Regulation revisited

Montana State Roundup

Published May 1, 2006  | May 2006 issue

The state Public Service Commission wants to give energy regulation another try.

Nine years after the state passed a law allowing utilities to charge electric ratepayers what the market will bear, the PSC has decided to enter talks with NorthWestern Energy that could eventually lead to repeal of the law and below-market, "cost-based" pricing.

The hope is that reregulation will lower energy prices by allowing NorthWestern to operate its own generating plants and sell electricity for less than it currently charges for power produced by PPL Montana. PPL supplies about two-thirds of the electricity consumed by NorthWestern customers in the state. The two firms are currently locked in a dispute over whether PPL enjoys a monopoly that drives up electricity prices.

Initially, the Legislature asked the PSC to look into permitting utilities to both produce and sell electricity, a practice banned by the 1997 deregulation law. But in March, the PSC said that the state should consider going further, bringing utility pricing back under state control.

NorthWestern has said that it's interested in acquiring power plants. But chances are that scrapping deregulation won't give Montanans the cheap electricity they crave. The high costs of getting involved in power generation would be passed along to consumers in the form of higher rates.

Phil Davies