Article published Oct 17, 2007

Energy firm claims it should be first in transmission queue

By JO DEE BLACK

Tribune Business Editor

The Texas-based company that bought a natural-gas fired electric power plant project near Great Falls from NorthWestern Energy claims the energy company has unfairly reassigned its spot in line for a transmission hook up.

Montgomery Great Falls Energy Partners is asking the Federal Energy Regulatory Commission to require NorthWestern Energy to move its proposed 277-megawatt plant to the front of the queue to connect into NorthWestern's system. FERC is the federal agency that regulates interstate transmission of natural gas, oil, and electricity, as well as natural gas and hydropower projects.

Montgomery officials say NorthWestern failed to manage the queue and as a result, plans to bill Montgomery approximately $131 million more than originally estimated to hook into its transmission lines.

NorthWestern officials counter that by the time Montgomery submitted an interconnection request, there were 10 other projects in line.

The Montgomery complaint adds another chapter to the proposed project's trouble-filled history.

Montgomery Energy announced plans to buy what was then called Montana Megawatts in March. Montana Megawatts was a NorthWestern Energy project originally scheduled to operate in November 2001, generating 277 megawatts of electricity from gas-fired and steam-powered turbines. The project stalled after the Montana Public Service Commission rejected plans to sell the electricity produced as firming power to NorthWestern's utility arm. Two years later, NorthWestern filed for bankruptcy and put the project up for sale.

The principal owner of Montgomery Great Falls Energy, Frank Giacalone, claims that when his company bought Montana Megawatts, NorthWestern Energy estimated that it would cost $15 million to connect to transmission lines. Now that estimate is $146.7 million.

FERC has yet to rule on the matter; three companies with projects ahead of Montgomery's request in the transmission queue filed protests to the company's claims.

Officials with Southern Montana Electric Generation & Transmission, which plans to build a 215- to 250-megawatt coal-fired power plant east of Great Falls, said the claim is without merit. SME's project is the first in the transmission queue.

"We do not agree with their (Montgomery) assertions," said Tim Gregori, SME's chief executive officer.

PPL Montana and Great Northern Power Development, which plan to build a 500-megawatt coal-fired plant near Circle, are also protesting Montgomery's claims.

"Montgomery wants FERC to drop other projects out of the queue and we think that would be an unfair outcome," said Bill Pascoe of Great Northern Power Development.

Attorneys for both Montgomery Energy and NorthWestern Energy declined to comment on the matter because the case is pending before FERC.

Taylor Cheek, Montgomery's managing director of business development, also declined comment. However, in July he expressed frustration with NorthWestern Energy and said his company may consider building its own transmission lines.

"The bottom line is that they (NorthWestern) do not have a good system in place to clean out their transmission queue," Cheek said at the time. "We don't think it's appropriate to pay for improvements for projects that may or may not happen."