Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — Non-Deal Roadshow (September 2009)
27 slides from Northwestern Energy's roadshow presentation, Sep 29, 2009
Slide 1: Investor Update
Investor Update Boston, Philadelphia, Cincinnati, Columbus & Cleveland September 29 – October 1, 2009
Slide 2: forward-looking statement
forward-looking statement… During the course of this presentation, there will be forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often address our expected future business and financial
Slide 3: who we are
who we are… 656,000 customers 392,000 electric 264,000 natural gas Approximately 123,000 square miles of service territory in Montana, Nebraska and South Dakota Total generation (mostly base load coal) MT – 222 MW – regulated as of 1/1/09 SD – 312 MW – regulated Total Assets: $2,720 MM (1) Total Cap
Slide 4: NorthWestern's attributes
NorthWestern’s attributes… Solid operations Cost competitive Above-average reliability Award-winning customer service Improving debt ratings and strong balance sheet and liquidity Secured credit ratings of A-(MT) BBB+(SD) / BBB+ / Baa3 Moody’s has on “positive” outlook Competitive dividend Current y
Slide 5: improving credit ratings
improving credit ratings… Secured Ratings S&P A- Moody’s A3 Fitch BBB+ NWE credit ratings now better than peer average shown here. 5
Slide 6: liquidity highlights
liquidity highlights… Recently issued $250 million in First Mortgage Bonds 10 year maturity with interest rate of 6.34% Priced $55 million additional First Mortgage Bonds 30 year maturity at 5.71% Expect to close in mid-October Extended unsecured revolver Maturity date now June 30, 2012 Added $50 mi
Slide 7: strong balance sheet
strong balance sheet… (Dollars in 000's) June 30, December 31, 2009 2008 Cash 22,963 11,292 Restricted Cash 16,640 14,727 Accounts Receivable, Net 97,962 155,672 Inventories 47,350 70,741 Other Current Assets 75,459 60,985 Goodwill 355,128 355,128 PP&E and Other Non-current Assets 2,104,468 2,093,49
Slide 8: free cash flow
free cash flow… Free cash flow available to fund future growth projects. 8
Slide 9: dividend history
dividend history… Goal for dividend payout ratio of 60% to 70%. Current yield of approximately 5.5%. 9
Slide 10: return on average equity
return on average equity… 12.0% 11.0% Authorized ROAE's in Utility Industry 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2005 2006 2007 2008 NWE Return on Average Equity Ammondson Verdict Authorized Return on Average Equity (ROAE) of 10-11% in utility industry. 10
Slide 11: potential earnings drivers
potential earnings drivers… 2010 Expecting flat volumes Not impacted like other utilities due to higher mix of residential/commercial vs. industrial customers 68% Residential and Commercial vs. 32% Industrial and Other Delivery services rate adjustment expected to take effect 3Q 2010 for rate case t
Slide 12: regulatory update
regulatory update… Rate case to be filed 4Q in Montana Filing to include both electric and natural gas distribution businesses Based on 2008 test year Expect decision in 3Q 2010 Mill Creek Generation Station filed with MPSC MPSC approval in 2Q 2009 Construction underway Working with FERC for MSTI ra
Slide 13: generation growth highlights
generation growth highlights… Mill Creek Generating Unit in Montana Existing regulating services are becoming more expensive and scarce 150 MW plant near Anaconda, MT To be built for regulation services to balance supply and load for NWE’s Balancing Area Rate-based cost of service investment Estimat
Slide 14: our proposed transmission projects
our proposed transmission projects… 14
Slide 15: generation plans shifting to wind
generation plans shifting to wind… New generation in Montana mostly wind and will need to find an end user. 15
Slide 16: supply – Montana wind potential
supply – Montana wind potential… Very strong wind regime in Montana. 16
Slide 17: demand – renewable standards
demand – renewable standards… The current renewable percentage of NorthWestern’s electric supply in Montana is a little more than 8%. 17
Slide 18: our transmission developments
our transmission developments… Colstrip 500 kV Upgrade Line already exists – represents an upgrade Upgrades substation capacity Increases load capacity of existing line by 500-600 MWs Needed to relieve congestion to the West Market interest is increasing for Montana’s high quality wind profile North
Slide 19: transmission project developments
transmission project developments… 230 kV “Collector System” Provides gathering system for new generation to access MSTI and network system benefits Our project with no partners In 2Q ’09, FERC approved NorthWestern’s proposal to directly assign the cost of the project to the generators The FERC fou
Slide 20: transmission project developments cont'd – MSTI
transmission project developments cont’d… MSTI Provides additional capacity on a historically constrained path, and connects expanding new renewable markets in Idaho, Utah and the Southwest U.S. Total project cost estimated from $800 million to $1 billion Considering strategic partners Plan to be op
Slide 21: capex spending – next few years
capex spending – next few years… Includes more than $1 billion of potential generation and transmission growth projects. Non-discretionary capex is funded 100% by free cash flow. MSTI project is now slated for early 2014 and capex has been modified accordingly. Company doesn’t anticipate needing equ
Slide 22: growth project potential
growth project potential… Annual Earnings (in millions) Cost of Project Opportunity * Timing Mill Creek Generation Station $ 200 to $ 200 $ 10.0 to $ 10.0 Dec 2010 Colstrip 500 kV transmission upgrade ** $ 50 to $ 75 $ 2.5 to $ 3.8 Jan 2012 South Dakota Peaking generation $ 75 to $ 90 $ 3.8 to $ 4.5
Slide 23: growth project milestones '09 & '10
growth project milestones ’09 & ’10… Mill Creek Mill Creek 2009 2010 Expect decision from the MPSC (APPROVED) Q2 Complete construction Q4 Begin construction Q3 Start up, commissioning and completion Q4 500 kV upgrade 500 kV upgrade 2009 2010 Complete engineering and planning studies Q4 Run subscript
Slide 24: economic environment
economic environment… Worst national recession for past 25 years: MT, SD, and NE better than a lot of areas NE, SD, and MT have the 2ndlowest, 3rdlowest, and 8thlowest unemployment respectively Due to the current recession, many companies are: reducing staff (# of unemployed nationally increased 5.5
Slide 25: our service territory
our service territory... Unemployment rates by state, seasonally adjusted, June 2009 (US. rate = 9.5 percent) MI=152% Highest 10.0% or over 7.0% 1 9.9% 6.0% 0 6.9% sede 5.0% 10 5.9% Bd 4.0% 0 4.9% > 30% 3.9 a SOURCE: Bureau of Labor Statistics 2.0% 29% = _ ce Local Area Unemployment Statstcs 1.9% or
Slide 26: 2009 results through June
2009 results through June… Unaudited (Dollars in 000's) Six Months Ended June 30, 2009 2008 Variance Gross Margin increased mainly due to transfer of Operating Revenues 606,616 662,481 (55,865) interest in CU4 into regulated Cost of Sales 314,850 378,438 (63,588) electric and offset by reduced Gross
Slide 27: summary
summary… Value Dividend yield of approx. 5.5% Strong financial profile All debt is investment grade rated Strong cash flows from operations and NOLs expected into 2012 Improving regulatory relationships Opportunity for growth Montana rate case to be filed in October 2009 expecting a rate increase ex