BILLINGS, Mont. (AP) — The trustee for a bankrupt Montana power cooperative is challenging in federal court a claim for $46 million from banks that financed a little-used natural gas power plant near Great Falls.
The outcome could affect electricity rates for tens of thousands of customers in central and southern Montana served by members of Southern Montana Electric Generation and Transmission Cooperative.
U.S. Bank National Association is seeking the $46 million as a "make-whole payment" to cover lost proceeds on a loan Southern Montana used to build the Highwood Generating Station. That's on top of the loan itself — $85 million.
Southern Montana trustee Lee Freeman says in court papers filed Friday that the make-whole request is exorbitant and should be rejected. An attorney for U.S. Bank National Association did not respond to requests from The Associated Press for comment.
Southern Montana trustee attorney John Parks said the loan itself is not in dispute and still would be repaid under a proposed reorganization plan for the cooperative.
The Highwood plant has seen minimal use, helping drive Southern Montana into bankruptcy after the cooperative also contracted with PPL Montana for more power than it needed at high rates.
Southern Montana is composed of five rural cooperatives and the city of Great Falls that in turn provide power to more than 50,000 Montana residents. It filed for bankruptcy in 2011.
Separately, attorneys in the case say the co-op's lenders could be owed tens of millions of dollars more depending on the value affixed to the power plant and Southern Montana's contracts as part of its federal bankruptcy case.
Freeman said in court documents that the plant is now worth only $5.6 million. And he says the power contracts with its members are worth nothing, since Southern Montana cannot profit off its members and anyone who bought those contracts wouldn't be able to profit, either.