Guest opinion: NWE must get that hydropower back

2014-05-27T00:00:00Z Guest opinion: NWE must get that hydropower backBy LES LOBLE The Billings Gazette
May 27, 2014 12:00 am  • 

When a friend referred to me as a "tribal elder," I was flattered. Then I realized she meant I was old, really old. Whether you are a tribal elder or really old, you learn first hand “what goes around, comes around.” So it is with hydropower for NorthWestern Energy. Hydropower has come around again.

I was here when Montana Power sold its hydropower. I hope to be here when NorthWestern gets it back. It is a golden opportunity. The Montana Public Service Commission must allow NorthWestern to get that hydropower back.

For 45 years I appeared before the PSC for Montana-Dakota Utilities or was one of the executives in charge of Montana Dakota Utilities. Montana-Dakota serves the eastern one-third of Montana with electric and gas service. Back when both MPC and Montana-Dakota each owned their own generation facilities, we at Montana-Dakota were envious of the residential electric rates charged by MPC. No more. Once ownership of the hydroelectric power passed to Pennsylvania Power & Light, electric rates climbed quickly. Before the restructuring in 1998, Montana-Dakota’s rates were 1 1/2 cents above those of MPC. Currently, they are 3 cents below — a 78 percent increase in rates for MPC/NWE customers.

Another important consideration for electric utility customers is stability of rates. The rates of Montana-Dakota have been rock-solid steady over the years. From 1998 to 2008, they didn’t budge. From 2008 to present they increased a bit over a penny. If NorthWestern is able to acquire the hydropower assets two good things happen:

- Stability of rates will return.

- Every kilowatt of electricity produced by those dams, is a kilowatt of electricity not produced by the burning of coal, natural gas, or oil.

When MPC successfully petitioned the Montana State Legislature to allow it to deregulate and restructure, Montana-Dakota opted out. MPC then sold off many of its component parts. It went into bankruptcy. Now, MPC is gone. The millions of dollars it got for the hydropower is gone. The company it bought with those millions is gone. Loyal employees invested in MPC stock for their retirement. Their nest eggs are gone. NorthWestern purchased the remaining assets of this crippled company. It too had to go through bankruptcy. Since Montana-Dakota had opted out of the deregulation laws, it remained regulated. That was a sound decision. Its rates remained stable. MDU’s stock price just hit the highest ever in its 66 years of being listed on the New York Stock Exchange.

Strong and stable electric utilities are essential to our survival in Montana. They are essential to our healthy economy in Montana. Strong and stable electric utilities own their own generation, transmission, and distribution of electricity. Their rates are set by the PSC. If a different company owns the generation, such as PPLM, then the commission loses control of a huge component of the cost that residential electric customers must pay. The commission should get that component back under regulation.

During my years in the regulatory arena, economist Dr. Tom Power would occasionally oppose rate increases sought by Montana-Dakota. Intelligent and articulate, Power’s arguments were always formidable. Powers has filed testimony supporting the reacquisition of the hydropower assets by NorthWestern. If two traditional opponents, an old utility guy like me and Power, agree on this issue then we are on the side of the angels.

Les Loble lives in Big Sky after retiring as executive vice president of MDU Resources Group, Inc., the company that owns Montana-Dakota Utilities.

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