Speeches

Remarks of Governor Judy Martz
Center for the New West
Leadership Forum on Energy Security
Denver, Colorado
April 9, 2001

CHECK AGAINST DELIVERY

Thank you so very much for the opportunity to be here. There is no question that the single greatest challenge facing the Western United States is the issue of energy.

I want to thank the Center for the New West for putting these issues in the spotlight - and for doing your part to make certain that we come together as a region to solve this problem.

I especially want to thank the Center's President, John Maddox, for his outstanding leadership. I so appreciate your vision and your friendship, John, and am glad to be here today to discuss the enormously important issue of energy.

Montana currently sits somewhere around 47th to 50th in the nation on various economic scorecards. Timber harvest, mining, manufacturing are all part of what I believe are keys to improving Montana's economy. Additionally, I am working aggressively to bring the "New Economy" to the state.

But frankly our efforts are being distracted by an energy crisis in the west. Instead of concentrating my sole efforts on bringing new, better paying jobs to Montana, I am spending my time trying to figure out how to keep what we have alive.

The Great Falls Tribune reported yesterday that over 2,700 employees have been laid off in recent months. The impacts to our tax rolls and our communities remain to be seen.

The impacts of higher energy will be felt across the state, from residential customers to industrial customers. Agriculture producers, already pinched from low commodity prices face an uncertain future, especially those farm producers who rely on irrigation.

As farmers reduce or eliminate their irrigation methods to save energy costs, the local implement dealer, fertilizer salesman, banker, hardware store all feel the pinch. And in many parts of rural Montana, the only remaining economy is the agricultural economy. When we shut down one farm, the effects are felt by every business on Main Street.

What timber industry we have left is now wondering how they can continue to operate. Not only have we seen environmental gridlock on our nation's forests and a glut of imported lumber, we are now faced with energy costs rising exponentially.

One timber mill reducing workload affects sawyers, truck drivers, and skilled mill operators to name but a few.

Additionally, commodity based industries are located in traditionally rural areas. One timber mill or ag producer closing brings additional closures to supporting businesses in the area. No where is the ripple effect felt more than in our rural communities.

And the bigger question. How long can these businesses "temporarily" stay closed? How long before your skilled work force is forced out of state in search of jobs? How long before the supporting infrastructure is permanently lost? These are questions that we have no answers for.

But this energy crisis doesn't stop at just impacting our existing industries. It also poses enormous challenges in our efforts to transition to the new economy because of the vast energy needs of computers, servers and all necessary office equipment to support a high-tech economy.

Furthermore, some states like Montana are facing declining enrollments in our schools, while costs have continued to rise. The problem is only exacerbated with rising energy prices. Schools have already begun budgeting for higher power costs, maybe two or three times higher than current.

Additionally, where do a majority of tax dollars come from for funding education? That's right, job providers. And as we see increasing job layoffs and business closures, we see a smaller and smaller pot to recover taxes.

A smaller tax base means fewer dollars for basic public services. That means fewer teachers, less road maintenance, fewer public health services, and additional layoffs. These challenges are enormous.

I have yet to touch on our residential customers of energy. In a state with one of the lowest per capita income, how do we absorb energy costs that are 40 -50% higher? How do you tell a retired couple living on a fixed income that their cost to heat their house could increase 40 - 50%?

In California, you raise energy costs and those folks have to suffer by turning down their air conditioning or turning off their hot tub.

In Montana, with winter temperatures dipping below zero, you suddenly start talking about lives.

The ripple effect is tremendous. The potential for Montana to be brought to its economic knees is real.

Now I know this all sounds like doom and gloom. And while I don't want to paint a picture that seems like we are headed for total disaster, I have to emphasize the seriousness of this issue.

And that is why I am so focused on finding solutions to this problem. I believe we can and will find the solutions. My entire staff and my department heads are constantly working on this issue. That is why we are gathered here today.

We have to shift our discussion from our glass being half empty to our glass being half full. Because I believe that one of the great ironies of these challenging times is that we are also looking at one of the greatest opportunities in history.

States like Montana in the west are rich in natural resources and fuels with vast fields of super-compliant coal and miles of timber to help quench the thirst for energy across our nation.

Montanans are anxious for the opportunity to contribute to the economic health of this country through responsible and environmentally sensitive development of these resources.

Here's what we have to do.

First, we have an enormous opportunity to reverse the decade long movement away from the responsible development of our natural resources. Second, we have an opportunity to develop and adhere to a thoughtful national energy policy - something that was an afterthought to the previous administration. And third, we can now reduce our reliance on foreign nations to supply us with our energy needs - a problem that has led to rising energy costs and power shortages across the nation.

