricity from the High-wood Generating Station. That plant will produce

250 megawatts of electricity and must run at a constant output 24 hours a

day. If that is more than the co-ops and Great Falls consumers need, the

electricity must be sold to someone else. Who will buy, for how many years,

for how many megawatts, at what cost and over what wires will it move?

Are there contracts to handle this problem? If no one will buy it, the plant

does not shut down - it pays a non-coal generator (the dams) to shut down

production. Since the dams are "flow-of-the-river, coal production replaces

hydro production (by far the cheapest) and the water is lost down stream.

What will that cost the customers of the Highwood plant? What effect will

future cost of coal and rail transportation have on customers of Highwood

and is it accurately reflected in proposed costs to customers?

Alternatively, if the Highwood plant is not producing enough electricity to

meet consumer needs, the power must be purchased on the market. That is very

complex and requires very sophisticated equipment, highly trained employees

and lots of money. This purchase must be made at any time the Highwood plant

shuts down for any reason including planned maintenance and emergencies.

Where will the electricity come from to replace the lost Highwood

electricity and how much will it cost? Will it even be available? Where is

the contract and what are the costs? The reliability of the Great Falls

supply will be dependent upon one single plant - Highwood.

In the end, do the people of Great Falls get more reliable and lower-cost

electricity? Does putting all your eggs in one basket (Highwood),

independent of the rest of the consumers in Northwestern Energy service

territory, make Great Fall's more secure?

How much will the likely upcoming carbon tax and cap and trade of carbon

dioxide (CO2), the major climate change pollutant, which is coming in the

near future fit into the cost per customer equation? Has it been calculated,

included, or ignored?

All of Europe, Canada, all of the New England states and California have

invoked cap and trade on CO2 and this will significantly raise the cost of

electricity from coal-fired plants such as Highwood that do not capture and

sequester CO2 emissions. The cost to pollute with CO2 has risen to more than

$20/ton in Europe and may be the same in the United States in the

not-too-distant future (post-President Bush).

Does the present estimate of the cost of electricity from High-wood reflect

the dramatic increase in the cost of cement and steel for construction since

the original proposal was submitted?

Once the .citizens of Great Falls commit to the Highwood plant they will not

be allowed back into the Northwest Energy control area for provision of

electricity. If all the contingencies are not covered and all the

purchase/sales contracts are not properly understood and committed to,

perhaps the citizens of Great Falls may soon wish they still stood with the

rest of the 330,000 Northwestern Energy customers who are reasonably

protected by a regulatory body that asks all the hard questions, demands and

reviews the answers and rules for the best interests of all concerned - the

PSC.

Do the citizens of Great Falls and the SME Cooperatives really want to

commit for 60 years to a single-source coal plant, pollution and all? Or, do

they want to participate in renewable energy production with wind and

hydrogen, or coal gasification plants with full pollution controls including

CO2 capture and sequestration?

The age of pulverized coal plants, such as Highwood, is almost over. Why

would citizens in the Great Falls area, want to commit to a 60-year future

with polluting technology .from the past, while facing multiple serious

unknowns about the future cost? It appears to be prudent counsel for Great

Falls area electricity consumers to look before they leap on the High-wood

plant.

Bob Raney, D-Livingston, is Public Service Commissioner from District 3,

which takes in southwestern Montana.