Already problematic at the state regulatory level, NorthWestern Energy’s pending $2.2 billion sale to Australian-based Babcock & Brown Infrastructure (BBI) faced a new potential obstacle last Friday from a proposed state law to create a public power entity to potentially take over the utility’s Montana operations if the Public Service Commission (PSC) turns down the BBI purchase later this year. The utility holding company had no immediate reaction to the new state Senate bill (SB 558).

NorthWestern’s Montana spokesperson did acknowledge concerns from the state’s consumer counsel that were aired during the recent three days of PSC technical hearings on the prospective purchase by BBI. Under current schedules, the state regulatory panel should begin deliberating on the purchase in early May.

A half-dozen federal and state regulatory bodies have approved the BBI-NorthWestern marriage, so a verdict from the Montana PSC is the last regulatory approval needed. Regardless of how the regulators decide, there are sure to be appeals and potential court filings, a NorthWestern spokesperson said Monday. Two merchant coal-fired generation plants already have indicated they will challenge an approval, and NorthWestern has said it will appeal if the deal is turned down.

State officials have raised concerns about Montana’s ability to have control over a foreign-based owner of the state’s principal private-sector energy utility. If approved, it is assumed that the PSC will impose various conditions, and then the issue of whether BBI can accept all of the conditions comes into play.

SB 558’s author, state Sen. Greg Lind, told local news media that for his bill to become a reality “requires somewhat of a perfect storm.” The bill addresses concerns citizens had with a proposed coalition of Montana cities takeover of NorthWestern’s utility operations that was rejected by the company last year. In the case of the new proposed law, it would establish a public-sector entity to buy the utility operations from NorthWestern.

The new electric/gas authority would sell bonds to finance the purchase of the utility and then repay them over time through ratepayer charges. SB 558 is scheduled to get its first legislative hearing this Friday by the Montana Senate Natural Resources Committee.

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