Highwood’s slow death: How people power helped kill a coal plant

Those who were listening carefully last week heard some big nails being pounded into the coffin lid of the ill-fated Highwood Generating Station, the proposed coal-fired power plant near Great Falls. Those nails came in the form of a letter from the Rural Utilities Service (RUS) of the U.S. Department of Agriculture, rejecting Highwood’s request for hundreds of millions of dollars in loans to construct the plant. The story behind that rejection is one worth telling.

The only exposure most Missoulians had to the seething controversies surrounding the Highwood plant came when Great Falls officials tried to lure Missoula’s mayor and City Council into signing up for a long-term power contract. After a minor revolt among the citizenry, the mayor and Council rejected the offer to buy dirty power from a coal-fired power plant that essentially would be outdated before it was ever built. Similar rejections from Helena and Bozeman were to follow, as environmentalists and financiers threw some light, and plenty of cold water, on the dubious proposal.

But for folks in Great Falls, the Highwood battle was a years-long struggle—not just with the developers, Southern Montana Electric, but also with their own city government. Great Falls officials refused to let the populace vote on the project, held numerous backroom meetings, and put taxpayers and ratepayers in considerable risk without the benefit of full public involvement, among other actions. The phrase “government out of control” would be fully applicable to the actions of city officials in their far-too-cozy relationship with the plant developers.

Moreover, it wasn’t just the financial risk that was a problem. Citizens for a Clean Environment formed to fight the plant because they were concerned about the public health and environmental effects of its emissions. Besides the estimated 3 million tons of global warming pollution the plant would belch out each year, residents feared the impacts from the nitrogen oxides, mercury, sulfur dioxide, lead, volatile organic compounds, and lung-clogging particulates that were sure to come from burning thousands of tons of coal each day. Others opposed the plant because of its visual impact on the historic Lewis and Clark portage trail.

Joining with the Montana Environmental Information Center, citizens put up a tremendous battle before their city and county commissions, the Board of Environmental Review (BER), and in federal and district courts. Despite producing hundreds of letters denouncing the plant, the citizens—in front of their own elected officials—lost as many battles as they won.

They lost their effort to deny new zoning that allowed industrial use of what was formerly agricultural land. They lost before the BER, which shut down their attempt to have the plant’s air pollution permit revised—an action they took after the U.S. Supreme Court ruled that carbon dioxide, the main greenhouse gas, was a pollutant and should be regulated by the U.S. Environmental Protection Agency. Still pending before the BER is a request to require control measures for fine particulates. Lawsuits over mercury emissions and carbon dioxide levels have also been filed.

What role has the state played? The Schweitzer administration, via its economic development office, initially supported Highwood, saying it would be “the last” coal-fired plant to be built before we moved into the promised fantasy land of “clean coal.”

To build the plant, however, the essential requirement was money—and lots of it. So the developers turned to the federal RUS, which has routinely dropped billions of taxpayer dollars in loans for similar power plants across the nation. The requested loan was critical to the plant’s future, providing 80 percent of its projected $720 million cost.

Enter Rep. Henry Waxman, D-Calif. A stickler for details, Waxman is arguably one of the finest minds in Congress and chairs the powerful Committee on Oversight and Government Reform. On Valentine’s Day, Waxman shot off a letter to the administrator of the RUS utilities development program, challenging the legitimacy of funding any future coal-fired power plants without taking a plethora of environmental and fiscal concerns into account.

Leading Waxman’s long list of concerns was a seminal question: How does the RUS address “the financial risks associated with construction of new coal-fired power plants without emissions controls for greenhouse gases?” If the loan failed, Waxman asked, would citizens wind up paying the price?

Waxman pointed out that “private sector investment banks, among others, have become increasingly concerned about the financial risks of investments in new coal-fired power plants.” He cited the recent adoption of “carbon principles” and “enhanced diligence” by corporations such as Citigroup, JP Morgan Chase, and Morgan Stanley, noting that those companies look hard at likely regulatory changes, such as a carbon tax or cap and trade program, and they “assess the plant’s ability to recover future costs through rate increases.”

Waxman also asked for significant amounts of information on how the agency assesses the financial risk of its loans, saying he feared “ratepayers may be stuck with billions of dollars in stranded assets and sky-rocketing costs for power.”

Waxman’s request sent shockwaves through the federal agency, and a mere five days later, the RUS wrote to the Highwood developers. Citing the pending litigation, the uncertain feasibility of the project, and other factors, the agency said it was prohibited from funding new base load generation projects through 2009. “The agency will not be able to fund the Highwood Station,” the RUS concluded.

Highwood’s developers are now seeking other funding sources, but the RUS decision is a victory for the citizens of Montana, the environment, and for future ratepayers. Missoula, Helena, and Bozeman didn’t buy in, our citizens never gave up, and good old Henry Waxman came through right when we needed him.

Helena’s George Ochenski rattles the cage of the political establishment as a political analyst for the Independent. Contact Ochenski at opinion@missoulanews.com.
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