Joint applicants defend Bright Horizons merger at Montana PSC hearing, face questions on data centers and Colstrip

Witnesses for the joint applicants told the Montana Public Service Commission on May 13 that the proposed merger of Northwestern and Black Hills would produce financing and operational benefits that are only achievable by combining the two companies. Brian Bird, who identified himself as president and chief executive officer of Northwestern Corporation, said the merger would improve the combined companies’ credit profile and allow the enterprise to raise capital more cheaply.

"Further, we expect the transaction to be accretive and at each company's shareholders in the first full year post closing," Bird told commissioners, repeating language from investor materials the parties put into the record. Bird also testified the combined company would pursue scale to support transmission and other large investments.

Counsel and commissioners repeatedly asked whether data centers were a driver for the transaction. Under cross‑examination, Bird acknowledged his investor presentation lists data centers among four growth opportunities but said the company’s regulatory filings modeling EPS growth did not rely on data‑center revenues. "We are both pursuing data centers today, and we both expect to be successful pursuing data centers today, but on a combined basis…that's a fair statement," Bird said on the record.

The commission probed how the applicants intend to treat the companies’ Colstrip interests, particularly the 370‑megawatt Puget share. Counsel asked whether Montana customers will pay operating costs now associated with that share; witnesses said they are not recovering those Puget costs from Montana customers today. The applicants said the purchase was intended to protect Montana’s resource interests and that decisions about putting Puget into Montana rate base would require separate regulatory proceedings and demonstration of need and cost recovery.

On executive compensation, witnesses and counsel clarified figures disclosed in the S‑4. Witness Crystal Veil — who answered questions about the S‑4 and merger benefits — said the large dollar amounts listed in the filing are SEC disclosure calculations that reflect accelerated payouts in the event of termination, not guaranteed ‘‘closing bonuses.’' "No. We will not" seek to recover the $10,000,000 residential bill credit from customers, Veil testified when asked whether a credit would be recovered in future rate proceedings.

Commissioners repeatedly raised the question of regulatory oversight and control after the merger. The applicants proposed an 11‑member Bright Horizons board with fiduciary duties to the combined enterprise; applicants said fiduciary duties and ring‑fencing commitments would be applied to protect Montana customers. The joint applicants also amended testimony and exhibits on the record to reflect corrected timing of investor communications: witnesses confirmed the press release and investor materials were publicly posted at 5 a.m. Mountain time on August 19, and that Montana commissioners were called after the boards voted the evening of August 18.

The commission admitted investor call transcripts and slide decks into the evidentiary record over objections from applicants who sought to limit the scope; commissioners said the documents help the record show what applicants told investors about potential opportunities. The hearing continued into late afternoon with interveners presenting settlement witnesses and related commitments.

The hearing will resume the next scheduled day for additional testimony and exhibits.