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MONTANA POWER $50 MILLION PREFERRED STOCK 'BBB+' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, Oct. 20 /PRNewswire/ -- Montana Power Co.'s ("MPC") (NYSE: MTP) proposed $50 million cumulative preferred stock issue is rated `BBB+' by Fitch. The rating reflects the beneficial impact of about $59 million in interim and permanent rate relief received in the last three years, refinancing of high-coupon securities, and continued strong contributions from MPC's conservatively financed nonregulated operations. The rating also takes into consideration low-cost electric utility operations, minimal Clean Air Act compliance costs, and the absence of nuclear exposure. The credit trend is stable.
 Prospectively, MPC's utility operations also should benefit from new optional filing rules adopted by the Montana Public Service Commission (PSC). The new rules, which permit the company to use a year-end test period adjusted for known and measurable changes and allow attrition adjustments and limited issue rate filings, should improve the utility's ability to earn its allowed return. In the past, reliance on historical test periods has impeded MPC's utility operations (50 percent OF MPC's consolidated 1992 earnings) from earning its allowed return. Utility operations earned only about 9.0 percent on average equity in 1992, compared with its allowed return of 12.1 percent.
 The company's credit outlook and future earnings power will depend importantly on a pending electric and gas rate increase request. Following a $21.0 million electric and $8.0 million gas interim rate request, the PSC authorized interim electric and gas rate increases of $8.8 million and $4.0 million, respectively, effective Oct. 18, 1993. The PSC is expected to issue a final order on the company's request for permanent electric and gas rate increases of $30.9 million and $9.6 million, respectively, by the end of March 1994.
 Construction spending is expected to average about $225 million for 1993-1997. Cash flow should fund about 60 percent of expenditures, necessitating manageable external financing and rate relief needs. Entech, Inc., a wholly owned nonregulated subsidiary whose principal operation is coal mining, should continue to contribute about 50 percent of consolidated earnings.
 Consolidated pretax interest coverage rose to 3.48x (adjusted for power sales from the leased Colstrip 4 unit) in 1992 from 2.1x in 1989, and debt leverage fell to below 45 percent (adjusted for power sales) from about 47 percent. Common equity increased to 52.6 percent from 49.4 percent.
 -0- 10/20/93
 /CONTACT: Ed King of Fitch, 212-908-0574/
 (MTP)


CO: Montana Power Co. ST: Montana IN: UTI SU: RTG

MP -- NY099 -- 4778 10/20/93 16:44 EDT
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Publication:PR Newswire
Date:Oct 20, 1993
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