“Deregulation in Montana has been a stunning failure.  If we don’t move to fix this problem our livelihoods and heritage will be lost.  We must act to protect Montana values and put our energy resources to work at home.  For too long, our public policy has been hatched in corporate board rooms and ram-rodded through the legislature without adequate public participation.”

-Kelly Flaherty-Settle, a Helena area rancher

    Prior to deregulation, Montana had some of the cheapest, most reliable energy in the country.  Since its passage, energy prices across the west have skyrocketed, Montana Power Company sold its generators to out-of-state interests and Montana has lost control of its low-cost energy resources.  As a result, hundreds of workers have been laid off, schools and hospitals are facing soaring power prices, and consumers face a dramatic increase in their power bills.    
    Disappointed with the lack of leadership to promote affordable and clean solutions to the deregulation debacle, MontPIRG is working with a coalition of low-income, labor, senior, farm, and conservation groups regain control of Montana’s energy future.

The 55th Legislature In 1997 the Legislature deregulated the generation, distribution, and sale of energy in Montana.  At the time proponents claimed that competition would lead to lower prices, while  public interest advocates warned that it was a risky experiment that would leave Montana without reliable or affordable power... The Montana Power Co.     A year after the passage of the state’s deregulation law, MPC announced that it was leaving the electric utility business and started selling assets.  The asset sales rang alarm bells for consumer and environmental advocates, proving that Montana was losing control of it energy resources.  Critics worried that Montana’s relatively cheap power would funnel into national markets while Montana continued its role as a resource colony... The Summer of 2000 The collapse of a functional energy market in California, combined with a persistent drought across the Northwest in the summer of 2000, resulted in sudden and severe wholesale price increases.  Many large industrial customers that had left the regulated market were suddenly paying up to $1,000 per megawatt-hour.       The sharp rise in power prices shut  down many of the large industrial customers that pushed so hard for deregulation. Small customers, temporarily insulated from the price increases, were told that they could expect a doubling or tripling of their energy bill. The critics’ worst fears of were coming true... The 57th Legislature     Instead of accepting responsibility for a failed policy utilities claim that the price crisis is a temporary bump in the road resulting from result of inadequate supplies. In the legislature they argued for building new power plants, as the best solution, despite the fact that Montana has long exported nearly half of the energy it produces.  The Governor and other prominent decision makers endorsed the calls for expanded energy production.     The legislature responded to these calls by passing bills that exempted power plants and most pipelines from the state siting laws, gutting the Montana Environmental Policy Act, made available $500 million in bonding authority to build new power plants, gave a ten-year tax holiday for new power plants, and reduced the coal severance tax.        At the same time the legislature rejected a package of pro-consumer legislation that would have eased the burden of rising costs... Energy Policy For Sale       One in every five dollars spent lobbying the legislature was spent by special interests with ties to the energy industry.  While massive lobbying efforts in the legislature may have persuaded some lawmakers to ride out the deregulation storm, the people of the state remain unenthusiastic about their prospects.

Clean, Affordable Energy
for Montana

VICTORY!!
Public Service Commission rejects initial Default Supply Portfolio.

MontPIRG members and supporters sent in over 1,000 comments to the Public Service Commission (PSC) urging them to reject Northwestern Energy's flawed proposal and demand cheaper, cleaner power.

As a result, the PSC rejected the proposal and sent Northwestern back to the drawing board.  One issue the PSC pointed out was the need for more conservation measures in the proposal...exactly what we'd been saying all along!

Thanks to all who sent in comments!

Read the related articles:

6/1/02 - PSC staff calls for rejection

6/04/02 - NorthWestern, MontPIRG generally favor decision

People’s Power League
    In the summer of 2002 MontPIRG announced the formation of a new citizen network, the People’s Power League. The inspiration for the People’s Power League comes from the 1910’s Montana reform movement that utilized the initiative and referendum process to secure beneficial legislation for Montanans in the face of the daunting power of the Anaconda Company.  The mission of the League today, is to promote clean, affordable, reliable, and efficient energy for small consumers including residential, small business, public institutions, and agricultural producers.  

Default Supply Portfolio
    As a result of deregulation, the Montana Power Company sold their power plants and hydroelectric dams to Pennsylvania Power and Light. At the time of the sale, PPL agreed to sell MPC customers electricity through July 1, 2002.  Now, NorthWestern must go out in a volatile energy market to acquire the electricity needed to meet customer demand.

    The set of contracts the utility has arranged what is known as the default supply portfolio.  NorthWestern is proposing to buy 50 percent of the portfolio’s power from existing plants; about 20 percent from spot-market buys or short-term purchases, and the remainder from new power plants, under long-term contracts (see sidebar). The portfolio will supply electricity to more than 280,000 customers for the next five years.  

Dirty Decisions
    The proposal relies too heavily on expensive and dirty fossil fuel fired power plants while ignoring cleaner and cheaper alternatives. Under the current plan residential customers and small businesses face a 20% rate hike, and irrigators a 32% rate hike, over the next two years.

    By excluding conservation strategies the portfolio ignores a proven source of clean, affordable energy. Investment in conservation yields smarter ways of using energy that saves money and curbs the rate at which energy is used.  A watt saved is the same as a watt generated and there is no cheaper cleaner power than power you don’t have to produce.  The power company’s own analysis shows that at least 100 average megawatts of electricity could be made available for use through conservation investments costing 3.5 cents per kilowatt-hour or less, yet no conservation is included in the portfolio.

          The plan also includes the  construction of two new expensive coal-burning power plants.  Pollutants from burning coal, including carbon dioxide, sulfur dioxide, nitrogen oxides, and mercury contribute to serious respiratory problems, neurological defects in unborn children, global climate change, smog, and acid rain.  The electricity from the proposed coal plants will be far more expensive than conservation or additional wind energy.

Behind Closed Doors
    Additionally, questions have been raised about the legality and openness of the process.  The portfolio includes a 20-year contract between the utility and a 150 MW gas plant in Great Falls. State law forbids utilities from discriminating in favor of its own subsidiaries. The contract with the gas plant also happens to be the highest price by a significant amount being paid for power in the portfolio.

     The Montana Consumer Counsel have criticized the utility for arranging the contacts in the portfolio without competitive bids while several media outlets filed a lawsuit to make public the full details, including the costs, of the individual contracts.

The Bright Side
    The portfolio does include a significant amount of energy from new wind projects.  Notably, the wind contracts cost less than any of the new fossil fuel-fired generation.  The wind projects also come with the added benefit of creating employment opportunities.  Compared to fossil fuel fired power plants, wind development creates more jobs per dollar invested and per kilowatt-hour generated.

    MontPIRG called on the Public Service Commission to reject the portfolio as it stands and require that conservation and more renewable energy replace the proposed new coal projects.

VICTORY!!
Public Service Commission rejects initial Default Supply Portfolio.

Read the related articles:

6/1/02 - PSC staff calls for rejection

6/04/02 - NorthWestern, MontPIRG generally favor decision

Buy Back The Dams
     To learn more about our work on Initiative 145, the initiative to buy back the Montana's hydroelectric dams, visit MontPIRG's Buy Back the Dams page.