Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — EEI Financial Conference 2009
26 slides from Northwestern Energy's conference presentation, Nov 2, 2009
Slide 1: EEI Financial Conference, November 1-4, 2009
EEI Financial November 1-4, 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 in the Northwest region. 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
Slide 4: NorthWestern's attributes
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
Slide 5: Secured credit ratings
SECURED CREDIT RATINGS —ser nooay's IASI: —riten BBB+/Baa1/BBB BBB/Baa2/BBB Investment Grade BBB-/Baa3/BBB- BBH/Bal/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: Guidance change
Earnings guidance range for 2009 revised to $1.95 - $2.05 guidance change…
Slide 9: Strong cash flows
Earnings growth, NOLs, and repairs tax deduction provide strong cash flows to fund future growth projects. strong cash flows…
Slide 10: 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 11: Competitive dividend
Goal for dividend payout ratio of 60% - 70%. Current dividend yield about 5.5%. competitive dividend…
Slide 12: Regulatory update
Establishing positive regulatory regulations in all jurisdictions. regulatory update… ¾ Montana » Rate cases filed October 2009 in Montana » Mill Creek Generation Station filed with MPSC ♦ MPSC approval in 2Q 2009 ♦ Under construction with $40.5 million capitalized CWIP as of 9/30/09 » Colstrip Unit
Slide 13: Rate request filed with MPSC
Rate request excludes Colstrip Unit 4 generation and the under- construction Mill Creek Generation Plant. rate request filed with MPSC… 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 by July 2010 » Inter
Slide 14: 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 15: 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 16: Distribution system enhancements
Investing in better services for our customers. distribution system enhancements … ¾ Continued emphasis on investment that maintains current high service quality levels ¾ Proactive approach to address future infrastructure needs » Significant potential for investment over next 5 - 7 years, increment
Slide 17: Energy supply
Rate based supply provides stability and diversity. energy supply … ¾ Mill Creek Generation Station » 150 MW plant near Anaconda, MT » Estimated cost $202 million » Construction underway with scheduled completion date of December 2010 ¾ South Dakota peaking generation » $50 million investment to add
Slide 18: Montana is between load and resources
Montana is between load and resources …
Slide 19: Our proposed transmission projects
our proposed transmission projects…
Slide 20: Transmission projects
Significant opportunity to grow transmission rate base. transmission projects … ¾ Colstrip 500 kV upgrade » Upgrade existing line and substations to increase capacity of existing line by 500-600 MW’s to relieve congestion to the west » Joint project with other Colstrip Transmission system owners » C
Slide 21: 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 22: Growth project potential
Opportunity to double and diversify earnings as compared with our existing $1.5 billion rate base. growth project potential…
Slide 23: 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 ¾ Complete engineering and planning studies Q4 ¾ WECC regional planning process begins Q4 ¾ Finalize commercial terms w/partners Q4 kV Collector System ü Information meeti
Slide 24: 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 25: Results through September (appendix)
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 September (appendix)…
Slide 26: Q4 2009 earnings bridge (appendix)
Q4 2009 earnings bridge … (appendix)