PP&L Resources, the Pennsylvania, US-based utility, has agreed to buy 13 power plants from Montana Power for US$1.6B. The total price represents a multiple of 1.55 for the book value of the assets or US$607 per MW for the plants, which include 11 hydroelectric plants.
Drawing on the region’s vast hydro power resources, power prices in the Pacific Northwest are among the lowest in the US, averaging about three cents per kWh when compared with a national average of almost seven cents per kWh.
For PP&L however, a key element of the deal was hooking up to the western power grid, which gives them access to California’s US$20B retail power market.
The Montana purchase follows PP&L’s agreement last month to buy Bangor Hydroelectric Company’s generating plants, giving it assets in New England.