June 27, 2008

City puts coal plant on back burner for 30 days

By RICHARD ECKE
Tribune Staff Writer

After much debate Wednesday over the Highwood Generating Station proposed east of Great Falls, city commissioners chose to wait at least a month before they decide what to do about the city's involvement in the controversial coal-fired power plant.

In a discussion at the commission's agenda-setting meeting, Great Falls' newest commissioners, Mary Jolley and Bill Bronson, demonstrated their differing positions on the power project.

Jolley opposes the city's involvement in the coal plant. She objects because she feels the city failed to ask voters how they felt about the project.

"I'm not against coal plants," Jolley told fellow commissioners Wednesday.

For his part, Bronson told Jolley that if the city drops efforts to purchase its own energy, it would be forced to go back to buying power from NorthWestern Energy. Bronson said NorthWestern abruptly canceled a power contract with Montana school districts and cities in 2003, a unilateral act that angered many public officials.

Since then, Great Falls joined the Southern Montana Electric Generation & Transmission Cooperative, with the idea of becoming part-owner of the power plant.

At meeting's end, Bronson warned that construction of new power plants cannot grind to a halt, or "we're going to have some real problems as a country."

Many environmentalists and physicians have spoken out against the coal plant, and some history buffs are irritated by the plant's proposed location along the Lewis and Clark Trail. Some conservatives, like Jolley, also oppose the plant because they don't want the city sticking its nose into private enterprise's territory. Critics tend to favor wind, other renewable power and energy conservation.

Plant backers say the coal plant would be one of the nation's cleanest, would boost the county tax base by one-fourth, employ union construction workers for several years and add around 70 good-paying permanent jobs when the plant opened. They also contend the power would be reliable and cheaper than the alternatives, including natural gas-generated and wind-generated power, and that renewable energy won't come close to meeting the country's power needs. The plant has received support from the Great Falls Development Authority and area labor unions.

Wednesday's meeting prompted a wide-ranging discussion of the city's involvement in the power project, which has become more controversial amid concerns about climate change.

One option would be for the city to give up its voting position on the SME board and simply become a customer.

"I don't know what that does to us long-term," Doyon said. As it stands, Doyon votes on motions in front of the SME board. In the past, city officials said being on the SME board gives the city a say about the project it would not otherwise have.

City Commissioner Bill Beecher said it will be up to Doyon and city staff to assess the options and make recommendations to the commission. A city decision may not come until August or later.

Rosenbaum said he believes the power project remains very attractive to investors or even to a potential buyer. The project already has been granted a state air-quality permit, though that permit is currently under review by a subcommittee of the Legislature's Environmental Quality Council.

"They could sell that air-quality permit tomorrow," Rosenbaum said. That's not an option SME officials have emphasized, however.

In Great Falls, SME General Manager Tim Gregori recently said he believes the project is on track to receive investment-grade ratings from two Wall Street ratings services later this summer. Then he said the approximately $800 million Highwood Generating Station project could be offered to private investors through the marketing of revenue bonds. Investors would decide whether the project would fly. Plans for federal low-interest loans for the SME plant and other coal plants fell through earlier this year.

Gregori recently advised city commissioners not to make any hasty decisions about the city's $2 million investment in the plant. SME has spent about $20 million so far developing the project, he said.

Gregori said he might ask the city for more money at some point, but he urged the city to sit back and see what happens in the coming months. He also said the city could stand pat on its investment, and end up owning an 8 percent or 9 percent share of the plant.

As various legal and regulatory hurdles remain for the project, Gregori said SME has been talking to a handful of groups interested in signing contracts for the remaining power that the 250-megawatt coal plant would produce.

The developer was left with extra power to sell after Yellowstone Valley Electric, SME's largest co-op member, dropped out.

One of the interested utilities is the Ephrata, Wash.-based Grant County Public Utility District, which might decide to add coal power to its portfolio, along with hydroelectric power generated by area dams, according to a news story last week in the Columbia Basin Herald.

Tom Flint, a PUD commissioner, told the newspaper the district needs "a firm power base that we can use and one that's 24-7 (that) we can rely on."

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