SIOUX FALLS, S.D.,
April 17, 2014 /PRNewswire/ -- NorthWestern Corporation d/b/a
NorthWestern Energy (NYSE: NWE) today announced that FERC issued an
order affirming a FERC Administrative Law Judge's (ALJ) initial
decision issued in September 2012
regarding cost allocation at its Dave Gates Generating Station
(DGGS).
We operate a transmission system and balancing authority within
Montana and are charged with the
responsibility of providing safe and reliable electric service to
both retail and wholesale customers. Today's order found that
a significant portion of DGGS costs could not be allocated to
wholesale customers under NorthWestern's proposal. Costs
allocated to our retail customers are being recovered and not
impacted by this decision.
As previously reported, since receiving the initial decision in
2012, we have recognized revenue consistent with the ALJ's initial
decision. As of March 31, 2014
we have approximately $27.0 million
of cumulative deferred revenue that is subject to refund as a
result of this order. We do not anticipate any incremental
negative impact to ongoing earnings. However, we will be
required to evaluate the order and our alternatives to determine if
an impairment charge on DGGS will be required.
"While we obviously disagree with the decision today, we
continue to be legally obligated to provide the balancing service
to FERC jurisdictional customers and meet strict reliability
criteria or face stiff penalties. This is the only asset we
have to meet this obligation and we certainly expect to be
reimbursed for the costs incurred and fairly compensated for our
investment," said Bob Rowe,
President and Chief Executive Offer. "The necessity of the plant
has never been in question and, in fact, the parties, including
FERC Staff, agreed through stipulation to a total revenue
requirement for DGGS. The plant came in nearly $20 million under budget, has performed as
intended, and now FERC has decided to deviate from its previously
approved costs allocation methodology. One side of FERC has
ordered us to meet reliability criteria and another side of FERC
has obstructed our ability to recover our costs of providing that
service. From where we sit in Montana, this decision appears
confiscatory."
We are reviewing the decision and have 30 days to decide if we
will pursue our full appellate rights through rehearing to
FERC. If unsuccessful on rehearing, we could appeal to a
United States Circuit Court of Appeals, which could extend into
2016 or beyond.
Excluding any potential one-time impairment charge as a result
of this decision, we continue to affirm our current 2014 earnings
guidance of $2.60 - $2.75 per diluted
share.
SOURCE NorthWestern Corporation