System unfair to smaller water users

The golden rule in politics is, "Those that have the gold make the rules." A case in point is the new water-rights fee system being implemented across the state. The fee system will raise about $3 million a year, the vast majority coming from small water-rights holders. The largest water-rights holders in the state pay a small fraction of the cost.

I served on the Environmental Quality Council, the legislative committee which developed the fee system. I watched the process unfold and repeatedly objected as small water-rights holders were put on the hook to pay for the water-rights adjudication process which is critical to our state.

In the new fee structure, small users, those with less than 20 rights, pay $10 per year per water right. These rights are predominately held by well owners, relatively small irrigators and people watering live stock. These small users will pay about 59 percent of the cost of adjudication.

Those with more than 20 rights pay the same fee, but it is capped at a total of $400. This category pays approximately 14 percent of the total.

The bottom line is that about 73 percent of the total cost of processing water rights is paid by these two groups.

Water rights used for commercial, industrial, mining and hydro-power contain the largest water-rights holders in the state. Naturally, some of these are the biggest corporations doing business in Montana.

These users pay just under 17 percent of the total cost of adjudication. Worthy of specific mention is that hydroelectric production rights pay just 1.23 percent of the total cost of the process.

In a nut shell, the fee system unfairly places the vast majority of the cost of adjudication on small water-rights holders. In addition, many of these water-right holders are in basins which have already been adjudicated and will see little direct benefit in the new process.

It didn't have to be this way.

In other states (and in the past in Montana) adjudication is paid for by a fee-based system combined with more money from the state general fund in recognition that all citizens of the state benefit from a good water-rights adjudication process.

Other states also make different distinctions between water users. Idaho, for example, assesses hydroelectric production rights based on the kilowatts produced by a dam. There are lots of options for allocating the cost of adjudication, and it is political process.

The two largest hydroelectric production companies in our state, Avista and Pennsylvania Power and Light, derive tremendous benefit and profit from selling the power generated with Montana water but pay less than 2 percent of the cost of the adjudication process.

Virtually all the power generated by Avista is sold out of state, keeping power rates low for consumers in Idaho and Washington. Pennsylvania Power and Light charges us as much as it can get for the power generated by the dams on the Missouri. They get away with it thanks to deregulation.

These two energy corporations had a combined total of 11 lobbyists in the last session of the legislature. Moreover, one of the "public members" of the Environmental Quality Council sitting on the subcommittee which developed the fee system was Tom Ebszery, of Billings, a long-time lobbyist for numerous energy corporations, including Avista.

I proposed an amendment to pay a larger share of adjudication with a tax on hydroelectricity. The idea was that the out-of-state beneficiaries of Montana hydroelectric generation (Avista and PPL owners and customers) should share in the costs of adjudication. Not surprisingly, it was vigorously opposed by industry lobbyists. The amendment failed.

The rest of the story is history. The bill passed, became law and the bills went out to water-rights holders. Those of us owning wells and small irrigation rights reached into our pockets to pay the fees and to pay ever increasing power bills.

The good news is that there will be another legislative session, and there is nothing preventing us from changing this fee system. We ought to just do it.

Sen. Ken Toole (D-Helena) is chairman of the Senate's Energy and Telecommunications Committee.