SME reorganizes in wake of Southern’s bankruptcy

2012-10-08T16:30:00Z 2014-08-25T07:31:18Z SME reorganizes in wake of Southern’s bankruptcyBy CLAIR JOHNSON cjohnson@billingsgazette.com The Billings Gazette

SME, an offshoot corporation of wholesale cooperative Southern Montana Electric Generation and Transmission, reorganized late last week in its first meeting since Southern declared bankruptcy almost a year ago.

Originally formed to build the Highwood Generating Station near Great Falls, SME made a fresh start last Friday in Billings.

SME doubled the size of its board of directors and named all new representatives from each of its four member distribution cooperatives — Mid-Yellowstone, Tongue River, Fergus and Beartooth co-ops, said Hysham attorney Gary Ryder, who represents Mid-Yellowstone in Southern’s bankruptcy.

SME also accepted the resignation of its general manager, Tim Gregori, who also formerly headed Southern, Ryder said.

While SME is not in Southern’s bankruptcy, it met because of pending issues and assets involving the bankruptcy, Ryder said. And as a registered corporation in good standing with the state of Montana, SME should have an annual meeting and remain a corporation until it has an idea of how the bankruptcy may affect it, he said.

SME’s new board members and officers are David Dover, president, from Fergus; Dave Knobloch, vice president, from Tongue River; Jim DeCock, secretary/treasurer, from Mid-Yellowstone; DeeDee Isaacs, board member, Tongue River; Terry Frost, board member, Fergus; Lee Howard, board member, Mid-Yellowstone; and Arleen Boyd and Pat Hoffman, board members from Beartooth.

SME’s old board was composed of Bill FizGerald, Southern’s president and Mid-Yellowstone board member; Gerhard Helm from Tongue River; Joe Dirkson from Fergus and John Prinkki, formerly of Beartooth.

Ryder said the new board agreed to review its finances and will try to meet monthly. SME has not hired a new general manager and made no decision about hiring an attorney.

SME has about $6,800, Ryder said. The organization’s only income comes from leasing undeveloped agricultural land it owns near the Highwood plant, he said.

SME formed in 2008 with four of Southern’s six members to continue building the Highwood plant when Southern switched from a 250-megawatt coal-fired plant to a 40-megawatt gas-fired plant. Southern’s two other members, Yellowstone Valley Electric Cooperative based in Huntley and the City of Great Falls, did not support the gas-fired plant and did not want to finance the $85 million project.

SME held separate and confidential meetings from Southern’s board as it forged ahead on building Highwood. But in 2010, SME transferred the Highwood project to Southern, which financed the plant’s construction.

The Highwood debt, along with contracts that obligated Southern to buy more and expensive power than it needed, prompted the wholesaler to become the first such power supplier in Montana declare bankruptcy. Southern, which has been appointed a trustee, is trying to reorganize its debts.

Yellowstone Valley and Great Falls have long criticized SME for its secrecy and lack of transparency about the Highwood project and both are suing Southern to end their power contracts. Beartooth, whose board of directors was mostly replaced because of Southern’s financial mess, also has questioned SME’s affairs.

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