Pricing Supplement No. 2                     Filing under Rule 424(b)(3)
     Dated: December 17, 1996                     Registration No. 333-17181
     (To Prospectus, dated December 12, 1996)

                                     $150,000,000
                              The Montana Power Company
                             Medium-Term Notes, Series B

     Principal Amount: $3,750,000        Original Issue Date: December 20, 1996
     Interest Rate: 7.07%                Maturity Date: December 20, 2006
     Issue Price: 100%                   Interest Payment Dates: January 1 and
                                                                 July 1
     Selling Agent's Commission: N/A     Initial Interest
     Purchasing Agent's Discount: .625%  Payment Date: July 1, 1997
     Net Proceeds to Company: 99.375%    Record Dates: December 15 and June 15
     Reallowance: N/A                    Redeemable:  Yes       No   X  
     Selling Concession: N/A                              -----    -----
     Form:                               In Whole:    Yes       No      
       Book-Entry (DTC)   X                               -----    -----
                        -----            In Part:     Yes       No      
       Certificated                                       -----    -----
                        -----            Initial Redemption Date: N/A
     Repayable at Option of Holder:      Redemption Limitation Date: N/A
       Yes:       No:  X
           -----     -----

     Redemption prices (if any):  The  Initial Redemption Price shall be N/A% of
     the principal amount of such Notes to be redeemed and shall decline on each
     anniversary of the  Initial Redemption  Date by a  Reduction Percentage  of
     N/A%  of the  principal amount  to be redeemed  until the  redemption price
     shall be 100% of such principal amount.

          Prior to the date of this  Pricing Supplement, the Company has sold $0
     aggregate principal amount of the Medium-Term Notes, Series B.

          Additional Terms:  N/A

          N/A as used herein means "Not Applicable."

          THESE  SECURITIES  HAVE  NOT  BEEN  APPROVED  OR  DISAPPROVED  BY  THE
     SECURITIES AND EXCHANGE  COMMISSION OR BY  ANY STATE SECURITIES  COMMISSION
     NOR  HAS THE  SECURITIES AND  EXCHANGE COMMISSION  OR ANY  STATE SECURITIES
     COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PRICING SUPPLEMENT.
     ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

                           Selling Agent/Purchasing Agent:

     ( ) Goldman, Sachs & Co.
                         (X) J.P. Morgan & Co.
                                         ( ) Lehman Brothers
                                                       ( ) Morgan Stanley & Co.
                                                               Incorporated