Great Falls Tribune
January 16, 2009
Co-op's electricity rates nearly double By RICHARD ECKE Tribune Staff Writer
Efforts to develop a coal-fired power plant near Great Falls prompted a surcharge added this week to power bills issued by the Red Lodge-based Beartooth Electric Cooperative.
Coupled with cold weather and a separate rate increase, some Beartooth customers saw their electric bills more than double.
Michael Kananen of Joliet said the electricity rate increases are the talk of the valley, a scenic area between Billings and Yellowstone National Park.
Kananen said the most recent bill for his 3,800-square-foot house was more than $900, up from $350 last month and $203 the month before.
George Nelson, a school teacher in Roberts, said his power bill jumped to $319, up from $130 last month.
Carbon County Commissioner and Beartooth President John Prinkki said the increase includes a 20.5 percent rise in the costs to cover operations and rising wholesale power prices. The rest is a surcharge necessary to cover a cash-flow problem caused by delays in obtaining long-term financing for the Highwood Generation Station about eight miles east of Great Falls. Kananen said Prinkki told him that about $200 of Kananen's bill was the surcharge. Other customers who use less electricity than Kananen were billed smaller surcharges.
Prinkki told Kananen that the surcharge will continue for a few months, but added it will drop off if officials secure a long-term loan for the $900 million plant, Kananen said.
"We're financially sound,'" Prinkki said. "We just don't have any operating cash."
Beartooth is one of four rural electric co-ops that belong to Southern Montana Electric Generation & Transmission, the coalition developing the power plant.
Tim Gregori, SME general manager, said power plant development costs recently increased the costs to co-op members by about 8 percent, not counting temporary additional charges.
"It is impacting all of our members," Gregori said.
He added that the power plant is not the only factor affecting rates for SME members, noting that Beartooth customers appear to have encountered the largest rate increases of any member co-op.
Scott Sweeney with central Montana's Fergus Electric Cooperative said he expected an increase similar to last year's 9 percent hike.
Alan See with the Tongue River Electric Cooperative in southeastern Montana said customers there will see about a 10 percent increase.
Sweeney and See said their cooperatives avoided any surcharge to fund the Highwood project because they entered into the venture with more cash on hand. See added that rate increases for Tongue River over the last several years allowed the cooperative to cover its power-plant-related costs more gradually.
Gregori said factors that may have affected Beartooth rates included internal costs and, perhaps, a reluctance to raise rates in the past.
Additionally, customers in Wyoming, who make up about 5 percent of the co-op's membership, aren't paying the increase because that state's Public Service Commission rejected it, Prinkki said.
Gregori said that the rural co-ops and their customers would be given some financial relief if long-term financing comes through for the power plant. In the coming weeks, SME officials plan to seek investment-grade bond ratings from Wall Street firms. If those ratings are approved, officials may be able to solicit investments for the project.
As for Beartooth's customers, Kananen is looking into buying solar panels or windmills to try to reduce his power bill.
"If it takes 10 years to pay off my investment, so be it," he said.
SME, which last year spun off a development group called SME Electric, has spent more than $25 million developing the power plant, and has committed an additional $15 million for construction costs and the plant's steam turbine generator, Gregori said.
The Associated Press contributed to this report.