Major Omisson

In the minutes of the joint City Commission-ECP board meeting held January 11, the admission by the city manager that ECP has been violating its own ordinance was not recorded. Here is the proof of that statement:

City Commission Work Session - Feb. 2, 2010

When: Tuesday, Feb. 2 at 5:30pm

Where: Gibson Room

Agenda:

Centene Stadium Proposal – Marty Basta
Snorkel Truck replacement – Randy McCamley
Great Falls Development Strategic Plan – Brett Doney
Firefighter Contract Negotiation Update

Neighborhood Councils - Week of Feb. 1, 2010

Two councils are meeting this week:

NC#6:

When: Wednesday, Feb. 3 at 7:00pm

Where: Sunnyside School Music Room

Agenda:

Committee reports

Nixel notification system—Kristal Kuhn (city's emergency planner)
Compost—Mike Dalton

Neighborhood Concerns

NC#3:

When: Thursday, Feb. 4 at 7:00pm

Where: Riverview School Cafeteria (new location)

Agenda:

Election of Officers and review of Bylaws
Nixel notification system —Kristal Kuhn (city's emergency planner)
Compost—Mike Dalton
Issues of Neighborhood Concern

Joint Meeting Minutes

On January 11, 2010, the City Commission and ECP board held a joint meeting. Here are the minutes to that meeting.

Neighborhood Councils - Week of Jan. 25, 2010

Only one NC is meeting this week:

NC#4

When: Thursday, Jan. 28 at 6:30pm

Where: Heritage Baptist Church, 900 52nd Street North

Agenda:

Election of officers

Review of bylaws

North Industrial Park - Brett Doney

Mitch Tropila - State senator

Neighborhood concerns

Cable 7 Breakthrough

UPDATE:

At this time, the link to forward the online application (see below) does not work. As soon as it is repaired, I'll let you know.

For quite sometime, several concerned citizens have expressed discontent with the lack of public meeting coverage supplied by Cable 7. Last year, the city cut Cable 7's budget (page 8) and currently has only 1 part-time employee.

What is frustrating is that the city receives $656,000 (page 13) in franchise fees from Bresnan, but allocated only $21,000 toward Cable 7. It's also been very frustrating and hard to understand why the "current" board hasn't met in years.

Suffice it to say Cable 7 has not been taken seriously for a very long time.

Last night, Mayor Winters asked if anyone would be interested in sitting on Cable 7's board. If you are, visit here for the application or contact Kevin Manthey at 761-8123 or kmanthey@greatfallsmt.net.

Good Move Toward Transparency

The City Commission took a step in the right direction toward transparency last night when they voted unanimously to have the city's check registers posted online. This will give citizens the opportunity to review every check the city writes. (This was an issue I addressed when running for mayor).

Wire transfers will not be online as they are a manual process. but they will still be listed on the over $5,000 report.

This is a very good decision.

Work Session - Jan. 19, 2010

Great Falls Port Authority
When: 5:30 PM - Gibson Room

Agenda:

Annual meeting and installation of officers


Work Session:

When: 5:45 PM - Gibson Room

Agenda:

EPA Update and Utility Rate Review by:

Chad Parker, Dave Dobbs, Coleen Balzarini, and Martha Cappis

Neighborhood Councils - Week of Jan. 18, 2010

Three councils are meeting this week:

NC#5

When: Monday, Jan. 18 at 7:00pm

Where: GF Clinic Specialty Center

Agenda:

Committee reports

Election of officers and review of bylaws

Neighborhood concerns

NC#1

When: Tuesday, Jan. 19 at 7:00pm

Where: Meadowlark School Library

Agenda:

Committee reports

Bylaws amendment

Airport Directory, Cynthia Schultz

Neighborhood concerns

NC#8

When: Thursday, Jan. 21 at 6:00pm

Where: PreRelease Center, Women's Annex

Agenda:

Committee reports

Election of officers and review of bylaws

Neighborhood Watch

Neighborhood concerns

Why We Continue To Have Problems

In today's paper, Electric City Power board member, Robert Pancich, took Greg Jergenson to task for contributing a critique of the Burns and McDonnell report. Pancich thinks it wrong and out of line:

Jergeson 'report' on Electric City Power wrong, out of line

By BOB PANCICH

Last Saturday, the Tribune published an article by reporter Richard Ecke which featured PSC Chairman Greg Jergeson's criticisms of the Burns and McDonnell consulting report on the city of Great Falls' energy ventures.

Notable among the criticisms was that the consultants "failed to include a deferred supply credit given to customers for the year." This was important because it skewed the comparison of NorthWestern Energy's rates with Electric City Power's rates.

According to Public Service Commission Chairman Jergeson, "ECP customers barely eked out $112,000 in savings compared to taking power supplies from NWE for the five-year period"

There is only one problem with this analysis. It is wrong. Dead wrong.

I asked the city for the calculation used in the consulting report. It shows that the deferred supply credit was subtracted from NWE rates for the years being compared. The comparison in the consulting report is correct. ECP customers saved approximately $2.6 million for the period shown.

Remember that 25.88 percent of ECP's customer load consists of agencies supported by the taxpayers such as the schools and city operations. So part of the savings directly benefits the taxpaying public.

Chairman Jergeson calls the report's conclusions "sophomoric." This characterization is an insult to sophomores everywhere.

I would suggest that any competent high school sophomore could do better research and analysis than the PSC chairman. All he had to do is ask for the calculation rather than making it up.

The chairman states that he did his work on nights and weekends. It shows.

If the staff of the PSC had analyzed the consultant's report, this mistake would never have been made.

The Tribune bears some responsibility as well. Sadly, print journalism seems to have devolved to a process of running back and forth between people who are opposed to each other and reporting what they say. There appears to be no independent analysis or verification.

In this case, there wasn't even an attempt to check the facts or to get an opposing viewpoint. The call to the consultants was merely "cover" since they could not possibly have had time read the Jergeson report to make intelligent comment.

The chairman delivered his work and it was rushed into print as "news." If I were a cynical person I would say it was meant to influence the discussion between the City Commission and the ECP Board on Monday evening.

The Public Service Commission is a statewide regulatory body, not a policy-making body. Why is the titular head of a state regulatory agency spending time and effort bullying a local policy-making body, the City Commission, into acting on his conception of what local energy policy should be?

State law and common sense require public officials, in their official capacities, to act within the scope of their responsibilities. The Public Service Commission chairman might benefit by reflecting on this basic ethical requirement.

The Tribune might do some reflecting on its responsibilities as well. It might save future embarrassment.

I couldn't help but chuckle at the over-whelming irony of Mr. Pancich's accusation toward the Tribune when he accused them of evidently not doing any "independent analysis and verification".

Mr. Pancich knows the "Jergeson report" is wrong, because he asked "the city", aka Coleen Balzarini, for the calculations used in the Burns and McDonnell report. And imagine that. The numbers used by B&M were correct!

Yes. Let's talk about why nobody else, except for the public and a publically elected official, have taken the responsibility to do any independent analysis of this entity.

This editorial only proves what so many of us have known all along; the ECP board is ill-advised, uniformed and an embarrassment.

City Commission/ECP meeting

Here is the play-by-play by Travis of the joint City Commission/ECP meeting held last night.

If you attended, let us know your thoughts.

