NorthWestern Energy Group, Inc.

Good morning, everyone. Welcome to today's conference call to discuss the Black Hills Corporation and Northwestern Energy merger. My name is Michelle, and I'll be your operator. At this time, all participants are in listen-only mode. The call will be open for analyst questions following the presentation, and instructions will be given at that time. You can find the press release and associated materials for today's call on the investor relations section of either company's website. As a reminder, today's call is being recorded. As provided on slide two, any forward-looking statements made during today's conference call are given in the context of today only and are subject to important risks as described in the presentation. Actual results and events could differ materially from those discussed here. Please also refer to the additional information discussed on slide two, as well as in the SEC filings and joint press release for both companies. With that, I will now turn the call over to Lynn Evans President and Chief Executive Officer of Black Hills Corporation. Len?

Thank you very much, and good morning, everyone. We're coming to you live from Rapid City, South Dakota. If you've had the opportunity to visit our building here in Rapid City, you might know that we're sitting in the northwest corner of our building with a gorgeous view this morning of the sun rising on the Black Hills, so just a great day to be here. So thank you for joining us, and this is really a memorable day for us. as we announced at our boards yesterday, unanimously approved a merger agreement to combine our two great companies to create what we see as a premier regional regulated electric and natural gas utility company. These are two great companies that are performing together for the last 20 years. We've talked about potentially combining these two companies and given the organic growth opportunities both to have before us and the impact on customer affordability, The benefits of scale, we would argue, have never been more relevant. Emerging our businesses now has never made more sense. On this slide, next slide is today's speakers. I'm very pleased to be joined today with a highly experienced team that will be leading our combined company post-closure. Brian Bird is with me this morning. He's President and CEO of Northwestern. who will become CEO of the Combined Company. Marnie Jones is also with us this morning. She's Black Hills Chief Utility Officer, and she will become the Chief Operating Officer of the Combined Company. And Crystal Lael, who's CFO of Northwestern, will remain as CFO going forward with the Combined Company. And I'm pleased that Kimberly Nooney, who's Black Hills CFO, will become the company's Chief Integration Officer upon close. I'm moving to slide four. This is a great slide that gives an overview of the transaction. I'll take some time to walk through this. Very important slide. The combination is being structured, importantly, as an all-stock combination of Black Hills and Northwestern, with no new debt being issued related to the transaction. The Northwestern shareholders will receive 0.98 shares of Black Hills stock for each share that they hold in Northwestern. As of the expected closing, we estimate today that the combined company will be owned 56% by the legacy Blackhill shareholders and 44% by the legacy Northwest Western Western shareholders. In terms of the executive leadership profile, which I just went through, our teams have been working very closely over the last several months to bring this deal together. Very complimentary cultures, great team of people that we've got to know over the, over a number of years and work very closely together. The corporate headquarters will be located here in Rapid City, but similar to what I would call our current operations model, we'll have other operation centers and other corporate offices that we'll maintain across our service territories, knowing how important that local service is to our ongoing success. And we'll continue to work through the integration process, and we'll announce what we believe will be a new company name and a new stock ticker upon closing. I will announce that as we start to head into the proxy vote period. Our utility subsidiaries will continue to do business under their legal names without any expected disruption to customer service. As you know, we've been through around this horn a few times with other M&A activity. We're very good at it as a collective team, so we're looking forward to making that happen. And the transaction will be subject, of course, to customary regulatory approvals. We'll seek approval in Montana Nebraska and South Dakota and its potential. We may need to seek approval in Arkansas. And importantly, expect that the closing will happen from 12 to 15 months from today's announcing. Also will be seeking approval, of course, from FERC and Hart-Scott-Rodino. So we're very excited about this transaction. Very favorable to customers, the communities we serve, shareholders and employees. And I hope you hear the excitement of my voice. We're very excited for this opportunity. With that, I'm going to turn it over to Brian.