While Montana has the potential to help supply this nation with clean, affordable energy, we have seen our ability to responsibly develop those resources grind to a halt through federal inaction and mismanagement.

At the end of previous Administration, the White House forced many federal land grabs through in an attempt to create a lasting legacy. Despite the previous Administration's attempt to protect the west from itself, we believe Montana still has tremendous potential to meet the demands of a growing nation.

Montana is in the process of receiving the federal mineral rights in super-compliant coal reserves in Southeast Montana. This area of land known as the Otter Creek tracts is the result of an exchange for the mineral development rights outside Yellowstone National Park.

The high quality coal found in Otter Creek Tracts 1, 2 and 3 will be in great demand in the Midwestern part of our country as power generating facilities struggle to improve air quality as mandated under the Clean Air Act.

The development of these tracts is also bringing increased interest from investors who recognize the need for additional power sources in the western half of our country.

I am pleased to say that working with the new Secretary of Interior Gale Norton, I am hopeful Montana will receive ownership of these tracts in the near future. At stake is the development of over 533 million tons of super-compliant coal.

We have already had several inquiries about the potential development of not only the coal, but also coal fired electric generating facilities that will fuel the power needs of Montana and the west.

Along with potential coal development, Montana has vast reserves of a resource only recently acknowledged as a viable energy source -- coal bed methane.

Currently, Montana's Department of Environmental Quality and the BLM are working jointly to assess environmental impacts from proposed development. Wyoming Governor Jim Geringer has had tremendous experience in the development of coal bed natural gas.

We hope to learn from efforts in Wyoming and participate in the bounty of an added energy source and improved economic conditions for rural Montana.

In Montana, we have seen increased interest in utilizing traditionally under-valued or no-valued timber byproducts to produce electricity.

And this prospect grows increasingly attractive as the United States Forest Service begins to implement The National Fire Plan, a plan that addresses the health of our forests that in part focuses on mechanical treatment of small trees and shrubs that contribute to catastrophic fires.

With the General Accounting Office identifying over 40 million acres of interior west forestlands at risk for catastrophic fire, we have a tremendous potential energy resource at our disposal.

We have a tremendous amount of energy reserves on our public lands. From coal to coal bed methane, from natural gas to timber byproduct co-generation, we have the potential to be much more self reliant in terms of energy production. We just need to re-evaluate the role our public lands can play in supplying this country with the energy it so desperately needs.

We must be careful that we do not stifle the increasing interest to develop additional power. A heavy-handed federal government can stymie efforts to address the long-term solution for our current energy problem.

Just a couple of weeks ago, I had a conversation with the representative of an out-of-state interest which is considering investing $200 million in a power generating facility in Montana.

Now, $200 million may not be a lot of money to people in other states, but to Montana that is a tremendous investment. And the beauty of this concept is that it helps increase competition in generation not only in Montana and the west, but it also has helps create good paying jobs.

It is important to note that I had a simple message delivered to me in that conversation: "Just keep the government out of the way."

While we do not want the federal government to come down on western states with a heavy regulated hand, we do want to work with the federal government to arrive at meaningful solutions.

First, we need them to work with us in an effort to address problems associated with a western grid straining to keep electricity flowing.

Second, we need them to work with us by allowing individual states the flexibility to address the energy shortage by creating new generating facilities, and transmission capabilities.

Third, we need them to work with us to create incentives to conserve existing resources, while developing new resources. They must work with us, not against us.

You can see that not all the impacts are bad. This crisis has been a wakeup call - a wakeup call that will allow us to work toward market driven solutions.

I am pleased that the Federal Energy Regulatory Commission has been working to aggressively identify and implement measures that will stabilize wholesale energy markets, increase supply and delivery infrastructure and promote the establishment of a western regional transmission organization.

All of us in the Western states are struggling to deal with a situation that has no easy answers. We need to address our energy needs for the long run. Ultimately, the long-term solution is to build additional power sources, thus increasing supply.

While the California crisis certainly has impacted the economic and political environment in the West - it has brought the need for market reforms, environmental protection and access to our nation's land to supply our thirsty nation's need for fuels.

If we work aggressively, united as a region, we will turn these enormous challenges into the best darn opportunities in decades. Let's not dwell on what got us here - but rather on what we can do together to craft and implement a new national and regional energy policy that will ensure the security and vibrancy of the New West.

Thank you again for the opportunity to be here.

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