Great Falls Tribune

April 7, 2009

SME buys additional power from PPL

By RICHARD ECKE
Tribune Staff Writer

A Billings-based electric cooperative has agreed to buy additional power from PPL Montana for another decade, its top official said Monday night.

Southern Montana Electric Generation & Transmission Cooperative, which supplies wholesale power to the city of Great Falls, contacted 20 power generators in recent months, said Tim Gregori, SME general manager.

Eight generators of power responded, and three were deemed qualified by a consultant, Gregori told the Electric City Power Board Monday in Great Falls. ECP is the city of Great Falls' electric utility arm. Then SME negotiated with the three power generators.

"We signed a contract with PPL Montana," Gregori said. "They were the best candidate." He said he could not disclose the exact rate, but he said he hopes the purchase will help keep SME's power cost increases to less than 10 percent toward the end of the next decade. The new rates, combined with existing sources, will be "not very much higher" than existing rates, Gregori said.

Gregori indicated SME fared well in the process, called a request for proposals, given a recent slowdown in the economy.

"We benefitted from the artificially depressed marketplace," he said.

If SME obtained what it views as relatively attractive rates over a shorter term, Gregori said the six-member cooperative has not decided whether to build a natural gas-fired Highwood Generating Station power plant eight miles east of Great Falls. No state air quality permit has been applied for, as SME tries to obtain solid bids for plant equipment and the natural gas that would fire it. Gregori said natural gas suppliers are interested in what financial ratings SME will receive from New York firms.

Gregori said a natural gas plant would be "much smaller in size" than the proposed coal plant, although he said either plant remains a possibility. He said SME officials are interested in seeing if the Montana Legislature will give proposals such as the Highwood Generating Station some relief during this session.

He said the PPL pact will not preclude the cooperative's development arm from building either the natural gas-fired or a coal-fired power plant eight miles east of Great Falls along Salem Road.

Because of controversy and lawsuits involving the coal plant, "we've had to take a step to the side," Gregori said.

"(Natural) gas plants are being financed," Gregori added. "They're being financed at reasonable rates."

Several spectators mentioned energy conservation and wind power as options; Gregori said those are possibilities SME can look at.

In response to a question, Gregori said SME has a right to purchase sufficient power from PPL even if a natural gas plant were not built.

Ken Thornton of Great Falls said natural gas works best to firm increasingly popular wind power, but he suggested the proposed plant's configuration might not be the best to supplement wind.

Gregori said several options would be available to SME if it decides to go ahead with the natural gas option.

He said a gas option appears to hold "considerable promise" for the group.

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