NorthWestern Energy Group, Inc. · NASDAQ:NWE
NorthWestern Energy — Technical Presentation (February 2018)
58 slides from NorthWestern Energy's technical presentation, Feb 28, 2018
Slide 1: 2018 NorthWestern Energy Montana 20-Year Load Forecast
2018 NorthWestern Energy Montana 20-Year Load Forecast ETAC February 28, 2018 (Subject to Revision) 1
Slide 2: Table of Contents
Table of Contents Peak and Energy Forecast Drivers (modeled) 1. Customer forecast 2. Normal weather forecast 3. Demand Side Management (DSM) and Navigant Net Energy Metering (NEM) forecast Peak and Energy Forecasts 4. Peak demand forecast 5. Energy forecast 6. Past load forecasts review 2
Slide 3: 1. Customer forecast
1. Customer forecast NorthWegterrt Delivering 0 Bright Future
Slide 4: Customer forecast methodology
Customer forecast methodology Customer Forecast – Population Forecast • Woods & Poole Economics • Montana and NWE service territory forecasted population growth rate: 20-year average 0.9% but marginally declines throughout forecast – Customer Forecast Methodology • Residential & GS1 Secondary custom
Slide 5: 2017 Default Supply load by class
2017 Default Supply load by class 5
Slide 6: NWE service territory population drivers
NWE service territory population drivers Largest 7 Counties in NWE Service Territory 2010 ‐ 2016 Population Growth Rates 3.0% 2.6% 2.5% 2.0% 1.5% 1.1% 0.9% 1.0% 0.9% 0.8% 1.0% 0.7% 0.5% 0.1% 0.2% 0.0% 6
Slide 7: Montana people per household
7 0.5 1.5 2.5 0 1 2 3 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 source: Woods & Poole 2028 2030 Montana People per Household 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 Montana people per household
Slide 8: NWE MT population projection scenarios
NWE MT population projection scenarios 2018 Montana Population Forecast Scenarios LOW CASE BASE CASE HIGH CASE 1/2 Base Case Growth Woods & Poole Projection 1 1/2 Base Case Growth MT Pop % Growth Net Inc MT Pop % Growth Net Inc MT Pop % Growth Net Inc 2017 1,051,408 0.9% 9,660 1,051,408 0.9% 9,660 1
Slide 9: NWE service territory population projections
NWE service territory population projections 2018 NorthWestern Energy Service Territory Population Forecast Scenarios LOW CASE BASE CASE HIGH CASE 1/2 Base Case Growth Woods & Poole Projection 1 1/2 Base Case Growth NWE ST % Growth Net Inc NWE ST % Growth Net Inc NWE ST % Growth Net Inc 2017 821,247
Slide 10: MT population projections
MT population projections 2018 MT Population Projection Scenarios 1,450,000 1,400,000 1,350,000 1,300,000 1,250,000 1,200,000 1,150,000 1,100,000 1,050,000 1,000,000 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 1/2 Base Case Growth Woo
Slide 11: Residential customer forecast scenarios
Residential customer forecast scenarios 2018 Residential Customer Forecast Summary Population Scenario Low Base High 2017A 295,427 295,427 295,427 2018 297,297 299,075 300,853 2019 299,086 302,669 306,268 2020 300,879 306,290 311,750 2021 302,683 309,947 317,312 2022 304,493 313,635 322,948 2023 306
Slide 12: Residential customer forecast scenarios
Residential customer forecast scenarios 2018 Residential Customer Forecast Scenarios (by Population Scenario) 430,000 410,000 390,000 370,000 350,000 330,000 310,000 290,000 270,000 250,000 2017A 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 Low
Slide 13: Residential customer-additions forecast
Residential customer-additions forecast 2018 Residential Customer Additions Forecast Population Scenario Low Base High 2017A 4,078 4,078 4,078 2018 1,870 3,648 5,426 2019 1,788 3,593 5,415 2020 1,794 3,621 5,482 2021 1,803 3,657 5,562 2022 1,811 3,689 5,636 2023 1,816 3,717 5,705 2024 1,821 3,745 5,
