Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — EEI Financial Conference 2024
52 slides from Northwestern Energy's conference presentation, Nov 8, 2024
Slide 1: EEI Financial Conference November 2024
EEI Financial Conference November 2024 8-K Date: November 08, 2024 Riverfront Missoula, Montana
Slide 2: Forward Looking Statements
NorthWestern Energy 2 Forward Looking Statements 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
Slide 3: Overview
Thank youOverview 3
Slide 4: NWE – An Investment for the Long Term
NWE – An Investment for the Long Term 4 • Approved Montana electric & natural gas and South Dakota electric rate reviews aid earnings, cash flow, and balance sheet strength • NOLs and tax credits expected to mitigate future cash tax obligations • History of consistent annual dividend growth • 100% p
Slide 5: About NorthWestern
About NorthWestern 5 Montana Operations Electric 405,500 customers 25,274 miles – transmission & distribution lines 1,062 MW maximum capacity owned power generation Natural Gas 212,100 customers 7,390 miles of transmission and distribution pipeline 17.85 Bcf of gas storage capacity Own 31.5 Bcf of p
Slide 6: The NorthWestern Value Proposition
9%-11% Total Growth 11%+ Total Growth Incremental Opportunities: 6% + EPS Growth ~5% Dividend Yield Base Capital Plan: 4%-6% EPS Growth FERC Transmission Incremental generating capacity (subject to successful resource procurement bids) Qualifying Facility and / or Power Purchase Agreement buyo
Slide 7: A Diversified Electric and Gas Utility
A Diversified Electric and Gas Utility 7 NorthWestern’s ‘80/20’ rules: Approximately 80% Electric and 80% Montana. Over $4.8 billion of rate base investment to serve our customers Data as reported in our 2023 10-K (1) Utility Margin is a non-GAAP Measure. See appendix for additional disclosure. * Re
Slide 8: Highly Carbon-Free Supply Portfolio
8 Highly Carbon-Free Supply Portfolio NorthWestern does not own all the renewable energy certificates (RECs) generated by contracted wind, and periodically sells its own RECs with proceeds benefiting retail customers. Accordingly, we cannot represent that 100% of carbon-free energy in the portfolio
Slide 9: Strong Utility Foundation
Strong Utility Foundation 9 Solid and generally improving JD Power Overall Customer Satisfaction Scores Solid electric system reliability • Residential rates below national average1 • Better than average natural gas leaks per mile 1) NWE rates are average for 2023: total residential revenues divid
Slide 10: Solid Economic Indicators
Solid Economic Indicators 10 • Customer growth rates historically exceed National Averages. • Projected population growth in our service territories better than the National Average. • Unemployment rates better than National Average Source: Company 10K’s, 2021/2022 EEI Statistical Yearbook – Table 7
Slide 11: NorthWestern's Combo-Advantage
NorthWestern’s Combo-Advantage 11 Combination electric & natural gas provider in Montana & South Dakota • Targeting best-in-class Customer Experience • Opportunity to invest in critical Capacity expansion (supply & transmission) • Continued Grid Evolution to improve resiliency and enhance wildfire
Slide 12: Natural Gas LDC – AECO Advantage to Customers
Natural Gas LDC – AECO Advantage to Customers 12 Natural gas is one of the most affordable energy sources, and NWE has access to some of the lowest and most stable natural gas prices in the nation through the Alberta Energy Company (AECO) and Henry trading hubs. Source: S&P Global In South Dakota, w
Slide 13: Corporate Sustainability
Corporate Sustainability 13 Environmental Social Governance These eight publications provide valuable insight into NorthWestern Energy’s Sustainability practices. The Sustainability Report includes Sustainability Accounting Standards Board (SASB) and Task Force on Climate-Related Financial Disclosur
Slide 14: Best Practices Governance
Best Practices Governance 14 America’s Most Responsible Companies Recognized by Newsweek as one of the most responsible companies in 2023. One of only eleven EEI member utilities selected. Board of Directors Executive Team 5th Best Score Among 50 Publicly Traded North American Utility and Power Comp
Slide 15: Financial & Regulatory Update
Thank youFinancial & Regulatory Update 15
Slide 16: Strong Growth Outlook
Strong Growth Outlook Revised 2024 Non-GAAP EPS Guidance1 of $3.32 - $3.47 • Assumes normal weather, Montana interim rates starting in December, an effective tax rate of 9% to 11%, and diluted shares outstanding of 61.4 million. Affirming long-term (5 Year) expected growth rates • EPS growth of
Slide 17: Credit, Cash Flow, and Financing Plans
Credit, Cash Flow, and Financing Plans 17 Credit Ratings 2024 Financing Plan No equity expected to fund the current 5-year | $2.5 billion capital plan Financing plans (targeting a FFO to Debt ratio > 14%) are expected to maintain our current credit ratings. We expect to pay minimal cash taxes into 2
