DOJ: News Release

McGrath: On Eve of Trial, State Settles with Avista

HELENA – Montana Attorney General Mike McGrath said Tuesday that the state has reached a settlement with Avista Corporation, one of two remaining power-generation companies named in a lawsuit seeking payment for the use of state lands. Spokane-based Avista operates two major hydroelectric dams on the Clark Fork River in western Montana.

“This is a very fair agreement for the state’s school trust,” McGrath said. “Both sides worked very hard to get to this point.”

Under the terms of the agreement:

  • Avista agrees to pay rent to the state each year beginning with calendar year 2007, and continuing through 2016.
  • The initial amount of the rent is $4 million per year.
  • The rent will be modified each year, with the base amount of $4 million adjusted upward by the Consumer Price Index annual average for the calendar year for which payment is due.

Representatives of the Attorney General’s Office and Avista signed the settlement Friday October 19th. The Avista agreement was sealed until today to allow the company time to comply with disclosure obligations required by the Securities and Exchange Commission.

The agreement also provides for Avista’s rent to be adjusted if PPL, either through litigation or settlement, receives a determination that the valuation of PPL’s land is more favorable to it than the valuation in the Avista settlement. Similarly, if the state enacts a statute, rule or policy that’s more favorable to Avista, the Avista rent will be adjusted.

The trial involving the remaining power-generation company, PPL Montana, began Monday in First District Court in Helena. The state reached a settlement with a third power-generation company, Pacificorp, in June.

“Our position is that other users of state trust lands are required to reimburse the people of Montana,” he said. “The same standard should apply to the hydroelectric power companies.”

The terms of the Avista settlement must be approved by the district court and the state Land Board before the agreement is final.

Avista is a regulated utility, serving electricity customers in Idaho and Washington.

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