Slide 14: GS1 Secondary customer forecast scenarios
GS1 Secondary customer forecast scenarios 2018 GS1 Secondary Customer Forecast Summary Population Scenario Low Base High 2017A 66,323 66,323 66,323 2018 67,016 67,409 67,802 2019 67,730 68,523 69,318 2020 68,447 69,643 70,850 2021 69,165 70,771 72,400 2022 69,887 71,909 73,967 2023 70,612 73,053 75,
Slide 15: GS1 Secondary customer forecast scenarios
GS1 Secondary customer forecast scenarios 2018 GS1 Secondary Customer Forecast Scenarios (by Population Scenario) 100,000 95,000 90,000 85,000 80,000 75,000 70,000 65,000 60,000 2017A 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 Low Base High 15
Slide 16: GS1 Secondary customer-additions forecast
GS1 Secondary customer-additions forecast 2018 GS1 Secondary Customer Additions Forecast Population Scenario Low Base High 2017A 913 913 913 2018 693 1,086 1,479 2019 715 1,114 1,516 2020 717 1,121 1,532 2021 718 1,128 1,549 2022 722 1,137 1,568 2023 725 1,145 1,584 2024 723 1,148 1,597 2025 723 1,1
Slide 17: Total NWE customer forecast comparison
Total NWE customer forecast comparison Total NWE Electric Customers 500,000 1.2% Forecast Growth 450,000 400,000 2015 Frcst Total Customers 2016 Frcst 350,000 2017 Frcst 2018 Frcst 300,000 Actual Forecast 250,000 200,000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 18: Residential customer forecast comparison
Residential customer forecast comparison Residential Customers 400,000 380,000 1.1% Forecast Growth 360,000 340,000 320,000 2015 Frcst Customers 2016 Frcst 2017 Frcst 300,000 2018 Frcst 280,000 260,000 Actual Forecast 240,000 220,000 200,000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 201
Slide 19: GS1 Sec customer forecast comparison
GS1 Sec customer forecast comparison GS1 Secondary Customers 95,000 90,000 1.4% Forecast Growth 85,000 80,000 75,000 Customers 2015 Frcst 2016 Frcst 2017 Frcst 70,000 2018 Frcst 65,000 60,000 Actual Forecast 55,000 50,000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 201
Slide 20: Population & customer counts summary
Population & customer counts summary NWE Annual NWE Annual NWE Annual NWE Annual GS1‐ Annual Montana Growth Srvc Territory Growth Total Growth Residential Growth Secondary Growth Year Population Rate Population Rate Accounts Rate Accounts Rate Accounts Rate 2000 903,773 705,765 292,437 235,784 49,75
Slide 21: 2. Normal weather forecast
2. Normal weather forecast NorthWesternt Energy Delivering 0 Bright Future
Slide 22: Total degree days
Total degree days Total Degree Days (HDD + CDD) – Heating degree day (HDD) = 65° - daily average temp – Cooling degree day (CDD) = daily average temp - 65° – Prior years’ forecasts used historical total degree days (1989 – current year) – Beginning with 2017 forecast, normal weather equals 10-year h
Slide 23: Climate metrics pointing warmer
Climate metrics pointing warmer NWE‐Montana Electric HDD NWE‐Montana Electric Total Degree Days 9 Station Weighted Avg 9 Station Weighted Avg 10,000 10,000 9,000 9,000 8,000 8,000 7,000 7,000 Linear (Total DD) 6,000 Linear (HDD) 6,000 5,000 5,000 4,000 4,000 1989 1991 1993 1995 1997 1999 2001 2003 2
Slide 24: Total degree day forecast
Total degree day forecast Total Degree Day Forecast 10‐Year Average 10,000 9,500 Actual Forecast Total Degree Days 9,000 8,500 8,094 8,000 7,997 7,937 7,500 7,000 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 10‐Year Avg
Slide 25: 3. Demand Side Management (DSM) and Net Energy Metering (NEM)
3. Demand Side Management (DSM) and Net Energy Metering (NEM)
Slide 26: DSM plan
DSM plan - Energy and Peak forecasts incorporate new 20- year DSM plan of 4 aMW/year (78 aMW 2017- 2036) - The old DSM plan consisted of 6 aMW/year (84 aMW 2009-2024) 26
