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[Host]
Wall Street investors are infiltrating your home
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in ways you might not even realize
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but are paying a huge price for.
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[Newscaster]
Get ready to pay more for your electricity bills.
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Energy bills are increasing
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along with those temps.
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My electric bill?
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Want to guess?
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$233.
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$300.
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... is $900!
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$950.
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Not $90.
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Everybody stop paying their bills right now.
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[Host]
Americans’ utility bills are rising
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at unprecedented rates
because of a systemic failure.
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[Larry Bean]
Their primary concern is to make more money.
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And their only way to make more money
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is to take it away from people like me.
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[Anne Hedges]
People should be angry.
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[Host]
To uncover how
electric utilities are getting away with this.
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[Host]
To uncover how
electric utilities are getting away with this,
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we talked to an industry insider...
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[Mark Ellis]
People were realizing, like, “Hey, this is a,
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you know, a corrupt business model.”
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It's not bribes, but it is corruption.
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[Host]
... And went to Montana to investigate
the most powerful utility in the state.
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[NorthWestern Security]
Can I help you with something?
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[Host]
Hi. We’re just filming.
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Need to take pictures of your license plates.
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Also, sheriffs are on the way.
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This is a private facility.
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[Host]
What we heard was a shocking account
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of how these companies
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are gaming the system
and making homes uninhabitable.
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[Steve Krum]
The hay’s drying pretty fast.
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[Kasey Felder]
My property boundary is here.
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And then obviously, look north,
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and there you have the plant.
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You can feel it vibrating inside of our house.
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[Host]
Kasey and her father, Steve,
live in Laurel, Montana.
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Two years ago,
the state's largest utility began building
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a $320 million methane gas power plant
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less than a mile from Kasey's house.
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[Steve]
This is the most populated area in the state,
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and yet they build a power plant right
smack dab in the middle of it?
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They just kind of shoved it down our throats —
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this area, this residential area —
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and claimed it was an “industrial area.”
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[Host]
NorthWestern provides power
for more than two-thirds of Montanans.
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The company claimed this new gas plant was
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“critical” to an even cleaner energy future.
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[Steve]
It's all bullshit. That's what it is.
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[Kasey]
Just kind of feels like
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local government
just pushes through
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whatever NorthWestern wants.
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[Mark Ellis]
They are literally... You know, it's like shooting...
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What's the expression, “shooting ducks in a barrel”?
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[Host]
Mark Ellis is a financial consultant
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who used to work at one of the largest utilities in the U.S.
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He saw the corrupt business model
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that companies like
NorthWestern are using firsthand.
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[Mark]
Lot of people don't realize
that their local utility company
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is a for-profit company.
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And like any other for-profit company,
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their incentive is to maximize profits.
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[Host]
NorthWestern Energy is an investor-owned utility.
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Its biggest shareholders
are massive investment firms
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like BlackRock and Vanguard.
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Almost two-thirds of U.S.
electric utilities are investor-owned.
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Their main goal is
not to provide affordable power for the community,
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but to generate profit.
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A utility’s profits are basically a fixed percentage
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on the amount of capital they invest
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in infrastructure: power plants,
pipelines, distribution systems.
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[Host]
The more expensive a project,
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the more money investors
get out of that fixed profit percentage.
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So if their profit is
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based on how much they invest,
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and like every other investor-owned company,
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they want to maximize profits,
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how do they do that?
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By maximizing the amount of capital they invest.
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[Anne Hedges]
Yellowstone County Generating Station
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is a 175 megawatt gas plant,
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and it is the most expensive type of gas plant
you can build today.
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But the utility wanted to build that
because, in my mind, it's expensive
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and that earns it a higher
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amount of money
for its shareholders over time.
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[Host]
But unlike the profits of other companies,
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utilities’ profits are set by government regulators.
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So in principle, the regulator’s job is to balance
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the consumer and the investor interest, right?
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Based on my work and
the observations of many others,
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regulators are not doing their job
when it comes to balancing
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those interests with respect
to setting the appropriate level
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of utility profits.
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[Host]
NorthWestern is currently asking
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Montana's regulators, the Public Service Commission, or PSC,
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to approve a 9.6% profit on its investments,
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which now include the costly Yellowstone gas plant.
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NorthWestern is back
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in the rate case right now arguing that
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all of the costs for this plan were justified.
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We understand that increases
in utility bills are difficult,
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especially when families are already managing
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rising costs in other areas.
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This is why we've worked hard
to keep the impact as low as possible,
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while still making critical investments
needed to keep the lights on and the heat flowing.
