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Southern Montana Electric Generation & Transmission Cooperative (SME), Highwood, Montana
Background:
- Five co-ops banded together in 2003 to build the Highwood Generating Station coal plant.
- Yellowstone Valley Electric, who had contributed the lion’s share of the financing, began questioning the feasibility of the project. The other four co-ops formed a new corporation excluding Yellowstone. Yellowstone will not receive any monies back and is committed to purchasing power from SME until 2030. They have lost their say over SME’s energy purchasing agreements and are out millions of dollars. Yellowstone has sued and in January 2009, SME filed a counterclaim and demand for jury trial.
- In the meantime, coal-fired power plants were losing clout and funding because of public health concerns and pending carbon costs. Challenges to air quality permits and a lawsuit from local landowners concerning zoning delayed the project. Then the federal Rural Utilities Service denied what would have been a favorable loan.
- February 2009 – the project was dropped. $40 million has been spent over the last five or six years. Pending cost estimates for the 250-megawatt plant nearly doubled from $456 million to about $950 million. Current plans are to construct a $210 million, 120- megawatt plant powered by natural gas with wind turbines for additional power. Much of the site work done for the coal facility is transferable to the natural-gas project.
What this means for co-op members:
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The 50,000+ electric cooperative members in Montana who were going to use the coal plant will be paying $30 per month for the next 35 years to recoup the $40 million spent thus far. Co-op officials are looking for long-term financing to cover the $40 million which would offer some relief to customers.
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Beartooth Electric is one of the four co-ops belonging to the SME consortium. Beartooth serves about 4,000 rural customers. During this winter’s (2008-2009) coldest months, Beartooth Electric, Montana, began charging members for the project. This, on top of 20.5% rate increases to cover operations and rising wholesale costs of power, amounted to 40% to 50% increases during December and January. For George Nelson that meant a jump from $130 in November to $319 in December. Owners of the Y-Stop convenience store saw an increase from $600-$700 per month to $1,233. Roberts School saw a nearly $1200 monthly increase. (See helenair link below) These increases came without warning. At the board of directors meeting in September 2008, the projected increase was estimated at 16.1%.
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Beartooth also serves members in Wyoming, where the co-op had anticipated exemption from rate-regulation before the Wyoming Public Service Commission (WPSC). Wyoming customers were facing a 65% increase for residential rates. However, the increase portion allotted to development costs was turned down by the WPSC.
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Fergus Electric Cooperative and Tongue River Electric Cooperative, two members of the SME consortium, entered into the Highland venture with more cash on hand. Thus, their cooperatives have avoided passing on the $40 million surcharge to customers.
What Beartooth Electric members are doing:
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Beartooth members are becoming vocal about other issues, as well. They have complained publicly to the press that it’s very hard to get specific information about the costs of the co-op and that it is even hard to get into a board meeting. Members are not allowed to make motions from the floor at board meetings and only have a voice when they vote for representatives on the board.
Sources:
http://www.billingsgazette.net/articles/2009/02/02/news/state/20-highwood.prt
http://www.helenair.com/articles/2009/01/15/state/100st_090115_electric.txt
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