PPL Montana

NorthWestern Energy will purchase 11 hydroelectric facilities totaling over 630MW and Hebgen Lake reservoir from PPL Montana, a subsidiary of PPL, for a cash consideration of $900m.

The companies have reached an agreement for the transaction, which is likely to be closed in the second half of 2014, subject to certain regulatory approvals including from the Federal Energy Regulatory Commission (FERC) and Montana Public Service Commission.

UBS Investment Bank and RBC Capital Markets have served as PPL’s financial advisors, while Simpson Thatcher & Bartlett has served as the legal advisor for the potential transaction.

The hydro facilities in the proposed deal include 94MW Thompson Falls Dam on the Clark Fork River, 194MW Kerr Dam on the Flathead River, 9MW Madison Dam on the Madison River, 19MW Hauser, 48MW Holter, 21MW Black Eagle, 60MW Rainbow, 64MW Cochrane, 60MW Ryan and 48MW Morony dams along the Missouri River, and 12MW Mystic Lake Dam on West Rosebud Creek.

"Besides electricity generation, the projects are providing flood control, irrigation and public recreation."

Besides electricity generation, the projects are providing flood control, irrigation and public recreation, as well as protecting and enhancing fisheries, wildlife, wetlands habitat and water quality.

The agreement does not include PPL Montana’s interest in the Colstrip facility, its JE Corette coal-fired facility located near Billings or the Butte-based power marketing and trading operations of the company’s affiliate, PPL EnergyPlus.

Meanwhile, PPL Montana will terminate a sale-leaseback arrangement for its interest in the Colstrip coal-fired facility by paying $271m and the termination is likely to complete by the end of 2013, should the company gets approval from FERC.

Total net proceeds from the sale of hydroelectric facilities, the termination of the sale-leaseback agreement, and other adjustments set forth in the applicable agreements, is estimated to be around $623m.

Image: PPL Montana to sell hydro facilities including Kerr Dam on the Flathead River. Photo: courtesy of PPL Montana.