Public Power

The Tribune thinks the City of Great Falls, along with four other Montana cities, should by Northwestern Energy's Montana energy distribution business. Obviously, City staff agrees.

But is it a good idea? Well, Northwestern officially declined the offer back at the end of June. They think it's a bad idea.

My problem is this: What do the various city staff members know about running a utility? Has John Lawton ever run a utility? Has Missoula Mayor Mike Kadas ever run a utility?

Here is a little bit more objective take on the situation. The part of the article that really caught my attention was this:

Typically a municipality must answer one question before it can determine whether it would be successful running a utility: How well does the city manage the businesses it is already in?" says Bill Collet, with investment banking firm Christenberry & Collet in Kansas City, Mo. And if the answer is positive, "then at least it has some credibility for a municipalization of an electric. If the citizens are willing to sell the full faith and credit of their municipality, they can borrow 100 percent of the financing needed....Furthermore, if Montana Public Power would be successful in its takeover attempt, "its debt would be owned by New York bankers and not by the people of Montana," says Shrum. "The ratepayers would have no holdings. All the increased debt to pay for the business would be on their citizens' shoulders." If the bid is approved, Standard & Poor's says that the entity's bond ratings could be reduced from its current BB level.

Let's look at each of these issues. First, how well has the City done in the businesses it runs? Water park? In the red. Pools? Closing. Waste pickup? Rates up. Taxes? Up again. I just don't know why or how these guys think they can run a complex enterprise in an incredibly complicated and competitive market? Someone, please explain it, and I'll be 100% behind this utility. Is the City going to improve service? Think about it, the Northwestern Energy service guys aren't rich suits in South Dakota, they're our neighbors. They do a pretty good job. How will the City improve on it?

Which brings us to the next point. What if the cities don't improve on it? What if they're wrong, and they cannot successfully run a utility? Think about the Lewis and Clark Signature Event's $500,000.00 loss, and add a couple of zeros. Then imagine the Tribune's editorial saying we can't blame them for trying, and it's really not Manager Lawton's fault the City of Great Falls has no bond rating (and by the way, he's really enjoying his new City Manager position in Tempe).

There's a great deal of risk, and with risk comes reward. But I remain unconvinced that the people who opened a skateboard park without requiring helmets are more qualified to run a 2 billion dollar utility than existing management.