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Probe of tax attributes deepens at PSC hearing after companies update NOL figures
Summary
On May 15, witnesses discussed differences between company NOL figures provided to the commission and those disclosed in SEC filings. Opponents said the discrepancies show late and incomplete disclosure; Northwestern said NOLs are handled in rate cases and protective settlement terms prevent harm now.
Helena, Mont. — Net operating losses (NOLs) emerged as a focal point on the fourth day of testimony in the Montana Public Service Commission’s review of the proposed Black Hills–Northwestern merger.
350 Montana counsel and intervenor witnesses pressed witnesses about differing NOL numbers in early data responses and later public disclosures. In a January email cited on the record, an internal figure for Black Hills NOLs was listed as $380,100,000; the company’s January response to PSC data requests reflected a different amount and the parties supplemented those responses on April 30 and May 11.
"Thanks for providing 380,100,000 for Black Hills NOL at 12/31/2025," an internal exchange showed in cross‑examination, and Northwestern witness Crystal Lael acknowledged updates were filed with the PSC and that related information had been included in routine 10‑K filings.
Opposing parties argued the staggered disclosures complicated the commission’s ability to fully evaluate the merger’s economic effects on Montana ratepayers. "The point being what you were telling your investors and filing publicly is different from what you were telling the commission," one attorney said; Lael disputed that characterization and said the information was publicly available when 10‑Ks were filed.
Technical witnesses and intervenors told the commission NOLs can be valuable when monetized; 350 Montana’s expert said the combined entity could monetize NOLs in ways that produce cash for the parent rather than direct, immediate reductions to Montana customer bills. Northwestern witnesses said accounting and rate‑making rules (deferred income tax tracking and subsequent rate cases) provide a mechanism for the PSC to ensure Montana customers are not harmed.
The commission pressed both sides on how such tax attributes would be treated post‑merger and on whether any monetization would be reflected back to Montana ratepayers. Commissioners emphasized that while NOLs and deferred tax balances are often reviewed in later rate cases, the commission can and should specify conditions now if it deems additional protections necessary.
No commission determination was reached Friday. Parties will submit post‑hearing briefs June 5 (joint applicants) and July 2 (interveners), giving the PSC additional material to consider on this and other contested issues.
