Most Montanans have suffered losses from the economic downturn caused by the COVID-19 pandemic. We’ve shipped cattle at low prices, our fairgrounds have taken hits of hundreds of thousands of dollars, and restaurants have closed. Our hospitals continue to incur significant financial losses to care for patients while overextending health care workers. Most of us will not be able to make up the setbacks we’ve experienced in the last year.
In contrast, the largest monopoly corporations in Montana want to benefit from the pandemic. NorthWestern Energy, a multibillion-dollar corporation that makes the lion's share of its profits in Montana, and Montana-Dakota Utility, have asked Montana’s Public Service Commission to issue what is called an “accounting order.” An accounting order would allow them to treat bad debts as a “regulatory asset.” Rather than being a loss to shareholders, unpaid accounts become an “asset” because shareholders can recover the debt, with a profit thrown in for good measure.
If Flathead County Fairgrounds were to be treated the way NorthWestern and MDU are asking to be treated, we would be paying Flathead County more than $500,000 in lost revenues as a result of the pandemic, plus an additional profit. No free market would absorb such a request. Neither should a regulated utility.
Montanans cannot choose who delivers the electricity we use to heat our homes and cook our food. Monopolies like MDU and NorthWestern are given a license to provide service in exchange for being regulated. When NorthWestern and MDU make investments on our behalf, in order to deliver service to us, we pay the cost of that investment, plus a reasonable rate of return. That is all that these monopolies are entitled to. They are not guaranteed a profit. They are not entitled to earn a profit on bad debt expense.
The Commission is all that protects us from the structural inequality that benefits these natural monopolies. As a government regulator, the Commission is legally obligated to promote the public interest: to set standards for performance, to compensate based on that performance, and to assign risk.
In seeking accounting orders, these monopolies are asking us to absorb all risk of the pandemic for their shareholders. The Commission authorized NorthWestern to track its unpaid accounts along with any savings and other considerations regarding the overall financial impact of the pandemic. MDU’s request is pending.
Let’s keep watch to see if the Commission forces us to pay these monopolies a profit on their COVID-related losses.
Monica Tranel grew up in eastern Montana and represents clients in front of the PSC. She formerly worked as a staff attorney for the PSC and the Montana Consumer Counsel.