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Montana Viewpoint

MORE ON DEREGULATION

February 5, 2001

We will presently be deluged with a flood of opinion on the effects of electrical deregulation in Montana. Some of it will be accurate, and some will not, and it will be a mystery to the average person as to who is selling the straight goods. Proponents of deregulation are sticking to their guns by saying that our present problems are not directly attributable to Montana´s passage of electrical deregulation in 1997: but they are. Previous to this legislation, power generated in Montana had to be first consumed in Montana before it could be exported to other markets out of state. In Montana, the price of power to industrial consumers was regulated. Now, it isn´t. Those industries find themselves unable to afford to be players in the free market, and over 600 people have lost their jobs as a result. The industries have expressed a desire to be able to come back in to the regulated fold.

Proponents state that because there are more Montanans today than a decade ago, we are consuming more electricity than the state´s generators can produce. This is false. We have always produced more power than we needed, and the Montana Power Company almost always had power to sell out of state. PP&L Global, the new owners of the power plants, continues to export that surplus power. But they also, because of deregulation, sell the power that the previously regulated industrial customers used to consume to the highest bidder. This is the nut of our current problem.

This leads into the argument that we need to produce more power for Montana customers. If we had not let the water out of the dam, so to speak, we would have power sufficient unto our needs. If we do not change this law, PP&L Global will continue to export power generated in Montana with water that is owned by Montanans and coal that is mined in Montana. It goes against my conservative grain to see our state´s natural resources being used for corporate profit by a giant international company. We do not need to build new power plants whose sole purpose seems to be to bail out the state of California while adding to the coffers of international utility giants at the expense of Montana electricity customers. If California wants to build its own plants, we can sell them plenty of coal to fire them with.

Other states have experienced electrical rate hikes for homeowners and small businesses while Montana has not, they say. That’s true; the Legislature imposed a rate freeze on those folks until June 30, 2002. But, in saying this, they adroitly avoid the core issue: industrial consumers in those states have seen minuscule rate increases that pale in comparison to the rates that Montana industries have been asked to pay. In some cases they have been 40 times higher than rates before deregulation. Those cost increases are coming for Montana families and small businesses in seventeen months. We all hope that they will not be as drastic. We hope, but frankly, no one knows.

Those of us who currently get our electricity from co-ops aren´t immune from price hikes, either. It has nothing to do with Montana´s deregulation policy. It´s because of California´s deregulation policy. Thanks, and go figure.

We do need to work together to solve this problem, but I would hope that those folks who led us into this mess would abstain from a leadership role in getting us out of it. Last week I asked Diane Jacob, a Republican County Supervisor from San Diego County, California a pointed question. (Jacob has led a consumer revolt against high energy bills, and supports public ownership of electric utilities.) Did she trust the people who caused the problem in California to fix it? She was adamant in her opinion that they should not be allowed to have any part in the solution, having been so intimately involved in the creation of the problem that they had eroded all confidence in their abilities in that area. She furthermore stated that she thought it was important to "point fingers" so people would know whose bad policy this was.

It is my opinion that anyone can make a mistake and can be forgiven. But, first, of course, they have to acknowledge that they have been wrong. No one in Legislative leadership, to my knowledge, except for House Minority Leader Gillan, D–Billings, has recanted their decision to deregulate. Until they do, I distrust their ability to solve the problem. There are a myriad of bills that have been written to address this problem. After five weeks only one is being seriously considered, and it´s a stopgap measure. This is an immense and immensely complicated problem. It should not, nor cannot, be solved in the less than seventy days remaining to the Legislative session. We have erred in haste, let us not repent in haste.

Jim Elliott
Phone: 406-444-1556
Mail: State Senate Helena, MT 59620

jim@jimelliott.org