Yellowstone utility sues over coal plant contract

Yellowstone Valley Electric Cooperative and the other utilities began planning for the 250-megawatt Highwood Generating Station in 2003.

In its lawsuit, filed in District Court in Billings, the co-op cited cost increases that have nearly doubled the plant's price tag to $900 million. The plant has faced repeated regulatory and funding delays and remains in the early stages of construction.

Yellowstone Valley also wants out of an umbrella entity formed by the five cooperatives — Southern Montana Electric Generation and Transmission Cooperative (SME).

In its lawsuit, the utility claims SME has taken out two loans on the project for about $6.1 million without seeking the consent of its five member utilities.

SME general manager Tim Gregori said Yellowstone Valley has not put any money into the project since early spring, when it first said it wanted out of its contract.

SME declined to allow the utility to exit, and Gregori said Monday that Yellowstone Valley is obligated to buy power from the Highwood plant through 2030.

"They have a contract with Southern Montana Electric that we believe is in effect and is enforceable," he said.

Gregori declined to comment on particulars of the lawsuit.

"We know they've been unhappy," he said. "We'll just have to take a look at it (the lawsuit) and see what it says."

Yellowstone Valley and the other four cooperatives have committed about $40 million to Highwood to date, Gregori said.

Yellowstone Valley serves 12,000 customers in six southern Montana counties.