PSC approves NorthWestern merger

The Public Service Commission this week approved a merger between NorthWestern Energy and South Dakota-based Black Hills Corporation. Once the deal is finalized, the $15.4 billion merger will create a new utility, Bright Horizon Energy, which will provide electric and natural gas services to over 2 million customers across Montana, Wyoming, Colorado, South Dakota, Nebraska and Arkansas. NorthWestern, Montana’s largest utility provider, will be a wholly owned subsidiary of Bright Horizon. 

The vote narrowly passed 3-2 on Tuesday. Commissioners Annie Bukacek, Kirk Bushman and Jennifer Fielder voted in support. Commissioner Randy Pinocci and PSC President Jeff Welborn voted against the proposal. 

Fielder recognized bigger is not always better but said a larger, merged utility could take out loans with lower interest rates and have reduced operating costs that could be passed on to customers. 

“To be able to to be able to take out a loan at a lower interest rate for multimillion-dollar projects makes a big difference,” Fielder said. “And that’s a big savings to Montana rate payers when they do that.”

Bushman said existing ratepayers were sufficiently protected from power bills going up as a result of the merger. “This application does not raise rates,” he said. “It does not change the jurisdiction of the commission regarding how we regulate these utilities. None of those things will change.”

The PSC’s decision this week regards whether or not to allow NorthWestern to merge with Black Hills. While the merger itself does not come with a rate increase, once the merger is complete a rate increase could still apply in the future through a rate case the merged company would bring to the PSC. The commission is still required to publish a final written order following Tuesday’s vote to finalize the decision. 

In an email to Montana Free Press, NorthWestern spokesperson Jo Dee Black wrote that the merger would ultimately benefit the utility’s customers. “If completed, the merger will position us to successfully continue delivering safe, reliable and affordable energy to the communities we serve with expanded scale, strong local roots and a shared commitment to service.” 

Pinocci is concerned that the merger does not benefit existing ratepayers, and doesn’t address the worries he’s hearing from his constituents. “What are we going to do about lowering the rates for the people?” he asked. “That’s what they want. That’s what they’re electing us for. And you know what they keep telling me? Their rates are just going up.” 

He’s also worried the merger could create a bigger monopoly that benefits the companies involved far more than their customers. 

Welborn said he was a “no” vote because didn’t see the merger being a positive or a negative for existing customers, “I don’t feel like it’s a bad deal. But I don’t see where there’s a clear benefit to advance the public’s interest here. We might be going through change for the sake of change.”

Montana was the last state to vote on the merger. Similar regulatory agencies in South Dakota and Nebraska have already issued their approval. Black said the companies have also secured all federal regulatory approvals. 

This merger is not the only regulation the PSC is considering for NorthWestern Energy. The utility’s plan for how it will generate power for the next 20 years, a large-load tariff that would apply to data centers, and ongoing requests for reconsideration of the rate case decided last year are also under review. The commission is also facing an ongoing legal challenge over failure to consider climate change in utility regulation. 

Tuesday’s vote occurred after two-and-a-half hours of public comment from 35 people. The majority of comments were opposed to the merger and included concerns over the risks a merger could have for Montana ratepayers, including data center-related demands and continued rate increases. 

Several commenters, including Brian Miller of Helena, said the merger was motivated by the utilities’ interests in profits and powering data centers. “I think we all know that this is not being driven by public service right now,” Miller said. “This merger is being driven by private interest, it’s being driven by data centers.”

Miller and others questioned why the PSC would decide on the merger before large-load tariffs, a specific set of rules a utility can apply to massive power consumers. The objective is to protect other customers from rate increases, including preventing the utility or its customers to be shouldered with abandoned assets if a company like a data center pulls out of a project. 

“Right now, you’re shooting in the dark,” Miller said. “You can’t guarantee anybody that they will be protected, and I don’t even know if that large-load tariff case will do it either. But that will at least give you more information, which I think would be in the public interest.”

Kristen Wing of Thompson Falls also asked the commission to vote against the merger. 

“I’m deeply concerned about Montana’s energy future, particularly the growing push to attract massive data centers,” Wing said. “Montana ratepayers do not trust the dynamics of this merger. We have legitimate questions about who benefits, who pays and who is left holding the bag if these plans don’t work out.”

A Montana Free Press-Eagleton Poll conducted earlier this fall found nearly three-quarters of registered voters in Montana oppose data centers being built in their city or in a neighboring county. That poll also showed 92% of registered voters in Montana said the state government should create regulations to limit the impact data centers have on the price of power.

Commissioners Fielder and Pinocci acknowledged that data-center regulation was a concern they regularly hear, but said it is the responsibility of the state Legislature, not the PSC, to manage data centers.