PPL Montana Leery of Mounting California Debt

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PPL Montana Leery of Mounting California Debt LCG, Dec. 18, 2000--PPL Montana, the power producing firm formed when PPL Corp. of Pennsylvania purchased the generation assets of Montana Power Co., said Friday it would go on shipping some power to California, but was keeping a close watch on the Golden State's bank balance.

"The primary obligation of PPL Montana is to supply the needs of the customers of the Montana Power Co. under a long-term contract," said Roger Petersen, president of PPL Montana. "We have been operating these plants at full capacity, regularly selling electricity to other electric utilities in the Northwest, and to California entities that can move power directly into that state."

PPL Montana sells electricity not needed in its home state into the wholesale power market of the Western Systems Coordinating Council, which covers the 14 western states. Power sold anywhere into that system can be of benefit to California. But PPL wants to make sure California can pay its bills.

"We have been monitoring the situation in California very carefully and we are doing our part -- within the guidelines of our risk management program -- to provide needed electricity," said Larry De Simone, president of PPL Energy Plus, the company that markets electricity produced at all of PPL Corp. power plants.

"At PPL, we have a very disciplined approach to the energy marketing business and that includes managing our exposure to credit risk," De Simone added. "The mounting debt of the California ISO members, and their continuing ability to pay the California ISO for power, is a concern that we have addressed to protect the interests of PPL shareowners."

De Simone acknowledged that his company had received a directive from the U.S. Department of Energy to continue to sell power to California purchasers. "While we still have significant concerns about the creditworthiness of the California ISO, we will comply with the DOE order to supply that market directly, after we have met our firm contractual obligations to Montana Power and to other parties in the Western Systems Coordinating Council," he said.

http://www.energyonline.com/Restructuring/news_reports/news/1218ca3.html

-- Martin Thompson (mthom1927@aol.com), December 18, 2000


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