Locals planning power revolt

By RICHARD HANNERS

Hungry Horse News

Calling on the Federal Energy Regulatory Commission to place a cap on wholesale power prices, Kalispell lawyer Dale McGarvey and a grassroots group called Families Against Deregulation are organizing to encourage the state's Congressional delegation to join their fight against "sky-high" power prices.

The group is also organizing to gather signatures for a ballot initiative in November 2002 that would repeal Montana Senate Bill 390, which brought deregulation to the state in 1997.

A 90 percent rate hike effective October 1 would cost Flathead Electric Co-Op customers $52.8 million per year, McGarvey said during an impassioned gathering May 25 in Kalispell. A 90 percent rate hike would mean an annual increase of $122,000 to Columbia Falls schools and $47,729 to Columbia Falls government, he claimed.

Already high power prices have closed industries, McGarvey said, but further rate hikes in the fall "will do so much damage to the Flathead economy, it will be hard to repair the damage." The rate increases were like a tax that did not support schools, roads or public services. "This energy deregulation "tax' goes to feather the nest of the power companies," he said.

A network with nine leaders across Montana was poised to support a statewide effort to re-regulate power prices, McGarvey said. The effort kicked off in the Flathead Valley because rate increases hit here first. Rate increases for former Montana Power Co. customers in the rest of the state will not take place until July 2002. McGarvey cited a Lee Enterprise poll showing that 71 percent of Montanans disapprove of electrical power deregulation.

The heart of the ballot initiative as drafted is a declaration of policy stating that "the generation and sale of electricity is not a competitive industry," "(there) is no workable competition in the electricity supply market" and "(any) competition that exists is insufficient to inhibit monopoly pricing or anti-competitive price leadership."

McGarvey explained at the meeting that Gov. Judy Martz favored "market-based solutions" to the current energy crisis, but that "the definition of a free market does not include monopoly." Utility companies and power generators, as the only companies selling electricity in a geographic area, operate in a natural monopoly.

"In a regulated market you could expect a 12 percent return, but in a deregulated market the sky's the limit," he said.

McGarvey warned listeners that their fight to re-regulate was an uphill battle. He cited a Wall Street Journal article reporting that Enron and eight other energy companies had pledged $50,000 each to pay for a media and lobbying campaign to counter re-regulation efforts.

Former Montana Gov. Marc Racicot, who signed Montana's deregulation bill into law in 1997, recently joined Enron's efforts to protect deregulation laws, and he has begun lobbying Western politicians. Enron is the country's largest trader in natural gas and electricity and has close ties with President George Bush.

Criticism was raised at the meeting that Montana had the sixth lowest power rates in the country, and that it was "idiotic" to expect that deregulation would reduce those rates even further.

McGarvey pointed out that Pennsylvania Power and Light's profits for the first quarter this year were 10 times higher than for the same period last year.

Stan Fisher, a state legislator from Bigfork, told the group how the deal was struck between the legislature and PP&L guaranteeing the power company substantial profits for five years and removing the threat of excess profits taxes or regulation by the Public Service Commission.

While admitting that SB 390 might have been a mistake, Fisher said the West Coast power problem began in California because of insufficient power supply in a growing economy, a situation that should correct itself in two to three years. The proposed excess profits tax bill would have left the money in the hands of government, he said, and not returned it to the people.

Fisher also supported the right of utility companies to charge what the market would bear. Turning to former U.S. Senate candidate Brian Schweitzer, he said, "You're a rancher. Wouldn't you sell to the highest priced market?"

Pointing out that undersized transmission lines prevented PP&L from selling surplus power to high priced markets outside the state, Schweitzer told Fisher, "We came here to fight deregulation. Anyone who doesn't want to help, there's the door!"

McGarvey said he believes PSC still has the right to regulate retail prices within the state, but with a nationwide trend toward deregulation he believed FERC would hurt PSC's efforts by leaving wholesale power rates unregulated.

It was too late to buy back Montana Power's hydroelectric dams from PP&L, he said, because the company would ask for too much money. Also the state government should not try to finance new generating plants because the state already produces 3,000 megawatts of power while consuming only 2,000. The answer, McGarvey said, was re-regulation, beginning with wholesale price caps by FERC.

McGarvey also cited evidence of forced power outages in California resulting from unnecessary scheduled maintenance, and he called for an investigation by the federal government of power market manipulation. "Once greedy power companies see what they've done and can do, they won't forget," McGarvey said.

A petition has been prepared for presentation at an energy forum Thursday (today) at 10 a.m. at the Flathead County Fairgrounds. Sen. Conrad Burns, Rep. Denny Rehberg, a representative from Sen. Max Baucus, Bonneville Power Administration acting administrator Stephen Wright and representatives from FERC and regional co-ops will be there to publicly discuss energy concerns.

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-- Martin Thompson (mthom1927@aol.com), May 31, 2001