DOJ: News Release

McGrath Joins Case for Reasonable Electric Rates

HELENA – Attorney General Mike McGrath on Monday joined a California lawsuit urging the federal government to set just and reasonable wholesale electricity rates for Montana businesses and consumers.

The lawsuit, originally filed May 22 on behalf of public officials in California, seeks an order from the Ninth Circuit Court of Appeals compelling the Federal Energy Regulatory Commission (FERC) to fulfill its statutory responsibility to set reasonable rates for electricity and end the energy crisis.

In the friend-of-the-court brief filed with the federal appeals court, McGrath argued that FERC’s failure to act on electricity rates is “arbitrary and unreasonable” and causes irreparable harm to the health, safety and welfare of citizens throughout Montana.

McGrath explained that, when there is no regulation of wholesale power rates at the state level, the Federal Power Act mandates that FERC act on electric rates but, so far, that agency has ignored its legal responsibilities.

“FERC needs to act and act now,” McGrath said. “Electricity rates have already had a significant impact on Montana’s economy. We’ve lost jobs in our industrial sector and, if the situation continues, it will have a devastating impact on our entire state economy, including agriculture.

“Soon Montana’s deregulation law will apply to residential power users,” he said. “If FERC doesn’t act by that time, Montana citizens will literally be out in the cold.”

Saying that the effects of electricity deregulation on Montana’s industrial users has been “nothing short of catastrophic,” the brief notes that shutdowns at the Columbia Falls Aluminum Company and Montana Resources, Inc., copper mining operations have already cost Montana more than 900 jobs.

In the brief, McGrath argued that the lawsuit passes the three-part test required for the court to order FERC to act:

  • The dramatic increase in power prices on the open market clearly shows that current rates are “unjust, unreasonable, unduly discriminatory or preferential.”
  • Given these unreasonable rates and the clear legal responsibility outlined in the Federal Power Act, FERC plainly has no discretion and must act to set just and reasonable rates.
  • Finally, business and residential ratepayers have no alternative but this legal action.

“For businesses that can’t afford to keep their doors open, for Montana workers who have lost their jobs, for elderly people on fixed incomes who may soon be unable to heat their homes during the winter – there is no recourse other than the protection that this federal agency has a clear duty to provide,” McGrath explained.

On May 29, a three-judge panel of the Ninth Circuit initially denied the request to force FERC to act. McGrath’s brief joins the California suit in asking that the full court agree to consider the case.

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