Great Falls city commissioners must decide whether they want the city to become a partial owner of the coal-fired Highwood Generating Station proposed east of Great Falls.

 

 

Owning a one-fourth share of the power plant could cost the city an additional $600,000 to $3 million in development costs before plant construction begins, City Manager Greg Doyon told commissioners Friday in a memorandum analyzing the situation. Doyon outlined the city's options in light of developments surrounding the controversial power plant during the past 12 months.

The city already has spent $2 million to help develop the plant, and has an ability to borrow another $500,000 for such costs, the memo said. However, because additional investment costs could be as high as $3 million, the city would probably need to ask voters to approve a general-obligation bond to retain a one-fourth interest in the project, the memo states.

"The commission is going to have to make some decisions," Doyon said Friday afternoon in an interview. Whether the city will attempt to own a part of the plant remains a pressing issue.

Another option would be for the city to maintain a "very, very minimal" share of the project, using the $2 million it already invested to continue to have a say in the plant's development.

The city also could try to sell its investment in the plant back to project developer Southern Montana Electric Generation & Transmission Cooperative, the memo states. The city's analysis said there could be down sides to that approach, however. The city would lose first rights to buy electricity from the power plant, and would give up power over SME's administrative activities.

Great Falls has contracts to purchase electricity from SME through 2048, so even without ownership in the plant it would remain an SME member and customer. But without first dibs on power from the coal-fired plant, the city might end up having to buy higher-priced power SME obtains from another source.

In the memorandum, Doyon cited three major developments affecting the project in the last year:

 

The federal Rural Utilities Service refusing to finance the bulk of the project;

 

 

SME recently deciding to create a new, standalone corporation to develop the project, minus its largest co-op member, the Yellowstone Valley Electric Cooperative; and

 

 

Legislative and regulatory changes prohibiting Electric City Power, the city's utility arm, from selling power from the Highwood power plant to the bulk of the city's residential users.

 

"I believe that these financing, legislative and membership developments require the city to pause and take a second look at its role in the development of HGS," Doyon wrote.

The first public discussion of the city's new analysis of its energy options may come at 5:30 p.m. Monday, when Electric City Power's board of directors meets in the Civic Center, 2 Park Drive S. Electric City Power buys electricity from SME and sells it to government and private customers in northcentral Montana and other parts of the state.

As a preface to his memorandum, Doyon pointed out he has attended only one Electric City Power board meeting and two SME board meetings so far.

"I also want to be clear that I am not being critical of prior decisions or the city's involvement with SME and HGS," Doyon said, adding he simply reviewed the status of the power plant project at the City Commission's request.

Doyon also said he is waiting for SME to explain how much information it is able to provide to the city. He said Montana has broad "right-to-know laws," but SME's corporate structure is not so flexible, and the co-op is less inclined to release information it considers sensitive or proprietary. Doyon said he would like this issue to be resolved.

In his memo, Doyon said the city of Great Falls could provide utility service to the proposed power plant regardless of whether it is an owner.

"If the intent was to provide affordable electric power for residential and commercial users, the city has essentially been prevented from achieving this goal," the memo states. "However, if it was the city's intent to provide services to the facility and make positive financial gains in the process, then that goal could be met if the plant were to be constructed without the city having direct ownership of the plant."

The memo states that despite the legislative restriction, Electric City Power still would have the ability to sell power to large industrial electricity users, which would be a plus for Great Falls' economic development.

Doyon said his memo was included in commissioners' informational packets distributed Friday.