Citing a “constructive dialogue” it is seeking in its sometimes contentious relations with Montana regulators, South Dakota-based NorthWestern Energy Thursday submitted a third-party audit of its electric and natural gas utility operations in the state, recommending improvements in some areas. The company, which just settled a pending investigation by the Montana Consumer Counsel, said it hoped the audit improves its ongoing relations with state officials.

Generally, the audit appears to find the natural gas system in sounder condition perhaps than the electric system for which the auditors had some specific recommendations for improvements.

Voluntarily agreeing to the third-party review by Quentin, PA-based Liberty Consulting Group, NorthWestern said the report provides “a thorough and objective review” of its utility operations, which have come in for criticism from the Montana Public Service Commission over the past 18 months, during which NorthWestern filed for Chapter 11 bankruptcy in a Delaware federal court.

“We hope this third-party review of our system continues a constructive dialogue with the commission about the integrity and reliability of our electric and natural gas transmission and distribution systems in Montana,” said Mike Hanson, NorthWestern’s COO, in a prepared announcement on the audit filing. The company also re-issued a June 21 announcement about its average electric supply costs being lower than anticipated last year, so its average electricity cost for this coming fiscal year (July 1-June 30) should be 4.1 cents/kWh, compared to 3.8 cents/kWh for the past 12 months ended June 30, 2004. Earlier the company had estimated the 2003-04 costs at 4.05 cents/kWh.

The Liberty Group provided a final 80-page report that was submitted to the Montana PSC, including the following that NorthWestern chose to highlight:

Regarding the audit, NorthWestern’s Hanson said the company had begun addressing some of the audit’s recommendations even before it was completed, citing such moves as expanding its apprentice pool (for technicians), standardizing and documenting processes better, and catching up on previously deferred expenditures.

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