Wealth Inequality in America and the Montana Public Service Commission

A friend emailed me  this video last night. I suggest you you devote 6 minutes to watching it:

As the video stated, I always knew there was a wealth inequity in this country. But can it really be that staggering?

How does the wealth inequity in Montana compare to that of the rest of the nation? Who are the Montanans in the top 1 percent?

Should we have a right to know?

And what does all of this have to do with the Montana Public Service commission, as indicated in the title of this post?

The answer to that last question is the Republican Public Service Commission will  today consider repealing a rule that requires Montana’s regulated monopolies to disclose the salaries of their  highest-paid employees.

As my colleague Karl Puckett reports in today’s Great Falls Tribune:

Bob Lake, a Republican from Hamilton, is bringing the issue forward. It’s his position, he said, that a government agency should not be in the business of distributing what he says is private information.

“It’s an independent private company and it should not be the Public Service Commission’s job to go out there and make sure the rest of the world knows the top executives’ salaries,” Lake said. “That’s a privacy issue for those people.”

Mountain Water in Missoula sued the PSC over the rule in 2010 and it looks like the PSC is going to settle the lawsuit today by promising to keep executive pay secret from the public.

If the current disclosure rule is repealed Montanans would have the right to know how much the local kindergarten teacher or the janitors at the Capitol make, but they won’t have the right to know what  the top executives of our state-regulated utility monopolies are making.

As a member of the press and the public I argue we do deserve to know that information.

Just as we have a right to know what ALL state employees are earning, (no privacy concerns there) we should have the right to know how much state-regulated utility monopolies are paying their top executives. Those salaries come from the rates we pay as captive consumers who have no free market options when it comes to turning on the lights, turning up the thermostat or turning on the faucet.

Heck, even federal securities law requires publicly traded companies such as NorthWestern Energy to disclose their top executives’ salaries. 

(If you care to know, NorthWestern CEO Bob Rowe made $1.4 million in 2011, while the average Montana household took home $44,222, or about 3 percent what Rowe earned).

Due to the ongoing litigation, we don’t know how much current Mountain Water CEO John Kappes makes, but based on documents filed with the PSC, Arvid Hiller, the former president of the company,  made $714,171 in 2011 before the company was acquired by the Carlyle Group in December of that year. (The average Montana household took home about 6 percent of what Hiller earned in his final year as president of the Missoula water utility).

So why, exactly, shouldn't the public be able to know the salaries of the top executives of public utilities, whose revenues come from the rates the public is forced to pay for services that are illegal to buy from anyone but those monopolies that are protected from competition by law?

As a Montana utility consumer I cannot go on the free market and buy electricity from a wind farm along the Hi-Line. I have to buy my electricity from NorthWestern Energy, and if I live in Missoula I have to buy my water from Mountain Water. I suppose theoretically Missoulians could buy their water in bottles, but if they want it to flow from the tap they have to buy it from a publicly regulated utility.

Which brings me back to the video.

What is it these public utility corporations don’t want us to know? If their salaries are in line for the work they do, then why should they care? And why does the PSC think a publicly-regulated utility CEO’s right to privacy is more important than a teacher for the Montana School for the Deaf and Blind’s right to privacy? How exactly is the public served if the Public Service Commission repeals this rule?

These are all questions I’m sure will come up at today’s PSC hearing.

You can log on and watch live here. 

Kavulla ousts PSC chairman in coup

In yet another bizarre twist at the Montana Public Service Commission, Commissioner Travis Kavulla, a Republican, sided with Democrats Gail Gutsche and John Vincent to remove fellow Republican commissioner Bill Gallagher from the chairmanship.

Kavulla then took over as chairman of the board that regulates the state's utilities by a 3-2 vote.

Citing a lack of confidence in leadership, Kavulla and Gutsche engaged in a bitter back and forth with Gallagher and Republican Vice chairman Brad Molnar over a bevy of issues. The "straw that broke the camel's back," said Gutsche and Kavulla, was what they described as an effort to conceal Molnar's publicly financed trip to a meeting in Washington, D.C.

