Northwestern Energy Group, Inc. · NASDAQ:NWE
Northwestern Energy — West Coast Utilities Seminar (Wall Street Access and Berenson & Co.) 2007
19 slides from Northwestern Energy's conference presentation, Dec 13, 2007
Slide 1: West Coast Utilities Seminar
West Coast Utilities Seminar Wall Street Access and Berenson & Co. December 13, 2007
Slide 2: Forward-looking statement
2 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 financi
Slide 3: Who we are
3 who we are… Electric transmission lines Natural gas distribution lines Supplier-owned electric or natural gas lines Electric generating plant Natural gas storage fields Natural gas compressor stations (1) As of 9/30/07. (2) Book capitalization calculated as short-term debt plus long- term debt plu
Slide 4: Contribution of segments
$662 $359 83 77 $119 Approximately 90% of gross margin is provided by the regulated businesses. Approximately 90% of EBITDA is provided by the regulated businesses. 4 contribution of segments… *EBITDA = Op. Inc. + Depr (trailing twelve months) Gross Margin Contribution EBITDA* Contribution
Slide 5: NorthWestern moving forward
5 NorthWestern moving forward… Company moving forward as a stand alone company Proposed merger terminated in July 2007 Regulated electric and natural gas business Strong financial profile Rate case settlements pending Earnings accretive Allow NWE to earn normal utility return Avoid expensive and tim
Slide 6: Summary of business drivers
6 summary of business drivers… Organic growth Customer base and load growth continues Natural gas pipelines to serve ethanol plants Other value drivers Colstrip Unit 4 under valued NOL value may not be considered by market Transmission and generation opportunities Opportunity to double rate base Opp
Slide 7: Rate case settlements
7 rate case settlements… Montana* Rate increase of $15 million annually Electric increase $10 million annually Nat. Gas increase $5 million annually Rate effective the earlier of Jan 1, 2008 or date of approval by the MPSC Confidential settlement on specific rate elements, such as capital structure
Slide 8: Rate case impact
8 rate case impact… Montana (subject to approval by the MPSC): Earnings accretive NWEC and MCC request and support interim rates effective January 1, 2008 Avoids an expensive and time consuming process Allows company to continue maintenance programs and infrastructure improvements, while providing n
Slide 9: Undervalued assets
9 undervalued assets… Colstrip Unit 4 Buyout values were repurchased at approximately $860/kW Mellon buyout approximately $743/kW GE buyout approximately $933/kW Market value today is likely at least double Net Operating Losses Balance of approximately $400 million at 12/31/06 FIN 48 reserve of appr
Slide 10: Poised for significant growth
10 poised for significant growth… Strong balance sheet debt to cap ratio of 48% Experienced management team to execute plan Average 25 years of utility experience Earnings and cash flow growth from existing businesses Existing regulated and unregulated businesses provide stable predictable earnings
Slide 11: Growth opportunities
11 growth opportunities… Existing Business Service territory Customer growth – 1.6% annually Load growth in electric segment – 2%-3% annually Capital investments have increased an average of $4.2 million per year since 2004 Natural gas pipelines – serve the growing ethanol industry Assumes a capital
Slide 12: Colstrip kV upgrade
12 Colstrip 500 kV upgrade… “Traditional” pathway to West Coast and California markets New substations near Townsend and Missoula, MT Upgrade to existing stations No new line construction necessary Capacity increase: 500-700 MW Working with other Colstrip transmission owners NWEC’s ownership share o
Slide 13: Next steps on Colstrip 500 kV upgrade
Go/No Go Operation $1-2M $20-30M $100-125M Substation design WECC planning Land acquisition Construction Engineering studies Rates with BPA Tx agreements WECC approval 13 next steps on Colstrip 500 kV upgrade… Assumes 50% ownership in the project. The costs represent NorthWestern’s pro rata portion
Slide 14: Mountain States Transmission Intertie Line
14 Mountain States Transmission Intertie Line… 500 kV AC Line Southwestern Montana to Southeastern Idaho Length: approx. 400 miles Capacity: 1,500 MW Deposits from subscribers of approx. 1,050 MW Capital Cost: $800 million Assumed ROE 10%-13%
Slide 15: MSTI timeline
Go/No Go Test Operation $3-5M $200M $500M $800M Open Season Rights of Way Construction Support of Agencies Major facility Siting Contracts EIS 15 MSTI timeline… Cumulative Dollars Spent: 2011 2012 2013 2007 2008 2009 2010
Slide 16: Potential for generation development
Go/No Go Testing Operation $1-2M $12-$15M $100-$125M Economic analysis Construction Reserve equip. Feasibility study MPSC review process Major engineering design 16 potential for generation development… 2007 Montana Legislature passed House Bill 25: Allows ownership of rate base generation Prior leg
Slide 17: Cap ex spending – next few years
Includes more than $1 billion of potential generation and transmission growth projects (includes Colstrip 500KV upgrade at 50% ownership of new project) 17 cap ex spending – next few years…
Slide 18: Value of growth potential
Possible earnings capacity of future opportunities 18 value of growth potential… Significant financial opportunity long term (in millions) Annual Earnings Opportunity On-line MSTI transmission line $800 million times 50% equity ratio times estimated ROE of 11% $44.0 Jan 2013 Colstrip 500 kV transmis
Slide 19: Investment highlights
Attractive Transmission and Distribution Business Strong, Predictable Growth in Earnings Significant Investment Potential in Transmission and New Generation Experienced Team Committed to Shareholder Value 19 investment highlights…
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