Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — Shareholder Meeting (April 2022)
40 slides from Northwestern Energy's shareholder meeting presentation, Apr 29, 2022
Slide 1: Annual Meeting of Shareholders
Thompson Falls Dam - Montana Annual Meeting of Shareholders April 29, 2022
Slide 2: NWE’s CEO – Bob Rowe
2 NWE’s CEO – Bob Rowe Robert C. Rowe • Current position since August 2008 • Board member since August 2008 • 20-plus years energy and utility industry experience • Co-Chair of the Institute for Electric Innovation, an Institute of the Edison Foundation focused on advancing the adoption of innovativ
Slide 3: Experienced & Engaged Board of Directors
3 Experienced & Engaged Board of Directors Dana J. Dykhouse Anthony T. Clark Jan R. Horsfall Britt E. Ide • Board Chair • Committees: Nominating and • Committees: Safety, • Committees: Safety, • Independent Governance, Human Resources Environmental, Technology Environmental, Technology and • Directo
Slide 4: Strong Executive Team
4 Strong Executive Team Robert C. Rowe Brian B. Bird Crystal D. Lail • Chief Executive Officer • President and • Vice President and • Current position since Chief Operating Officer Chief Financial Officer 2008 • Current position since • Current position since 2021 (formerly Chief 2021 (formerly VP a
Slide 5: NWE’s Auditors – Deloitte & Touche LLP
5 NWE’s Auditors – Deloitte & Touche LLP • Independent registered public accounting firm • Deloitte provides the following services for more than 20 industries: • Risk & Financial Advisory • Audit & Assurance • Consulting • Tax • Merger & Acquisition • Artificial Intelligence and Analytics • Cloud •
Slide 6: NWE’s Board Chair / Meeting Agenda
6 NWE’s Board Chair Dana J. Dykhouse • Director since January 30, 2009 • Chief Executive Officer of First PREMIER Bank in Sioux Falls, South Dakota. • Serves on the boards of directors for Junior Achievement of South Dakota, the South Dakota State University Athletic Champions Council, Sioux Falls D
Slide 7: Corporate Secretary’s Report
7 Corporate Secretary’s Report Report • Affidavit of distribution for the proxy materials • Registered holders of common stock of the Company • Establishment of a quorum
Slide 8: Items of Business to be Considered
8 Items of Business to be Considered Election of Directors • Our Board is nominating 8 people for election as directors to serve for one year. Ratification of Deloitte & Touche LLP, as Independent Registered Public Accounting Firm for 2022 • Our Audit Committee oversees the integrity of our accounti
Slide 9: Electronic Voting
9 Electronic Voting • If you have not voted: Please use the virtual meeting voting platform to cast your vote now. • If you previously voted, but want to change your vote: Please use the virtual meeting voting platform to cast your new vote now.
Slide 10: Forward Looking Statements
10 Forward Looking Statements 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
Slide 11: Vision, Mission and Values
11 Vision, Mission and Values Our Vision Enriching lives through a safe, sustainable energy future Our Mission Working together to deliver safe, reliable and innovative energy solutions Our Values Safety Excellence Respect Value Integrity Community Environment
Slide 12: NWE - An Investment for the Long Term
12 NWE - An Investment for the Long Term • 100% pure electric & natural gas utility business Black Eagle dam Pure Electric & with over 100 years of operating history Gas Utility • Solid economic indicators in service territory • Diverse electric supply portfolio ~56% hydro, wind & solar • Electric &
Slide 13: About our Company
13 About our Company “Everything works – and will continue to 753,600 work – as long as we have electricity. Customers It’s what keeps the lights on, the oxygen flowing, the information going. Everything is the grid, the grid, the grid.” 1,483 - Peggy Noonan Employees Wall Street Journal Columnist 3
Slide 14: Customers and Communities
14 Customers and Communities South Dakota Operations Electric 64,200 customers 3,628 miles – transmission & distribution lines 395 MW nameplate owned power generation Natural Gas 48,600 customers 1,759 miles of transmission and distribution pipeline Montana Operations Electric 391,400 customers 24,9
Slide 15: A Diversified Electric and Gas Utility
15 A Diversified Electric and Gas Utility (1) (1) NorthWestern’s ‘80/20’ rules: Approximately 80% Electric and 80% Montana. Nearly $4.2 billion of rate base investment to serve our customers Data as reported in our 2021 10-K (1) Utility Margin is a non-GAAP Measure. See appendix for additional discl
Slide 16: Highly Carbon-Free Supply Portfolio
16 Highly Carbon-Free Supply Portfolio MT NWE Contracted energy from Colstrip Energy Limited Partners (CELP), Yellowstone Energy Limited Partners (YELP) as well as a majority of the contracted wind, hydro and solar are federally mandated Qualifying Facilities, as defined under the Public Utility Reg
Slide 17: Strong Utility Foundation
17 Strong Utility Foundation Solid and generally improving JD Power Overall Customer Satisfaction Scores * SD & NE bills temporarily impacted by ongoing Residential electric and natural gas rates below national average * recovery of the February 2021 prolonged cold weather Solid electric syste
Slide 18: Solid Economic Indicators
18 Solid Economic Indicators Source: NorthWestern customer growth - 2008-2016 Forms 10-K Unemployment Rate: US Department of Labor via SNL Database 2/21/17 Electric: EEI Statistical Yearbook (published December 2015, table 7.2) Natural Gas: EIA.gov (Data table "Number of Natural Gas Consumers") Sour
Slide 19: Investment for a Reliable Energy System
19 Investment for a Reliable Energy System $3.30-$3.50 $3.10 - $3.30 $2.60$3.20-$3.40 - $2.75 Approximately $7 billion of Gross Plant in Service to reliably serve our customers across Montana, South Dakota and Nebraska.
