4/10/2000

KUMF / KGPR

T. M. Power

The Premature Death of the Montana Power Company

Having spent a good part of my professional life working cooperatively with as well as energetically against the Montana Power Company, it seems appropriate to comment on its imminent demise after a century-long love-hate relationship with the citizens of Montana.

Montana Power has announced that it intends to sell off its remaining Montana electric and natural gas properties, primarily the electric and natural gas lines that deliver energy to most Montanans. With that cash and the cash generated late last year when Montana Power sold its hydroelectric and Colstrip facilities, the company will metamorphose into a telecommunications business, Touch America, most of whose assets are scattered across the nation, not located in Montana. This evaporation of what five years ago was one of the Montana’s largest and most influential businesses should give all Montanans pause. How did it happen? What does it mean?

It all happened by accident. In the early 90s, the Montana outposts of various international conglomerates such as Exxon, Rohn-Poulenc, and Champion International rebelled against what they saw as gross business incompetence on the part of a parochial, two-bit company by the name of Montana Power. These international giants objected to the high prices they had to pay for electric and natural gas services. They knew that if they could shop around the West for energy bargains they could get their energy cheaper than the regulated prices Montana Power charged.

Montana Power’s prices were high because it, like most utilities in the nation in the 70s, had invested in very expensive and unnecessary electric generation facilities, here in Montana, the Colstrip facilities. The international big boys wanted to escape having to pay for these facilities even though they had not joined in the opposition to their construction. Wrapping themselves in the banner of “customer choice,” they convinced the naïve free market ideologues that controlled the state government to set them and all Montanan’s free from the tyrannical bonds of government regulation. Of course, only the largest of the large businesses went free. The rest of us are still waiting for the benefits of this deregulation. We will get them soon in the form of much higher utility rates while the big boys skip cheerfully away, stuffing money into their pockets as they do.

Montana Power supported this move to deregulation, convinced that it was better to be ahead of the curve than playing political and financial catch up. It quickly decided, however, that the risks associated with a deregulated competitive electric market were more than it could afford to face. So Montana Power sold off its electric generating facilities to a Pennsylvania company. Now MPC has also discovered that the potential profits associated with simply maintaining electric wires and gas pipes seem trivial compared to the speculative gains to be had in the telecommunications business. So MPC has put its remaining electric and gas properties up for sale too. No doubt some New Jersey or Texas company will buy them.

When Montana Power ceases to exist later this year, where will Montanans be? Well, as electric power markets in the region begin to tighten and talk of shortages emerge, we will have to pay much higher prices for electricity than those associated with the old hydroelectric and Colstrip facilities that previously served us. The sky, or at least tight markets, are the only limit to what we might face. Then, thanks to the sneaky little surprises built into the electric restructuring legislation that started this fiasco, we are likely to also pay a lot more just to remain connected to the electric and natural gas grid. Montana Power intends to sell its electric lines and gas pipeline to the highest bidder, pocket the money itself, and leave the state. But the Montana legislature, in its wisdom, apparently phrased the restructuring law so that not only do Montanans have no claim on the profits from the sale of the facilities they personally financed, but we will also have to finance those speculative gains out of own pockets too. The new owner, we are told, will be allowed to bill us all that it takes to recover the generous purchase price they will pay MPC. We, apparently, will be forced to line the pockets of Montana Power shareholders (and executives) as they leave the state to live comfortably in cyberspace. This was our legislature’s version of the free market: use government regulation to subsidize rich corporations and executives at the expense of most of the citizens.

Of course, then when the dust clears and we are all poorer, we will enjoy the excellent service that will be provided by as subsidiary of a subsidiary of a subsidiary of a corporation with executive offices in Hoboken or Peoria. Montana’s regulatory institutions will be incapacitated; a Montana business with a long history and commitment in the state will have disappeared; and we will be paying more for our energy services. Just who was the genius that arranged this? Call your state legislator or the governor’s office. You will be talking to that very same genius.