Utility, Consumer Group Reach Agreement On Montana Wind Project

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NorthWestern Energy says it has reached a stipulated agreement with the Montana Consumer Counsel (MCC) regarding the financial components of the proposed 40 MW Spion Kop Wind Project in central Montana.

NorthWestern announced its intent to purchase the project in April 2011. If approved by the Montana Public Service Commission (MPSC), the proposed $86 million project will be developed by Compass Wind and placed into utility rate base for NorthWestern's Montana electric retail customers.

Both the energy and associated renewable energy credits will be used to meet Montana's renewable portfolio standard obligations.

A hearing on the project is scheduled for mid-December. NorthWestern and the MCC recommend that, upon the completion of this hearing, the commission issue a final order approving, adopting and implementing the terms of the stipulation and agreement.

Specifically, NorthWestern and MCC agree that the following terms represent a fair and equitable resolution of the issues regarding return on equity, capital structure and future treatment of Spion Kop Project capital costs.

NorthWestern would be allowed an initial return on equity of 10%, along with its actual debt cost; an initial capital structure consisting of 52% debt and 48% equity; and NorthWestern would agree to include the project in its next full general rate case so that its cost of capital and capital structure can be determined on a consolidated basis with NorthWestern's Montana electric utility operations. NorthWestern had asked for a 10.25% return on equity in the original filing in May 2011.

If the MPSC fails to grant approval for the project on or before April 1, 2012, then either party may terminate this agreement. Construction would commence upon a favorable ruling, with commercial operation projected to begin by the end of 2012.

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