The Architect of Disaster, Holding Forth in the Capitol

Lately in the legislature, a slippery Republican from Stevensville by the name of Fred Thomas has become one of the Republicans’ leading voice on major issues, such as whether the state should take or refuse $5 billion in federal funds that will circulate in our economy for Medicaid coverage and jobs.

Who is Fred Thomas? He was the architect of Energy Deregulation, the most disastrous policy ever enacted by the Montana legislature, a program that swiftly led to the bankruptcy of the Montana Power company and with it the savings, pensions and retirement accounts of tens of thousands of Montanans.

Thomas left Helena in disgrace afterwards, but has now slimily slunk back into town.

For those of you who do not know the history, the Montana Power company was the quasi-private, regulated power company for almost all of Montana, for close to a century.   Montana Power owned all the dams and power plants and it was as blue chip a company as could be–stable and reliable.  The company and its workers were integral parts of every community in the state.

But one day the CEO of Montana Power, Bob Gannon, decided that he wanted more growth, more profits.   So he and his lobbyists persuaded the Governor, Marc Racicot, and the Republicans in the legislature (and a small number of democrats too) to “deregulate” the energy business in Montana.  Fred Thomas led the effort.  “Deregulation” meant that the company could sell off its energy generation equipment and go into other ventures, no matter how speculative.  The public, meanwhile, would be left to buy power wherever it could, on the open market.

The deregulation vote was taken in the closing hours of the 1997 session, almost in the dark of night, and was quickly signed by the Governor.  Right away, the CEO Gannon began unloading the company’s assets.  This was during the boom, and what the public would soon learn is that the whole scam of deregulation was designed to allow the honchos at Montana Power to try their luck in the tech sector.

Montana Power was renamed Touch America and the CEO Gannon spent all of the company’s money on laying fiber-optic cable in the ground across the state, so that the company would be well-positioned for the technology revolution.  Gannon became the new darling of Wall Street, giving speeches around the country about “innovation” and being lauded as a tech visionary.  The shareholders of Montana Power, however, were never consulted about this change in direction, which seemed a terribly risky business for employees and retirees of the company, and the many Montanans who were in or nearing retirement, and had a good chunk of their money in Montana Power company stock.

Of course, the tech revolution ended up using cell towers instead of fiber-optic cable.  So Touch America went bankrupt almost overnight, but not before Gannon and his pals all took mult-million dollar payouts and fled the state.  Company retirees lost everything, their whole pensions.   Stockholders were wiped out.  Seniors woke up to find their 401(k)s empty.  And thousands lost their jobs.

And the price of power went through the roof, because Montana didn’t have dozens of energy companies competing for our business – we had only one.    Thomas claimed this would never happen and that those who criticized him were using “scare tactics” and “politicizing the debate.”  But it did, and businesses across the state took a big hit.  Others, like Columbia Falls Aluminum company, for example, shut down the plant and laid everyone off, not because the aluminum market had changed but because the company suddenly found itself with a huge supply of electricity that was now far more valuable to sell on the energy market than to use in the processing of aluminum.

He was also a central figure in CI-64, the initiative that resulted term limits in Montana. At any given moment, Fred is very inclined to lead the cause for the out-of-state right-wing astroturfers ‘flavor of the day.’

In sum, energy deregulation was the most catastrophic single policy ever enacted in Montana.  So when Fred Thomas speaks with the tone of a policy expert on major issues facing the state (like the Medicaid expansion and HELP Act, among others), please keep in mind he is the last person that anyone, anywhere, should ever listen to, about anything.



17 Comments on "The Architect of Disaster, Holding Forth in the Capitol"

  1. Montana Power was a ‘widow and orphans’ stock. You bought it to support widows and orphans because it was so solid, so guaranteed.
    Would you believe we just got the last statements on the legal settlements over that debacle last year. Our thousand dollars invested in MP for our retirement was worth 50¢ after the lawyers were through and we didn’t even get the 50¢ because it cost too much to issue a bunch of checks for that little.
    Thanks, Mr Republican, for proving yet again that Democrats should run the economy.

