Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — EEI Financial Conference 2007
21 slides from Northwestern Energy's conference presentation, Nov 5, 2007
Slide 1: EEI Financial Conference
EEI Financial Conference November 6, 2007
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: NorthWestern today
NorthWestern today… Company moving forward as a stand alone company Regulated electric and natural gas business Strong financial profile Poised for growth 3
Slide 4: Who we are
who we are… 640,000 customers 382,000 electric 258,000 natural gas Approximately 123,000 square miles of service territory in Montana, Nebraska and South Dakota Total Generation (all base load coal) Electric transmission lines MT – 222 MW – unregulated Natural gas distribution lines Supplier-owned e
Slide 5: Contribution of segments
contribution of segments… (trailing twelve months) Gross Margin Contribution EBITDA* Contribution 77 83 $119 $359 $662 Approximately 90% of gross margin is Approximately 90% of EBITDA is provided provided by the regulated businesses. by the regulated businesses. *EBITDA = Op. Inc. + Depr 5
Slide 6: Poised for significant growth
poised for significant growth… Strong balance sheet Experienced management team to execute plan Average 25 years of utility experience Earnings and cash flow growth from existing businesses Existing regulated and unregulated businesses provide stable predictable earnings Continued customer and load
Slide 7: Growth opportunities
growth opportunities… Existing Business Growth Opportunities Service territory Transmission development Customer growth – Upgrade Colstrip 500kV 1.6% annually transmission line Load growth in electric segment – Mountain States Transmission 3.2% annually Intertie line (MSTI) Capital investments have
Slide 8: Earnings/cashflow drivers – rate cases
earnings/cashflow drivers – rate cases… (A) (B) (C) (D) (A*B*D) (A*B*C) in millions in millions Rev Request = $57M Rate Base Requested Requested Earned '06 Earned Requested in millions Cap structure ROE ROE Income Income (Tax effected) X 60% Net income on rate increases MT Electric $ 667.4 51.46% 12
Slide 9: Colstrip 500 kV upgrade
Colstrip 500 kV upgrade… “Traditional” pathway to West Coast and California markets New substations near Townsend and Missoula, MT Upgrade to existing stations No new line construction necessary Capacity increase: 500-700 MW Working with other Colstrip transmission owners NWEC’s ownership share of u
Slide 10: Next steps on Colstrip 500 kV upgrade
next steps on Colstrip 500 kV upgrade… 2007 2008 2009 2010 2011 WECC planning Rates with BPA Tx agreements WECC approval Go/No Go Engineering studies Substation design Land acquisition Construction Operation Cumulative Dollars Spent: $1-2M $20-30M $100-125M Assumes 50% ownership in the project. The
Slide 11: Mountain States Transmission Intertie Line
Mountain States Transmission Intertie Line… 500 kV AC Line Southwestern Montana to Southeastern Idaho Length: approx. 400 miles Capacity: 1,500 MW Deposits from subscribers of approx. 1,050 MW Capital Cost: $800 million Assumed ROE 10%-13% 11
Slide 12: MSTI timeline
MSTI timeline… 2007 2008 2009 2010 2011 2012 2013 Open Season Support of Agencies Major facility Siting EIS Contracts Go/No Go Rights of Way Construction Test Operation Cumulative Dollars Spent: $3-5M $200M $500M $800M 12
Slide 13: Potential for generation development
potential for generation development… 2007 Montana Legislature passed House Bill 25: Allows ownership of rate base generation Prior legislation didn’t allow generation in rate base Provides for project approval by PSC prior to construction NorthWestern is considering a 100-150 MW gas fired generatio
Slide 14: Cap ex spending – next few years
cap ex spending – next few years… Includes more than $1 billion of potential generation and transmission growth projects (includes Colstrip 500KV upgrade at 50% ownership of new project) Approximately $1.6 billion in capital expenditures to 2013 14
Slide 15: Value of growth potential
value of growth potential… Possible earnings capacity of future opportunities (in millions) Annual Earnings Opportunity On-line MSTI transmission line $800 million times 50% equity ratio times estimated ROE of 11% $44.0 Jan 2013 Colstrip 500 kV transmission upgrade $120 million times 50% equity rati
Slide 16: Other value drivers
other value drivers… (in millions) NPV of contribution per share GE Lease: 2011-2018 decrease of lease $11.5M/yr $50.9 $1.30 Accretion of owner participant purchase $15.1 $0.39 DB contract expires 12/31/2010 $15.8 $0.40 Puget contract expires 12/31/2010 $9.0 $0.23 Potential Value of NOL NPV of NOL (
Slide 17: Investment highlights
investment highlights… Attractive Transmission and Distribution Business Strong, Predictable Growth in Earnings Significant Investment Potential in Transmission and New Generation Experienced Team Committed to Shareholder Value 17
Slide 18: Exhibits
exhibits… Select Financial Data 18
Slide 19: Y-t-d 9/30/07 financial results
y-t-d 9/30/07 financial results… 3Q '07 y-t-d 3Q '07 3Q '06 3Q '07 3Q '06 Gross Margin $ 126.8 $ 123.7 $ 392.5 $ 380.0 Operating, general & admin (93.6) (90.2) (296.7) (296.0) Operating income 33.2 33.5 95.8 84.0 Interest expense (14.6) (13.8) (42.4) (42.8) Other income/(expense) 0.9 (0.4) 1.6 8.0 I
Slide 20: Y-t-d 9/30/07 operating income by segment
y-t-d 9/30/07 operating income by segment… Nine Month Results: Regulated Unregulated Electric Gas Electric Other Total 3Q '07 3Q '06 3Q '07 3Q '06 3Q '07 3Q '06 3Q '07 3Q '06 3Q '07 3Q '06 Gross Margin $ 260,563 $ 244,923 $ 88,886 $ 82,132 $ 42,008 $ 49,138 $ 1,024 $ 3,800 $ 392,481 $ 379,993 Operat
Slide 21: Expected rest of 2007
expected rest of 2007… Actual 2006 Quarterly Results: Q1 Q2 Q3 Q4 2006 Net income 21,025 (2,446) 11,398 7,923 37,900 Ammondson verdict 11,400 11,400 Net income (adjusted for Ammondson} 21,025 (2,446) 11,398 19,323 49,300 EPS $ 0.59 $ (0.07) $ 0.32 $ 0.22 $ 1.07 EPS (adjusted for Ammondson) $ 0.59 $