July 8, 2008

Former mayor plans to resign from board of Electric City Power

By RICHARD ECKE
Tribune Staff Writer

A key backer of the city's foray into selling electricity said Monday evening he plans to resign from the Electric City Power board.

Former Great Falls Mayor Randy Gray said Monday's meeting of the advisory board might have been his last. Gray said he would be willing to attend the Aug. 4 meeting if a replacement hasn't been named by city commissioners.

At the power board session, Gray expressed mixed feelings about leaving the board, which advises the City Commission on city sales of power to other government agencies and private businesses.

"I've enjoyed my time here, but I'm out of town quite a bit," Gray said.

Opponents of a proposed coal-fired power plant east of Great Falls have criticized Gray and fellow board member Dawn Willey for missing meetings. Willey was absent Monday, but the board did not discuss her situation.

"You will be missed," board member Bob Pancich told Gray at the meeting.

"By some," Gray quipped in reply.

Gray was mayor of Great Falls in 2003 when NorthWestern Energy, the dominant utility in Montana, canceled a contract to provide power to many of the state's school districts and cities. A settlement of that dispute gave the city money that it used to join Southern Montana Electric Generation & Transmission Cooperative, a co-op that wants to build the coal-fired Highwood Generating Station.

Gray lost the mayor's race in 2005 to challenger Dona Stebbins, who expressed some reservations about the power plant. Since taking office, Stebbins has largely supported the project.

In a consolation prize of sorts, frequent city critic Mike Witsoe — who had supported Stebbins as a candidate in 2005 — told Gray he was sorry about the resignation.

"I'm sorry to see you go," Witsoe told Gray. "We made a mistake."

Also at the meeting, local accountant Larry Rezentes criticized Electric City Power for selling electricity to customers at a loss. Rezentes noted that's contrary to a city ordinance that created the advisory board.

After the meeting, Rezentes argued the city should shut down Electric City Power and cancel contracts with customers. Asked if that might be similar to what NorthWestern Energy did to the city five years ago, Rezentes said the city's primary responsibility is to taxpayers.

The city's electric utility has lost about $1 million so far, according to Fiscal Officer Coleen Balzarini, and the tentative city budget projects a loss of $222,631 in the budget year beginning July 1. Rezentes said he is not satisfied the city's losses are shrinking.

"Who's going to pay that?" Rezentes asked. "It's like an individual spending more than they earn and they keep incurring debt on their credit cards."

City officials have said the $1 million-plus debt will be repaid if the power plant is built, or by raising rates to existing customers after old contracts expire. Before the coal-fired plant is built, SME had obtained electricity for Electric City Power from PPL Montana, which owns hydroelectric dams and a portion of the coal-fired Colstrip power plants in southeastern Montana.

Rezentes also criticized the city for proposed budget reductions in city police and other programs, contending Electric City Power losses are prompting that budget trimming.

"Many other programs are being sacrificed," Rezentes contended.

Balzarini denied the city general fund budget, which covers police, fire and other services, is affected by Electric City Power's budget shortfalls.

"It's wrong," she said. "It doesn't affect those programs."

She said Electric City Power "is borrowing that cash from the city's pooled cash." The pooled cash amounts to about $34 million of city funds, not all of which are used every day, she said. Balzarini said the city borrowed $1.5 million from First Interstate Bank to help cover development costs of the coal-fired plant. The city's electric utility budget makes $148,000 in payments to the bank annually.

Balzarini added the city general fund backed that loan, so the general fund might be on the hook to take over those payments if the power-plant project were to fall apart.

City commissioners say they hope to clarify the city's role in the power-plant project later this summer.

Plant developers hope the project will receive bond ratings sometime in August, which would help clear the way for plant backers to try to market revenue bonds to pay for the $800 million project.