A little-used gas-fired power plant built by the Southern Montana Electricity Generation and Transmission Cooperative and at least partly blamed for the wholesale electricity supplier's 2011 bankruptcy will be taken apart and resold for its parts.
HGS Holding Trust entered a dismantling and sale agreement with ProEnergy Solutions for the 46-megawatt Highwood Generating Station near Great Falls, officials with both the trust and the Sedalia, Missouri-based company said Tuesday.
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Neither Trustee Dean Swick nor ProEnergy president of energy parts solutions Bill Mars would disclose the price paid for the plant, which SME borrowed $85 million to build. "After exploring various liquidation strategies, the Trust, with the support of Southern, has determined dismantling and removing HGS will best maximize its value," Swick said in a statement.
ProEnergy Solutions is a service and equipment provider for the power-generation and oil and gas industries. The company plans to dismantle the Highwood plant beginning later this month and resell the assets — buildings, equipment, poles and wires — to a power company or companies that can use them, Mars said.
"We don't have a buyer currently," he said.
The deal does not include the 197 acres where the plant is located. The land will likely be sold later, Swick said.
The Highwood plant was completed in 2011 after eight years. It was meant to provide power to the city of Great Falls and the then-five rural electricity cooperatives that were part of SME, and the wholesaler was trying to borrow more to expand its capacity up to 250 megawatts.
But SME filed for bankruptcy soon after construction was completed, halting expansion plans. The plant was seldom used because of the high cost to operate it.
The debt incurred to build the plant and unfavorable contracts SME entered into with PPL Montana contributed to the company's cash crunch.
Under SME's reorganization plan approved in June 2014 by a federal bankruptcy judge, HGS Holding Trust was created to oversee the liquidation of the plant, the wholesaler's largest asset.
SME rejected a $30 million offer in 2013 to buy the Highwood plant.