RW Beck Study-Part 3: Hidden Issues

Yesterday, I pointed out that, in considering the Beck study, it is important to consider what it didn't tell us. This piece will focus more on issues that were not directly excluded from consideration, but instead hide behind Beck's assumptions, SME's representations, or just the plain old lack of information.

First, there is a common phrase in the Report: "According to SME." In other words, these are things about which R.W. Beck offers no independent opinion, but merely relies on what SME told them:

• The costs for potentially purchasing mercury allowances and/or reducing
  mercury emissions have been incorporated into the Project’s capital and operation
  and maintenance costs.
• SME is undergoing discussions with the appropriate agencies to define
  mitigation measures to minimize the impacts on the historic Lewis and Clark Trail as much as practicable and allow the Project to proceed.
• The cost for purchasing allowances to comply with the acid rain provisions have been
  incorporated into the Project operation and maintenance costs.
• Information regarding the fuel and transportation assumptions used in forecasting the cost of operations of the Project was provided by SME.

Now, the mere fact that these matters are contained in representations by SME does not mean they are wrong. Given SME's guardedness about releasing information, though, that fact can certainly raise suspicions.

Did you know that SME contemplated a coal mine in the Great Falls area? Neither did I. That is something that should have been disclosed to residents. Why wasn't it?

"After 2011, a portion of ECPI’s energy requirements, as well as ancillary services may be met from regional power marketers by way of SME. It is anticipated that SME will provide management of ECPI’s power requirements program." p. 17

What? SME will manage Electric City Power's "power requirements program?" Where is that contract? How much will SME be paid to do this?

"ECPI is currently engaged in sales and marketing efforts to secure new customers for its power sales program. Current substantive discussions include other governmental entities in the state. ECPI is also engaged in discussions with various large businesses in Montana to serve their energy needs." p. 18 Electric City Power is trying to secure new customers? Who? They apparently did not discuss this in their meeting yesterday.

Between their September meeting and the present, the ECP board has documented exactly one discussion on this issue: "[Coleen Balzarini] updated the Board on staff’s plans to expand the ECPI customer base. As appropriate, ECPI will execute bridge contracts to carry its current customers to 2011 and work to have all ECPI customers document their interest in long-term supply service with letters of intent. In addition, the City is working to regroup the former consortium of Montana cities, towns, and school districts to purchase electricity from ECPI."

Not very instructive. I guess we'll just have to take their word for it. There's a lot of word for it taking going on in this project.

This could be a very important issue because the City's 'share' of power output will be roughly 62.5 MW, but its current consumption (including sales to others) is only 20-25 MW. I say "could" because we do not know what the City's obligations are to SME with respect to excess power because either there is no contract or because SME refuses to produce it. Do we have to purchase it even if we don't need it? Who knows?

Also according to Beck, Electric City Power "will develop" (as in has not yet developed) a "financial plan" including a forecast of revenue and expenses post-2011 and forecast of its debt service and debt service coverage ratios or other financial requirements. p. 18

I don't know about you all, but I would sure like to see these forecasts. And while I have a sneaking suspicion that they have been started or already exist, I would never, ever suggest that the City withheld them from me.

Again, why the secrecy?