Electric City Power-Unofficial Minutes

Electric City Power held a board of directors meeting on Monday, May 7, 2007. While I was unable to attend, I received written outlines from two who did. Additionally, the Tribune had a piece today about the meeting. (And, in three months when the official minutes come out, we can compare this piece to them.)

First, let's discuss the City's quest to find customers for its share of the power from the Highwood Generating Station. The Tribune's headline, "Electric City Power hooks potential customers," is really quite misleading. Actually, the City has some "prospects" who are "interested in signing up." Not quite "hooked," you see.

You will recall that we have attempted to gain information about these customers, but those requests have been refused. Once again, so much for open government. Oh well, maybe MEIC will get their hands on it.

Anyway, according to Coleen Balzarini, the City has some potential customers. Apparently, RW Beck has been marketing the City's share of the coal plant's power, and the marketing costs could be up to $400,000.00.

A local resident, Jerry Taylor, asked whether Electric City Power would pass the following resolution: "The customers of ECP will be solely responsible for and will reimburse all the expenditures incurred by the city in promoting the HGS. Further, that the city taxpayers will not be held responsible for these expenses." The Board declined with board member and Benefis facilities manager stating, "We don't pass resolutions. We are just an advisory board."

If we don't build the plant, the City can use economic development funds to repay the $2,000,000.00. Funny, I never assumed those economic development monies would be used to support the City's own business ventures, did you? I thought they would be used to entice new businesses to come to Great Falls.

The board then turned to the issue of rate setting. According to the Tribune, the board elected to wait until June 4 to decide whether to endorse the proposed new rates for ECP's customers. The City Commission will decide the following night, June 5, whether to adopt these rates. So the public will have a grand total of 24 hours to consider the proposed rates and comment on them. Considering that there is virtually no information available as to how the rates were set, that is laughable.

A local citizen asked Ms. Balzarini who is advising the City as to the propriety of the proposed rates. Does the City have an expert on staff? "Nope," she replied.

We don't need an expert to help us set rates, she said, because it is "just math." The rates are cost based, so there's really nothing to set. Wait a minute. As I pointed out earlier, the costs of the power are not just being passed on to customers. Some power is being sold for more than cost, some for less. So it is not, in fact, just math. Who is setting the rates and on what basis? Don't worry, us mere earthlings do not need to be involved in the process.

Next, further inquiry was made into the status of the Development Agreement between the City and SME. This is the Agreement that will dictate the City's rights and obligations vis-a-vis the cooperative into which it has invested.

Ms. Balzarini said they are "working on it." Then, City Manager Lawton stated that the City is waiting on financing to complete the Agreement. I'm no expert in high finance, but if you were going to underwrite $180,000,000.00 in debt, wouldn't you want the contracts in place? Yes you would.

UNLESS, unless, unless...unless you were going to try to dictate some of the terms of that contract. Unless you were intimately involved in the negotiation process yourself. See, what I fear here is a last minute bait and switch. We have been told all along that the project will be financed with "revenue bonds." In other words, the bonds will only be repaid with the revenue from the power plant project. I am afraid that when we are on the very brink of completing this transaction, there will be some last minute change that transfers the risk from bondholders to taxpayers, say, for example, a provision in the not yet finalized Development Agreement that requires the City to purchase a certain amount of power.

So, there you have it. We don't need an expert in pricing, we have an expert (expensive at that) in marketing, and there's still no contract. If anyone attended and has additional or contrary information, please let me know.

1 comment:

Anonymous said...

GF City Code
Chapter Title 5 Chapter 20
Establish Electric City Power
This corporation is to sustain itself. It does not say "Except for Water Credit thingy."
ECP Board May 7, 2007
Question - does it sustain itself?
Balzarini almost in a whisper, "Yes."
Is there a water credit in these new rates?
Balzarini, "Yes until 2008."
There was no discussion at this Potemkin Board meeting about the cost of this power - just what our city would sell it for.