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Who's driving the power plant?

Wind turbines will be built at the Highwood Generation Station, but they can't serve as SME's primary source of electricity, SME General Manager Tim Gregori said. Wind doesn't blow all the time. But customers expect to be able to flip a switch or have their appliance powered whether or not there is a breeze. That leaves coal, hydropower, natural gas or nuclear power as sources. Coal is the most economical and feasible among those choices, Holzer said. "With 25 percent of this nation's coal supply in Montana, it needs to be a part of our energy picture," he said.

When about 700 members of Yellowstone Valley Electric Cooperative gather at the Holiday Inn Trade Center in Billings Tuesday for their annual meeting, election of trustees and the co-op's plans for future power supplies will top the agenda.

There will be door prizes, drawings for $6,000 in scholarships, and entertainment by the Skyview choir. Lunch and child care will be available.

Customers of investor-owned utilities such as NorthWestern Energy may not recognize such fanfare, but the program is typical among the state's 25 electric cooperatives.

What's not typical is the source of electricity being considered by the directors of Yellowstone Valley Electric Cooperative and four others: a proposed coal-fired plant that they will own near Great Falls.

The co-ops, along with the city of Great Falls, are members of the Southern Montana Electric Generation and Transmission Cooperative. That's the entity planning to build a 250-megawatt coal-fired electric plant, the Highwood Generating Station, east of Great Falls. The plant will provide the electricity they need to serve their member, and the excess will be sold on the market.

On the surface, investing in a project... more [truncated due to possible copyright]  

When about 700 members of Yellowstone Valley Electric Cooperative gather at the Holiday Inn Trade Center in Billings Tuesday for their annual meeting, election of trustees and the co-op's plans for future power supplies will top the agenda.

There will be door prizes, drawings for $6,000 in scholarships, and entertainment by the Skyview choir. Lunch and child care will be available.

Customers of investor-owned utilities such as NorthWestern Energy may not recognize such fanfare, but the program is typical among the state's 25 electric cooperatives.

What's not typical is the source of electricity being considered by the directors of Yellowstone Valley Electric Cooperative and four others: a proposed coal-fired plant that they will own near Great Falls.

The co-ops, along with the city of Great Falls, are members of the Southern Montana Electric Generation and Transmission Cooperative. That's the entity planning to build a 250-megawatt coal-fired electric plant, the Highwood Generating Station, east of Great Falls. The plant will provide the electricity they need to serve their member, and the excess will be sold on the market.

On the surface, investing in a project that may end up costing more than $720 million and venturing into the business of power wholesale seems out of step with typical cooperative business practices.

More commonly, co-ops are conservatively managed, focused on providing the lowest-cost electricity to members.

While directors of some publicly traded utilities, including NorthWestern Energy, gambled and lost trying to increase revenue by entering into areas such as communications and technology in 2000, co-ops were locking in to long-term supply contracts.

A short time later, though, the five SME co-ops learned they need a new supply source.

"We put out a request for proposals to suppliers before we decided to start our own project," said Bob Walker, the general manager of Beartooth Electric Cooperative, another SME member. "The proposals weren't attractive in pricing or terms."

Contract terms

A portion of the SME co-op's electric supply comes from the Bonneville Power Administration, a division of the U.S. Department of Energy that sells federal hydropower at cost. BPA serves parts of Oregon, Washington, Idaho and western Montana.

In 2000 Enron was shaking up the energy market, offering BPA customers lower-cost contracts, supplied with electricity they planned to buy on the open market. At the time, natural gas-fired electricity plants also were offering competitive prices.

BPA had excess capacity, which it peddled outside its designated region. The five SME coops, located in central and southeastern Montana, signed on.

By late 2001, Enron collapsed. The BPA, required by the federal government to give priority to customers within its region, was overextended.

The SME co-ops learned in 2002 that their BPA electric supply will begin to taper in 2008 and end in 2011.

Build verses buy

The five SME co-ops, which also include Tongue River Electric, Mid-Yellowstone Electric and Fergus Electric, made the decision to break away from their original buying pool, Central Montana Electric Generation and Transmission, and form their own.

After exploring options, they settled on the plan to build a plant.

"We buy about $9 million in wholesale power a year now," said Holzer. "We'd rather be paying ourselves that $9 million than a supplier such as the BPA."

SME's projections show that the Highwood Generation Station will produce electricity for less than what electricity will be selling for on the open market, he said.

"We wouldn't be doing this if those projections showed that the plant could only produce electricity at the market price," Holzer added.

Member support

Yellowstone Valley Electric surveyed about 5 percent of its members six months ago. About 92 percent support building the Highwood Generation Station, Holzer said.

"About 80 percent of our customer base is residential," Holzer said. "Our members include people on limited and fixed incomes. The cost of electricity is going up and those are the people I worry about. That's why we are doing this, to offer them the lowest price possible."

Roy-area rancher Roger Siroky likes the lowest cost plan. He's a member of Fergus Electric Cooperative.

He installed electric baseboard heaters when he built his home in 1991 to back up the primary heat source, a wood stove.

"When we have to use electricity for heat, boy can you tell in our bill," Siroky said.

He questions the wisdom of building a coal plant, however.

"I'm a believer in more futuristic ways of generating power," he said.

Siroky says he worries about the environmental impact of coal and potential consequences that new regulations could impose on plants that use the fuel in the future.

"In the long run, it may be cheaper to generate with other power," Siroky said, mentioning the wind turbines at Judith Gap.

Wind turbines will be built at the Highwood Generation Station, but they can't serve as SME's primary source of electricity, SME General Manager Tim Gregori said.

Wind doesn't blow all the time. But customers expect to be able to flip a switch or have their appliance powered whether or not there is a breeze.

That leaves coal, hydropower, natural gas or nuclear power as sources.

Coal is the most economical and feasible among those choices, Holzer said.

"With 25 percent of this nation's coal supply in Montana, it needs to be a part of our energy picture," he said.

Different route

The one other co-op in this part of Montana with a BPA contract, Livingston-based Park Electric, decided to take another route.

"We looked at building generation and assessed the risk differently than SME," said Doug Hardy, Park Electric Cooperative's general manager. "We decided to become a more invested member in Basin Electric Cooperative and buy our power from their existing generation facilities."

Basin Electric Cooperative has 120 member utility systems serving 2.5 million consumers in nine states. The co-op owns several generation plants, including coal, natural gas and wind, in Wyoming, the Dakotas and Minnesota.

It was formed in the 1960s after BPA's sister organization, the Western Area Power Administration, tapped out its federal hydro power resources.

Hardy says Basin Electric Cooperative's multiple plants offer reliability. If one goes down, there's still a supply.

"To SME's credit, as far as economic development in Montana, they get an A plus," Hardy said.

That's an important point, says SME's Gregori.

"This is a Montana project that will serve Montanans," he said.



Source: http://www.greatfallstribun...

MAR 11 2007
https://www.windaction.org/posts/7739-who-s-driving-the-power-plant
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