Great Falls seeks to sever ties with co-op
Associated Press
GREAT FALLS — City officials in Great Falls have reached a tentative agreement to extricate the city from ties with a bankrupt Montana power cooperative.
Officials on Friday agreed to pay $3.25 million to Southern Montana Electric Generation and Transmission Cooperative, which filed for bankruptcy in 2011.
Southern Montana is composed of five rural cooperatives and the city of Great Falls that in turn provide power to more than 50,000 Montana residents.
City Manager Greg Doyon said the agreement calls for a first payment of $2.5 million by June 30 and a final payment of $750,000 due Dec. 31. The settlement would only be due if the agreement is approved by the U.S. Bankruptcy Court, The Great Falls Tribune reported.
Doyon said the city will have to tighten its belt, but it’s too soon to tell whether layoffs will result if the city ends up making the payments. “The effect of it will be felt for years to come,” he said.
A trustee for Southern Montana previously said the city owed as much as $60 million to the co-op for wholesale power that had been set aside for the city. But the agreement includes a mediated amount of $2.06 million and an owed water credit of $1.18 million, or roughly $3.25 million.
“It went from $60 (million) to $30 (million) and finally ended up where it’s at,” said City Commissioner Bob Jones. “We thought it was very fair and equitable.”
He said that Great Falls city property taxpayers will not have to pay a special tax levy if the agreement goes through.
Doug James of Billings, the city’s private attorney, said if the city were to go through a formal trial it would likely cost $1 million in legal fees, so settling could be cheaper.
“At this point, I think everybody is going to be happy to be rid of me,” James said. “The best thing I can do for the city of Great Falls is to get off their payroll.”
Besides the city of Great Falls, Beartooth Electric Cooperative wants out of Southern Montana and, like Great Falls, filed a lawsuit to accomplish that as part of the bankruptcy case. On another front, Southern Montana in February filed a reorganization plan that calls for keeping the electricity wholesaler together by restructuring its debt and holding on to a 40-megawatt power plant near Great Falls.
The cooperative filed for bankruptcy in 2011 after contracting with PPL Montana for more power than it needed at high rates and trying to borrow $215 million to expand the gas-fired Highwood Generating Station to 250 megawatts.