A Carlyle director testifies to the Montana Public Service Commission in 2011

The Montana Public Service Commission hears testimony in 2011 on the sale of Mountain Water Co. to the Carlyle Group. The PSC has received another proposal for the sale of Mountain, this time from Carlyle to Liberty Utilities.

Regulators have no reason to delay the proposed sale of Mountain Water Co. in one venue just because a lawsuit against the water company is pending in another one, according to a filing with a state agency.

On Thursday, Mountain Water Co. and a subsidiary of The Carlyle Group told the Montana Public Service Commission it shouldn't postpone consideration of the proposed sale of the Missoula water company.

The city of Missoula and the Clark Fork Coalition both had asked commissioners to stay the proceeding until the condemnation case the city brought against Mountain Water is resolved.

"There is no basis to stay these proceedings," reads the filing by Mountain and Carlyle subsidiary Western Water Holdings. "The Commission's authority to proceed forward to consider the requested approval of a sale and transfer of stock is clear.

"There is no reason why the Commission should demur to the condemnation court and suspend these proceedings indefinitely."

***

The trial for the eminent domain case is scheduled to begin March 18 in Missoula County District Court. The outcome could be appealed to the Montana Supreme Court, as it was in the 1980s condemnation case the city lost.

Last April, the city filed the condemnation lawsuit to try to force owner Carlyle to sell it the water utility.

This fall, though, Carlyle signed an agreement to sell Mountain Water to a subsidiary of Algonquin Power and Utilities Corp., Liberty Utilities. The Public Service Commission will consider approval of the sale, as well as which parties can formally comment on the matter.

PSC staff attorney Laura Farkas said the agency hopes to hold a scheduling conference within a couple of weeks. In order to do so, however, it must have the right parties at the table.

"We'll have to settle the matter of who is in the case and who is not in the case before we have a scheduling conference," Farkas said.

The parties who want to intervene are the Montana Consumer Counsel, the Clark Fork Coalition, the city of Missoula and employees of Mountain Water.

In its petition to intervene, water watchdog the Clark Fork Coalition argued Algonquin of Canada should be a party to the proceeding and answer questions about its operations and plans. Currently, subsidiary Liberty Utilities is named on the joint application for sale approval, but its owner, Algonquin, is not listed.

***

Algonquin declined to comment on whether it would oppose being a party. In an email, Alison Holditch, investor relations and communications specialist, said Algonquin would file comment with the PSC on Friday and discussion Thursday would be premature.

Farkas said she believes the commissioners soon will identify the appropriate parties to the case. Then, those parties will discuss a timeline for hearings and document filings.

It does not appear the PSC could hear the case before the condemnation trial in March. At this point, Farkas said, she has not heard any discussion of expediting the docket.

The PSC and parties will discuss whether intervenors want to hold briefings on requests, such as the one to delay the sale consideration, she said. The city argues the purchase proposal will be moot if it buys Mountain.

"If the City is successful, there will be no need for Liberty to seek permission for approval of the sale of Mountain Water's parent corporation, and this proceeding would be a waste of taxpayer money," wrote the city in its petition to intervene.

However, the Public Service Commission is obligated to consider sale applications and decide if they're in the public interest, argued Mountain and Carlyle's Western Water. And they said neither the city nor the Clark Fork Coalition provided legal support for their request to delay a ruling on the sale.

"Whether the requested transfer is in the public interest is a question properly decided by the Commission and has nothing to do with the issues before the condemnation court," wrote Mountain and owner Western Water of Carlyle.

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