label: POWER PLAY

GILLETTE - The Campbell County Commission unanimously approved a request by Denver-based North American Power Group to transfer $213.5 million of its bonding capacity to tax-exempt status.

For more than six years, NAPG has been trying to fund and build the 300-megawatt, coal-fired Two Elk power plant in southern Campbell County. The project qualifies for tax-exempt bonding because the power plant would burn "waste coal," coal that usually isn't sold to utility customers and is reburied in the mining process.

To date, Campbell County and the state have approved granting NAPG $126.3 million in tax-exempt bonds.

NAPG gets money from private investors to fulfill the bonds. Ultimately, the governor decides which groups

qualify for a limited amount of tax exempt bonding but the county hosting the project must first approve of the

request. The Wyoming Student Loan Corporation and the Wyoming Community Development Authority, among others, also are given tax-exempt bonding.

A year ago, Campbell County approved of another tax-exempt bond issuance for the Two Elk project but Gov. Dave Freudenthal denied NAPG's request. The company had suffered some serious blows to the project, having lost its main funding partner and an air quality permit for the power plant. NAPG Vice President Daniel Yueh said those setbacks took the project off the market for a while and it took some time to get the project back on track.

"Rightly so, (Freudenthal) said, 'I need to see progress on the project,'" Yueh said. "And I think we can show progress now."

Yueh said the main permits for Two Elk are in place, including the air quality permit and a permit from the

Industrial Siting Council. Also, NAPG is only weeks away from closing a deal with a major utility to buy power from the Two Elk plant, Yueh said.

"We're still here, and we're still writing checks," Yueh said. "We think this is going to be our year because we get nightmares about going into 2005."

The air quality permit for Two Elk is set to expire in June 2005.

To underscore the importance of the Two Elk project, Yueh noted that Xcel Energy, a major power utility in Colorado, recently predicted it would fall short of meeting the area's power demand by more than 3,000 megawatts in 10 years.

Commissioner Alan Weakly said he supports tax-exempt bonding for Two Elk because the county stands to gain a big revenue increase from the project and because, "We're not on the hook for anything financially," for the bonds.

NAPG has announced several additional power projects for Wyoming in recent years, including a 500-megawatt, coal-fired power plant to be constructed near another coal mine in Campbell County. NAPG had also proposed a new transmission power line project to connect a direct link from the Powder River Basin to the Colorado Front Range, but the company abandoned the idea.

"We're not a wire company," Yueh said.

Yueh said he believes that a "newcomer" company isn't likely to fix existing bottlenecks on the electrical

transmission systems connecting Wyoming to surrounding states. Instead, it will likely be the companies that

already own transmission systems.

In recent years, state officials have become more active in seeking to boost Wyoming's electrical export capacity, recognizing the state's ability to generate power at low cost with its existing mining operations. This year, the Legislature approved of a new Transmission Authority and gave it $1 billion in bonding authority for the project to meet the goal of boosting Wyoming's electrical generation and export abilities.

To find out more about NAPG, visit the company's Web site (www.napg-ltd.com).