The wacky machinations of the Montana energy markets resulting from the 1997 Legislature’s not-so-great idea to deregulate the electricity industry are reaching critical mass. How bad is it? Well, just this week Gary Buchanan, one of the members of the brand new Montana Power Authority appointed by Governor Martz, advised the governor to call a special legislative session to attempt to fix our colossal energy mess before the citizens take over through a host of ballot initiatives. Buchanan, an investment manager for D.A. Davidson who labels himself a political “independent,” thinks calling the Legislature back to the drawing board will solve the state’s energy problems. But his request raises a number of questions, not the least of which is why he thinks the same bunch of legislators that got us into this mess will somehow get us out.
To be sure, there are good reasons Montana’s businesses, institutions, and citizens should be concerned. When open-market electricity prices went through the roof last year, thousands of Montanans paid the price with the loss of their jobs as the industries they worked for shut down. Like dominoes, Butte’s mine closure was followed by cutbacks and closures at mills, refineries, and other large industrial operations across the state. As an investment professional, Mr. Buchanan has watched the painful economic throes brought on by wildly out-of-control electricity prices. He also knows that no business, small or large, will move to Montana or make plans for the future if they don’t have some idea how much significant expenditures—like the cost of electricity—will be next year. And right now, no one knows what the price of electricity will be next year.
What has Buchanan most worried, however, seems to be that Montana’s citizens, clearly fed up with the ineffective solutions of our political leaders, are taking matters into their own hands through ballot initiatives. Sen. Ken Toole (D-Helena) has drafted an initiative to condemn and buy back the hydroelectric generation facilities, water rights, and recreational lands associated with the dams Montana Power sold to PPL Global (for details, see: www.damcheappower.com). A couple of freshman legislators from Livingston and Bozeman are already gathering signatures on their referendum (IR-117) to repeal HB 474, the 2001 Legislature’s main energy policy bill. Under the last-minute “deal” the Legislature struck with utilities, power bills are predicted to rise by at least 50 percent. Want to find out how much your power bill might be? Go to the IR-117 website (www.dumpthedeal.com) and punch in the cost of your present bill. Prepare yourself for a shock (so to speak). Another initiative in the draft stage would slap an excess profits tax on price-gouging utilities.
Buchanan is worried about the initiatives and says they may lead to an “18-month protracted warfare” in the state. Nor is he alone. Rep. Dave Lewis (R-Helena), a former budget director for both Republican and Democrat governors, recently told reporters, “We can’t just sit quietly by and let all of these initiatives go forward.” Lewis is concerned that the initiatives may freeze further sale of Montana Power Company assets, affect the role of the Public Service Commission, and stop the power authority from issuing bonds. That Lewis, a Republican legislator, would be calling for a special session a mere three months after the conclusion of the regular 90-day Legislature is indicative of just how dysfunctional the last effort was—as well as an acknowledgement of the public’s mounting angst. Lewis, like Buchanan, voices general support for the initiative process—but both men seem terrified at what angry Montana citizens might do on energy issues.
What’s really tough to figure out, though, is why these guys think the Legislature will solve the problems. Sure, the Legislature provides a forum for the free exchange and debate of policy ideas. But ask yourself, “What’s changed in the Montana Legislature in the last three months?” The answer, of course, is “nothing.” The utilities far outspent any organized lobby effort at the regular session to influence the majority votes and it can safely be assumed they will do so again. Buchanan estimates that the utilities might have to spend $10 million trying to defeat the citizen initiatives, but it will only take a fraction of that to sway special session votes. After all, the same legislative leaders are still in charge—and those leaders cling like death to the same supply-side, free-market theories that got us in this mess in the first place.
Rather than solutions, a special session is likely to treat our disenchanted citizenry to yet more chanting of the Republican mantra that competition will bring us lower prices. Unfortunately, no one is rushing in to offer Montana’s small and far-flung population cheap power—so there is no competition. The only way the free-market theory will work is if the nation is flooded with a glut of surplus electricity generation. And if we do what Bush, Cheney, and the Republicans are suggesting, by the time we get done drilling, mining, and burning our way to that electricity surplus, the global environment will be toast...literally. And so will we.
Montana has already suffered a world of hurt because of the deregulation debacle—and if power rates rise to the predicted levels, we will suffer even more. Single parents, low-income families, seniors on fixed incomes, and young couples just starting out will all be hit disproportionately by utility costs. But everyone will feel the pinch when money that would have gone for home improvements, college, or any of the thousand other things we need gets sent off in the mail to the power company instead. The citizens of Montana, who by the very nature of their climate have pretty good survival instincts, know this. And now the politicians know it, too. Buchanan and Lewis may be right—perhaps the Legislature could go back to the drawing board and come up with a solution. On the other hand, maybe the Legislature had its chance and blew it. And now, like it or not, it’s the citizens’ turn to “take it to the streets” to do what we think is best for our businesses, our families, and our state.
When not lobbying the Montana Legislature, George Ochenski is rattling the cage of the political establishment as a political analyst for the Missoula Independent.