Slide 20: Maintaining Affordability for our Customers
20 Maintaining Affordability for our Customers NorthWestern’s typical electric and gas bills are below national average even considering the significant burden of Montana property tax increases and recent severe price pressures, especially for purchased energy, that have impacted customer rates. 200
Slide 21: Credit Ratings
21 Credit Ratings While great strides have been made since emergence from bankruptcy in 2004, regulatory concerns in Montana have put pressure on credit ratings over the last few years. In March 2022, Fitch downgraded our senior secured, senior unsecured and commercial paper credit ratings. We issue
Slide 22: 2022 Earnings Bridge
22 2022 Earnings Bridge Guiding down to $3.20 to $3.40 primarily due to equity needed to support increased capital investment. • An increased, yet more sustainable, level of operating expenses, along with dilution from equity financing of capital investment, is expected to be partially offset by org
Slide 23: Capital Investment Forecast and Funding
23 Capital Investment Forecast and Funding $2.4 billion of low-risk capital investment forecasted over the next five years to address grid modernization and renewable energy integration. This sustainable level of capex is expected to drive annualized rate base growth of approximately 4%-5%. We expec
Slide 24: MT Generation Portfolio Timeline
24 MT Generation Portfolio Timeline NorthWestern Energy Montana Timeline of Owned and Long-Term Contracted Electric Portfolio Additions Since 2011, NorthWestern Energy has added 782 MW of carbon-free electric generation (both owned and long-term contracted) to its Montana generation portfolio. Howev
Slide 25: De-risking the Montana Capacity Deficit
25 De-risking the Montana Capacity Deficit NorthWestern has made significant progress to de-risk the capacity deficit between now and 2025. These near term capacity solutions allow time for clarity on Colstrip arbitration, further development in the western markets, and ongoing technological advance
Slide 26: Growth Supporting Renewable Energy
26 Growth Supporting Renewable Energy Two facilities designed specifically to provide peak capacity and support the intermittent nature of renewable energy that currently comprises approximately 56% of NorthWestern’s energy supply portfolio. Dispatchable Intermittent • 175 MW of flexible natural gas
Slide 27: Accredited Capacity of Diverse Resources
27 Accredited Capacity of Diverse Resources On a megawatt basis, wind generation Accredited Capacity Contribution is the ability of each resource fuel-type to contribute to meet demand during peak energy usage by customers. comprises a very significant portion of Accredited Capacity Contribution or
Slide 28: Alternative Capacity Considerations
28 Alternative Capacity Considerations We expect to build the 175MW nameplate Yellowstone County Reciprocating Internal Combustion Engine (RICE) generation facility for approximately $275 million with capacity generation output of roughly 160 MW*. If we were to build wind or solar to provide the equ
Slide 29: Transmission System Update
29 Transmission System Update Electric Transmission: • In June 2021, we joined the Western Energy Imbalance Market (WEIM). WEIM active & Pending Participants This real-time, within-hour energy market will provide the company’s Montana customers with economically efficient energy to resolve imbalance
Slide 30: Distribution Grid Update
30 Distribution Grid Update Accomplishments 5 Year Projects Grid of the Future •Emergency System Management System Efficiencies New Technology (EMS) •ADMS Enhancements •EV Charging •Mobile Work Force •Fault Location, •Micro Management Management (MWM) Isolation and Service System (MGMS) •Advanced Di
Slide 31: Our Net-Zero Vision
31 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
Slide 32: ESG Publications
32 ESG Publications Environmental Social Governance These eight publications* provide valuable insight into NorthWestern Energy’s Environmental, Social and Governance (ESG) Sustainability practices. * Available at: https://www.northwesternenergy.com/about-us/environmental-social-governance and https
Slide 33: ESG - Environmental
33 ESG - Environmental 56% Carbon-Free Owned and Long- Term Contracted Portfolio in 2021 vs ~40% National Average in 2021 NWE Based on MWh’s Montana & South Dakota via U.S. Energy Information Administration – form combined EIA.gov Table 7.2b Electric Net Generation: U.S. Electric Power Sector 2021 B
Slide 34: ESG - Social
34 ESG - Social Community Customers Employees $2.6 Billion Economic Output in Typical Residential Bills Lower than Safety Culture Transformation 2021 ($2.30B in Montana & $300M National Average in SD/NE) Over $5 million Donations, Sponsorships, Economic Development, Scholarship Funding, Public Recre
Slide 35: ESG - Governance
35 ESG - Governance 5th Best Score Among 50 Publicly Traded North American Utility and Power Companies by Diverse Leadership Board of Directors Executive Team Moody’s Investment Services on Best Governance Practices Corporate Governance What We Do: • Annual election of all directors. • Majority vote
Slide 36: Conclusion
36 Conclusion Best Attractive Pure Strong Solid Utility Practices Future Electric & Earnings & Foundation Corporate Growth Gas Utility Cash Flows Governance Prospects
Slide 37: Question and Answer
37 Question and Answer • Please submit questions through the virtual annual meeting website. • We will edit profanity orQuestions other inappropriate language. must: We will edit • be pertinent to meeting •profanity Questionsor other must: matters inappropriate • Be pertinent to meeting matterswith
Slide 38: Preliminary Results
38 Preliminary Results • Election of Directors • Ratification of Deloitte & Touche LLP, as Independent Registered Public Accounting Firm for 2022 • Advisory Vote to Approve Named Executive Officer Compensation
Slide 39: Thank you for attending today’s Annual Meeting
39 Thank you for attending today’s Annual Meeting
Slide 40: Non-GAAP Financial Measures
Appendix 40 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
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