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NorthWestern wants to acquire
the most expensive resources
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that it can get away with in order to earn
a greater return for its shareholders.
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And it wants to convince the utility commission
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to charge customers
for those at a really sweet return on equity.
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[Host]
Regulators are supposed to grant profits
that are fair and reasonable
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in order to avoid driving up costs
for consumers that utilities serve.
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But the financial evidence is that these profits,
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or what's called the cost of capital,
should be much lower.
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[Mark]
There are models that have been used
for decades — not just in utilities,
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but all over finance —
to estimate the cost of capital for any business.
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So you can run those models,
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and if you run them correctly,
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you come in at around 5.5 to 6%.
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[Host]
But utilities are repeatedly granted profits
of around 9 to 10%.
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Customers pay both for the investments
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and they pay for the excess profits.
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The excess profits alone
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are about $50 billion
a year nationwide,
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so it works out to about $300 a household.
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So it's real money.
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[Edward Barta]
Thank you very much for being here.
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We are here today because we are fed up.
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We are here because
Northwestern Energy is out of control.
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How many of you have felt
the squeeze of your wallets lately?
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How many of you are tired of seeing
your hard-earned money
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disappear into the wallets of a
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greedy monopoly?
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[Host]
In addition to approving NorthWestern’s profit,
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the PSC approves the rates
the utility can charge its customers.
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Two years ago,
the PSC approved a 28% rate hike.
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And now NorthWestern is back
asking for another 20% increase.
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I see people trying to work longer hours,
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sometimes six days a week,
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eight-to 12-hour days, or juggling different,
you know, several jobs.
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I see people turning off their lights.
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I see people in mobile home parks,
where there's not good insulation,
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being cold during the winter
because they don't want to use more gas.
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My 20,000 constituents
certainly can’t afford
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a senseless increase in energy costs
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simply to pay for
the Laurel natural gas generating fossil fuel plant.
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[Mark]
Since 2020,
the last time I looked at the data,
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publicly-owned utilities,
their rates have basically
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just gone up a little bit
below inflation,
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but investor-owned utilities
have gone up much faster than inflation.
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As a utility consumer, I'm confused.
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Is NorthWestern Energy
regulating this body,
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or is this body
regulating NorthWestern Energy?
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You just can't give these rate increases
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and look out for the best interests
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of the actual average everyday user.
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I think they try really hard
to try to protect the people,
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but I think their hands are really tied
because of politics.
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[Host]
The PSC is still deciding
on NorthWestern's proposed rate increases.
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What they do could set a new precedent
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for what utilities
are able to get away with nationwide.
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[Steve]
We do come to a point of hopelessness
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when all the stuff
you go through, it just doesn’t matter.
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They just go forward with
what they’re going to do.
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They make their rulings based on what NorthWestern Energy wants.
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[Host]
For Kasey and Steve,
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the Yellowstone plant has fundamentally
changed the place they live.
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The people in the area are really upset.
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It was so unfair.
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They tried everything they could think of
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to convince NorthWestern
not to build it near their homes,
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not to build it along
the banks of the Yellowstone River.
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I am concerned about
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the air pollution
that is coming from that plant.
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[Steve]
None of these pollutants
kill you in a day or two.
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It's down the road
when my granddaughter grows up,
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as Kasey gets older, when we’re gone.
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She probably going to get sick sooner because of that.
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The people who live around
these things should have a say in it,
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and instead it's the controlled politicians.
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Until our elected officials
try to rein in this out-of-control utility,
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we're going to continue on this path
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of ever increasing rates
and a degraded environment.
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[Host]
Some states are taking action to curb
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utilities’ incentive to invest in expensive
and polluting projects.
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[Mark]
This is starting to get political traction.
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You know, you are continuing to see
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state and federal legislators saying, like,
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“The rates are too damn high.”
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[Host]
Five states recently
introduced bills to match utilities’
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profits to what financial models
actually say they should be.
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It hasn't gone anywhere,
unfortunately, in any of the states,
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but the basic idea is like, hey,
we need to formally legislate a standard.
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Huge step in the right direction.
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[Host]
Until then, it's up to regulators
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to put the interests of consumers
ahead of corporations.
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Nationwide they talk about an affordability crisis,
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and I think that that's starting
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to reach a tipping point.
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Whoever sees this —
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many, many people across the country
are going to go,
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“Oh, yeah. That's us.”
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So I hope we have a good outcome.
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And I hope that will be an encouragement for others.
