by Mike Dennison, Great Falls Tribune Capitol Bureau
May 13, 2005, A-Section, Page: 1A

HELENA - PPL Montana not only is gouging Montana electric consumers, but also is misleading federal regulators in an attempt to protect its authority to charge "market-based" power rates, a consumer and utility lawyer say.

Regulators should reject false information provided by PPL Montana and revoke the power generator's "market-rate authority," possibly leading to re-regulated rates, say the Montana Consumer Counsel and a lawyer for NorthWestern Energy.

"PPL Montana has used its competitive advantage to steadily and consistently increase the price of power in Montana, to the detriment of the Montana homeowner and small business owner," Steven Weiler, an attorney for NorthWestern, wrote in documents filed last week with the Federal Energy Regulatory Commission (FERC).

The Consumer Counsel, an office representing Montana consumers in utility rate cases, is asking FERC to revoke PPL Montana's authority to sell market-priced electricity to Montana consumers.

Weiler and a lawyer for the Consumer Counsel filed arguments last Friday with FERC, saying PPL Montana gave the agency false information in attempting to show it doesn't have near-monopoly control over power sales to NorthWestern's 310,000 Montana customers.

"The bottom line is that PPL has market power" and therefore should be subject to regulation, said Robert Jablon for the Consumer Counsel. "PPL should not be allowed to sell power at market-based rates..within the NorthWestern Energy control area."

PPL Montana has 10 days to file a written response, after which the commission could make a ruling in the three-year-old case.

Celeste Miller, a FERC spokeswoman in Washington, D.C., said Thursday the case is not yet scheduled for a decision, and she's not sure when the commission might act.

"It could be at any time (once) the comment period is over," she said.

PPL Montana, which bought Montana Power Co.'s electric plants in 1999, won approval from FERC that year to charge unregulated, market rates for electricity. At the time, however, it also agreed to sell electricity to Montana Power's customers at $22.50 per megawatt hour until mid-2002.

As that contract expired, PPL Montana negotiated a new price of about $32 per mwh, a 40 percent increase. By then, NorthWestern had bought Montana Power and assumed its electric customers.

That contract expires in mid-2007. PPL Montana has offered to renew and expand the contract to provide all electricity to NorthWestern customers for about $40 per mwh - another 25 percent increase.

PPL Montana spokesman David Hoffman said the company "absolutely denies" the allegations by the Consumer Counsel and NorthWestern, and will reply in greater detail on May 23.

"It's clear that we don't have the power to control the market price of electricity in Montana," he said Thursday. "If that were the case, why would we be providing power (to NorthWestern) at the lowest price of any electricity in their portfolio?"

The "portfolio" is the mix of electricity bought by NorthWestern to supply its Montana customers. PPL Montana is the lowest-priced power among those supply contracts, whose total cost is about $42 per mwh. An average home consumes about three-fourths of a megawatt hour of electricity per month.

PPL supplies two-thirds of the total power needs of NorthWestern, which must buy the remainder on the short-term market, which is more expensive than long-term contracts arranged with PPL Montana.

Jablon and Weiler said PPL Montana essentially controls 90 percent of the available power in Montana, and therefore can charge whatever the market will bear and undercut any other bidder for "base-load" power, which is the amount of electricity NorthWestern needs to supply its customers during times of lowest demand.

They said PPL Montana misled FERC by saying large amounts of power produced at the Colstrip power plants are available for competitive sale in Montana, when in fact it is committed to out-of-state utility customers.

Hoffman said NorthWestern is providing "contradictory information" in its arguments, and is trying to push power projects in which it has an interest, such as the mothballed gas-fired power plant in Great Falls.