Neighborhood Councils - Week of Jan. 11, 2010

Three councils meet this week:

NC#7

When: Monday, Jan 11 at 7:00pm

Where: Great Falls Rec. Center

Agenda:
Goals for 2010

Traffic problems

Neighborhood concerns
Committee reports

NC#3

When: Thursday, Jan. 14 at 7:00pm (rescheduled from last week)

Where: Westgate Mall

Agenda:
New council formation

Neighborhood concerns

NC#9
When: Thursday, Jan. 14 at 7:oopm

Where: GF High South Campus, Room #111

Agenda:

Neighborhood Watch

Neighborhood concerns

A Critique Of The Burns And McDonnell Report

Here is the critique of the Burns and McDonnell report written by Greg Jergeson, the chair of the Montana Public Service Commission.

It pretty much says it all; the city paid $60,000 for a whitewash:

"As a whole, it is regretted that the City of Great Falls did not get better value for its money, for the Burns & McDonnell report is surely an insufficient product, grounded in facts which are simply incorrect".

City Commission/ECP Meeting

When: Monday, Jan. 11 at 5:30pm

Where: Missouri Room, Civic Center

Agenda: Discuss the recommendations of the Burns and McDonnell report

Response To "Licensed CPA"

The other day, we had, once again, an anonymous commenter take aim at Larry Rezentes' credentials as a Certified Public Accountant. The following is Mr. Rezentes' response to this latest, unwarranted attack:


HERE WE GO AGAIN. MY RESPONSE TO “A LICENSED CPA”

My background was posted on this blog a number of months ago, with a link to that posting kindly provided yesterday by Sandra Guynn. I suggest that our "Licensed CPA" read it.

As noted in my prior response, I am a CPA, and maintain my license in Texas, where I first became certified, and have for the last 34 years. I do so, as does apparently our “Licensed CPA”, by meeting my required annual 40 hours of Continuing Professional Education, and payment of an annual license fee. As I also mentioned in my prior response, I am a member of the American Institute of Certified Public Accountants and have been a member for the last 14 years. Obviously, to be a member of the AICPA one must be a Certified Public Accountant.

One thing we may infer is that our “Licensed CPA” is unaware that Montana is among 39 other states, including Texas, that have passed mobility legislation providing reciprocal recognition to CPAs from other states. Such legislation has been enacted in recognition of the uniform exam we take to become CPAs, together with, in almost all cases, identical Continuing Professional Education requirements. As my practice as a CPA is in my employment with the U.S. Department of Justice, Office of the U.S. Trustee, however, I have no need or requirement to be licensed in the State of Montana. I do not engage in the practice of public accounting and never have in the State of Montana.

Our “Licensed CPA’s” petty and patronizing assessment and resentment to the contrary, I challenge him or her to compare credentials to mine. I am not impressed by their petty resentment of my use of the credential that I have held for well-nigh thirty-five years. Yes, as they indicate, I am well able to analyze financial statements to assess the financial results of businesses. That comes from my educational background with an undergraduate degree in accounting from Fairleigh Dickinson University, an M.B.A. in finance from the University of Chicago Graduate School of Business; followed by three years in public accounting with Arthur Andersen; and then two years as Senior Financial Analyst for Friedrich Air Conditioners. A 25 year career followed that as CFO in public, venture capital and private equity financed businesses. These included businesses in both high-growth and turnaround settings. I have served as CFO of two businesses in chapter 11 bankruptcy. This, of course, is now abetted for the last 5 years initially assessing, and then monitoring, all chapter 11 bankruptcies filed in the State of Montana. I also was active for 15 months prior to that in participating in the liquidation of Touch America, working with Protiviti. I possess hands-on CFO experience in multiple industries; including manufacturing, retail, high-technology, medical technology, telecommunications, e-learning, and support services; with one experience in such a role for two years on-site overseas in the Middle East. As shown above, yes, I also am a CPA.

And what do we know about you, “Licensed CPA” that qualifies you to judge my credentials? You have chosen to hide behind the anonymity provided in the blogosphere.

Lawrence C. Rezentes, CPA

Will There Even Be A Video Conference?

The regularly scheduled meeting of ECP was canceled last night, because "scheduling the date and time for the next ECP Board meeting will be determined subsequent to the video conference meeting with the City Commission and Burns & McDonnell".

Interesting that an assumption has been made that a video conference is going to take place. Publicly, there has not been an announcement made to that effect.

I'm wondering why Burns and McDonnell would even make an effort to "show-up" at a video conference. They've been paid in full (here and here) for their services in spite of the fact that our city manager, Greg Doyon, said the report didn't answer all of the questions about ECP.

And if they do agree to a video conference, how much are they going to charge to tell us what they should have told us initially?

And speaking of full payment for this report, who authorized it? To the best of my knowledge, the Commission certainly didn't. Once again, payments were "authorized" after they were made.

"Dereliction Of Affairs"

As noted yesterday, ECP did not meet last night at what should have been a regularly scheduled meeting. Instead, they used the excuse that they will meet after the teleconference with the Commission and Burns and McDonnell.

As Travis reminded us, Bronson made a huge deal out of reappointing two of the ECP board members so they could conduct business at the start of the new year. As most of us suspected, that was nothing but show on Bronson's part.

There was no viable excuse for not meeting last night. There was plenty of business to conduct besides the B&M report. For starters, they could have followed their own bylaws, which indicate they are to appoint officers at their "regular January meeting". And if following the rules weren't enough reason to meet, there are always the monthly financial reports and updates on lawsuits they can pretend to discuss.

Even though this is a do-nothing board, it is still an official advisory board to the City Commission. As Travis pointed out, it's a "dereliction of their affairs" to not meet.

Here We Go Again

Once again, somebody is trying very hard to discredit Larry Rezentes. On this post, done today, somebody using the moniker, "a licensed CPA", is claiming that Mr. Rezentes is not a Certified Public Accountant. (Here, you can find Larry's response to the first attack).

How convenient that "a licensed CPA" didn't bother to identify themselves so we could check on their legitimacy as a licensed CPA.

Perhaps it has everything to do with the fact that the IP address of the computer used to make the comment is in Billings, the headquarters of SME.

Go figure.

No ECP Meeting Tonight

This just in:

Electric City Power Meeting

As discussed at the December Electric City Power Board meeting, scheduling the date and time for the next ECP Board meeting will be determined subsequent to the video conference meeting with the City Commission and Burns & McDonnell.

I find it interesting this little tidbit couldn't be posted sooner.

Neighborhood Councils - Week of Jan. 4, 2010

UPDATE:

The city has updated their calendar and two councils are meeting this week. When I know the agendas, I'll post them.

NC#6

When: Wednesday, January 6 at 7:00pm

Where: Sunnyside School Music Room

NC#3

When: Thursday, January 7 at 7:00pm

Where: Westgate Mall

************************************

I have no idea if any councils are meeting this week.

No meetings are mentioned on the city calendar and I did not receive any meeting details from the city. The Tribune did not have any meetings mentioned either.

Was anybody at the city working last week?

January 5 Work Session

When: Tuesday, January 5 at 5:45pm

Where: Gibson Room, Civic Center

Agenda:

Annual work plan and goal setting

The Burns & McDonnell Report, A Waste Of $$s

In today's Tribune is an editorial by Larry Rezentes on the Burns and McDonnell report:

Consultant report on Electric City Power incomplete, whitewash

By LARRY REZENTES (A certified public accountant who works for the U.S. Department of Justice, Office of the United States Trustee. The views expressed herein are his own and are not intended to represent the views of the Department of Justice of the Office of the United States Trustee).

At a cost of $60,000, Burns and McDonnell satisfied city government's need to self-justify, but missed the mark recommending that Electric City Power continue in business providing electric power to its 18, primarily business, customers.

In supporting the city's history operating ECP while it generated large losses in violation of Ordinance 2925; of botched investment; and of wasting millions of taxpayer dollars; the report is a whitewash, and unconvincing.

