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Gazette Opinion

In one of the stranger developments in the final days of the 2003 Legislature, lawmakers were suddenly asked to authorize $800 million in bonds to help finance a huge coal energy and railroad project in Eastern Montana's Otter Creek area.

Promoters persuaded Ron Devlin, R-Terry, to introduce the mega-bonding amendment to a bill already on the House floor. Gov. Judy Martz and many lawmakers were surprised. Martz injected a measure of common sense into the debate, saying: "These are all Fortune 500 companies that don't need us to bond. What's going on?"

The last-minute bond bid was derailed in the House. Was this conclusion an affront to economic development?

No. The strange attempt to amend SB487, illustrates the sometimes misleading causes touted as economic development in Montana. Economic development depends on private enterprise. Private entrepreneurs, by definition, must take the leading roles. The ultimate regulators of developing Montana's vast coal reserves will be private investors.

Great Northern Power Development and Kiewit Mining Group, giants in the coal ownership and coal mining industries, plan to build a 500-megawatt coal and wind power project near Miles City. Coal for the plant would be mined nearby, but not on the Otter Creek tracts. The estimated cost is $900 million for the project with power generation starting in 2008.

Five years is not a long time for bringing a coal-fired power plant on line. It takes time to do business right.

Transmission critical A key to the project will be linking the proposed Miles City plant to electrical transmission grids owned by Western Area Power Administration and NorthWestern Energy. The project relies on a 2002 WAPA study showing that existing lines could be upgraded to accommodate 500 megawatts.

Identifying transmission projects with high public benefits and facilitating their speedy completion is the No. 1 goal listed by the Federal Energy Regulatory Commission in its report to Congress last year.

"The transmission system definitely needs to be upgraded," said John Hines, a Montana representative to the Northwest Power Planning Council.

FERC and members of Congress have been trying to improve the efficiency of how the transmission system is used, Hines said. The possibility of change is a concern for energy developers. As Hines said: "Investors are risk averse. The more certainty they have, the more willing they are to participate."

In-state markets There are in-state and interstate markets for power made in Montana. Contracts for Montana's small-customer default supply expire in 2006. Montana rural electric co-ops have contracts expiring in 2007-09.

Coal production in Montana and throughout the nation declined last year as electricity generators used stockpiled coal, and a warm winter combined with economic downturn depressed demand. Exports and imports fell.

Will miners delve deep into the Bull Mountains to power a new coal-fired plant near Roundup? Will Otter Creek become the state's gold mine?

The answers depend on markets and private investors.

However, Miles City can expect to see a complex energy project coming together in several years. The principals have studied the market, confirmed its technical, environmental and financial feasibility. GNP and KMG have the wherewithal to build this plant in the lower Yellowstone Valley. That's how economic development really works for business and for Montana.

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