That surprising news came after Montgomery Energy was rebuffed Friday by the Federal Energy Regulatory Commission. The federal commission ruled Texas-based Montgomery had no right to leapfrog ahead of other power-plant projects that are waiting in line to hook up to transmission lines in the Great Falls area.
But Montgomery Energy officials said they simply had been trying to move ahead of projects that were struggling.
"The FERC ruling will have absolutely no impact on our project," said Dan Hudson, president of Montgomery Energy Partners. Instead, Montgomery officials said they not only plan to build north of Great Falls a 275-megawatt baseload power plant, estimated to cost up to $300 million, but also another 125-megawatt peaking plant, estimated to cost $96 million, which would be used to fulfill extreme power needs.
The combined facility would produce 400 megawatts of electricity, cost about $400 million to build and provide power flexibly to Montana's power grid, company officials said.
"Any time we have $100 million invested in energy in Montana, it's continuing evidence of the potential we have in all forms of energy," said Evan Barrett, chief business development officer in the governor's office.
"We're number one in coal potential and number one in wind potential, but natural gas is a resource we want to use as well," Barrett said Tuesday. "To be able to use this for peaking will allow us to use the whole combination better."
Cascade County Commissioner Peggy Beltrone praised Tuesday's announcement, saying the project "strengthens Montana's position as a national provider of clean energy." She said the plant would mean more jobs and tax base for the county. Interest in wind power is growing in Montana, and electricity produced by natural gas can be use to supplement wind energy.
In an interview, Hudson said the negative FERC ruling was "no big deal" to the company because of some positive negotiations between Montgomery Energy and NorthWestern Energy, the dominant utility in Montana. In fact, Hudson said Montgomery Energy and NorthWestern Energy had discussed mutually withdrawing the complaint several weeks ago, but the issue was too far along.
NorthWestern and Montgomery have been working in recent months to winnow down a huge estimated cost of $146.7 million for Montgomery to connect to NorthWestern's transmission lines.
That figure has now been reduced to about 2 percent of the original figure, or between $2.5 million and $3 million, he said. According to Hudson, the large cost was the principal basis for Montgomery's complaint to the federal energy regulatory board.
Hudson explained the smaller connection fee of less than $3 million is "a straight interconnect," rather than a more complex arrangement to join NorthWestern's larger network.
Mike Cashell, chief transmission officer for NorthWestern Energy in Butte, said Tuesday he could not confirm the figure of less than $3 million, but he agreed it is substantially less than before.
"There are two types of interconnections," Cashell explained.
One type of connection looks at integrating a proposed project into NorthWestern's network, and determines what type of "significant upgrades" would be needed, Cashell said. In the case of the natural gas plant, NorthWestern figured a new 238-kilivolt line would need to be built for the gas plant starting at Great Falls. That would have given Montgomery Energy all the room it needed on area transmission lines, any time of the day or night, he explained.
"We have to clear the congestion that might exist when this plant comes on," Cashell said.
Instead, Montgomery Energy opted for the second kind of connection, a simple hookup to NorthWestern lines, and to use NorthWestern's lines "if there is excess transmission available," Cashell said. "They would only get access as the transmission capacity is available."
That might be a problem for a power plant, except Hudson said his plant's prospective customers already have plenty of space reserved on transmission lines to more than cover the size of the Montgomery Energy plant.
Cashell agreed it's possible Montgomery's customers could clear the way for Montgomery to access those transmission lines.
Hudson said Montgomery Energy is still working to line up customers for what it hopes will be its 400-megawatt project, and that construction could begin late this year or in the spring of 2009.
"We need a couple things to fall into line," he said. "The design is completed."
Montgomery has a number of potential customers, including rural electric cooperatives, NorthWestern Energy itself, the city of Great Falls and customers in Alberta who could be reached through a proposed new transmission line between Great Falls and Lethbridge, Alberta, he said.
Great Falls has said it gets its power through the umbrella group Southern Montana Electric Generation & Transmission Cooperative, and SME officials have criticized wind power and natural-gas power as too expensive.
But Hudson contends SME and Great Falls may still be interested in buying power from Montgomery Energy, and/or wind farms, if plans for the proposed coal-fired power plant near Great Falls do not pan out.
"It's very hard to finance coal plants right now," Hudson said. He said Montgomery already has the money to build its project. The Rural Utilities Service earlier this year declined to finance SME's Highwood Generating Station.
Brett Doney, president of the Great Falls Development Authority, said one long-term solution is to build more transmission lines.
"We obviously want to see both projects go ahead," Doney said.
Montgomery Energy Partners' chief executive, Frank Giacalone, added, "We have the track record, are farther along in the development process, and have the ability to provide the relief to the energy needs of Montana sooner than anyone else." He said the company has built four similar facilities in the last two years, twice each in Odessa and Wharton, Tex.
Hudson said his company has been working with wind developers in Montana, since energy generated by wind turbines can complement natural-gas-fired electricity. He said Montgomery Energy's gas-fired facilities at Odessa manage 4,000 megawatts of total wind power being produced in the area.
"Our plant manages all the wind production for that area," Hudson said. "We really know how to manage it." He suggested the company could do the same in Montana, where wind development is on the rise, and said the Great Falls Energy Center is being designed to handle more than 2,000 megawatts of wind power.
Hudson said the Great Falls main plant might be expected to run about 40 to 60 percent of the time, while the smaller peaking plant might run between 15 and 40 percent of the time to accommodate customers' "extreme needs."
Hudson conceded natural gas is more expensive to burn than coal, but he noted natural gas generators are less costly to build than coal plants. The estimated cost of Montgomery Energy's 400-megawatt facility is about $400 million, half the estimated $800 million cost of the 250-megawatt coal-fired Highwood Generating Station.
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