The consultants acknowledge the city's violations of Ordinance 2925; as do auditors' "Special Emphasis" reports on ECP and prior City Attorney David Gliko.

The only valid use of the consultant's services would have been development of an exit plan. Ironically, but not surprisingly, such a plan was not prepared.

The consultants reported to the city commissioners and mayor and had as primary sources of information, together with them, city managers (current and past), and the city finance director/executive director of ECP.

Other than Commissioner Mary Jolley, these are the very individuals who spearheaded the program; supported its continued operation in violation of the ordinance; oversaw and managed the program; and watched as millions of taxpayer's dollars were wasted.

The city engaged the consultants to provide support for a decision that under city law they had no right to make, and stacked the deck to assure they would obtain the recommendation desired. The report, touting savings for ECP's customers (the list including big business enterprises such as FedEx and General Mills), ignored that those savings occurred at a cost to the taxpayers of millions of dollars, and resulted from initial subsidized pricing to these customers.

What benefit did the taxpayers of Great Falls get from these losses and subsidies? How did any such supposed benefit compensate for loss of the ability to fund (without proposing additional tax burden rejected by the voters) needed hiring of police officers and firefighters? What benefit will the citizens and taxpayers of Great Falls receive from continuing this diversion of city time, attention and finances?

Now the theory is that ECP is in prospect of making money. Is this prospect real, and enough to justify the continued diversion of the city's attention in light of its history of misspent millions? Is the consultant's solution of negotiating rate increases to existing customers (suggested at 32 percent but settling at 10 percent to avoid loss of customers) realistic given existing contractual rate commitments to customers?

The report erroneously states: "In the last full fiscal year alone that trend reversed and ECP for the first time showed a positive cash flow by collecting more revenues from its customers than the amount paid to SMEC (Southern Montana Electric Generation and Transmission Co-op) for power purchases."

In fact, ECP financials show an excess of payments over receipts from customers of $318,885 for the fiscal year ended June 30 ($9,027,329 customer receipts and $9,346,214 payments). The cash drain has continued.

Further, Burns and McDonnell's assessment of ECP profitability is based on use of the "transitional/blended rate" for ECP cost of power in ECP's financial reporting. Out of pocket, ECP in fact continues to pay for power what it paid before.

Recognizing the full cash paid for power, ECP continues to lose taxpayer's money. ECP's reporting may, at the margin, conform to acceptable application of accounting principles, but does not conform to reality for the taxpayers.

Year-to-date ECP financial statements continue to reflect this fiction. Adjusting ECP financial statements to reflect full cost paid for power, ECP continues to lose money.

It belies common sense for ECP to recognize benefits from the "transitional rate," assuming ultimate recovery of the associated "deposit," pending resolution of the Yellowstone Valley Electric Cooperative lawsuit challenging its availability to ECP, among many uncertainties.

Repayment to SME of a $1.2 million liability for the "water credit," resulting from initial subsidized ECP customer pricing, is a major such uncertainty.

Unstated is that the zoning of the land owned by SME, to be used for Highwood Generating Station, is currently under appeal before the Montana Supreme Court to overturn the resultant conversion of farm land to heavy industrial use.

Should the justices conclude the zoning was improper, the project itself, even as currently configured as gas-fired, would fail.

Repayment would be demanded from ECP without the consumption of water by HGS in prospect as the source of repayment, placing deposits in the hands of SME in jeopardy.

Overstated are risks of claims resulting from a shutdown, including that of a claim by SME for "stranded cost." ECP in fact possesses limited assets as a source of recovery for such claims, should it simply be liquidated.

Additionally, the consultants mislead when they state that "...Ordinance 2925 does not state any time period for its criteria of 'revenues sufficient to pay all ECP expenses,'" without continuing the citation to include "at all times."

They take the position that the break-even requirement does not state a time period and "has been an ineffective tool."

What do the consultants not understand about the meaning of "at all times"? Their recommendation that the city amend (they say "update") the ordinance ex post facto,seemingly to render "matter-of-fact" the city's violation, is outrageous. The major deficiency in the report, in fact, is its lack of a plan to exit Electric City Power, given the requirement to comply with Ordinance 2925.

Our new mayor and city commissioners will need citizen support to terminate ECP despite the recommendation of the consultants, and without such a plan. I suggest that they first ask Burns and McDonnell to "update" (in fact to complete) the report to include such a plan, at no further cost to the city.

Off To A Great Start

UPDATE: Evidently, ECP isn't going to meet until after the commission has their video teleconference with Burns and McDonnell. I find it interesting this little tidbit couldn't be posted sooner. From the city's website:

Electric City Power Meeting
As discussed at the December Electric City Power Board meeting, scheduling the date and time for the next ECP Board meeting will be determined subsequent to the video conference meeting with the City Commission and Burns & McDonnell.
*****************************************************

I see ECP is off to a great start for the new year. Tonight is supposed to be their board meeting and it's not listed on the city's calendar nor on ECP's city page either. The Tribune doesn't have it listed either in today's public meeting column.

Nothing like keeping the public guessing. And then they have the audacity to wonder why members of the public don't trust them.

Happy New Year!

For some folks, the New Year means resolutions. Had I been elected mayor, here are some resolutions/changes I was going to propose, in no particular order:

* Approve payment for invoices BEFORE they are paid; not after.

* Change the $5,000 report to $1,000. A lot of bills can be paid for under $5,000 that can add up to really big bucks that miss public scrutiny. (This report used to be $500., but was changed, without commission approval, a few years ago when ECP came into existence). How convenient.

* Concerning the above report: Quit combining all utility bills together under one lump sum. Break it out like it used to be so the public can see what departments are paying what amounts for services.

* Ask that all advisory boards give at least quarterly reports concerning their activities. We NEVER hear from most of the boards, and as far as the others are concerned, we only hear from them when they want money.

* Require that city staff give the pros AND cons of suggested projects. Right now, we only hear about the up-side to everything proposed. There is no such a thing as a win-win situation when the government is involved.

* ALWAYS allow enough time at work sessions for public comment.

* Don't schedule a work session about an actionable commission agenda item on the same night it is scheduled to be acted upon. This minimizes public involvement.

* Get the microphone system fixed in Commission Chambers and then speak into it!

* Gavel Brett Doney (director of the Great Falls Development Authority) as out of order when he mentions for the umpteenth time "shove-ready" projects. Just kidding, but in this article from USA Today, "shovel-ready" is one of the words that has been included in the '09 banned words list. Thank you Lake Superior State University's Word Banishment Committee.

* Require that city department heads (public servants) address their comments/responses at City Commission meetings to not only the Commission, but to the people they work for, the tax-paying public; those of us who pay their comfortable salaries.

* Under Old Business; require Coleen Balzarini, and any other department head, to have available, at the next regularly scheduled City Commission meeting, the answers to questions she/they couldn't or wouldn't answer at the previous meeting. No exceptions.

* Tell the city manager the Commission will have an office in the Civic Center where they can meet with the public. And no, it's not going to be a room tucked away in the bowels of the building or miles away from an elevator.

* LISTEN to Neighborhood Councils and quit leaving them out of the process. Invite them to participate in the budget process.

*Quit fooling around with the animal shelter. It's been 2 1/2 years that the police department has been running the show. It's more than time they focus all their energies and budget on public safety. After all, that's what we're paying them to do.

* Require that the ECP board, not Coleen Balzarini, give at least a quarterly "advisory" report to the Commission. Oops. I just remembered. This can't happen. Nobody currently on the board is qualified enough in public power to "advise". (Learning about power, public or otherwise, from Tim Gregori doesn't count).

