NorthWestern Corporation d/b/a NorthWestern Energy (NYSE: NWE) today submitted its formal request to the Montana Public Service Commission to approve the purchase of 11 hydroelectric generating facilities and related assets from PPL Montana, LLC, a wholly owned subsidiary of PPL Corporation (NYSE: PPL).
The filing initiates the formal regulatory process necessary to complete the previously announced $900 million agreement between the two companies. In addition, the company is asking permission to include the hydro assets into the company's rate base and to issue the securities necessary to complete the purchase.
"This proposed acquisition, if approved by the Montana Commission, will provide tremendous long-term benefits to our customers," said Bob Rowe, CEO. "Other utilities would love to have the chance to diversify their supply portfolios with hydro power. Opportunities like this come around rarely – if ever. We believe strongly that these are the best possible resources to serve our customers – that's what they were originally built to do. If approved by the Commission, they will be permanently dedicated to serve our Montana electric customers, with future prices based on the cost of production, not on prices in the western power market."
The filing outlines the various long-term customer benefits including greater resource adequacy and reliability; stable and reasonable costs/prices; and a more diversified portfolio featuring environmentally responsible, lower risk supply resources. It also confirms commitments to proceed with the transfer of Kerr Dam to the Confederated Salish and Kootenai Tribes, to maintain a strong presence in the river communities and to be a responsible steward of the facilities and river.
"We have received overwhelming support for this transaction from our customers and communities since announcing it earlier this fall," added Rowe. "This really is a significant opportunity for the PSC to approve the addition of utility-owned, regulated hydroelectric generation to NorthWestern's electricity supply resource portfolio."
If approved, the addition of the assets into the electric supply portfolio would cause total residential electric bills to be 4.22% higher than what they are today, but then they will help to maintain relatively stable electric supply costs for the foreseeable future. The natural gas portion of a combined customer (natural gas and electric) bill is not affected by this acquisition.
Subject to necessary regulatory approvals and customary closing adjustments, the company and PPL intend to complete the transaction in the third quarter of 2014.