Key investor in Montana coal-fired power plant backs out

Meanwhile, the executive overseeing the development of the Highwood Generating Station said Monday that he remains optimistic the plant will be sufficiently financed.

Earlier this month, the Yellowstone Valley Electric Cooperative asked to withdraw from the project after investing several million dollars. The request was granted by the board of the Southern Montana Electric Generating & Transmission Cooperative, the coalition planning the 250-megawatt plant east of Great Falls.

Yellowstone Valley had questions about Highwood's prospects for adequate financing and was concerned about the steep cost of compliance with shifting environmental regulations for coal-fired plants, amid growing concern the fuel contributes to climate change, according to Terry Holzer, general manager of the co-op based in Huntley.

"We don't feel it's a viable project any longer," Holzer said. "Many utilities across the country have pulled the plug on coal-fired power plants."

As the largest partner, Yellowstone Valley had invested $4.3 million of a $10 million line of credit and had another several million in Highwood equity, Holzer said.

Five cooperatives and the city of Great Falls launched Southern Montana Electric several years ago and pursued development of the estimated $790 million plant, which has faced a series of environmental hurdles. In the latest, a state board decided last week that Montana regulators and plant developers must examine more ways to control air emissions.

Although Yellowstone Valley was the largest backer, its departure does not kill the project, said Tim Gregori, chief executive officer for Southern Montana Electric. Gregori said there are prospective replacement partners, but declined to name them.

Gregori said Yellowstone Valley's "comfort for the level of risk and the progress being made has reached the point that they asked to be relieved" of partnership in the plant, and the board honored that request.

If the plant is built, Yellowstone Valley could be reimbursed for its investment, Gregori said. If the plant fails, then the investment would be lost, Gregori said.

Highwood developers have said they anticipate the state-of-the-art plant will be able to pass environmental muster.

Holzer said Yellowstone Valley's withdrawal from the project was not intended to prevent Highwood from moving forward.

"If they want to go ahead, fine," he said. "Find a replacement partner."

Apart from the Highwood project, Yellowstone Valley remains in Southern Montana Electric for purposes of power purchases, power transmission and related services.

Cooperatives still involved with Highwood are Beartooth Electric in Red Lodge, Fergus Electric in Lewistown, Mid-Yellowstone Electric in Hysham and Tongue River Electric in Ashland.