Tribes closer to purchase
LAKE COUNTY – NorthWestern Energy closed the purchase of Kerr Dam and 10 other hydroelectric facilities previously owned by PPL Montana.
The includes an immediate 5.12 percent rate increase and the commitment to sell the 194-magawatt Kerr Dam to the Confederated Salish and Kootenai Tribes in September 2015, in accordance with the license issued by the Federal Energy Regulatory Commission.
The deal for the tribes to purchase Kerr Dam for $18.3 million came in March after a three-decade negotiation settled by arbitrators. PPL Montana asked for $49 million.
The increase amounts to about $4.20 per month for a typical residential customer and is consistent with the commission’s order approving the acquisition, NorthWestern officials said.
The total purchase of all 11 dams, generating 633 megawatts is $900 million, according to NorthWestern officials.
More than half of NorthWestern’s owned and contracted electric supply in Montana now comes from wind and water, officials said.
“Our electricity supply is now much greener, we are nearly 40 percent better than the EPA’s proposed target for the entire state of Montana,” said NorthWestern V.P. John Hines in a statement “With this acquisition, we believe our customers are well positioned, given the uncertainty of what’s to come from potentially tougher regulations.”
As of Nov. 17, 81 employees transferred from PPL Montana to NorthWestern Energy. All but a handful of the transferring employees are involved in the daily operation and maintenance of the dams.
The other employees are joining the company to assist with various administrative needs.
NorthWestern Energy provides electricity and natural gas in the Upper Midwest and Northwest, serving about 678,200 customers in Montana, South Dakota and Nebraska.
NorthWestern Energy’s (NYSE: NWE) website address is www.northwesternenergy.com.
Since announcing the close, NorthWestern’s stock price went from $52.10 to $53.23.
LOCAL IMPACTS
The CSKT will become the first tribes in the nation to own a major hydroelectric facility. The CSKT created Energy Keepers, Inc., to help purchase, operate and sell power from Kerr Dam.
Energy Keepers CEO Brian Lipscomb estimated that annual revenues for the tribes could be $32 million, according to a published report. He also said the only difference ratepayers will see is that more money will stay in the Mission Valley instead of going to Pennsylvania, where current owner PPL Montana is headquartered.
Still, Lake County Commissioners and school officials are bracing for a potential loss of an estimated $1.2 million in taxess annually.
“We’ve been in talks with the Tribal Council,” said Lake County Commissioner Gale Decker. “They have pressures from their constituents as to the (payment in lieu of taxes).”
Commissioner Bill Barron is concerned that current Tribal Council members have verbally committed to help offset the potential lost revenues but he would feel better with a written agreement over a long term.
Decker said there is federal Impact Aid that could serve to replenish the estimated $800,000 a year the county would miss.
The Polson School District could lose an estimated $400,000 annually and Flathead County would take a hit if funding is not replaced.
Republican Steve Daines, Montana’s lone representative, said sale of the Kerr Dam could have a negative affect on the valley’s economy for years.
“It could have a significant impact on budgets and tax revenues on our communities here,” he said. “If it does reduce (tax revenues), we will have to look at new sources of revenues for the county and cities.”
Daines often seeks a balance between tribal and non-tribal interests.
RATES
Some non-tribal ratepayers fear the tribes might raise rates but tribal officials said the FERC would still regulate the cost just as it always has.
The tribes operate Mission Valley Power.