PPL Montana, NorthWestern seek FERC approval for hydro deal

PPL Montana LLC and NorthWestern Corp. d/b/a NorthWestern Energy jointly applied Jan. 10 at the Federal Energy Regulatory Commission for approval of license transfers for four hydropower projects that NorthWestern is buying from PPL Montana.

The application covers the following four hydroelectric projects: Kerr Project No. P-5; Thompson Falls Project No. P-1869; Missouri-Madison Project No. P-2188; and Mystic Project No. P-2301. The applicants are requesting a determination on this application by no later than April 30. PPL Montana is a unit of PPL Corp.(NYSE: PPL) and this deal was first announced in September 2013.

“The Projects consist of eleven hydroelectric dams totaling 633 MW of installed capacity and one dam without installed generation,” said the application. “All are located in western or southern Montana, with one located in the watershed of the Flathead River, one in the watershed of the Clark Fork River, one consisting of nine developments, located on the Madison and Missouri Rivers, and one located in the watershed of the Yellowstone River. All four Projects were acquired by PPL Montana from The Montana Power Company (‘MPC’) in 1999.”

Although NorthWestern does not currently own any hydroelectric assets, it is legally, technically, and financially qualified to hold the projects’ licenses, the application noted.

The acquisition agreement provides for establishment of a closing date once the required federal and state approvals of the transaction have been obtained, which is expected to occur in the second half of 2014. Therefore, in order to ensure timely transfer of the licenses, the applicants request a FERC approval order by no later than April 30.

NorthWestern Energy plans to rely heavily on the 11 hydroelectric facilities it plans to buy from PPL Montana for future resource needs, said the company in a resource plan filed Dec. 23, 2013, with the Montana Public Service Commission. In a separate application, NorthWestern is also seeking PSC approval of the hydro project purchase.

The resource plan covers a 20-year planning horizon. In addition to satisfying the biennial regulatory filing requirement, this 2013 Electric Supply Resource Procurement Plan documents resource acquisition and evaluation work, analyzes and defines load-serving needs and alternatives, examines changes effecting supply, addresses Montana PSC comments on the 2011 plan, and proposes appropriate courses of action.

“The timing of the 2013 Plan finds NorthWestern’s portfolio in transition,” the plan said. “On September 26, 2013, NorthWestern announced that it entered into an agreement to purchase the hydro assets of PPL Montana, LLC (‘Hydro Acquisition’ or ‘Hydros’). The Hydro Acquisition includes 11 hydroelectric facilities representing 633 MWs of generation, a storage reservoir, and other related assets. The Hydro Acquisition clearly falls into the category of an ‘opportunity acquisition’ as envisioned in NorthWestern’s 2011 Electricity Supply Resource Procurement Plan (‘2011 Plan’). The 2011 Plan, while not specifically identifying the Hydros, contemplated similar resources in terms of availability for purchase, applicability in serving Montana retail load, portfolio value contribution, and cost effectiveness. If the Commission approves NorthWestern’s Application to acquire the Hydros under satisfactory terms, NorthWestern will place the Hydros into its resource portfolio in the second half of 2014.”

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.