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 earliest event reported June 25, 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
ITEM 5. Other Events
In July 1985, the Federal Energy Regulatory Commission (FERC) issued to
the Company a new license for the 180 megawatt Kerr Project (the Project) and
required the subsequent adoption of conditions to mitigate the impact of
Project operations on fish, wildlife, and habitat. The Company proposed a
consensus plan in June 1990 that was agreed to by the Confederated Salish and
Kootenai Tribes and other state and federal resource agencies. In November
1995, the United States Department of Interior (Department) submitted
alternative conditions to those stated in the Company's plan. This matter has
been pending FERC's consideration. For further information, see Item 8,
"Financial Statements and Supplementary Data - Note 2 to the Consolidated
Financial Statements" in the Company's 1996 Annual Report to the SEC on Form
10-K.
On June 25, 1997, FERC approved a mitigation plan, substantially
adopting the Department's conditions. FERC's order requires the Company to
change Project operations from peaking and load following to "baseload"
generation. The order requires the Company to make payments, beginning within
60 days of the date of the order, to a fish and wildlife mitigation fund.
Required payments include a payment of approximately $15.6 million for the
period from 1985 to 1997, a two-part "start-up" payment of $2.8 million and
$1.1 million, the second part due a year from the date of the order, and
annual payments of approximately $1.4 million. In addition, the order
requires the Company to purchase approximately 6,800 acres of habitat and
build a revetment to minimize erosion at the north end of Flathead Lake. FERC
concluded that the Department's conditions adversely affect the Project's
economics, but that, under the Federal Power Act, it has no authority to
reject or modify them. FERC noted, however, that the reasonableness of the
Department's conditions may be appealed to the Federal Court of Appeals for
review.
The Company is evaluating the order. It has decided to seek rehearing
and a stay of any obligation to make the $15.6-million payment. Further, in
the event FERC does not modify the order, the Company expects to seek judicial
review of the reasonableness of the Department's conditions.
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 hereunto duly authorized.
THE MONTANA POWER COMPANY
(Registrant)
By:/s/ J. P. Pederson
J. P. Pederson
Vice President and Chief Financial and
Information Officer
Date: July 9, 1997
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