by WTF 406 Staff | Dec 31, 2022 | Elections, Housing
It is often hard to understand the convoluted process of regulating electric utilities in Montana. But that doesn’t stop us from taking a stab at it.
The basics
Electric utilities in Montana (NorthWestern Energy and Montana Dakota Utilities) are monopolies. The benefit of allowing these businesses to operate as monopolies is that it avoids risks created by a competitive market. No one wants to see their utility collapse because they provide a vital service. But monopolies can charge customers whatever they want and customers have no choice but to pay up. To protect consumers and make sure power providers didn’t go out of business, utilities were allowed to operate as monopolies BUT the price and services they offer would be regulated by the government. Here in Montana that is done by the Public Service Commission.
Fast forward to the 1970s
Following the Arab Oil Embargo in 1973, America was in a panic about an energy crisis. Coal became “America’s Ace in the Hole” and utilities all over the country began building coal plants. The precursor to NorthWestern Energy, The Montana Power Company, and other utilities in the Northwest built four coal plants at Colstrip. Units 1 and 2 came on line in 1975 and 1976. Unit 3 came on line in 1983 followed by Unit 4 in 1985.
Colstrip Unit 3— Let the fighting begin
Though the Public Service Commission allowed Montana Power to charge customers for the cost of units 1 and 2 (including a profit for their stockholders), that was not the case with Colstrip Unit 3. Montana Power was not the only utility building generating plants in response to the Oil Embargo, and by 1983, utilities in the northwest were in surplus and the power from Colstrip 3 was not needed by Montana Power customers. To make a long story short, Montana Power asked the Public Service Commission to make customers pay for Unit 3. The Commission ruled that the cost of Colstrip 3 would not be covered by Montana Power’s captive customers because the power was not “used and useful”, the standard at the time for deciding if a power plant would be paid for by consumers. Montana Power went off to court and eventually succeeded in forcing its Montana customers to pay for Unit 3. It was a long and ugly fight and as a result Montana Power opted to sell power from Colstrip Unit 4 in the open market rather than try to put it into customer rates.
Fast Forward to 2007—Pre-approval, NorthWestern Energy’s Holy Grail
After the Colstrip 3 fight Montana Power, and it’s successor NorthWestern Energy, never forgot how the requirement that power be “used and useful” had worked to their disadvantage. They argued that it takes a long time to build a power plant and no one could reasonably be expected to predict markets and energy requirements that far in advance. So, they came up with a nifty idea that they should be able to go to the Public Service Commission with their plan to build a power plant and get “pre-approval”. If granted, the cost of the plant (including a profit for their stockholders) would automatically be charged to customers— whether or not it was “used and useful”. They went off to the legislature, which they basically owned, and changed the law to grant them the ability to get pre-approval for future plants.
A brief editorial comment
Pre-approval screws consumers! It represents a huge shift in the risk of building big power plants from utility stockholders to customers. Reasonable people can disagree whether pre-approval is good or bad for maintaining a healthy power system but there is no question that it reduces the monopoly’s risk from requiring the power be “used and useful” when placed in customer rates. In theory, if the utility’s risk is reduced, stockholders profit should be reduced as well. But NorthWestern remains remarkably silent on this issue.
Enter our Hero, Monica Trannel
Yes, that Monica Trannel. In addition to being the Democratic candidate for the Western District Congressional seat, Trannel is also a consumer advocate and utility lawyer. Representing the environmental group, 350 Montana, she looked at the law which allowed pre-approval in the 2007 legislature and said, “Wait just a minute, fellas This law is unconstitutional” and off to court she went. Her argument was that the law violated a couple of “special legislation” rules in the Montana Constitution because it only applied to one business entity in the state, NorthWestern Energy. The courts agreed, and the pre-approval law was found to be unconstitutional.
