Snag Could Derail Middleton Plantby Ken Dey
Idaho Statesman, July 23, 2002
IdaCorp says it doesn’t have the money to build it
Lack of financing could pull the plug on the controversial Garnet Energy Power Plant near Middleton.
IdaCorp Inc. officials told the Idaho Public Utilities Commission on Monday that “there is a substantial likelihood” the company won´t be able to find financing to build the natural-gas-powered electric power generating plant.
Meanwhile, the plant´s only committed customer, Idaho Power Co., said it will cancel plans to buy power from Garnet Energy if financing isn´t obtained within 90 days.
Without a major customer such as Idaho Power, it would be even more difficult for Garnet Energy to obtain financing.
Darrel Anderson, IdaCorp´s chief financial officer, said turmoil in the financial markets coupled with the controversy around other companies involved in power, such as Enron, has made it difficult to find financial backing for power plants.
“Companies much larger then IdaCorp are having difficulty in financing all types of power plants,” Anderson said in testimony filed with the commission.
He said the company is still seeking alternative financing arrangements so it can begin construction on a site southeast of Middleton in Canyon County.
“However, this will take some additional time and, candidly, in today´s financial market environment, may not be successful,” Anderson said.
This new uncertainty caused Idaho Power Co. on Monday to ask the commission to delay for at least four months public hearings on the company´s application to buy power from the planned 250-megawatt plant.
The hearings had been scheduled to start today on a power purchase agreement between Garnet Energy and Idaho Power. Idaho Power had proposed buying electricity from the plant during June, July, August and December, when its power needs are greatest.
Barton Kline, Idaho Power´s attorney, said financing is being hindered further because Garnet Energy hasn´t yet found customers for the months that Idaho Power wouldn´t be buying from the plant.
The commission agreed to cancel this week´s hearings, but held off on approving the delay until it can hear a motion from Citizens for Responsible Land Use and the Idaho Rural Council to dismiss Idaho Power´s application.
Attorney Brad Purdy, who represents the citizens´ groups opposing the plant, told commissioners, in a hastily scheduled hearing Monday afternoon, that IdaCorp´s admission that it was having trouble finding financing validated his clients´ arguments that the project wasn´t economically viable.
“Garnet as proposed is dead,” Purdy said “It´s time to put the coffin in the ground and move on. They can always come back with a project that is more viable.”
The commission will hear Purdy´s motion at 10 a.m. Wednesday.
John Prescott, Idaho Power´s vice president for power supply, said the company still will need a new source of electricity in 2005, and, if financing can be obtained, the Garnet plant remains the most economical option.
But Prescott said that if Garnet can´t get financing, Idaho Power would have to look at other options to provide for its power needs.
“Ultimately, everything boils down to finding reliable and affordable electricity supplies to meet future growth,” Prescott said. “It is only prudent for us to examine all of our options to find resources we could put on line within the same time frame that Garnet is scheduled to begin operations.”
Company officials said it´s too soon to determine whether other options for power would be more expensive than power from the Garnet plant.
Monday, Kline told the commission that no later than Oct. 21, Idaho Power will have a report prepared for the commission that will outline what alternatives the company could pursue if financing for the Garnet plant cannot be obtained.
Kline also said that if Garnet doesn´t have any financing in place by that date, Idaho Power will withdraw its power purchase agreement application.
Since the Garnet plant was first proposed in January 2001, it´s been a source of constant controversy. People living near the plant have opposed it on the basis of environmental effects it could have on the Middleton area.
Others have raised concerns about the affiliate relationship between Garnet Energy and Idaho Power. Both companies are controlled by the parent company IdaCorp Inc.
Although IdaCorp has maintained that the affiliate relationship did not lead to preferential treatment, critics have suggested that Idaho Power would have been better off finding a new builder for the plant that had no affiliate connections.
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