NorthWestern Energy to acquire hydroelectric facilities for $900 million
By Emily Wolfe Explore Big Sky Managing Editor
BUTTE – NorthWestern Energy on Sept. 26 announced it plans to purchase 11 hydroelectric facilities that generate 633 megawatts, a storage reservoir, and a number of related assets from electricity generator PPL Montana, for $900 million.
The facilities are: the Hebgen Lake Dam and reservoir south of Big Sky, and the Madison Dam north of Ennis, both on the Madison River; the Hauser and Holter dams, on the Missouri River north of Helena; the Kerr Dam, on the Flathead River near Polson; the Thompson Falls Dam on the Clark Fork River near Thompson Falls; and the Black Eagle, Rainbow, Cochrane, Ryan and Morony dams on the Missouri River, in the Great Falls area.
The announcement has brought back the historic discussion about energy deregulation in Montana. Passed by the 1997 state legislature, and proposed by the now defunct Montana Power Company, the deregulation law allowed the Montana Public Service Commission to regulate only delivery rates, leaving supply rates to the whims of the market. The idea was for consumers to choose their own electricity supplier, and it more than doubled the cost of electricity.
The Sept. 27 Associated Press story on the potential acquisition gained national attention, citing Rowe’s intention to use this a way to reverse the affects of deregulation.
“These facilities were originally built as part of the integrated system that we own today and complement our existing set of supply resources,” said Bob Rowe, NorthWestern’s president and CEO in a press release about the announcement. Rowe is also former chairman of the PSC.
“The addition of Montana-regulated, clean, sustainable and reliable hydro power will provide supply diversity to our portfolio and will reduce risks associated with variable fuel prices,” Rowe said.
If the deal goes through, the release said, NWE will be able to fulfill nearly half of its customer’s energy needs through wind, hydro or solar resources, and provide most of the state’s power supply during light load periods.
After the initial purchase, customers would likely see their energy bills rise. In the long run, Rowe said, it should provide energy stability, cost less than building entirely new production facilities, and reduce NWE’s reliance on third-party and spot-market purchases, thus stabilizing rates.
Subject to closing conditions and regulatory approval from the PSC, the Federal Energy Regulatory Commission, other state and federal agencies, the acquisition is expected to close in the second half of 2014.