News
Power plant plan drained-hang-up has been landing a contract with someone willing to buy the power.
Construction on a coal-fired power plant near Hardin was sup-posed to have gotten underway last fall.
Now, plant construction could be as far off as three or four years.
The hang-up has been landing a contract with someone willing to buy the power.
BY JAN FALSTAD
Of The Gazette Staff
Centennial Power, a subsidiary of MDU Resources Group Inc. of Bismarck, N.D. is developing the Rocky Mountain Power plant, which would be located next to the abandoned Holly Sugar Co. refinery.
At a time when power plants across the United States are up in the air due to troubles in the utility industry, MDU chief executive Martin White remains optimistic about the Hardin project.
In a conference call with analysts last week, White said Centennial Power has been working with several potential customers and has passed the first test on one request-for-proposal.
"We’ve made it through the sec-ond round and are very well along, and think we may have an opportunity to get a contract that would be for the total output of the plant," he said.
Another perspective
Ray Sheldon, Centennial’s project manager, is equally optimistic, although perhaps more realistic. He has been working with several companies to find another way to build in Hardin.
After negotiating with five or six companies, Sheldon said one out-of-state utility is analyzing a proposal and another one is interested.
"One out-of-state co-op has indicated that we’ve made their short list," he said.
The obvious customer is NorthWestern Corp. of Sioux Falls, S.D., which bought the former Montana Power Co. transmission and distribution lines that run past the Hardin site. NorthWestern not only owns the grid, but it also provides electricity to 295,000 former Montana Power customers.
NorthWestern spokesman Roger Schrum said the company doesn’t comment on negotiations, but he confirmed that NorthWestern has conducted a study of linking the Hardin plant to the power grid.
"We have done an interconnection study at their request," he said. "That’s been completed,
But, the process is continuing, he said.
The next step would be for Centennial to request space on the grid for its proposed power.
Boiler angst
Centennial Power plans on importing a boiler built in 1968 from South Africa to install in the Hardin plant.
Two Denver-based environmental groups claim that MDU is buying the vintage boiler to skirt pollution reviews under the New Source Performance Standard. Those clean air standards were passed after the boiler was built.
Eric Guidry, an attorney with the Land and Water Fund of the Rockies, said Wednesday that Montana failed to follow the law in issuing an air quality permit on June 11.
"Their claim was that it was an existing source, but, of course, that source had never been subject to review in the United States," Guidry said. "I don’t think we’ve seen this egregious a case before."
Last September, the U.S. Environmental Protection Agency said it was looking into complaints about the Hardin plant and the proposed Roundup power plant. The EPA has not made a decision.
The complaints aren’t a concern to environmental engineer Debbie Skibicki , who works for the Montana Department of Environmental Quality in Helena. Skibicki issued the air quality permit.
"It is as clean as if they bought a boiler from Michigan last year," Skibicki said. "The environmental groups are making a big deal out of it, but it really doesn’t matter that much."
Power switcharoos
To serve its 295,000 electric customers in Montana, NorthWestern has a one-year contract with Duke Energy. That contract expires July 1.
NorthWestern also is buying power from PPL Montana on a five-year contract.
These deals supply roughly 60 percent of the electricity that NorthWestern needs to serve Montana. It has to buy the balance of its power on the open market.
Last May, the Montana Public Service Commission voted against most of NorthWestern’s power portfolio saying the South Dakota utility hadn’t followed industry standards for bidding contracts.
After the decision, NorthWestern canceled five power plant contracts including Hardin and its own Great Falls plant being built by a sister company.
Expansion edicts
The cost of the Hardin coal plant is confidential.
However, White told analysts that MDU has set aside $60 million in its 2003 capital budget to complete the plant.
MDU and its subsidiaries are involved in some other large construction projects in this region.
Fidelity Exploration and Production Co., another MDU subsidiary, is a major player in coalbed methane development in Wyoming’s Power River Basin with 750 operating wells.
And MDU’s Williston Basin Interstate Pipeline Co. is building a $70 million pipeline – probably the country’s largest this year – to carry gas from Wyoming to North Dakota.
Despite the challenges of a big project, Sheldon said the Hardin plant is more a question of timing than whether or not it will be built.
"I’ve always found in my career that if you’re diligent and treat people right you can get to the right ends," he said. "Sometimes you end up at a different place, but I think we’ve got a better than even chance of getting this done."
Plant’s long history
The Hardin coal plant pro-posal hasn’t been around long, but it sure has taken some twists and turns.
In May 2001, Dick Vinson of Thompson Falls and Lloyd Debruyuker of Dutton first proposed the plant.
The two Western Montana businessmen had no experience in the power industry and apparently lacked enough money to develop the project.
However, their idea soon took on real economic value when the former Montana Power Co. awarded the pair a 10-year contract.
Less than one year after they proposed the power plant, MDU Resources Group Inc.’s subsidiary, Centennial Power, bought out Vinson and Debruyuker for undis-closed millions.
When NorthWestern Energy bought MPC a year ago, it inherited the Hardin contract.
When the Montana Public Service Commission rejected NorthWestern’s plans for new power plants last spring because of the flawed bidding process, the Hardin plant was out in the cold again.
"We had this project on track, a contract and permits and everything," project man-ager Ray Sheldon said. "But being canceled by NorthWestern put us in a position of being all dressed up and nowhere to go."
Vinson and Debruyuker are still in the game. They want to build an ethanol plant in the former sugar plant next door to proposed coal plant.
Jan Falstad can be contacted at (406) 657-1306 or at [email protected]
MATR Supporters (view all)
Sorry, we couldn't find any posts. Please try a different search.