CALL TO ORDER: 5:00 P.M.
ROLL CALL: City Commissioners present: Randy Gray, Bill Beecher, Sandy Hinz, Diane Jovick-Kuntz and John Rosenbaum. Also present were the City Manager, Assistant City Manager, City Attorney, Directors of Community Development, Fiscal Services, Library, Planning, Police Chief, Acting Fire Chief, Acting Director Public Works and the City Clerk.
Representatives from the Montana Public Power Inc. the history and rationale for the proposed acquisition of Northwestern Energy, the commitment to the partners in the company, and the financing and approval process for the purchase of Northwestern Energy.
Mr. Ron Moe stated that Northwestern Corporation had been doing business as Northwestern Energy and was one of the largest providers of electricity and national gas in the Upper Midwest and Northwest, serving approximately 617,000 customers in Montana, South Dakota and Nebraska. Mr. Moe then reviewed the history and downfall of Montana Power Company and the bankruptcy of Northwestern Energy. Mr. Moe stated that the structure of the Montana Public Power Authority (MPPA) which was formed by the cities of Bozeman, Great Falls, Helena and Missoula and the consolidated government of Butte/Silverbow. This Authority caused the Montana Public Power Incorporation a Montana non-profit corporation (MPPI) to be formed. MPPA offered to purchase Northwestern Energy for $32.50 per share and was currently waiting for a response. Mr. Moe stated that the acquisition would benefit consumers because the rates would be the same as, or less than, they would be under Northwestern Energy ownership. He explained that since MPPI was a not-for-profit it would not have to focus on generating returns for its shareholders. He added that reliability of utility services would be expected to improve since MPPI intended to spend more on maintenance and capital improvements than Northwestern did and that MPPI would not divert its attention from its core utility business which was proven to be the downfall of Montana Power as well as Northwestern Energy. MPPA's proposal to Northwestern Energy included the safeguarding of local jobs as MPPI would retain substantially all of Northwestern's existing work force as well as honor all union and labor contracts. Further, MPPI intended to maintain Northwestern's current benefit and compensation programs and fund its current pension obligations. Mr. Moe assured the Commission that MPPI would continue to pay property taxes, retain cash flow in the local economy and remain under the Public Service Commission regulation. On the legal front, Mr. Moe explained that the Montana Attorney General issued a final opinion with respect to MPPI's legal authority to acquire Northwestern Energy and concluded that "Nothing in MPPI's articles appear to prohibit the operation of an electric and national gas utility business, and nothing in Montana statutes would appear to prevent the corporation from carrying on business activities in states other than Montana." Therefore, he concluded, that MPPI had the corporate power to acquire Northwestern Energy. Mr. Moe explained that MPPA acquired a fully underwritten commitment letter from Citigroup in an amount sufficient to consummate the transaction. MPPI used a well-established financial model for publicly owned utilities throughout the country. MPPI contemplated financing the debt through the sale of revenue bonds and that its projections indicated it could clearly meet its debt service requirements and meet the guidelines for an investment grade credit rating. Mike Kadas, Mayor of Missoula, explained the process to acquire Northwestern Energy has proceeded forward and to date each of the corporate partners had contributed $100,000. Mr. Kadas explained that in order to proceed with the next step, each partner was being asked to contribute an additional $100,000 each. He added that the partners would either be reimbursed the $100,00 once the bonds were sold or the additional funding would not be spent, depending on what Northwestern did with MPPA's offer to purchase the company.Following a brief question and answer session from the Commission, Mayor Gray adjourned the regular work session of October 18, 2005, at 6:55 p.m.
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