Thanks, Len. I'll tell you to start, I think a picture speaks a thousand words in slide five here. You know, it's pure play utility across eight contiguous states. And as you look at the map, the states of this combined service territories are going to cover 20% of the continental United States, which allows the combined company to be exposed to incremental accretive growth projects across electric, and natural gas and now with the financial scale to better capture those opportunities. The combination of these two highly complementary businesses with shared cultures and commitment to operational excellence creates in what we believe will be a premier utility platform in our region. Together we'll have approximately 11 billion of combined rate base underpinning energy delivery to approximately 2.1 million electric and natural gas utility customers. All of this will be supported by workforce 4,400 highly skilled employees. Our business mix will be more balanced across 61% electric and 39% gas. We'll be much more diversified by regulatory jurisdiction with no single jurisdiction being more than 33% of the combined rate base. And of our CapEx, 75% of that CapEx is going to be focused on gas and electric T&D business. The combination presents compelling and strategic and financial rationale. We believe this strategic transaction is the right combination at the right time. We've been working leading up to this day almost for half a year on this transaction, and as Lynn pointed out early on his points, it's been a very, very cooperative and you can tell cultures aligned extremely well to do it. Both management teams have reinforced our shared belief in the importance of scale in the utility industry. This combination of contiguous utility service territories, we believe, will enhance our ability to continue delivering safe, reliable, and cost-effective energy to our customers. As a sign of the recognition of how these two companies will be better together, we are setting a long-term EPS growth rate for the combined company of 5% to 7%. It's 100 basis points higher than than each standalone company's 4% to 6% range currently. We believe this can be achieved through a combination of smaller equity issuances, operational optimization in the business, and enhanced growth opportunities of the combined business. Further, we expect the transaction to be accretive to each company's shareholders in the first full year post-closing. We would expect this combination to continue to produce strong and predictable earnings and cash flows. Overall, we believe the combined company will be in a stronger position to capture incremental creative growth opportunities more than either company could achieve independently. Lastly, our two teams know each other well at both the executive and operational levels, which we believe is an asset to help us deliver operational and financial best practices. Regarding scale. We are firm believers in the value of scale and how this will unlock our ability to do more together than either company can do standalone as we continue to invest for the benefit of our customers. Across various metrics, this transaction will transform our scale position, solidifying us as a regional leader and will move us from this mid-cap space to a mid-cap utility. This larger footprint provides enhanced opportunities to efficiently manage our business and ensure affordable and reliable service while supporting substantial rate-based investment opportunities. Regarding diversity, in addition to scale, both companies share a belief that a balanced business mix provides benefits to all stakeholders and customers across our predominantly residential electric and gas customer base. The balanced contribution by jurisdiction supports the company's ability to manage the regulatory outcomes, and supports a stable earnings and cash flow profile with no single jurisdiction representing more than one-third of rate base. And with that, I'm going to pass it over to Marnie.

Thank you, Brian, and good morning. So Lynn and Brian just spoke to the compelling benefits from a financial lens. We also believe that coming together, we bring aligned core operating priorities, bring value to the merger. First, for our customers, today our 4,400 teammates across our two entities are committed to serving our customers with safe, reliable, and cost-effective energy. As we come together, we plan to continue our customer-focused efforts as we serve our combined 2.1 million customers. For our employees, we strive to be the employer of choice in our region, reinforcing our safety-focused culture and continuing to attract and retain top talent as a combined organization that will drive enhanced opportunities for our teams and our communities. We live and work in the same communities we serve, and that will continue. We are privileged to serve over 1,200 communities across our eight states and believe the merger will provide benefits through strong community partnerships and continued support of local philanthropic activities. Moving into our operations, individually, We're each proud of our operational performance and reputation for operational excellence through safety and reliability of our natural gas and electric systems. Together, we expect to continue and build upon our operational performance while keeping customers at the center of our focus, leaning into our scale and executing on operational optimization to maintain cost-effective rates for our customers. With that, I'm going to turn it over to Kimberly.

Good morning. Thanks, Martin. If you look at the left side of the slide, you will see on a combined basis, together, we have almost $7.5 billion of capital investments within our five-year financial plans, of which more than 75% represent both gas and electric transmission and distribution investment opportunities. This $7.5 billion in capital supports our increased long-term EPS growth target of 5% to 7%. the work we've been doing as a team we believe there are significant growth opportunities beyond what we've included in our standalone plans that will enhance our growth profile further supporting why we are better better together these opportunities will span across the various areas of our business including being able to serve the growing demand data center demand and large load customer demand before leaving this slide i'd like to reiterate that as a combined company we can collectively benefit from greater accretive growth opportunities that we have not included on a combined basis in our plans. Moving to the next slide, we as a combined company and management team are committed to providing an enhanced total return for our shareholders. As mentioned earlier, this merger is accretive to both companies' shareholders in the first year. This accretion will be driven by financial benefits, including incremental growth opportunities and operational optimization that we have assessed leading up to today's announcement. These benefits and optimization opportunities substantially contribute to our combined long-term EPS growth target of 5% to 7% up from our previous individual company EPS growth targets of 4% to 6%. Additionally, this merger doubles rate base and provides incremental capital investment opportunities beyond our current standalone five-year plans. From a dividend perspective, Both companies will continue current dividend policies between now and closing. Following closing, our pro forma dividend growth will balance a competitive dividend per share growth rate with efficient financing of incremental accretive growth opportunities. I'm going to turn it over to Crystal. Crystal?

