NorthWestern Energy (NWE) has entered into a $900M agreement to acquire 11 hydroelectric facilities with a total capacity of 633MW, one storage reservoir, and related assets from PPL Montana, a subsidiary of PPL Corporation.
The facilities are situated in two separate river basins, covering both sides of the Continental Divide, and benefit from a history of strong and reliable operating performance, low variable operating costs and favorable environmental qualities. NorthWestern's Board of Directors has approved the transaction.
"This is a unique opportunity to acquire hydroelectric facilities dedicated to serving our Montana customers for generations to come," said Bob Rowe, NorthWestern's president and CEO. "These facilities were originally built as part of the integrated system that we own today and complement our existing set of supply resources. 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."
This transaction is expected to allow NorthWestern to reduce its reliance on third party power purchase agreements and spot market purchases, more closely matching NorthWestern's electric generation resources with forecasted customer demand. Upon completion, about half of NorthWestern's total energy needs in Montana would be met with hydro and wind generation.
In addition, the facilities are anticipated to provide energy stability well below the cost associated with "new build" alternatives, making this acquisition an attractive option to help stabilize customer rates over the long-term.
"In joining our portfolio of wind, natural gas and coal assets, these hydroelectric facilities will increase our energy capacity and provide NorthWestern with greater certainty about our energy supply. We'll be able to provide continued reliability and price stability to our customers. We'll also be better able to protect current and future NorthWestern customers from the impact of market price volatility, allowing us to offer clean, cost-effective and reliable energy for years to come," added Rowe.
Once the transaction is completed, it is expected that NorthWestern will be able to provide nearly all of Montana's required power supply during light load periods, while using market purchases or other resources to meet demand during heavier load periods. These assets will be added to the rate base in Montana in keeping with NorthWestern's long-standing commitment to being a regulated utility.