Opposing parties present closing arguments on proposed NorthWestern merger

A hearing before the Public Service Commission concluded Friday when the opposing parties gave their closing argument for NorthWestern Energy’s and South Dakota-based Black Hills Energy’s proposed merger after four days of witnesses and examinations.

“We are going to keep these brief; it’s been a long week,” PSC Vice President Jennifer Fielder told the lawyers facing the five-person body ahead of the closing arguments.

If the merger is successful, ratepayers will get a one-time $18 credit for the electric bill.

Representing Black Hills, attorney Wiley Barker said that there would be no rate increase associated with the merger. Further, he emphasized that the PSC would be able to continue to regulate rate increases in the future. NorthWestern shareholders will own 44% of the proposed merged entity, called Bright Horizon Energy Company, while Black Hills will own 56%.

“These two reliable Montana utilities will continue to provide quality services throughout the same systems by local employees and the merged entity Bright Horizon Energy will ensure the Montana utilities will be willing, and able to serve, which is what you'd expect when two excellent companies come together,” Barker said.

Barker referenced settlements other parties reached in advance of the merger hearing to alleviate groups’ concerns, including with the Montana Consumer Council. Other parties included the City and County of Missoula, labor unions and the Large Customer Group, which represents large business interests.

“This is a wide array of Montana interests, and you've heard from them directly, and all of these settlement parties have resolved their concerns and their opposition to the merger,” Barker said.

Two remaining parties — environmental group 350 Montana and the Montana Farmers Union — didn’t agree to a settlement. Attorney and former PSC candidate Monica Tranel represented them.

She opened with one sentence she heard from a witness for the merging parties: “Capital is not finite.” Tranel asked if that is true for anyone else besides the utility companies. Both have publicly stated that the merger would bring greater opportunities for data centers in the future. Black Hills currently powers a data center for Microsoft in Cheyenne, Wyoming for roughly $200 million, Tranel said.

“Who says capital is not finite? The people who came here and asked this commission to sell Montana down the river,” Tranel said.

Attorneys for the merging parties repeatedly objected to the insertion of data centers during the hearing, but Tranel repeatedly emphasized the subject.

She further speculated that with the merger, energy from Colstrip could be used to power the data centers in Wyoming and elsewhere, amid concerns that those electricity and infrastructure costs would be subsidized by ratepayers.

“Whatever they want for people who, for whom capital is not finite, whatever they want, who stops them? You do here, now, today.” Tranel said.

The attorney for the opposing parties noted what was left out of the record including enforceable customer savings and the large load tariff affecting data centers that’s currently undecided upon in a separate item.

“Don't accept promises,” Tranel said. “This is not a place for hopes and dreams. This is a place for boring numbers and for you to do right by your constituents — for you to go home and say I voted against that merger, because I understand that for you, for us, capital is finite, and I killed that merger to protect Montana.”

NorthWestern attorney Mike Green responded by saying they “can’t win” as they tried to make it a straightforward decision for regulators.

“We have been repeatedly criticized for filing overly complicated and complex cases in front of this commission,” Green said. “We now file a case that's very simple, addresses the one issue that has one legal threshold, and now we're getting criticized because we're not addressing everything related to utility regulation in the state.”

Still, in his closing statement, Green noted the weight of the decision before commissioners that will be decided in the coming months. The PSC will have to determine whether the merger is in the public interest, won’t harm customers and will be an overall benefit. Counsel said data center decisions will be faced in the future whether the merger happens or not, with NorthWestern CEO Brian Bird testifying during the hearing that the move was about stability and growth.

“Some of you have asked this week, what do you tell your constituents about this merger?” Green said. “I want to help you with that. You can tell them, ‘I spent three and a half days looking the leadership of this new company in the eye and asking them tough questions.’ Now we all agree that we are facing record energy demands in the future, and I think that the team that I saw in question can help us meet those demands. You can tell them this merger is going to create a stronger support system and help Northwestern be more efficient and resilient.”

The merger will still require approval from regulators in Nebraska and South Dakota. The companies expect the transaction to complete in the second half of this year. Shareholders of both companies have already approved the merger.