Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — Shareholder Meeting (April 2021)
46 slides from Northwestern Energy's shareholder meeting presentation, Apr 22, 2021
Slide 1: Annual Meeting of Shareholders
CELEBRATING EARTH DAY 2021 Annual Meeting of Shareholders April 22, 2021
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: NWE's Board of Directors
3 NWE’s Board of Directors Stephen P. Adik Anthony T. Clark Dana J. Dykhouse Jan R. Horsfall Britt E. Ide • Board Chair • Committees: Governance, • Committees: Human • Committees: Audit, • Committees: Independent Human Resources Resources (chair), Audit Operations (chair) Governance, Operations • Di
Slide 4: NWE Executive Team
4 NWE Executive Team Robert C. Rowe Heather H. Grahame Curtis T. Pohl • Chief Executive Officer • General Counsel and Vice • Vice President - • Current position since President of Regulatory Distribution 2008 and Federal Government • Current position since Affairs 2003 • Current position since 2010
Slide 5: NWE's Auditors – Deloitte & Touche LLP
5 NWE’s Auditors – Deloitte & Touche LLP • NorthWestern Energy’s accounting firm in 2020 • 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
6 NWE’s Board Chair Stephen P. Adik • Director since November 1, 2004; retiring April 2021 • Retired Vice Chairman of NiSource, Inc., a Merrillville, Ind.-based electric and natural gas production, transmission and distribution company. He has held a number of executive positions including Chief Fin
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 2021 • 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: NorthWestern Energy Value Proposition
11 NorthWestern Energy Value Proposition A pure electric and natural gas utility serving as stewards of critical energy infrastructure that provides essential services to a broad service territory spanning across Montana, South Dakota, Nebraska and Yellowstone National Park. A Strong Financial Found
Slide 12: COVID-19…Our Response
12 COVID-19…Our Response COVID-19 has consumed our everyday life. This pandemic has affected all aspects of our operations. We implemented a comprehensive set of actions to help our customers, communities and employees, all while maintaining our commitment to provide safe and reliable energy. We wil
Slide 13: About NorthWestern
13 About NorthWestern South Dakota Operations Electric 63,900 customers 3,622 miles – transmission & distribution lines 411 MW nameplate owned power generation Natural Gas 48,000 customers 1,766 miles of transmission and distribution pipeline Montana Operations Electric 384,700 customers 24,877 mile
Slide 14: NWE - An Investment for the Long Term
14 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 ~65% hydro, wind & solar • Residentia
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. Over $4.0 billion of rate base investment to serve our customers Data as reported in our 2020 10-K (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measu
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 improving JD Power Overall Customer Satisfaction Scores Residential electric and natural gas rates below national average Solid electric system reliability Low gas leaks per mile – just outside 1st quartile
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 Nearly $7 billion of Gross Plant in Service to reliably serve our customers across Montana, South Dakota and Nebraska.
Slide 20: Recent Total Shareholder Return (TSR)
20 Recent Total Shareholder Return (TSR) 2020 TSR: NWE TSR: (15.06)% Peer TSR: (16.81)% Rank: 7th of 12 peers S&P 500 Utilities: +0.48% S&P 500: +18.40% Nasdaq: 43.64% • 12 member peer group: ALE (ALLETE), AVA (Avista), BKH (Black Hills Corp), IDA (IDACORP), MGEE (MGE Energy), NWN (Northwest Natural
Slide 21: Maintaining Affordability for our Customers
21 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 on customer rates. 2008-2020 CAGRs NWE Property Taxes: 7.2% (Montana only 7.5%) NWE typical electric bill:
Slide 22: Credit Ratings
22 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 May 2018, Moody’s downgraded our senior secured and unsecured credit ratings and in March 2021, Moody’s placed
Slide 23: Earnings Growth
23 Earnings Growth $3.30-$3.45 $2.60 - $2.75 Non-GAAP Adjusted EPS Growth Averaged 4.3% from 2013 - 2020 NorthWestern affirms its 2021 earnings guidance range of $3.40 to $3.60 per diluted share based upon, but not limited to, the following major assumptions and expectations: • COVID-19 related redu
Slide 24: Maintaining Capital Investment Forecast
24 Maintaining Capital Investment Forecast • $2.1 billion of total capital investment over the five year period. • We expect to finance this capital with a combination of cash flows from operations, first mortgage bonds and equity issuances. We anticipate initiating a $200 million At-the-Market (ATM
Slide 25: Transmission System Update
25 Transmission System Update Electric Transmission: • Continue planned retirements of generating resources in Montana in conjunction with increasing demand is placing more stress on the transmission system (two record peaks in the last three seasons). As a result, we are experiencing less available
Slide 26: Distribution Grid Update
26 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 27: Generation Portfolio Update
27 Generation Portfolio Update Montana • Initial bids for the January 2020 RFP were received in July 2020. Bid 60 MW of flexible capacity underway in Huron, SD submissions were evaluated by an independent party with the following portfolio of projects selected: • Laurel Generation Station - Construc
