State in grips of power struggle

Montana State Roundup

Published July 1, 2002  | July 2002 issue

Still smarting after efforts to deregulate the electricity industry fell short of expectations, consumers and public agencies are hitting the complaint button on recent energy developments.

First in line is NorthWestern Energy, headquartered in Sioux Falls, S.D., which bought the former Montana Power and its 300,000 residential customers early last year. NWE was told by the state Legislature to come up with a plan for meeting energy demands for its customer base. It did and subsequently asked the Public Service Commission to approve rate increases of 20 percent.

The PSC has gotten an earful at public hearings, both on price hikes and claims that NWE has a flawed portfolio of outside contracts to provide the customers with necessary power. Some complained the portfolio doesn't include enough power from renewable energy sources, while others complained about the lack of competitive bidding for contracts.

The PSC's initial ruling in early June reflected critics' concerns: Five of eight power-purchase contracts were rejected.

An effort called Initiative 145 is also under way to buy back some of the hydro dams sold last year by Montana Power to two out-of-state power companies. More than 20,000 signatures are needed to bring the matter to public referendum on the November ballot, and was halfway there in early summer.

If approved, it would create an elected public power commission to determine whether regaining control over the dams is in the public interest, given recent electricity price increases. If enacted, the commission could either negotiate the purchase of dams or use the power of eminent domain to acquire the dams at fair market value.

Lastly, flawed analysis regarding coalbed methane drilling in the Powder River Basin is likely to ripple through Montana. The Environmental Protection Agency found two studies—one in Wyoming, one in Montana—to be inadequate in gauging the environmental impact of the practice.

The EPA judgments prompted the reversal of several drilling leases in Wyoming and could lead to similar action in Montana. Gallatin County also approved emergency zoning measures to temporarily block coalbed methane drilling on 32,000 acres of unzoned land west of Bozeman.

Ronald A. Wirtz