* Give the city manager direction so he can start earning his pay.

* OBEY THE LAW! Yes. I'm primarily thinking of ECP when I say this.

If you have other ideas for improvements, please feel free to let us know what they are.

PART IV - Beartooth Member Editorial

This is the final installment in a four-part opinion series written by Arlene Boyd, a member of the Beartooth Vigilance Committee. Parts I, II and III are here, here and here.

Part IV: Can BEC members get their co-op to live up to cooperative principles, improve business practices, and deliver affordable power?

It’s been nearly a year since Beartooth Electric Co-operative members were hit with a steep rate hike, and some members still question the decision-making that led to the increase. This is the final installment a four part opinion series exploring concerns about electricity rates, power generation, and the future of rural electric cooperatives.

By Arleen Boyd

Beartooth Vigilance Committee

Approximately 4500 Stillwater and Carbon county residents own the business that provides their electricity, Beartooth Electric Cooperative (Beartooth).

Beartooth members share ownership of Southern Montana Electric Generation and Transmission Cooperative, Inc. (Southern) that provides wholesale power. Soon, if financing comes through, Beartooth members will help carry well over half a billion dollars in debt to build a power plant for a profit-making corporation, SME Electric Generation and Transmission Cooperative, Inc. (SME).

With electricity bills that may be the highest in Montana and plans to add financing for a power plant to their monthly charges, responsible Beartooth members are going to have to step up and exercise the democratic control that a successful co-op depends on. They have to demand transparency and sound business practices from Beartooth, Southern, and SME.

Owning a power plant without an investment evaluation?

If SME’s power plant receives financing, Beartooth members will pay for it for at least 30 years. With no prospectus, no return-on-investment calculation, and no vote members will make a huge investment in a highly volatile, capital intensive industry.

Members do not know why they are investing in a for-profit corporation, SME. There is no evidence that they will even use the new plant’s power.

Beartooth members must demand that SME provide all members standard investment information including:

A prospectus for the proposed plant.

Withheld information including bylaws, financial documents, annual reports, and board minutes.

All contracts and agreements between the co-ops and SME.

A detailed cost analysis of the projected project including likely increases in natural gas prices, full gas and electricity transmission rate analysis, and estimates for complying with CO2 regulation which the Montana Board of Environmental Review is preparing for projects emitting as little as one tenth of that expected from this plant.

Information and transparency: standard business practice, a co-op obligation

Electric non-profit cooperatives are a hybrid form of business that, unchecked, is subject to manipulation and secrecy. Transparency allows members to track board and staff activities and protects the co-op from conflict-of-interest and other business irregularities.

Information about the co-ops that are spending Beartooth money has been hard to get. Southern will not release its bylaws or annual reports and SME operates in complete secrecy.

Members can insist on improved transparency and tell Beartooth to:

Provide access to all corporate documents and financial reports.

Release financial audits and prospectus information on affiliate investments, land investments, and, if allowed at all, for-profit investments.

Give members up-to-date information including board agendas and minutes through mailings and a regularly updated website.

Inform members before major board decisions are made.

Respond openly to member inquiries.

Continue to survey members and hold informational meetings.

Provide monthly reports from Beartooth’s representative on the Southern and SME boards.

Creating a culture of transparency and democracy

A co-op fails as a democracy if it accepts elected board members as the only source for decision-making and the board releases information to justify their decisions rather than to improve them with input. Beartooth members can create a democratic, member-driven co-op starting with the bylaws and the annual meeting.

Bylaws
Bylaws establish the rules and contract between the cooperative and its members. A committee of members at large and board members is rewriting the Beartooth bylaws and will submit their revisions at the 2010 annual meeting. Members should read the current bylaws, call their representatives on the bylaw committee, and ask them to:

Make greater transparency and member involvement the primary mission for bylaw revision.

Review legal issues like conflict-of-interest in light of the unusual three-tiered co-op structure Beartooth currently supports.

Distribute proposed bylaw revisions to all members before the annual meeting, ask for input, and weigh suggestions before completing a final draft.

Distribute the final draft before discussing and amending it at the annual meeting.

Annual meeting and elections
Beartooth Board members and management call the annual meeting the opportunity for members to exercise democratic control. Democracy with informed voting will happen when:

Annual meeting agendas are circulated to members before the meeting with a request for additions and amendments.

Motions by members at large are accommodated, on the floor of the meeting or through prior submissions.

Information on all aspects and from all sides of important issues is circulated in advance and given equal time at the meeting.

Members are encouraged to ask questions and comment on issues.

Voting for board members at Beartooth annual meetings is controlled by management and the board. To ensure fairness the co-op must:

Provide incumbents and challengers equal time at the meeting and equal opportunity to present their qualifications at the meeting and in mailings.

Allow all members to vote, with mail-in ballots counted along with those cast at the annual meeting. Encourage nominations from the floor according to bylaw stipulations.

Engage an independent election consultant to evaluate Beartooth procedures.

Get the information, check the facts

The financial risk associated with the planned SME venture in power generation and the fact that it is being carried out in secrecy make it the most vivid example of what happens when cooperative principles and transparency are ignored.

There are many other examples of misleading statements that have caused Beartooth members to ignore important issues, accept poor decision-making, and cast uninformed votes.

Statements calling the current BBB bond rating for the new plant “investment grade” and “very favorable with a very positive impact on the interest rate that will be realized” are not accurate, but imply that plans for a new plant are financially sound.

To justify the original over-scaled and badly planned Highwood venture members have been told repeatedly that the RUS (Rural Utility Service) lied – they “reneged” on a “letter of commitment” because of environmentalists. There was no letter of commitment. The rejection letter listed four reasons for denial including the fact that 40% of the plant’s capacity was not needed by members. RUS finances plants to serve members, not to market electricity.

With real transparency and information, members who pay attention can challenge inaccurate statements. More importantly, they can work together to make Beartooth a co-op that lives by the cooperative principles, employs sound business practices, and delivers affordable power.

Sources of information and copies of reports cited in the series are available from the author or Beartooth Vigilance, 962-3815.

Will Mary Be It?

In my unofficial poll I conducted, Commissioner Jolley came out on top as far as your choice for Mayor Pro Tem; this in spite of the fact she told everyone to vote for Bob Jones. We'll see what happens. Final tally:

Mary Jolley - 58%

Bob Jones - 25%

Fred Burow - 12%

Bill Bronson - 3%

SME's 2009 Annual Report

We have a copy of SME's 2009 annual report, which up to this time, we've been told is secret, confidential or whatever you want to call it. (The copy is not very good, but you can get the gist of it).

Well, according to Montana Code Annotated 2009, it's not:

2-3-203. Meetings of public agencies and certain associations of public agencies to be open to public -- exceptions. (1) All meetings of public or governmental bodies, boards, bureaus, commissions, agencies of the state, or any political subdivision of the state or organizations or agencies supported in whole or in part by public funds or expending public funds, including the supreme court, must be open to the public. [emphasis added].

Neighborhood Councils - Remainder of Dec. 2009

No Neighborhood Council meetings are scheduled for the remainder of the year.

Advisory Board Openings

The city currently has two advisory board openings:

CITY-COUNTY HEALTH BOARD
One opening for a three-year term through December 31, 2012. The City-County Health Board oversees the operation and management of the City-County Health Department. The Board meets on the first Wednesday of the month at noon eleven months out of the year. For more information about the Board, contact the City-County Health Department at 791-9260.

