Shining a Light on BEC in 2012
A look back at Beartooth Electic Co-op activity in 2012.
•With a recall meeting looming on Saturday, Jan. 28, Beartooth Electric Co-op (BEC) Trustees, John Prinkki and Joe Kern formally submitted their resignations Tuesday, Jan. 3, to the BEC.
• The Montana legislative Interim Committee on Energy and Telecommunications held a hearing on Jan. 13, to review the Southern bankruptcy. At the end of the hearing the committee decided to research possible legislation that would require a majority vote by individual members of rural electric cooperatives before financing construction of new power plants or entering into long-term power contracts that exceed consumption forecasts.
• Another bankruptcy hearing took place on Tues., Jan. 24, for Southern, including an intervention request by the Public Service Commission. Trustee Arleen Boyd reported that Tongue River, Fergus County and Mid Yellowstone co-ops opposed the intervention as did the trustee. Great Falls supported the intervention. Boyd said Beartooth Electric Coop provided a letter explaining why it valued the input of PSC but did not take a formal position on the issue.
•Beartooth Electric Co-op General manager Ron Roodell resigns his post after six years.
•Southern Trustee Lee Freeman sets aside PPL Contract for up to $587 million. PPL reserves the right to ask for damages.
•Montana Legislature’s Energy and Telecommunications Interim Subcommittee investigates Southern history. It prepares legislation prohibiting co-ops from signing massive energy contracts without member approvals. Terry Holzer, Yellowstone Co-op General Manager submits presentation that Phase II would bring a combined total of $72,000 in debt to each coop member.
•First quarter 2012: First payment due on $85 million Highwood debt: $2.5 million in Feb.; approximately $2.5 million per quarter the next two years-in addition to PPL power payments. Bankruptcy defers resolution of debt.
•BEC files complaint in current Southern bankruptcy action to void Southern contract, alleging Wyoming Public Service Commission never approved the Highwood financials and Southern failed to get a reappraisal of its land before transferring it to SME for sale. It will be heard Sept. 25.
•BEC General Manager Richard Peck said a co-op’s mission is to provide maximum value to members at the most economical price and, “co-ops are never involved high risk or profit basis. It (Highwood) was pure risk and pure speculation that all that excess power could be sold.” He said delays in Highwood were not purely environmental but the result of a poorly executed business plan.
•The City of Great Falls files a complaint in current Southern bankruptcy action seeking a declaratory judgment, alleging that USDA RUS never made a loan commitment and that Southern implemented policies to prevent critical information concerning Southern Montana from becoming subject to public disclosure.
•BEC reports its independent study gives Highwood a market value worth less than 50% of the value of its $85 million loans, without counting interest. BEC’s wholesale Power Rates upon leaving Central were 3.25 cents. Its rates are currently 7.1 cents.
•The National Rural Utility Corporate Finance Corporation (CFC) reports BEC has the highest retail rates in the 7 state Western region and of 814 coops in the nation, only 29 have higher rates.
• The Beartooth Electric Cooperative, Inc. (BEC) held its annual meeting at the Red Lodge Civic Center on Saturday, Sept. 21 to discusss its future. Keynote speaker, Gary Buchanan says it will be a very long haul with the bankruptcy court having a major say in the share of debt burdening BEC which could reach $20 million or more. Possible solutions the BEC board is looking at include: 1, Buying power from a direct wholesale distributor; 2. Joining or collaborating with another distribution cooperative; 3. Joining a transmission and generation company on its own or with another coop; 4. Merging or selling to a utility, possibly with the MT Public Service Commission as a willing partner in controlling rates or 5. Declaring bankruptcy.
• With the future of the Beartooth Electric Cooperative in Red Lodge so open, it was declared at the meeting of the board on Friday, Oct. 26, that they looked forward to the Nov. 16 determination by the Trustee of Southern Electric Generating and Transmission Company (Southern) in the proper solution of the bankruptcy. On that date, according to Arleen Boyd (due diligence committee and BEC board member) the trustee must issue a solution for Southern and hopefully, a determination of the debt burden for BEC through a plan or outline of his approach. The board admitted it was a huge obstacle to future planning for the little co-op to not know the size of the shadow of debt under which it would be laboring. The latest news is that the November date has been moved back to Dec. 14.
• On Dec. 14, the U. S. Bankruptcy Court will receive the basis for a plan from Trustee Lee Freeman for Southern Electric Generation and Transmission Cooperative (Southern) for the future of Southern. Beartooth Electric Co-op (BEC), four other small rural co-ops and Great Falls accepted responsibility for Southern’s debts through their representatives on Southern’s board. If the agreements hold, they will be held liable for some or all of the debts that may total over half a billion dollars. BEC attorney Larry Martin advised the BEC board at a meeting held Friday, Nov. 30 at the Red Lodge Area Community Foundation. He said while it is hoped that the debts will be substantially reduced by the court, the trustee’s first obligation is to the creditors.
• On Dec. 20 U.S. Bankruptcy Judge Ralph B. Kirscher ruled that Beartooth Electric Cooperative (BEC) may pursue its complaint to void the cooperative's 2008 wholesale power contract with Southern Montana Electric Generation and Transmission Cooperative (Southern). The judge rejected Southern's Motion to Dismiss the BEC Complaint for Declaratory Judgement to void the cooperative's 2008 all requirements contract with Southern. The Motion to Dismiss was filed by Southern and its court-appointed bankruptcy trustee.
•U.S. Bankruptcy Court Judge Ralph Kirscher set Feb. 15, 2013 as the date for Southern Montana Electric (Southern) Trustee Lee Freeman to file a completed reorganization plan and disclosure statement documenting the financial status of the bankruptcy and the potential impact of his plan on creditors and other parties. The court’s time frame calls for hearings on the trustee’s plan and disclosure information to begin on March 26. Other parties may introduce plans at any time.