South Dakota regulators approve Northwestern–Black Hills merger under settlement conditions

PIERRE, S.D. — The South Dakota Public Utilities Commission voted unanimously June 24 to approve two settlement stipulations and the joint application for a stock‑for‑stock merger of Northwestern Energy and Black Hills Corporation, the commission said at a hearing in Room 413 of the State Capitol.

Chairman Nelson opened the hearing by asking how the commission should proceed on docket GE25‑001 and then moved that the commission "grant the joint motion for approval of two settlement stipulations and the stipulation for the entry of all prefiled testimony and exhibits, and that the commission approve the joint application for approval of merger subject to the terms and conditions stipulated to by the settling parties." The motion carried with Commissioners Hansen and Feagin voting aye.

Kathy Sabers, representing Black Hills Corporation, told the commission the transaction is a stock‑for‑stock merger "with no incremental debt, no transaction costs, and no cash exchanged at the time of close," and that joint applicants’ testimony from five witnesses showed the merger would not cause increased rates or a decline in service quality for South Dakota customers. "There is no likelihood of adverse impacts to South Dakota customers," Sabers said, summarizing the applicants’ position.

Staff recommended approval. Logan Schaeffauer for commission staff said he and staff retained a consultant and reviewed other states’ merger proceedings before negotiating the settlement. "We were able to reach a settlement with the joint applicants that, if approved, we believe removes any likelihood of significant adverse impacts to South Dakota customers," Schaeffauer told commissioners.

The consultant Mr. Pfaff said South Dakota’s statutory test — whether there is a "likelihood of significant adverse impacts to South Dakota customers" — is narrower than some other jurisdictions’ standards and shaped the staff review. He described focusing on merger risks that could meet that higher threshold and said the settlement addresses those risks.

Labor union intervenor LIUNA (the Laborers' International Union of North America) supported a separate settlement with the joint applicants. William Taylor, who appeared for LIUNA local 620, described the agreement as patterned on settlements in Montana and Nebraska and said the union sought to increase South Dakota hiring opportunities and ensure construction quality and safety: "The purpose of the settlement ... is to assure that for construction work done in South Dakota, we maximize hiring South Dakota residents in the course of construction," Taylor said.

Commissioners asked multiple questions before voting. Commissioner Feagin pressed staff on the timing and completeness of exhibits and asked whether the settlement prevents recovery of golden parachute or severance payments from ratepayers; staff said the stipulation excludes such recoveries. Applicants clarified that retention awards and any golden‑parachute or change‑in‑control payments would be paid by shareholders and not sought from South Dakota customers.

Brian Bird, a joint‑applicant witness, told commissioners the companies do not plan immediate changes to customer service locations or operations on day one and that it could take roughly two years for operational practices to be harmonized. The applicants said Northwestern and Black Hills would remain separate operating utilities after closing and that future rate changes would require separate rate proceedings.

Other protections in the stipulations noted during the hearing include enhanced ring‑fencing measures, commitments to maintain a corporate presence in South Dakota (including a five‑year presence in Sioux Falls for Northwestern), and requirements that certain informational filings be made available in the commission docket so commissioners can review them.

After discussion, Chairman Nelson made the motion to approve the settlements and the merger subject to the stipulated protections. The roll call recorded Commissioner Hansen: aye; Commissioner Feagin: aye; Chairman Nelson: aye. The commission announced the motion carried.

Public comment followed the vote. Frank Klochek, appearing online, urged a pause and raised concerns about market concentration and other long‑term impacts, including claims about data‑center energy usage that Klochek said were in public materials he submitted to the commission. The commission noted that the approval under the settlement does not itself change rates and that rate changes would require a separate proceeding.

Commissioners also reminded the room that South Dakota law requires the commission to act on the application within 180 days of filing. The meeting adjourned after the vote and public comment.

What the order does and does not do: the approved stipulations resolve contested issues in the merger docket and impose conditions intended to protect South Dakota customers; they do not, by themselves, change customer rates, which would require future rate cases, nor do they eliminate the commission’s future regulatory jurisdiction over the operating utilities.

The South Dakota Public Utilities Commission adjourned after the action.