Thank you, Kim. I am absolutely delighted to be sitting in this room with this team of people and have the opportunity to discuss further this transaction, which we believe is at the right time for the right set of companies and further the financial implications of what we're talking to you about today. From a financial perspective, our combined size and scale will provide the opportunity to grow while maintaining the strength of our balance sheets and our credit profile. Many of you know these management teams and know what we've done alone together. We think we will be compelling from an investor perspective, but also committed to what we've already done, which is to have a strong investment-grade balance sheet which we believe is a critical value driver for a premium utility and supports our ability to maintain efficient access to capital and finance investments for our customers. The rationale of bringing together these two companies in an all-stock transaction without issuing any transaction-related debt, we believe this combined company will be efficiently capitalized to capture these future growth opportunities, as many have alluded to already, incremental to our current plans. And with the strength of our balance sheet and cash flows, allowing us to reduce equity needs over time. Moving to slide 14, we believe this creates a compelling opportunity for meaningful value uplift potential. You've heard each of us today talk about both the quantitative and qualitative combination benefits, including the combined financial strength, the increased compelling diversification, and our enhanced market position. All of these things that have been summarized by the team create a real valuation re-rating opportunity for the stock. Specifically, as alluded to by several others, the ability to increase our long-term EPS growth rate by 100 basis points to 5% to 7% and achieve that on a consistent basis while preserving further upside for accretive growth opportunities across our expansive service territory. Meanwhile, our balance sheet remains strong with ample credit capacity to minimize future reliance on equity capital supporting our current organic growth and future growth, not in our plans. In closing, the financial rationale for this transaction is compelling. We're all committed to it and believe in it, and it results in a financially strong entity well positioned for future growth. The combined company offers a strong investment opportunity. And with that, I'll turn it back to Brian.

Thanks, Crystal. Next page highlights required approvals and estimated timings. We have expected state approvals across Montana, South Dakota, and Nebraska, plus approvals required by FERC, DOJ, and the SEC. We may also require approval from Arkansas if that's needed. We anticipate filing our joint proxy over the coming months, followed by shareholder meetings for each company. With expected approvals and a closing in 12 to 15 months. Throughout this timeline, we will be developing our transition integration plans so we'll be able to hit the ground running immediately post-closing. So in summary, we strongly believe that scale is necessary today, given the unprecedented growth our sector is experiencing. By merging our companies, we can organically increase our long-term EPS growth rate to 5% to 7% and achieve accretion to both companies' shareholders in the first full year. We intend to maintain our strong investment-grade balance sheet to responsibly finance future growth. Our combined geographic footprint expands investment opportunities in areas that may not be available to either company on a standalone basis across data centers and other traditional utility growth projects. Lastly, our combined 2.1 million customer base enhances our business diversity with 44 combined employees, 44,000, excuse me, combined employees to continue serving our customers. And with that, I'll pass it over to Lynn to close. Thanks, Lynn.

Yeah, thank you, Brian. Thank you to the team. Very well said. We truly believe that this combined platform really poises us very well, more than either company could do in a standalone basis. And I believe we have the right team at the right time to execute this plan. And I'm very excited about this strategic merger, the combination of these two great companies and the benefits that we know will extend to all of our stakeholders, our customers, our communities, our shareholders, and our employee team. And we want to thank you very much for joining us this morning. We look forward to engaging you along with the process as we go through the approval process. And with that, that's our prepared comments, and we're happy to answer your questions.

Thank you. If you'd like to ask a question, please press star 1-1. If your question has been answered and you'd like to remove yourself from the queue, please press star 1-1 again. Our first question comes from Nicholas Campanella with Barclays. Your line is open.

Hey, good morning. Congrats on the announcement. Thanks for all the information.

Thanks, Nick.

