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City OKs $100K for power bid

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The Helena City Commission added spark to a five-city bid to create a public power company Monday, adding cash in a bid for NorthWestern Energy.

Despite pleas from a company executive and concerns from Commissioner Paul Cartwright, the city became the second municipality to pony up $100,000 to Montana Public Power Inc. for additional legal work, assuming a sales agreement can be reached with reluctant company officials.

The Missoula City Council narrowly approved a similar deal last month, after Mayor Mike Kadas, MPPI board chairman, broke a tie vote. Butte-Silver Bow, Bozeman and Great Falls officials are expected to make a decision by the end of November.

Helena's MPPI representative, Mayor Jim Smith, said he's comfortable with the public power group's offer, which amounts to just over $2 billion for gas and electricity delivery to 310,000 Montana customers. Smith and Commissioner Tom Pouliot said they didn't want to see the offer go any higher.

Cartwright was the lone dissenter Monday night, questioning the deal.

Many of his concerns centered around the public power group's governance structure.

Cartwright also said he doubted the deal could get quick regulatory approval or low-cost federal power. He said he wondered if MPPI's underwriter - Citigroup - might unwittingly benefit.

At one point, Cartwright likened MPPI's reliance on consultants' advice to the former Montana Power Company executive who steered the company into the wireless telecommunications industry and, eventually, extinction.

"I'm worried that the (MPPI) board is not as involved and knowledgeable for a board about to do a $2 billion deal," he said. "The question I'm asking the board is how much did Bob Gannon trust his consultants? I'm wary of this deal."

Smith said smaller cities would be added to the board as the deal progresses. The five bigger cities "jumpstarted" the process, he said.

MPPI secretary and League of Cities and Towns administrator Alec Hansen said the group's nonprofit status makes it possible to issue low-interest bonds to pay for future power plants.

While company and public power officials sparred in Commission Chambers, nobody from the public testified.

NorthWestern Energy vice president Pat Corcoran told commissioners the utility business is "more complicated than you might think."

NorthWestern Energy has emerged stronger from bankruptcy, he said, challenging statements that the company is running itself into the ground. NorthWestern Energy beats average reliability standards and has won industry awards, he said.

Corcoran also said MPPI faces the challenge of buying power on the open market.

"Really what we're talking about is a $2 billion experiment," Corcoran said. "The question I have is: Why do that?"

City of Helena administrative services director Tim Magee likened the "due diligence" legal work to an inspection before buying a house.

As part of the commission's approval, the city agreed to give up an additional $100,000 if they pull out of a sales agreement. Magee said such an action would be unlikely.

Commissioners had already spent $100,000 on the buyout offer.

Reporter Jason Mohr can be reached at 447-4075 or helenair.com">jason.mohr@helenair.com.

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