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26 March 2004 - A Montana utility regulator and NorthWestern Corp.'s top executive clashed Wednesday over the company's natural gas purchase policies.
They also disagreed on whether NorthWestern had artificially inflated the value of "goodwill" as it recalculated its balance sheet in hopes of emerging from bankruptcy later this year.
Locking horns were state Public Service Commissioner Tom Schneider, D-Helena, and Gary Drook, NorthWestern's president and chief executive officer. NorthWestern's corporate executives and its chief bankruptcy officer visited the PSC to update regulators on the company's effort to reorganize its finances to come out of bankruptcy some time this fall.
NorthWestern officials outlined the steps they are proposing to turn the company into an investment-grade, dividend-paying, utility-focused company later this year. Any plan needs the approval of NorthWestern's creditors' committee and ratification by the US bankruptcy judge in Delaware.
Drook emphasized the need of maintaining a good working relationship with the PSC as an important element in the steps needed to receive good credit ratings from Standard and Poor's and Moody's Investors Service. The worse the ratings issued by these agencies, the higher the interest rate NorthWestern must pay to borrow money, which costs consumers more.
These bond rating agencies "get on the Internet and dial up every newspaper in Montana to see what they're saying about this," Drook said. He told the bond rating agencies emphasized to him the need to work better with the Montana PSC.
One bone of contention was NorthWestern's natural gas procurement policies and how the PSC has treated them. NorthWestern appealed to court a PSC decision advocated by Schneider last summer to disallow as imprudent some of NorthWestern's past gas purchases. As a result, NorthWestern wasn't able to recover about $10m in costs of buying gas for Montana consumers in rates and had to absorb the costs.
NorthWestern said it is being treated differently than other gas utilities in Montana.
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