HomeMy WebLinkAboutYellowstone Valley Electric (2)Dear Member:
1 -E100-736-532~
FAXC406]~48-3414 Yo~J~-'rou¢]3~l:ono Entree"y"" PaJ~l:ner ~
April 24, 2008
Periodically, your Board of Trustees and General Manager have provided updates about the
Highwood Generating Station (HGS), a proposed coal-fired power plant to be constructed near Great Falls.
At our recent Annual Meeting, Terry Heizer outlined some of the issues and challenges faced by that project,
as well as Yellowstone Valley Electric Cooperative's (YVEC) concerns about that project.
By way of background, YVEC is a member cooperative in Southern Montana Electric Generation and
Transmission Cooperative (SME). YVEC, along with the other member cooperatives, has entered into a
long-term agreement to buy power from SME. Eighty percent (80%) of Yellowstone Valley Electric
Cooperat~ve's power supply is in place un~l Sept,-mS, F, ~011, and twenty percent ~2-'0~o-~i~ arrange~d-fothe-- -
year 2020.
About four years ago, SME initiated plans to construct, the HGS. At that time, the member
cooPeratives of SME believed owning a power supply, through SME, appeared to be the best option to
control future power supply costs. For a variety of reasons, estimates of the cost of the power plant project
have increased from $456 million to nearly $800 million. YVEC has concerns that the cost of financing and
complying with government regulations could increase the price of the power generated from HGS to the
point that purchase of this power could be cost prohibitive. Your Board has expressed its concerns about
the viability of the project to SME and our desire to have SME look for alternative power sources. Despite
our concerns, SME remains committed to the HGS.
In the past few weeks, SME proposed a meeting with representatives of YVEC to negotiate the terms
of YVEC's withdrawal from any obligations relating to the HGS. YVEC responded and gave SME a proposal
to enter negotiations to find a mutually acceptable agreement that would allow the parties to sever their
relationship. We were then advised by SME that certain issues were "nonnegotiable". Because we believed
those issues were of critical importance to our membership, further discussions did not take place.
A~rd Meeting or April 1/, zo08, ~he~Sl~lEl~oardbf Directors vbtedlo crea e~r¢~ separate legal
entity which will, apparently, be owned and operated by the member cooperatives of SME and the City of
Great Falls, but will exclude YVEC. SME voted to transfer all of SME's interest in the HGS to the new entity
at a price to be determined by SME's accounting staff. In effect, the other member cooperatives of SME and
the City of Great Falls have voted to remove YVEC from the HGS project.
Your Board and General Manager believe this development is significant and that you deserve to
know about it. We will continue to do everything within our power to advocate for your interests and to make
the appropriate decisions that are necessary to secure the most reliable, lowest cost, long-term power
supply for our members.
APR 2 8 2008
CITY OF LAUREL
Sincerely,
Daniel R. Swartz
Board President