Nov. 20--HELENA -- At least one thing is certain about the push by five Montana cities to buy NorthWestern Energy: Without cooperation from the company, the deal won't happen.

"We need to have the board (of NorthWestern Energy) to agree to allow us to perform due diligence," says Ron Moe, an economist with R.W. Beck, a consulting firm hired by the cities.

"Without the board's approval, we can't do due diligence. Without due diligence, there isn't any money." Money, as in $1.7 billion, which the cities will need to complete the purchase.

And "due diligence," as in a review of NorthWestern records that any lender will require before handing over that kind of cash.

Which creates a sticky Catch-22 for the cities: Their plan to buy NorthWestern and convert it to a publicly owned utility cannot occur unless they prove it's financially sound and good for ratepayers, but NorthWestern maintains it is not, and won't let them try to prove it.

"There's no reason to provide due diligence because we don't see this thing moving forward," says NorthWestern spokeswoman Claudia Rapkoch.

NorthWestern's directors, however, serve more as gatekeeper of any deal, rather than final judge.

For even if NorthWestern says it will consider the buy-out, the cities still must clear a string of financial and regulatory hurdles.

The first step would be "due diligence," which is financial- speak for checking under the company's hood to see if the engine looks as good as the buyer thinks it may be.

Montana Public Power Inc., the nonprofit company created by the cities to buy NorthWestern, and its financiers would scrutinize NorthWestern's books and property to see if they still believe it's worth the purchase price of $2.17 million.

If the company still looks good after this once-over, MPPI would ask state and federal regulatory commissions to approve the purchase. The Montana Public Service Commission would examine the financial prospects of MPPI and give its blessing only if it thought the new owner was sound and able to serve ratepayers at a fair price.

The review by the commission would involve scrutiny by the Montana Consumer Counsel and other "intervenors," who provide sworn testimony to the PSC. The process could take as long as a year.

If regulatory approval is obtained, MPPI's financier Citigroup of New York will loan MPPI $1.17 million to buy NorthWestern's 36 million shares of stock.

MPPI also must get an "investment grade" credit rating from two of the three national major rating agencies before Citigroup will loan the money.

NorthWestern officials and others have suggested it might be difficult for MPPI to obtain these ratings, but it doesn't matter what they think. If MPPI doesn't get the ratings, the deal is off.

If everything pans out to this point, MPPI issues $1.7 billion in tax-exempt bonds, gets $400 million from a coalition of South Dakota cities that is buying NorthWestern's South Dakota and Nebraska operations, pays off the Citigroup loan, assumes and restructures nearly $1 billion in debt and takes over the utility in Montana.

When it's all said and done, MPPI says it will operate the utility pretty much like it is now, at the same rates.

Many questions remain about how MPPI would run this newly structured, publicly owned utility. Would rates for its 310,000 customers truly stay the same, or even drop? Can it obtain low- cost, government-produced power? How would it calculate the property taxes it pays to the state and scores of local governments? What top- level employees would go, which would stay? How much at risk are ratepayers for any management mistakes?

But unless NorthWestern lets MPPI get its foot in the financial door, nothing's going to happen.

"Our understanding is that we have shareholders representing more than 50 percent of the company saying yes," says Moe. "The hurdle is for those shareholders to persuade the board that we should be able to perform due diligence.

"That's the current situation. We are trying to figure out alternative ways to persuade the board to grant our request."