Power plant developers working on financing for Butte facility

Developers of a $37 million gas-fired power plant in Butte said Wednesday they are ready to start construction this fall as soon as they nail down financing.

Billings Gazette

Jim Williams, president of Basin Creek Power, told Gov. Judy Martz that he and others working on the project plan to seek some of the money they need from state Board of Investment loan programs.

Martz said she has no control over that agency, but made it clear she’s behind development of the project in her hometown. "We want it in Montana. We want it done," she said.

She met Tuesday with Williams and Don Peoples, president and chief executive officer for MSE Technology Applications Inc., which has a minority interest in the plant.

The proposed 48-megawatt plant would provide all its electricity to cover some of the peak needs of NorthWestern Energy, which supplies power to about 295,000 Montanans.

Williams said his company’s contract with the utility would supply the electricity at cheaper rates than the average that NorthWestern pays in the open market.

The plant, which has received its state permit and reached a settlement with an environmental group to head off any challenges, could be built in six months, he said. Up to 200 workers would be involved in construction, and the plant would require 10 full-time employees for operation.

It would be built near easy connection to a natural gas supply and electric transmission lines, and that will help hold down the price of its power, Williams said.

Finding money to build the plant is the immediate challenge, Williams said. Financing is tough in the wake of corporate accounting scandals such as Enron, and because NorthWestern’s own financial problems have investors concerned whether that company will be able to pay its bills, he said.

Basin Creek has a commitment for about $10 million from a Chicago company called Equity Group and hopes to get the remaining $27 million from the Board of Investments. Also, the Rural Development Association, a federal agency, has committed to guarantee $15 million in loans.

Carroll South, executive director for the board, said the agency doesn’t lend money directly to borrowers but helps finance loans made by banks.

In an interview, he said the board has two programs that could be used in this case.

One is for projects that add value to Montana products and create at least 10 new jobs. That program has a $6.7 million limit for a loan. The other program finances up to 80 percent of loans for commercial projects.

A project could use both programs, a combination that could supply Basin Creek with its needed money.

But South said the board’s staff would carefully analyze any such application submitted by a bank willing to lend money to Basin Creek, particularly because the plant’s sole customer is on shaky financial footing.

The loan guarantee that Basin Creek obtained from the Chicago company can improve the chances of obtaining financing, South said.

Williams told Martz time is critical for the project because it promises lower-cost power and because price commitments from equipment manufacturers are not indefinite.

"The longer this thing gets put off, the more expensive it is for Montana consumers," he said.

He and Peoples said their meeting with Martz was not an effort to put pressure on the Board of Investments to support the project. Instead, they said they want to make the public more aware of the project and how far it has progressed.

Williams said developers are pursuing various options for financing the plant and are confident the money will be found for such an attractive investment.

"Eventually we’ll get there, it’s just going to take some time," he said. "It’s a very economic alternative to the marketplace. I don’t think anybody can meet this price for this type of power."

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