Article published Feb 22, 2008

Governor asks for investigation of power plant settlement

By JOHN S. ADAMS

Tribune Capitol Bureau

HELENA — Gov. Brian Schweitzer on Thursday asked Attorney General Mike McGrath to open a criminal investigation into whether the owners of a troubled western Montana power plant misled state regulators in order to avoid paying a $1.9 million fine.

The request comes just two days after environmental groups and more than a dozen Sanders County resi-dents sent a letter to the governor accusing former Thompson River Co-gen co-owner Barry Bates of misleading the state Department of Environmental Quality. They said Bates wasn’t honest about the company’s financial situation and its plans to sell the plant to an investment firm, and urged the governor to initiate an investigation.

“I believe the allegations raised in the letter are serious and warrant investigation,” Schweitzer wrote in his letter to McGrath.

A spokeswoman for McGrath’s office said the matter has been referred to the Division of Criminal Investiga-tion.

Anne Hedges, program director for the Montana Environmental Information Center, said she applauds Schweitzer’s speedy response to the issues raised in the letter to Schweitzer. 

“This is exactly what should be done,” Hedges said Friday. “It’s going to take a criminal investigator to get to the bottom of this and to find out what people knew and when they knew it. That will be the only way to truly determine if they lied to state.”

In 2006 the DEQ fined Thompson River Co-gen $1.9 million for violating its air quality permit, but company officials told the DEQ that the plant, which had voluntarily shut down in October 2005, was in dire financial straits and couldn’t afford to pay the full amount. The DEQ agreed to let the company to hire an independent analyst to assess the company’s ability to pay the fine. 

According to the independent financial report, one of the factors that would have impacted the plant’s future capability to pay the full $1.9 million fine was whether the plant, or the company, could be sold to an entity that could operate the facility more economically. The report concluded that there was “no such possibility on the horizon.”

The DEQ settled with the company in November 2007 for $200,000. That same month Thompson River Co-gen sold the plant to a new Montana corporation, Thompson River Power, for an undisclosed amount. 

Details of the sale have not been made public, and calls to Bates’ Kalispell office have not been returned. A representative for Wayzata Investment Partners, the Minnesota-based investment firm that owns Thompson River Power, said the company does not comment to the media. 

The plant’s critics say the DEQ never should have allowed Thompson River Co-gen to hire an independent analyst in the first place. Instead, they say, DEQ should have conducted the analysis in-house and kept the details of the audit on file. John Arrigo, administrator of the DEQ’s enforcement division, said the company refused to divulge private corporate information to the state but agreed to turn the information over to the independent auditor. 

In his letter to McGrath, Schweitzer said he instructed DEQ Director Richard Opper to ensure full depart-mental cooperation with the investigation. 

Reach Tribune Capitol Bureau Chief John S. Adams at 442-9493, or jadams@greatfallstribune.com