COMMUNITY DEVELOPMENT COUNCIL
The Community Development Council has two openings. The Council consists of ten members appointed by the City Commission. The Community Development Council reviews CDBG funding applications and makes recommendations to the City Commission concerning funding from the City’s annual Community Development Block Grant. Interested applicants must be live within the city limits. The Council meets on demand, generally in February and March. For more information, contact Chris Imhoff at 455-8407.

Deadline to apply is Wednesday, December 30th.

SME's 2008 Form 990 Is Here

Many thanks to Rich Liebert who doggedly pursued the city manager with a FOIA request for SME's 2008 form 990:

Dear Greg,
I wish to formally request a copy of the 2008 IRS Form 990 filed by Southern. I do not have the time or inclination to register with guidestar.org (as Ms. Balzini suggested) and expose personal information to them and also be subject to fees and marketing schemes. This 990 document is also essential for Burns and McDonnell to scrutinize as well as we the general public.

As a citizen of the state of Montana, I make this request under the Montana Public Records Act and MCA 2009. Frankly, I'm tired of the sophistry and intend to ask for any documentation, records and notes produced or obtained by any public official attending a Southern meeting as allowed under MCA and the Public Records Act. The routine response that 'it's all under litigation and forbidden' is quite inadequate. If we citizens cannot attend Southern meetings, then we certainly have a right to PUBLIC records, as Southern is an entity that benefits from the public funds of the City of Great Falls.

I fully understand the complexity of trade secrets and such, but certainly records can be redacted. I don't care about what Southern might pay for a turbine part, but citizens do care about what's impacting our city, especially fiscal obligations and our equity. Feel free to have the city attorney consider this request along with the city clerk and I await your advice and response. I am proud of our federal and state constitutions and expect them to be honored and complied with please.

Respectfully,
Richard D. Liebert

Within a day, the document was mailed to the city. City clerk, Lisa Kunz, did a great job of notifying Rich and getting the information into his hands ASAP.

Could this be a sign the city manager is waking up? If he isn't, he better. As I understand it, he has a job review coming up in three months.

PART III - Beartooth Member Editorial

See Parts I and II here and here.

This is Part III in a four part editoral series written by Arleen Boyd, a member of the Beartooth Vigilance Committee:

**************

Rights and responsibilities go hand-in-hand for electric cooperatives
It’s been nearly a year since Beartooth Electric Co-operative members were hit with a steep rate hike, and some members still question the decision-making that led to the increase. This is the third in a four part opinion series exploring concerns about electricity rates, power generation, and the future of rural electric cooperatives. The final installment will run the last week of December.

By Arleen Boyd

Beartooth Vigilance Committee

Electric cooperatives have done a good job for rural America. They accomplished their original mission by bringing electricity to rural areas that were almost entirely without power before 1936 when the Rural Electrification Administration provided $100 million for rural power development (approximately $1.3 billion in today’s dollars).

Today, electric co-ops provide electricity to 42 million people in 47 states. Despite serving fewer customers per mile of line than other utilities, nonprofit electric cooperatives, for the most part, supply electricity at rates comparable to or lower than investor owned utilities.

Programs help electric cooperatives succeed

Cooperatives are owned and controlled by the people using their services. Unlike for-profit utilities whose mission demands a return for stockholders, nonprofit electric cooperatives receive government support because their sole purpose is to supply affordable, reliable power for members. Electric cooperatives are given legal advantages like:

•Nonprofit tax status that removes the obligation to pay federal or state income taxes.
•Low interest loans, loan guarantees, grants and program assistance from the Department of Agriculture’s Rural Utility Service (RUS)
•Very low cost (at cost) power from government supported providers like the Western Area Power Administration and Bonneville Power.
•Exemption from regulation by the Public Service Commission in Montana

Requirements for gaining the co-op advantage: Cooperative Principles

In return for these advantages and what amounts to an unregulated monopoly on rural electricity business in co-op areas like Montana, nonprofit electric cooperatives are expected to focus exclusively on their members’ need for affordable, reliable electricity; meet nonprofit business standards; and observe the cooperative principles.

The cooperative principles, universally acknowledged by co-op organizations across the country, are the criteria for nonprofit electric cooperative status.

•Voluntary and open membership
•Democratic member control – Cooperatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions.
•Member economic participation – Members contribute equally to, and democratically control, the capital of their cooperative.
•Autonomy and independence -- Cooperatives are autonomous, self-help organizations controlled by their members.
•Education, training and information -- Cooperatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their cooperatives.
•Cooperation among cooperatives

Concern for community

How does Beartooth Electric Cooperative measure up?

Cooperative Principles – In recent testimony before the U.S. House of Representatives’ Agriculture Committee, Glenn English, CEO of the National Electric Cooperatives Association, emphasized that cooperatives are “closely regulated by their consumers” as they are owned and controlled by the consumers they serve.

In contrast, John Prinkki, Beartooth board president, says that the “control and regulation” belong to board members, that elected board members have the authority to make decisions, and that there is no obligation to consult with members or share information about board decisions.

Democratic control by members can only happen when members cast informed votes about issues they understand and for candidates who have made their positions and qualifications clear. Until Beartooth pays attention to principles numbered two through five, it will not meet the requirements for democratic control.

Beartooth policy requiring signed, witnessed requests for financial statements, which are by law public documents, is only one example of the co-op’s poor understanding of what democratic control is all about. Procedures for attending a board meeting or knowing what is on a board agenda are difficult. The Beartooth website provides no links to documents like bylaws or financial statements.

Members need information about issues facing the board, especially when major investments in a for-profit venture like SME’s proposed power plant are being made. Members can “actively participate in setting their policies and making decisions” only when the board provides opportunities for all members to review and comment on important issues like the bylaw revisions that currently are underway.

Affordable, reliable electricity? Beartooth Electric Cooperative charges may be the highest in Montana. Beartooth members pay 50 percent more per kilowatt hour than local NorthWestern customers.

Nonprofit cooperative business standards? Like for-profit corporations nonprofit organizations must meet business practice and ethical standards. Beartooth management says it is updating business practices and improving responsiveness to members.

Legal requirements for transparency and conflict-of-interest policies are crucial. Transparency is limited at Beartooth, so we do not know how issues like conflicts of interest are handled by the board. There is a potential for serious conflict-of-interest violation when the Beartooth board president who represents the retail consumer also is an officer on the Southern wholesale co-op board, and on the board of SME, the for-profit electricity supplier to the co-ops. Objectives conflict when SME needs to get the best possible price for its product; Southern needs a price that will maintain its operational margins; and the Beartooth retail co-op needs the lowest possible price for members.

The next article will answer these questions:

How do we improve cooperative democracy and business standards at Beartooth?

What sources of information can Beartooth members use to better understand their co-op and the issues facing the board?

Do members have any rights to information about decisions being made at Southern and SME?

Mayor Pro Tem

In a sidebar to today's article about ECP board reappointments, Mayor-elect Mike Winters has indicated that he is going to recommend that Bob Jones be appointed Mayor Pro Tem. Bronson currently holds that position.

Bill says he doesn't have any "strong feelings" about holding the title, but then accuses Mike of taking a "potshot" before he assumes office.

Who would you like to see in this position? Take my unofficial poll and let us know what you think.

Bronson Sets The Tone

In today's paper, the Tribune has an article about the stunt pulled Tuesday night by the outgoing commission.

On the agenda was the reappointment of two ECP board members; Ebeling and Golie. Several members of the audience and two new commissioners, Mayor-elect Winters and Fred Burow, requested that the current commission table these appointments.

Not surprisingly, they did not. They voted 4-1 (Jolley dissented) to reappoint.