Slide 27: DSM plans summary
DSM plans summary 2009 DSM Plan 2017 DSM Plan Combined Plans 15 Years / 84 aMW 20 Years / 78 aMW 27 Years / 120 aMW Annual Annual Cumulative Annual Annual Cumulative Annual Annual Cumulative aMW MWh MWh aMW MWh MWh aMW MWh MWh 2010 5.5 48,180 48,180 2017 4.35 38,106 38,106 2010 5.5 48,180 48,180 201
Slide 28: DSM peak shaving contribution
DSM peak shaving contribution New DSM Plan ‐ Peak Shaving Forecast Including Losses Peak Shaving Cumulative Winter Summer DSM December July aMW MW MW 2017 4.72 7.43 6.89 2018 9.44 14.85 13.78 2019 14.16 22.28 20.67 2020 18.88 29.70 27.56 2021 23.60 37.13 34.45 2022 27.69 43.56 40.42 2023 31.78 50.00
Slide 29: Total net metering
Total net metering Total Net‐Meter Total Net‐Meter Installed Capacity Customers 13 11.73 2,500 12 2,143 11 10 2,000 9 8 1,500 7 MW 6 5 1,000 4 3 500 2 1 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2010 2011 2012 2013 2014 2015 2016 2017 Photovoltaic Wind Other (hydro) Photovoltaic Wind Other (hydro)
Slide 30: Solar-PV net metering
Solar-PV net metering Solar PV Solar PV Installed Capacity Customers 12 10.96 2,500 11 2,041 10 2,000 9 8 7 1,500 MW 6 5 1,000 4 3 2 500 1 0 0 2010 2011 2012 2013 2014 2015 2016 2017 Jan‐18 2010 2011 2012 2013 2014 2015 2016 2017 Jan‐18 Residential Commercial Residential Commercial Solar PV Solar PV
Slide 31: Net-Meter system cost trend
Net-Meter system cost trend Net‐Meter System Cost of Installation Trend $9,000 $8,000 $7,000 $/kW $6,000 $5,000 $4,000 $3,000 $2,000 2010 2011 2012 2013 2014 2015 2016 31
Slide 32: Net Meter – solar PV forecast scenarios
Net Meter – solar PV forecast scenarios Solar PV Net Meter Forecast ‐> Based on Navigant NEM Study (Navigant's solar net‐meter penetration forecast informed by NREL's penetration study in 2017) Installed Capacity (MW) Growth Assumptions Low Growth Case Base Growth Case High Growth Case Residential C
Slide 33: Net Meter – solar PV forecast scenarios
Net Meter – solar PV forecast scenarios Residential Solar PV Forecast Commercial Solar PV Forecast Installed Capacity (MW) Installed Capacity (MW) 180 180 160 160 140 140 120 120 100 100 MW MW 80 80 60 60 40 40 20 20 0 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Slide 34: Net Meter – solar PV contribution to summer peak
Net Meter – solar PV contribution to summer peak Solar PV Net Meter Forecast Contribution to NWE Peak Load (MW) ‐ Excludes Losses Peak Capacity Factor for MT (SPP Model) 52% Contribution to Summer Peak In Low Base High 2012 2 2 2 2013 2 2 2 2014 3 3 3 2015 3 3 3 2016 4 4 4 2017 6 6 6 2018 9 10 11 20
Slide 35: Net Meter – solar PV contribution to annual energy
Net Meter – solar PV contribution to annual energy Solar PV Net Meter Forecast ‐> Based on Navigant NEM Study (Navigant's solar net‐meter penetration forecast informed by NREL's penetration study in 2017) Energy Production (MWh) ‐ Excludes Losses Capacity Factor 15% Low Growth Case Base Growth Case
Slide 36: 4. Peak demand forecast
4. Peak demand forecast NorthWesternt Energy Delivering 0 Bright Future
Slide 37: Peak demand forecast methodology
Peak demand forecast methodology Peak Demand Forecast Methodology • Regression – For the summer peak forecast, peak-day max temperature, monthly energy, and customers used as explanatory variables » 10-year average peak-day max temperatures assumed in forecast – For the winter peak forecast, peak-da
Slide 38: Summer peak forecast results
Summer peak forecast results Historic and Forecast Values Include Losses Summer 2018 Less Less 2018 2 1,2 Regression DSM NEM Forecast 2012 1133 1133 2013 1162 1162 2014 1115 1115 2015 1146 1146 2016 1147 1147 2017 1210 1210 2018 1197 7 4 1186 2019 1212 14 11 1187 2020 1226 21 19 1187 2021 1241 28 29
