The vice president of Montana’s utility regulator wants its president gone

Interpersonal conflict among Montana’s elected utility board and the staff that work for them escalated a few notches this week amid a first-of-its-kind attempt to unseat its president, Brad Molnar.

The PSC is the board tasked with balancing the financial health of monopoly utilities with the concerns of its customers, who cannot shop around for service from other utility companies.  All of its current members, who are elected by district, are Republicans.

The agency and the commissioners who lead it have wrestled with political infighting, staff turnover, inadequate financial controls and office culture issues in recent years. Agency dysfunction has come with a financial cost: In the past three years, the state has paid $330,000 to settle two lawsuits filed by former agency employees over claims related to wrongful termination and privacy violations.

The subject of Wednesday’s meeting was PSC Vice President Jennifer Fielder’s request to Republican Gov. Greg Gianforte that Molnar be placed on administrative leave while an independent investigator looks into Molnar’s workplace conduct. Molnar has bristled against the allegations and investigation, securing legal counsel and holding a press conference last month arguing that agency staff are trying to oust him for surfacing his concerns about the agency’s preference for conducting its business in “secrecy,” to the detriment of utility ratepayers. 

At the Sept. 3 PSC meeting in Helena, Molnar said the three-person response team investigating his conduct has decided to “spend $10,000 of ratepayer money because Brad Molnar told a joke somebody didn’t like.” He also argued that the stakes with the administrative leave request are high, amounting to an “overturning of an election” by a three-person response team investigating his conduct.

Fielder sent the letter to Gianforte on Aug. 20 as one of the members of the response team assembled to “address reports of workplace misconduct and stop retaliation against those who exercise their rights to a workplace free from harassment and discrimination.” She wrote that proceeding under the current conditions is “not possible with [Molnar’s] presence in the workplace” and lamented during the Wednesday afternoon meeting that Molnar has continued to obstruct the investigation and has failed “to accept responsibility for his actions and his conduct.”

Recently elected commissioner Jeff Welborn of Dillon presided over the commission’s proceedings, which started with PSC staff highlighting the challenging working conditions they said they have encountered under Molnar’s tenure and closed with public commenters raising concerns about Molnar’s rights to free speech and due process. 

During her comments, PSC Executive Director Alana Lake said Molnar had threatened to “take out anyone who was involved in the process against him.”

She also argued that Molnar is trying to evade professional scrutiny by mischaracterizing the events that prompted the investigation.

“[Molnar] insinuated that I was siding with the utilities. I have been sworn at. I have been yelled at. I have been disparaged for hiring an outside investigator to address the issues,” she said. “Particularly disappointing was the attempt, which is ongoing, to tie the investigation to regulatory business. Statements were made to suggest that the investigation was a political tool to retaliate against or undermine President Molnar’s ability to fight for the people against the utility’s mergers or big data centers. The attempts to twist the narrative to build public support for President Molnar has been nothing short of skillful political theater.” 

While conversations about Molnar’s conduct, commission transparency and the process for unseating a sitting commissioner dominated the discussion Wednesday, the commissioners themselves also mentioned the substantial — and critical — regulatory work before the PSC during the work session that stretched for nearly three hours.

Commissioner Randy Pinocci, who has seen his share of controversy during his 6.5 years at the PSC, was the only commissioner to side with Molnar’s unsuccessful attempt to rescind Fielder’s letter.

“I don’t want to see anyone in the situation I was in, and I think we should have had these meetings before that letter was sent,” Pinocci said, going on to reference how closely the letter’s timing lined up with a $3.6 billion proposed merger between NorthWestern Energy and Black Hills Corp. as something that “just smells bad.” 

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“I would have suggested that we wait and let’s talk this over and find out what the facts are,” Pinocci continued. “I don’t know what [Molnar] has done. He’s asked me; I can’t tell him. How can this be retaliatory when [we] don’t even know what the claim is?”

Commissioners Welborn, Fielder and Annie Bukacek voted against rescinding the letter, so Molnar’s motion to claw the letter and its request back from Gianforte’s review failed on a 3-2 tally.

While Fielder focused her comments on the process for investigating a PSC staff member facing misconduct charges, Molnar focused his comments on a different PSC protocol — the portion of the agency’s internal policy manual providing for a governor’s suspension of a sitting commissioner. When making his case for the letter’s rescission, Molnar argued that the letter lacks proof. 

“It’s an illegal act for the governor to accept hearsay,” he said. “If you can find a judge anywhere that will say [that] if a public official holds a press conference, it’s retaliation, I’ll eat my hat.”

Thursday afternoon, less than 24 hours after Molnar made that argument to his colleagues, state district court Judge Mike Menahan granted a request by Molnar’s attorney to halt the ouster, arguing it amounts to a “nullification of election results.”

Menahan, in his decision granting a temporary restraining order, cited the commission’s internal policy dictating that a governor’s suspension of a PSC commissioner first go through a “properly noticed public meeting” and receive the endorsement of the commission’s other four members.

“Despite these procedural violations, Governor Gianforte has not dismissed the complaint and has requested briefings from both parties, creating immediate risk of unlawful suspension,” Menahan wrote in his order.

The next three pieces of the order highlight the commission’s duty to review NorthWestern’s pending deal with Black Hills, Gianforte’s swift public endorsement of the merger and the issuance of a letter seeking Molnar’s “immediate” suspension within 24 hours of the merger announcement.

In a Thursday afternoon email, Gianforte spokesperson Kaitlin Price wrote that the governor is “committed to an impartial review of any complaints” made under a Montana law that allows him to remove a commissioner if “good cause is shown” that the commissioner has engaged in official misconduct. 

“The office is also committed to due process by issuing required notice and providing an opportunity to be heard as this process moves forward,” Price wrote.

In a conversation with MTFP Thursday afternoon, shortly before Menahan issued his order, Molnar described the events that prompted the investigation as a mix of personality conflicts and mismatched appetites for regulating utilities like NorthWestern, the shareholder-owned company that supplies electricity and natural gas to nearly two-thirds of Montana’s residents. 

Molnar also argued that the commission has a long history of accepting rate case settlements between NorthWestern and a handful of its large customers and other stakeholders rather than crafting their own rate structure based on a fulsome evaluation of the utility’s books and plans. He said his calls for stricter oversight and more transparency into NorthWestern’s rate request and agency processes have generated much of the strife between him, his fellow commissioners and commission staff. 

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During the PSC’s proceedings Wednesday, PSC Chief Legal Counsel Lucas Hamilton, who will be parting ways with the agency Friday, nodded at the “unprecedented” situation before the commission, saying the process in question hasn’t been used before. 

Molnar maintains that the established protocols were designed to defend against what he alleges is happening — political interference in utility regulation. He also predicted that the investigation’s outcome won’t meet the “good cause” threshold for an official misconduct finding.

“You’ve got four letters to an attorney. You’ve got an investigation that’s ongoing,” he said. “Where’s the good cause?”

This fall, the PSC is expected to rule on NorthWestern’s rate hike request amid ongoing turbulence surrounding the proposed merger, planned increases in the company’s coal-fired power generation as other Colstrip co-owners exit the 40-year-old plant and NorthWestern’s efforts to more than double its electricity generation requirements by tying power-hungry new data centers into its transmission system.