Commissioner Bronson was so upset that he even interrupted the mayor when she was calling for the vote. He proceeded to bloviate about why this action needed to be taken. Yes, Mayor-elect Mike is correct when he said that he felt Bronson was "talking down" to the new commissioners; he was. In fact, he was talking down to everybody, which is nothing new.

His argument, that the board needed to be filled so that business could be conducted in the new year, is ridiculous; three members constitutes a quorum, which they would have had. And given that about the only thing this board does is approve the minutes, it's not a big deal to go into the new year without all five members.

The hypocrisy is blatant; he got all worked up over the ECP advisory board reappointments, but isn't concerned at all that ECP is breaking the law by not being in compliance with its own ordinance.

NC#4 Meeting Cancelled

Due to unforeseen circumstances, tonight's Neighborhood Council #4 meeting is cancelled.

If you have any questions, please contact me at siguynn@yahoo.com.

Tonight's City Commission Meeting

Tonight's meeting of the City Commission is probably going to be a good one. This will be the final meeting for Mayor Stebbins, Commissioners Beecher and Rosenbaum.

The highlight of the evening will be the public hearing to adopt Ordinance 3047, which would repeal Ordinance 2956, which prohibited smokers from smoking within 20' of entrances, exits, windows, vents, etc. where smoking was prohibited. This is an emotional issue for both sides. If my very unofficial poll is an indicator, folks want the ordinance repealed. (Of 39 votes, 53% think the ordinance should be repealed; 25% said no; 15% want it rewritten and 5% don't care).

Another bone of contention is the reappointment of Lee Ebeling and George Golie to the ECP board. According to the city, reappointments don't require public notification . Since these guys think they should be given another opportunity to do nothing, they should get it. An interesting sidebar to this situation is that the Burns and McDonnell report recommended this board be reduced to three members (no reason given). It will be very interesting to see how this plays out.

Neighborhood Council Meetings - Week of Dec. 14, 2009

Two councils are meeting next week:

NC#7

When: Monday, Dec. 14 at 6:30pm

Where: NeighborWorks

Agenda:
Appointment of Council Officers for 2010
Discussion of Council Goals for 2010

Tax Appraisal Issues
Neighborhood Watch Training

Whittier Speed Petition

Status of Park Drive Speed Petition
Status of Gibson Park Lighting Project
Neighborhood Concerns
Problem Properties

Committee reports
Neighborhood concerns

NC#4

When: Wednesday, Dec. 16 at 6:30pm (rescheduled because of Christmas Eve).

Where: Heritage Baptist Church, 900 52nd Street North

Agenda:
Committee reports

Problem properties update

Various speed limit/traffic/parking problems - Jim Rearden

Neighborhood concerns

PART II - Editoral From Beartooth Co-op Member

Here, I posted Part I of an editorial by Arlene Boyd, a member of the Beartooth Vigilance Committee.

Here is Part II:

Supporting three co-ops, Beartooth members lack information
It’s been nearly a year since Beartooth Electric Co-operative members were hit with a steep rate hike, and some members still question the decision-making that led to the increase. This is the second in a four part opinion series exploring concerns about electricity rates, power generation, and the future of rural electric cooperatives.

By Arleen BoydBeartooth Vigilance Committee

Members of Beartooth Electric Cooperative (Beartooth) finance three cooperatives: Beartooth, Southern Montana Electric Generation and Transmission Cooperative, Inc. (Southern), and SME Electric Transmission and Generation, Inc (SME).

Most members do not understand the need for two G&T cooperatives. Some see a hierarchy with SME at the top, planning to generate electricity that Southern will buy and then sell to Beartooth, which has contracted to buy all of its power from Southern through 2048.

The farther up this electricity supply chain members go, the less information they find about their co-ops.

Tim Gregori, General Manager of Southern and Director/Registered Agent of SME says Beartooth members actually are not members of his two cooperatives and, therefore, are not entitled to information. Their lawyer agrees.

After Gregori denied Beartooth members permission to attend Southern’s annual meeting last March attorney Brian Holland listed the co-ops belonging to Southern and SME and wrote, “Each of these cooperatives has its own members, but being a member of one of these cooperatives does not make one a member of either Southern or SME.” He added that Southern’s bylaws “are not available to the public.” Holland’s promised response to requests for clarification of Southern versus SME responsibilities and a Highwood financial report has never arrived.

There is much about these three co-ops that members have been denied access to or simply cannot reconcile. This is an uneasy position for co-op members who are being asked to take on hundreds of millions of dollars in debt to build a power plant, without information about its justification or how the bills will be paid.

This opinion piece looks at Southern and SME. Next week’s piece will examine the structure and advantages of cooperative organization and look at how Beartooth Cooperative measures up.

What do and don’t we know about our generation and transmission co-ops?

Many cooperatives have excellent websites with access to financials, bylaws, plans, and staff. Southern has a one-page site listing its members and sources of power. SME has no website.

Southern and SME share an address.

Southern: our sole source of energy, not much information

Southern was formed when Tim Gregori and five co-ops (Beartooth, Fergus, Mid-Yellowstone, Tongue River and Yellowstone Valley) left Central Montana Electric Cooperative in 2003. Gregori and Prinkki cite unfair rates as the reason for leaving. Central Montana members also recall disagreement with Gregori’s wish to build a power plant.

Southern buys power from Western Area Power Administration, Bonneville Power Administration, and PPL to supply wholesale electricity to its member cooperatives. Southern plans to build a gas-fired generation plant. No business plan or financial justification for Southern’s proposal has been presented to Beartooth members.

Tim Gregori says that Southern has only six official members, so Beartooth members are not entitled to attend its annual meetings, even though other non-members routinely attend. John Prinkki, Beartooth board president and one of Southern’s six members has not reported on Southern’s meetings or financials to Beartooth members.

Southern will not supply its 2007 tax return to Beartooth members, but it appears on guidestar.org which provides information on nonprofit organizations. Southern’s accountant reports that its 2008 Form 990 should be available on that site soon.

Southern will not provide its bylaws. They are filed with Yellowstone Valley Electric Cooperative’s lawsuit against Southern which is available at the County Courthouse in Billings from the Clerk of District Court.

Beartooth policies require written, witnessed requests for information. Requests sent to Beartooth on November 18 asking for Southern’s Form 990 and the tax return for SME have not been answered.

SME: follow the money, if you can

In April, 2008 SME was incorporated in Montana as a nonprofit cooperative, excluding YVEC from membership after YVEC filed suit to leave Southern.

John Prinkki says that SME is responsible for building the Highwood Generating Station while Southern will fund it. He says that SME pays no salaries and does not compensate its board members. Southern pays Tim Gregori more than $200,000 per year and reports board member fees and expenses of $123,316 in 2007 and $53,570 in 2008.

It appears that SME has no bylaws, no financial reports and no tax documents available to the public. It is not clear how money goes from Southern to SME or how decisions are made between the co-ops.

SME is the registered owner of the Highwood plant land in Cascade County and has paid for services at the site. The Electric City Power executive director has said that SME spent approximately $20 million of the $40 million spent on the failed Highwood coal-fired plant.

Economic control by members and democratic decision-making are guiding principles for co-ops. By defining this cooperative narrowly (four members) SME withholds the right to information from Beartooth members while holding them financially responsible for its business.

SME filed with the Montana Attorney General’s office as a nonprofit cooperative. Asked about finding SME’s federal nonprofit tax return on guidestar.org, however, SME’s accountant reported that “SME, unlike Southern, does not need to file a 990 – the way it is incorporated does not require it.” This may mean that SME recorded less than $25,000 in revenue, allowing it to file a 990 short form or that it filed a corporate 1120 tax return, which would be harder to understand. Either way, the return will not be seen by the public.

