Engineering Group Raises Issues in Dams Purchase

Consulting company questioned whether the proposal budgets enough money for operations and maintenance

By Dillon Tabish

GREAT FALLS — A consulting company hired to evaluate NorthWestern Energy’s planned $900 million purchase of 11 hydro-electric dams has questioned whether the proposal budgets enough money for operations and maintenance of the structures.

The Montana Public Service Commission hired The Essex Partnership to raise any questions and detect any omissions that should be considered as part of the proposed purchase from PPL Montana, Bob Decker, public policy chief for the commission, told the Great Falls Tribune in a story Sunday.

“The consultant was not hired to be a design team or draw judgmental conclusions,” Decker said.

The analysis by The Essex Partnership relied on information provided by NorthWestern Energy, not on-site analysis.

The consultant questioned whether NorthWestern’s proposal included enough money for operations and maintenance as it calculates rates its customers would be expected to pay if the sale goes through.

The analysis raised unfounded concerns, said William Rhoads, NorthWestern Energy general manager for power generation.

The Essex review “was not conducted at the same level of completeness as the due diligence conducted by NorthWestern,” Rhoads said, noting that Essex did not interview any PPL Montana employees, did not conduct site visits and didn’t have all the institutional knowledge of evaluators hired by NorthWestern.

PPL has spent $350 million on maintenance since it purchased the dams in 1999, said NorthWestern spokesman Butch Larcombe.

“We don’t think the dams are in poor condition by any stretch,” he said.

The Montana Consumer Counsel, which represents the interests of utility consumers, also believes the $8.5 million NorthWestern budgeted for capital spending in 2018 is too low.

Essex consultants said the maintenance spending should be $6.89 million in 2021. NorthWestern put the figure at $4.21 million.

The consumer counsel wants NorthWestern to understand that shareholders, not ratepayers, should be held financially responsible if the company significantly under-budgets for operations and maintenance, utility analyst Paul Schultz said.

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