MT: Energy-price jumps could burn state, schools

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Energy-price jumps could burn state, schools

Associated Press

HELENA - Budget analysts are trying to predict what the state, universities and school districts will face in higher electrical bills next year, and early forecasts are not encouraging.

"It could be a lot of money - that we don't have," says Chuck Swysgood, Gov. Judy Martz's budget director.

Early estimates put the added cost of electricity on government, schools and the university system at $15 million, possibly more.

"The electric energy cost, no questions asked, is going to hammer everybody," said Lance Melton, executive director for the Montana School Boards Association.

However, it all depends on what happens with prices in the volatile Northwest power markets, and what the 2001 Legislature may do regarding Montana's deregulated wholesale prices for electricity.

The state, the university system and many cities and schools on the Montana Power Co. system are buying electricity on contract for relatively low, regulated rates that expire in June 2002.

Once the contracts expire, those entities may be paying unregulated, market prices.

What those prices will be is anyone's guess. But based on current market conditions, the rates are going way up.

Currently, governmental entities pay about $25 per megawatt hour for electricity. Analysts for the schools and the state have based initial calculations on the assumption that the price will triple.

The Great Falls Tribune, citing unnamed industry sources, said current market rates for contracts beginning in July 2002 could be even higher.

Even at a tripling of rates, the electricity bill for some 40 public school districts on an aggregated contract would increase $3 million in fiscal year 2003, which begins in July 2002. These districts cover just over half the children in Montana, including schools in the major cities.

Two dozen cities on an aggregate contract arranged by the Montana League of Cities and Towns can expect to see at least a $3 million increase if prices triple.

The Montana University System estimates a $4.2 million increase in fiscal 2003.

Non-university state offices could pay $5 million to $6 million more, legislative and state analysts say, although the figure has been difficult to estimate.

If electricity prices end up higher, as some industry analysts have projected, the ante is upped further.

The problem, however, is accurately predicting what prices will be. Wholesale electricity prices in the Northwest are at record highs and changing daily.

Swysgood said he's "looking at all the options available" to determine how the state will pay higher electricity bills, and how much they may actually be.

"We're hoping to get a little more information, so we can know what the prices will be," he said Thursday. "It's sort of a moving target right now. ... It's like a roller coaster."

http://www.missoulian.com/display/inn_news/news06.txt

-- Martin Thompson (mthom1927@aol.com), February 25, 2001


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