By Ellen Thompson/Havre Daily News/ethompson@havredailynews.com
Rep. John Musgrove, D-Havre, will ask the Legislature to buy back Montana's dams more than two years after a similar proposal failed as a ballot initiative.
Musgrove said today he plans to introduce the bill as soon as the draft is finalized, likely today or Friday.
Musgrove's bill would include a $500 million bond issue to pay for the buyback. His goal, he said, is to give Montana the opportunity "to have a better regulated energy source again and to drive the prices down."
It will also include provisions for reimbursing local governments for lost property taxes, he said.
"It's hard not to say the state is doing a takings, because in fact they are, but they're giving a fair market value for it," Musgrove said.
Musgrove said the bill will come before the House Federal Relations, Energy and Telecommunications Committee.
"I really would like to see it passed. I wouldn't have brought the bill forward if I didn't think it was necessary," he said today. "But realistically, I'll probably get one hearing and I'll have to make my case during that one hearing."
Musgrove said that from 1912 to 1997 Montana Power Co. owned hydroelectric dams across the state. The regulated industry provided the state with a cheap, clean energy source. When the state decided to deregulate, Montana Power sold the dams to PPL Montana, a subsidiary of PPL Corp. of Pennsylvania, and got out of the power business.
"It's my contention that they're taxed too low for the price that they're charging," Musgrove said. The company sells most of its power to NorthWestern Energy, the state's primary distributor.
PPL Montana also sells power directly to industries, said David Hoffman, manager of external affairs for PPL Montana.
A ballot initiative in 2002 included the same provisions as the bill Musgrove proposes, but the Buy Back the Dams initiative failed after gaining enough signatures to come before voters.
The vote was 221,999 against and 103,742 for. The industry spent hundreds of thousands of dollars to oppose the initiative.
"It's going to be just another game with the same players, probably the same arguments, but with the factor of time being part of the process," Musgrove said.
He said he has contacted the initiative's supporters and received encouragement.
"That issue has really been aired in the public and political forum and the public has rejected that by 70 percent," Hoffman said today. "With two and a half more years under our belt, it's clear that PPL is a responsible provider of electricity" in Montana.
Hoffman said he is skeptical that the buyback could deliver on its promise to lower power prices. PPL Montana hydroelectric power accounts for 60 percent of energy distributed by NorthWestern Energy, and the lowest priced portion, he said. PPL Montana currently sells power to the distributor for $32 a megawatt, less than the $42-a- megawatt average that NorthWestern Energy pays for other power sources.
Also, hydroelectric power, at its most productive, only produces enough energy to supply half of Montana's needs, Hoffman said. Hydroelectric dams are least productive when power demands are highest, in the summer and winter.
"One of the fallacies of the buying the dams initiative is that would somehow serve the Montana load," he said. "Principally, what we use the hydro for is to supplement" the coal-fired plants.
Musgrove said one cause of his suspicion that PPL Montana is getting a tax break is that according to information about the company's holdings from 2002 to 2003, PPL Montana consisted of 6 percent of PPL International's holdings, and 20 percent of the company's profits.
Hoffman said the company's holdings are always fluctuating, and he did not have that information readily available.
Before deregulation, power suppliers were promised a fixed profit by the state, Musgrove said. That profit percentage, along with production, dictated costs.
The promise of deregulation, he said, was that "we would be able to go into the market and buy energy at the lowest price, but that has not materialized, nor do I think it's ever going to."
When PPL Montana bought the dams, prices were at first determined by contract, Hoffman said. In 1999, the company sold energy from the dams for $22.25 a megawatt, $10 less than what the same power goes for now.
The whole industry was affected by spiking power costs in California several years ago, he said.
As to the company's tax payments in Montana, Hoffman said: "We pay real property taxes in Montana. We pay wet tax, we pay generation tax, we pay income tax, we pay a variety of taxes, probably exceeding - including payroll taxes - $30 million."
Musgrove said he hopes the hearing can bring out more information about the tax agreements between PPL Montana and the state.
From the time the ballot initiative failed, Musgrove said, he was interested in bringing the issue back to life again.
The bill was originally drafted at the request of Rep. Norma Bixby, D-Lame Deer, but was never introduced.
It will carry Musgrove's name when he introduces it.
