NorthWestern Energy urges council not to pursue co-op plan

A local NorthWestern Energy official cautioned members of the Havre City Council Monday night that a public utilities commission they've been asked to support is unlikely to lower energy rates.

"I guess I might as well point out that Northwest Energy basically right now is just the delivery company. We're the wires and pipes," said Pat Patterson, manager of operations at NorthWestern Energy in Havre.

Even under the proposed public power co-op to take control of that delivery system, he said, the supply of energy would still be subject to market fluctuations. The plan would do little to address the cause of volatility of energy rates, he said.

"I really don't know a lot about the plan, but if you decide to go along with this and it does happen, really the supply portion is still going to be subject to the market. Prices still can go up and down," he said.

NorthWestern Energy serves about 300,000 electricity customers and 157,000 natural gas users in Montana. Its parent company, NorthWestern Corp. of Sioux Falls, S.D., filed for federal bankruptcy reorganization last year.

The Montana League of Cities and Towns is coordinating an effort to form a public utilities commission among Montana cities. Four city councils or commissions in the state - Bozeman, Helena, Great Falls and Butte-Silver Bow - have voted to each put up $25,000 to support the effort. Billings voted not to join. If Missoula supports the proposal, the League of Cities and Towns will submit a letter this month notifying the creditors committee for NorthWestern Energy of the cities' intent to make a bid for NorthWestern Energy assets in federal bankruptcy court this summer.

Supporters say the effort will help contain the state's energy rates.

Alec Hansen, executive director of the league, sent a letter to the Havre City Council asking it if it would be interested in joining the commission. He said Havre and other smaller towns would not have to pay to join.

On Monday night Patterson distinguished energy production from energy delivery.

He noted that the price of electricty and natural gas has been volatile the last four or five years. However, there's been only one transmission rate increase since 1997, he said - that was in 2001.

"So in reality the rates that the utility - that I guess the co-op of municipalities is looking at taking over - those rates have been relatively stable," he said.

Hansen said today that half of every power bill covers transmission, and that without the profit margin and extravagant salaries and bonuses of a corporation, transmission can be done more cost-effectively.

Hansen said about 70 percent of NorthWestern's energy comes from long-term fixed-rate contracts, which are relatively stable. Some of the rest comes from the open market, where prices bounce around. Hansen said he believes that through negotiations, effective management and monitoring the market, a co-op should be able to secure a more competitively priced supply.

The council did not vote on the matter.

After the meeting, some City Council members said they don't know yet whether Havre should join the co-op.

"I don't really have enough information about what the League of Cities and Towns wants to do," council member Emily Mayer Lossing said. She said she wants to know if the league is interested in trying to get a stake in energy production as well.

Council member Allen "Woody" Woodwick said there are other options before the bankruptcy court, and that he doesn't have enough information to argue one way or the other.

"I don't have a lot of information on the co-op plan right now," he said.

"It just doesn't sound like it's an option that would save much, but we've got to look into it," Finance Committee chair Tom Farnham said this morning.

Some other business took place on Monday night.

A vote on a new one-year lease for the Heritage Center was delayed until the May 3 City Council meeting. Farnham said the vote was delayed because the city had not yet provided the H. Earl Clack Foundation with a copy of the city's insurance policy on its buildings and an estimate on the roof damage caused by a hail storm last summer.

At a public hearing, several community members spoke in favor of the city's sponsorship of an application for state funding for a new Head Start facility in Havre. The city has to sponsor the application before the District IV Human Resources Development Council can be eligible to get Community Development Block Grant funding for the project. The building is estimated to cost about $2.6 million. CDBG funds would pay for $500,000 of that.

No other potential CDBG projects were presented at the hearing.

The City Council has not yet voted on whether to sponsor the project.

The council voted 7-0 to permanently install two stop signs at the intersection of Second Avenue and Sixth Street.

The Finance Committee voted 4-0 to negotiate with public defender Jim Spangelo for a new one-year contract. Farnham said if the committee feels the price is too high, it can put the job out to bid. He added that Spangelo has done a good job at a reasonable rate in the 15 years he's been public defender, and that he does not expect the city to replace him.

The council's Ordinance Committee will meet on April 26 at 6:30 p.m. at City Hall to discuss a proposed city water ordinance to require a water deposit from renters.