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Montanans Still Paying for Electric Deregulation Experiment

Last fall, we blogged about the lessons learned from full electric deregulation in Montana.  The state once enjoyed the sixth-cheapest power prices in the country before a move to full electric deregulation caused the incumbent state-based electric company—the now-defunct Montana Power Company—to sell off its assets and give control of Montana’s dams and rivers to an out-of-state entity. Families and businesses across Montana are paying the price for giving up control over their own energy future. 

Montana Continues to Pay for Failed Deregulation Policy 

Now, 16 years after experimenting with a risky deregulation scheme, Montanans are still feeling the impact of that mistake.

NorthWestern Energy, Montana Power Company’s successor, is now trying to buy a dozen hydroelectric dams back from out-of-state companies that took control after Montana’s “tarnished utility-deregulation law” went into effect.  

At a cost of $900 million, which will undoubtedly be shouldered by consumers, the purchase will likely cause electric prices to “increase just over 6 percent, or about $60 a year for an average household.”  The purchase is necessary, however, to restore the state’s ability to produce its own power, and NorthWestern’s lawyer said the purchase will be a chance to “put the failed experiment of utility deregulation behind us.” 

“No Going Back”   

For Michigan, which for now seems to have dodged the latest deregulation efforts by politicians, the takeaway is an easy one:  A balanced approach to Michigan’s energy policy is far, far better than a headlong plunge into the murky waters of electric deregulation.

While Montana may eventually regain some of the ground it has lost, it will likely never see pre-deregulation prices again.  As Montana Consumer Counsel Bob Nelson put it, “Unfortunately, there is no going back to the low cost of hydro generation (before utility deregulation).”

Click here to learn more about AMP’s views on electric deregulation in Michigan.