Montana First Megawatts project to be default electricity supplier for state

SIOUX FALLS, S.D. and GREAT FALLS, Mont., Sept. 26, 2002 — Montana Megawatts I, LLC, a subsidiary of NorthWestern Corp., recently announced that it has reached an agreement to supply an average of 130 megawatts of dispatchable, on-demand electricity from its Montana First Megawatts generation project for 10 years to default supply customers in Montana. The 250-megawatt natural gas-fired, combined-cycle project is being constructed near Great Falls.

Under the agreement, Montana Megawatts will receive a price that is consistent with a regulated rate of return for the generation capacity and will be reimbursed for a pro-rata share of the actual operation and maintenance expenses for the plant.

The contract will be with NorthWestern Energy, NorthWestern’s electric and natural gas transmission and distribution company, on behalf of its 290,000 electric default supply customers in Montana. NorthWestern Energy also will be responsible for procuring and managing natural gas for the Montana First Megawatts project. As required by federal law, the agreement will be reviewed by the Montana Public Service Commission.

Montana First Megawatts will begin supplying electricity to the default supply in late 2003. After 10 years, NorthWestern Energy will have an option to renew the contract for an additional 10 years. The agreement also includes an option for the purchase of another 20 megawatts of generation capacity if needed to integrate intermittent renewable resources that have not yet been secured. Montana Megawatts also is discussing the sale of the remaining energy from the facility to interested third parties in Montana and the region.

“We are pleased to have reached an agreement to provide a valuable, flexible resource to Montana electric customers,” said Eric Jacobsen, president of Montana Megawatts.

“The need for on-demand generation has always been recognized as an essential portion of the default supply portfolio. We took guidance from the Montana Public Service Commission’s June default supply order and developed and submitted to NorthWestern Energy in August a cost-based proposal to fill that need. NorthWestern Energy, with the assistance of outside consultants, conducted a competitive bidding process to assess the Montana Megawatts proposal and explore market alternatives.

“As a result of this process, it was determined that the Montana First Megawatts project provided the lowest cost and best value to default supply consumers. Also following commission guidance, we have agreed to a number of measures, including operating under a strict code of conduct, to govern our affiliate relationship.”

Jacobsen said construction on the $150 million Montana First Megawatts project is likely to resume during the fall of 2002. The project has all necessary permits and is approximately 40 percent complete including the installation of General Electric turbines and generators. The project will continue to use available union labor during construction.

According to Randy Gray, Mayor of Great Falls, completion of the Montana First Megawatts project will have a positive influence for electricity users in Montana and for citizens of Great Falls.

“I’m proud that Great Falls will continue to live up to its name as Montana’s ‘Electric City,'” Gray said. “Power from this project will benefit Montanans by replacing volatile short-term energy costs. In addition, the citizens of Great Falls will be securing a new, large taxpayer and a large user of our water system that will help hold down costs to all citizens by increasing contributions to our fixed operating costs.”

Gray added that the development of the Montana First Megawatts project provides substantial economic development opportunities for the region.

“This project will provide hundreds of construction jobs and 15 permanent jobs when completed,” Gray said. “But equally as important, this plant will be the centerpiece of a new industrial park that will provide opportunities for additional development and further job growth for Great Falls.”

NorthWestern Corporation, a FORTUNE 500 company, is a provider of services and solutions to more than 2 million customers across America in the energy and communications sectors. NorthWestern’s partner businesses include NorthWestern Energy, a provider of electricity, natural gas and related services to customers in Montana, South Dakota and Nebraska; Expanets, the largest mid-market provider of networked communications solutions and services in the United States; and Blue Dot, a leading provider of air conditioning, heating, plumbing and related services.

Source: NorthWestern Corporation


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