NorthWestern Energy Group, Inc. · NASDAQ:NWE
NorthWestern Energy — Non-Deal Roadshow (September 2009)
27 slides from NorthWestern Energy's roadshow presentation, Sep 29, 2009
Slide 1: Investor Update
Investor Update Boston, Philadelphia, Cincinnati, Columbus & Cleveland September 29 – October 1, 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
who we are… 656,000 customers » 392,000 electric » 264,000 natural gas Approximately 123,000 square miles of service territory in Montana, Nebraska and South Dakota Total generation (mostly base load coal) » MT – 222 MW – regulated as of 1/1/09 » SD – 312 MW – regulated Total Assets: $2,720
Slide 4: NorthWestern's attributes
NorthWestern’s attributes… Solid operations » Cost competitive » Above-average reliability » Award-winning customer service Improving debt ratings and strong balance sheet and liquidity » Secured credit ratings of A-(MT) BBB+(SD) / BBB+ / Baa3 » Moody’s has on “positive” outlook Competitive di
Slide 5: Improving credit ratings
improving credit ratings… NWE Credit Rating History A-/A3/A- BBB+/Baa1/BBB+ BBB/Baa2/BBB BBB-/Baa3/BBB- Investment Grade BB+/Ba1/BB+ BB/Ba2/BB BB-/Ba3/BB- 2005 2006 2007 2008 2009 S&P Secured S&P Unsecured Moody's Secured Moody's Unsecured Fitch Secured Fitch Unsecured S&P Long Term Issuer Ratings (
Slide 6: Liquidity highlights
liquidity highlights… Recently issued $250 million in Debt Maturity Schedule as of 6/30/09 First Mortgage Bonds ($Million's) » 10 year maturity with interest rate $500 of 6.34% $450 Priced $55 million additional First $400 Mortgage Bonds $350 » 30 year maturity at 5.71% $300 » Expect to close in
Slide 7: Strong balance sheet
strong balance sheet… (Dollars in 000's) June 30, December 31, 2009 2008 Cash 22,963 11,292 Restricted Cash 16,640 14,727 Accounts Receivable, Net 97,962 155,672 Inventories 47,350 70,741 Other Current Assets 75,459 60,985 Goodwill 355,128 355,128 PP&E and Other Non-current Assets 2,104,468 2,093,49
Slide 8: Free cash flow
free cash flow… Cash Flow / Maintenance CapEx $250,000 $200,000 $150,000 $100,000 ($000) $50,000 $0 -$50,000 -$100,000 CFO Maintenance CapEx CFO Less Maintenance CapEx -$150,000 2005 2006 2007 2008 Free cash flow available to fund future growth projects. 8
Slide 9: Dividend history
dividend history… $1.40 Annual Dividend Per Share Dividend Payout Ratio 100% 90% $1.20 80% Dividend Payout Ratio Dividend Per Share $1.00 70% 60% $0.80 50% $0.60 40% $0.40 30% 20% $0.20 10% $- 0% 2005 2006* 2007 2008 * 2006 Payout Ratio adjusted to exclude impacts of Ammondson Verdict ( $0.32) Goal
Slide 10: Return on average equity
return on average equity… 12.0% 11.0% Authorized ROAE's in Utility Industry 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2005 2006 2007 2008 NWE Return on Average Equity Ammondson Verdict Authorized Return on Average Equity (ROAE) of 10-11% in utility industry. 10
Slide 11: Potential earnings drivers
potential earnings drivers… 2010 » Expecting flat volumes ♦ Not impacted like other utilities due to higher mix of residential/commercial vs. industrial customers ♦ 68% Residential and Commercial vs. 32% Industrial and Other » Delivery services rate adjustment expected to take effect 3Q 2010 for ra
Slide 12: Regulatory update
regulatory update… Rate case to be filed 4Q in Montana » Filing to include both electric and natural gas distribution businesses » Based on 2008 test year » Expect decision in 3Q 2010 Mill Creek Generation Station filed with MPSC » MPSC approval in 2Q 2009 » Construction underway Working with
Slide 13: Generation growth highlights
generation growth highlights… Mill Creek Generating Unit in Montana Existing regulating services are becoming more expensive and scarce 150 MW plant near Anaconda, MT » To be built for regulation services to balance supply and load for NWE’s Balancing Area » Rate-based cost of service investment
Slide 14: Our proposed transmission projects
our proposed transmission projects… 14