Friday's meeting started as a discussion on how to reprimand Molnar and quickly devolved into heated bickering and a bubbling over of grievances and grudges.

Gutsche and Kavulla alleged that the commission did not authorize Molnar to travel to the nation's capitol for a Federal Energy Regulatory Commission settlement conference last month that Gallagher was attending. They said Molnar and Gallagher made a concerted effort to keep Molnar's participation in the trip a secret from the other three members of the commission.

Kavulla said the majority of the commission — himself and the two Democratic members — did not believe Molnar could be trusted to represent the commission at the conference, and they would have objected to his participation. Molnar knew that, which is why he kept the trip off his travel calendar and told Gallagher to keep it from the others, Gutsche said.

Molnar disputed those claims, saying that his trip was posted on the calendar and he made no effort to conceal his participation.

"What the hell did I do wrong? I went to a conference I was supposed to be at, as a majority member," he said during a break. "This is the harpy, partisan sniping that has brought this commission almost to a standstill."

A compromise had been worked out where Molnar would have paid about $800 in travel expenses out of his personal travel budget and he could keep his position as vice chairman.

But that deal fell apart when neither Molnar nor Gallagher expressed remorse or acknowledged wrongdoing, Kavulla said.

Kavulla dives into a great detail about his role in yesterday’s circus over at Electric City Weblog:

I do regret that this could not be solved through other means. But, sometimes, when you’re very clearly in the right—and others are very clearly in the wrong—you just need to draw a line. That’s just what happened here.

Click the link above and read the post. It has some good insight.

The current commission, of which Republicans gained a 3-2 majority with the November election, has suffered from hyper-partisanship and bickering from all sides since they convened in January. Republican commissioners Molnar and Gallagher accused Kavulla of making self-serving power plays behind closed doors with the Democrats on the panel in order to advance his own political career.

"Twenty years I have been doing this. In 20 years I have seen some of the biggest issues in the Legislature," said Molnar, a former legislator. "I have never, ever seen this level of infighting, back stabbing, self-aggrandizement, personal vendetta building. I have never seen anything like this in 20 years. If you want to have a partisan moment and say it's not a partisan moment, go right ahead."

Gallagher ascended to the chairmanship in January after a bitter two-day battle in which Kavulla, citing concerns about Molnar's "temperament and leadership abilities," refused to vote for Molnar as the chair. As a compromise, Gallagher agreed to serve as chairman only if Molnar would serve as vice chair. That arrangement was tenuous throughout the ensuing three months.

Gallagher said he never wanted to be chairman and never really had control of the body.

"I want it publically on the record the circumstance that I've been dealing with since day one, and that is your partisan politics, your joining with two (Democratic) members of the commission and playing party politics from the get go. I have not been in control of this commission since day one. You have been," Gallagher said. "It doesn't bother me to lose the chairmanship, with the exception in being disappointed that you didn't actually make the motion yourself."

Gallagher said Kavulla doesn't have the integrity, character or maturity to run the commission effectively.

Kavulla countered that Molnar and Gallagher have consistently put partisan politics and party loyalty above the work of the commission.

"This shouldn't be and isn't a partisan issue," Kavulla said. "Any Montanan would be outraged at the notion that one commissioner had asked another commissioner to keep their publically funded travel secret and that that had happened."

Kavulla said he's sick having the "party card played all over Helena."

"I'm happy to be a Republican. I'm proud to be a Republican. I will not run for office as anything else," Kavulla said. "But if you think party loyalty is going to keep me from speaking my conscience on an issue like this, Mr. Chairman, you really are sorely mistaken."

After removing Gallagher as chair, then vice-chairman Brad Molnar took the gavel and preempted an inevitable motion to remove him from that position and opted instead to resign from his leadership post.