Hey, so lots of questions to ask here. I guess just first, you talked about approvals in Montana, South Dakota, Nebraska. Can you remind us just which states are no harm versus net benefit? And then just if you've had the opportunity to speak with stakeholders in each of these states before or after you've announced this transaction, just what has been the initial feedback? Thank you.

All right, Nick. Well, fortunately for us, all three of these states are no harm states. And so, um, in essence, from our perspective, we'll spend some time, uh, hopefully having a chance to talk to them about the benefits in advance of a filing. Um, and we expect to do that. The filing of somewhere in the 60 days timetable. So think October. And, uh, I think it's important to have a conversation in terms of why this is a great thing for customers. and truly have that opportunity as you know. And during the rate review process, it's difficult to have those conversations. So we look forward to having them here very, very soon.

Okay, great. And then no equity issuance post 26 plus for this base plan. Can either of you just remind me if you have equity to do ahead of that in 25 or even early 26 that's needed for credit or otherwise?

Yeah, good morning, Nick. It's Kimberly. For Black Hills for 2025, we'll continue to execute our current equity plan, which within our guidance is $215 to $235 million. And then for 2026, we have not provided public guidance, but we do have equity in the plan to support that capital in line with our capital needs, and it will be significantly lower than our 2025 numbers. And beyond that, there's no capital in this combined, or no equity in this combined plan. Thank you very much.

Congrats again.

Thanks, Nick. Thanks, Nick.

Thank you. Our next question comes from Julian Dumoulin-Smith with Jefferies. Your line is open.

Yeah, hi, good morning. It's Brian Russo on for Julian.

Good morning, Brian.

Hey, Brian. Hey, you know, just, I know, you know, you discussed the combined fundamental attributes of the company and the accelerated EPS CAGR, but it is pretty fragmented up there in the continental United States. And I'm just curious, what was the thought process that actually brought the two companies together to ultimately agree on this merger as opposed to pursuing other options or opportunities?

Well, I think Lynn will certainly vouch for this one. There's been conversations on and off for decades amongst these companies, and I think we continue to see it's even more important today than it's been over the last two decades, the importance of scale. All of you sell-side guys write about importance of scale, and we're listening. So, no, seriously, from our perspective, the opportunities to compete in this space are are getting harder and harder, and it's going to be much, much easier for us as a larger organization to do that. The diversity is also extremely important for us to be more consistent from an earnings perspective. And as we talked to each other, we saw that there'd be an opportunity combining these two balance sheets and looking at our ability to how we finance our growth to do it in a way that neither one of us as standalone companies could do today. It just became extremely obvious as we sat down and compared notes This made total sense for us to move forward at this point in time.

Very well said, Brian. And I would add that if you look at it from the Black Hills perspective, these jurisdictions just overlay so nicely, you know, not adding any new states from the Black Hills perspective so we can continue on and be very aggressive with growth in that service territory.

Okay, great. And you mentioned some of the upside opportunities in terms of data centers or transmission and Can you maybe elaborate on that? I suppose that means there could be upside to the 5% to 7% initial pro forma. Kager?

Yeah, I think we've been impressed. We wish we had more service in Wyoming ourselves. We've been impressed with what Black Hills has been to accomplish from a data center perspective and comparing notes. We have opportunities in Montana, and we both have opportunities in South Dakota. And so it just made sense. as we looked at that, combining our two teams to take better opportunities. As you might expect, two smaller companies may not have the same resources to compete again from a data center perspective. And I see as we put these two teams together, we'll have more resources to do that and be more competitive. And plus, as we talked about in the slide, we represent about 20% of the of the US. And so if you want to do business in our states, you're going to be talking to us. And so we think it's important on a combined basis to work together. And so I'm excited about getting our two teams together and how can we really capture data center opportunities even more than we have been thus far.

Yeah, very well said, Brian. And Brian, to answer your question, I think you specifically mentioned transmission. We've had our engineers talking to each other for very specific projects about how we could advantageously connect our systems Well, now this makes it very compelling that we would connect our systems for purposes of reliability, for purposes of controlling costs for customers, and being more resilient organizations. So we see a lot of upside from that potential. All right, great. Thank you very much. Thank you, Brian.

Thank you. Our next question comes from Chris Ellinghoff with Siebert Williams Schenck. Your line is open.

Good morning, everybody. How are you?

Morning, Chris. Good morning, Chris. Great.

Hey, guys. I just want to understand or maybe clarification here. You both sort of have had standalone this upside opportunity. Did any of that get into your long-term growth rate or are you basically both where you were standalone with that level of upside?

