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Montana Viewpoint

IT'S ALL ABOUT THE POWER BUSINESS

The rhetoric surrounding a plan to have Montana take over the power supply is getting a little windy

November 1, 2003

There's been a lot of chatter recently about the feasibility of Montana’s buying out the generating and transmission assets of a couple of out-of-state companies and running the show ourselves. Whether or not we’d be any good at it would be a matter for history to judge, but the present system is nothing to brag about.

Proponents of this idea claim it will provide a stable power supply for Montana, which sounds tempting given the debacle of deregulation. The proposal is to negotiate a fair selling price with the companies and buy them out. If they’re unwilling to sell at any price, well hey, the state has the power of Eminent Domain, or condemnation, which is basically the ability to name the price and force the seller to take it.

Opponents of this plan have decried the arrogance of the proponents, likened the potential condemnation and operation of the facilities to communism, and belittled the ability of government to run a utility. I’m not making a case one way or another about the proposal, but the rhetoric of the opponents is, to put it kindly, overstated and misleading. If they have valid arguments against the plan, they should use them instead of scare tactics.

In fact, both utility companies and governments have the power of condemnation, and both use it to expedite projects that are deemed to be “in the public good.” Whether it’s a proposed state highway or an investor-owned utility’s power line going through your property, the result will be the same. You’ll lose, and you probably won’t care whether it’s government or business that wins; you’ll willingly despise either with the same passion. (Personal prejudice; my family’s farm had 20 acres condemned for a sewage treatment plant. It did wonders for our property value.)

Businesses have another way to force reluctant sellers to hand over their assets. It’s called a “hostile takeover.” That's where company X takes over reluctant company Y by getting control of just a tad more than 50% of company Y’s stock. Bingo, it’s now all company X. I personally loath the idea of condemnation, but let’s not pretend that it’s only evil governments that take property unfairly.

Montana government running an electric utility has been likened to big C Communism. That should make the folks in Nebraska see Big Red. Nebraska’s largest electrical utility is the state-owned Nebraska Public Power District. Of the 3152 electric utilities in America, 64% are run by some form of governmental entity; from state to local. That’s not counting 28% of the total run by consumer co-operatives or the 7 federal power agencies. Among these are the South Carolina Public Service Authority, The San Antonio (Texas) Public Service Board, and the Merced County (Modesto, California) Irrigation District. Two of the largest are the city of Los Angeles and the New York State Power Authority. Here in Montana there’s the city of Troy.

On average, public power companies supply residential electricity 25% cheaper (9.1 cents a Kilowatt/ hour versus 12 cents) than investor-owned utilities, but that’s only an average and some have higher rates than the investor-owned utilities. Total revenues of public power companies, however, pales in comparison to the 240 investor-owned utilities; $16 billion to $204 billion in 2000.

How well are they run? Well there’s got to be some lemons out there. As I remember, Seattle City Light made some unwise power purchases during the 2001 energy crisis, but then, so did investor-owned Avista, formerly the Washington Water Power Company. A company, by the way, that used the power of Eminent Domain to acquire thousands of acres of Montana land, including the entire town of Tuscor, to use as the reservoir for their Noxon Rapids Dam. Avista has also come to be recognized as the most community-minded utility in Washington State, and they deserve similar recognition in Montana as well.

So, spare me the scare tactics and sound bites. All I care about is consistently affordable electricity for Montanans, and I don’t much care who gets it to us. There are good arguments that investor owned--state regulated--utilities can provide electricity at low and stable rates (Montana before deregulation, for example); that's what the public deserves to hear.

There’s no need for a government run utility enterprise if the public is already being well served by private industry. Unhappily, however, we are presented with the chicanery of Enron, the greediness of Montana Power, and the bankruptcy of NorthWestern Energy. If private sector utilities want to stay in charge, a good starting point would be to stop giving examples of why public power is an attractive alternative.

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

jim@jimelliott.org