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Public Service Commission claims juisdiction over MPC sale

HELENA - Legal battles are brewing over whether state utility regulators have any jurisdiction over Montana Power Co.'s plans to sell its remaining energy businesses and whether customers stand to see any financial benefits from the sale.

Some members of the state Public Service Commission said Tuesday that the PSC has jurisdiction over the sale, but it must brace for a legal challenge from Montana Power on that issue.

But Jerry Pederson, Montana Power's vice chairman and chief financial officer, said the company doesn't believe the PSC has any jurisdiction over the sale except to determine whether the buyer is capable of providing safe and reliable service. Pederson also said sale proceeds must go to Montana Power shareholders, not its customers, just as when any business is sold.

A confrontation over the issues is likely to surface April 13 when Montana Power officials make a formal presentation on the sale to the PSC. On March 28, Montana Power announced its intention to sell its remaining energy businesses in six to 12 months and focus entirely on Touch America, its booming telecommunications business. Montana Power will change its name to Touch America.

Commissioner Bob Anderson, D-Helena, said the PSC has the legal authority, but "we may very well be challenged" by Montana Power and will need to prepare a strong legal case to defend its position in case the utility sues.

Pederson noted that Montana Power doesn't believe the PSC has any jurisdiction over the sale itself, including the right to approve or veto it. However, he said, the PSC has the right to review the prospective buyer of Montana Power's businesses to ensure that it can provide safe and reliable service

"Certainly we want to have contact with them," Pederson said of state regulators. But he added: "Their responsibility goes to the provisioning of the service; that it's appropriate to the consumer, that it's reliable and safe."

Meanwhile, two Democratic officials running for higher office said Tuesday that the special legislative session next month should take up issues arising from Montana Power's sale plans.

Rep. David Ewer, D-Helena, who's running for state auditor, told a press conference that he has requested that the House Business and Labor Committee conduct oversight hearings on the proposed sale of Montana Power's remaining utility assets and other issues.

And Attorney General Joe Mazurek urged Gov. Marc Racicot to include the planned sale of Montana Power's properties in his formal call for a special session because state law on regulation of these sales is vague.

Ewer said House Speaker John Mercer, R-Polson, and committee Chairman Bruce Simon, R-Billings, have agreed to hold the hearings he requested.

Issues that have arisen since MPC's announcement March 28, Ewer said, include: what can government to do to assure an orderly transition to a new era; what changes to Montana law might benefit state rural electric cooperatives when bidding on MPC's property; what factors might impede the sale; what can electricity customers expect; and can additional cheap electricity be obtained from the Bonneville Power Administration.

If the oversight panel comes up with any possible legislation, Ewer said it possibly could be introduced in the session if it is expanded.

Mazurek urged Racicot to let the special legislative session to give the PSC clear authority to regulate the sale of Montana Power's energy operations. It also is an economic development issue for Montana, he said, because it could lead to higher commercial rates for energy.

As the state's chief legal officer, Mazurek expressed concern that state law isn't clear whether the PSC has the power to require Montana Power to reimburse its ratepayers for any "over book" value it receives from selling its regulated assets.

He said state law requires the PSC to allow regulated utilities to charge rates based on the book value of their assets, plus reasonable overhead and profit. Book value is the depreciated value of the assets.

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