HELENA, Mont. - NorthWestern Energy and its Australian suitor say they would be willing to move the utility's headquarters, at least for Montana operations, from South Dakota to Montana.

The offer comes in a list of conditions the companies would agree to as part of regulatory approval from the Montana Public Service Commission. They also said they don't believe the PSC has the legal authority to completely reject the proposed sale to Babcock & Brown Infrastructure.

The PSC is reviewing the sale, and a string of final arguments are still coming in for the regulators to review. At a hearing last month, the location of the headquarters was discussed.

NorthWestern said it is committed to keeping the corporate headquarters, which has about 50 employees, in Sioux Falls, S.D., for three years after the sale as part of an agreement with South Dakota regulators.

But after that, NorthWestern would evaluate moving either the entire headquarters to Montana or establishing a separate Montana business entity. The company has roughly 500 employees in the Butte area.

The offer is one of nine conditions the company said it would find acceptable.

But the company argued that the PSC does not have the authority to reject the proposed $2.2 billion deal.

"The sole issue for decision is what conditions may be appropriately imposed by the commission upon the sale," the companies wrote in a joint filing this week with the PSC. "Northwestern and BBI have agreed to the imposition of a majority of the conditions proposed by the parties to ensure adequate service at just and reasonable rates."

Commissioner Ken Toole, D-Helena, took issue with the assertion that the PSC doesn't have the authority to reject the sale.

"I believe the authority to condition (the sale) is tantamount to the ability to say no," he said.

Toole said PSC approval of a sale was a clear byproduct of a settlement agreement coming out of NorthWestern's bankruptcy.

If the sale goes through, it would be the third company to own Montana's main utility in the 10 years since the state approved deregulation. The remnants of the Montana Power Co. filed bankruptcy, as did NorthWestern, and most of the power plants are now owned by PPL Montana.

Montanans have a clear interest in the future of the utility, Toole said.

"We all believed we were getting future oversight over transactions like this" following the NorthWestern bankruptcy, Toole said. "I think it will be an interesting legal discussion here on what we can do and what we can't do."

NorthWestern and BBI also promised not to pay dividends out of utility operations that exceed cash flow, a response to criticism that the parent company could pull all of the cash out of the subsidiary.

The companies said they would agree to conditions that include ensuring ratepayers are protected from merger-related costs and that the utility is protected from other business operations.