NorthWestern Energy agreed to buy 633 MW of hydropower capacity from PPL Montana, the two companies announced September 26. The assets include 11 hydroelectric facilities, a storage reservoir and related assets
Under the agreement, PPL Montana will receive $900 million in cash, subject to certain adjustments.
NorthWestern said in a release the transaction would allow the company to reduce its reliance on third-party power purchase agreements and spot market purchases. After the sale is finalized, about half of NorthWestern’s total energy needs in Montana would be met using hydropower and wind generation.
The company also stated it should be able to provide nearly all of Montana’s required power supply during light load periods and use market purchases or other resources to meet demand during heavier load periods.
NorthWestern’s board of directors has approved the transaction, and the sale is expected to close in the second half of 2014, pending regulatory approvals.
PPL Montana also announced a related transaction where it will pay $271 million to terminate a sale-leaseback arrangement for its interest in the Colstrip coal-fired facility, with termination of the lease expected to be completed by 2013, subject to approval of the Federal Energy Regulatory commission.