While Eastern Pennsylvania utility, PP&ampL Resources, continuedits cross-country expansion, annexing assets in Montana and Maine,former utility Montana Power mapped out a future in oil, gas andtelecommunications.

PP&ampL announced last week it was purchasing the energymarketing operation of Montana Power to go with the 13 power plantsit is already in the process of purchasing from the same company.All key employees of the marketing operation agreed to joinPP&ampL. The energy marketing and trading operation will remain inButte but become part of PP&ampL EnergyPlus, the company’sunregulated marketing arm. It will sell electricity in both thewholesale and retail markets in Montana and the Northwest.

Through its PP&ampL Montana LLC subsidiary, PP&ampL Resourcesalready is in the process of Montana Power’s majority share inplants with 2,600 MW of capacity. It will acquire the rest fromEnron/Portland General Electric and Puget Sound Energy. PP&ampLexpects to own the plants by year-end.

“The Montana plants are especially important,” according toRoger Petersen, CEO of PP&ampL Montana, “because they are locatedin the vast Western Systems Coordinating Council (WSCC), whichincludes all the western states and Canadian provinces of Albertaand British Columbia. We envision that other plants acquired orbuilt in the western United States – such as the 600 MW plant aPP&ampL Resources company is developing in Kingman, AZ, – will usethe Montana-based marketing and trading organization.” The groupalso will do the trading for the 13 plants being acquired. Oneindustry source suggested marketing power west into other portionsof the WSCC will be a challenge because of the shortage oftransmission capacity from Montana.

Montana Power said last year it would exit the electricitytrading business because it represented too much risk for a companyits size without generating assets to back up sales. The companywill remain in gas trading and marketing to support its domesticand foreign petroleum exploration and development efforts and itsgas commodity retail marketing activities.

Montana Power’s E&ampP focus has been shifting from oil tonatural gas since 1996, said Jim Benner, president of NorthAmerican Resources Co., Montana Power’s E&ampP division. Gas nowaccounts for about 80% of North American’s business. The companyalso is active in coal. North American accounts for about 10% ofMontana Power’s revenues.

Telecommunications is seen by Montana Power as its primarygrowth engine, said spokesman Cort Freeman. The company has 10,000miles of fiber optic cable in the ground now and expects to have18,000 miles by the end of 2000, border to border and coast tocoast.

Meanwhile PP&ampL continued its expansion outside themid-Atlantic region last week, taking possession of most of Bangor(ME) Hydro-Electric Co.’s generating assets and certaintransmission rights. PP&ampL Global, a PP&ampL Resourcessubsidiary, picked up all but one of Bangor Hydro’s hydroelectricassets, as well as its interest in an oil-fired generationfacility. The assets have a total base load capacity of 83 MW.PP&ampL Global paid $79 million. The closing was approved by theFederal Energy Regulatory Commission, the Maine Public UtilitiesCommission and other agencies.

PP&ampL Global also is snagging Bangor Hydro’s long-term rightsto transmit power over the Maine Electric Power Co. (MEPCO)transmission facilities connecting the New England Power Pool(NEPOOL) to New Brunswick, Canada; Bangor Hydro’s rights as aparticipant in the regional utilities’ agreements with Hydro Quebecpursuant to an agency agreement; and Bangor Hydro’s rights todevelop a second high-voltage transmission line that will connectNEPOOL to New Brunswick, Canada. The proposed transmission line hasbeen reviewed by all necessary federal and state agencies.

PP&ampL Resources, based in Allentown, PA is aiming to amassabout 20,000 MW of electric generation capacity in key U.S. marketsin the next five years. Including current acquisitions andconstruction the company is only about 8,000 MW short of its goal.

Joe Fisher, Houston

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