No, I think the The interesting thing we've done is we've looked at our existing plans, and when we put those together and looked at financing and some other ways to think about our business, we were able to achieve 5% to 7%. The exciting thing is to solidify that, be more consistent, and hopefully be, if you will, on the higher end of that. There are future opportunities that we were talking about. Lynn mentioned one on transmission. We shared notes, of course, on data centers, and so We're excited about the opportunities.

Now that we've announced, Chris, we can put our teams together to really get into the detail about how we can, at the appropriate time, we have to be very careful about being compliant with non-compete and things of that nature. We'll be cautious, but same time, there's going to be some opportunity that we can uncover that we haven't discussed yet.

Do you think in terms of the large customer load upside that the merger is also a creative in the sense that you have better negotiating power combined?

Yeah, I think as you might expect us versus our other peers and just from a supplier perspective across all of our necessary procurement opportunities, we're going to expect more leverage, if you will, from that perspective. So I I think it's, again, a combination of being able to have more resources to look at tackling these problems, but certainly having more leverage and better negotiating power.

My response would be amen. Well said.

Does the combined entity sort of alter at all your thought process on where to locate future generation resources?

It certainly would open up more opportunity to think about that, yes. You know, where and why, based on customer load, customer growth, transmission resources, things of that nature?

I think Lynn's point, too, on transmission earlier, you know, that it's called the Path 80 corridor. Obviously, think Montana, Wyoming, Colorado, ability to move power through that corridor through our, you know, today, disparate service territories, but now on a combined basis, it gives us more flexibility.

Last week, we announced the new 99-megawatt generation facility here in Rapid City. Western South Dakota appreciates generation. Wyoming appreciates generation. We have all these states. I think it would be great places for us to add generation that's cost-effective and, again, makes us more reliable as a combined organization.

Okay. Maybe one more. Maybe this is the big enchilada. Okay. What kind of confidence or what's your thought process on the Montana approval process? I've always thought that would be the most difficult in terms of any kind of M&A. So what's your thinking today on that?

Yeah, I think with any merger, there's going to be efficiencies, optimization of our business. Ultimately, these benefits accrue to customers over time. and we believe that that will be compelling information, and I think it would be difficult for commissions to turn down benefits to customers. So I think from a success standpoint, that information should overwhelm a commission.

Yeah, the long-term benefit to customers just has to be compelling, and it is.

Okay, thank you very much. Appreciate it.

Thank you. Thanks, Chris.

Thank you. Our next question comes from Paul Cole with Bank of America. Your line is open.

Thank you. Good morning. Good morning. If possible, I'd like to sort of follow up a little on Chris's question, but also just on the comments you made regarding the EPS accretion in year one and obviously the improved long-term growth rate. And you identified obviously the less equity, the lower cost, and the growth opportunities. Maybe if you could dig a little more into that cost optimization aspect and that the expectations around that, sort of the dependency on the accretion commentary to achieving those savings and keeping those savings.

Sure, Paul. I'll take a stab at it first here, and then others will pile on. But the path from, as we've talked about in quite a few of the questions, of our base standalone plans together move from 4 to 6 to 5 to 7, and then we retain this ability to go after what we believe is opportunity for both of us and capture those. On the base plan perspective, it's a couple of things. It's where you're going towards synergies, and I think there's kind of standard rules of thumb about transactions together and what you can achieve together and optimizing what you do on supply chain procurement, all of those. That's certainly a component of it. We mentioned our balance sheets, combining those and the ability to optimize the financing plan and take out some equity over time to drive that. So it's a combination of those things that will allow us to go from four to six to five to seven. And I would add again, because I can't help myself and having been inconsistent, getting to consistent earnings, which we know from an investor perspective is important to you guys. So those things together are the important fundamentals we believe in putting our plans together and working on that to get to what we think is a compelling five to seven growth rate. And then on top of that, The ability then to go after the things that we both have had as incremental opportunities to our plan, we think that's what gets it there. But you would see kind of standard the ability, and Brian also alluded to with Chris's question of why should a commission approve this, the economies of scale of two entities being together, there's certainly going to be over time cost savings that enter themselves to customers, and we think that's pretty compelling, but it also is a key part to being accretive to both sets of shareholders in the first year.

