Black Hills Corp. expects to close its purchase of Aquila utility assets in four states in the first quarter next year, and the company would reconsider buying its South Dakota-based neighbor NorthWestern Energy Corp. since that company's merger with Australia's Babcock & Brown (B&B) was thwarted by Montana regulators, Black Hills CFO Mark Thies said Friday.

Black Hills plans to acquire Aquila's gas utilities in Nebraska, Colorado, Iowa and Kansas and its electric utility in southeastern Colorado for $940 million in cash and debt assumption (see NGI, Feb. 12). Although there is some initial regulatory staff resistance that surfaced in Colorado, Thies said during a conference call that the Aquila sale should be closed in the first quarter, and that all regulatory filings at both the state (Colorado, Iowa, Kansas and Nebraska) and federal levels have been made.

In response to a question from an analyst, Thies expressed qualified interest in Black Hills reactivating a marriage bid with NorthWestern, a move it abandoned 15 months ago after B&B won out in the somewhat heated competition at the time (see NGI, May 1, 2006). "There is no transaction [obviously] at this point, per se, and I wouldn't want to leave anyone with the impression there is," he said.

"We are interested in good utility acquisitions as we continue to grow," Thies said. "But NorthWestern has come out and they have to look at their stand-alone plans for their company, and to the extent there was interest on their part in something, we would have to evaluate that at the time.

"Right now, we believe they are looking at what they can do from a stand-alone plan. We are always interested in the potential for growing our retail base, and if it would make sense for both parties, we would have to look at that."

On another question regarding the Colorado Public Utilities Commission staff's proposed rejection of Black Hills buying the Aquila utility operations in the state, Thies would not speculate on whether that was "posturing," as the questioner called it.

"We continue to work through the regulatory process -- not only in Colorado, but in Iowa, Nebraska and Kansas," Thies said. "The transaction makes sense for customers of those jurisdictions, and we believe we will be able to show benefits, or as the standard calls for, at least no negatives to the customers. We think we can absolutely demonstrate that, and the merits of this transaction are very strong."

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