Article published May 12, 2007

Coal-fired power plant gets green light

By KARL PUCKETT

Tribune Staff Writer

State and federal regulators on Friday gave two thumbs up to plans to construct the state's seventh coal-fired power plant outside of Great Falls.

"It was a good result for the project and, I think, a good result for the public," said John Lawton, city manager for Great Falls, which is a partner in the facility.

Opponents of the project, however, gave the rulings a thumbs down, and vowed to continue fighting the proposed Highwood Generating Station.

The $720 million plant would produce 250 megawatts of power and serve up to 120,000 rural electricity customers from Great Falls to Billings.

The favorable "record of decision" for developer Southern Montana Electric Generation and Transmission actually contained two major decisions:

The U.S. Department of Agriculture's Rural Utilities Service agreed to fund the majority of the construction cost — assuming the specifics of SME's loan application are approved in the coming months.

And the state Department of Environmental Quality agreed to issue a final air-quality permit, which the plant needs to operate.

RUS and the state DEQ jointly issued the decisions, which do not guarantee the plant will be built.

But for those who support the plant, they were critical victories in the march toward a groundbreaking.

The remaining regulatory hurdle is a federal decision on the loan guarantee to finance construction.

"It's one of the steps we go through in getting ready to reach a decision on loan approval," Jim Newby, RUS's assistant administrator of electric programs, said of Friday's decision.

Now that RUS officials have agreed in concept to fund the project, federal officials will go to work evaluating specifics of the project's financial and engineering feasibility.

That process will take a couple of months and will precede a decision on the loan guarantee, Newby said.

The environmental review of the project found the power plant would not have a significant environment impact, said Jim Andrew, administrator of RUS. He also noted that most of the power from the new plant already is committed.

For him, both were key issues to consider before signing the record of decision.

"With all those factors together, it just seemed feasible to me," Andrew said from Washington, D.C.

The consortium of five rural cooperatives that make up SME is seeking a loan from RUS to cover 85 percent of the estimated cost of $720 million, while the city of Great Falls is planning to pay for the remaining 15 percent.

The previous split had been 75-25.

SME CEO Tim Gregori said the change is because of revised load forecasts showing the five co-ops now need 213 megawatts of power, which would reduce the dedicated allocation for Great Falls to 37 megawatts.

But Lawton said the city still would be able to buy additional power from the plant, if necessary. The city's utility arm, Electric City Power, provides power to larger governmental and industrial customers, but not residents.

The final air-quality permit requires SME to install additional mercury-control equipment above and beyond its regular pollution controls, said Dave Klemp, the DEQ's permitting program manager in the agency's permitting and compliance division.

Klemp said one of the biggest complaints the DEQ received from the public was that the mercury-control equipment wasn't included in the draft permit.

"It's going to add some extra expense (to the plant), but it's not uneconomical from our perspective," Klemp said.

Gregori said SME was planning to use the "activated carbon injection" mercury-control equipment anyway.

The public has 15 days to appeal the air-quality permit decision, Klemp said.

Friday's decision drew a quick reply from opponents, who have criticized the facility over emissions even as the developers have touted the plant's state-of-the-art pollution-control technology.

"We feel very confident this is never going to happen," said Charles Bocock of Citizens for Clean Energy.

He predicted that lawsuits he expects to be filed in response to the decisions would shine a spotlight on what he described as RUS' ineptness in reviewing the project.

Anne Hedges of the Montana Environmental Information Center said MEIC would appeal the air-quality permit decision.

She also said lawsuits were "probable" against the state for the air-quality decision and the RUS for its environmental review of the project. She called the record of decision a "pathetic excuse" for a decision.

"RUS has been ignoring the concerns of the public for almost a year," Hedges said.

One of the environmental organization's largest concerns is the emission of greenhouse gases. According to the environmental impact statement, Highwood would emit about 2.8 million gallons of the gases — linked by scientists to climate change — yearly.

Gregori, however, said the decision affirmed the need for the plant to provide electricity and also that it meets all applicable state and federal environmental regulations.

He said the DEQ and RUS did yeoman's work. He added that he is expecting a legal challenge.

"When we started this process, we realized it was a significant undertaking that would have many peaks and valleys," he said.

RUS officials say they want the National Park Service and SME to reach an agreement on mitigating the proposed plant's impact on the historic Lewis and Clark Trail before funding is released.

A portion of the trail, a National Historic Landmark, is within view of the plant.

Even without a mitigation agreement, Newby said RUS has the authority to fund the project. The record of decision says "additional stipulations" resolving potential adverse effects to the Great Falls Portage National Historic Landmark are being negotiated.