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Owner says power generation capability shouldn't be brushed

If the goal is efficiently produced energy, Milltown Dam is not the solution - as its hydropower turbines only average about the amount of electricity generated by a train locomotive, the Missoula City-County Board of Health told federal regulators Thursday.

If the goal is economically produced energy, Milltown again is not the answer - as its hydropower will cost about $14.2 million per megawatt, if even the least-cost cleanup is ordered for the toxic sediments in Milltown Reservoir, the board said.

In a letter to the Federal Energy Regulatory Commission, board members asserted that the 1.4 megawatts of electricity produced by Milltown Dam "in no way justifies allowing an environmental and public safety hazard of the magnitude it presents to remain in place."

Health board members want the dam - which sits seven miles upstream of Missoula at the confluence of the Clark Fork and Blackfoot rivers - removed and with it, the 6.6 million cubic yards of metals-polluted sediments in Milltown Reservoir.

But Montana Power Co. (which owns the dam), Arco Environmental Remediation (the British Petroleum subsidiary which is responsible for the reservoir cleanup) and the Bonner Development Group want to keep both the dam and the sediments in the river.

"It's no Grand Coulee, I understand that, but by the same token, there is a capacity to generate energy and that is beneficial," said Bruce Hall, the development group's executive director. "With the energy situation we have in Montana right now, it's not something you can pooh-pooh and say it's negligible."

"If you change the price of electricity by a penny, it makes Milltown a profitably producing dam," said Mike Manion, Montana Power's vice president and general counsel. "The price of electricity has increased dramatically, and that has enhanced Milltown as an important economic resource for the area."

Not so, Health Board members said during their Thursday afternoon meeting.

"That dam is not a significant source of power generation," said board member Garon Smith, a chemist at the University of Montana. "As a comparison, consider that each of the diesel units that Smurfit-Stone Container has brought in to provide power for its mill produces 1.5 megawatts - as much as Milltown."

"It's not a big player," said Peter Nielsen, an environmental health supervisor in Missoula's City-County Health Department.

Nielsen told board members that the Federal Power Act's stated purpose is to provide efficient power production and to ensure that power providers "serve the public interest." Milltown Dam, he said, does neither.

Health Board members agreed. In their letter, they questioned an agreement signed last year by Montana Power Co. and Arco Environmental, and providing for a Superfund cleanup where the dam and sediments remain in place and the dam is maintained and operated by a third party.

Estimated cost of the leave-it-be remedy is $20 million.

"We request that the commission evaluate whether it is licensing the appropriate entity for this project," health board members said in their letter to FERC. "Clearly, British Petroleum (which owns Arco Environmental) has exercised a great deal of control over the management of this project, for the purposes of complying with its obligations pursuant to the federal Superfund law. The Federal Power Act's purpose of providing efficient power production does not appear to be served by the agreement between these companies."

In addition, board members said, "we sincerely question the economic rationale behind investing a sum of $20 million into a facility that generates only an average of 1.4 megawatts of electric power."

NorthWestern Energy recently estimated the cost of a new 250-megawatt power plant at $140 million, or $560,000 per megawatt. Adding in the Superfund cleanup cost, Missoula's Board of Health estimated the cost of producing power at Milltown Dam at $14.2 million per megawatt.

"Clearly, if a party had $20 million to invest in producing power and it investigated alternative sources of supply, it would not choose to invest its money in the Milltown Dam," the board said.

Manion, the Montana Power Co. vice president, provided the counterpoint. Missoula's Health Board, he said, is not considering "all that is happening right now in the electricity marketplace."

Montana Power intends to fix Milltown's No. 1 generator, which has been shut down for several years, he said. That will boost the dam's power production and efficiency. Also, the droughts of recent years have kept hydropower production abnormally low, he said.

"Milltown has the potential to add megawatts," said Hall, of the Bonner Development Group. "It is rated at 3.2 megawatts, if it were operating with everything fully functioning, which it isn't right now."

Hall said he has talked informally with area educators about the possibility of Milltown selling affordable energy to schools. "We have a generation capacity to basically power four school districts, 29 buildings, in Bonner, Missoula, Target Range and Lolo," he said.

"Talking in those terms gets us around the notion that Milltown doesn't have substantial production," he said.

"At some time, there will be a decision at Milltown," Hall said. "If it says keep the dam there, then the dam will produce energy and it will have to be sold. If it's going to be sold at an affordable rate, maybe we could sell to the schools."

There is nothing nefarious about Bonner Development Group, Arco Environmental and Montana Power planning for Milltown Dam's future, said Sandy Stash, British Petroleum's vice president for environmental remediation and head of Arco Environmental.

"The whole idea of the agreement we signed last year was for the companies to work cooperatively," she said. "The agreement helped the companies get on the same page."

"We're just not on the page Missoula's Health Board would prefer," said Manion. "We just have a difference of opinion with those folks."

Reporter Sherry Devlin can be reached at 523-5268 or at sdevlin@missoulian.com.

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