The Highwood Generating Station, a new natural gas power plant near Great Falls, appears to have sailed through recent air-quality tests, but the plant has sat mostly idle because it is not economical to operate.

Highwood is an $85 million, 40-megawatt peaking plant built by the Billings-based Southern Montana Electric Generation and Transmission Cooperative, a wholesale cooperative that filed for bankruptcy in October to reorganize its debts.

Southern completed construction on Highwood in September and was given 180 days, until March, to show compliance with its Montana air-quality permit.

‘Flying colors’

The plant “passed with flying colors,” said Alan See, Southern’s interim manager, said this week. See is the general manager of the Tongue River Electric Co-op, which is a member of Southern. See stepped in when Southern filed for bankruptcy and its former manager, Tim Gregori, retired.

Highwood ran for about 15 hours over two days, Feb. 7 and 8, See said. Southern’s engineering consultants, Bison Engineering, conducted the tests with DEQ officials present.

Bob Gallagher, a DEQ environmental engineer who was present for the testing on Feb. 8, said “the initial numbers looked good.” Southern has 60 days to submit test results, he said.

The tests measured the plant’s emissions of carbon monoxide and oxides of nitrogen. The initial numbers appeared to be well below the permitted limits, Gallagher said.

Southern previously had tested its continuous emission monitors, which are working well, Gallagher said.

Little action

Since its completion last September, Highwood has seen little action. See was uncertain how much Highwood was operated in September but said the plant since has been run only for testing.

With the current low price of energy, it doesn’t make sense to run the plant, See said.

The situation may change in July or August, with demand for air conditioning, or in November and December, with demand for heat, he said. The plant also would run more if demand for power increased in the Pacific Northwest and if snowpack is lower than normal, decreasing the amount of hydropower, he said.

Prior to bankruptcy, Southern had contracted for natural gas to run Highwood at a fixed price that is now higher than the spot market price, See said.

As a peaking plant, Highwood’s first phase was designed to run only at times of high demand to supplement other power sources. The first phase is limited by permit to 3,200 hours of operation in any 12-month period.

Meanwhile, Highwood has eight employees who are finishing construction items, going through training and cleaning up the site, See said. There have been no staffing cuts, he said.

At the time it filed for bankruptcy, Southern was seeking up to $300 million in financing for phase two of Highwood, which would enlarge the plant to 120 megawatts of capacity and enable it to run full-time.

Southern’s financial problems stemmed from contracting for more power than its members could use and having to sell excess electricity into a depressed market. Southern buys power and sells it mostly to its members, which include five rural co-ops in central and southeastern Montana and the city of Great Falls.

The Highwood plant is part of a secured claim against Southern by Prudential Capital Group of Dallas, Texas, and other lenders.

Since the bankruptcy, Southern has stopped buying power from its main supplier and largest unsecured creditor, PPL Montana, and is purchasing only what it needs on the open market at about half the price. The change will allow Southern to build up its cash.