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Montana Power Issues Bonds to Recover Costs
Hoping to relieve stranded costs due to state deregulation,Montana Power Co. (MPC) announced Tuesday that its MPC Natural GasFunding Trust issued $62.7 million worth of asset-backed transitionbonds in a private placement. There was a 6.2% coupon on the bondsissued. The utility said proceeds from these bonds will be used toreduce its outstanding debt and equity.
The issuance has helped the utility stay competitive. “At thetime we started the transition to deregulation, our costs exceededthose of the market. If customers just left, we would haveunder-recovered the charges. This bond sale has let us refinancecosts at a lower interest rate,” said an MPC spokesman.
State legislation allows the utility to securitize strandedcosts related to gas industry deregulation, and MPC said thisissuance will save customers $1.9 million annually for 15 years.”Natural gas rates were reduced 1.5% as of Nov. 1, 1997anticipating the issuance of these bonds,” spokesman Pat Corcoransaid. “Because of this, customers’ bills on average will stay thesame.”
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