NorthWestern submits final filing for 194-MW Kerr hydropower project

Kerr Hydropower Project

NorthWestern Energy has submitted its final compliance filing to the Montana Public Service Commission as required by a November 2014 order approving the acquisition of the 194-MW Kerr hydroelectric plant from PPL Montana.

The utility said the primary purpose of the compliance filing is to "adjust the hydro portion of electricity supply rates to remove operating costs related to the Kerr Dam facility that was conveyed to the Confederated Salish and Kootenai Tribes (CSKT) in September, update the anticipated revenue credits for 2016 and to reflect the most recent level of actual property tax expense."

The Montana Public Service Commission established a fixed annual revenue requirement of $160 million less $43 million in revenue credits for NorthWestern's hydropower projects when it approved supply rates last year.

The revenue credits came primarily from the sale of excess energy from Kerr that was not needed by the regulated customer base and was used to offset the cost of the hydroelectric facilities collected from customers. As a result of the plant's conveyance to the CSKT, sales of excess generation from NorthWestern's portfolio and the level of revenue credits available to offset electricity supply costs will decrease in 2016.

"Our customers received a $2.7 million net benefit from our short period of ownership of the Kerr facility," NorthWestern President and CEO Bob Rowe said. "The value of the energy produced by Kerr during the 10 months that we held it exceeded the facility's revenue requirement, thereby meeting one of the sale conditions that the ownership results in a zero or net positive financial impact for customers."

NorthWestern acquired Kerr in 2014 as part of an 11-plant, $900 million deal with PPL Montana.

The project -- to be renamed the Salish Kootenai plant -- was acquired by the CSKT in September under 30-year-old terms of Kerr's Federal Energy Regulatory Commission license.

When the Kerr project was relicensed by FERC in 1985 to Montana Power, NorthWestern Energy's predecessor, the license made the tribes a co-licensee and directed that after 30 years, the license would be fully transferred to the tribes upon payment of an agreed amount. The federal Office of Indian Energy and Economic Development last year awarded $1.2 million to the CSKT to help them acquire critical expertise and infrastructure necessary for the final stages to acquire and operate Kerr.

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