Company looks at buying dam

THOMPSON FALLS - The Thompson Falls Dam may be under new ownership as early as January of next year, if a proposed buyout is approved by the Montana Public Service Commission and the deal survives a public hearing, scheduled for early July.

NorthWestern Energy, a utility company based out of Sioux Falls, South Dakota has proposed to buy Thompson Falls Dam, and ten other hydroelectric facilities in Montana.

The Thompson Falls dam began operating in 1915 and was constructed on the site of natural falls of the Clark Fork River. It is a seven-unit hydroelectric plant that can produce 94 megawatts of energy.

The current owners of the aforementioned dams, PPL Montana, a subdivision of the PPL Corporation, an energy company headquartered in Allentown, Pennsylvania has been offered $900 million for the properties throughout the state.

The Montana Public Service Commission has initiated the process to determine if the proposed acquisition of utilities will be approved. Commissioners from the state’s five PSC districts, Sanders County falls within District 4, have started to host listening sessions around the state, in an effort to gauge public input on the pending transaction.

A potential stumbling block for this massive infrastructure deal is the rise in utility rates that are likely to occur, if NorthWestern Energy becomes the new owners of Thompson Falls Dam and the other facilities in western Montana.

According to Paul Schulz, the utility analyst on the Legislative Consumer Committee and Consumer Counsel of Montana, the rate increase for consumers would be just short of nine percent.

Additionally, consultants and economists familiar with the deal, predict costs will remain higher for the first eight years due to repair, maintenance and operating costs under the new ownership, but will then begin to turn around and be lower over time.

However, Schulz was quick to note that there is no guarantee that utility rates will eventually fall as far as representatives from NorthWestern energy are predicting.

“Key assumptions made by the company need to hold,” Schulz said.

Some of these assumptions include, low maintenance expenditures and the ambiguous prediction that the majority of the dams, hydroelectric facilities and reservoirs will appreciate in value over time.

“If their numbers are off, ratepayers will be on the hook. It is the ratepayers who are bearing the majority of risk for this transaction,” Schulz said.

This is a view shared by members of the PSC, who are not rushing to approve the proposed deal without due diligence.

Schulz noted there is support for the proposed purchase, while emphasizing the need to mitigate the risks faced by consumers throughout Montana.

“A lot of people have been favorable to the dams being purchased, with the caveat that they are being purchased at the right price,” Schulz said.

The public hearing is tentatively scheduled for early July, assuming all things go well the Public Service Commission will come to a decision a few months after that.

If the PSC approves the multimillion-dollar deal, NorthWestern can be expected to assume ownership of the utility properties in early 2015.