Deregulation Has Stung Montanans
HELENA, Mont. — Almost a decade after the utility deregulation fad swept through Montana, the state is learning the hard way it isn't easy to rebuild the broken pieces of a stable, publicly regulated utility once it's gone.
California got all the headlines for its post-deregulation fiasco in 2000-01 that was topped by energy market manipulation, but it's Montana that some point to as the poster child for deregulation gone awry. Montana was seen as the only low-cost energy state talked into deregulation.
Although Montana's plight is unique, it isn't the only state where resentment to electricity deregulation is growing.
When the old Montana Power Co. came to lawmakers in 1997 with a plan to offer customers a multitude of choices for cheap power, deregulation was seen as inevitable. But power today isn't cheaper -- it's far more expensive -- and the other promises made that year now ring hollow.
Montana Power sold off its dams and power plants, and then its utility business, to pursue an ill-timed pipe dream to become a fiber-optic company. It quickly filed for bankruptcy.
The company that bought the utility piece of Montana Power, NorthWestern Energy, filed for bankruptcy protection itself and reorganized.
Along the way, Montana went from having some of the lowest electricity prices in the country to having among the highest in the region.
"It's almost an unbelievable story when you go through all the events that happened there," said Ken Rose, a senior fellow at the Institute of Public Utilities at Michigan State University. "It's much more of a soap opera than in other states."
Backlash, percolating almost from the day deregulation passed the Legislature, has grown and given birth to more efforts to undo the effects of deregulation.
Separate efforts, such as one from a group of cities looking to buy the utility from NorthWestern, aim to rein in skyrocketing electricity rates and give public officials more authority. But they all face huge hurdles, big price tags or federal approval.
NorthWestern Energy said it couldn't be held responsible for decisions made by the old Montana Power.
NorthWestern finds itself in a market-based system with no power plants of its own.
Prices will rise as they go up around the country, NorthWestern spokeswoman Claudia Rapkoch said.
"We're just trying to find out what is going to be the best solution for our customers going forward," she said.
