By BOB ANEZ/Associated Press Writer
HELENA - The Montana Public Service Commission on Tuesday rejected a proposal requiring NorthWestern Corp. to separate its healthy Montana utility from the financially ailing parent company.
On a 4-1 vote, commissioners agreed with their staff that such a move is premature with the PSC's sweeping investigation into NorthWestern's economic condition just beginning.
At the same time, the commission told its staff to come up with a plan to speed up that probe into the South Dakota-based company's finances that have deteriorated rapidly over the past year and left NorthWestern facing possible bankruptcy.
The action came as NorthWestern shareholders were meeting in Sioux Falls, S.D., to consider issuing more stock.
Commissioner Tom Schneider of Helena had recommended immediate PSC action to demand NorthWestern transform NorthWestern Energy into a separate subsidiary. The idea surfaced earlier this month when the Montana consumer counsel office suggested it be considered as part of an investigation into the parent company.
Schneider, with initial support from Commissioner Matt Brainard of Florence, said the PSC should push for quick action to ensure NorthWestern Energy is not pulled down the financial drain with NorthWestern Corp.
Creation of an independent subsidiary would make it easier for the commission to monitor the utility's operation so that service quality and rates are not threatened for NorthWestern Energy's more than 300,000 electric and natural gas customers in Montana, he said.
The PSC doesn't have to wait to complete it investigation, ordered just four days ago, Schneider said. NorthWestern has a history of financial decline that warrants action now to preserve the utility, he added.
Brainard liked the idea of forcing the issue of a separate subsidiary now rather than later. Corporate officials already have assured the commission they want to make sure the utility is left standing after the financial dust settles, Brainard noted.
''If the company wants to maintain this core utility, why don't we assist them now?'' Brainard said. ''Keep the core afloat. It's in the public interest to do that. I don't think we have the luxury of a lot of time.
''The first step in first aid is to stop the bleeding,'' he said. ''There's a lot of blood in the water already.''
But Robin McHugh, chief PSC attorney, counseled against demanding NorthWestern Energy be isolated while the investigation is under way. He said the commission should not act hastily just because it feels something has to be done.
He suggested that issuing a separation order could invite legal action, an apparent reference to a NorthWestern spokesman's comment last week that the company doesn't believe the PSC has such authority.
In the end, Schneider was the only vote to act now. Brainard said he sided with the majority once it became clear Schneider didn't have the votes.
On a related matter, the commission told its staff to talk with NorthWestern officials about what steps can be taken to ensure ratepayers' money is not diverted from NorthWestern Energy's account used to purchase of electricity and natural gas supplies for Montana customers.
NorthWestern Corp. has had financial problems largely linked to two money-losing subsidiaries. With $2.2 billion in debt, a stock price that has plummeted to less than $1 a share and possible removal from the New York Stock Exchange, company officials have said bankruptcy may be the next step.