Remember when deregulation sent your energy bills soaring in 2000? Did it seem you were getting cheated and couldn’t do a thing about it? Well, according to research done by the Federal Energy Regulatory Commission (FERC), your suspicions were right—you were being cheated.
Based on FERC’s findings, Montana Attorney General Mike McGrath filed a lawsuit earlier this month against more than a dozen energy companies doing business in Montana and the western United States. The suit alleges that consumers in Montana were defrauded out of millions paid in excessive rates since 2000.
None of the companies named in the suit are based in Montana, and the energy companies most often associated with Montana—PPL and NorthWestern—aren’t defendants. McGrath’s suit is based instead on the ripple effect.
“The FERC made a specific finding that the western power grid is all interconnected,” he says. “That’s very helpful to us in making a case that what happened in the California energy market had an impact in Montana.”
The defendants illegally manipulated energy markets by fixing prices and restricting supply in California, says McGrath. That in turn affected prices in Montana.
“For example, Flathead Electric had to buy power at a very high contract rate,” he says. “Other big users had to bring in big diesel generators and other things because after deregulation, they had to go out on the open market, and the market went through the roof.”
Last week, the board of Flathead Electrical Cooperative voted to join the suit because it felt that price manipulation cost the co-op, says company spokesman Mike Radel. Flathead is a Montana rural electric cooperative that distributes power from out-of-state companies.
McGrath is quick to point out that Montanans shouldn’t consider this an attempt to get blood from a stone—even though a number of the defendant companies are already involved in dozens of suits and settlements across the West, Enron among them.
“These are hardly stones,” says McGrath. “They made millions; billions as it turns out.”
In March, one defendant settled with California for $1.6 billion in a similar suit, but there is no assurance things will move so fast in Montana. Even if the state wins, it could be months or even years before Montanans receive a rebate.