Article published Mar 4, 2008

Future of Highwood murky after meeting

By RICHARD ECKE Tribune Staff Writer

Opinions were split Monday on whether a loss of federal financing has squashed a pro­posed coal-fired power project near Great Falls area, or simply given the Highwood Generating Station a temporary setback.

At a meeting of the city’s elec­tric utility arm Monday evening, Electric City Power, the city’s fis­cal officer said officials were not shocked by the loan loss.

“That’s something that we’ve been talking about a little bit all along,” Coleen Balzarini said. She said Southern Montana Electric Generation & Transmis­sion Cooperative is checking into private financing for the project.

“That requires a rating for Southern Montana,” Balzarini explained. Balzarini and acting City Manager Cheryl Patton noted it will be up to the financial markets to decide whether the plant is viable.

“It’ll be looked at as to whether it’s a worthy project or not,” Balzarini said.
Critics of the project contend­ed the loss of federal loan dollars means the plant is doomed.

“All this is unraveling,” said accountant Larry Rezentes, who urged the city to get out of the electricity supply business entirely. He estimated Electric City Power’s losses may reach $1.3 million.

“How do you justify your con­tinued existence?” Rezentes asked.
Power board member Bill Ryan said the utility’s rates origi­nally were set too low.
“The contracts following that have now been adjusted,” Ryan said. “We’re recouping these losses as we go along.”

Balzarini also noted the city of Great Falls borrowed $1.5 mil­lion to use for part of the devel­opment costs of the Highwood project. The city has been inter­ested in owning a minority por­tion of the plant.

She said the city would not be obligated to cover any of SME’s costs if the project failed, although the city could still face a potential $1.5 million loss of borrowed dollars if the plant is not built.

She has said Electric City Power could cover its own deficit by raising prices to customers over time.

“This is an incredibly scary thing to get into,” said Ken Thor­ton of Great Falls, a member of the governor’s Climate Change Committee. Thorton repeated his warnings about high poten­tial costs to capture carbon diox­ide given off by the plant.
After the meeting, City Com­missioner Bill Bronson, who has supported the coal plant project, indicated he was not panicking about the project’s loss of federal financing. He said he does not see any “disaster” at this juncture.

Bronson said he believes the project would be aided if the U.S. Department of Energy gives the project federal dollars as a pilot project to capture and sequester carbon dioxide. That’s a green­house gas many scientists believe contributes to global warming.

Commissioner Mary Jolley, who has been skeptical about the city’s involvement in the project, questioned whether the Depart­ment of Energy would give the project money. She criticized SME General Manager Tim Gre­gori for offering assurances that federal funding for the project was “secure.”

“I don’t think the Department of Energy will go into business with Mr. Gregori,” she said. “I wouldn’t lend Mr. Gregori 50 bucks.”

Gregori was not immediately available for comment Monday evening.
Patton noted Electric City Power plans to continue to buy power from SME even if the coal-fired plant is not built. SME has an advantage that it’s a non­profit venture, so it doesn’t need to mark up power prices to gen­erate a profit, Ryan said. 

Reach Tribune Staff Writer Richard Ecke at recke@greatfall­stribune.com, or at 406-791-1467 or 800-438-6600.