Attempting to draw a clear line in the sand with state regulators, PPL Corp. yesterday openly questioned the Montana Public Service Commission’s authority over the company’s power plants in the state, and PPL said it wouldn’t rule out the possibility of taking legal action in response to a PSC order issued Tuesday.

At issue is a PSC order directed at Montana Power Co. PPL asserts that the PSC used the order as a vehicle in which to indicate that it has regulatory authority over PPL Montana’s power plants. “The state of Montana has no authority to direct PPL Montana to sell electricity at a given price,” said Joanne Raphael, PPL vice-president for external affairs. “The federal government has given us the right to sell power from these plants at market-based rates.”

“Despite an attempt by the PSC to construct some legal basis for authority to dictate the terms under which we sell electricity generated at our Montana facilities, there simply is no legal justification for such a conclusion,” Raphael said. “If the PSC continues to pursue this misguided reasoning, we would be forced to pursue a challenge to such an illegal action.”

PPL Montana, a subsidiary established by PPL in 1999, operates two coal-fired power plants and 11 hydroelectric facilities in the state generating about 1,150 MW. PPL has offered to supply Montana Power with 500 MW of power produced by PPL’s plants at 4 cents per kWh for five years. PPL has already signed an agreement providing for this power supply and is awaiting signature from Montana Power. That contract must be approved by the PSC. “It would be extremely unfortunate for the people of Montana if the PSC puts at risk a contract that would provide for about two-thirds of Montana Power’s electricity supply needs at very attractive prices,” said Raphael.

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