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PPL Montana and NorthWestern reach legal settlement

5 May 2005 – PPL Montana and NorthWestern Energy have reached an agreement to settle a lawsuit related to PPL’s purchase of power plants in Montana.

Under the terms of the agreement PPL and NorthWestern have agreed to drop all claims against each other, ending litigation that has been ongoing since 2002. The litigation began with a disagreement regarding PPL’s obligation to purchase certain transmission facilities associated with the Colstrip power plant in eastern Montana.

Brad Spencer, vice president and chief operating officer of PPL Montana, the owner and operator of power plants that PPL originally purchased from Montana Power Company in 1999, said: “With this litigation out of the way, we are hopeful that we will be able to improve our working relationship with NorthWestern.”

The 1999 asset purchase agreement that spelled out the terms of PPL’s acquisition of the Montana power plants included a provision concerning the proposed purchase by PPL of a portion of NorthWestern’s interest in transmission facilities near the Colstrip plant for $97m.

However, in September 2002, NorthWestern filed a lawsuit in Montana against PPL seeking court action to compel PPL to purchase the transmission facilities or pay damages. PPL filed defences denying liability for NorthWestern’s claims as well as counterclaims against NorthWestern seeking damages PPL Montana believed it had suffered. PPL also filed claims for damages in NorthWestern’s bankruptcy proceeding.

Under the terms of the settlement, NorthWestern will retain the transmission facilities, PPL will pay $9m, and will receive a back-up transformer that is located at the Colstrip facility. Each party will drop its claims in the pending litigation in Montana and the bankruptcy court.

Once a definitive agreement has been reached, the settlement would become effective following the dismissal by the US District Court of the Montana lawsuit, and acceptance by NorthWestern’s bankruptcy Plan Committee and approval by the US Bankruptcy Court for the District of Delaware.