Proposed utility buy-out makes sense for Australians

The proposed sale of NorthWestern Energy to Babcock & Brown Infrastructure has received an incredible amount of attention in recent months, and many Montanans have questions about it. I was recently asked by BBI whether, as an economist and longtime observer of Montana's economy, I would offer my own objective opinion. I agreed to do it, hoping that it could provide some clarity to this debate.

My report was recently released, and I would like to take this opportunity to make a few additional comments.

BBI is not some voracious international financial conglomerate. It's a conservative infrastructure firm managing high-quality utility and other infrastructure assets, mostly for its investors' retirement accounts.

The Australians have privatized much of their retirement/social security system, and employers are required to deposit about 9 percent of workers pay into accounts roughly (but not exactly) like our 401Ks.

BBI is one of the firms into which these workers invest their retirement money. So, just like other retirement investment fund managers, BBI is constantly seeking conservative and safe assets into which it can invest its clients' funds. And just like other smart investors, BBI seeks worldwide investment opportunities to provide international diversity to its portfolio.

Why would BBI be interested in Montana? The data suggest that Montana is now a good place to do business, especially if your business is serving the local population. All of the general indicators (employment, income, unemployment) show a strong statewide economy.

The energy-commodity boom is certainly one reason, but there are multiple causes for our favorable trends. All of Montana's basic industries (including agriculture, non-resident travel, federal government, construction and other sectors) have been contributors. So, if one were searching the world for a place to invest, Montana's strong economic statistics would catch your attention.

I concluded in my full report, which may be viewed at www.bbinfrastructure.com, that Montana's economy is strong and growing, making it an attractive place for a company like BBI to do business. On our part, attracting strong and stable investors such as BBI is just what Montana should be trying to do.

BBI's purchase of NorthWestern Energy would mean that one of our major utilities would be owned by foreigners. This is really no big deal in today's global marketplace. We routinely buy Nestles chocolate (Swiss ownership) and Toyota autos (Japanese), both of which were manufactured in the U.S.

Also, a number of Montana companies are foreign-owned. For example, there is the Stillwater Mining Co. (Russian ownership) and Sodexho (French), which provides food and management services. Reliable information is sketchy, but it appears at least 6,400 Montanans work for foreign-owned companies.

As noted in my report, BBI ownership will enhance NorthWestern Energy's access to the international capital markets. Access to these funds will make it easier for NorthWestern Energy to provide the service we all need while maintaining system reliability, meeting new demands and capitalizing on growth opportunities.

That is a favorable way for Montana to continue its integration into the global economy.

Paul Polzin is a professor of management and the director of the Bureau of Business and Economic Research at the University of Montana-Missoula.