Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — West Coast Utilities Seminar (December 2009)
25 slides from Northwestern Energy's conference presentation, Dec 10, 2009
Slide 1: West Coast Utilities Seminar
West Coast Utilities Seminar Four Seasons Hotel, Las Vegas, NV December 10, 2009
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 to support renewables. who we are… (1) As of 9/30/09 (2) Book capitalization calculated as total debt, excluding capital leases, plus shareholders’ equity. ¾ 656,000 customers » 392,000 electric » 264,000 natural gas ¾
Slide 4: NorthWestern's attributes
¾ Solid operations » Cost competitive » Above-average reliability » Award-winning customer service ¾ Improving credit ratings and strong balance sheet and liquidity » Secured and unsecured investment grade ratings » Moody’s has us on “positive” outlook ¾ Positive earnings and ROE trend » Colstrip Un
Slide 5: Secured credit ratings
SECURED CREDIT RATINGS sep ooay's IASI: —riten BBB+/Baa1/BBB BBB/Baa2/BBB Investment Grade BBB-/Baa3/BBB- BBH/Bat/BB+ 2005 2006 2007 2008 2009 ‘September 30, 2009 Agency ‘Secured Unsecured ‘Outlook Standard & Poor's ‘A- (MT) ‘BBB Stable BBB+ (SD) ‘Moody's Investor Services Ag Baa2 Positive Fitch Rat
Slide 6: Strong balance sheet and liquidity
strong balance sheet and liquidity … ¾ Debt / Total capitalization of 53.4% (9/30/09) ¾ October » $55 million, 30 year First Mortgage Bonds issued at 5.71% ¾ June » Extended unsecured revolver maturity to June 30, 2012 » Increased size from $200 million to $250 million ¾ March » $250 million, 10 yea
Slide 7: Positive earnings and ROE trend
Mill Creek and Colstrip Unit 4 ROE’s of 10.25% & 10.00% respectively. positive earnings and ROE trend…
Slide 8: Strong cash flows
Earnings growth, NOLs, and repairs tax deduction provide strong cash flows to fund future growth projects. strong cash flows…
Slide 9: Pension funding and expense
2009 return of approximately 20% year-to-date and expect to be greater than 90% funded. pension funding and expense …
Slide 10: Competitive dividend
Goal for dividend payout ratio of 60% - 70%. Current dividend yield about 5.5%. competitive dividend…
Slide 11: Regulatory update
Establishing positive regulatory regulations in all jurisdictions. regulatory update… ¾ Montana » Rate cases filed October 2009 requesting $17.5 million revenue increase ♦ We anticipate a rate adjustment to go into effect October 2010 » Mill Creek Generation Station filed with MPSC ♦ MPSC approval i
Slide 12: Near-term potential earnings drivers
Near-term earnings drivers independent of transmission projects. near-term potential earnings drivers… ¾ 2010 » Expecting flat volumes ♦ Due to higher mix of residential/commercial vs. industrial customers as compared to other utilities ● Electric: 67% Residential & Commercial, 33% Industrial ● Natu
Slide 13: Longer-term potential earnings drivers
Balanced growth opportunities across the business. longer-term potential earnings drivers … ¾ Distribution system enhancements » Exploring incremental rate based investment (early stages) ¾ Energy supply » Mill Creek Generation Station » South Dakota peaking generation » Natural gas reserves (early
Slide 14: Great wind potential in our service territory
great wind potential in our service territory…
Slide 15: MSTI provides link between supply and demand
MSTI provides link between supply …
Slide 16: 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 17: Our proposed transmission projects
our proposed transmission projects…
Slide 18: Capex spending - next few years
Additional equity not anticipated until we proceed with MSTI or other major investments. We will move forward with the funding of these projects only when they make economic sense. MSTI project is now slated for early 2015 and capex has been modified accordingly. Capital still shown at 100% but stil
Slide 19: Growth project potential
Opportunity to double and diversify earnings as compared with our existing $1.5 billion rate base. growth project potential…
Slide 20: Growth project milestones '09 & '10
growth project milestones ’09 & ’10… Mill Creek ü Expect decision from the MPSC (APPROVED) Q2 ü Begin construction Q3 kV Upgrade ü Complete engineering and planning studies Q4 ü WECC regional planning process begins Q4 ¾ Finalize commercial terms w/partners Q4 kV Collector System ü Information meeti
Slide 21: In summary
in summary… ¾ Solid operations ¾ Improving credit ratings and strong balance sheet and liquidity ¾ Positive earnings and ROE trend ¾ Strong cash flows ¾ Competitive dividend ¾ Improving regulatory environment ¾ Realistic growth prospects
Slide 22: Guidance change
Earnings guidance range for 2009 revised to $1.95 - $2.05 guidance change… (appendix)
Slide 23: Results through Q3 2009
Prior earnings guidance of $1.75 - $1.85 revised upward to $1.95 - $2.05 on October 28, 2009 due to repairs tax deduction. results through Q3 2009… (appendix)
Slide 24: Q4 2009 earnings bridge
Q4 2009 earnings bridge … (appendix)
Slide 25: MPSC rate request
Rate request excludes power supply costs, Colstrip Unit 4 generation and the under- construction Mill Creek Generation Plant. MPSC rate request … (appendix) ¾ Requested revenue increase of $17.5 million » Electric T&D = $15.5 million (6.98%) » Natural gas T&D = $2.0 million (1.89%) » Expect decision
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