Administrative Rules of the State of Montana

BEFORE THE DEPARTMENT OF PUBLIC SERVICE REGULATION

OF THE STATE OF MONTANA

In the matter of the adoption of New Rule I pertaining to minimum filing requirement for utility applications for approval of natural gas production or gathering resources

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NOTICE OF PUBLIC HEARING

ON PROPOSED ADOPTION

TO: All Concerned Persons

1. On January 20, 2010, at 10:00 a.m., the Department of Public Service Regulation (PSC) will hold a public hearing at the Bollinger Room, Commission offices at 1701 Prospect Avenue, Helena, Montana to consider the proposed adoption of the above-stated rule.

2. The PSC will make reasonable accommodations for persons with disabilities who wish to participate in this public hearing or need an alternative accessible format of this notice. If you require an accommodation, contact the PSC no later than 5:00 p.m. on January 13, 2010, to advise us of the nature of the accommodation that you need. Please contact Verna Stewart, PSC Secretary, 1701 Prospect Avenue, P.O. Box 202601, Helena, Montana 59620-2601; telephone (406) 444-6170; TTD (406) 444-6199; fax (406) 444-7618; or e-mail [email protected].

3. The rule as proposed to be adopted provides as follows:

RULE I MINIMUM FILING REQUIREMENTS FOR UTILITY APPLICATIONS FOR APPROVAL OF NATURAL GAS PRODUCTION OR GATHERING RESOURCES

(1) An application by a utility for approval of the acquisition of a natural gas production or gathering resource that is not yet procured must include, as applicable:

(a) a statement explaining fully the type and nature of the acquisition;

(b) testimony and supporting work papers describing the resource and stating the facts (not conclusory statements) that show that acquiring the resource is in the public interest and is consistent with the requirements in 69-3-201 and 69-3-1413 through 69-3-1416, MCA, the utility's most recent natural gas supply procurement plan, if applicable, and these rules;

(c) testimony and supporting work papers demonstrating the utility's analysis of the cost of the acquired production or gathering resource over the short and long term compared to the market cost of natural gas and to all other potential production or gathering resources evaluated by the utility;

(d) a copy of any contract(s) or agreement(s) related to the acquisition, including all appendices and attachments;

(e) testimony providing a thorough explanation and justification for any terms in any contract or ownership agreement for which the utility is requesting approval;

(f) testimony and work papers describing all of the utility's due diligence related to the acquisition;

(g) a copy of any request for proposals issued in connection with acquisition of the natural gas production or gathering resource;

(h) testimony and supporting work papers comparing all bids received in connection with any request for proposals;

(i) testimony and supporting work papers concerning the utility's bid evaluation in connection with any request for proposals, including the ranking of bids and reliance on management judgment;

(j) a complete description of each aspect and all infrastructure of the production or gathering resource for which the utility requests approval;

(k) if the application concerns acquisition of an existing natural gas production resource, records demonstrating the production history of the resource;

(l) an attestation as to the accuracy of the potential gas reserves being considered for acquisition from a licensed petroleum engineer or a licensed petroleum geologist;

(m) financial statements of the utility demonstrating adequate financial capacity to support the acquisition of the natural gas production or gathering resource, and information concerning any proposed financing arrangements necessary to finance the proposed assets;

(n) the estimated effect of the transaction on current and future utility rates and charges, including specific tariff rate impacts; and

(o) other information as the commission may require.

AUTH: 69-3-1415, MCA

IMP: 69-3-1415, MCA, Chapter 127, Laws of Montana, 2009

4. The PSC is proposing the adoption of new Rule I pertaining to minimum filing requirements for utility applications for approval of a utility's acquisition of natural gas production or gathering resources. These rules are necessary to implement House Bill 294 (HB 294), 2009 Laws of Montana, Chapter 127. HB 294 imposes a rulemaking responsibility on the PSC which must be completed by March 31, 2010. The purpose of 69-3-1413, MCA through 69-3-1416, MCA is to establish procedures for a natural gas utility that has restructured to acquire rate-based facilities. The proposed new rule is intended to reflect the requirements of the statutes. A natural gas utility may apply to the PSC for approval of a natural gas production and gathering resource that is not yet procured. The PSC is required to adopt rules that prescribe minimum filing requirements for applications for approval of a utility's acquisition of a natural gas production or gathering resource that is not yet procured.

5. Concerned persons may submit their written data, views, or arguments either orally or in writing at the hearing. Written data, views, or arguments (original and ten copies) may also be submitted to Legal Division, Public Service Commission, 1701 Prospect Avenue, P.O. Box 202601, Helena, MT 59620-2601, and must be received no later than January 20, 2010 at 5:00 p.m., or may be submitted to the PSC through the PSC's web-based comment form at http://psc.mt.gov (go to "Contact Us," "Comment on Proceedings Online," then complete and submit the form) no later than January 20, 2010. (PLEASE NOTE: When filing comments pursuant to this notice please reference "Docket No. L-09.11.1-RUL.")

6. A PSC staff attorney and one or more commissioners will preside over and conduct this hearing.

7. The Montana Consumer Counsel, 616 Helena Avenue, P.O. Box 201703, Helena, Montana 59620-1703, telephone (406) 444-2771, is available and may be contacted to represent consumer interests in this matter.

8. The PSC maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by the PSC. Persons who wish to have their name added to the list shall make a written request which includes that name, e-mail address, and mailing address of the person to receive notices and specifies that the person wishes to receive notices regarding: electric utilities, providers, and suppliers; natural gas utilities, providers, and suppliers; telecommunications utilities and carriers; water and sewer utilities; common carrier pipelines; motor carriers; rail carriers; and/or administrative procedures. Such written request may be mailed or delivered to Public Service Commission, Legal Division, 1701 Prospect Avenue, P.O. Box 202601, Helena, Montana 59620-2601, faxed to Verna Stewart at (406) 444-7618, e-mailed to [email protected], or may be made by completing a request form at any rules hearing held by the PSC.

9. An electronic copy of this Proposal Notice is available through the Secretary of State's web site at http://sos.mt.gov/ARM/Register. The Secretary of State strives to make the electronic copy of the Notice conform to the official version of the Notice, as printed in the Montana Administrative Register. However, the PSC advises that it will decide any conflict between the official version and the electronic version in favor of the official printed version. In addition, although the Secretary of State works to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.

10. The bill sponsor contact requirements of 2-4-302, MCA, apply and have been fulfilled. The primary bill sponsor was contacted on November 25, 2009, by telephone following with notice by regular mail.

/s/ Greg Jergeson /s/ Robin A. McHugh

Greg Jergeson, Chairman Reviewed by Robin A. McHugh

Public Service Commission

Certified to the Secretary of State, November 30, 2009.