During my time on the Public Service Commission, commissioners have faced many difficult and complex issues while pursuing the elusive goal called “the public interest.” The parties and special interest groups that come before us are typically thoughtful, well-prepared and provide valuable input to the regulatory process — although they are also generally driven by self-interest and ideological agendas. In the midst of these contentious cases, one entity, the Montana Consumer Counsel, stands out as a consistent defender of ratepayers’ interests.
This tiny, constitutionally-established state agency is driven by the singular objective of guaranteeing consumers a fair shake in the regulatory process.
In a perfect world, freedom and free markets would create vigorous competition for the consumer’s dollar, the interests of companies and consumers would coalesce, and the “public interest” would take care of itself.
But alas, we don’t live in that perfect world, and with each passing year, we seem to drift further from it. There are two reasons for this — the first avoidable, the second unavoidable:
(1) America’s love affair with big government, and our increasing acceptance of the notion that politicians are smarter than consumers and bureaucrats are smarter than markets. We regularly discard America’s traditional faith in freedom, and replace it with a trust in the kind of top-down economic manipulation that belongs in the dustbin of history.
(2) The necessary and essential regulation of natural monopolies. Regulated power companies like NorthWestern Energy fall firmly into the monopoly category, as they own the means of transmission and distribution in their service area and thus face no disciplining competition from the marketplace. That’s the reason we have a state Public Service Commission. In Montana, the Commission is charged by state statute to establish rates and regulatory parameters that are “just and reasonable” and “in the public interest.” The PSC does not make law, but within our statutory framework, it has considerable discretion in the way it goes about regulating in the public interest. That’s where the help and input of the Montana Consumer Counsel fills a vital role.
In all of our deliberations, the MCC is the ever-present voice of the consumer, reminding us how our decisions will impact rates and other consumer priorities. In doing so, they are unafraid to test the limits of troublesome federal mandates that often work against the consumer. Case in point was their important contribution to our recent decision on rates and contract lengths for small-scale, independent solar projects. The consumer counsel has been arguing for years that long-term (up to 25 years) fixed-rate contracts are unworkable and place consumers at great risk. The Commission agreed in principle, but hadn’t yet found a good solution.
The MCC proposed a maximum contract length of five to seven years, with rate recalculations every three years. The Commission’s solution was largely patterned after the MCC model, offering a somewhat more generous 10-year contract with an automatic adjustment to current tariff rates in year six. However, the Commission went further by incorporating the utility into this same regulatory principle and calling for five-year reviews of the rate-based returns of any new generating asset owned by the company. This shared risk/shared reward approach more accurately reflects the changing realities of the energy marketplace, and creates an even playing field that favors no one and serves everyone.
Certainly, the MCC’s positions aren’t always adopted by the PSC, and the Commission is willing to re-examine its decisions when presented with compelling new information. Every case stands on its own merits, and every party is given equal consideration. But the contribution the MCC provides, as exemplified in our most recent decision, affords exactly the kind of safeguards the framers of our state constitution had in mind. The Montana Consumer Counsel deserves the thanks of every Montana ratepayer.
Roger Koopman, R-Bozeman, is serving his second term on the Montana Public Service Commission, representing PSC District 3. He is a former two-term state legislator and operated a small business in Bozeman for 37 years.