Unscrupulous electric utilities, 1984 to today (Part II)

For many decades, the Montana Power Company (MPC) was the state’s largest monopoly energy utility. Since MPC’s bankruptcy, NorthWestern Energy now has that role in Montana. As NorthWestern continues the practice of putting energy ratepayers on the hook for expensive, polluting fossil fuel plants, we see history repeating itself. However, we also see historical rhymes as Northern Plains members today work to hold NorthWestern accountable just as we did with MPC in the 1980s.

1984

The Montana Public Service Commission (PSC) considered Montana Power’s 1984 request for a 55% rate increase ($96.4 million) to help pay for Colstrip Unit 3.

The PSC – chaired by Tom Schneider with a consumer-oriented mindset – denied the increase in July 1984. Montana Power sued.

1985

MPC submitted a new request in February 1985, this time for an expanded increase of $129.4 million, phasing in its 1984 request and charging for interest accrued during the phase-in period.

Meanwhile, in June 1985, a state district judge in Butte ruled on MPC’s 1984 suit, concluding that the PSC analysis was flawed, severely weakening the commission’s future ability to protect consumers from huge rate increases connected with Colstrip Units 3 and 4.

After much debate – and against Northern Plains’ urging – the PSC decided not to appeal the decision. Northern Plains sought to appeal the case but was not allowed to because we had not taken part in arguments in the original case.

The public was confused and disillusioned, and did not show up in strength at the 1985 hearings. In August 1985, the PSC allowed Montana Power a phased-in $80 million rate increase to pay for Colstrip Unit 3.

1988

MPC submitted another rate increase in spring 1988, this time for 11.8%.

Northern Plains and Tom Schneider, who left the PSC in 1985 and was now an expert witness, uncovered incriminating evidence – including internal memos – and submitted them to the PSC as this rate request was being considered.

Colstrip Unit 4 was run by an MPC subsidiary, and MPC had negotiated an inflated price for electricity (4.7¢ kilowatt hour), substantially higher than they could have secured in competitive markets (3¢ KWH). This meant higher costs for ratepayers. Upon being publicly confronted over its shady maneuvers, MPC lowered its requested increase from 11.8% to 7%.

One MPC memo underscored the company’s desire to avoid the marketplace: “The… market price is not one that can easily be manipulated to our ends.”

The PSC was so troubled by MPC’s self-dealing that it not only rejected the 1988 request; it made a 3% cut to the increase it had approved in 1985.

Progress/Regression

During that case, MPC reached an agreement with intervenors to form a Least-Cost Planning Advisory Committee, creating an avenue to avoid future controversies while encouraging MPC to acquire power from the most affordable sources in the marketplace instead of relying so heavily on high-cost power from Colstrip Unit 4. Schneider represented Northern Plains on the Committee.

The Committee released its report and recommendations in 1990. For several years, those recommendations improved Montana Power’s operations. In 1997, however, the Legislature deregulated Montana Power, a disaster for consumers.

After MPC collapsed, South Dakota’s NorthWestern Energy stepped in as Montana’s primary electrical utility.

In the early 2000s, the legislature began to nibble away at integrated resource planning. Pre-approval of utility company plans became a higher priority for lawmakers, leading to today’s environment in which regulatory oversight has been weakened, as have transparency and meaningful public participation.

NorthWestern Energy has continued Montana Power’s destructive monopoly behavior, now well into the 21st Century, straining consumers while continuing to hold onto expensive Colstrip power and building dirty gas plants for the future. The company’s extreme anti-customer, anti-environment behavior has made NorthWestern Energy an outlier in its own industry.

You can read part I of this story here.

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