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Commissioner Kavulla’s Comments are Deeply Troubling and Repugnant

Aug 11, 2017 |

In a recent op-ed published by the Montana Standard on Aug. 9, 2017, Travis Kavulla, the Vice Chairman of the Montana Public Service Commission (PSC), accuses NorthWestern Energy of all sorts of misdeeds, including making risky bets on dams, wind projects and other generation (all reviewed and approved by the PSC) and being indifferent to our customers’ financial interests.  His op-ed is full of factually incorrect statements. 

What Mr. Kavulla’s tirade is really about is his belief that NorthWestern should not own generation assets but should rather purchase energy from the open market.  He would like to rewrite Montana law through the PSC’s decisions because he doesn’t like the law the Montana Legislature established.  

Late in 2014, NorthWestern purchased Montana hydroelectric dams from PPL Montana.  After many public meetings around the state and a two-week-long public hearing, the PSC voted 4 to 1 to approve NorthWestern’s purchase. The single “no” vote came from Mr. Kavulla, who proceeded to write a 34 page dissent. 

The Montana dams are the bedrock of our generation portfolio and provide about 40 percent of the electricity we provide to Montana customers. Rather than being a “bad bet” for customers, the dams provide clean energy at prices insulated from the long-term volatility of the electricity market. Mr. Kavulla claims customers would have saved significantly if NorthWestern had purchased energy bought on the open market instead of providing it through NorthWestern-owned resources, such as the dams.  Although Mr. Kavulla isn’t saying so directly, what he is really urging is a return to the deregulation of electric generation, a theory that has already failed miserably in Montana.

During Montana’s previous experiment with deregulation, NorthWestern was forced to buy electricity for our customers on the open market, and customers saw their supply cost of electricity increase 151 percent.  In response, the Montana Legislature ended deregulation for retail customers in 2007 and allowed NorthWestern to once again own generation.  We are now required to build and maintain a portfolio of resources that is the long-term, least-cost and least-risk for our customers, under the PSC’s oversight.  The Legislature’s actions have benefitted NorthWestern’s customers: since deregulation ended, customers have seen electric supply costs go up only 16 percent and our Montana electric and natural gas rates today remain well below the national average.  Mr. Kavulla’s harsh comments about NorthWestern’s acquisitions ignore this history and Montana law.     

Mr. Kavulla’s comments go well beyond his never-ending criticism of NorthWestern’s acquisition of the dams.  He compares NorthWestern to Enron, a corporation that intentionally misstated financial income and hid financial losses – whose business was built on speculative transactions in the very markets that Mr. Kavulla endorses.  This is truly disappointing for an elected official who is supposed to be knowledgeable and unbiased.  NorthWestern’s ethics, culture and business model could not be more different than Enron’s.  

Mr. Kavulla’s comments are absolutely unfair to the nearly 1,600 NorthWestern employees who are devoted to NorthWestern’s mission of providing safe, reliable and innovative energy solutions to our customers.  Our employees’ dedication has resulted in NorthWestern earning top customer satisfaction scores and achieving its best safety record ever in 2016. 

In short, Mr. Kavulla’s diatribe is deeply disappointing.  His comparison of NorthWestern to Enron is repugnant and troubling.  Would you be comfortable that a judge who had compared you to the morally-bankrupt “Enron” could be fair and impartial toward you?  As a lawyer, I am not.

Heather H. Grahame, NorthWestern Energy
Vice President and General Counsel

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