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PPL rate ruling near

Montana State Roundup

January 1, 2006

PPL rate ruling near

Does PPL Montana wield monopoly power over NorthWestern Energy and its electric ratepayers, or not? The Federal Energy Regulatory Commission is expected to answer that question early this year, ending two years of wrangling between PPL, the dominant power producer in the state, and the Consumer Counsel, a legislative committee that represents Montana ratepayers in utility rate cases. At issue is hundreds of millions of dollars in potential energy savings.

PPL and NorthWestern Energy, a utility serving 300,000 customers in Montana, are trying to hammer out a new power contract. The Consumer Counsel claims that PPL enjoys near-monopoly control over electricity supplies in the state. Thus, FERC should require PPL to charge "cost-based" rates below what the company can command on the open market. Under its current contract with NorthWestern, which expires in mid-2007, PPL provides about two-thirds of the power consumed by NorthWestern customers in Montana. NorthWestern has told FERC that it can't buy enough "firm" or reliable power from any other supplier.

PPL has denied that it holds a power monopoly and urged FERC to allow it to keep charging what the market will bear. According to the U.S. Department of Energy, retail electricity prices in Montana have risen about 7 percent in the past year, fueled by rising demand and tight natural gas supplies.

Phil Davies