NorthWestern Energy Returns to The Legislature
So here we are at the beginning of 2023,. and NorthWestern Energy is returning to the legislature to “clarify” the pre-approval issue. There will likely be several bills on the pre-approval issue but the first one out of the gate is by Rep. Jerry Schillinger, a Republican from Circle. This bill will make the pre-approval law apply to all utilities, not just Northwestern energy, in order to bring it into harmony with the Montana Constitution.
NorthWestern Energy says jump! Republican Legislators ask, “how high?”
WTF406 has already covered the attempt of Great Falls Senator Steve Fitzpatrick to muzzle the state consumer representative in utility matters in the legislative rules. https://wtf406.com/2022/12/senator-steve-fitzpatrick-great-falls-very-own-utility-slug/ Fitzpatrick now says he will not pursue his rule making effort. There will be plenty of bills NorthWestern Energy will try to pass given the Republican majority in the legislature. Rest assured that Great Falls Republican Legislators will be lining up to give them whatever they want. They always have.
by WTF 406 Staff | Dec 18, 2022 | Uncategorized
By K.T.
Utility Slug – noun- Politicians and lobbyists who routinely advocate for the interests of monopoly utilities and their stockholders over the interests of small customers and consumers. Synonyms: corporate hack, sell out, shill, swindler
Senator Steve Fitzpatrick has a long history of carrying water for NorthWestern Energy in the Legislature. This session he is starting right out of the gate with an effort to muzzle the office that represents consumers in utility rate cases. Details are here: https://billingsgazette.com/news/state-and-regional/legislators-attempting-to-muzzle-state-consumer-advocate/article_59f6012a-7a84-11ed-a3b0-cfc3799411b4.html
But first, a little history
What is really happening here has a lot to do with the Colstrip plants in Eastern Montana. These plants were built around 50 years ago by a consortium of utility corporations located in the Northwest. For years, the Montana Power Company operated and took a share of the power from the plants and made sure that the “Colstrip Partners” were getting their share of the output.
The old Montana Power Company went bankrupt after it was “deregulated” by Republicans in the legislature and the Racicot Administration. After a long period of economic upheaval NorthWestern Energy emerged from the ashes of the deregulation and took on a large (expensive) chunk of power from the Colstrip complex as well as assuming responsibility for operating the plants.
Everybody knows coal power is a bad deal—except the Montana legislature
Today coal has become a marginal and very costly source of power. Part of that is associated with the realization that coal is a major source of green house gasses and continuing to burn it is, well. . .suicidal. More importantly, the increasing availability of renewable power that is much more efficient than burning coal as well as advances in “fracking” technology that has increased our supply of natural gas has left coal as the least desirable and most expensive source of energy out there. Today there is no market for coal plants or the power they produce. On top of that, the plants also carry significant liability for environmental clean up.
Most of the Colstrip partners have accepted that getting out of the Colstrip mess was going to be expensive, but that it was better to get out of the deal, accept the losses, and move on. But NorthWestern has been slow to make a similar conclusion. Through the PSC and in the legislature, NorthWestern Energy has been trying one way or another to put the public on the hook both for buying expensive and dirty coal power and for the clean-up that will come. (Odd fact— the town of Colstrip already has to pipe water from 30 miles away because it’s wells have been contaminated by the Colstrip plants.) Most of those efforts have been thwarted by a constitutionally-created agency called the Montana Consumer Counsel, which was created by the Montana Constitution to represent consumers in the legal arena and in the legislature.
Meanwhile, back to Fitpatrick’s schemes
Fast forward to Steve Fitzpatrick and his legislative shenanigans. (Another Odd fact—Fitpatrick’s father, John Fitzpatrick, is a long time lobbyist for NorthWestern Energy and just got elected to the Montana House of Representatives.) In the last session of the legislature, Fitzpatrick introduced a bill which prohibited the Consumer Counsel from taking positions on bills without the permission of the Legislative Consumer Committee. That bill failed . . .thankfully.