Slide 15: Generation plans shifting to wind
generation plans shifting to wind… Potential Transmission Delivery in Montana 5000 4500 4000 3500 Capacity (MW) 3000 2500 2000 1500 1000 500 0 C o al Ga s Wi nd Tra nsmission and To tal MT Existing Po wer Marketers Ge neration Feb '08 June '09 New generation in Montana mostly wind and will need to f
Slide 16: Supply – Montana wind potential
supply – Montana wind potential… Very strong wind regime in Montana. 16
Slide 17: Demand – renewable standards
demand – renewable standards… The current renewable percentage of NorthWestern’s electric supply in Montana is a little more than 8%. 17
Slide 18: Our transmission developments
our transmission developments… Colstrip 500 kV Upgrade Line already exists – represents an upgrade » Upgrades substation capacity » Increases load capacity of existing line by 500-600 MWs Needed to relieve congestion to the West Market interest is increasing for Montana’s high quality wind pro
Slide 19: Transmission project developments
transmission project developments… 230 kV “Collector System” Provides gathering system for new generation to access MSTI and network system benefits Our project with no partners In 2Q ’09, FERC approved NorthWestern’s proposal to directly assign the cost of the project to the generators The
Slide 20: Transmission project developments cont'd – MSTI
transmission project developments cont’d… MSTI Provides additional capacity on a historically constrained path, and connects expanding new renewable markets in Idaho, Utah and the Southwest U.S. Total project cost estimated from $800 million to $1 billion » Considering strategic partners Plan
Slide 21: Capex spending – next few years
capex spending – next few years… Includes more than $1 billion of potential generation and transmission growth projects. $700 Non-discretionary $600 capex is funded 100% by free cash flow. $500 $400 MSTI project is now slated for early 2014 and capex has $300 been modified accordingly. $200 Company
Slide 22: Growth project potential
growth project potential… Annual Earnings (in millions) Cost of Project Opportunity * Timing Mill Creek Generation Station $ 200 to $ 200 $ 10.0 to $ 10.0 Dec 2010 Colstrip 500 kV transmission upgrade ** $ 50 to $ 75 $ 2.5 to $ 3.8 Jan 2012 South Dakota Peaking generation $ 75 to $ 90 $ 3.8 to $ 4.5
Slide 23: Growth project milestones '09 & '10
growth project milestones ’09 & ’10… Mill Creek Mill Creek 2009 2010 Expect decision from the MPSC (APPROVED) Q2 Complete construction Q4 Begin construction Q3 Start up, commissioning and completion Q4 500 kV upgrade 500 kV upgrade 2009 2010 Complete engineering and planning studies Q4 R
Slide 24: Economic environment
economic environment… Worst national recession for past 25 years: » MT, SD, and NE better than a lot of areas NE, SD, and MT have the 2nd lowest, 3rd lowest, and 8th lowest unemployment respectively Due to the current recession, many companies are: » reducing staff (# of unemployed nationally
Slide 25: Our service territory
our service territory... Unemployment rates by state, seasonally adjusted, June 2009 (US. rate =9.5 percent) MI=15.2% MT= 6.4% Highest 8" Lowest 10.0% crover 7.0% 9.9% 6.0% 06.9% 5.0% ito 5.9% 40% 4.9% im O 3.0% to 3.9% 2.0% ito 29% L9%erbelow NorthWestern Energy 25 Delivering a Bright Future Local
Slide 26: 2009 results through June
2009 results through June… Unaudited (Dollars in 000's) Six Months Ended June 30, Gross Margin increased 2009 2008 Variance mainly due to transfer of Operating Revenues 606,616 662,481 (55,865) interest in CU4 into regulated Cost of Sales 314,850 378,438 (63,588) electric and offset by reduced Gro
Slide 27: Summary
summary… Value » Dividend yield of approx. 5.5% Strong financial profile » All debt is investment grade rated » Strong cash flows from operations and NOLs expected into 2012 Improving regulatory relationships Opportunity for growth » Montana rate case to be filed in October 2009 ♦ expecting