  2. Fred is just the case-in-point, the proof that we really are devolving towards fascism. In ’95 the Bitterroot sent another winner to the Legislature (there’s been such a long, long line. Sorry.) On the day Oklahoma City was bombed, Matt Brainard had a bill pending that would have authorized tax-subsidized militias. Okla. City should have flushed all that s— down the toilet, but it didn’t. Look what’s happening in the Okla. legislature right now. Comrade Burns set the future tone by inviting John Trochmann to testify before a Senate panel as an “expert” on domestic terrorism mere months after Tim Mcviegh and Cal Greenup (the Bitterroot’s own Randy Weaver wannabe) carried things just a tad too far too soon for the money boys, and look who’s vice-chair of the the Republican Central Committee today (Trochmann’s protege Jennifer Fielder). Deregulation was just the opening salvo for these tea bagging nutcrackers, and Fred is right where he should be for these times. Shame on us.

  3. Is no one going to point out that Fred Thomas, Art Wittich, Cary Smith, and Nancy Ballance- and a couple of others- were flown down to Florida by the Foundation for Government Accountability and received a bunch of boilerplate bills, including ALEC bills, which they then came back and introduced whole cloth?!

    They have no clue of the actual impacts of the boilerplate they are pushing – and then they brought out some Brownshirt from the FGA to “educate” the members of both the house and senate budget committees and the joint appropriation HHS subcommittee. I find this to be despicable and unethical, and it’s resulting in some terrible and extremely stupid bills.

    • Don’t be too eager to characterize these folks as stupid. It is reasonable to say they know what they are doing. The “stupid” part of the equation is at the feet of those who vote them into office!

  4. If you want a good history of Montana Power, check out Cecil Kirk’s book. He writes in the introduction how Bob Gannon wanted to sue him to keep it from being published. It’s in the Missoula Public Library and probably in a few others. It’s about time someone wrote a detailed biography of Gannon, in my opinion. Until then, read this “important piece of Montana history,” as the IR said:

    Kirk, Cecil H. A History of the Montana Power Company. Self-Published Work: Pleasant Hill, 2007.

    • Does Kirk credit a certain Butte Democrat for the key pro-deregulation vote needed to sink Montana Power?

    • Thanks, ‘HIgh, Wide and Handsome’ – a Montana classic – also addresses the power and cunning of Montana Power Company. By the way, the WORST telephone service I ever had in my life was ‘Touch America’ and I met that scoundrel Bob Gannon at a ‘Mad’ Max (yep, that Baucus guy) economic ‘summit’ and when I challenged him about ‘Touch’ he just shrugged and walked away. Thanks for reminding what Fred, ‘Rat’ Raciot and both parties – including the Butte Dems – brought us, a disaster that’s held back our state in so many ways.

  5. If you haven’t seen “The Power Brokers” I recommend it. This tells the Montana Power story in a clear understandable way. Enron, Marc Racicot, Fred Thomas and others along with a full cast of characters tell the story. Find it here:

  6. As for Wittich, Ballance, et al, I think their ideology renders any “fact based” analysis of the results of their actions as irrelevant to them. In their case I think the means justify the ends. They don’t care what happens after the legislature goes home and their lunacy becomes the law of our land. The goal is implementation of an astroturf agenda. Since they appear to have a belief in the orthodoxy of their means, to them, whatever results is better than what came before. Unfortunately this orthodoxy has been swallowed by many of our neighbors who voted these ideologues into office. Equally unfortunate is the public’s inability to think critically about the rampant dismantling of state government and what it means for the citizens of Montana. We know what these people are against. What are they for? What kind of state do they want to live in? What kind of state do you want to live in?

    The re-election of Fred Thomas seems to support the notion that the electorate does not live in a fact based world either. I have no idea what to do about that!

