Co-op defends look at joining Oregon group

Flathead Electric Cooper-ative general manager Ken Sugden defended the Co-op's decision to consider joining an Oregon-based utility cooperative during the Co-op's annual meeting on March 20.

The move would be in response to the Co-op's need to find new power sources now that the Bonneville Power Administration has capped the Co-op's power allocation.

Sugden disagrees with some of the assertions former Co-op board president Francis Rosse made in a letter to the editor in the March 11 Hungry Horse News.

Sugden said it's not true that the Co-op would have to turn over its low-cost federal hydropower allocation from BPA to PNGC Power, a cooperative of 16 electric utilities in a seven-state region.

PNGC members assign their BPA power supply contracts to the cooperative, but the members retain all statutory rights they have as individual utilities. There is no transfer of assets, and member cooperatives do not contribute BPA hydropower to PNGC, Sugden said. If Flathead Electric joins PNGC, it would retain its BPA preference rights and would retain those rights even if it later left PNGC, he said.

Rosse also said it will cost the Co-op $8 million to $14 million to join PNGC, but while Sugden said he can't disclose specific figures, he said the amount is "nowhere near that."

Sugden also took issue with Rosse's assertion that the Co-op would have to come up with a disproportionate share of the total financing for new power plants in Oregon. He said it was premature to say a combined-cycle gas turbine plant there would cost Co-op members more than $50 million in capital alone.

The Co-op would have a seat on the PNGC board, Sugden noted, and PNGC members would pay for new resources based not on current size but on future incremental power needs beyond what they get from BPA. The Co-op's cost would be based on what it requires to meet its power needs, he said.

The Co-op's board of trustees have been exploring several options to meet power needs after BPA caps the amount of low-cost power it provides in October 2011. Energy-efficiency programs have been ramped up, but conservation alone can't accommodate all the expected growth, Sugden said.

In late 2008, the board signed a contract with BPA to provide its capped power allocation through 2028 and then began looking at alternatives to meet the Co-op's current projected growth rate of 2-3 megawatts per year.

The Co-op could opt to let BPA buy power on its behalf at market rates. The Co-op, which currently pays BPA $35 per megawatt-hour, was under a Nov. 1, 2009, deadline to tell BPA whether it would find its own power resources or have BPA buy power for the Co-op.

The Co-op's board decided to take BPA's offer for the first three years, and will buy incremental power from BPA at $50 to $55 per megawatt-hour during that time, Sugden said. The board now faces a September 2011 deadline to decide whether it will have BPA buy incremental power for the next five years after that.

The board also looked at joining utility cooperatives to pool resources, including Bismarck, N.D.-based Basin Electric Cooperative and Northwest Requirements Utilities, but PNGC is among the most desirable options at this point, Sugden said. Joining a group such as PNGC gives its members significant financial advantages, he said.

The decision to join PNGC doesn't require a vote from the Co-op membership, Sugden said, a point disputed by current Co-op board member Jay Downen, of Whitefish, and state Rep. Dee Brown, R-Coram.

Brown is running against Chris Byrd for the District 1 seat on the Co-op board. Other candidates include Doug Grob, District 4, and George Taylor, District 7.

Ballots were mailed out to Co-op members and must be returned by April 9. The annual meeting will reconvene at the Co-op's offices in Evergreen on April 16 to announce the results of the election.