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Proposed dam purchases good for Montana

By Bob Rowe, CEO, NorthWestern Energy

 

D.D. Hardy’s recent letter in the Bitterroot Star raised questions about NorthWestern Energy’s proposed purchase of the PPL Montana hydroelectric facilities. I will address some of the questions raised in the letter.
PPL Montana bought the dams from the Montana Power Company in 1999 – in the aftermath of supply deregulation in Montana. PPL has now decided to sell those facilities. PPL Montana sells the electricity generated by the dams on the western power market. It IS NOT regulated by the Montana Public Service Commission.
NorthWestern IS regulated by the Montana Public Service Commission.  We are a pure regulated utility, with most of our customers, most of our infrastructure, most of our employees, and most of our senior management team in Montana. (We’re also by far Montana’s largest taxpayer.)
In December, we submitted to the PSC an extensive application seeking approval to buy the PPL assets. Since then, we’ve supplied thousands of pages of documents and answered nearly 750 detailed questions from the PSC and Montana Consumer Counsel in connection with the proposed purchase. There have been no attempts by NorthWestern or the PSC to keep any details about the proposal from the public. The opposite is true. In fact, others from NorthWestern and I have participated in meetings all around Montana discussing the purchase.
NorthWestern is seeking permission to include the hydro facilities in our Montana-regulated “rate base.” Just like our other Montana assets, such as gas and electric transmission and distribution, they will be dedicated to serve our Montana customers at prices based on the cost of production, not what happens in the western power market. The cost of energy makes up a significant portion of customers’ bills each month. In our current electricity portfolio, we rely heavily on market purchases to meet our customers’ needs. Buying the hydro assets now, when the market is relatively low, will allow us to lock in a portion of our cost of electricity, reduce our customers’ exposure to the gyrations of the energy market and reduce risks, such as future environmental regulations.
We have no plans to sell the electricity generated by the Montana facilities to the highest bidder. Once the dams are dedicated to public service, we wouldn’t even be allowed to. From a customer’s perspective, it will be like going from the uncertainty of the rental housing market to the certainty of taking out a long-term mortgage that you pay down over time.
PPL has spent more than $340 million in maintaining and upgrading the hydro facilities. Owning well-cared-for dams that use a cost-free fuel, water, to generate stably-priced electricity for the sole use of our Montana customers makes sense.
The PSC is planning listening sessions in coming weeks that will allow Montanans to ask questions and learn more about this important transaction. The PSC has also scheduled a formal hearing on the proposal for early July and is expected to make a decision on the application in September. We encourage our customers to learn as much as possible about this proposal and, if interested, participate in the Public Service Commission’s process, to help make a sound decision about our state’s energy future.

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