The commission then elected Kavulla as chairman and Gutsche as vice chair by 3-2 votes, with Gutsche, Kavulla and Vincent voting "yes" and Molnar and Gallagher voting "no." Gutsche cast Vincent's vote by proxy as he was not at Friday's work session.

In an interview after the commission meeting, a visibly irritated Molnar called Kavulla a "sociopath" who gladly accepted Molnar's help during the election season and then stabbed him in the back.

"He was my creation," Molnar said. "Anybody could have beat (Democratic opponent) Don Ryan, but he never would have beat Jerry Black in the primary if it wasn't for me."

Molnar said Kavulla's actions Friday took control of the board away from conservative Republicans and handed it over to "liberal environmentalists" on the panel.

Gutsche, who along with Vincent refused to vote for Kavulla as chairman in January when the battle over control of the PSC first ignited, said she has faith in Kavulla's ability to lead the board going forward. She said Friday's events demonstrated that the panel can work together in a bipartisan way.

"We need to move this commissioner forward," Gutsche said. "We need to get down to doing the people's work instead of wasting time dealing with one rogue commissioner who never should have been in a leadership position in the first place."

Gutsche praised Kavulla's work ethic and tenacity in the job and said he will help the PSC "turn the corner."

"His work ethic is solid," Gutsche said. "He is the hardest worker, most studied, understands and asks highly technical questions of staff and legal questions of attorneys and he is always prepared."

Kavulla close to victory in GOP primary for PSC District 1

As of late Tuesday, Travis Kavulla, the 25-year-old GOP wunderkind and the youngest Public Service Commission candidate in recent memory, had a 10 percentage point lead over state Sen. Jerry Black in the Republican primary race for the PSC District 1 seat.

As of 11 p.m. Tuesday, Kavulla had 55 percent of the vote to Black’s 45 percent, with 79 of 198 precincts reporting.

The latest tally from the Secretary of State’s office can be found here.

Meanwhile, the Associated Press was reporting that Helena attorney Bill Gallagher and former Secretary of State Brad Johnson were in a dead heat in the District 5 PSC Republican primary with 63 of 147 precincts, or 43 percent, reporting.

Johnson, who suspended his campaign last week after being arrested for drunk driving, trailed his opponent with 7,377 votes to Gallagher’s 7,421 votes.

Kavulla, a writer and activist from Great Falls, out-fundraised Black, a two-term state senator from Shelby, nearly 2 to 1.

The winner of Tuesday’s primary will face Democrat Don Ryan, a former state senator from Great Falls, in the Nov. 2 general election.

With 60 percent of the votes still waiting to be tallied late Tuesday, Kavulla was in high spirits and expecting to win the GOP nomination.

“Obviously we’re happy with the turnouts so far. We ran a really strong campaign and I think you’re seeing the fruits of that,” Kavulla said.

With Kavulla carrying a strong lead in Cascade County, Black all but conceded the election Tuesday night.

“I can’t make any prediction of how those remaining votes will come in, but it looks to me like Cascade County is the key and he’s carrying Cascade County very well. I think that’s where the swing voters are,” Black said. “The way he is carrying Cascade County he will probably win the election, but we’ll have to wait and see.”

Officials in large counties such as Fergus and Richland were still counting ballots late Tuesday, but Kavulla led in Choteau, Daniels, Garfield, Judith Basin and Sheridan counties.

Black led in Blaine, Hill, McCone, Petroleum, Roosevelt, Toole, Valley and Wibaux Counties.

“I’m concerned that we have to wait for the Hi-Line counties to come in and Lewistown, but I think it’s going to be hard for my opponent to find the votes to close that gap,” Kavulla said late Tuesday night. “Of course, I could be eating those words tomorrow (Wednesday).”

Black congratulated Kavulla Tuesday on running a strong campaign.

“He worked very hard and that’s what it takes, but we’ll just have to wait until morning to see what happens,” Black said.