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Home My WebLink About20180201MDU Resources.pdfEXECUTIVE OFFICES I rurenruouNTAlN Gns CorupeNv 555 SOUTH COLE ROAD . p.O. BOX 7608 . BOISE, IDAHO 83707 . (208) 377-6000 o FAX: 377, R[C E I VED -6097 201$ FEB - I AH 9: 0r+ iD jriiil ijU[3Llll"li:S C0h4l'{l 0r'{ Cea February 1,2018 Ms. Diane Hanian, Commission Secretary Idaho Public Utilities Commission 472W. Washington P.O. Box 83720 Boise,ID 87302-0074 Dear Ms. Hanian: Intermountain Gas Company ("lntermountain") hereby provides notice to the Idaho Public Utilities Commission (the "Commission") of a planned reorganization of its parent company MDU Resources Group, Inc. ("MDU Resources"). At this time, MDU Resources has two distribution company indirect-subsidiaries, Intermountain and Cascade Natural Gas Corporation ("Cascade"). MDU Resources also provides electric and natural gas utility services through two operating divisions, Montana-Dakota Utilities Co. and Great Plains NaturalGas Co. (the "Legacy Utilities"). MDU Resources also has three other indirect-subsidiaries, WBI Energy Transmission, Inc., an interstate natural gas transporter; Knife River Corporation, a construction materials company; and MDU Construction Services Group, Inc., a contracting and constructions services company. MDU Resources seeks to implement a plan of corporate reorganization (the"Plan") that will result in a holding company structure. The new holding company ("Holding Company") will assume the name "MDU Resources Group, Inc." and willengage in business activities through separate subsidiaries. There will be no change in the manner in which Intermountain provides utility services to its customers in Idaho. After the reorganization, the MDU Resources public utility businesses operated by the Legacy Utilities will, instead, be provided through a stand-alone subsidiary. The stand-alone subsidiary will be named Montana-Dakota Utilities Co. ("Montana-Dakota") and the operations of Great Plains will be conducted as a division of Montana-Dakota. Because the MDU Resources Plan is essentially a "paper" transaction, it will not impact Intermountain's day-to-day operations, nor will it have any effect on the regulatory authority by the Commission pertaining to Intermountain. In the reorganization, the newly formed Holding Company will become the public company and ultimate parent, with two principal first-tier subsidiaries: (l) MDU Energy Capital, LLC ("MDU Energy"), which will own and operate Intermountain and the other two distribution utility companies, Cascade and Montana-Dakota; and (2) Centennial Energy Holdings, Inc. ("Centennial Energy"), which will continue to hold the business subsidiaries of WBI Holdings, Inc. ("WBl Holdings"), Knife River Corporation ("Knife River"), and MDU Construction Services Group, Inc. ("MDU CSG"). Attached hereto are two corporate structure diagrams, the first depicts the MDU Resources existing corporate structure, and the second depicts the proposed corporate structure once the Plan is fully implemented. All of the MDU Resources outstanding debt securities at the time the Plan is implemented, which have been incurred solely for the operations of the Montana-Dakota/Great Plains divisions, will remain at the Montana-Dakota/Great Plains level. Intermountain and Cascade, the current subsidiaries of MDU Energy, as well as the subsidiaries of Centennial Energy will not be affected by the merger transactions. The merger transaction contemplated by the Plan will not result in MDU Resources transferring any of its utility assets or properfy to any other affiliate. All costs associated with implementing the Plan will be bome by MDU Resources. MDU Resources will not seek to recover any portion of those costs in utility rates. No incremental financing will be required to implement the Plan. Intermountain will continue to have its own capital structure and the ring-fencing that was implemented when MDU Resources acquired Intermountain will remain unchanged. MDU Resources and Intermountain believe the Plan is in the best interest of Intermountain's customers, employees, shareholders, and other stakeholders. The Plan will result in a holding company structure that furthers the separation between MDU Resources' Legacy Utilities and its regulated affiliates (including Intermountain) and its non-regulated affiliates. Although MDU Resources already maintains substantial separation between its various lines of business, the proposed holding company structure will increase the degree of financial separation between the Legacy Utilities and MDU Resources' other regulated and non-regulated business lines. The Plan also creates a more transparent business structure for MDU Resources which is consistent with its business model and the utility industry. MDU resources and Intermountain also believe the Plan benefits Intermountain by increasing the degree of financial separation between the Legacy Utilities and MDU Resources' other affiliates, including Intermountain. The structure proposed in the Plan will work to better insulate the Intermountain assets and reduce the risk that such assets could be reached by the creditors ofthe Legacy Utilities and vice versa. Although this benefit may be relatively small in light of the existing ring-fencing provisions, it is a benefit nonetheless. MDU Resources anticipates implementing the Plan effective on January 1,2019. If you have any questions, please contact me at 208-377-6168. Sincerely, Michael P Director, Regulatory Affairs Cc Scott Madison Mark Chiles Attachment: Existing and Proposed Holding Company Structure 1 ATTACHMENT Existing Structure Proposed $tructure MDU Rssources Group, lnc. lnckxhs olyisbns: Mont8na-DEkob Utilitios Co Grsrt PlainE Natural Gag Co, Gentennial Energy Holdinge, lnc.MDU Energy Gapital, LLC Cascado Natural Gar Gorporalion Intennountain Gas Company Knifs River Corporation wBt Holdings, lnc. MDU Construction Services Group, lnc. MOU Resources Group, lnc, MDU Enorgy Capital, LLCC€nlennhl Enargy Holdlngs, lnc. Knlfo Rival Corporstion Cricad6}hturrl Ga:Corporation wstHoldlngs,lnc, ilIDUCoiliuuction 8orulc6i Group, lnc" Ger Company lllontana-Dakoti tttilitis Co. lncludes Divsion:Gre8t Pbins Nalural GaE Co