Will GOP-led PSC Shift on Clean Energy?

By Beacon Staff

Amid the sweeping legislative gains Republicans achieved in the recent election, the party’s pickup of another key governing body has been largely overlooked: the Montana Public Service Commission. This five-person, quasi-judicial body regulates utilities including gas, water, electric and telecom, as well as taxi services.

And as the PSC shifts from a 4-1 Democratic majority to a 3-2 Republican majority in 2011, the outgoing commissioner representing the Flathead, and the head of Montana’s leading environmental group say they have deep concerns about the direction energy policy in Montana could take under the GOP.

“We are very nervous about what the PSC might come up with,” Anne Hedges, program director for the Montana Environmental Information Center, said. “I think there’s a real fundamental misunderstanding of what the PSC’s job is.”

Based on the campaigns of the two new commissioners and the likely new chairman, Commissioner Brad Molnar of Laurel, Hedges thinks the new PSC will be more hostile to renewable energy and less inclined to advocate for consumers.

“How they’re going to abdicate their responsibility, which is to protect our interests as ratepayers, is just unfathomable,” Hedges said. “It’s an ignorance of the job that they’ve been elected to serve.”

However, Molnar said a GOP-controlled PSC will reexamine certain clean-energy mandates implemented under Democrats that he believes drive up utility bills for consumers, and hopes to work with the Republican majorities in the Legislature to roll back some of these requirements.

“We will revisit the decisions made that are anti-consumer,” Molnar said. “If we can get them cut, we’ll save people a lot of money.”

That includes advising lawmakers to get rid of Montana’s Renewable Portfolio Standard, which requires regulated utilities to generate 15 percent of their power through renewable sources by 2015. Molnar said the standard has resulted in requested rate increases from Montana-Dakota Utilities.

“If we can get that repealed, we don’t have to worry about forcing it on anybody,” Molnar said. “Now, we’ll have three, and a majority of commissioners, advising legislators that this really is an unnecessary burden on ratepayers: It’s a tax.”

The two incoming Republican commissioners are political newcomers who defeated long-serving Democrats decisively on Nov. 2. In the open race for District 1, which stretches from Great Falls across the “Hi-Line” to the northeast corner of Montana, Travis Kavulla, a 26-year-old freelance journalist and former associate editor for the conservative magazine, “National Review,” took 64 percent of the vote over former state Sen. Don Ryan, D-Great Falls.

Helena attorney Bill Gallagher won 58 percent of the vote to unseat incumbent Ken Toole for the District 5 seat, which encompasses Helena, Polson, Kalispell and Cut Bank. (In Flathead County, Gallagher won 66 percent of the vote.) Toole, who outspent his opponent, was in line to be the next chairman of the commission if Democrats held a majority.

Gallagher does not believe his win represents a major mandate to push the PSC in a drastically different direction, so much as it may indicate a desire for a more “balanced approach” to energy and utility issues.

“I’m not going to pretend that this is about everybody all of a sudden falling in love with Bill Gallagher and the Republican Party,” Gallagher said. “People want balance, common sense and respect from their government officials.”

“It’s more of a reaction to too much progressivism too soon,” he added.

Gallagher, who describes Toole as an “extreme environmentalist,” said the new makeup of the PSC would be more open to developing all of Montana’s natural resources, including fossil fuels, in ways that could lower energy costs and lead to job creation.

“I consider myself an environmentalist; I’m not anxious to do anything that would harm our state,” Gallagher said. “At the same time, we’ve got to make a living here.”

He cited Glacier County as an area with potential to develop wind energy, as well as oil and gas resources: “Development of these resources could do wondrous things for those communities in Glacier County.”

Gallagher also noted he was in the process of divesting his interest in a water utility and any mutual funds with stocks in companies that could come before the PSC – an issue that was a key point of contention in the hard fought campaign.

For his part, Toole chalked the election results up to national issues.

“This was all about the national economy and people’s anger and frustration was taken out on Democrats,” Toole said. “You don’t have to look beyond Flathead County to see that was the case.”

But Toole pulled no punches in his criticism of Molnar, and how he expects the commission to fare under his leadership.

“The PSC is in deep trouble with Brad Molnar as chair,” Toole said. “Brad has no credibility in Montana because of his ethics violations.”

In September, Molnar was ordered to pay nearly $21,000, for a fine and to cover the cost of the investigation, after the commissioner of political practices ruled he violated state ethics laws by improperly soliciting and receiving money from energy companies. Molnar is appealing the ruling. He is also facing traffic charges for failing to report or identify himself following a minor car accident in Laurel.

“What that means is the PSC will be much less of a player in terms of setting energy policy,” Toole said. “I don’t know how they overcome that.”

Toole said the new PSC may prioritize new power sources over conservation, like natural gas, because it looks cheap in the short term but could rise in price over time. He also ventured that with Molnar at the helm of the state’s energy regulatory body, ratings agencies may downgrade Montana-based utilities, potentially driving up the rate at which they can borrow.

“If Molnar’s chair, it will affect our bond ratings,” Toole said. “I can’t overemphasize how marginal Brad is.”

Molnar called Toole’s assertion, “pretty outrageous,” noting that he still only holds one vote on a five-person commission, and that any PSC decisions can be challenged in court.

“Obviously people were far more concerned about him being chairman; that’s why he wasn’t,” Molnar said. “I doubt Wall Street knows either one of our names.”

He also pointed out that his margins of victory in both elections were significant.

“I think that’s all the credibility somebody needs,” Molnar said. “The campaign’s over, maybe he should quit slinging mud and throwing rocks and be gracious.”

Despite their differences, however, both Toole and Molnar acknowledged there are limits to how much the PSC can roll back some long-standing conservation or clean energy mandates, particularly when major utilities have begun spending on new technologies to comply with those requirements.

“It’s a lot easier to pass one than it is to repeal one,” Molnar said, “because people started making investments.”

And there, Toole agreed.

“There’ll be a lot of rhetoric about it,” he said. “It’s not going to be the world shifting under our feet.”