ALLENTOWN, Pa.---Expanding its ability to maximize the value of generation assets it will soon own in the Western United States, PP&L Resources, Inc. (NYSE: PPL) is acquiring one of the key power marketing and trading groups in the region.
PP&L Resources said Tuesday (5/25) that it is in the process of acquiring the energy marketing operation of The Montana Power Company (NYSE: MTP) and that all the key employees of that function have agreed to join the PP&L Resources family of companies. The energy marketing and trading operation will remain in Butte.
Through its PP&L Montana LLC subsidiary, PP&L Resources is in the process of buying 13 Montana power plants with 2,600 megawatts of capacity.
"We are pleased that these employees, who have decades of power sales experience, are joining the PP&L team," said Roger Petersen, chief executive officer of PP&L Montana. "These employees have been very successful at Montana Power because of their extensive knowledge of contracts, the assets and the transmission systems throughout the region.
"The combination of the expertise of PP&L people in the new competitive electricity marketplace and the regional knowledge of these highly qualified employees will enable us to maximize the value of these important generation assets," said Petersen.
Montana Power announced last year that it would make an "orderly exit" from the electricity trading business, saying it represented too much risk for a company of its size without generating assets to back up sales. The company will remain in natural gas trading and marketing to support its domestic and foreign petroleum exploration and development efforts and its natural gas commodity retail marketing activities.
"We are very pleased to announce that this group of highly skilled employees has an opportunity to continue working here in the Butte area," said Dick Cromer, Montana Power's executive vice president of Energy Supply.
PP&L Resources announced the purchase of the plants last November. It is buying the generation assets from Montana Power, which owns the majority of the assets, and from Enron/Portland General Electric and Puget Sound Energy.
The Montana marketing and trading operation will become part of PP&L EnergyPlus, PP&L's marketing company, and will sell electricity in both the wholesale and retail markets in Montana and the Northwest. John Cotter, senior vice president-PP&L EnergyPlus, will direct the Montana sales operations.
"The Montana plants are especially important," Petersen said, "because they are located in the vast Western Systems Coordinating Council, which includes all the western states and the Canadian provinces of Alberta and British Columbia. We envision that other plants acquired or built in the western United States — such as the 600-megawatt plant a PP&L Resources company is developing in Kingman, Ariz. — will use the Montana-based marketing and trading organization."
PP&L Resources has an objective of owning and operating about 20,000 megawatts of electric generation capacity in key U.S. markets within the next five years. Including the Montana plants, the company now either has, or is in the process of acquiring or developing, about 12,000 megawatts.
PP&L Montana is expected to take ownership of the Montana power plants by the end of the year, subject to the receipt of required regulatory approvals and third-party consents. Petersen said the company has pledged that there will be no layoffs as the result of the change in ownership.
The Montana Power Company was formed in 1912 through the merger of four small regional electric companies. The company now operates or invests in businesses worldwide, supplying energy — electricity, natural gas, oil and coal — and providing energy and telecommunications services. The company has assets of $2.9 billion, consolidated revenues for the 12 months ending Dec. 31, 1998, of about $1.25 billion, net income of $162 million, and 2,900 employees. For more information, visit The Montana Power Company's Web site at www.mtpower.com