Every year, NorthWestern Energy customers pay millions of dollars for power generated by the power plants the company owns. The company then uses that money to repay shareholders who put up the capital to buy or build those plants.
If the relationship between Northwestern and its customers was that simple there would not be a problem. Normal business relationships are something we can all be happy with.
What most Montanans do not know is that NorthWestern Energy’s has legal guarantees that ensure that they will make the same profit whether their plants are running or not. It gets worse for customers in that the company also gets to transfer all the cost of buying replacement power directly to customers while plants are being repaired.
In other words, the company has no incentive to keep its power generating facilities running and in fact it gets to “double dip” from customers when they break down. This is wrong. How did this happen?
As many of us remember, Northwestern Energy bought the distribution sector of our power grid when Montana Power Co. was broken up and sold off in the early ’90s. Since NWE owned only poles and wires, it was not expected to bear any of the financial risk of power plants breaking down. The law was written so that they just passed those costs through directly to its customers. It kind of made sense.
Times have changed. Today, NorthWestern Energy owns many power plants so it is wrong to allow them to use the same pass-through mechanism they had when they were just a distribution company. What we have now is a power company that doesn’t have make good decisions or perform well in order to turn a profit. This is bad for Montanans.
Other states acknowledge that plant outages are a risk that should impact a utility’s bottom line and have developed cost-sharing mechanisms for when generating facilities break down.
In fact, even within our state Montana-Dakota Utilities must contribute to outage-caused costs because they are subject to different laws than Northwestern Energy.
Is it fair to have different laws for different companies?
Simply put, we created a board to oversee utility rate increases called the Public Service Commission. It must be allowed to do its job and protect the interests of Montanans who pay their power bills.
NorthWestern Energy should not get special treatment so on Jan. 21 we introduced House Bill 189 to address the situation. Our legislation will allow the Public Service Commission to hold NorthWestern Energy to the same standards it does for the other electric utilities it regulates.
The current legal standard creates a situation where NorthWestern can almost never lose. The company employs a group of experienced and effective lobbyists at the Capitol who will fiercely oppose HB 189. This is understandable. What company wouldn’t want to keep laws which guarantee their profits? We, however, hope that our fellow legislators will see through their self-serving arguments and pass HB 189. It’s about making the process of energy billing more fair to Montanans.
Tom Woods, D-Bozeman, and Randy Pinocci, R-Sun River, serve as representatives in the Montana Legislature.
Last Updated on Thursday, 12 February 2015 13:55