Court ruling shines a bright light on Republican primaries

It’s standard strategy in Republican primaries. Every GOP candidate suddenly sounds like a cross between Ronald Reagan and Milton Friedman. They all embrace classic Republican philosophies, which in the economic realm, include a strong belief in private initiative and competitive free enterprise as the best means of providing consumers with the most stuff at the least cost.

But then something very strange happens on the way to our monthly power bills. Many of these “competitive, free market Republicans” take a detour down Crony Capitalism Way, assisted by the six paid lobbyists from NorthWestern Energy. The final destination is a swaddled, protected utility company, fed by captive customers who are forced to pay higher rates because good economics was left behind.

Earlier this month, Judge Jason Marks did GOP primary voters — and all NorthWestern ratepayers — a big favor, by striking down a law that has allowed that utility to enjoy grotesque, rate-increasing advantages by taking on major acquisitions at no risk. Montana’s “pre-approval” statute, designed exclusively for NWE during its deregulation days, allows that utility to buy major facilities with the PSC issuing a blank check, shielding them from any risk if the investment later proves to be imprudent or vastly overpriced. (They are, of course, further protected by having no competition, which is precisely why monopoly regulation is necessary in the first place.)

This arrangement is antithetical to the basic Republican belief that a system of risks and rewards incentivizes private businesses to make wise decisions and perform at their very best. Companies and consumers enjoy a mutual win-win. But under pre-approval, the incentives are exactly reversed. NorthWestern is rewarded with automatically higher profits when they invest unwisely and pay too much! The incentive is to pay more, and pass it all on to the consumer. With the PSC’s seal of approval, the monopoly is insulated from the PSC’s ability to later question or adjust any of these investments once an operational record is available.

The most recent examples of massive mal-investments by NorthWestern, using its unique pre-approval process, are the purchases of 30% of Colstrip #4 in 2008 and the hydroelectric dams in 2014. While the acquisitions themselves may be justified, pre-approval resulted in huge overpayments totaling $300-400 million that landed squarely on the ratepayers’ backs. In both cases, the commission had limited information and was given no other options. Had another utility bought these assets, they would have been required to come before the PSC in a general rate case after ownership data was established, and receive an informed approval that protected all parties.

Here’s what all Republican primary voters need to know. In the last session, HB 99 would have repealed pre-approval and placed NorthWestern on an even playing field with all other public utilities. Free market principle would have dictated unanimous Republican support. Instead, GOP legislators — under the leadership of Rep. Derek Skees, unanimously opposed the measure, in the interim committee (ETIC) and later the House Energy Committee — both chaired by Skees. The all-Republican PSC wasn’t any better, refusing to support the bill on a unanimous vote that included commissioner Randy Pinocci.

I mention Skees and Pinocci because both have consistently voted in this monopoly protectionist, anti-consumer fashion (many other examples could be mentioned. SB 331 comes to mind…), and both are currently involved in Republican primary races for seats on the PSC. Opponents Annie Bukacek and K. Webb Galbreath would have supported HB 99. In addition to noting this distinction in the PSC contests, voters should also find out where candidates stand in the contested GOP legislative primaries.

Bottom line: We do not elect Republicans to inject notions of monopoly protectionism into Montana’s energy policy. Nor do we elect them because we delight in seeing our energy bills skyrocket while NorthWestern dumps all its risk on our shoulders. Those Republicans who have abandoned the party’s core beliefs need to be sent packing on June 7th.

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Roger Koopman was District 3 Public Service Commissioner from 2013-2020. He had previously served two terms in the Montana State House of Representatives from Bozeman, and ran a small business there for 37 years.