NorthWestern Energy Profit Growth Returns as Merger Nears Finish Line
NorthWestern Energy Group posted second-quarter adjusted earnings of $0.50 a share, up from $0.40 a year earlier, as its pending merger cleared every regulatory hurdle but Montana.
NorthWestern Energy Group (NWE) reported second-quarter diluted earnings of $0.40 a share, up from $0.35 a year earlier, with net income rising to $25.0 million from $21.2 million. On an adjusted non-GAAP basis, earnings climbed to $0.50 a share from $0.40, which the Montana-based utility attributed to new rates and higher retail volumes, partly offset by merger costs, Colstrip ownership expenses, and higher depreciation and interest costs.
The result marked a reversal from the first quarter, when diluted earnings fell to $1.03 a share from $1.25 a year earlier as net income dropped to $63.5 million from $76.9 million. The swing back to year-over-year growth in the second quarter suggested the cost pressures that weighed on the first-quarter comparison began to ease relative to revenue gains.
Consolidated utility margin, a non-GAAP measure the company uses to track core profitability, grew 13.2% to $302.8 million, with electric margin up 14.4% to $251.4 million and natural gas margin up 8.0% to $51.4 million. Gross margin rose 12.8% to $106.6 million, but total operating expenses excluding fuel, supply and transmission costs grew faster, up 15.4% to $238.6 million from $206.7 million. That gap left operating income up just 5.6% to $64.2 million from $60.8 million, as merger-related costs of $3.3 million, roughly $9.0 million in Colstrip generation maintenance costs — including $6.4 million tied to the Puget interest and $3.7 million to the Avista interest — and $4.6 million of higher depreciation ate into the margin gain.
Interest expense rose 11% to $40.3 million from $36.3 million on higher borrowings and interest rates, partly offset by higher capitalized interest. The effective tax rate fell to 12.2% from 13.7%, helped by a larger flow-through benefit from repairs deductions. NorthWestern also disclosed two new financing moves during the quarter: a $150 million South Dakota First Mortgage Bond priced at 5.51% and issued June 15 to redeem $60 million of 2.80% bonds, and a new $225 million secured term loan at NW Corp maturing November 2027. Total net liquidity improved to about $339.2 million from $317.9 million a year earlier.
The company's pending combination, to be renamed Bright Horizon Energy, advanced through its remaining state and federal reviews during the quarter. FERC approved the deal in May 2026, followed by the Nebraska Public Service Commission the same month and the South Dakota Public Utilities Commission in June, leaving Montana as the only outstanding regulatory approval. That marks a narrowing from the first-quarter release, which described only settlement agreements in several states and a targeted second-half 2026 closing with multiple approvals still pending. Montana's Public Service Commission has a final order pending following a May 2026 hearing. Merger costs are accumulating as a discrete line item, reaching $6.7 million for the first six months of 2026, implying $3.3 million in the second quarter alone.
NorthWestern reiterated its 2026 non-GAAP earnings guidance of $3.68 to $3.83 a share for a third consecutive release and held its capital plan at $683 million for the year, part of a five-year, $3.2 billion plan through 2030 that itself represented a 17% increase over the company's prior five-year outlook.
Growing electricity demand from data centers is a driver behind that capital plan, with a pipeline of 150 megawatts starting in late 2027 and growing to roughly 1,500 megawatts by 2030 across three named counterparties: Sabey, Atlas Power and Quantica. The first-quarter release had disclosed only the newly signed Quantica agreement without the consolidated figures. To help meet that demand, NorthWestern recorded $42.3 million of non-refundable turbine milestone payments in other noncurrent assets tied to its roughly $300 million, 131-megawatt Aberdeen, South Dakota gas plant, first submitted to the regional grid operator in October 2025.
NorthWestern held its quarterly dividend at $0.67 a share, unchanged since a 1.5% increase disclosed with fourth-quarter 2025 results. The company moved the payment and record dates for the current dividend earlier, to September 1 and August 17, 2026, from the previously disclosed September 30 and September 15, citing dividend-coordination provisions tied to the pending merger.