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MONTANA POWER POLLUTION CONTROL BONDS 'A-' BY FITCH, SENIOR DEBT RAISED TO 'A-' -- FITCH FINANCIAL WIRE --

 NEW YORK, May 24 /PRNewswire/ -- Montana Power Co.'s (MPC) first mortgage bonds are upgraded to "A-" from "BBB+", and the new $90.2 million City of Forsyth, Rosebud County, Mont., secured pollution control revenue bonds are rated "A-". In addition, MPC's sinking fund debentures, unsecured medium-term notes, and preferred stock are raised to "BBB+" from "BBB". The credit trend remains stable.
 The higher ratings reflect the beneficial impact of interim and permanent rate relief received in 1990 and 1991, refinancing of high- coupon securities, and continued strong contributions from MPC's conservatively financed nonregulated operations. Also contributing to the higher ratings are such qualitative strengths as low-cost electric utility operations, minimal Clean Air Act compliance costs, and the absence of nuclear exposure.
 Prospectively, MPC's utility operations also should benefit from new optional filing rules adopted by the Montana Public Service Commission (PSC). The new rules should improve the utility's ability to earn its allowed return. Most importantly, the new rules permit the company to use a year-end test period adjusted for known and measurable changes and also allows attrition adjustments and limited issue rate filings. 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.
 Construction spending is expected to average about $225 million for 1992-1997. 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 the mining of coal, should continue to contribute 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 44.4 percent (adjusted for power sales) from 47.3 percent. Common equity increased to 52.6 percent from 49.4 percent.
 -0- 5/24/93
 /CONTACT: Edward King of Fitch, 212-908-0574/
 (MTP)


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

TS -- NY045 -- 1630 05/24/93 11:04 EDT
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Publication:PR Newswire
Date:May 24, 1993
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