PSC releases “secret interest rate” in Mountain Water case; upholds other protections
By Martin Kidston/MISSOULA CURRENT
The Montana Public Service Commission on Tuesday made public the closely held interest rates Liberty Utilities Co. secured when it purchased Mountain Water Co. earlier this year.
The commission released the figures after receiving approval from Mountain Water. The Effective Average Interest Rate on the short-term loan was listed at 1.39 percent while the Fixed Interest Rate on the date of retirement from Liberty's books was 3.5 percent.
While the commission agreed to release the figures on a unanimous vote, it upheld a standing protective order covering other financial information detailing the terms and conditions of the deal, which has not yet been authorized by the PSC.
PSC attorney Laura Farkas made the advisement to the commission.
“It's not my opinion that the terms and conditions of the agreement should be removed from protection, which is what the Montana Consumer Council and the city (of Missoula) are asking for,” Farkas said. “The commission has protected information like that in the past and it was my opinion when I issued that protective order – and still is my opinion – that that information remain protected.”
Farkas said Mountain Water has argued that the information represents a trade secret and is therefore subject to protection from public viewing. She said the information was filed confidentially with the Securities and Exchange Commission.
However, she said, Mountain Water agreed to make public the interest rate on its short-term loan. She said the PSC had avoided disclosing the rate out of caution, though the figure guided the commission when it ordered a $1.1 million rate reduction to Mountain Water consumers last month.
“I was able to speak with council for Mountain Water, and Mountain Water has also agreed that the effective average interest rate and fixed interest rate be removed from protection and they will not contest that,” Farkas said. “However, they reserve the right to contest any other information we remove.”
Last month, the PSC voted 4-1 to implement a rate reduction for Mountain Water, reflecting what staff at the time called the “secret interest rate” on the company’s $235 million credit facility.
The $1.1 million rate reduction amounts to an estimated 5.9 percent savings to local consumers. The PSC is expected to issue a written order explaining its actions, which played a hand in why it moved Tuesday to release the interest rate.
“This was the relevant number used to calculate the rate decrease we approved last week,” said PSC spokesperson Eric Sell. “It's why we wanted to make that number public. It was relevant to the calculation of the rates.”
While the PSC agreed to release the interest rate, it has not yet acted on its pledge to deal “swift and severe” penalties to Mountain Water and Liberty for entering into an unauthorized transfer and sale late last year.
That effort remains outstanding. The Montana Supreme Court is also expected to rule in the coming months on an appeal filed by Mountain Water regarding a District Court ruling that awarded the city of Missoula the right to acquire the water utility via eminent domain.