Conflict of interest The triple co-op structure creates many conflicts of interest. One example is support for conservation programs. As board president, John Prinkki is responsible for conservation efforts at Beartooth. As Southern’s board vice-president, he suffers when Southern sells power back to PPL at a loss because of Beartooth’s reduced consumption. As vice-president of SME, Prinkki’s mission is to build a power plant and sell its electricity. If SME is a co-op, 85 percent of that power must be sold to its members. Prinkki’s three responsibilities conflict.

With Beartooth members seeking information and circulating a petition to require member approval for major spending, Gregori and Prinkki need to answer these questions:

Why do we need two generation and transmission cooperatives?

Why do we need a power plant?

Why is information about Southern and SME being kept from Beartooth members?

How will you increase transparency at the co-ops?

ECP Board Openings

Here, I posted about the lack of public posting of the openings on the ECP board.

On Monday night, Travis braved the weather and, in his words, the sublime comedy that can be ECP meetings, and attended their board meeting.

According to Travis:
"Also, Mr Eberling let it be known that he would like to be reappointed. (His term expires at the end of this month.) Ms. Balzarini said he should make that intention clear this week because the city commission meets next Tuesday.

Whoa there nelly! With respect to Mr Eberling, I think any reappointment by the outgoing city commission would leave an extremely bad taste in everyone’s mouth. I think the practical outcome of the city election should be some diversity of opinions on the ECP Board".

Not only would it leave a very bad taste in everyone's mouth, but to the best of my knowledge, as I already mentioned, there has never been any public posting of these openings. (Golie's term expires as well). He can't just be reappointed because he wants to be.

Oops. I just remembered. This is ECP. They don't need no stinking laws.

Chicken Caper

In yesterday's paper, the Tribune had an article about a Great Falls couple who want to keep a handful of chickens in their yard.

They went to the city and were told by the Community Development Department it was OK.

But it wasn't OK, according to the Planning Department.

What bothers me is that they were told it was OK by one city department, more than once, but another department comes along and says no, according to the ordinance, you can't.

This is nuts. How in the world are citizens supposed to abide by the laws when various city departments have a different understanding of how those laws read?

According to Acting City Attorney, Chad Parker, "Bocock and Reichert might have received the go-ahead from the Communi­ty Development office, but he said the Planning office would have been a better choice. Animal control officers also could have helped, according to Parker".

Don't blame the citizens Chad. They did the right thing. They contacted the city. The fact the city doesn't know which end is up is not their fault.

The city is the one with egg on their face, not these folks.

Neighborhood Councils - Week of Dec. 7, 2009

There are three meetings this week:

NC#1

When: Tuesday, Dec. 8 at 7:00pm

Where: Meadowlark School Library

Agenda:
Committee reports

Neighborhood Watch update

Election of officers

Review of Bylaws

Neighborhood concerns

NC#2

When: Wednesday, Dec. 9 at 7:00pm

Where: West Elementary, school cafeteria

Agenda:

Election of officers

Review of Bylaws

Neighborhood concerns

NC#9
When: Thursday, Dec. 10 at 7:00pm

Where: GF High School, South Campus, Room 111

Agenda:

Election of officers

Review of Bylaws

Committee reports

Neighborhood concerns

What a Bunch Of Baloney

I am unable to attend the ECP meeting tonight. I think the part I will miss the most is hearing why the executive director thinks the Tribune's poll about the accuracy of the Burns and McDonnell report is even worth mentioning.

Yes, the commissioners last Friday packet has a copy of the poll conducted by the Tribune shortly after the B & M report came out. They also got copies of the Tribune articles where certain folks criticized that report's findings.

Desperation is all that comes to mind. How in the world an executive director of a city run utility can think an online poll conducted by a local newspaper, that can't even be bothered to conduct an investigative report into the operations of this business, is important, is beyond me.

"If you can't tell the truth, dazzle them with BS".

And don't forget; we're paying her to waste everybody's time.

ECP December 2009 Meeting

When: Monday, Dec. 7th at 5:30pm

Where: Gibson Room, Civic Center

Agenda:

EXECUTIVE DIRECTOR REPORT
Financial Reports
HGS Asset Impairment
WREGIS Account Holder Registration Agreement

NEW BUSINESS
* Accept Board Meeting Minutes from November 2, 2009
* NWE Natural Gas Utility Unit Rate Adjustments/Proposed Rates and NWE Monthly Electric Supply Tracker Rate Change Detail – December
* Burns & McDonnell report/recommendations
* Great Falls Tribune on-line vote results and articles of November 25 and 28, 2009, regarding Burns & McDonnell’s report
* Board terms expire December 31, 2009; Ebeling and Golie

BOARD MEMBER REPORTS
* S& P’s bond rating - follow-up memo and general summary chart
* Judith Gap Wind Farm – Director Ebeling presentation

PUBLIC COMMUNICATIONS
Handouts from November 2, 2009, meeting
Public Comment

NEXT ECP BOARD MEETING
January 4, 2010

Beartooth Vigilance Committee Weighs In

The following editorial was recently written by Arleen Boyd, a member of the Beartooth (cooperative) Vigilance Committee. Hat tip: C.B.

Part I: BEC members face high priced power, debt
It’s been nearly a year since Beartooth Electric Co-operative members were hit with a steep rate hike, and some members still question the decision-making that led to the increase. This is the first in a four part opinion series exploring concerns about electricity rates, power generation, and the future of rural electric cooperatives.

Beartooth Electric Cooperative electricity charges may be the highest in Montana. Beartooth members’ residential rates dramatically exceed those of their close neighbors who receive electricity from NorthWestern Energy, even though Department of Energy records show co-op rates running below those of investor owned utilities like NorthWestern for the past 30 years.

An October electric bill for a residential customer using 1000 kilowatts shows bundled supply and delivery costs (total electric bill) of 9.36 cents per kilowatt hour for NorthWestern and 13.50 cents per kilowatt hour for Beartooth, not including Beartooth’s monthly surcharge. Adding the surcharge, which covers the member’s share of approximately $40 million spent on the failed Highwood coal-fired generation plant, brings the Beartooth cost to14.38 cents per kilowatt hour.

For Beartooth: one source of wholesale power, recurrent price increases

Beartooth Electric Cooperative is a member of Southern Montana Electric Generation and Transmission Cooperative (Southern) which sells wholesale power to five member cooperatives and Electric City Power in Great Falls. Beartooth recently signed a contract to buy power from Southern through 2048.

A statewide survey conducted last year reported that Southern, Beartooth’s sole electricity supplier, charged its member cooperatives the highest power rates of any generation and transmission cooperative in Montana. In 2009 Southern raised the rate it charges member cooperatives five times. Members have been told to expect another increase in January 2010.

Southern buys power from Western Area Power Administration, Bonneville Power Administration, and PPL Montana. With the BPA contract expiring in 2011, Southern signed a contract in March to buy additional electricity from PPL Montana. Southern and Beartooth have not shared the terms of that contract with co-op members, but PPL reports that a majority of the electricity it generates is sold through fixed-priced, long-term competitive contracts. PPL says, “That means that our prices do not change during the term of the contract — no matter what the market does.” NorthWestern Energy also buys power from PPL.

Southern buys inexpensive power from WAPA and Bonneville and predictably priced power from PPL. Beartooth and Southern have not explained why the recurring increases in electricity rates have apparently been unanticipated.

A risky and expensive strategy

Tim Gregori, General Manager of Southern, has announced plans to build a 120-megawatt gas-fired power plant. He projects a cost of $100 million for phase-one of this project, calling that low compared to the $1 billion price tag for Southern’s failed coal-fired plant.

