Try 1 month for $5

If you read last weekend's interview with former Montana Gov. Marc Racicot, you can be forgiven for choking on your coffee when you read this statement on utility deregulation:

"If somebody said to me today, would you be deregulated or not deregulated after what you've seen occur, I'd still say we should be deregulated,'' Racicot told a newspaper editorial board.

That's right. The governor who supported and signed Montana's infamous 1997 utility deregulation bill and resisted attempts to undo the damage says if he had the chance to do it all over again, he would.

The former governor, now the head of a national insurance lobby, also opined that "there are a lot of myths surrounding deregulation and what happened'' and that doomsday scenarios are "not supported by the evidence.''

Sorry, but the only mythology on deregulation I heard that day came out of Racicot's mouth. And if it's evidence you want on the folly of utility deregulation, it's easily found.

Customers of NorthWestern Energy (formerly Montana Power Co., which hatched the deregulation law) now pay the highest electric rates in the region; higher than customers for any other major utility or co-op in Idaho, Washington, Oregon, Utah or the Dakotas.

Before deregulation, we were in the middle of the pack, and among the lowest in the nation. Not any more.

Why? Because, in the wake of the deregulation law, Montana Power Co. sold its dams and power plants that produce low-priced electricity that was dedicated to its customers in Montana.

Now we have to buy that power at "market rates,'' which, surprise, have become much higher. NorthWestern owns no power generation in Montana and is entirely at the mercy of the marketplace when buying electricity for its 300,000-plus customers.

When asked if Montana wouldn't have lower rates under the old MPC with its own power plants, Racicot said "I don't think so.''

Really? Is it just a coincidence that every other major utility in the region did not sell off its power plants, and that every one of these utilities now has lower electric rates than here?

Speaking of coincidences, Racicot suggested that the financial demise of Montana Power had little or nothing to do with deregulation, and that this train wreck just happened to coincide with the unfolding of the deregulation law.

In fact, Montana Power's 1997 decision to sell its power plants sprang directly from a process required by the deregulation law.

Alarmed by the prospect of MPC customers being thrown onto the market for all of their power, Democratic state Rep. David Ewer (now Gov. Brian Schweitzer's budget director) tried not once, but twice, to convene a special session of Legislature to stop the sale.

Racicot and fellow Republicans, who controlled the Legislature at the time, did not support Ewer's petitions, which therefore failed. The sale went forward, and we're now buying back that power from the plants' new owner, PPL Montana, at market rates as opposed to cheaper cost-based, regulated rates.

Two years later, MPC decided to sell off the rest of its utility assets and convert to Touch America, its telecom subsidiary. You know what came next: Bankruptcy, the wiping out of hundreds of employees and retirees' life savings, another bankruptcy and higher utility rates.

Certainly part of this tragedy can be blamed on supremely stupid business decisions by the people who ran Montana Power. But a major catalyst perhaps the catalyst was the deregulation law.

Racicot also trotted out the old defense that Congress was pushing deregulation in the mid-1990s and that it was inevitable: "We couldn't stop it; it was sweeping the states,'' he said.

If that's true, then how is it that Wyoming, Idaho, Washington, Utah and the Dakotas managed to resist this tide, and refused to pass sweeping deregulation laws? Only Oregon passed a similar "restructuring'' law, in 2002, but it made sure utilities did not sell off their power plants to third parties.

Racicot offered his version of a solution to the mess that deregulation has become in Montana: Build more power plants to create more competition, thus lowering prices.

Subscribe to Breaking News

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.

If you think you've heard this line before, you have. It's the same pitch used to promote the deregulation bill in the first place: Just unleash the free market on power, and we'll have loads of choices, at lower prices.

It sounds good in theory, and maybe some day it will happen. But I can't help but think what I thought in 1997: What power developers are going to be rushing to compete for the business of Montana, one of the most physically isolated and least populated states in the country? Eight years later, we're still waiting.

One final fiction served up by Racicot on deregulation: That the 1997 bill passed "without any controversy'' and was "endorsed in strong terms by both Republicans and Democrats.''

The dereg bill generated huge amounts of news coverage, complete with packed legislative hearings and vocal, adamant opposition. I'd call that controversy.

It did pass the Legislature by wide margins, but that's mostly because Republicans had huge majorities that session and supported the bill.

The final vote on the bill was 78-21 in the House and 35-15 in the Senate. All but five of the session's 99 Republicans voted for the bill. Only 19 of the 51 Democrats supported it.

Unlike Racicot, some Republicans have expressed genuine regret about those votes.

In October 2004, former state Sen. John Harp, one of the bill's top supporters in 1997, said it had "created a lot of heartache and disappointment,'' and apologized for pushing it.

"I was hoodwinked along with other people,'' he said. "For people like myself who were involved with public policy, it was a mistake and something that we all have to live with now.''

Mike Dennison is a reporter at the Lee Newspapers State Bureau in Helena. He can be reached at (800) 525-4920 or (406) 443-4920. His e-mail address is

Subscribe to Breaking News

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.

Load comments