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HELENA (AP) - Former state Commerce Director Gary Buchanan is urging formation of a statewide electric cooperative to take over NorthWestern Energy's utility business in Montana.
The Billings investment adviser, a strong critic of deregulation, says such a co-op is the state's last chance to escape from the problems that followed deregulation of the electric utility industry.
He wants state officials to take a ''brass-knuckles approach'' in dealing with NorthWestern Energy and its parent company, NorthWestern Corp. The South Dakota company is struggling financially, and Montana utility regulators are openly discussing the consequences if NorthWestern were to file for bankruptcy.
Montana rural electric cooperatives and a group formed by some Montana cities were among the competitors bidding to buy Montana Power Co.'s utility business. Montana Power sold its utility business to NorthWestern last year for $1.1 billion. NorthWestern paid $602 million in cash and assumed $488 million of MPC debt.
Buchanan said cities on their own or through the Montana League of Cities and Towns could work with rural electric cooperatives to buy the company. There are 2,000 communities across the country served by public power, Buchanan said, including Los Angeles and the state of Nebraska.
''I think a special (legislative) session is inevitable anyway,'' Buchanan said. ''Why not go in with a plan that's aggressive and can solve something?''
Montana voters, by a 68 percent to 32 percent margin, rejected a proposal last year for the state to buy Montana Power's power-generating dams. Buchanan thinks the proposal would pass now because voters are so angry.
NorthWestern recently got state approval to raise its natural gas rates by 35 percent, on top of a 35 percent hike in December, and to boost its electricity rates by 14 percent.
''I think the Montana public feels bamboozled,'' Buchanan said. ''They don't like companies that don't pay taxes, they don't like companies that break their contracts, and they don't like companies that aren't straight with our elected officials.''
NorthWestern spokesman John Fitzpatrick said Buchanan's idea is no solution.
''Irrespective of who runs this business, the operator has to have an energy supply, and transforming it into a co-op doesn't magically create electricity,'' Fitzpatrick said. ''There is no cheaply priced large quality of power available to serve the Montana market if NorthWestern disappears. You can buy power at market rates.''
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