Monty Bannerman
ArcStar Energy
+1 646-402-5076
From: "Rebecca Van Nichols" <rvan@tnag.net>
Date: Sep 26, 2014 10:55 PM
Subject: Montana regulators advance $900MM hydroelectric power purchase
To: <mbannerman@arcstarenergy.com>
Cc:
Montana regulators advance $900MM purchase of 11 hydroelectric dams
HELENA, Mont. (AP) — The Montana Public Service Commission approved NorthWestern Energy's $900 million plan Thursday to buy 11 hydroelectric dams and charge the cost to its electricity customers.
The commission voted 4-1 to approve the deal after nine months of review, which included public meetings and a two-week hearing in July.
"I'm very pleased to have made the motion and support it," commission Chairman Bill Gallagher said. "The question is benefits, do they outweigh the risk to customers, and I believe there's substantial evidence to that."
Once the deal is finalized, it will immediately increase rates for NorthWestern's 344,500 electricity customers, adding close to $5 more per month to the bill of the average electricity customer.
Commissioner Travis Kavulla, who cast the lone vote against the plan, said he would have liked to have seen conditions on the deal that would cause the utility to "have more skin in the game."
"The motion unamended gives the utility everything they ask for," Kavulla said.
While the approval includes some conditions, the measure doesn't reflect many of the recommendations from the Montana Consumer Counsel, the state-consumer advocacy office. Their experts had said the plan should include compromises that put more of the costs and risk on the company and its shareholders.
Bob Nelson of the consumer counsel said after the decision that he thought the costs involved could have been reduced. He had also advocated for a lower profit margin for the company, recommending 9 percent. The approved motion sets as a condition a 9.8 percent return, which Gallagher said was a compromise.
Kavulla and Commissioner Roger Koopman each proposed amendments to the motion that, among other proposals, would have changed the profit margin and reduced costs. All the amendments failed, and Gallagher's motion passed in its original form.
NorthWestern officials have said the purchase of the dams will assure that customers have stable electricity rates in the future because they'll be based on the production rather on the whims of a largely unregulated and at times volatile wholesale market.
After the approval, NorthWestern CEO Bob Rowe said the company would work to finalize the purchase as quickly as possible and said it would happen sometime this fall. Customers will see the related rate increase by December, and projections show rates leveling off and possibly dropping by 2021, he said.
NorthWestern didn't receive everything it asked for in the deal's approval, including a caveat that puts a ceiling on capital expenditures, Rowe said. He added the conditions would not halt the sale.
"Very farsighted public servants at work today," he said of the commission's approval.
The dams included in the sale are on the Missouri, Madison, Flathead and Clark Fork rivers and West Rosebud Creek and were built from the 1940s to the 1960s. They were owned by the Montana Power Co. until PPL bought them during deregulation in the late 1990s and early 2000s.
Combined, the 11 dams have capacity to generate 633 megawatts of electricity, or as much as a large coal-fired power plant.
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