NorthWestern Energy Group, Inc. · NASDAQ:NWE
NorthWestern Energy — EEI Financial Conference 2009
26 slides from NorthWestern Energy's conference presentation, November 2009
Slide 1: EEI Financial
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
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 beginning 1/1/09 » SD – 312 MW – regulated Total Assets: $2,
Slide 4: NorthWestern's attributes
NorthWestern’s attributes… Solid operations » Cost competitive » Above-average reliability » Award-winning customer service Improving credit ratings and strong balance sheet and liquidity » Secured and unsecured investment grade ratings » Moody’s has us on “positive” outlook Positive earnings
Slide 5: Improving credit ratings
improving credit ratings… SECURED CREDIT RATINGS S&P Moody's A-/A3/A- Fitch BBB+/Baa1/BBB BBB/Baa2/BBB Investment Grade BBB-/Baa3/BBB- BB+/Ba1/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 A3
Slide 6: Strong balance sheet and liquidity
strong balance sheet and liquidity … Debt / Total capitalization of 53.4% (9/30/09) October 2009 » $55 million, 30 year First Mortgage Bonds issued at 5.71% June 2009 » Extended unsecured revolver maturity to June 30, 2012 » Increased size from $200 million to $250 million March 2009 » $250
Slide 7: Positive earnings and ROE trend
positive earnings and ROE trend… 12.0% $100 Authorized ROE's in Utility Industry $90 10.0% $80 $70 Net Income (millions) 8.0% Return on Equity $60 6.0% $50 $40 4.0% $30 $20 2.0% $10 0.0% $- 2005 2006 2007 2008 2009 Est.* NWE Return on (average) Equity Net Income * 2009 Estimate assumes midpoint of g
Slide 8: 2009 guidance change
2009 guidance change… Low Midpoint High 2/13/09 Guidance $1.85 $1.92 $2.00 Economy - transmission (0.08) Mild weather (0.04) 7/29/09 Guidance $1.75 $1.80 $1.85 $1.80 $1.80 Economy - transmission (0.05) (0.03) Mild weather (0.06) (0.06) Economy - wholesale pricing (0.04) (0.02) Economy - retail (0.04
Slide 9: Strong cash flows
strong cash flows… $250,000 $200,000 $150,000 $100,000 ($000) $50,000 $0 -$50,000 -$100,000 -$150,000 2005 2006 2007 2008 LTM 9/30/09 CFO CapEx * CFO Less CapEx * * Utility maintenance capex only, excludes investment growth projects. Earnings growth, NOLs, and repairs tax deduction provide strong ca
Slide 10: Pension funding and expense
pension funding and expense … $100 $90 Expense $80 Cash Funding $70 $60 (millions) $50 $40 $30 $20 $10 $- 2004 2005 2006 2007 2008 2009F 2010E 2011E 2012E 2013E |------------------Estimates-----------------------| Note: Expense and funding estimates are revised annually based upon actuarial assumpti
Slide 11: Competitive dividend
competitive dividend… $1.40 130% 120% $1.20 110% Dividend Payout Ratio 100% Dividend Per Share $1.00 90% 80% $0.80 70% 60% $0.60 50% $0.40 40% 30% $0.20 20% 10% $- 0% 2005 2006 2007 2008 2009 Est.* Annual Dividend Per Share Dividend Payout Ratio * 2009 Estimate assumes midpoint of guidance range $1.
Slide 12: Regulatory update
regulatory update… 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 4 into rate base starting January 2009 South Dakota / Nebraska »
Slide 13: Rate request filed with MPSC
rate request filed with MPSC… 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 » Interim rates requested » Increase primarily due to pension and wage increases Requested for both Electric and
Slide 14: Near-term potential earnings drivers
near-term potential earnings drivers… 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 ● Natural Gas: 99% Residential & Commercial, 1% Industrial » Montana ra
Slide 15: Longer-term potential earnings drivers
longer-term potential earnings drivers … Distribution system enhancements » Exploring incremental rate based investment (early stages) Energy supply » Mill Creek Generation Station » South Dakota peaking generation » Natural gas reserves (early stages) » Wind projects and other renewable project
Slide 16: Distribution system enhancements
distribution system enhancements … Continued emphasis on investment that maintains current high service quality levels Proactive approach to address future infrastructure needs » Significant potential for investment over next 5 - 7 years, incremental to current maintenance capex spending, is und
Slide 17: Energy supply
energy supply … Mill Creek Generation Station » 150 MW plant near Anaconda, MT » Estimated cost $202 million » Construction underway with scheduled completion date of December 2010 South Dakota peaking generation » $50 million investment to add one 45 MW modular peaking unit Natural gas reserv
Slide 18: Montana is between load and resources
Montana is between load and resources … 18
Slide 19: Our proposed transmission projects
our proposed transmission projects… 19
Slide 20: Transmission projects
transmission projects … 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 » Cost of our portion of the project (assuming full partici
Slide 21: Capex spending – next few years
capex spending – next few years… $600 MSTI ($1,080M) Utility Maintenance Colstrip 500kV Upgrade ($41M) Capex is funded 100% First 230 kV Collector - ($220M) $500 by free cash flow. South Dakota peaking generator ($55M) Mill Creek Generation Station ($202M) Utility Maintenance Capex - ($895M) MSTI pr
Slide 22: Growth project potential
growth project potential… (millions) Annual Earnings Project Cost Estimate Opportunity * Timeline Energy supply Mill Creek Generation Station $202 to $202 $10 to $10 Q1 2011 South Dakota peaking generator $50 to $60 $3 to $3 Q4 2012 Transmission projects Colstrip 500kV Upgrade $40 to $75 $2 to $4 Q3
Slide 23: Growth project milestones '09 & '10
growth project milestones ’09 & ’10… 2009 2010 Mill Creek Mill Creek Expect decision from the MPSC (APPROVED) Q2 Complete construction Q4 Begin construction Q3 Start up, commissioning and completion Q4 500 kV Upgrade 500 kV Upgrade Complete engineering and planning studies Q4 Run subscri
Slide 24: In summary
in summary… Solid operations Improving credit ratings and strong balance sheet and liquidity Positive earnings and ROE trend Strong cash flows Competitive dividend Improving Regulatory Environment Realistic growth prospects 24
Slide 25: 2009 results through September
2009 results through September (appendix)… Three Months Ended Nine Months Ended September 30, September 30, Diluted Diluted 1 1 Pretax Net Income EPS Pretax Net Income EPS ($millions, except EPS) 2008 reported $ 20.9 $ 13.4 $ 0.35 $ 73.1 $ 46.3 $ 1.19 Lower average share counts $ - $ - $ 0.02 $ - $
Slide 26: Q4 2009 earnings bridge
Q4 2009 earnings bridge … (appendix) Actual Q4 2008 $ 0.59 2008 Insurance recoveries and settlements (0.15) Pension expense (timing) (0.10) 2008 Montana property tax tracker adjustment 0.06 2008 unrealized loss on forward contract 0.06 2008 fees related to CU4 transaction 0.04 2008 mild weather in Q