By the end of 2026, South Dakota residents from the far corners of the Black Hills to the southeastern tip of the state could be sharing an energy provider. Black Hills Corp. and NorthWestern Energy announced Aug. 19 that the two companies would be pursuing a merger, consolidating two of the largest public-utility providers in South Dakota.
Where do the companies operate now?
Both companies provide energy resources to South Dakota and several other states:
- NorthWestern serves 787,000 customers in South Dakota, Nebraska, Montana and in Yellowstone National Park.
- Black Hills Corp., which operates under the name Black Hills Energy for its distribution services, has a customer base of 1.35 million in eight states: Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming.
- NorthWestern has 49,882 natural gas customers and 64,839 electric customers in South Dakota.
- Black Hills Energy has 77,941 electric customers in the state.
What will the new company look like?
The merged company will be headquartered in Rapid City, S.D., where Black Hills Energy is currently based. It will have a new name and ticker symbol on the New York Stock Exchange, which is yet to be announced.
Brian Bird, current CEO of NorthWestern Energy, will serve as the company’s new CEO. Black Hills Energy CEO Linn Evans will retire after the deal closes, according to Black Hills Corp.’s 8-K form filed with the Securities Exchange Commission on the day of the merger announcement.
While both companies are headquartered in South Dakota, they have significant presences outside of the state. According to an investor presentation given on Aug. 19, 31% of the new company’s total rate base will come from Montana, with South Dakota at 17%, the second-largest portion.
How long is the merger going to take?
The investor presentation accompanying the merger announcement said the process would take 12-15 months.
During that time, the two companies will have to pursue approval from several bodies. Those include the Federal Energy Regulatory Commission and public utilities commissions in Montana, Nebraska and South Dakota.
"They have to file here for approval, and when they do file, we'll have six months from the time of filing to make a decision. During that six months, people can file written comments in the docket," South Dakota Public Utilities Commission attorney Kristin Edwards told News Watch.
Why is this important?
The transaction is considered a megamerger because of its high value.
The combined company, after the merger is complete, will have a market capitalization, or equity value, of $7.8 billion, making it the most valuable publicly traded company based in South Dakota by more than $5 billion. The next-largest is Pathward Financial, which has a market cap of $1.9 billion.
The merger is also one of the first of its kind in South Dakota's public utilities history, according to Edwards.
“I can't think of another time, off the top of my head, when there's been a large utility merger in South Dakota," she said.
In the Aug. 19 call with investors, the companies indicated that a growth priority for them as the merger closes will be data centers and other "new large-load opportunities," projects that require a large amount of energy.
NorthWestern Energy has already entered into agreements with data centers in Montana. In July, the company signed a letter of intent to provide power to a Quantica data center in the state.
“If you want to do business in our states, you are going to be talking to us,” Bird said during the call.
Will my energy rates go up or down, or will energy services be affected?
South Dakota is a monopoly state for public utilities, which means only one company operates in a specific area. Users cannot choose their energy provider.
Because of that status, the South Dakota PUC’s role is to keep energy prices in check. Customers in the state do not need to be worried about rates changing or energy services being affected as a result of the merger, Edwards said.
“They have an obligation to provide reasonable service at reasonable rates. So they cannot put themselves into a situation where they cannot serve their customers,” she said.
Will South Dakota get more transmission lines after the merger?
The combined company will operate 59,000 miles of transmission and distribution across eight states, according to the merger announcement.
About 7,000 of those miles are in South Dakota: NorthWestern currently operates 2,365 miles of distribution lines, 1,308 miles of transmission and 124 substations in the state; Black Hills Energy operates 1,234 miles of transmission and 2,627 miles of distribution in the state.
While the merger announcement referenced growth opportunities including regional transmission and natural gas transmission, there were no specific plans mentioned to increase the number of transmission or distribution lines in South Dakota. NorthWestern Energy did not respond to a request for comment regarding transmission line expansion in the state.
What about renewable energy?
Both Black Hills Energy and NorthWestern Energy have committed to clean energy goals, albeit on different timelines: Black Hills Energy pledged net-zero emissions for natural gas distribution systems by 2035, while NorthWestern said it will achieve the same goal by 2050.
Black Hills Energy did not respond to a request for comment on the company's net-zero goals by the time of publication.
In South Dakota, 77% of in-state electricity was generated from renewable resources in 2023, according to the U.S. Energy Information Administration, with the majority coming from wind and hydroelectric power through the Missouri River dams.
Both Black Hills Energy and NorthWestern Energy have significant investments in wind, solar and hydroelectric power: 44% of NorthWestern's electricity in South Dakota comes from wind resources; Black Hills Energy's most recent renewable facility, the Corriedale Wind Energy Project, serves electricity customers in both South Dakota and Wyoming.
The state currently does not produce any energy from nuclear. But the subject recently entered the conversation as a potential source for increased capacity, as data centers consider South Dakota as a valuable location.
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South Dakota Gov. Larry Rhoden and Nebraska Gov. Jim Pillen spoke Aug. 26 about the South Dakota's potential to enhance electric capabilities through small-module reactors, a nuclear energy source.
However, neither Black Hills Energy or NorthWestern Energy have yet indicated whether nuclear energy is in the company's future.
Justin Ballard, a senior associate in energy and sustainability practice and government affairs at consultant FGS Global in Washington, D.C., said the state may see both benefits and drawbacks from nuclear power.
"It provides enormous amounts of energy with a very small impact as far as land usage," Ballard told News Watch.
"The issue, of course, with nuclear that's still worth considering is the nuclear waste issue. The United States still does not have a long-term solution for nuclear waste storage. It's not an elephant in the room that can never be addressed, but it's there."
How can I get more information?
The two companies launched a website that provides information about the merger. Financial records for both companies, as well as merger information, is available to the public online through the SEC's EDGAR Public Dissemination Service System.
This story was produced by South Dakota News Watch, an independent, nonprofit organization. Read more stories and donate at sdnewswatch.org and sign up for an email for statewide stories. Investigative reporter Molly Wetsch is a Report for America corps member covering rural and Indigenous issues. Contact her at molly.wetsch@sdnewswatch.org.
