CALL TO ORDER: 5:05 P.M.
ROLL CALL: City Commissioners present: Randy Gray, Bill Beecher, Sandy Hinz, Diane Jovick-Kuntz and John Rosenbaum. Also present were the City Manager, Assistant City Manager, City Attorney, Directors of Community Development, Planning, Public Works, Fiscal Services, Library, Acting Chief of Police, Acting Fire Chief, Acting Director of Park and Recreation, and the Deputy City Clerk.
General Manager of Southern Montana Electric G&T (SME), Tim Gregori presented an update of the Power Plant to the Commission. The City was proposing to build the Highwood Generation Station, a $515 million dollar project. The project includes five rural electric. He stated that they currently have contracts circulating to start the power plant process. The financing is through Co-bank. As of the time of his report, Mr. Gregori stated that $3.2 million has been spent on the project. The Department of Environmental Quality was currently working with the rural utilities to prepare for the environmental review of the project and the use of electrical transmission lines was being worked out.
Mr. Gregori stated that they have made progress on the Environmental Impact Statement (EIS) and air quality permits. He added that the plant was a self-contained facility that required water usage. The City was looking to sell 4.6 million gallons of water per day and was working on an application for water intake above the Morony Dam for the coal plant. He added that the total project had financing.
Commissioner Hinz asked what would happen if the project did proceed forward due to complications with the permitting process. Mr. Gregori stated that it was more of a matter of what was required. He added that the air permit was a big issue because of dealing with mercury. He stated that one to two percent of mercury comes from a coal-fire plant that comes from outside the state. He also stated that they could meet or exceed any requirements. Commissioner Jovick-Kuntz asked where the testing was done. Mr. Gregori stated that it was done in Hartford, Connecticut.
Water Rights Solution consultant, Dave Schmidt, presented a water rights report to the Commission. He added that the City has historic water rights that are used to meet the City needs. The City would be selling water to the coal plant at 4.6 million gallons per day. The City was working on moving the intake of water to just above the Morony Dam for the coal plants use. Mr. Schmidt stated that the City had ample water under the existing water rights to run the City and even if the City was to grow there would be enough water to meet the increased demands.
He added that the City needed to use its water rights or loose them. By using them it would be perfecting the water right system. The historical water rights needed to be put to a beneficial use and the City had until 2025 to show beneficial use. Once the reservation right was perfected it would become a property right that would never expire. Any water under the reserved rights would be available for future municipal uses.
Harley Harris, water right attorney from Luxan Murfitt, stated that he had been working with the City over the past six to eight months. He stated that by approving the project that would put the City ahead of the priority date. He added that the reservation was a right that was currently sitting on a shelf. The coal plant would use up to 80 percent of the reservation.
Mr. Harris presented the Commission with a hand out with questions and answers concerning the change of the present point of diversion to be diverted upstream of the Morony Dam to allow the place of use to be the location of the proposed Highwood Station coal-fired generation plant.
He added that the purpose, place of use and diversion were all components and put together that becomes the water rights. Two existing elements need to be changed. The change process would include filing an application to with Department of Natural Resources and Conservation (DNRC) stating that here were the water rights and what the City wanted to do with it. DNRC would do a complete review. Another process review would be done by Environmental Protection Agency (EPA). Once this was completed a notice would be sent to the public that would allow an objection time period. He added that it was usually other users that would object during this time. Objections must be filed by the deadline. If one is filed then that person filing would continue with the process and then would go to a formal hearing proceeding. Any discussion was up to the judicial review. He added that each claim goes through a process then there was an objection period. Then the water court collects any objections and then it goes through litigations. Mr. Schmidt stated that the claims going through the process would have issue remarks on them and if there were no issue remarks on the claim, it would slide through the process.
Stuart Lewin asked about future water rights for the growth of the City. Mr. Schmidt stated that the water usage peaked in the 70s and has declined since then and that there was enough water to meet the demands of any growth. Mr. Lewin asked if they had provided an analysis and presented it to the Commission. He also asked at the end of 2025 would the City have to go through the process of an extension and would the water rights go back to the concept of use it or lose it. Mr. Schmidt stated yes they had provided an analysis to the Commission. He also added once the water right was perfected it would become permanent and the City would not lose it.
Commissioner Beecher asked for an explanation of the level of usage, where the City was now and what would be left to use. Mr. Schmidt stated that the City had ample water for water rights including ample water to provide to the plant and any growth the City occur. Commissioner Hinz confirmed that 80 percent of the water right would be used by the plant. Mr. Schmidt stated that the coal plant would use around 80 percent. He also stated that if a water reservation was sitting on a shelf and the City did not use it by 2025 the reservation expired. Once you use it, it becomes a property right and becomes permanent and it does not expire. Commissioner Jovick-Kuntz asked that after 2025, other water rights if not used do they just go away. Mr. Harley stated yes, the other water rights that were not used would no longer be available.
City Manager John Lawton suggested coming back to the Commission with information of the up coming process of the project, who was paying for it and a time frame of the project.
Representative, George Golie, asked if the City could lose its historic water rights. Mr. Schmidt stated that once the water rights were perfected it was permanent. Mayor Gray asked if the City would be better off perfecting the water right with this project or waiting for something else to come along. Mr. Schmidt stated that perfecting it now would be best, due to the fact that you do not know what was down the road.
Commissioner Hinz asked in 2025 could the water rights process change and what would happen if the plant was not constructed by then. Mr. Schmidt stated that once it was perfected, the City could use it for another project. He added that all that was being asked was to change the diversion; not transferring the water right and this would be a marvelous opportunity for the City. Fiscal Services Director Coleen Balzarini stated that if the plant was not constructed by 2012 the City could move onto another use if the agreement with SME was not perfected.
There being no further business to come before the Commission, the regular work session of August 16, 2005, adjourned at 6:37 p.m.
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