Paul, this is Lynn. It's very, very well said by Crystal, and I echo what she just said. And I'd also suggest that this is a strategic merger, and that's compelling in and of itself versus other models where you combine and gain scale. So I think that's going to provide us great advantage.

Thank you. If I can just come back briefly to the dividend policy commentary that you made, obviously there is a difference in the absolute dividend between both companies going in. Can you just sort of elaborate a little further on your expectation for the absolute level of the dividend going forward for the combined entity?

Sure, I'll take that one too. There is a bit of a difference in dividend policy. And one of the things that we'll have to work on once we get to a little bit closer to closing and forward is what that financial plan and policy looks like going forward. But we're absolutely committed to an appropriate dividend return. And as we said, from a total shareholder return, hopefully providing more in the price accretion side with a appropriate dividend policy that allows us to go after the capital that we have in front of us. So no final decisions on what that dividend policy might look like. And once we get closer to closing, we'll talk about the financial policy combined.

Perfect. And just my last question is around Arkansas. Can you give us a little color on sort of the factor is influencing whether or not you're going to need to file for an approval in that jurisdiction?

Yes, the interpretation of a statute that we need to be more, spend more time with, actually probably visit with that commission closely, talk to them. It's our opinion that we do not need to go to Arkansas for approval. That's our current conclusion, but it's not crystal clear, and we want to make sure it is before we make the final decision on Arkansas.

Perfect. Thank you very much. Thank you.

Thank you. Our next question comes from Sophie Karp with KBCM. Your line is open.

Hi. Good morning. Congrats on the deal. Terrific news. Thanks, Sophie. Thank you. A couple of questions for me. For those of us not intimately familiar with Black Hills, I know that Northwestern's team has spent a lot of time building out generation capabilities in Montana and more importantly capacity, right? What is the profile of the combined entity going to be in terms of generation and capacity across its territories? And what are the synergies that you are seeing there, if any?

Morning Sophie, this is Marnie. So yes, there has been a lot of generation build out and as Lynn just mentioned, we are currently building out here in Rapid City. Both entities do their long-term resource planning to meet their capacity needs. Right now, with our peak about 2.4, and we've got generation capacity of about 2.9, we've got a very diverse mix between hydro, we've got solar, we've got wind, as well as your typical fossil. So I think we've got a really diverse mix, continuing to see opportunities from a combined perspective to look at You know, how do you be, you know, do you have opportunities to build generation in areas where you can get it to both locations or multiple locations? And so much to be done as far as what that build out looks like. But what we know today is that we're in a good place from a capacity perspective with a good diverse mix.

And Northwestern brings, sorry, Sophie, Northwestern brings a lot of skill sets to this combination. I think one of the skill sets that Black Hills can bring to this combination is is a team that knows how to permit, build, and operate generation. And so I think together we're going to do really, really well when it comes to generation capacity and having the opportunity to add that.

Yeah, the one thing... Sorry, Sophie.

No, it's going to be... Go ahead.

No, I'll just add, I think the great opportunity here is we're seeing a lot of growth opportunities. So in essence... having some excess capacity certainly helps. But longer term, I see there's going to be generation build opportunities in all the jurisdictions that we have electric businesses today. And I think from the gas business perspective, to support generation build-out is certainly going to help our gas businesses. So that's a great opportunity. And I think over time, certainly modernizing our fleet, that's five, ten years out. But certainly over the next decade, I see a fantastic amount of opportunity to invest in the generation space.

Yeah, I was just going to kind of follow up on that question. Is there any change with you in terms of your cold strip strategy after the merger?

No.

No, okay. And that's clear. And then one other question for me was after the merger, it's clearly a lot of territories Will you be taking a look at some point at the combined entity to maybe see if any of those territories are like less core and would be spun out from the combined entity? Or do you think like all of them are core territories?

Our perspective from the Black Hills perspective, at least, that we're always looking at our portfolio. We're always thinking about shareholder value and how we serve our customers effectively. I think that's the best way to respond to that, Sophie.

Okay. Thank you.

Thank you.

Thank you. Our next question is from Nicholas Campanella with Barclay. Your line is open.

Hey, just one, two follow-ups from me. I'm sorry if I missed it in the remarks. Just the base year that you're saying this is EPS accretive, what is kind of the base year of the new plan? Is it 26 or 27?

Hi, Nick. I know you're working your model over there, but we'll determine base year once we get to closing here and have more visibility as to when that occurs.

