Thompson Falls: A Lesson in How NOT to Develop a Power Plant

[August 2004] In November 2001, the State of Montana granted an air quality permit for a 12.5 megawatt (MW) power plant to be located next to the Thompson River Lumber sawmill, four miles east of Thompson Falls. The plant was designed to burn either wood waste (from the mill) or coal, or a combination of both. The plant was also designed as a “co-generation” facility, in which a portion of the steam produced by the boiler would be used by the adjacent mill. While the mill would consume some of the electricity produced, most of the power would be purchased by NorthWestern Energy (NWE) as part of its default supply portfolio.

During the initial round of permitting, the proposed plant, known as Thompson River Co-Gen (TRC), engendered little opposition. In retrospect, the quiet response had as much to do with misinformation and lack of awareness as with genuine support for the project. Charges that the developers misrepresented the project now abound in Thompson Falls and surrounding communities. As one resident later pointed out, the interests of public participation were not well-served by a single legal notice that appeared in the Sanders County Ledger on 9/11/2001—the day of the terrorist attacks on the United States.

Since that time, the level of public awareness—and opposition—has risen considerably. Many members of the community now feel they were misled into believing that the plant would provide employment opportunities to area residents, and that it would burn mostly biomass (sawdust, bark, and shavings) from the neighboring lumber mill. As for jobs, it is now expected that only three Sanders County residents would be qualified to apply for the plant’s 15 positions. And as for fuel source, the project is looking more and more like a coal plant that will burn some biomass, rather than a biomass plant that will burn some coal.

Biomass is considered a renewable energy resource, and one which could be obtained locally in Thompson Falls to help improve the overall efficiency of the mill. In addition, biomass facilities (also known as “biopower”) are generally considered cleaner than coal-fired power plants, especially when it comes to mercury and greenhouse gases. Unfortunately, the TRC developers now state that the plant will burn approximately 80% coal, brought in by rail from the Bull Mountain mine at Roundup, 500 miles away. (It is interesting to note that this contract may also help improve the economics surrounding the struggling Bull Mountain coal mine and the proposed 780 MW Roundup Power Project.)

Adding to the concerns over air pollution are the valley’s topography and tendency to experience inversions. Air quality in the area has already been compromised, with the boundary of a non-attainment area for particulate matter located just two miles from the project.

The uneasiness in the community only intensified last October, when the TRC developers submitted an application to modify their air quality permit. In addition to a lower stack height (100 feet instead of the permitted 145 feet), TRC proposed weakened requirements for storage and handling of coal, and numerous other changes to which DEQ did not agree. Since that time, DEQ and the developer have gone back and forth, multiple times. DEQ has issued two more “deficiency letters” dated March 19, 2004 and June 10, 2004. In the June 10 letter, DEQ cited “significantly increased impacts associated with the proposed TRC modification” that could lead to violations of federal and state ambient air quality standards for particulate matter and nitrogen oxides. The plant is now designed to be slightly larger, at 15.6 MW (with a coal conveyer rate that has doubled from 100 tons per hour to 200 tons per hour).

Further controversy erupted in March 2004, regarding a $10.5 million loan that the State Board of Investments (BOI) had made available to TRC at a below-market interest rate of 2%. The loan was made on the condition that all necessary permits were in place. The State received that assurance from First Interstate Bank in Kalispell, even though the permitting was far from complete. In addition to the continuing unresolved disputes over the air quality permit, it turns out that TRC also had not received (or even applied for) needed water use and water discharge permits. BOI has now asked the First Interstate Bank to take over its portion of the construction loan.

Adding insult to injury, construction of the TRC plant went forward, even without the final permits in place. And the plant was constructed according to specifications in the proposed air permit, not according to specifications of the approved permit. In a letter dated July 27, 2004, DEQ stated: “The Department believes that TRC is currently out of compliance with the provisions of the Administrative Rules of Montana because TRC has constructed a different facility than what is currently contained in Permit #3175-00.”

A July 13th inspection of the facility by DEQ led to the discovery of an unpermitted “propane-fired boiler pre-heater.” DEQ directed TRC to submit “emission calculations, application forms, modeling analysis, and BACT analysis for the heaters and any other source of air contaminants that has not been identified to the department.” On July 15th, DEQ learned of other heaters which had been operated at the facility without permits. DEQ has given TRC until August 23, 2004, to resolve these issues and submit the appropriate information.

A final aspect of the development of the plant that needs to be carefully studied is the electricity purchase contract between NorthWestern Energy and TRC. That contract was entered into early in the process, before the plant changed its configuration and also before NorthWestern Energy had convened its Default Supply Advisory Committee, on which MEIC serves. News that the plant would be 80% coal-fired quickly put an end to NorthWestern’s hopes for marketing the energy to its customers as “green power.” It is MEIC’s recommendation that NWE abandon the contract altogether, due to the project’s abysmally poor track record of community relations, and legal and environmental compliance. If NWE is unable to escape from the contract, the PSC should still refuse to allow the costs to be passed on to Montana ratepayers.

Because of their numerous concerns about this plant, area residents organized a Community Awareness Network (CAN) for informing and mobilizing their neighbors. The group has been meeting monthly, drawing crowds of up to 160 people, and has begun a fundraising drive. In addition, the group has collected several hundred signatures on a petition (see petition language above), sending a clear message to TRC and other developers that Montanans will not stand for irresponsible energy development. MEIC will continue to track this project, and provide assistance to the concerned citizens of Sanders County.

See MEIC Energy Program Director Patrick Judge's comments on the Thompson River Co-gen Environmental Assessment (October 2004) (78k pdf)