Montana PSC hears wide public split and intense questioning as merger testimony begins

The Montana Public Service Commission opened a multi-day evidentiary hearing on May 12 in Helena to consider docket 2025.10.078, the joint application by Northwestern Corporation, Black Hills Corporation and Northwestern Energy Group for approval of a stock-for-stock merger.

The day began with 30 minutes (stretched to cover more speakers) of public comment that included sharply divided views. Elected officials and business groups — including Representative Gary Perry, the Helena Area Chamber's president Callie Asham, chambers in Missoula and Billings, regional economic-development advocates, and construction contractors — told commissioners they support the merger as a way to secure long-term reliability, access to capital for transmission and generation investment, and protection for business growth. Opponents, including several individuals and environmental and consumer groups, urged delay or rejection amid worries about lack of transparency around proposed data centers; potential impacts on residential rates, water and local control; and concentration of decision-making outside Montana.

After public comment the commission moved to preliminary matters and admitted a large set of prefiled exhibits and testimony, including multiple settlement packages the joint applicants said resolve contested issues with several intervenors. The commission also ruled on a motion by 350 Montana to de-designate confidential materials, denying the motion except as to an SEC-filed S-4 that had been made public. The chair ruled on a broad slate of disputes about admission of specific data responses; the record now includes numerous data responses and preserves others for confidential handling as the commission directed.

Joint applicants' opening statements framed the transaction as a stock-for-stock "merger of equals" that will (they said) strengthen the utility's financial resilience without imposing transaction costs or goodwill write-ups on Montana customers. Counsel pointed to settlement commitments including a one-time, $10 million residential bill credit and to ring-fencing measures and other conditions the applicants say preserve the commission's regulatory authority.

Northwestern's chief financial officer Crystal Veil was sworn as the joint applicants' first witness and gave testimony that the commission admitted as part of the record. Cross-examination by interveners 350 Montana and the Montana Farmers Union focused on investor-facing materials the companies filed in August and subsequently with the SEC. Key points from that questioning included:

- Investor rationale and return targets: Veil acknowledged investor-facing statements that the combined company aims to improve financial metrics (the presentation cited a target range expressed as "5'7%" in investor materials). She told the commission that achieving that target relies principally on (a) balance-sheet optimization (taking equity out of the financing plan), (b) achievable synergies in procurement/operations and (c) additional incremental growth opportunities (for example, serving new large loads such as data centers), although she said the first two elements would produce substantial benefit even without the incremental-growth opportunities.

- Quantified benchmarking and confidentiality: Veil confirmed that third-party benchmarking (PwC) and internal analyses estimate a gross, enterprise-wide value-creation or "savings opportunity" in the range roughly described in the record as $48 million to $70 million (the joint applicants' public summary and the confidential attachments provide the full detail). She described a narrower non-labor-savings estimate in the $25'3 million range and a labor-related estimate cited around $36 million; she also said timing for realizing those savings is variable and some details were provided under the hearing's confidential procedures.

- Executive compensation and transaction costs: Commissioners and interveners pressed Veil about change-in-control and retention payments disclosed in SEC filings (the S-4 exhibits show disclosure figures that several intervenors aggregated to roughly tens of millions across executives). Veil said the SEC numbers represent required disclosure of hypothetical change-in-control payouts and that the joint applicants have committed that those amounts (and transaction fees) will not be recovered from Montana ratepayers.

- Colstrip and recently acquired interests: Questioning turned to the company's recent acquisitions of Colstrip interests (Avista and Puget shares), and the roughly disclosed quarterly operating-cost impacts that the company had described in investor materials (Veil acknowledged public statements estimating incremental Avista/Puget costs). Veil said the Avista portion is being addressed through a PCAM waiver and that Puget's treatment is subject to other dockets and the ongoing Colstrip investigation; she emphasized that those items are being litigated or processed in other, separate PSC dockets rather than as part of the merger decision.

- Cost allocation, ring-fencing and regulatory authority: Commissioners repeatedly pressed whether the merger would reduce Montana's influence over strategic investment decisions, and whether cash or earnings "upstreamed" to a merged holding company could leave Montana short in the event of a shock such as wildfire or a large project failure. Veil said the merger does not change the PSC's statutory oversight of the Montana utility, that pre-existing ring-fencing protections (adopted in earlier dockets) remain in place and were reaffirmed in settlement commitments, and that cost-allocation work and IRP-level coordination studies are to be performed post-closing and in their appropriate dockets.

Commissioners noted limits on what the joint applicants could disclose or negotiate pre-closing: under antitrust constraints the companies said they cannot jointly solicit vendor bids or negotiate combined-supply contracts prior to closing, so some supplier- or procurement-specific savings remain conditional on post-closing integration and will be supported by confidential benchmarking submitted to the record.

What the commission decided on day one

- The commission denied 350 Montana's motion to de-designate confidential information except for S-4 material the SEC had made public. (Chair's ruling recorded on the record.) - The commission admitted a set of data responses and prefiled exhibits while sustaining several targeted objections; a list of admitted/refused response IDs was placed on the record. - The joint applicants' amended rebuttal testimony for Crystal Veil (JA2 as amended) was admitted without objection; several intervenors waived cross-examination of some settling-party witnesses.

What remains and next steps

No final decision on the merger was made on May 12. The commission scheduled confidential follow-up examination on data identified as confidential (including MCC 10 attachments and other detailed benchmarking) and directed that remaining confidential issues be handled in closed session. The hearing recessed for the day with plans to resume May 13 at 8:30 a.m. for public comment and 9 a.m. for the evidentiary hearing. The commission and parties signaled they will continue to weigh (a) the applicants' financial case for scale and financing advantages, (b) confidential benchmarking supporting asserted synergies, (c) the treatment of Colstrip interests and cost allocation, and (d) conditions in settlements intended to safeguard Montana customers.

Why it matters

The proposed transaction combines two utilities whose combined footprint and financial profile would shift governance and scale in ways that affect capital access, credit metrics, procurement and the ability to serve large industrial loads. Commissioners must decide whether the combination will cause "no harm" to Montana ratepayers and whether settlement terms and existing regulatory protections — including ring-fencing, commitments not to recover transaction/retention costs from customers and post-close compliance filings such as updated cost-allocation manuals and IRP coordination — are sufficient to protect Montana customers.

What to watch next

The commission will take confidential testimony on detailed benchmarking and the joint applicants' internal analyses; it will also receive additional witness testimony in the joint applicants' case-in-chief (including Black Hills witnesses) and continued questioning from intervenors and commissioners. Separate dockets (PCAM waiver, Colstrip investigation, and Northwestern's large-load tariff) will continue in parallel and may bear on how specific assets and potential data-center loads are treated for rate and cost-allocation purposes. The PSC typically issues a written interim or final order after the evidentiary record closes and the commission deliberates in a publicly noticed work session.

Sources and provenance: This article is based entirely on the May 12, 2026 public hearing transcript in docket 2025.10.078; key transcript spans include public comment (SEG 073'152; SEG 164'199 etc.), preliminary rulings (SEG 1734'1812; SEG 2239'2264), joint applicants' opening (SEG 2460'2707), and Crystal Veil direct/cross examination including investor materials and SEC S-4 references (roughly SEG 3170'7920, SEG 3960—208, SEG 5130—700). Direct quotations in this article are verbatim from the transcript where indicated.

Ending note: No final merger decision was reached; the commission recessed and will continue the evidentiary record, including a confidential session planned by the commission before additional redirect and testimony.