UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 12, 1997
THE MONTANA POWER COMPANY
(Exact name of registrant as specified in its charter)
Montana 1-4566 81-0170530
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
40 East Broadway, Butte, Montana 59701
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (406) 723-5421
Exhibit Index is found on page 4.
ITEM 5. Other Events.
Reference is made to "Legal Proceedings" in the Company's Annual Report
on Form 10-K for the year ended December 31, 1996 and in the Company's
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997, June 30,
1997 and September 30, 1997 for a description of litigation commenced by
Houston Lighting & Power Company (HL&P) against the Company's coal mining
subsidiary, Northwestern Resources Company (NWR), in the District Court of the
157th Judicial District, Harris County, Texas. HL&P purchases lignite produced
by NWR.
On December 12, 1997, a District Court jury ruled in favor of NWR. HL&P
had claimed that: (i) changed conditions had occurred which resulted in a
gross inequity; and (ii) changed conditions had occurred which resulted in
unreasonable profits being earned by NWR. HL&P further contended that as a
result of (i) and /or (ii) a renegotiation and reduction of fees was required
under the lignite supply agreement (LSA). HL&P sought a reduction in fees in
excess of 60 percent of the existing LSA, which governs delivery of lignite to
the Limestone generating plants and is effective until July 29, 2015. NWR
currently realizes approximately $25,000,000 per year from these fees.
As a result of the verdict, current pricing under the terms of the LSA
is unchanged.
The Company issued the press release filed herewith as Exhibit 99 on
December 12, 1997.
ITEM 7. Exhibits.
99 Press Release of the Company dated December 12, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE MONTANA POWER COMPANY
(Registrant)
By /s/ J. P. Pederson
J. P. Pederson
Vice President and Chief
Financial and Information
Officer
Dated: December 17, 1997
Exhibit Index
Exhibit Page
99 Press Release of the Company dated December 12, 1997. 5
Exhibit 99
Press Release of the Company dated December 12, 1997.
TEXAS JURY FINDS FOR NORTHWESTERN RESOURCES IN COAL DISPUTE
HOUSTON - A Harris County District Court jury here found today that
Houston Lighting & Power (HL&P) had failed to demonstrate any changed
circumstances that would constitute a gross inequity in its lignite-supply
agreement with Northwestern Resources Co. (NWR), of Jewett, Texas. As a
result, current pricing under the terms of the agreement is unchanged.
Northwestern Resources is a coal mining subsidiary of The Montana Power
Company (NYSE:MTP) of Butte, Montana.
The jury also found:
? That NWR's profits have not been unreasonable, are not unreasonable,
and will not be unreasonable under the existing terms of the supply
agreement.
? And that conditions have not changed since the supply agreement was
signed in August 1979 in any way that would require a price change.
The Houston-based energy firm had claimed that changed circumstances had
triggered a gross inequity clause in the lignite supply agreement with
Northwestern, and that NWR had an obligation to renegotiate new, lower fees.
HL&P also had claimed that NWR was earning an unreasonable profit, which also
required the renegotiation of the fees. But the jury disagreed. HL&P had
sought reduction in fees in excess of 60 percent, retroactive to September 1,
1995.
Before the trial began on October 20, the presiding judge concluded that
the lignite supply agreement requires HL&P purchase its requirements for
lignite only from Northwestern Resources. Consequently, according to the
judge's interpretation, HL&P may substitute other fuels at the Limestone
generating plants. NWR intends to appeal this decision.
The lignite supply agreement governs delivery of 9 million tons of
lignite per year and is effective until July 29, 2015.
