NorthWestern Energy Group, Inc. · NASDAQ:NWE

NorthWestern Energy — KeyBanc Capital Markets Utilities Conference 2010

22 slides from NorthWestern Energy's conference presentation, Nov 17, 2010

  1. Slide 1: KeyBanc Capital Markets Utilities Conference

    KeyBanc Capital Markets Utilities Conference November 17, 2010 Grand Hyatt New York

  2. 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

  3. Slide 3: Who we are

    who we are…  661,000 customers » 399,000 electric » 262,000 natural gas  Approximately 123,000 square miles of service territory in Montana, South Dakota, and Nebraska » 32,000 miles of electric T&D lines » 8,400 miles of natural gas T&D pipelines » 18 Bcf natural gas storage » 8 Bcf natural gas p

  4. Slide 4: NorthWestern's attributes

    NorthWestern’s attributes…  Solid operations » Cost competitive » Above-average reliability » Award-winning customer service  Low single A secured credit ratings with a strong balance sheet and liquidity » April 15, 2010 Fitch upgraded secured and unsecured ratings to A- and BBB+ respectively  Po

  5. Slide 5: Improving credit ratings

    improving credit ratings… SECURED CREDIT RATINGS S&P Moody's Fitch A-/A3/A- BBB+/Baa1/BBB+ BBB/Baa2/BBB Investment Grade BBB-/Baa3/BBB- BB+/Ba1/BB+ 2005 2006 2007 2008 2009 2010 Agency Secured Unsecured Outlook Standard & Poor's A- BBB Stable Moody's Investor Services A3 Baa2 Positive Fitch Ratings

  6. Slide 6: Strong balance sheet and liquidity

    strong balance sheet and liquidity…  Total Debt / Total capitalization of 55.8%(1)  May 2010 » We refinanced existing $225 million, 5.875% Senior Secured Notes due 2014 with 15-year First Mortgage Bonds due 2025. Bonds priced April 15th at 5.01%.  Total liquidity approximately $147 million  Near

  7. Slide 7: Reaffirming 2010 EPS guidance

    reaffirming 2010 EPS guidance… $2.15 $2.10 $2.02 $1.95 $1.95 $1.75 $1.77 $1.65 $1.55 $1.44 $1.35 $1.15 High $1.01 Low $0.95 $0.75 2005 2006 2007 2008 2009 2010 Est.  The major assumptions include, but are not limited to, the following expectations: » Excludes approximately $.06/share for the 2010 e

  8. Slide 8: Strong cash flows

    strong cash flows… $250 $200 $150 $100 $57M (millions) $50 $47M $30M $23M $43M $- $(41M) $(50) $(100) $(150) $(200) 2005 2006 2007 2008 2009 2009 Adj.(2) CFO Capex (1) Dividends CFO less capex(1) & dividends (1) Utility maintenance capex only, excludes investment project opportunities. (2) 2009 Cash

  9. Slide 9: Solid pension funding position

    solid pension funding position… As a result of the significant contribution of $93 million to our pension plan and solid market returns in 2009, we are better positioned than our peers at December 31, 2009 Data source: SNL Financial 9

  10. Slide 10: Competitive total shareholder return

    competitive total shareholder return… TSR NWE 53.44% UNS 71.21% MGEE 64.54% WR 61.64% AVA 49.53% IDA 49.44% EDE 44.81% BKH 44.00% VVC 40.46% ALE 39.10% POR -17.05% PNM -38.31% Peer Avg. 37.22% DJU 1 30.40% S&P 500 18.34% 1.) Dow Jones Utility (DJU) Reflects change in index value only and not the val

  11. Slide 11: Growing dividend

    and growing dividend… $1.40 130% 120% $1.20 110% Dividend Payout Ratio 100% Dividend Per Share $1.00 90% 80% $0.80 70% Targeted payout range 60% $0.60 50% $0.40 40% 30% $0.20 20% $1.00 $1.24 $1.28 $1.32 $1.34 $1.36 10% $- 0% 2005 2006 2007 2008 2009 2010 Est. (1) Annual Dividend Per Share Dividend P

  12. Slide 12: Constructive regulatory environment

    constructive regulatory environment…  Montana » Rate case filed October 2009 ♦ September 2010 - Stipulated settlement with Consumer Counsel for a $6.7 million rate increase, subject to MPSC approval ♦ Hearing ended September 24th and we are awaiting a final decision from the MPSC during the fourth

  13. Slide 13: Near-term potential earnings drivers

    near-term potential earnings drivers…  In 2010 we anticipate » Mill Creek AFUDC ♦ Approximately $9 million full year pre-tax contribution » Modest recovery in volumes and economic activity in 2010 ♦ High ratio of residential/commercial vs. industrial customers ● Electric: 69% Residential & Commerci

  14. Slide 14: Longer term investment opportunities

    longer term investment opportunities…  Distribution system enhancements » Incremental rate based investment to enhance reliability and capacity, improve rural service, and prepare the system for potential smart grid applications (early stages)  Energy supply » Mill Creek Generation Station » South

  15. Slide 15: Our proposed transmission projects

    our proposed transmission projects… 15

  16. Slide 16: Potential project summary

    potential project summary… (millions) Annual Earnings Estimated Project Cost Estimate Opportunity * Timeline Energy supply Mill Creek Generation Station $202 to $202 $10 to $10 2011 Montana renewable generation (25-50 MW's) $40 to $100 $2 to $5 2011-12 South Dakota peaking generator $50 to $60 $3 to

  17. Slide 17: In summary

    in summary…  Solid operations  Low single A secured credit ratings with a strong balance sheet and liquidity  Positive earnings and ROE trend  Strong cash flows  Competitive total shareholder return and dividend that has increased every year since 2005  Constructive regulatory environment  Fo

  18. Slide 18: Appendix

    Appendix NorthWestern Energy 18 Delivering a Bright Future ee PPP! eee

  19. Slide 19: 2009 to 2010 earnings bridge

    Appendix 2009 to 2010 earnings bridge… Original Updated Low High Low High 2009 Fully Diluted Earnings Per Share $2.02 $2.02 $2.02 $2.02 Increased equity AFUDC (Mill Creek) 0.08 to 0.10 0.08 to 0.10 Increasing loads - economy and w eather 0.05 to 0.07 0.03 to 0.04 Montana transmission recovery 0.03 t

  20. Slide 20: Income statement

    Appendix income statement… (in thousands) Nine Months Ended September 30, 2010 2009 Variance Operating Revenues $ 819,050 $ 839,502 $ (20,452) Cost of Sales 390,685 420,033 (29,348) Gross Margin 428,365 419,469 8,896 Operating Expenses Operating, general & administrative 173,871 184,210 (10,339) Pro

  21. Slide 21: Balance sheet

    Appendix balance sheet… (in thousands) September 30, December 31, 2010 2009 Cash 6,561 4,344 Restricted cash 11,367 13,608 Accounts receivable, net 98,642 143,759 Inventories 64,696 47,305 Other current assets 72,512 55,811 Goodwill 355,128 355,128 PP&E and ther non-current assets 2,290,468 2,175,17

  22. Slide 22: Cash flow

    Appendix cash flow… Nine Months Ended September 30, (in thousands) 2010 2009 Net Income $ 54,788 $ 47,811 Depreciation 68,697 66,959 Amort. of debt issue costs, discount, deferred hedge gain and restricted sto 2,692 3,271 Equity portion of allowance for funds used during construction (4,597) (828) L

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