Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — Shareholder Meeting (April 2010)
26 slides from Northwestern Energy's shareholder meeting presentation, Apr 22, 2010
Slide 1: Annual Meeting of Stockholders
Annual Meeting of Stockholders Huron, SD April 22, 2010
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
Located in states with relatively stable economies with potential grid expansion. who we are… ¾ 661,000 customers » 396,000 electric » 265,000 natural gas ¾ Approximately 123,000 square miles of service territory in Montana, South Dakota, and Nebraska » 32,000 miles of electric T&D lines » 8,400 mil
Slide 4: NorthWestern's attributes
NorthWestern’s attributes… ¾ Solid operations » Cost competitive » Above-average reliability » Award-winning customer service ¾ Low single A secured credit ratings with a strong balance sheet and liquidity » April 15, 2010 Fitch upgraded secured and unsecured ratings to A- and BBB+ respectively ¾ Po
Slide 5: Low single A secured credit ratings
low single A secured credit ratings…
Slide 6: Strong balance sheet and liquidity
strong balance sheet and liquidity… ¾ Total Debt / Total capitalization of 54.3% (1) ¾ May 2010 » We anticipate refinancing existing $225 million, 5.875% Senior Secured Notes due 2014 with 15 year First Mortgage Bonds due 2025. Bonds priced April 15th at 5.01% with closing expected in May. ¾ October
Slide 7: Reaffirming 2010 EPS guidance
reaffirming 2010 EPS guidance… ¾ The major assumptions include, but are not limited to, the following expectations: » A consolidated income tax rate of approximately 30% of pre-tax income; » No impact from requested rate increase in Montana due to anticipated final order in the rate case during the
Slide 8: Positive earnings and ROE trend
Recent authorized ROE’s: Mill Creek (10.25%) and Colstrip Unit 4 (10.00%). positive earnings and ROE trend… * 2010 Estimate for illustrative purposes only and based on guidance range $1.95 - $2.10 and 36.5 million fully diluted shares
Slide 9: Strong cash flows
Earnings growth and NOLs provide strong cash flows to fund future investment. strong cash flows…
Slide 10: 2010 cash flow freed up for investment
It is also anticipated that our $93 million investment to fund pension in 2009 will free up significant cash flow for future investment. 2010 cash flow freed up for investment…
Slide 11: Pension funded status
12/31/09 pension funded status… Data source: SNL Financial
Slide 12: Competitive total shareholder return
competitive total shareholder return… Data source: SNL Financial
Slide 13: And growing dividend
Goal for dividend payout ratio of 60% - 70%. Current dividend yield about 5% . and growing dividend… (1) 2010 estimated payout range assumes midpoint of $1.95 - $2.10 guidance range
Slide 14: Constructive regulatory environment (Montana)
Maintaining positive regulatory relations in all jurisdictions constructive regulatory environment… ¾ Montana » Rate cases filed October 2009 requesting $17.5 million revenue increase ♦ November 2009 the MPSC determined the initial filing failed to comply with minimum filing requirements related to
Slide 15: Constructive regulatory environment (FERC)
Maintaining positive regulatory relations in all jurisdictions constructive regulatory environment… ¾ FERC » Working with FERC for MSTI rate design ♦ FERC encouraged Company to develop MSTI on a cost of service basis by requesting appropriate tariff waivers for existing OATT » FERC approved 230kV Re
Slide 16: Economic status of service territory
economic status of service territory… ¾ Unemployment rates in Montana, South Dakota , and Nebraska are the best in the nation . However the national recession still impacts NorthWestern through: » Lower OASIS sales to the west » MAPP pricing to the east » Industrial losses » Slower customer growth
Slide 17: Near-term potential earnings drivers
near-term potential earnings drivers… ¾ In 2010 we anticipate » Due to higher ratio of residential/commercial vs. industrial customers and a relatively healthy economy within our service territory we anticipate modest recovery in volumes and economic activity in 2010 ♦ Electric: 69% Residential & Co
Slide 18: Long-term balanced growth opportunities
long-term balanced growth opportunities… ¾ Distribution system enhancements » Exploring incremental rate based investment to enhance reliability and capacity, improve rural service, and prepare the system for potential smart grid applications (early stages) ¾ Energy supply » Mill Creek Generation St
Slide 19: Great wind potential in our service territory
great wind potential in our service territory…
Slide 20: Service territory is a link between supply and demand
service territory is a link between supply…
Slide 21: Incremental Electricity Demand 2007-2030
Incremental Electricity Demand 2007-2020 and 2007-2030 (6Wh/yr) Demand 2007 - 2030 (GWh) Califomia 92,108 Man ‘Arizona 79.306 Washington 40,821 Colorado | 25017 Utah = 22,749 Oregon 21,059 Nevada 17.494 e c E t Renewable Portfolio Standards in the West Wa 15% by 2020 [Dstt ce eeray stir MT 15% by 20
Slide 22: Our proposed transmission projects
our proposed transmission projects…
Slide 23: Growth project potential
Opportunity to increase and diversify earnings as compared with our existing $1.5 billion rate base. growth project potential…
Slide 24: Capex spending - next few years
Utility Maintenance Capex is funded 100% by free cash flow. MSTI project is now slated for early 2015 and capex has been modified accordingly. Capital still shown at 100% but still evaluating partners. Additional equity not anticipated until we proceed with MSTI or other major investments not shown
Slide 25: Growth project milestones '10 & '11
Mill Creek 500 kV Upgrade 230 kV Collector System MSTI 2011 Mill Creek ¾ Providing regulating services Q1 ¾ Completion of MPSC prudence review Q1 500 kV Upgrade ¾ WECC phase 2 rating Q3 ¾ Construction begins Q3 230 kV Collector System ¾ Open season results posted Q1 ¾ Customers provide full credit s
Slide 26: In summary
in summary… ¾ Solid operations ¾ Low single A secured credit ratings with a strong balance sheet and liquidity ¾ Positive earnings and ROE trend ¾ Strong cash flows ¾ Competitive total shareholder return and growing dividend ¾ Constructive regulatory environment ¾ Realistic growth prospects