The move puts into motion a long process that supporters hope could lead to a "vertically integrated" utility that sells electricity to consumers at cost-based prices -- like Montana once had with the old Montana Power Co.

"What we want to do is rewrite the statute so that it gives us the opportunity to move back to where we were, not that we'll get there," said Public Service Commissioner Bob Raney.

NorthWestern, which has indicated an interest in acquiring power plants, said it looked forward to the talks. "We would certainly encourage dialogue to vertically integrate, or at least to consider that option," said Dave Gates, NorthWestern vice president of wholesale operations. "It is not our decision to make alone, but we are supportive of those discussions and we would like to participate in them.

Lawmakers asked the PSC to look at legislation that would let NorthWestern buy or build its own power plants. The so-called vertical integration was banned as part of 1997's deregulation law.

Such a wide-ranging look at the deregulation law should start by entering into talks with NorthWestern Energy and the Montana Consumer Counsel, the PSC unanimously decided Tuesday.

The decision was made after reviewing a staff recommendation that said the Legislature should do more than just let NorthWestern back into the power generation business, and move instead to repeal much of deregulation and return to a "traditional regulatory model."

An interim legislative committee is resuscitating a bill from the 2005 session that would allow NorthWestern Energy to get into the power generation business. The PSC, which opposed the bill last year because it wasn't written correctly, decided to pitch its recommendation of a complete overhaul to lawmakers in April.

Rep. Alan Olson, the Roundup Republican who backed the 2005 legislation, said he would be happy to take a broader look at the deregulation law with the PSC.

NorthWestern, which bought the energy distribution assets of Montana Power, buys much of its electricity from PPL Montana, which owns most of the power plants from the old company.

The two companies are currently embroiled in a dispute before federal regulators over charges that PPL has a monopoly in setting prices NorthWestern pays for electricity.

Experts, though, have said any attempts to undo deregulation won't give the state the cheap electricity it once enjoyed because consumers would have to pay for the high cost of the new power plants in their rates.

"We're looking at giving them the options to do these things," Raney said. "I think the odds are very good that we'll be changing the law. Citizens certainly want it. They certainly recognize restructuring didn't work for them."

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