Slide 28: February Cold Weather Event
28 February Cold Weather Event • In February 2021, a prolonged cold spell resulted in record winter peak demand for electricity and natural gas. In our SD & NE service territories, natural gas costs for the month of February 2021 exceeded the total cost for all of 2020. • We recorded a regulatory as
Slide 29: February Cold Weather Event (Montana)
29 February Cold Weather Event (Montana) Portfolio Resource Portfolio Resource Production (Megawatts) (Megawatt Hours) Resource Adequacy Requirement Wind (455MW) Purchase Price NWE Load Solar (17MW) Accredited Capacity of current portfolio Coal and Natural Gas (511MW) Hydro (484MW) The chart illustr
Slide 30: MegaWatts (MW)
• • • MegaWatts (MW) 0 -900 -800 -700 -600 -500 -400 -300 -200 -100 2/10/21 0:00 2/10/21 3:00 2/10/21 6:00 2/10/21 9:00 2/10/21 12:00 2/10/21 15:00 2/10/21 18:00 2/10/21 21:00 2/11/21 0:00 2/11/21 3:00 2/11/21 6:00 2/11/21 9:00 2/11/21 12:00 2/11/21 15:00 2/11/21 18:00 2/11/21 21:00 2/12/21 0:00 2/1
Slide 31: Looking Forward (Regulatory)
31 Looking Forward (Regulatory) • We do not expect to make general rate case filings in any of our regulatory jurisdictions during 2021. We have made or anticipate making several other regulatory filings, primarily in our Montana jurisdiction, including: • An April 15, 2021 filing requesting to dela
Slide 32: Recent Significant Achievements
32 Recent Significant Achievements Strong year for safety at NorthWestern • Industry Leader Accident Prevention Award from American Gas Association in 2019 • Continue to be a top performer among Edison Electric Institute member companies. Record best customer satisfaction scores with JD Power & Asso
Slide 33: ESG Advances
33 ESG Advances • NorthWestern has a new Environmental, Social and Governance landing page. The new page: • Consolidates existing ESG information; • Includes disclosures of 20 new and existing policies and standards necessary for a best-practices ESG program; and • Includes a new, easy reference, Su
Slide 34: ESG Publications
34 ESG Publications Environmental Social Governance Code of Conduct Annual Report Environmental Report http://www.northwesternenergy.com/docs/default- http://www.northwesternenergy.com/our- source/documents/corporategovernance/code-of-conduct.pdf company/investor-relations/annual-reports http://www.
Slide 35: ESG - Environmental
35 ESG - Environmental NWE Montana & South Dakota combined Based upon 2020 MWH’s of owned and long-term contracted resources. 65% of NorthWestern Energy’s 2020 Electric Generation Portfolio Delivered was Carbon-Free (based on megawatt hours) Mystic Dam Beethoven Wind Farm 57% Carbon Free Nameplate P
Slide 36: ESG - Social
36 ESG - Social Community Customers Employees $2.3 Billion Economic Output in Typical Residential Bills Lower than Safety Culture Transformation 2020 ($2.013B in Montana & National Average $249M in SD/NE) Over $5 million Donations, Sponsorships, Economic Development, Scholarship Funding, Public Recr
Slide 37: ESG - Governance
37 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 38: Our Carbon Reduction Vision for NorthWestern Energy in Montana
38 Our Carbon Reduction Vision for NorthWestern Energy in Montana 90% carbon reduction by 2045 NorthWestern Energy commits to reduce the carbon intensity of our electric energy portfolio for Montana 90% by 2045.* * As compared with our 2010 carbon intensity as a baseline Already over 60% carbon free
Slide 39: Farewell and Thank You Julia L. Johnson
Farewell and Thank You Julia L. Johnson “Julia has been a tremendous Board member. Her distinguished career, experience and stature will be difficult to replace. As long-term Chair of the Board’s Governance Committee, Julia helped establish our commitment to excellent corporate governance. Along wit
Slide 40: Farewell and Thank You Stephen P. Adik
Farewell and Thank You Stephen P. Adik “After more than fifteen years of service, Steve is retiring from our Board of Directors. Steve set the standard as a great Finance Committee Chair. He knew the numbers and the trends as well as anyone, asked tough questions, promoted rigorous debate, and ensur
Slide 41: Conclusion
41 Conclusion Best Attractive Pure Strong Solid Utility Practices Future Electric & Earnings & Foundation Corporate Growth Gas Utility Cash Flows Governance Prospects
Slide 42: Question and Answer
42 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 43: Preliminary Results
43 Preliminary Results • Election of Directors • Ratification of Deloitte & Touche LLP, as Independent Registered Public Accounting Firm for 2020 • Approve Amendment to Equity Compensation Plan • Advisory Vote to Approve Named Executive Officer Compensation
Slide 44: Thank you for attending today's Annual Meeting
44 Thank you for attending today’s Annual Meeting
Slide 45: Non-GAAP Financial Measures
45 Non-GAAP Financial Measures These materials include financial information prepared in accordance with GAAP, as well as other financial measures, such as Gross Margin and Adjusted Diluted EPS, that are considered “non-GAAP financial measures.” Generally, a non-GAAP financial measure is a numerical
Slide 46: Non-GAAP Financial Measures
46 Non-GAAP Financial Measures Disclaimer on Net Operating Net Operating Losses (NOL’s): The expected tax rate and the expected availability of NOLs are subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond the control of the
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