Judge orders PPL Montana to pay $41 million rent for riverbeds

A judge has ordered PPL Montana pay $41 million in back rent to the state of Montana for use of riverbeds occupied by the utility’s hydroelectric facilities, including $6.2 million for 2007.

First District Judge Thomas Honzel issued the ruling June 13, saying PPL Montana owes $34.8 million for 2000-2006, and $6.2 million for 2007. Amounts to be paid going forward are to be determined by the Board of Land Commissioners.

�We are extremely disappointed with the decision,� PPL Montana spokesman David Hoffman said.

PPL Montana has 60 days from the date of the order to decide whether it will appeal to the Montana Supreme Court.

PPL Montana’s hydropower holdings include 326.9-MW Missouri-Madison (No. 2188), 10-MW Mystic Lake (No. 2301), and 92.6-MW Thompson Falls (No. 1869). The company acquired the projects from Montana Power Co. in 1999.

Two other utilities once involved in the case, Avista Corp. and PacifiCorp, settled last year rather than go to trial on the state lawsuit. (HNN 10/30/07) Avista and PacifiCorp are regulated utilities and can pass the costs of the rents through to their ratepayers. PPL Montana is not regulated by the state and does not have a mechanism for passing along the cost.

Avista agreed to pay millions of dollars in rent each year to the state for riverbeds occupied by the utility’s hydroelectric facilities, including $4 million for 2007. PacifiCorp agreed to lease 47.84 acres of riverbed in the Swan River in return from being dropped from the case.

Montana Attorney General Mike McGrath filed the lawsuit, intended to force hydro utilities to pay rent for state-owned riverbeds their projects occupy. McGrath also is one of five members of the land board, which oversees management of 5.2 million acres of school trust land in the state. The board is responsible for deciding how best to generate revenue for the trust from school trust lands.

Additionally, McGrath is a candidate for chief justice of the seven-member Montana Supreme Court. Montana’s voters will choose the chief justice in November’s election.

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