PPL Montana and NorthWestern Energy asked the U.S. District Court today to dismiss a lawsuit, ongoing since 2002, related to PPL Montana’s purchase of power plants in Montana. The request comes after a definitive settlement agreement between the two companies was approved late last week by the U.S. Bankruptcy Court overseeing NorthWestern’s recent bankruptcy case. PPL Montana and NorthWestern announced an agreement in principle to settle the lawsuit in May.
"Resolving these legal issues outside of the courts allows both of us to move on and focus on our core business operations," said Brad Spencer, vice president and chief operating officer of PPL Montana, the owner and operator of power plants that PPL Montana originally purchased from Montana Power Company in 1999.
Under the terms of the settlement agreement, PPL Montana and NorthWestern dropped all claims against each other arising from a disagreement about PPL Montana's obligation to purchase certain transmission facilities associated with the Colstrip power plant in eastern Montana. NorthWestern will retain the transmission facilities, and PPL Montana will pay NorthWestern $9 million and receive a backup transformer located at the Colstrip facility.
In May, PPL Corporation recognized an unusual after-tax charge of $6 million, or 1.5 cents per share adjusted for the recent stock split, against its first quarter earnings following the announcement of the agreement in principle to settle the lawsuit.
The 1999 asset purchase agreement that spelled out the terms of PPL Montana’s acquisition of the Montana power plants included a provision concerning the proposed purchase by PPL Montana of a portion of NorthWestern's interest in transmission facilities near the Colstrip plant for $97 million. During 2002, PPL Montana had been in discussions with NorthWestern regarding the proposed purchase of the transmission facilities and the claims that PPL Montana believed it had against NorthWestern arising from the asset purchase agreement and related agreements. In September 2002, NorthWestern filed a lawsuit in Montana against PPL Montana seeking court action to compel PPL Montana to purchase the transmission facilities or pay damages. PPL Montana filed defenses denying liability for NorthWestern's claims, as well as counterclaims against NorthWestern seeking damages that PPL Montana believed it had suffered. PPL Montana also filed claims for damages in NorthWestern’s bankruptcy proceeding.
PPL Montana, a subsidiary of PPL Corporation (NYSE: PPL), has offices in Billings, Butte and Helena. With about 500 employees, PPL Montana operates the coal-fired Colstrip and Corette power plants and 11 hydroelectric facilities along the Missouri, Flathead, Clark Fork and Madison rivers and Rosebud Creek. PPL EnergyPlus, another PPL subsidiary, operates a trading floor in Butte that markets and sells power in the wholesale energy market. More information is available at http://www.pplmontana.com.