PSC’s Staff Recommends Panel Consider BBI’s Revamped Plan

By Falstad, Jan

Four staff members of the Montana Public Service Commission have unanimously recommended that the five commissioners consider the revised offer by Babcock & Brown Infrastructure to buy the state’s largest utility.

After a year of testimony – and analysis, the PSC on May 22 unanimously rejected BBl’s first pitch to pay $2.2 billion for NorthWestern Energy. Commissioners decided there were too much risk to Montana consumers and no measurable benefits.

Before that decision could be finalized and a draft order adopted, executives of the Australian-based BBI admitted they “blew it” on their first attempt and have submitted a second offer.

In a memorandum released Thursday PSC attorney Al Brogan wrote that BBI has failed to show material changes in the law that would trigger a reopening of the legal process. He also wrote that BBI and NorthWestern failed to provide additional evidence to rehear the case.

Nonetheless, Brogan and three other staff members recommended the commission consider the revised offer because it would be a more economical use of time than starting over. If the PSC rejects a rehearing, the companies still could ask for another formal hearing on their second offer. But that would begin a new lengthy “Their new proposal is substantially different than their first proposal,” Brogan said in an interview “We recommend doing this so we’re building on the record that is already there rather than starting from scratch if they wanted to open a new docket?’

Either decision – reopening or refusing to reopen – would be legally defensible, Brogan wrote.

The PSC will consider this staff recommendation Tuesday morning during its work session in Helena BBI executives have been traversing Montana arguing their case for reconsideration. Full- page ads showing a picture of Mike Garland, head of Babcock & Brown U.S. Infrastructure in San Francisco, appeared in Thursday’s state newspapers, including The Billings Gazette. The Gallatin Group, a public relations firm with an office in Helena, has coordinated a full-press lobbying effort for BBL Garland said his team has listened to the PSC’s concerns and to Montana residents and has changed its proposal to offer significant benefits to NorthWestern customers.

In 2002, NorthWestern bought the transmission and distribution assets of the former Montana Power Co. and went bankrupt 19 months latex Last year, NorthWestern, a utility based in Sioux Falls, SD., with customers in South Dakota, Montana and Nebraska, chose BBI from a short list of potential buyers.

Supporters and opponents of the first sales proposal have given testimony and legal briefs to the PSC.

These opponents include former Montana Power retirees represented by Billings attorney Cliff Edwards. Edwards sent a brief to the PSC sayingif his clients have to redo their presentations because the case is reopened, BBI should pay their legal costs.

When asked if his company would do that, Garland said no.

On Thursday, Edwards said he didn’t agree with the staff recommendation.

“I’m surprised to hear that the Public Service Commission may grant a re-ride to an outfit who essentially is taking the position, ‘We did a half-ass job the first time. Come on, give us another chance and we’ll do better,’ ” he said.

Edwards was allowed to officially comment on this proposed sale because last winter after a two-week trial in Butte, the jury awarded $21.4 million, including $4 million in punitive damages, to 15 of his clients.

The jury decided that NorthWestern, which succeeded Montana Power, unlawfully cut off their supplemental pensions. NorthWestern is appealing

If the Montana utility is sold again, Edwards said, he hopes the PSC will protect his clients by making the company set aside cash to cover the Butte jury award during the appeal process.

If the commissioners rehear the case, the second BBI offer will undergo extensive testimony, discovery and rebuttal.

Brogan said the legal process means the PSC probably won’t vote on the second offer until November or December.

Copyright Billings Gazette Jul 20, 2007

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