July 13, 2008

 

City's bill for power plant push draws fire

So what about the coal-fired plant?

The city has spent about $2 million so far to help develop the coal-fired Highwood Generating Station power plant proposed east of Great Falls.

Critics have latched onto that in slamming this year's city budget cuts and reductions.

Their argument is that if the city had not spent money trying to build a the power plant, it would have money to pay for fireworks and the DARE program.

City Fiscal Officer Coleen Balzarini said that spending money on power plant development — and the city's utility arm, Electric City Power — does not affect the general fund budget, which covers basic city services.

An Electric City Power deficit of $222,641 this year will be considered a loan from spare city cash, with the expectation that it will be paid back.

That's how the Electric City Power deficit differs from city pools and golf courses. Those facilities each receive direct cash subsidies from the general fund, not loans from other city funds.

Critics do not accept the city officials' explanation that Electric City Power's losses do not affect the rest of the budget.

They say there is at least one way the city's energy spending could affect the general fund.

The city has borrowed $1.5 million for the power plant project from First Interstate Bank at an interest rate of 6.79 percent. The annual payments of about $148,000 will be made through 2025 out of Electric City Power's budget.

If the Highwood Generating Station is not built, and the utility arm cannot raise customers' rates enough to cover the loan payments, the city's general fund, as co-signer to the loan, will be responsible for the annual payment.