By Ron VandenBoom
Montana Power Company wanted to paint the deregulation picture for Montana before Montana had eastern states paint it for them.
That's the word Scott Patera, customer advocate for Montana Power in Great Falls, gave to the Havre Landlords Association Tuesday during their monthly meeting.
"Montana Power felt it was better they get into deregulation, and go along with helping to paint that picture for Montana or we would end up letting a state like New York paint the picture for us," Patera said.
But is it deregulation that has led to the dramatic rise in prices that consumers throughout the west are experiencing?
The answer according to Patera is "No."
The real culprit is supply and demand, Patera told the landlords while pointing a finger directly at California.
"Nobody has built new plants in California for 10 or 12 years and the demand keeps going up," he said.
As California power companies find their demand exceeding their ability to supply their own needs, they have been forced to buy power on the open market from other suppliers. This has created a golden opportunity for the "other suppliers" to sell their excess power to the highest bidder.
"And they're making pretty good money at it," Patera said.
This then has left states like Montana competing for power in a market place where power companies can make huge profits selling their power somewhere else.
"You can't blame a business for making money when they can make money," Patera said. "And that's what PP&L (Pennsylvania Power and Light) did. They are selling their power down there (in California)."
But is it something that would have happened whether Montana deregulated or not?
The answer appears to be yes. It is a story that is being repeated in all western states and all due to the same reason the California power crisis.
"Idaho, a state that did not deregulate, just had their electric rates go up 25 percent, Patera said. "And they are going to go up maybe another 25 percent."
Montana Power had sold its power generation facilities to PP&L before the California power crisis became an issue a move, that because of the huge profits being made, prompted Patera to suggest that maybe MPC should have stayed in the business. But today MPC is what Patera described as a "pipes and wires company" responsible for delivering gas and electric to homes and businesses, but not a producer of electricity.
Northwestern Company, out of Sioux Falls, South Dakota, will be completing arrangements to purchase the "pipes and wires" portion of MPC in the fall of 2001 when MPC will become known as NorthWestern MPC. NorthWestern has also announced that they will build three 80-megawatt gas-fired generation facilities in the state with the first one coming on line sometime this fall.
Northwestern, Patera said, has also agreed to supply 80 megawatts of electricity to a power pool that will go to supply electricity at cost to industries that have been forced to shut down due to rising electric rates.
MPC has been designated the default supplier of electricity to Montana after July 1, 2002, when the rate cap is lifted and residential customers are expected to see about a 50 percent increase in their electric bills.
HB-474 that was just recently signed into law by Gov. Judy Martz, allows MPC, as the default supplier, to contract with utility companies to supply electricity for what Patera said he believes will be a five-year period. During that time PP&L will supply 570 megawatts of power to Montana for a fixed rate of $40 a megawatt. Any power requirements above 570 megawatts will be purchased on the open market.
The needs of Montana customers peak depending on the time of the year, Patera said. Montana's power needs in the summer can be as low as about 600 megawatts and he said he has seen it as high as 1,200 megawatts in the winter.
Patera said in a telephone interview Wednesday that the most power MPC was ever able to produce from its generation facilities, during the time they were electricity producers, was 1,017 megawatts. That included hydroelectric facilities as well as Coal Strip fired plants. He said he can remember times when MPC would have to go out-of-state and purchase power on the open market in order to meet the needs of Montana consumers.
Suggestions that MPC ever produced 3, 000 megawatts of electricity, as claimed by former Senate candidate, Brian Schweitzer, is untrue, Patera said.
It is true however that MPC, especially during the summer months when demand of electricity is low, did sell excess power to other states. He also said that the Western Power Grid was capable of handling all of the energy MPC was capable of pumping into it.
Patera said he is optimistic that the cost of power will be less than the 50 percent increase predicted by the Republicans and the Martz Administration. But he emphasizes that there is no way to predict what power prices are going to be like on July 1, 2002.
He is also optimistic that over time greater competition and more supply will lower prices.