  7. one other connection to note here: Bob Gannon also served as an energy adviser to the Carlyle Group, the global private equity firm that purchased Missoula’s Mountain Water Company in 2011, and is now reneging on its commitments to the people of Missoula. See:

    • I don’t think the Caryle group is reneging on its commitments to the people of Missoula, since they only said they’d at least look at an offer made by the City of Missoula. Missoula gave them a low ball offer then offered an even lower offer with condemnation proceedings. Nothing has changed since Missoula last brought condemnation proceedings against Mountain Water and Ed wheeler, the owner at the time. Missoula’s tax payers will end up footing the bill, when the city loses this lawsuit for the second time.

  8. My book “Poles Apart” details Montana Power duplicity prior to 1970 and the difficulty of bringing justice to our state. It has a foreword by US Senator Lee Metcalf.

  9. Bill LaCroix is right on target. Fred is my Senator. He is anal, pompous, arrogant and most annoying to me…. is his sense of entitlement as a senator. He has no empathy but somehow was elected again in the Bitterroot. The scary part is he has his sights set on the Governors seat at some point in the future. Bottom line he is a pathetic, self absorbed human being .

    • Although it feels like someone is ripping my very soul out when I say it, Thomas is my senator as well. I always felt that there were certain acts that should disqualify you from certain positions in the future…forever…no exceptions….just get over it. Thomas’ unrepentant pivotal role in the dismembering of MPC and destruction of the pensions, savings and livelihoods of so many Montanans is one such act. The fact that he seems hardly to acknowledge his role in the pain and suffering he facilitated sticks in my craw like a cockelbur in my dogs tail. Humans make mistakes, but only sociopaths are indifferent to their own mistakes.

      I remember sitting with my accountant going over my taxes not long after the MPC debacle. He was near tears as he described meeting with client after client who had lost nearly everything…pensions, savings, and jobs in the MPC, nee Touch America implosion. It was clear to me that this “numbers guy” was scarred by seeing so much hurt and betrayal on the faces and in the words of those who had trusted this blue-chip, widows and orphans investment.

      Sometimes I wish I believed in Hell so I could dream of the special place it holds for those who cause grat harm and who do not care.

  10. How about the rest of the story ‘Cowgirl’ –
    Lest you forget, on May 25, 1999 on PSC docket D99.4.82, four Democrats;
    DAVE FISHER (Chairman)
    and one lone Republican GARY FELAND, approved deregulating energy in Montana.

    Since that time the Dems on the PSC didn’t see a rate increase that they didn’t like.

    No wonder the above-mentioned Democrat Bob Rowe was rewarded by giving him the top job at PP&L a few years after he left the PSC – the same company he voted to benefit.

    Yes – deregulation sucks – and we were all suckered in on it. I thought the free market would be a good thing too until I realized there was only one power line going down the alley.

    But the final blame rests with that PSC – if they gave it the thumbs down, it would not have happened.

    • Eric,

      Sorry, but we were not ALL “suckered in on [deregulation].” At the time or Thomasgate, everyone I knew was aware that Montana had some of the lowest retail power rates in the area, and that the idea that somehow deregulation would get us even lower rates (as opposed to having our cheap power sold elsewhere for higher rates) was just a corporation’s snake oil.

      I am frankly appalled at the pearl clutching keening that “I know I got drunk and high and stole my neighbor’s car and tried to set a time record driving from one side of the state to the other, but WHERE THE HECK WERE THE COPS, WHOSE JOB IT IS TO STOP ME FROM DOING THIS? IT IS CLEARLY THEIR FAULT I CRASHED THE CAR AND KILLED THAT FAMILY OF FOUR!”

      Just because you are not the last person to touch stolen property, does not absolve you of the guilt.

      By the way, Bob Rowe never to my knowledge worked for PPL, as you stated.

      In my book, the final blame lies with the person(s) who loaded the gun and pulled the trigger, not primarily with the ones who failed to push the state out of the way of the bullet.

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