Now Steve Fitzpatrick is the chairman of the senate rules committee. And lo and behold, Fitzpatrick is proposing a legislative rule to require the Montana Consumer Counsel to get permission from the Legislative Consumer Committee — which Fitzpatrick has more ability to control — before taking a position on any legislation. If Fitzpatrick and his pals at Northwestern Energy succeed, Montana consumers will be paying for these old, dirty coal plants for decades into the future.
by WTF 406 Staff | Dec 14, 2022 | Taxes
By K.T.
We are in the calm before the storm — that period between elections and the legislative session. After a sweeping victory in the elections, the Republicans are sharpening their knives to cut already stressed public infrastructure and services. And along the way, they plan to “rebate” much of the current budget surplus to the taxpayers of Montana. How much, (and who gets it) remains to be seen, but count on it happening.
Is there really a Surplus?
So first let’s talk about the budget surplus. While it is true that we have a record surplus, it is not true that it all came from Montana taxpayers. Plain and simple, much of the money was sent to Montana from the Federal government in the form of Biden’s American Rescue Plan Act (ARPA) and other Covid relief programs for the purpose of providing emergency grants, lending, and investment to hard-hit small businesses so they can rehire and retain workers. And damn little of the money coming from the Federal Government came from Montana taxpayers. For every dollar Montana sends to the Federal Government, it receives $1.47 back. Interestingly, 7 of the 10 states which pay the least and receive the most from the Federal Government are governed by Republicans, while over 50% of the states which actually send more to the Feds than they get back are governed by Democrats. https://www.moneygeek.com/living/states-most-reliant-federal-government/
Back in August, the right flank of Republican legislators began thumping their chests, demanding a special session to “return the surplus” to Montanans. In promoting the call for a special session, Republican Mark Blasdel said, “Legislative Republicans are excited to return excess tax money back to the taxpayers who paid it, … What taxpayers need to know at this point is that under Republican leadership, they can look forward to receiving their money back that the state doesn’t need.” Nice rhetoric, but we don’t think they were really talking about sending anything back to the people who live in other states, ones that actually foot the bill for a big part of the surplus.
Well, the effort to call a special session failed and highlighted the friction between moderate and hard-right Republicans. Republican Representative Llew Jones of Conrad wrote an editorial which ran in papers across the state arguing to use the surplus for long term investments in infrastructure. . .a rare good idea from a Republican. (Here in Great Falls we didn’t see it because the Great Falls Tribune doesn’t run editorials).
The votes of Republican legislators here in Great Falls follow the fault line split between “moderate” and hard-right Republicans. Supporters of a tax rebate special session included: Lola Galloway, Stephen Galloway, Scot Kerns, Steve Gist, and Jeremy Trebas. Opponents included Wendy McKamey, Steve Fitzpatrick, Ed Buttrey, Fred Anderson and Brian Hoven. (Democrat Carlie Boland voted no and Democrat Tom Jacobson did not respond to the Secretary of State’s poll).
Check the poll here: https://sosmt.gov/wp-admin/admin-ajax.php?juwpfisadmin=false&action=wpfd&task=file.download&wpfd_category_id=777&wpfd_file_id=48436&token=c5ae0d97d318b35ffe27e66a6281d79f&preview=1
Is this “refund” even legal?
But let’s get back the idea of giving tax rebates at the state level using ARPA funds from the federal government. Stated simply, it violates the spirit and the letter of the law. ARPA specifically prohibits states using the funding for tax rebates. Seems those wiley Federal bureaucrats anticipated that some states would try to put the money in wealthy people’s pockets rather than use it to stimulate their economies by putting dollars to work providing street level services and money for investment to deal with the economic havoc caused by the pandemic.
So in the up-coming session the war of wiggle words will begin. The Republican party is so wedded to the failed idea of “trickle down economics” that they can’t see, or don’t care about, the reality that giving tax breaks to wealthy people simply does not do much to stimulate the economy. Instead it goes into fancy financial vehicles and things like stock buybacks which actually move money out of the community. And given that Republicans in Montana have consistently passed legislation that is unconstitutional or in violation of existing Federal law we can bet that they will go ahead with their plan no matter what.
