- Associated Press - Tuesday, July 28, 2015

HELENA, Mont. (AP) - Montana’s Public Service Commission voted unanimously Tuesday to continue its review of a Canadian company’s proposed purchase of Missoula’s drinking water system while the city’s attempt to acquire the system for itself plays out in court.

The utility regulatory panel voted 5-0 to deny the city’s request to reject or delay a decision on The Carlyle Group’s proposed sale of Park Water Co. to Ontario-based Algonquin Power and Utilities Corp. The $327 million deal includes Missoula’s Mountain Water Co. and two water systems in Southern California, Apple Valley Ranchos Water and Park Central Basin.

Missoula city officials have been trying to wrest ownership of Mountain Water from Carlyle, and the city recently won a ruling in its condemnation case that will allow it to buy the water distribution system. The case is not finalized, though, with Mountain Water’s purchase price still undecided, which will likely be followed by an appeal to the Montana Supreme Court.

The commissioners cited the uncertainty in that case and Carlyle’s continued ownership as justification to deny the city’s request to dismiss or stay the PSC’s approval of the acquisition by Algonquin.

“The city does not own the Montana Water facilities,” Commissioner Roger Koopman said. “It’s not a done deal that they will.”

The PSC also rejected the city’s request to force the Algonquin to participate directly in the acquisition review instead of its U.S.-based subsidiary, Liberty Utilities Co.

The commission plans to hold a full hearing on the proposed acquisition in October.

An attorney representing Missoula argued earlier Tuesday in a trial-like hearing that the PSC’s deliberations should be halted to allow the court case to be completed. The attorney, Scott Stearns, said he wanted to avoid any potential to delay or distract from the court case, because it is important for Missoula to take ownership quickly and fix a faulty system that leaks more than half the water it ships.

Attorneys for Mountain Water and Algonquin’s U.S. subsidiary, Liberty Utilities, said the sale of the company’s stock does not affect the company assets that are at stake in condemnation case.

Stearns had also argued that the deal would be bad because Algonquin faces the prospect of owning only two drinking water systems when it is paying for three.

Mountain Water attorney Thor Nelson responded that the city’s purchase of the water system would not change anything for the larger acquisition. “Mountain Water will either have these assets, or it will have a big pile of cash” from the city’s purchase, he said.

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