By Martin Kidston

Mountain Water Co. will pay $150,000 in penalties and not challenge a recent $1.1 million rate reduction under the terms of an agreement reached Thursday with the Montana Public Service Commission.

Eric Sell, spokesman for the PSC, said Liberty Utilities Co. and Mountain Water approached the PSC with an offer to settle the long-standing dispute stemming from January's unauthorized sale and transfer of the water utility.

The PSC saw the unauthorized sale as a challenge to its regulating authority and agreed to the terms of the settlement on a 5-0 vote.

“This is essentially we what we would have gotten in court, so it's the best result we could have hoped for,” said Sell. “This doesn't prevent us from opening up any future investigations if Mountain Water fails to meet its obligations with the utility. Right now, it closes the sale and transfer docket, and we still regulate the utility.”

Under the agreement, Mountain Water will pay $150,000 to the Montana Human Resource Council to pad its renters repair and replacement program. The program assists low-income residents with the cost of replacing service lines or meters - costs that are typically paid by customers within the utility's service area.

The $150,000 fine represents the maximum amount the state could impose if the complain had gone to court. The PSC will introduce a bill in the 2017 Legislature upping the maximum fine for future violations from $1,000 a day to $10,000 a day.

“This settlement not only reaffirms the commission’s authority to review sales and transfers of utilities, it also demonstrates to all other utilities operating in Montana that ignoring the commission’s oversight authority is unacceptable, and doing so has consequences,” said PSC Chairman Brad Johnson, R- East Helena.

According to the terms of the settlement, Mountain Water will not challenge the $1.1 million annual rate reduction approved by the PSC in May. The company and Liberty Utilities – along with their corporate affiliates – also agreed to seek approval from the PSC for any future sale or transfer within the state.

Sell added that Mountain Water will not attempt to recover of any costs related to the Liberty Utility acquisition. It will also provide the PSC information detailing its corporate ownership to explain any future rate increases.

“It was completely inappropriate for Liberty Utilities to skirt the laws of our state,” said Commissioner Bob Lake, R-Hamilton. “The $1.1 million annual rate reduction that we approved for ratepayers last month is now protected from being challenged in court. This settlement is as good as any outcome that we could have hoped for from a lawsuit.”

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