PPL files suit against Montana state regulators

PPL Montana, a unit of PPL Corp., filed suit Tuesday in federal court seeking an order to halt Montana state regulators from exercising any 'authority, control, or regulation' of wholesale transactions from the company's Montana generating assets.


By the OGJ Online Staff

HOUSTON, July 10 -- PPL Montana, a unit of PPL Corp., filed suit Tuesday in federal court seeking an order to halt Montana state regulators from exercising any "authority, control, or regulation" of wholesale transactions from the company's Montana generating assets.

Action by the Montana Public Service Commission that attempts to regulate sales from power plants owned by PPL Montana not only is unconstitutional, but also contradicts a previous action by the commission, PPL Montana said in the complaint filed in US District Court in Helena. The lawsuit asks the court to declare the PSC action "preempted, unconstitutional, and void."

On June 26, the Montana PSC issued an order in which it found that any purchaser of power plants formerly owned by the Montana Power Co. must sell electricity to Montana Power under conditions established by the PSC. PPL Montana purchased two coal-fired plants and 11 hydroelectric units from Montana Power in 1999.

Montana's restructuring law gave the commission rate-setting power until it has declared the market workably competitive or July 2007, said David Hoffman, utility division administrator for the Montana PSC. PPL must have "overlooked that portion of the statute when they purchased [Montana Power] assets," he said. The PSC has taken the position completion of the asset sale is contingent on completion of the transition period, he said.

Montana Power filed its transition plan in 1997, but the PSC proceeding to consider the plan is still under way and no final order has been issued.

Robert J. Grey, PPL general counsel, said that the Federal Power Act preempts states from exercising regulatory authority over sale of electricity in wholesale markets. In addition, the Federal Energy Regulatory Commission has granted PPL Montana special status to sell solely in the wholesale market.

Grey also pointed out that, in an action taken on May 25, 1999, the Montana PSC approved federal control over PPL Montana's plants as in the public interest.

Grey said the commission's recent action inexplicably tries to overturn that previous judgment. PSC actions violate the contracts, due process, and taking clauses of the US Constitution, he said.

PPL understands the energy challenges facing the state of Montana and has taken meaningful actions to help mitigate these challenges, said Grey. He noted PPL has offered to supply Montana Power with 500 Mw of power produced by PPL's plants at 4�/kw-hr for 5 years.

When PPL Montana purchased its Montana plants, it agreed to supply Montana Power with electricity at less than 2.5�/kw-hr and is honoring the agreement through June 30, 2002, he said.

PPL Montana also volunteered to provide 20 Mw of below-market-priced electricity to a power pool that the state has established for industrial customers, he said.

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