NorthWestern Energy has rocky road to infrastructure, power investments

The investment NorthWestern Energy now is making in replacing, upgrading and buying power and natural gas production and transmission infrastructure is a reversal of a trend that started two decades ago and put two companies, including NorthWestern, into bankruptcy.

In the late 1990s, Montana Power Co., which formed in Butte in 1912 and operated as a solid power utility in Montana for most of a century, lobbied for utility deregulation in the state. The Legislature approved deregulation in 1997, and Montana Power began selling off its electricity and natural gas production facilities and its transmission facilities and focused on its telecommunications branch, Touch America.

That branch collapsed — along with the telecommunications bubble — and Touch America filed for bankruptcy in 2003. That was after the New York Stock Exchange delisted its publicly traded stock, after it fell to 53 cents a share. It traded at $65 a share when Montana Power sold off its non-telecommunications assets.

In 2010, U.S. District Judge Sam Haddon approved a lawsuit settlement ordering $115 million in payment to former Montana Power employees and investors from insurance companies and Goldman Sachs and a law firm that advised Montana Power in the sale of its assets.

NorthWestern Energy, which bought Montana Power’s electricity transmission facilities, also filed for bankruptcy 2003, implementing a plan it said would reduce its debt, improve its capital structure and ensure the long-term financial health of the utility.

In the last few years, NorthWestern has started implementing a new strategy some are saying it could be the end of deregulation, investing heavily in buying natural gas production and transmission facilities, including in north-central Montana on and near the Hi-Line, and moving to buy back hydroelectric generation facilities, as well as replacing and upgrading its electricity transmission infrastructure.

Last month, NorthWestern paid more than $70 million to purchase from Devon Energy its ownership of some 90 natural gas wells in the Bear Paw Basin and Devon’s 82 percent interest in Havre Pipeline Co.

Last year, NorthWestern requested the Montana Public Service Commission approve its purchasing 11 plants at Montana dams for $900 million from PPL Montana — the company to which Montana Power sold the dams while converting to a telecommunications-only company.