The Real Cost
So we just want to leave this with a final thought. Cascade County just passed a public safety levy. We’ll see property tax increases from that. The City of Great Falls is about to put their own public safety levy on the ballot. High end estimates of the property tax increase of a City safety levy will double the city’s budget and result in a 191% increase in city property tax bills. https://theelectricgf.com/2022/11/18/city-considering-35-million-public-safety-levy/
State tax cuts and rebate programs often result in increased local government spending on vital services such as police, fire, facility maintenance, roads, streets, and schools. And if the local mill levies fail, the quality of the community suffers. Schools can’t hire teachers, public safety suffers, streets get potholes and VIOLA! No one wants to live here. And ironically, Republicans justify this snowballing deterioration of our community infrastructure in the name of “economic development.”
by WTF 406 Staff | Dec 8, 2022 | Uncategorized
The Great Falls Tribune is a shadow of its former self. Back in the day, it was the best paper in the state, routinely fielding solid reporters like Chuck Johnson, Mike Dennison, and John Adams. Today, it is short-staffed, has no editorial page, and has rapidly declining subscriber rates. Most print papers across the country find themselves facing similar issues. There is little doubt that the Tribune and many other papers will not be around in ten years. The question is what, if anything, replaces the daily local newspaper?
The good news is that local papers, mostly online and “free” (contributions and subscriptions encouraged), have been springing up across the state. These include The Flathead Beacon, Missoula Current, and here in Great Falls, The Electric. In addition, we now have two state-wide online papers, The Daily Montanan and Montana Free Press. Both of these papers have solid reporting and provide in-depth coverage of many issues. The Daily Montanan also has regular commentary and guest editorial content.
Check out these links for online papers and consider subscribing or contributing this holiday season.
by WTF 406 Staff | Dec 6, 2022 | Taxes
Sitting on top of Gore Hill at the end of the airport runway sits a building that resembles a cardboard box: the Cascade County Adult Detention Center. Unfortunately, this ugly building is the first thing visitors approaching from the south see when coming to Great Falls. Now, the Sheriff’s office wants to expand the jail complex to include a new “evidence facility”.
Where’s the money coming from?
During the campaign for the recently passed public safety mill levy, most of the proponents’ campaign centered on the need to increase salaries for county attorneys and sheriff’s deputies. But that’s not all. It is bad enough that goofy ideas like Slaughter’s plan to have deputies teaching courses on the constitution and putting armed volunteers in local schools may get some of that public money. But we don’t think many people thought we would be paying for a big garage to house the Sheriff’s search and rescue jet boat and a new grant-funded, $700,000 “command vehicle” (Whatever the hell that is).
Wait, how much are we paying for this?
If you are surprised by this, you are not alone. So was the County Commission. The Electric reported that Undersheriff Scott VanDyken and Public Works Director Les Payne met with the commission to discuss the project on Nov. 21. Commissioner Joe Briggs said the first they saw of the project was in a memo which said it was already going over cost estimates. The proposed ten thousand square foot facility is now estimated to cost almost $2 million. Briggs also said there was no mention of having to build a garage for the vehicle when the commission approved submitting the grant to buy it.
Just last year, the City of Great Falls bought two incident command vehicles. We have to wonder how much of this kind of hardware we need in Great Falls. The county and city should be able to share use of these vehicles rather than spending all of this money to buy and store these expensive vehicles.
Is this money well spent?
Right wing politicians like Jesse Slaughter and City Commissioner Rick Tryon want to focus public fear of violent crime to promote pet projects. In both the recently passed Public Safety Mill Levy and the yet-to-be-proposed City Public Safety Levy, the public is on the hook for significant tax increases. Even worse, while law enforcement is stomping around with military-style equipment and weapons, public services which really could reduce crime (like mental health care, crisis intervention programs and adequate housing) get none of this tax-funded largess.
-KT
