Biomass plant to be online by 2013

Flathead Electric and Stoltze sign historic power agreement

In what is being described as a win-win deal for jobs, alternative energy and forest health, Flathead Electric Cooperative signed a power purchase agreement with F.H. Stoltze Land & Lumber Co. on Jan. 31 for biomass energy from the timber company's mill.

In the 20-year agreement, which begins in 2013, the Co-op agreed to purchase up to 2.5 megawatts of power at 9 cents per kilowatt-hour. The Co-op will receive Renewable Energy Credits as a result of the purchase.

"Not only is this agreement great for the community, but it will provide a renewable energy source and also help manage the forests," Stoltze vice president Chuck Roady said.

Talk about using wood waste from mills or biomass from forest thinning and logging projects to generate power has been going on since at least 2001, when the West Coast energy crisis shut down the Columbia Falls Aluminum Co. smelter.

More recently, as Stoltze moved forward with plans to replace the aging boiler system at its Half Moon mill - and to include a steam-powered electrical generator - public interest grew in the project. U.S. Secretary of Agriculture Tom Vilsack, for one, had expressed interest in a biomass generating plant in Montana, Roady said.

"This is a mutually beneficial arrangement, in which both parties have been negotiating in good faith for some time," Co-op general manager Ken Sugden said. "Stoltze will be able to maintain and add local jobs, and Flathead Electric will be able to efficiently distribute electricity in our service area. Although a small component, this purchase agreement also adds to the Co-op's renewable energy portfolio without financially overburdening our members."

Flathead Electric Cooperative currently receives nearly all its power from the Bonneville Power Administration at about 3-4 cents a kilowatt-hour, which could be capped at about 169 megawatts. It also uses about 1.1 megawatts from a generator powered by landfill gas at the county landfill, and it will receive about a quarter megawatt of power from the city of Whitefish's hydroplant when that project is completed.

According to Co-op assistant general manager Mark Johnson, the Co-op's board set a criteria that the impact from purchasing Stoltze's power at 9 cents a kilowatt-hour could not raise members' retail rates by more than 1 percent. The 2.5 megawatt purchase amounts to about 1 percent of the Co-op's total load, so there is little impact to costs.

Stoltze landed a $190,720 Woody Biomass Utilization grant last June to develop engineering, designs and permits for the project. In January, the Department of Environmental Quality announced Stoltze had requested a modification to its air quality permit so it could replace a bank of out-dated boilers rated at 60 million Btu/hour with a single boiler rated at 70 million Btu/hour.

Stoltze's Half Moon lumber mill was constructed by the State Lumber Co. between 1918 and 1923. Five boilers were acquired from mills in Kila and Eureka - two Frost boilers, two Casey Hedge boilers and an Erie City Iron Works boiler.

"One of the boilers is dated 1905," Roady said.

The boilers primarily burn bark but also consume sawdust, wood chips, planer shavings and hog fuel - ground up wood waste from forests and the log yard. The primary use of the steam is to heat kilns to dry finished lumber.

Stoltze initially looked at powering a 20-megawatt generator with a new boiler system, but by last June it had downsized its goals to about 2 megawatts - enough to handle the mill's electrical load of 1.3 to 1.7 megawatts. An additional 2.5 megawatts will now be sold to the Co-op.

"The limitation is not biomass," Roady said. "It's the amount of biomass power the Co-op can handle."

The new boiler will be built by Wellons Inc., of Vancouver, Wash., which has a long history building boilers and drying kilns for the timber industry - including Stoltze's drying kilns, Roady said. Stoltze will borrow $20 million for the project, Roady said, which will start as soon as weather cooperates and take about 18 months to complete.

"We'll tweak the system beginning in May or June, and put power on the grid by Oct. 1, 2013," Roady said.