Okay. No problem. And then just 5% to 7% EPS growth, just simplistically, where do you see combined rate-based growth?

From an overall rate-based growth perspective, I know that Black Hills isn't traditionally given that number. Obviously, we've been kind of flat 4% to 6% rate-based growth CAGR on top of 4% to 6% earnings growth. I would – it's been impressive to understand Black Hills' capital light strategy and what they've been able to achieve from an earnings perspective there. So I would tell you it'll be in the range of the EPS growth.

Okay. Thank you very much. And then just one more, if I could, just – are there any cost savings embedded in that number when you're talking about it on the five to seven – the combined five to seven EPS outlook?

Yeah, I would tell you there's some, and they're very light is what I would say, but there is some assumed efficiencies within that number.

Thank you.

Thank you. As a reminder, to ask a question, please press star 1-1. And our next question comes from Aiden Kelly with J.P. Morgan. Your line is open.

Hey, good morning, guys. Good morning, Aiden. Just a quick question. Just a quick question going back to the prepared remarks. I believe you kind of mentioned the conversations we've kind of spent maybe past decades. I'm just curious, you know, kind of summing up everything we've addressed in the Q&A, maybe, you know, outline why the timing on this, you know, today versus, you know, the past, maybe curious on how they've kind of evolved over the years.

Yeah, I'll take that. I'm sure Lynn has thoughts on this too. I think, you know, there's... there's usually what happens over time from both parties, you could have different CEOs, you could have different things that have happened. Um, from, from our perspective, it's just what's happening in the utility space today. And this expectation of significant growth, something we haven't seen in the last two decades and the necessity to be able to capture that scale is going to be extremely important for us to do that. And it, from our perspective, and again, we, We've talked over the years, as you might expect, being neighbors, and just it seemed like the right time from our perspective. And once we sat down and started chatting about the opportunities, it became crystal clear that it was the right time.

Yeah, it's very challenging to add to that. I would say that adding these two balance sheets in this way, in this format, in this strategic manner of the merger and the combination, it's compelling for us to be able to capture more than our fair share of growth in that large service territory that we have. So we feel now it's compelling, especially as there's more focus on customer costs and affordability than ever before. This is going to help both of these organizations do a much better job of serving customers.

Understood. Thanks for the color there. And then just one last question on my end. How much of a challenge could it be to pursue new generation build approvals? while we're kind of in the process of getting a merger approval there, is there any considerations worth calling out on that end?

I'll speak from Northwestern's behalf. In terms of new build during this time period, we don't have anything in Montana from a new build perspective that's a concern. We just, I guess, announced here recently South Dakota we plan to do incremental new build, but I think I think the South Dakota Commission will understand that. I believe they can handle that from a parallel perspective. So I don't see any issues with that.

Please, Marty, go ahead.

I'll just add from a Black Hills perspective. As I mentioned, we do our long-term resource planning to determine build needs. But as we see additional opportunities, whether it's to serve some growing loads through data centers, et cetera, I expect fully it's business as usual and our ability to run our business as we need to today and certainly just provides future opportunity as we come together to look at these builds even broader, but certainly do not see issues in moving forward on the projects that we have, as well as adding to what we need to to meet our customers' needs in the meantime.

That's also been our experience with other M&A activity over the years. Normal, routine things such as generation approvals, rate reviews, those go on just like we had planned before and tend to be very successful.

Understood. Appreciate the color there. I'll leave it there.

Thanks. Thank you. I'm showing no further questions at this time. I'd like to turn the call back over to management for any further remarks.

Well, thank you. I thought Lynn did a fantastic job opening this morning. And I think you can sense just we've been working extremely well together this process. As he pointed out, cultures are very much aligned. certainly knowledge of one another over the years, and just a true excitement. The benefit we can see, obviously from a shareholder perspective, obviously from a customer's perspective, but certainly from an employee perspective too, being part of a bigger organization where we can help grow this business more than we could on a standalone basis is extremely important for all of us, and there's a tremendous amount of excitement to make this happen.

I completely echo Brian's comments. This is a compelling transaction. very meaningful to all of our stakeholders. We thank you for participating today with us. We thank you for the partnership we have with you, and we value it greatly. And we typically end our calls with saying have a Black Hills Energy Safe Day. I want to say have a Black Hills Energy Safe Day and a Northwestern Energy Safe Day, and thanks for joining us. Thank you.

Thank you for your participation. You may now disconnect. Everyone, have a great day.