< back		 Bob Gannon, Montana Power Company

Gannon is vice-chairman and president of the Montana Power Company, where he has worked for 22 years. Before joining Montana Power in 1974 as an attorney, he served two years as an assistant attorney general for the State of Montana, and another two and a half years as an assistant U.S. attorney for Montana.

Gannon is a native of Butte, Montana. He graduated from the University of Notre Dame with a bachelor’s degree in government. He earned his law degree in 1969 from the University of Montana and completed the Harvard University Advanced Management Program in 1989.
1. What is the best thing about the recommendations? The recommendations represent a hard-won consensus of widely diverse interests, for the most part dealing with issues realistically and comprehensively. With a limited number of concise changes, these recommendations should provide for a transition that enables the region to preserve benefits of the regional hydro system for Northwest consumers, enables customers choice through an efficient competitive market, and preserves the region’s leadership position in acquisition of public purpose benefits.

A regional consensus presented to Congress that assures the U.S. Treasury recovery of its regional investment will greatly increase the probability that the regional hydro system future benefits, and system management, will remain with the Northwest. The movement of various parties’ positions, from self-interest to regional best interests, demonstrated the significant capability of the steering committee process.
2. What is the most challenging thing about the recommendations? The recommendations have a critical weak link that lessens the opportunity to realize the Governors’ goals and the Committee’s principles. At the least, the committee should have adopted pricing principles for calculating the option associated with short-term power purchase, that reflect the goals and principles. If the cost is set so that short-term contracts are economically advantageous to long-term contracts, as suggested by the draft’s “1 mill proposal.,” most parties will elect short-term. This reward structure is contrary to the region’s best interests, and fails to balance risk and reward by placing undue risk on the U.S. Treasury and long-termers.

Ideally, there should be no economic advantage to either long-term or short-term alternatives, because the option provides short-termers all the positive advantages long-termers have. Additionally, the effectiveness and competitively neutral requirements (a level playing field) of the public purposes proposal is seriously jeopardized by its voluntary nature.
3. Why should people care about the recommendations? It is very likely the regional hydro system will remain a low-cost source of environmentally sound power well into the future. These recommendations deal with a transition period to competitive markets when the system’s value will be in question. It is conceivable that if we fail to bridge this transition period, the system’s short-term diseconomies could prevent us from realizing significant long-term benefits.

These recommendations provide a developing mechanism to retain benefits for the region’s ratepayers, provide them with choice, and preserve acquisition of public purposes. However, there still are a number of key issues that need resolution if these recommendations are to deliver the transmission mechanism. Divisive special-interest issues, which could prevent the recommendations from realizing the goals established by the Governors, can be resolved by the public’s balanced participation at this critical juncture of the process.