Montana Power announces contracts for default supply

BUTTE, Mont., Oct. 16, 2001 – The Montana Power Company today announced it has finalized most of the portfolio of electricity contracts needed to serve customers beginning next summer.

The company signed a contract with PPL Montana late yesterday and has a pending agreement with a second supplier to fill out the portion of the portfolio designated for existing generation.

PPL Montana is one of 14 companies that submitted proposals to Montana Power last week in a selected bid process targeted to electric generators capable of delivering power on July 1, 2002. The identity of the second company will be announced once the contract has been signed.

“Our objective was to obtain, on behalf of our customers, the best-priced electricity available on the market today. The bid process achieved the results we were hoping for,” said Jack Haffey, president and chief operating officer of Montana Power’s Utility Division. “Our customers are assured of safe and reliable electricity supply at very competitive prices.”

The five-year agreement with PPL Montana includes the purchase of 300 megawatts (MW) of base-load power and 150MW of heavy-load supply. The total blended price of this agreement is about $32 per megawatt hour (MWh).

As previously noted, the company is securing a portfolio of contracts to serve its existing customers, also known as default supply customers, beginning July 1, 2002. The company does not earn a profit in its role as a default supplier.

Roughly half of the portfolio is comprised of existing supply resources including the contracts resulting from this selected bid process and the company’s long-term contracts with qualifying facilities (QF) – power that federal law required Montana Power to purchase at rates set by the Montana Public Service Commission. Another 25% is comprised of new generation including previously announced contracts and pending agreements with wind generators. The remainder of the portfolio will be rounded out through short-term market purchases.

With roughly 75-80% of the portfolio now in place, the company will prepare a filing and submit the portfolio to the state’s Public Service Commission in the next two weeks.

SOURCE: The Montana Power Company

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