Northern States Power Company

Northern States Power Company (formerly NYSE: NSP) was a publicly traded S&P 500 electric and natural gas utility holding company based in Minneapolis, Minnesota that is now a subsidiary of Xcel Energy (NYSE: XEL).

History

In 1909 H.M. Byllesby (engineering apprentice to Thomas Edison who helped build Manhattan’s Pearl Street Electrical Station in 1881 and employee of George Westinghouse from 1885-1891) forms the Washington County Light & Power Company, a subsidiary of his utilities conglomerate, Consumers Power Company. Byllesby then bought Stillwater Gas & Electric less than two months after forming Washington County P & L. From 1912 through 1915, Byllesby links power lines around Minneapolis, Saint Paul, Chaska, Shakopee and builds business operations in Faribault, Mankato, Northfield, Coon Rapids, Rockford, Delano, Watertown, Waconia, Chaska, Shakopee, and Crookston growing his customer base from several thousand to 48,000. ^[1]

Northern States Power Company (NSP) was a publicly traded utility, paying a cash dividend to shareholders every year since 1910.^[2]

It was originally called the Consumers Power Company — one of several divisions within H. M. Byllesby's vast public utility empire — but changed its name to NSP in 1916 (possibly to avoid confusion with an identically named company in Michigan) 42 smaller companies over the next seven years.

While the bulk of NSP's territory grew across central and southern Minnesota (starting from the Twin Cities), it acquired territory in North Dakota (centering on Fargo, Grand Forks, and Minot) and grew southwest into South Dakota (centering on Sioux Falls). Its territory extended east into Wisconsin as well, but due to state regulations requiring local ownership of all utilities, these operations were under a separate subsidiary: Northern States Power-Wisconsin. This latter subsidiary extended east into northern neighboring Upper Peninsula of Michigan, bounded between Lake Michigan and Lake Superior around 1995.^[2]

In 1952, Northern States Power brings the Black Dog Coal-fired power plant online and in 1974 the Prairie Island Nuclear Plant begins operating with a total capacity of 1,100 Meg-watts, enough to power 1 million homes.^[3]

By 1986, the company had grown to be included among the S&P 500 list of 500 of the largest companies in the United States. By that time it had accumulated nearly $1.2 billion in long-term debt. NSP served the agriculturally based region of its headquarters state of Minnesota, and also the neighboring states of North Dakota and South Dakota to the west.^[2] These territories were served through its subsidiary, NSP-Minnesota.^[4][5]

On May 28, 1996 NSP voted to split its stock two-for-one. It paid an annual 6.5% dividend yield.^[2]

By the end of 1995, NSP had reduced its debt to US$1.5 billion.^[2]

Primergy merger

On May 3, 1995, Northern States Power Company and Wisconsin Energy Corporation (NYSE: WEC) each filed a Securities and Exchange Commission Form 8-K to combine in a merger-of-equals transaction to form Primergy Corporation, which would be a registered public utility holding company, and to be the new parent of both NSP and of the operating subsidiaries of WEC. It would be the tenth largest investor-owned electric and gas utility company in the United States, based on market capitalization at that time of about US$6.0 billion, and with 1994 combined revenues of US$4.2 billion and with total assets of more than US$10.0 billion. Shareholders of NSP common stock would own 1.626 shares of stock of Primergy for each share of NSP stock they owned, and WEC shareholders were to receive one-for-one shares of Primergy.^[4][5]

At that time, Richard A. Abdoo, served as Chairman, President and Chief Executive Officer of Wisconsin Energy. James J. Howard served in the same positions with Northern States Power. With the new Primergy Corporation, Howard would become Chairman and CEO, and Abdoo would serve as Vice Chairman, President and Chief Operating Officer. Further, with Howard scheduled to retire in July 2000, Abdoo would then succeed him as Chairman of Primergy.^[4][5]

Wisconsin Energy's two then-existing utility subsidiaries, Wisconsin Electric Power Company (WEPCO) and Wisconsin Natural Gas Company (WNG) were to be consolidated under a new subsidiary name, Wisconsin Energy Company. Under that name, it and Northern States Power Company would continue to operate as the two principal subsidiaries of Primergy Corp. Also, NSP-Wisconsin would merge into the operating subsidiary Wisconsin Energy Company. The headquarters of the two utilities would remain distinct and separate in their existing respective state locations--Milwaukee for Wisconsin Energy and Minneapolis for NSP. The merged company would have been headquartered in Minneapolis (with NSP as the nominal survivor), but incorporated in Wisconsin. The Primergy board of directors were to be equally split, composed of six from each company. The merger deal was expected to be completed in the fourth quarter of 1996.^[4][5]

By 1997, approvals had been granted by the state regulatory commissions in Michigan and North Dakota, but not by the commissions in Minnesota and Wisconsin. Approvals from the Securities & Exchange Commission and the U.S. Department of Justice were still pending.^[6]

On May 16, 1997 both CEOs announced that the boards of directors of both companies had voted that day to terminate the merger plan. Howard stated that the problem was that the regulatory agencies were changing their merger policies as they were considering the companies' filing. In particular, Howard blamed the Federal Energy Regulatory Commission, which had issued a decision earlier in the week remanding the case back to the companies, for further negotiation among themselves. "There is simply no end to this process in sight," stated Howard. Abdoo said the decision to end the merger factored in that after two years of already waiting, the further likely wait of at least six months of delay would significantly reduce the benefits of the Primergy transaction.^[6]

The delay had put the merger five months behind schedule and had reduced earnings for both utilities by a total of US$58 million to that point, costs which had not been passed on to consumers. Adding to the discomfort was a growing gap between the performance of the two companies by early 1997. Wisconsin Energy's stock had by then fallen about 13% since early 1995 when the deal had been announced, due to other ongoing problems that had developed within the company, including issues with its Point Beach Nuclear Generating Station in Manitowoc County, Wisconsin. But Northern States Power's stock had risen by 6%. The case was considered to be a bellwether in the utilities industry, putting an end to the rapid pace of mergers and acquisitions that had been ongoing up to then.^[7]

Xcel merger

However, in 1998, after the failed Primergy merger, NSP merged with New Century Energies of Denver, owner of Public Service Company of Colorado and Southwestern Public Service, to form Xcel Energy.

References

External links

• Xcel Energy

Additional resources

• The Historical Records of Northern States Power Company's predecessors are available for research use at the Minnesota Historical Society.