BILLINGS – A Montana utility is dropping plans for a 250-megawatt, coal-fired power plant near Great Falls and will instead build a smaller natural gas plant and some wind turbines, an official with the utility said Monday.
The abandonment of Southern Montana Electric’s Highwood Generating Station adds to a long list of coal plants canceled across the country over the past several years. Coal projects have been buffeted by skyrocketing construction costs, climate change pressures and a concerted legal campaign from environmental groups.
SME General Manager Tim Gregori said SME will build a 120-megawatt gas plant and erect at least six megawatts of wind turbines.
“We had to make a pragmatic business decision, to pursue something we knew we could build to meet our customers needs,” he said.
Before Monday, the utility had stuck doggedly with the $900 million Highwood coal plant despite rising costs and lawsuits that kept pushing back the project’s construction schedule.
Environmental groups said the project would worsen climate change by emitting 2.1 million tons annually of carbon dioxide, considered a leading cause of global warming.
Gregori said “regulatory uncertainties” made it impossible to continue with the coal plant because it became harder to raise money for the project. He said building a natural gas plant would be simpler and faster, with the first phase, 80 megawatts, to be ready for service by late 2011.
Cost projections for the Highwood plant had almost doubled since it was first proposed in 2005. SME suffered a major setback when the U.S. Department of Agriculture denied a loan requested from the utility last year.
Gregori declined to say how much a gas plant would cost, except that it would be cheaper to build and more expensive to run than a coal plant.
By comparison with Highwood’s $900 million price tag, NorthWestern Energy is proposing to build a 200-megawatt gas-fired power plant near Anaconda for $206 million.
SME serves more than 50,000 customers through five smaller cooperatives: Fergus Electric, Tongue River Electric, Beartooth Electric, Yellowstone Valley Electric and Mid-Yellowstone Electric.
Those co-ops, longtime customers of the Bonneville Power Administration, have been looking for ways to generate their own power after Bonneville announced it would not renew its contracts beyond 2011.
More than $40 million had been sunk into the project since its 2004 proposal. At least one of the five co-ops, Yellowstone Valley Electric, had sued SME to get out of the project.
Initial construction on the Highwood coal plant began last fall as efforts to get full financing for the project continued. SME was forced to build portions of the plant’s foundation to meet a state-imposed deadline for retaining its air pollution permit.
Gregori said much of the work done to date could be used for the planned natural gas plant.
In the past two years, at least 78 coal projects have been canceled or put on hold, according to the environmental advocacy group Source Watch.
The Highwood plant was embroiled in a pending lawsuit in state District Court over carbon dioxide emissions, two regulatory appeals dealing with hazardous pollutants before the Montana Board of Environmental Review, and ongoing zoning challenges.
Abbie Dillen is an attorney for EarthJustice, a Sierra Club-related law firm that has pursued multiple lawsuits and regulatory appeals against Highwood. She said the switch to a natural gas plant was “the reasonable course” for SME.
“You halve the (greenhouse gas) emissions by 50 percent,” she said. “The worst possible thing they could have done was to build a new coal-fired plant that was going to supply much more power than anyone in that cooperative would ever need.”
SME’s Gregori said he continued to believe in the cost advantages of coal — a cheaper fuel than natural gas — but could no longer justify the continuing delays.
“We’re getting tired of being the guinea pig,” he said.