The collapse of Enron, the nation’s seventh-largest company, sent major shock waves through financial and energy markets when the $100 billion-a-year company announced it was filing for bankruptcy this week. From its beginnings as a pipeline company, the Houston-based corporation grew to include insurance, Internet services, banking, real estate, manufacturing, and newspaper publishing. But the wave that laps upon Montana’s political shore from this financial tsunami is most directly tied to Enron’s role as a major proponent and fiscal benefactor of electricity deregulation. California’s horrendous experience last summer, with questions of price-fixing, energy supply manipulation, and consumer gouging, proved deregulation is a very expensive disaster. But for Montana, thanks to energy karma and a newly-launched initiative, there is hope.
Despite its other commercial interests, Enron made significant money in the energy arena by slipping between suppliers and consumers. As the middle man, the corporation “managed” natural gas and electricity supplies for 28,500 accounts ranging from J.C. Penney stores to factories nationwide and 40 other countries. Their rap was simple: Clients could avoid the volatility of unpredictable energy markets by signing supply contracts with Enron. The huge company, with so many sources of energy (and maybe a little market manipulation), could assure customers of long-term, stable supplies at predictable prices.
But here’s the catch. While Enron was making billions selling energy stability, they were busy pushing a deregulation agenda across the nation. In Montana, as is well-known, the 1997 Republican-dominated Legislature, at the urging of then-Governor Marc Racicot, suspended the rules of the Legislature to introduce and pass the dereg bill in the last weeks of the session. Suddenly, substituting raw political power for careful policymaking, Montana found itself one of the few western states to leap into dereg—and oh, how we now wish we had looked a lot harder before that tragic leap.
Within months after Racicot signed the electricity deregulation bill into law, Montana Power Company, under the benighted leadership of CEO Bob Gannon, announced it would be getting out of the energy business and into Touch America, its telecommunications branch. It would fund the switch, and the massive investment required to lay thousands of miles of fiber optic cables, by selling off the utility assets paid for by Montana consumers over most of the last century. Montanans, through their utility bills, picked up construction and maintenance costs for the dams, power lines and natural gas pipelines under a regulated utility policy with rates sufficient to cover development costs, as well as guaranteeing a tidy profit for MPC. What we had, ironically enough, was what Enron made its billions selling: predictable, stable utility rates. And MPC, as so many Montanans remember, was a predictable, stable utility stock for most of the last century as well.
Before 1997 came to an end, MPC announced its hydroelectric dams and coal-fired power plants would go to the highest bidder. Within a year Pennsylvania Power and Light (PPL), a massive East Coast energy corporation, became the new out-of-state owner of the dams, their historic water rights, and the recreational lands associated with their operation. Montana’s Department of Natural Resources and Conservation did an analysis to determine what would happen if the new owners of the dams decided to use all the water to which they now owned the senior rights. The estimate was frightening. Not only had Montanans lost control of vital energy assets, but should worst come to worst in a drought situation, nearly a quarter million acres of irrigated agriculture would be shut down at a cost of millions of dollars a year for Montana producers and employees, so that the water could turn the turbines for an out-of-state energy company.
About this time, Racicot left Montana to seek his fortune (literally) in the east in the company of his pal George W. Bush, then-governor of Texas and, as we all know, the man who would go on to become president by garnering less votes than his opponent. Some might believe it was a coincidence that Enron, already a massive contributor to the Bush campaign, gave an extra $10,000 during the Florida recount during which Racicot ditched his duties as the governor of Montana to get his man W. in office. But it was no coincidence that Enron then hired Racicot, through his new job at a Texas-based law firm, to stump for even more deregulation. He could sing their tune and was politically connected at the highest levels. If there’s one thing Texas energy conglomerates do well these days, it’s throw political weight around to their own advantage in the White House and the halls of Congress and Racicot was a perfect fit for their nefarious plan to create energy chaos so they could profit from the promise of stability.
But now, as they say, what goes around comes around, and energy karma has brought some justice to bear. Enron lies in the ashes of its former glory while its customers, who may not have read the fine print in the contracts, are now finding they are on their own to acquire the gas and electricity they need to keep the lights on and their businesses in operation. Nor did the bad karma stop with Enron. Touch America is on the rocks too, a victim of overbuilding and under-demand for telecommunications services. And MPC, what used to be “our” utility, has lost 77 percent of its stock value in the last year.
Meanwhile, an initiative effort has just been launched to buy back the dams, water rights, and associated recreational lands we lost through the slimeball collusion of Racicot, a brain-dead Legislature, and MPC. A recently released Helena reader’s poll found that more than 80 percent of those who responded support the initiative. The goal, of course, is to get us back to where we used to be—to stable, predictable, affordable electricity, generated locally using our own water resources. And guess what? We don’t need no stinking Enron (or its political hacks) to get us there.
When not lobbying the Montana Legislature, George Ochenski is rattling the cage of the political establishment as a political analyst for the Missoula Independent.