New Coal Plant to Be Built Near Great Falls, Montana

Power plant to be built with or without financing help from nearby town


HELENA - A proposed coal-fired power plant that would provide electricity for at least 60,000 people in central and south-central Montana doesn't need financing help from the city of Great Falls to succeed, its developer said this week.

"If (Great Falls) doesn't get it all together. we're just going to move forward," said Tim Gregori, general manager for Southern Montana Electric Generation and Transmission Cooperative.

Gregori's comments come as Great Falls' municipal utility, a partner in the 250-megawatt power plant, tries to rustle up enough customers to cover its 15 percent share of plant construction costs.

The city believes it has until Oct. 1 to woo additional electric customers away from NorthWestern Energy, the state's largest private electric utility' The city's nonprofit utility also can sign up, at any time, new industrial customers who aren't buying power from NorthWestern at regulated rates.

"Offers are being made to potential customers," Great Falls City Manager John Lawton said, "They have to assess their risk with us versus their risk of staying with (NorthWestern). That's a business decision for them."

Missoula and Helena both opted not to buy power from Great Falls, citing concerns about the plans for the coal plant. Missoula's decision earlier this month came only after a public outcry against the city's preliminary decision to sign a deal with Great Falls.

Southern Montana Electric (SME) is developing the plant near Great Falls as a source of power for five rural electric cooperatives that are its members. The co-ops deliver power to 60,000 to 70,000 people in rural and suburban areas that stretch from Lewistown to the Wyoming border.

The co-ops have a major supply contract that begins to expire next year. The plant wouldn't be completed until 2011 or 2012.

The city of Great Falls, also a member of SME, has planned to finance 15 percent of the plant, reserving that power for sale through its nonprofit utility, Electric City Power.

The city's utility already is buying power from SME and reselling it to local commercial customers, such as the Great Falls School District and the Montana Refining Co. refinery. SME is buying that power under a contract with power generator PPL Montana.

But the city needs to line up these same customers and more for the long term, before it can finance 15 percent of the plant construction. The entire plant is projected to cost $670 million to $720 million.

Lawton said the city's nonprofit, publicly owned utility can provide long-term competition to Northwestern, by offering power at the cost of production.

"We think we can beat what they may (offer) over the long term," he said.

Gregori said the city of Great Falls has been "an important contributor" to the development of the proposed plant, known as the Highwood Generating Station.

But plant development will proceed if Great Falls doesn't line up enough customers to finance 15 percent of the construction costs, he said.

The size of the plant can be adjusted to 215 megawatts, which is the amount of power the five rural electric co-ops will need, Gregori said.

"Whether (Great Falls) has 15, 10 or five megawatts doesn't reflect on the viability of the plant," he said. "Whatever their load is, we'll meet it."

Great Falls has until Oct. 1 to attract NorthWestern customers because of a law passed by the 2007 Legislature, limiting competition for those customers.

Northwestern, which serves about 320,000 electric customers in Montana, pushed for the law, saying it was needed to shore up NorthWestern's customer base so the utility could build new power plants to serve those customers.

The bill was pitched as utility "re-regulation," allowing NorthWestern to own power plants that would provide a dedicated, regulated source of electricity for its customers. NorthWestern owns virtually no power production and must buy electricity for its customers on the open market at nonregulated prices.

Claudia Rapkoch, a spokeswoman for NorthWestern, said the company is evaluating how it might build 120 to, 180 megawatts of power production, and is looking at a gas-fired plant.

The Highwood Generating Station also faces opposition from one of the state's leading environmental groups, the Montana Environmental Information Center (MEIC), which is opposed to coal-fired plants that will contribute to global warming.

MEIC has challenged the plant's air-quality permit and is closely watching zoning changes that are needed to allow construction of the plant.