Montana cities offer $2 billion for NorthWestern operations

HELENA, Mont. (The Associated Press) - Jun 30 - By SARAH COOKE Associated Press Writer

A nonprofit corporation formed by five Montana cities offered NorthWestern Corp. about $2 billion Thursday for its utility transmission and distribution systems in Montana, Nebraska and South Dakota.

The proposal, approved unanimously by directors of Montana Public Power Inc., includes about $1.17 billion in cash and the assumption of $825 million in company debts and other financial obligations.

The offer, if approved by NorthWestern's major creditors and various state and federal regulators, could result in the cities taking over operation of the utility's electric and natural gas operations by the end of the year, officials said.

NorthWestern Vice President Roger Shrum declined immediate comment, saying he needed more time to examine the proposed offer. The company has rejected similar offers.

NorthWestern's non-Montana assets would be sold to the South Dakota Power Co. under the agreement, said Mike Kadas, Missoula mayor and chairman of Montana Public Power's board. South Dakota Power is a nonprofit corporation made up of 22 municipalities in South Dakota formed to buy NorthWestern's transmission assets in South Dakota and Nebraska.

Kadas cited a need for more reliable and cost-effective electricity behind the move, saying it's time for the public to take back the control they lost following deregulation in the late 1990s.

"Bringing NorthWestern's utility operations under local control is necessary to ensure that our communities will have the highest quality utility services at reasonable prices," he said.

Based in Sioux Falls, S.D., NorthWestern emerged from Chapter 11 bankruptcy protection last November after cutting debt and selling non-utility assets. The company cited $2.2 billion in debt when it filed for bankruptcy reorganization in 2003.

NorthWestern serves 608,000 utility customers in South Dakota, Montana and Nebraska.