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Lawmakers Look at NorthWestern Energy Dam Purchase
The deal isn't expected to be completed until at least September 2014
HELENA — NorthWestern Energy's planned $900 million purchase of 11 hydroelectric dams will mean decades of stable customer rates after an initial increase of about 5 percent, or about $4 per month, on an average residential bill, company executives told lawmakers Friday.

NorthWestern CEO Bob Rowe and vice president of supply John Hines outlined the utility's agreement to buy the 11 PPL Montana dams to an interim legislative committee.

The deal isn't expected to be completed until at least September 2014, and it must be approved by the Montana Public Service Commission, the Federal Energy Regulatory Commission and anti-trust regulators in the U.S. Department of Justice.

NorthWestern now only owns between 25 percent and 30 percent of the resources it uses to provide electricity to its customers, Hines said. Adding the dams, which produce a combined 633 megawatts of power, would bump up the utility's resource ownership to more than 60 percent, he said.

That means NorthWestern will be less susceptible to swings in the energy market, he said. That, combined with the flat cost of operating the dams, means greater long-term rate stability for customers, he said.

"We believe these assets will continue to operate as long as there is water in the rivers," Hines said.

NorthWestern and PPL Montana have been working on the deal since June and announced the agreement in October. PPL bought the dams on the Missouri and Clark Fork rivers from Montana Power Co. during deregulation in the late 1990s and early 2000s.

Though more information is needed, having NorthWestern Energy buy the dams instead of them going to an outside buyer should be good for the state, Sen. Alan Olson, R-Roundup, said.

"The opportunity to take that risk out of the market will go a long way toward the stability we used to have with the old Montana Power Co.," he said.

PSC Chairman Bill Gallagher told the committee that he expects NorthWestern to submit a pre-application in December. If it is approved, the regulator has 270 days to approve the final deal, putting the deadline around mid-September, he said.

NorthWestern plans to finance the purchase through a combination of debt and equity, Rowe said. The dams are already in the utility's territory, so no additional transmission build-out will be required, he said.

The addition of the dams
 
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