City Club Missoula discussion wrestles with energy, ownership issues

A University of Montana economics professor says publicly owned power companies can be a good thing, but not if they’re not democratic, transparent and truly working for their tax paying customers.

By Michael Moore of the Missoulian http://www.missoulian.com

“Public power is attractive when it’s truly public and democratic,” Tom Power said Friday at the monthly gathering of City Club Missoula.

When it’s not, however, it can be just as bad as a poorly run corporation, Power said.

Friday’s gathering was billed as a discussion about electric power distribution in Montana, but what most people wanted to talk about was the proposal by Montana Public Power Inc. to buy NorthWestern Energy.

NorthWestern has emerged from bankruptcy, but large shareholders are pressuring the company to accept buyout or merger offers. One of those offers comes from MPPI, a partnership of Montana cities – Missoula, Butte, Helena, Great Falls, and Bozeman – that wants to buy the utility.

Thus far, NorthWestern has considered MPPI’s offer and rejected it. And most recently, NorthWestern shareholders have been focused on an offer from Black Hills Corp., a utility based in Rapid City, S.D.

Part of NorthWestern’s problem, said the company’s John Nines, is that it is saddled with a poor business model imposed by the Montana regulatory environment. The trouble, he said, is that NorthWestern isn’t allowed to profit on its purchases of electricity and natural gas.

The company is allowed to recover its cost for buying power for its customers, but that’s all, Hines said. There’s no markup, and there’s the potential the company won’t be allowed to recover 100 percent of its costs if the state Public Service Commission determines the company did a poor job of purchasing power.

“We need to earn a rate of return on these purchases,” Hines said.

Rather than seeing their utility bills turned into corporate profits, Montana utility customers would be better served by a public company focused on keeping rates low, said Alex Hansen, executive director of the Montana league of Cities and Towns.

With public power, Hansen said, the focus changes “from Wall Street to Higgins Avenue.”

“The only people who matter are the consumers, the ratepayers, the taxpayers,” Hansen said.

Power said that MPPI may eventually prove a competent utility manager, but he stressed the importance that the company’s directors be accountable to its customers. That said, Power said there are plenty of publicly owned utility companies that conduct their business in their customers’ best interest, noting in particular Seattle City Light.

And Hansen said if MPPI were to acquire NorthWestern, the cities would structure their business plan on just such a company.

Most important, Power said, Montana must reshape its utility industry in a way that helps Montanans and avoids having to pick between “least worst proposals” for making those changes.

“It’s time for us to begin with what we think is best for Montana,” he said.

Reporter Michael Moore can be reached at 406-523-5252 or at [email protected]