A revealing Standard and Poor’s credit report evaluates the proposal: a $270-million project with three phases of 40 megawatts of power each. The first two phases come online in 2011 and the third in 2012. Delivering a BBB rating, S&P notes management’s lack of experience in plant operation, execution risk in the power supply strategy, and above average retail rates. Favorable factors include a stable customer base and lack of regulation in Montana, allowing the company to set rates as it wishes.

Interest costs for the project are not yet known, but the spread between the best A-level ratings and BBB, one of the worst, suggests a double digit rate which would nearly triple the amount required to repay a 30-year, $270-million loan.

If $270 million was borrowed through a 30-year loan using the S&P analysis ($270 M) at a 10 percent interest rate, the monthly payment would be $2,370,000, racking up $583,289,000 in interest, for a total cost of $853,289,000 over 30 years.

Using a $250 million estimate with lower interest rate of 8 percent, the monthly payment would be $1,835,020, generating $410,607,432 in interest, for a total of $660,607,432 over the lifetime of the loan.

Last week one more concern for members and potential investors arose when an audit ruled that $9.1 million of what Southern had booked as assets related to the original Highwood plant were impaired. The $9.1 million must be written off by the member cooperatives.

A good idea for Beartooth members?

Gregori says building this plant will secure members’ power supply. Beartooth President John Prinkki says that financing the new plant will absorb Beartooth’s short-term debt for the failed Highwood plant, eliminating the current surcharges by stretching the payments over a long-term loan. Prinkki cites the NorthWestern Energy plan to build a similar plant as evidence that building a plant is a good idea.

NorthWestern plans to build a 200-megawatt gas-fired plant at Mill Creek for regulation services and firming. Regulation service and firming plants keep the transmission grid in balance by matching electric generation with electric load on the system on a moment-by-moment basis.

Since Southern does not generate baseload power, it needs neither regulation services nor firming capacity, the standard uses in our area for gas-fired plants. If Southern wants to build a gas-fired baseload plant, Gregori and Prinkki should explain that unusual strategy to Beartooth members. NorthWestern’s 332,000 Montana customers will share the costs for its plant. Assessments for Southern’s plant will go to fewer than 50,000 ratepayers.

More power than needed?

Gregori and Prinkki assert that the PPL contract will meet members’ needs through 2019. Currently Southern does not use all the power it buys from PPL and is selling it back to PPL at 85% of the market rate, which is lower than Southern’s contracted rate.

Co-op members are about to become sellers of electricity – indebted sellers of electricity. With the new Highwood project co-op members will pay for construction and operation of a plant in addition to paying for their electricity. They will pay that extra cost to generate power they do not need in order sell it into an uncertain market.

Beartooth members have been given no information indicating a financial benefit from this plan or how it falls within the cooperative’s charter. The leaders who kept members in the dark about the failed Highwood coal plant need to meet with members, justify this project, and answer the following questions:

Why and how will a new loan absorb the old Highwood debt?

What is the Beartooth share of the $9.1 million write-off?

Where are the cost/benefit analyses for the buy versus build power strategies?

What are the anticipated operating costs for the plant?

What overhead will Southern and Beartooth pay to manage development and implementation of a power plant?

GF Jewish Community Donates Menorah

When: December 11 at 4:00pm

Where: Steps of the Civic Center

20' Smoking Rule

At last night's City Commission meeting, discussion was held concerning repealing a city ordinance that does not allow smoking within 20' from a public building entrance, window or vent.

Several commented that the ordinance is not wrong; the fact that a few businesses are evidently having a problem complying doesn't constitute doing away with the rule entirely.

On December 15, a public hearing will be held and a decision may or may not be made at that time.

What do you think? Take my very unofficial poll and share your thoughts.

Another Public Hearing

Sheriff Castle is holding another public hearing to discuss his budget problems:

When: Today, Dec. 2 at 7:00pm

Where: Black Eagle Community Center, 2332 Smelter Ave.

Neighborhood Councils - Week of November 30, 2009

Do not pay attention to the schedule printed in yesterday's Tribune. They published meeting information from two weeks ago. Here is the correct information:

Two councils are meeting this week:

NC#3

When: Thursday, Dec. 3 at 7:00pm

Where: Westgate

Agenda:

Committee reports

Neighborhood concerns

NC#6

When: Wednesday, Dec. 2 at 7:00pm

Where: Sunnyside School music room

Agenda:

Committee reports

Election of officers

Bylaws review

Neighborhood concerns

Public Meeting On Impediments To Fair Housing

Message from Terry Youngworth, Fair Housing Specialist for the City of Great Falls:

The City of Great Falls is currently undertaking a study to evaluate fair housing throughout the City of Great Falls. All interested citizens, local government agencies, private agencies that provide assisted housing, health services and social services are invited to provide input on the Analysis of Impediments to Fair Housing Choice on: December 3, 2009, 2:00 PM – 4:00 PM, Gibson Room, Civic Center.

We encourage you to provide your knowledge, opinions and feelings about fair housing and housing choice.

Go to http://www.greatfallsmt.net/people_offices/cdev/fairhsg.htm to view a copy of the last Analysis of Impediments prepared by the City.


Terry Youngworth
Fair Housing Specialist
Community Development Department
City of Great Falls
Great Falls, MT 59403
406.455.8418
TDD 406.454.0495
tyoungworth@greatfallsmt.net

ECP Advisory Board

Here, I posted about several City advisory boards that have openings. Filing deadline is this Friday, December 4.

The ECP board has two openings, but they were not posted. Why?

Yes, I know the $60,000 consultants recommended this board be reduced to three members, but we didn't hear of that news until last week. And besides, there has not been public action taken to reduce this board's numbers.

What's going on? According to their bylaws, this board is to consist of five members. After December, they will only have three.

Could it be that report was available sooner than we think?

ECP In Court Today

In a sidebar in today's Tribune, today is the day that State District Judge Kathy Seeley will hear arguments involving a dispute between ECP, the Public Service Commission and Northwestern Energy.

Since 2007, when the State legislature refused to allow ECP to sell power to residential residents, Northwestern Energy has refused to allow ECP to provide new electric meters to its existing customers. ECP turned to the PSC for help, but was rebuked.

In February 2009, ECP sued the PSC; however, the City Commission never publicly voted to do this. (At the Feb. 2 ECP board meeting, Coleen said the deadline to file the suit was Feb. 17. When I pointed out that Feb. 17 was the next scheduled City Commission meeting, she finally, after her usual facial contortions, indicated the City Commission could hold a special meeting. They never did).

ECP Is Fined

As Travis first posted here, ECP has been fined $23,260 by the Public Service Commission. They did not comply with the rules by obtaining renewable energy credits for 2008. (Thanks very much to David at KRTV for posting the memo from the PSC detailing their decision).

No big deal though, because according to Coleen Balzarini, the fine is only $5,815 more than if ECP had complied with the rules in the first place. (Travis also explains why this is not the case). He also disagrees with her statement that this fine will be passed onto existing customers. Hard to do since some customers have fixed rates and their contracts can't be adjusted.

As usual, everything and everybody else is to blame for ECP's ongoing ineptness. Thankfully, the PSC didn't buy into their lame argument and did not grant them "mercy", as Coleen had hoped they would.

As Ken Toole, Vice Chair of the PSC board, indicated: "It's important that the the rules are consistently applied".

Too bad the City of Great Falls doesn't consistently apply the rules. If they had, ECP would have been dissolved a long time ago and we wouldn't be going through this mess.