This is a guest editorial in the March 5, 2010 Billings Gazette from a member of the Beartooth Co-op:
Beartooth co-op shouldn’t pay for plant it can’t use
Beartooth Electric Cooperative members pay the highest electricity rates in Montana. Our rates rose 25 percent in 2009 and will rise again next month. Now we are about to add to our electricity bills payments on an $85 million loan for phase one of a major power-generating project.
Southern Montana Electric Generation and Transmission Cooperative Inc. (Southern), Beartooth’s wholesale electricity provider, contends that building a generating station will secure our power supply and lower our bills.
There is no evidence that Beartooth members will be able to use any power from this plant before 2019, when Southern’s all-requirements contract with PPL Montana, which supplies our power, ends. Yet, we will begin paying immediately for Southern’s gas-fired Highwood Generation Station described by Standard and Poor’s as a $270 million, three-phase, 120-megawatt facility. Southern has recorded financing agreements for the first 40-megawatt phase of the project.
Beartooth members already are paying off debt for Southern’s first effort at power generation. Southern and its for-profit development arm, SME Electric Generation and Transmission Cooperative Inc., spent nearly $40 million on the 250-megawatt coal-fired Highwood Generation Station before failing to finance it.
It is hard to see how Beartooth, a very small co-op with low electricity demand, can realize a positive return on the $4 million to $6 million it already has invested in Highwood Southern has six members: four small co-ops, Beartooth, Fergus, Tongue River and Mid-Yellowstone; Yellowstone Valley Electric Cooperative, which has filed suit to leave Southern; and Great Falls Electric City Power commercial customers, recruited to justify the original 250-megawatt plant.
Beartooth members have repeatedly underwritten Southern’s expenditures without information or open discussion. Without our knowledge, Southern placed the co-ops’ cheap federal hydropower into a “blended supply.” This allowed Great Falls, which cannot qualify for the federal power on its own, to save $20,000 to $50,000 per month while our rates rose 25 percent.
Electric co-ops pay no state or federal income tax, get low-interest government loans and buy the lowest cost power in the country from federal power-making authorities. In return, they must deliver at-cost, reliable power to rural customers and abide by the universally recognized cooperative principles: democratic decision-making, member control of capital and open information. The principles require Beartooth, Southern, and SME to make the following changes:
• Provide information and insure transparency.
• Pay Beartooth for the power it funds but cannot use.
• Assume no further debt on Beartooth’s behalf without member approval.
• End the conflict of interest for Beartooth’s board president, who simultaneously represents the differing interests of Beartooth, Southern and SME.
Beartooth’s board president serves on the boards of Southern and SME. He represents both sides in negotiations between Beartooth and Southern or SME. This conflict of interest is bad business practice and bad for Beartooth.
Arleen Boyd of Fishtail is a member of Beartooth Electric Cooperative.