DOJ: News Release

McGrath: Operation of a Utility is Public Purpose

HELENA – In a formal opinion released Wednesday, Attorney General Mike McGrath held that operation of an electric and natural gas utility is a “public purpose” for which a city may grant funds, and Montana statutes allow cities to create a public nonprofit benefit corporation to acquire and run such a utility.

The cities of Bozeman, Great Falls, Helena and Missoula and the city-county government of Butte-Silver Bow have created the Montana Public Power Authority (MPPA) to acquire and operate certain electrical and natural gas transmission and distribution systems formerly served by the Montana Power Company. The MPPA, in turn, has incorporated Montana Public Power, Inc., (MPPI) to serve as the legal entity that holds and operates the transmission and distribution assets.

Butte-Silver Bow County Attorney Robert McCarthy requested the opinion on June 20, asking whether a local government may provide financial support to an authority like MPPA and if so under what conditions.

Wednesday’s opinion held that municipalities may provide funding to advance the public purpose of securing affordable utility services for their residents. McGrath held that the MPPI can finance its operations by issuing and selling corporate bonds. “The bonds,” the opinion says, “will be corporate debt of MPPI and not municipal bonds issued by the municipalities or MPPA.”

McCarthy also asked if Montana’s Nonprofit Corporation Act permitted the creation of a corporation like MPPI.

McGrath held that nothing in the Nonprofit Corporation Act bars an entity like the power authority from membership in a public benefit nonprofit corporation like MPPI. Further, “The powers of a nonprofit corporation include the power to acquire and dispose of property or any interest in property, including another corporation or its stock,” the opinion said.

Attorney general’s opinions carry the weight of law unless a court overturns them or the legislature modifies the laws involved.

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