I think this "Pilot" should crash.

Some of you might recall a "Pilot Program" whereby the City of Great Falls, acting through Electric City Power, obtained permission to sell electrical power to a small group of residential customers for a 5 year period. This was an idea floated by City Staff, as the PSC denied the City's application to become a small-customer supplier. In response, the City said, in effect, "Well, let us try it with this group and if we can keep the lights on, maybe the PSC might reconsider down the road." When I inquired about this Pilot Program back in June, I was told that "According to Martha Cappis, ECPI has a license with the PSC to provide a small specific group of customers power. The customers were chosen to include small commercial and residential customers that we could not serve under our existing license due to their average monthly usage being below the PSC set limit. We 'brainstormed' to come up up with a diverse group of knowledgeable participants who we could rely on to give us an unbiased opinion of our service, rates, etc. To date, we have not initiated the program." [Emphasis mine]

Now, one nice thing about being a blogger is that people tell you things. So, after the last Electric City Power Board of Directors meeting, I received an email. The following is a direct quote from the email; I wasn't at the meeting, so I cannot confirm that it is accurate: "John L[awton] made a rambling speech complaining about the Bloggers making much about who was on the ECP residential power pilot program list. Lawton said he doesn't read the blogs, but others tell him about what is posted there and it's wrong. The people on the pilot program list were volunteers who understood the risks involved and agreed to participate so the City could test the mechanics of operating a residential power system. While the program may not be safe enough for 'widows and orphans,' the people involved were selected by the City because they understood the risks."

Recently, I have been seeking information from the City about the latest group of customers signed up by the City. Based in part on Mr. Lawton's purported statements at the ECP Board meeting, I have also been seeking information about the Pilot Program.

Well, today we learned something new. I received the following Memorandum from our very helpful City Clerk, Lisa Kunz, after she received it from Martha Cappis:













What do you know? There is a Pilot Program. And the "participants were able to choose a flat rate or an adjusting rate for the term of the program." Ok. And do any of these customers look familiar to you? Balzarini? Lawton? Patton? Gregori? Or how about members of the Electric City Power Board: Gray, Golie, or Ryan?

And there are contracts, too. First there is the "Optional Customer Service Contract." This is the "adjusting rate" that Ms. Cappis spoke of in her recent memo.

























Then there is the "Standard Service Offer," or "flat rate" contract:


























That's all well and good, of course, completely above board and all that. After all, these are certainly "knowledgeable" and "unbiased" participants. Nope, nothing unusual here, move along please...

Wait a minute, though. Humor me. Take a look at the first page of these two contracts. Take a close look at the rates our intrepid test group is paying for its power. The adjustable rate group is paying, for the next 14 months, until 12/31/08, a rate of $0.0472 and $0.0508 per kilowatt-hour. Adding the "Administrative Fee," they are paying a rate of $0.048616 to $0.052324.

Interestingly, though, if we review the Agenda Report from November 8, 2006, we find that the City purchased from SME "an additional 7 MWh's block of power beginning January 1, 2007, through December 31, 2008..." As background for this purchase of additional power, we learned "The proposed Residential and Small Commercial pilot program was recently approved by the Montana Public Service Commission, and services will begin in the near future." Presumably, then, this additional power was purchased, in part, to service the needs of the Residential program, right?

Well, what is Electric City Power paying for this power, then? This power that it is selling to City Staff and ECP Board members for a rate between $0.048616 to $0.052324? Keep reading the Agenda Report.

That's right. We're paying SME $0.0528 for every kilowatt. Electric City Power is then selling these kilowatts to City Staff and ECP Board members for less than it paid for them. It is selling these people power at a loss.

How bad a deal is that for the rest of us? Well, not only are we taxpayers subsidizing the power costs of these folks, we have to buy our power from Northwestern Energy. We're paying $0.056811 for our power, because we don't have taxpayer subsidies for our power.

Wait, you ask. What do you mean taxpayer subsidies?

Think about it. Every time one of the Pilot Program customers uses a kilowatt hour of electricity, Electric City Power loses a penny or two on that deal. It doesn't sound like much, but it does have to come from somewhere.

The Electricity Fund lost over $400,000.00 in the last fiscal year (2006) for which we have audited financial statements. (See p.28)

Electric City Power lost over $400,000.00 and it is selling power at a loss to its Board Members and City Staff?

Am I out of line, here? This just doesn't seem right to me.

Hat Tip: Thanks to Mayoral Candidate Ed McKnight for providing me with the link to NWE rates.