NorthWestern Energy plans to conduct "Open Seasons" as planned for two major transmission projects following the Federal Energy Regulatory Commission's (FERC) recent action on the company's petitions.

FERC affirmed its support of the company's efforts to build new transmission on congested pathways. FERC encouraged the company to develop the Mountain States Transmission Intertie (MSTI Project) on a cost of service basis by requesting appropriate tariff waivers to provide for the flexibility to efficiently and effectively facilitate the project development. FERC also agreed with the company's proposed pricing for the Collector Project and the general approach for the Collector open season process.

"The FERC Orders are complex and required time to fully sort through all of the details," said Dave Gates, Vice President - Wholesale Operations. "However, after careful review, we regard the Orders as providing necessary guidance from FERC and supporting the development of both projects. Accordingly, we will continue to develop the projects without delay or interruption."

In requesting market-based rates for MSTI, NorthWestern Energy followed the approach that FERC has approved for similar projects in the region, including the Montana-Alberta Tie Line and TransCanada's proposed Chinook project. NorthWestern Energy believed that this approach would provide it with flexibility to meet market conditions and would best insulate its native load customers from the costs and risks of the project. Although FERC denied the company's request, it provided strong encouragement for continuing with the project using a more traditional approach.

To quote the Order, "We also recognize the Petitioners' desire to insulate native load customers from the costs and risks associated with an export-only project...we believe that NWE has ample opportunity to accomplish its objectives and construct a project comparable to the MSTI proposal on a cost-of-service basis by requesting appropriate tariff waivers." In support of the MSTI Project, FERC further noted "...we acknowledge the need for innovative proposals to develop new transmission projects, especially in regions rich in potential to deliver renewable energy to load centers."

As to the Collector, FERC approved NorthWestern's proposal to directly assign the cost of the project to the generators. This has the effect of insulating native load customers from the cost of the project. While FERC deferred ruling on NorthWestern's request for waivers, FERC specifically found the proposed open season process to be a reasonable means of accommodating a large number of interconnection requests in the queue.

The open seasons for the MSTI and Collector projects will be conducted on a transparent basis in order to ensure fairness and non-discriminatory access. The results of the open seasons will be used to size the projects according to customer demand. The open season process will also ensure that the projects have sufficient contracts with creditworthy shippers to support financing.

With more than 5,000 megawatts of proposed new electric generation - much of it wind energy - that has sought access to the transmission system in Montana, the company has proposed two major projects - MSTI and the Collector Project - to facilitate development of these projects.

The Collector Project consists of up to five new transmission lines in Montana that would connect new generation, primarily wind farms, to the existing NorthWestern Energy transmission system and to the proposed Mountain States Transmission Intertie (MSTI). Most of the new proposed wind generation that would be served by the collector system would be located in north central, central, south central and eastern Montana.

MSTI is a proposed 500kV transmission line that would run near Townsend, Montana to near Midpoint, Idaho. The project is currently undergoing environmental review with a draft Environmental Impact Statement due in late-2009.