Slide 18: Track Record of Growing Capital Investment
Track Record of Growing Capital Investment 18 2019-2023 Invested over the last 5 years* * Historical Capital Investment includes property, plant and equipment additions and AFUDC Credit, both from our cash flow statement, and change in capital expenditures included in accounts payable. ** See Regula
Slide 19: Solid Balance Sheet
Solid Balance Sheet 19 Investment grade credit ratings, liquidity significantly greater than our $100 million target, debt to capitalization at the bottom of our targeted 50%-55% range, and a manageable schedule of debt maturities. * Liquidity target was raised to $200 million during the height of t
Slide 20: Disciplined Expense Program
20 Disciplined Expense Program Source: FERC Form 1 Reports - 2023 expenses and company filings through S&P Global IQ. Electric Non-Fuel O&M excludes fuel and steam costs for power generation, water costs for hydro operations, and purchased power cost unless identified in company disclosures. Electri
Slide 21: Rate Reviews
Thank youRate Reviews 21
Slide 22: Rate Review Summary
22 Rate Review Summary Key Dates of Montana procedural Schedule • 12/20/24: Final day for data requests to NWE (with final responses due 1/10/25) • 1/17/25: Intervenor testimony due • 3/14/25: NWE rebuttal and cross- intervenor testimony due • 3/24/25: Final day to file settlements • 4/22/25: Hearin
Slide 23: Strategic Update
Thank youStrategic Update 23
Slide 24: Energy West / Cut Bank Natural Gas Acquisition
Energy West / Cut Bank Natural Gas Acquisition 24 Transaction Highlights Purchase Price Approvals and Timing • Two natural gas LDC’s in Montana: Energy West Montana (“EWM”) and Cut Bank Gas Co. (“CBGC”) from Hope Utilities • 33,000 customers in Great Falls area, West Yellowstone and Cut Bank communi
Slide 25: Colstrip Transactions Overview
Colstrip Transactions Overview 25 NorthWestern Energy entered into an agreement to acquire Puget Sound Energy’s ownership interests in Colstrip Units 3 and 4. This transaction is in addition to our previously disclosed agreement with Avista to acquire their ownership interest in Colstrip. Similar to
Slide 26: Colstrip Facility Ownership
Colstrip Facility Ownership 26 In January 2026, we will own 55% of Colstrip Units 3 &4. This allows us to guide investments in operation and maintenance in providing on- demand, 24/7 cost-effective generation for our Montana customers until a viable equivalent, carbon-free energy resource is availab
Slide 27: Regional Transmission Opportunities
Regional Transmission Opportunities 27 In addition to the Colstrip Transmission System Upgrade, we are considering an investment in North Plains Connector and are engaged in several other potential regional transmission development activities. Colstrip Transmission System Note: Import / Export MW Sh
Slide 28: Montana Wildfire Mitigation Plan
Montana Wildfire Mitigation Plan 28 Reduction of Ignition Potential System and Environmental Monitoring Enhanced Vegetation Maintenance Enriched Public Communication and Outreach Comprehensive summary of wildfire mitigation activities Expect to update plan with each electric rate review filing
Slide 29: Montana Public Safety Power Shutoff Plan
Montana Public Safety Power Shutoff Plan 29 Guiding Plan Principles • Uphold our commitment to sustainable, affordable and reliable service • Ensuring the safety of our employees, customers, the public, communities, and the environment • Maintain robust situational awareness strategy for monitoring
Slide 30: Conclusion
Conclusion Pure Electric & Gas Utility Solid Utility Foundation Best Practices Corporate Governance Attractive Future Growth Prospects Strong Earnings & Cash Flows 30
Slide 31: Appendix
Thank youAppendix 31
Slide 32: 2024 Earnings Bridge
2024 Earnings Bridge Revising 2024 Non-GAAP EPS guidance in light of delay in Montana interim rates This guidance range is based upon, but not limited to, the following major assumptions: • Normal weather in our service territories; • Interim rates in Montana in December 2024 • An effective income t
Slide 33: Regulated Utility Five-Year Capital Forecast
$2.5 billion of highly-executable and low-risk capital investment Regulated Utility Five-Year Capital Forecast 33 Appendix
Slide 34: Rate Case Summary and Footnotes
(1) The revenue requirement associated with the FERC regulated portion of Montana electric transmission and ancillary services are included as revenue credits to our MPSC jurisdictional customers. Therefore, we do not separately reflect FERC authorized rate base or authorized returns. (2) The Montan
Slide 35: 2023 System Statistics
