Seasoned reporters ought to recognize political grandstanding when they see it. But when Mike Dennison wrote his March 21 story on the Montana Public Service Commission’s approval of a routine interim rate increase, he missed it.
Please note: approving the interim adjustment to natural gas prices had absolutely nothing to do with whether a commissioner supports or opposes the approval of higher gas rates. The reverse is also true. Voting “no” on the interim order had no relevance to the actual rates the commission will eventually approve, and had no effect whatsoever on what consumers will pay. A no vote looks darn good if you’re trying to rack up political points. But it’s meaningless. It just plays to the crowd.
Here are the facts on interim rate increases. Utilities, both large and small, that have general rate cases before the PSC, often face a significant “regulatory lag” between when they file their initial data and the time when the commission actually decides what if any increases are empirically supported and legally required. If an increase becomes justified, companies will experience major shortfalls in their collected revenues while waiting for the slow and complex process of the PSC to catch up.
Interim orders reasonably protect companies from these potential losses that occur through no fault of their own. At the same time, interim increases totally protect the interests of consumers, by making no assumption that any rate increase is actually justified. If, when the docket is decided, the increase is either denied or reduced, and the interim order resulted in over collections, the rate-payers get every cent back – plus interest, at a rate of over 10 percent.
While the article touched on this, it failed to explain any of the reasons why commissions throughout the years have routinely allowed interim increases. Instead, it left the impression that all of the PSC commissioners, save one, were doing the bidding of Northwestern Energy.
Nothing could be further from the truth. Nobody wants to see higher gas prices, and the current commission is more dedicated than any to keeping utility bills down in every way possible. But there are legitimate reasons why rate adjustments are sometimes unavoidable. In the case of gas for example, one consideration is the stepped up emphasis on safety (a good thing) following several tragic explosions. This is resulting in major outlays for pipeline replacement and other costly upgrades, which public law requires be passed through to the rate-payer.
One argument Commissioner Travis Kavulla advanced in justifying his opposition, was that Northwestern Energy was large enough to handle the financial hit. Frankly, I cannot imagine a more injudicious position for a commissioner to take. Do we now have two standards of justice on the PSC? One for large companies that have money and one for smaller companies that don’t? While emotionally, one might be tempted to feel this way, judicially (the commission’s role) there is no place for populist demagoguery that masquerades as concern for the little guy. Bigotry is bigotry, politics is politics, and integrity demands that we give no quarter to either.
The PSC has come a long way back in rebuilding its tarnished image. For two years, the Public Service Commission, under the chairmanship of Kavulla, was a crucible of conflict and confusion. Politics ruled the day, and the work of the PSC was encumbered by never-ending partisan warfare and internecine dust-ups. Montanans were disgusted at the spectacle, and rightfully so.
Chairman Bill Gallagher has ushered in a new era of Public Service Commission civility, professionalism and devotion to duty. Gallagher treats all commissioners with deference and respect, encourages diversity and free thought, and under his leadership, makes clear that there is no place for politics. Teamwork and cooperation – for the public good – are the overriding principles that now govern the PSC.
But I guess old habits die hard. Sadly, Kavulla is still using issues before the commission as a pathway to political advantage, rather than helping build a team of professionals dedicated to keeping utility bills down. I’m hoping that soon will change. Disagreements are healthy and helpful, but meaningless political posturing only distracts us from our vital mission.
Roger Koopman is a former state legislator from Bozeman and current Montana Public Service commissioner representing District 3.