Montana Public Service Commission

The sale of Mountain Water Co. to the subsidiary of a Canadian conglomerate will continue to proceed before the Montana Public Service Commission, despite the city of Missoula's claim to the company.

And the PSC will not bring Algonquin Power and Utilities Corp. of Canada into the sale proceedings.

On Tuesday, commissioners voted 5-0 to deny the city of Missoula's request to dismiss or stay the sale application by Liberty Utilities Co. that's pending before the body.

Commissioners also unanimously denied the city's request that parent company Algonquin be a party to the case.

“It’s important to understand that the issue before the commission is not affected by the condemnation case currently in the courts,” Public Service Commission Chairman Brad Johnson said in a statement.

“Moving forward with this proceeding allows the commission to gather more information to determine if Liberty Utilities Co. is qualified to take over ownership and operation of Mountain Water Co., and that determination is not affected by the condemnation case proceeding.”

Last month, Missoula County District Judge Karen Townsend ruled the city can use its power of eminent domain to buy Mountain Water Co. from owner The Carlyle Group. Another court proceeding will determine a fair price for the city's public drinking water system.

Before the trial, though, Carlyle announced it had signed a proposal to sell Mountain Water to Liberty, a subsidiary of Algonquin. That proceeding is pending before the Public Service Commission.

At the PSC hearing Tuesday, the city of Missoula argued the judge's order gives it "constructive ownership" of the water utility, and it has the power to buy the company at any time.

However, Thorvald Nelson, a lawyer representing Mountain Water and Carlyle, said the city hasn't yet paid "one red cent" for the company, and therefore, it doesn't control the utility. He also offered his definition of "constructive ownership."

"Constructive ownership is a legal figment of the city’s imagination. It is nothing," Nelson said.

In arguing Algonquin should be included in the case, Scott Stearns, lawyer for the city, said it's the entity making every single decision for Liberty. Algonquin has the financial models, and its board is the one that made all the decisions, he said.

"Algonquin is calling the shots, and so you need Algonquin to be here. That is entirely consistent with every matter that has been before this commission before," Stearns said.

Carlyle's director of infrastructure, for instance, testified before the commission before the global equity firm purchased Mountain Water, he said.

So far, though, Algonquin has not presented information the city has requested, and its CEO failed to appear for his deposition, in violation of a court order, Stearns said.

In a news release, though, the public service commissioners noted the reason they denied the city's motion to require Liberty's parent company to join the proceeding.

"So far, the commission believes it will nonetheless be able to obtain all relevant information through Liberty Utilities Co.," the release said. "If those circumstances change, the commission will revisit the issue of ordering Algonquin to appear."

Commissioner Bob Lake, whose district includes Missoula, said his job isn't to choose the company's next owner, but to protect consumers.

“Our role is to ensure that, regardless of ownership, the consumers will be fairly and adequately served based on long-established standards of service. It is our goal that the consumers are unharmed, no matter the outcome of this sale,” Lake said in a statement.

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