PPL Montana seeks FERC approval for Colstrip coal plant lease buyout

PPL Montana applied Oct. 4 at the Federal Energy Regulatory Commission for permission to buy stakes in the coal-fired Colstrip power plant that have been held for years by financial entities under a sale-leaseback arrangement.

PPL Montana parent PPL Corp. (NYSE: PPL) had on Sept. 26 announced plans for this buyout in conjunction with its proposed sale of hydroelectric assets in Montana to NorthWestern Energy.

PPL Montana would acquire direct ownership of certain undivided interests in Colstrip from Montana OL1 LLC, Montana OL3 LLC and Montana OL4 LLC. PPL Montana currently has operational control over the output of the subject interests in Colstrip, and thus control of those interests will not change as a result of the transaction.

Colstrip is a coal-fired facility located east of Billings, Montana comprised of four units, which collectively are capable of producing a total of up to 2,094 MW of capacity. The owner-lessors collectively own undivided interests in Colstrip Units 1, 2, and 3 and certain interconnection and common facilities. These interests constitute 50% of each of Units 1 and 2, for a total of 307 MW, and 30% of Unit 3, or 222 MW. The owner-lessors currently lease their Colstrip Interests to PPL Montana.

PPL Montana wants a FERC approval so it can finish this transaction by Dec. 31.

The generating facilities owned by PPL Montana are located in the NorthWestern Corp. d/b/a NorthWestern Energy balancing authority area (BAA), which is part of the Northwest Power Pool and the Western Electricity Coordinating Council.

Colstrip Units 1 and 2 each provide about 307 MW of capacity. Units 3 and 4 each have about 740 MW of capacity. Montana OL3 owns 43.06% of Units 1 and 2 and Montana OL1 owns 6.94% of Units 1 and 2. Montana OL4 owns 25.83% of Unit 3 and Montana OL1 owns 4.17% of Unit 3.

The owner-participants of Montana OL1, Montana OL3, and Montana OL4 are Montana OP1 LLC; Montana OP3 LLC; and Montana OP LLC, respectively. The upstream owner of Montana OL3 and Montana OL4 is NCC Golf Co., and the upstream owner of Montana OL1 is CIT USA Capital Inc.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.