Interactive map of the dams proposed for sale.
HELENA – NorthWestern Energy, the state’s largest electric utility, announced Thursday it has agreed to buy 11 hydroelectric plants from PPL Montana – the same power-producing dams that NorthWestern’s predecessor, Montana Power Co., sold in the wake of deregulation almost 15 years ago.
NorthWestern said it agreed to buy the 11 dams along five separate Montana rivers for $900 million, subject to approval by state and federal regulators.
The purchase will expand and diversify NorthWestern’s portfolio of electricity generation it owns, thus reducing the power it must buy on the open market for its 330,000 customers in Montana.
People are also reading…
NorthWestern President and CEO Bob Rowe said the purchase will help create stable, long-term electric rates for customers.
“This is something I’ve wanted to do for a long time,” he said in an interview Thursday afternoon. “I would hope for as long as there is water in the rivers, it will be dedicated to serving our customers, and the price for electricity will be based on the cost of generating electricity, and not on the cost in the market.”
Since 2007, NorthWestern has been working to rebuild the company into a traditional gas-and-electric utility that owns more of its power- and gas-producing assets, to supply customers.
In the wake of a deregulation bill supported by Montana Power Co. and passed by the 1997 Legislature, MPC sold the power plants and its coal and gas-producing assets and converted to a telecom company, Touch America, which went bankrupt.
MPC also sold the utility’s power lines, pipelines and other distribution assets in 2001 to NorthWestern, which was left to buy all of its electricity and natural gas on the open market for its Montana customers.
NorthWestern has since bought or built several power plants and sources to serve customers, but Thursday’s announcement marks its biggest foray yet back into owned power plants that are dedicated to serving Montana customers.
Rowe said if the $900 million purchase is approved by the state Public Service Commission, it would raise electric rates about 5 percent the first year, but should lead to relatively stable rates for years to come.
While NorthWestern is buying 11 hydroelectric plants from PPL, the purchase agreement does not include PPL Montana’s share of coal-fired power plants in Colstrip or Billings.
Rowe noted that NorthWestern already owns a piece of the Colstrip 4 generating plant, and that buying hydropower “gives us an opportunity to diversify our portfolio, and is very helpful in terms of there being no fuel risk, and no going-forward environmental risk in terms of what (federal environmental regulators) might do.”
The Environmental Protection Agency last week came out with proposed stricter emission rules for new coal-fired plants and is expected to come out with additional rules next year for existing plants, like those at Colstrip.
David Hoffman, spokesman for PPL Montana, said the dams have been a “great asset” for PPL, but that the company felt it has obtained “a very attractive value for our shareholders.”
“Not to mention that they are just a great fit for the NorthWestern system, a great fit for their (energy) portfolio and a great asset for the region,” he added.
It’s been rumored for almost a year that PPL Montana has been trying to sell its Montana power-plant properties, including the Colstrip coal-fired plants, and that NorthWestern might be interested in the purchase, but both companies had declined any public comment until Thursday.
Rowe said talks on the sale have been on-going for several months.
The sale needs approval from the Montana PSC and the Federal Energy Regulatory Commission.
Both companies said they expect the transaction to be completed by late 2014.
Public Service Commissioner Travis Kavulla, R-Great Falls, whose district includes five of the 11 dams, said the PSC will closely scrutinize the proposal to ensure whether it’s a good deal for ratepayers.
“It will mean asking NorthWestern and PPL hundreds of questions … and thinking long and hard not just about whether this investment is right for customers in the here and now, but whether it’s the right decision for Montanans 10 or 20 years down the road,” Kavulla said.
The announced sale brought praise from several corners, including U.S. Sen. Jon Tester, D-Mont., and a leading conservation group that opposed deregulation.
Tester said the deal “ensures that ratepayers in the Treasure State will be able to use electricity generated from Montana’s own waterways.”
Anne Hedges, program director for the Montana Environmental Information Center, said the purchase is “a step in the right direction for NorthWestern to own clean generation assets, and a step in the right direction for clean energy.”
The purchase also was praised by Ken Toole, a vocal deregulation opponent, former state public service commissioner and leader of an unsuccessful 2002 effort to have the state consider buying the dams from PPL.
Yet Toole also said the purchase needs to be for the right price, and that he hopes NorthWestern negotiated well.
“PPL clearly wants to get out of Montana,” Toole said. “So, good riddance to them. Too bad they took so much of our money, and I sure hope they’re not taking a bunch more here.”
Rowe said NorthWestern is buying the dams at a time when electricity market prices are low, so that should mean a good price for the company and consumers.
Reach the Missoulian newsroom at @missoulian, at firstname.lastname@example.org or at (406) 523-5240