2023 System Statistics 35 Note: Statistics above are as of 12/31/2023 except generation for YCGS (online in October 2024) was added to natural gas (1) Nebraska is a natural gas only jurisdiction (2) Dave Gates Generating Station (DGGS) in Montana is a 150 MW nameplate facility but consider it a 105
Slide 36: January 2024 Cold Weather Event - Montana
January 2024 Cold Weather Event - Montana 36 The above charts illustrate our resource nameplate capacity, the actual resource specific contribution of energy, the capacity deficit we faced, and the market price of power during the January 2024 multi-day cold weather event in Montana. As a result of
Slide 37: Our Net-Zero Vision
Our Net-Zero Vision Over the past 100 years, NorthWestern Energy has maintained our commitment to provide customers with reliable and affordable electric and natural gas service while also being good stewards of the environment. We have responded to climate change, its implications and risks, by inc
Slide 38: Timeline of Montana Generation Portfolio
38 Timeline of Montana Generation Portfolio 38 Since 2011, we have added approximately 954 MW, both owned and long-term contracted, to our generation portfolio, all of which is from carbon-free resources. Appendix
Slide 39: Comparison of Installed Capacity
Comparison of Installed Capacity 39 California is dealing with significant capacity issues DESPITE having a greater amount of dispatchable generation and fewer renewables than NorthWestern Energy in Montana (as a percentage of the total). Source: EIA.gov – 2023 Form EIA-860 Data - Schedule 3 for cal
Slide 40: Electric Wallet Share
Electric Wallet Share Appendix 40
Slide 41: Natural Gas Wallet Share
Natural Gas Wallet Share Appendix 41 Note: Montana typical bill is based on 65 therms which translates to ~0.32% lower wallet share than pictured. For consistency with South Dakota and Nebraska, 100 therms is used for Montana in this illustration. Oct. - Sept. Fiscal Year *2023 - 2024 is partial per
Slide 42: Experienced & Engaged Board of Directors
Experienced & Engaged Board of Directors 42 Britt E. Ide • Nominating & Governance, HR • Independent • Since April 2017 Anthony T. Clark • Nominating & Governance, HR • Independent • Since Dec. 2016 Jan R. Horsfall • SETO (chair), Audit • Independent • Since April 2015 Brian B. Bird • President & Ch
Slide 43: Strong Executive Team
Strong Executive Team 43 Brian B. Bird • President & Chief Executive Officer • Current position since 2023 (formerly President & Chief Operating Officer ’21-’22 and Chief Financial Officer ’03-’21) Crystal D. Lail • Vice President and Chief Financial Officer • Current position since 2021 (formerly V
Slide 44: Our Commissioners
Our Commissioners 44 Appendix Montana – one incumbent commissioner re-elected and two new commissioners elected District 2 – Comm. O’Donnell (termed out) Brad Molner (R) defeated Susan Bilo (D) District 3 – Comm. Brown (not seeking re-election) Jeff Welborn (R) defeated Leonard Williams (D) District
Slide 45: Rate Review Appendix
Thank youRate Review Appendix 45
Slide 46: Montana Electric Rate Review
Montana Electric Rate Review Montana Electric: • $69.4M Net Request • $874M Plant-in-Service additions (’23-’24F) • Operating Costs 1.1% CAGR (’21-’23) • Typical Residential Bill: 8.3% at full request 46 $156.5 Million Base Rate Increase Requested & $69.4 Million Total Request Typical 750 kWh Reside
Slide 47: Montana Gas Rate Review
Montana Gas Rate Review 47 $28.6 Million Base Rate Increase Requested Montana Natural Gas: • $28.6M Total Request • $174M Plant-in-Service additions (’23-’24F) • Operating Costs 3.3% CAGR (’21-’23) • Typical Residential Bill: 17.0% at full request Typical 65 Therm Residential Natural Gas Bill Append
Slide 48: South Dakota Natural Gas Rate Review
South Dakota Natural Gas Rate Review 48 South Dakota Natural Gas: • $6.0M Total Request • $80M Plant-in-Service additions (’10-’23) • Operating Costs 1.9% CAGR (’10-’23) • Typical Residential Bill: 7.9% at full request $6.0 Million Rate Increase Requested Typical 100 Therm Residential Natural Gas Bi
Slide 49: Nebraska Natural Gas Rate Review
Nebraska Natural Gas Rate Review 49 $3.6 Million Rate Increase Requested Typical 100 Therm Residential Natural Gas Bill Nebraska Natural Gas: • $3.6M Total Request • $42M Plant-in-Service additions (’07-’23) • Operating Costs 1.3% CAGR (’07-’23) • Typical Residential Bill: 5.8% at full request Appen
Slide 50: Non-GAAP Financial Measures
Non-GAAP Financial Measures 50 Appendix
Slide 51: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation includes financial information prepared in accordance with GAAP, as well as other financial measures, such as Utility Margin, Adjusted Non-GAAP pretax income, Adjusted Non-GAAP net income and Adjusted Non-GAAP Diluted EPS that are considered “non-GAAP fi
Slide 52: Thank you
Thank youDelivering a bright future 52
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