PPL Montana and Energy West have agreed to settle a federal court lawsuit over an energy supply contract that led to the loss of millions of dollars in revenue for PPL.

"We are pleased that we were able to reach a compromise agreement that protects PPL Montana’s business interests while still allowing Energy West to continue meeting the needs of Montana customers," said David Hoffman, PPL Montana’s manager of External Affairs.

PPL Montana signed a two-year contract in 2000 to provide below-market-price power to Energy West specifically for its customers in western Montana. PPL alleged that when power prices were high, Energy West scheduled more power than it needed to supply its customers, and then sold the excess electricity on the open market at a higher rate than what it paid PPL Montana under the contract.

PPL Montana filed a lawsuit to recoup damages from Energy West’s actions. In March of this year, a federal district judge ruled that Energy West’s scheduling practices were in breach of the contract.

Under the terms of the settlement agreement, Energy West will pay PPL Montana a total of $3.2 million, with an initial payment of $1 million immediately and a final payment of $2.2 million by September 30, 2003. If Energy West does not make the payments on time, interest will accrue and the issue may be remanded to the court.

PPL Montana, a subsidiary of PPL Corporation (NYSE: PPL), has offices in Billings, Butte and Helena. With more than 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.