City May Ask Court to Supervise Water System; PSC to Resolve Legal Questions

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By Martin Kidston/MISSOULA CURRENT

The Montana Public Service Commission began seeking comment Wednesday on a number of issues related to Monday’s surprise announcement that a Canadian firm had purchased Mountain Water Co. from The Carlyle Group without board approval.

At the same time, the city considered filing a motion in Missoula County District Court seeking supervision over the water utility, in part to ensure that Liberty Utility Company and its parent owner, Algonquin Power and Utilities Corp., don’t alter the system.

Algonquin is based in Canada.

“There could be changes to the system, or some degree of capital improvements we’re not aware of that would change the nature of value,” Missoula Mayor John Engen said Wednesday. “We believe we’ll ask the court to create some method where the city is advised – or the court is made of aware – so the city and the court has some ability to adjoin parties from making particular improvements.”

The PSC’s call for comment Wednesday muddies the quickly changing legal landscape surrounding the Mountain Water case, one dating back to a District Court order issued last year granting the city the right to purchase the utility through imminent domain.

Liberty had also sought to purchase the utility, but had not held an official hearing before the PSC regarding the acquisition. District Court Judge Leslie Halligan ordered the PSC in December to postpone the hearing pending further review by the court.

But on Monday, Liberty usurped the court’s order and the PSC’s regulatory authority by announcing it had purchased Mountain Water – an action the PSC described as unprecedented.

In response, the PSC asked the court on Tuesday to partially lift the stay it had issued in December. The court agreed, allowing the PSC to solicit comments on an number of issues, including potential rate adjustments and whether Liberty and Carlyle violated state law.

PSC spokesman Eric Sell said it was up to the court to decide if Liberty and Carlyle were in contempt of court. He said the board seeks to answer jurisdictional questions raised in the case.

While unresolved questions face the PSC, the city plans to continue its own efforts to take ownership of the water system – a right it was granted by the court last year.

On Wednesday afternoon, Engen briefed the City Council’s Committee of the Whole on the evolving case.

“We continue to plan to exercise our right to take possession of the company as soon as we have clarification on a number of items pending before the court,” Engen said. “I remain confident that we will own a water company. It will be a matter of months, not a matter of years.”

Ward 1 council member Bryan von Lossberg reminded the committee of an order issued by the PSC five years ago when Carlyle purchased Mountain Water.

In that order, the PSC stated it had jurisdiction over the sale or transfer of a public utility, to ensure customers receive adequate service and don’t face rate hikes resulting from the transfer.

Von Lossberg had harsh words for Liberty and Carlyle.

“If there was any question that anybody in this community had about the character of these two corporations prior to this latest action, I hope that’s resolved,” von Lossberg said. “By the action of Carlyle and Algonquin, we know everything we need to know about their corporate character, which is not pleasant and is not in the interest of this community.”

Engen said the town of Apple Valley, California, filed its papers to acquire its water system – also owned by Carlyle – through the process of imminent domain last week.