PPL Corp. announced this week that it has signed an agreement to sell 11 of its hydroelectric power facilities to NorthWestern Energy for $900 million in cash. It is anticipated the sale will close in the second half of 2014 following the necessary regulatory approvals.
The deal includes PPL Montana's 11 hydroelectric power plants, with combined generating capacity of more than 630 megawatts, and its Hebgen Lake reservoir.
NorthWestern highlighted that the acquisition will allow it to "secure more than 60% of NorthWestern's average load serving capability in Montana and provide price stability for customers." It noted it anticipates the transaction will be impactful to earnings within its operational year. The reasons behind the Board of Directors of NorthWestern approving the transaction included the facilities having a "history of strong and reliable operating performance, low variable operating costs and favorable environmental qualities."
In addition to the sale, PPL also announced it would pay $271 million to terminate an agreement for a sale-leaseback of its interest in a coal-fired electric facility in Colstrip, Mont. As a result, it anticipates the net proceeds from the transactions to be $623 million.
The President and CEO of NorthWestern, Bob Rowe, added in a statement, "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."
NorthWestern concluded its announcement by noting that it anticipates it will be able to provide almost all of Montana's power needs when demand is light, and it will use the open market or other resources to meet the higher demand periods. In addition, upon the completion of the sale, almost half of NorthWestern's energy needs in Montana would be generated using hydro and wind power.
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