A whopping 50 percent increase in power rates made a hard landing this month on Montana customers of Beartooth Electric Cooperative Inc.
"It was staggering," said George Nelson, a teacher in Roberts who rents a home there.
With the rate increase and a long cold snap, his bill jumped from $130 in November to $319 in December.
Nearby, Rod and Roxie Melton, owners of the Y-Stop convenience store, are still reeling from the size of their bill.
"My small-business power bill ran between $600 and $700 per month," she wrote in a letter of complaint to the electric co-op that covers rural areas of Stillwater, Carbon and Sweet Grass counties in Montana and Park County in Wyoming. "This month it is $1,233.54."
"This means that I must net approximately $40 per day just to cover the power bill," she continued. "That's the profit on about 97 20-ounce soft drinks, 147 packs of cigarettes or 18 video rentals. We don't do that much business this time of year."
At Roberts School, Superintendent Jeff Bermes said a nearly $1,200 monthly increase has the School Board considering options to reduce energy use. Everything is on the table, including a four-day school week or a shorter school year with longer school days.
The increase exceeds a 7 percent contingency budget for cost increases. Money to pay power bills will have to come from cuts somewhere else, Bermes said.
"I knew there was going to be an increase," he said. "I had no idea how huge. It's going to have an overall effect on salaries, supplies and equipment."
There is no way to pass the increase on, and additional state funding doesn't look promising, he said.
"We can't ask for a mill levy to cover energy costs, when everyone has been hit so hard already," Bermes said.
John Prinkki, president of Beartooth Electric and a Carbon County commissioner, knows how deeply unpopular the increases that took effect in December are. The office got 100 calls Monday after members received their bills.
"Let people know this makes all the board of directors sick," he said. "We are members. We're affected, too. It affects our friends, our families, our neighbors. We feel the pain, too."
The increase included a 20.5 percent rise in costs to cover operations and rising wholesale costs of power. But half the increase came as a surcharge that Prinkki hopes will be temporary. The surcharge, he said, was necessary to cover a cash flow problem caused by delays in obtaining long-term financing for the Highwood Generation Station project.
"We're financially sound," he said. "We just don't have any operating cash."
Beartooth is one of four rural electric co-ops that form Southern Montana Electrical Generation and Transmission Inc. Southern Montana Electrical started construction last fall on a coal-fired power plant eight miles east of Great Falls.
Prinkki said the co-ops decided that the best way to guarantee their customers a continuing power supply at reasonable costs was to build their own plant. Beartooth Electric's long-term power supply contracts expire in 2011, he said, and the co-op, which serves about 4,000 rural customers, will be forced to buy power on the open market at much higher prices. Because of increasing demand nationwide and a shortage of power generation facilities, it could become difficult to purchase power at any price, the co-ops reasoned.
The cost of the plant originally was estimated at $470 million. More recent estimates put the price at $900 million.
Prinkki said at least $150 million of the additional cost as well as complications in obtaining financing can be attributed to environmentalists who challenged the air quality permit and delayed the project by 16 months. The delay was largely responsible for the surcharge, he said.
Ron Roodell, general manager of Beartooth Electric, told members that while the challenge was pending, the co-ops missed an opportunity to secure long-term financing through U.S. Department of Agriculture's Rural Utilities Service program. Now, he said, the co-ops face the task of trying to find long-term financing in a difficult financial market.
Some customers aren't satisfied with that explanation and are angry that the surcharge is being blamed on environmentalists.
"They're trying to make the devil out of someone who has legitimate concerns," said Dave Grimland, who lives in rural Stillwater County. "They're trying to focus the blame on someone else."
Grimland said he was also frustrated that the big December increase came without warning. At the board of directors meeting in September, the increase was estimated at 16.1 percent, he said.
"Everybody knew a rate hike of some kind was coming," he said. "Then we get the bill, in which the actual increase turned out to be 25 percent higher than they predicted."
Prinkki said that the need for a bigger increase and a surcharge became apparent after the board meeting. The board tried to get the word out through the December issue of Rural Montana Magazine, published by Montana's electrical co-ops.
Grimland in general doesn't like the way the board operates.
"It's very hard to get specific information about costs of the co-op," he said. "It's very hard to even get into a board meeting. If you ask about financial details, you're put off."
He said that although the customers are also owners of the co-op, members are not allowed to make motions from the floor at board meetings. Customers have a voice only when they vote for representatives on the board, he said.
Barry Jones, a Carbon County rancher, said he, too, wants more answers.
"There's not much information about it," said Jones, whose bill increased from $300 to $700. "I don't know why I should have to pay $300 more for the same amount of electricity."
Customers in Wyoming, who make up about 5 percent of the membership, won't be sharing the pain. The increase was turned down by the Public Service Commission there, Prinkki said. They will be paying 25 to 30 percent less than Montana customers. That means a loss of $10,000 to $11,000 a month to the operation, he said.