June 30, 2008
NorthWestern Energy Submits Colstrip Unit 4 Filing With Montana Public Service Commission
SIOUX FALLS, S.D., June 30 /PRNewswire-FirstCall/ -- NorthWestern Energy today announced that it has made a filing with the Montana Public Service Commission (MPSC) to initiate the review process that will determine whether the company's ownership interest in Colstrip Unit 4 should be placed in rate base at fair market value.
Earlier this month, NorthWestern Energy announced plans to sell its 30-percent merchant interest in Colstrip Unit 4 to Bicent (Montana) Power Company LLC ("Bicent") for $404 million. However, the parties structured the sale agreement to provide Montana regulators with what essentially amounts to a right of first refusal option similar to an existing option available to the other partners in the Colstrip plants. This enables the MPSC and various stakeholders to investigate whether it is in customers' best interest to place the currently non-regulated asset into the Utility's rate base at fair market value.
If the MPSC ultimately decides not to place the merchant interest in rates at fair market value, the sale agreement with Bicent provides the Utility's regulated supply function with the option to purchase power at a discount to Mid-Columbia (Mid-C) Index prices as existing contracts are reduced and power becomes available in future years.
"This filing is intended to provide the MPSC with clear and constructive alternatives so that it can make a well-informed decision in the best interest of customers and shareholders," said Mike Hanson, President and CEO. "We are not advocating one position over another as there are pros and cons to each alternative depending on future events. We want the MPSC to have the relevant information it needs to make its determination based on all that is known of energy markets and policy today."
The divestiture of the company's minority interest in Colstrip Unit 4 is in keeping with NorthWestern's long-stated business strategy to be a purely regulated utility. NorthWestern is contractually obligated to proceed with closing the sale to Bicent if the MPSC does not make a timely determination.
A copy of the filing can be found at the MPSC Web site at http://www.psc.mt.gov/.
About NorthWestern Energy
NorthWestern Energy is one of the largest providers of electricity and natural gas in the Upper Midwest and Northwest, serving approximately 650,000 customers in Montana, South Dakota and Nebraska. For more information about NorthWestern Energy, visit our Web site at http://www.northwesternenergy.com/.
Web site: http://www.northwesternenergy.com/