Northern States Power Company
Encyclopedia
Northern States Power Company (formerly ) 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
.
to shareholders every year since 1910.
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).
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 around Fargo, Grand Forks, and Minot) and grew southwest into South Dakota (centering around 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.
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. These territories were served through its subsidiary, NSP-Minnesota.
On May 28, 1996 NSP voted to split its stock two-for-one. It paid an annual 6.5% dividend yield.
By the end of 1995, NSP had reduced its debt to US$1.5 billion.
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.
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.
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, in Milwaukee, Wisconsin
and NSP's in Minneapolis, Minnesota
. Primergy headquarters were to be incorporated in Wisconsin, but located in Minneapolis. 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.
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.
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.
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.
was formed as a holding company to own three formerly independent companies: Northern States Power (Minnesota), Northern States Power (Wisconsin), and New Century Energies.
S&P 500
The S&P 500 is a free-float capitalization-weighted index published since 1957 of the prices of 500 large-cap common stocks actively traded in the United States. The stocks included in the S&P 500 are those of large publicly held companies that trade on either of the two largest American stock...
electric and natural gas utility holding company based in Minneapolis, Minnesota
Minneapolis, Minnesota
Minneapolis , nicknamed "City of Lakes" and the "Mill City," is the county seat of Hennepin County, the largest city in the U.S. state of Minnesota, and the 48th largest in the United States...
that is now a subsidiary of Xcel Energy
Xcel Energy
Xcel Energy, Inc. is a public utility company based in Minneapolis, Minnesota, serving customers in Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas, and Wisconsin. Primary services are electricity and natural gas...
.
History
Northern States Power Company (NSP) was a publicly-traded utility, paying a cash dividendDividend
Dividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders. When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business , or it can be distributed to...
to shareholders every year since 1910.
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).
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 around Fargo, Grand Forks, and Minot) and grew southwest into South Dakota (centering around 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
Upper Peninsula of Michigan
The Upper Peninsula of Michigan is the northern of the two major land masses that make up the U.S. state of Michigan. It is commonly referred to as the Upper Peninsula, the U.P., or Upper Michigan. It is also known as the land "above the Bridge" linking the two peninsulas. The peninsula is bounded...
, bounded between Lake Michigan
Lake Michigan
Lake Michigan is one of the five Great Lakes of North America and the only one located entirely within the United States. It is the second largest of the Great Lakes by volume and the third largest by surface area, after Lake Superior and Lake Huron...
and Lake Superior
Lake Superior
Lake Superior is the largest of the five traditionally-demarcated Great Lakes of North America. It is bounded to the north by the Canadian province of Ontario and the U.S. state of Minnesota, and to the south by the U.S. states of Wisconsin and Michigan. It is the largest freshwater lake in the...
around 1995.
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. These territories were served through its subsidiary, NSP-Minnesota.
On May 28, 1996 NSP voted to split its stock two-for-one. It paid an annual 6.5% dividend yield.
By the end of 1995, NSP had reduced its debt to US$1.5 billion.
Primergy merger
On May 3, 1995, Northern States Power Company and its neighboring Wisconsin Energy CorporationWisconsin Energy Corporation
Wisconsin Energy Corporation , based in Milwaukee, Wisconsin serves more than 1.1 million electric customers in Wisconsin and Michigan's Upper Peninsula and more than 1 million natural gas customers in Wisconsin through its utility subsidiary, We Energies...
each filed a Securities and Exchange Commission Form 8-K
Form 8-K
Form 8-K is a very broad form used to notify investors of any material event that is important to shareholders or the United States Securities and Exchange Commission. This is one of the most common types of forms filed with the SEC...
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.
At that time, Richard A. Abdoo, served as Chairman, President and Chief Executive Officer
Chief executive officer
A chief executive officer , managing director , Executive Director for non-profit organizations, or chief executive is the highest-ranking corporate officer or administrator in charge of total management of an organization...
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
Chief operating officer
A Chief Operating Officer or Director of Operations can be one of the highest-ranking executives in an organization and comprises part of the "C-Suite"...
. Further, with Howard scheduled to retire in July 2000, Abdoo would then succeed him as Chairman of Primergy.
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, in Milwaukee, Wisconsin
Milwaukee, Wisconsin
Milwaukee is the largest city in the U.S. state of Wisconsin, the 28th most populous city in the United States and 39th most populous region in the United States. It is the county seat of Milwaukee County and is located on the southwestern shore of Lake Michigan. According to 2010 census data, the...
and NSP's in Minneapolis, Minnesota
Minneapolis, Minnesota
Minneapolis , nicknamed "City of Lakes" and the "Mill City," is the county seat of Hennepin County, the largest city in the U.S. state of Minnesota, and the 48th largest in the United States...
. Primergy headquarters were to be incorporated in Wisconsin, but located in Minneapolis. 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.
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.
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
Federal Energy Regulatory Commission
The Federal Energy Regulatory Commission is the United States federal agency with jurisdiction over interstate electricity sales, wholesale electric rates, hydroelectric licensing, natural gas pricing, and oil pipeline rates...
, 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.
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
Point Beach Nuclear Generating Station
Point Beach Nuclear Plant is a nuclear power plant located on Lake Michigan north of Two Rivers, Wisconsin, USA.The plant is currently owned and operated by NextEra Energy Resources , of Juno Beach, Florida...
in Manitowoc County, Wisconsin
Manitowoc County, Wisconsin
Manitowoc County is a county in the U.S. state of Wisconsin. As of 2000, the population was 82,887. Its county seat is Manitowoc. The United States Census Bureau's Manitowoc Micropolitan Statistical Area includes all of Manitowoc County.-Government:...
. 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.
Xcel merger
However, after the failed Primergy merger, Xcel EnergyXcel Energy
Xcel Energy, Inc. is a public utility company based in Minneapolis, Minnesota, serving customers in Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas, and Wisconsin. Primary services are electricity and natural gas...
was formed as a holding company to own three formerly independent companies: Northern States Power (Minnesota), Northern States Power (Wisconsin), and New Century Energies.
External links
Additional Resources
- The Historical Records of Northern States Power Company's predecessors are available for research use at the Minnesota Historical Society.