Slide 39: Summer peak forecast results
Summer peak forecast results Summer Peak Forecast Comparison Including DSM & NEM 1600 1500 1400 MW 1300 1200 1100 1000 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2018 Forecast 2017 Forecast 2015 Forecast 39
Slide 40: Summer peak forecast regression results
Summer peak forecast regression results Summer Peak Regression Results 1600 1500 R Square = 0.93 1400 1300 1200 1100 1000 Actual & Regression 900 MW 800 Fitted 700 600 Actual Forecast 500 Average Load Factor (70%) 400 300 200 100 0 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 202
Slide 41: Winter peak forecast results
Winter peak forecast results Historic and Forecast Values Include Losses Winter 2018 Less Less 2018 1,2 Regression DSM NEM Forecast 2012 1074 1074 2013 1272 1272 2014 1176 1176 2015 1050 1050 2016 1163 1163 2017 1202 7 1195 2018 1224 15 1210 2019 1236 22 1214 2020 1248 30 1218 2021 1260 37 1222 2022
Slide 42: Winter peak forecast results
Winter peak forecast results Winter Peak Forecast Comparison Including DSM 1600 1500 1400 MW 1300 1200 1100 1000 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2018 Forecast 2017 Forecast 2015 Forecast 42
Slide 43: Winter peak forecast regression results
Winter peak forecast regression results Winter Peak Regression Results 1600 1500 1400 R Square = 0.93 1300 1200 1100 1000 900 Actual & Regression MW 800 700 Fitted 600 Actual Forecast Average Load Factor (72%) 500 400 300 200 100 0 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 202
Slide 44: 2018 summer vs winter peak forecast
2018 summer vs winter peak forecast 2018 Winter vs Summer Peak Forecast Including DSM & NEM 1600 1500 1400 MW 1300 1200 1100 1000 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 Winter Summer 44
Slide 45: 2015 summer vs winter peak forecast
2015 summer vs winter peak forecast 2015 Winter vs Summer Peak Forecast Including DSM 1600 1500 1400 MW 1300 1200 1100 1000 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Winter Summer 45
Slide 46: 5. Energy forecast
5. Energy forecast NorthWegterrt Delivering 0 Bright Future
Slide 47: Energy forecast methodology
Energy forecast methodology Energy Forecast Methodology • For forecast years 2023-2038, Residential & GS1 Secondary load forecasts based on regression model using customer counts and 10-year average degree days (normal weather) as explanatory variables • For forecast years 2018-2022, Residential & G
Slide 48: Default supply forecast
Default supply forecast 20-Year Default Load, Incremental DSM, and Incremental NEM Forecasts Default Load Incremental Incremental Incremental Default Load Excluding Future DSM Energy NEM - NEM - Including Future DSM & NEM Savings Photovoltaic Photovoltaic DSM & NEM aMW aMW Installed MW aMW @ 15% CF
Slide 49: 20-year load forecast
20-year load forecast NorthWestern Energy Long-term Load Forecast Includes Losses, DSM, and Solar PV-NEM Annual Annual Annual Annual Annual Total Control Growth Default Growth Growth Growth Growth Year Area Rate Supply Rate Industrial Rate Commercial Rate Residential Rate 2000 8,361,848 5,624,145 3,
Slide 50: Default supply forecast
Default supply forecast Total Energy Supply Load - Actual and Forecast At the meter before losses, forecast includes DSM & NEM 7,500,000 0.4% Forecast Growth 7,000,000 6,500,000 6,000,000 2015 Frcst MWh 2016 Frcst 2017 Frcst 2018 Frcst 5,500,000 5,000,000 Actual - Not Weather Forecast - Weather Norm
Slide 51: Residential forecast
Residential forecast Residential Load - Actual & Forecast At the meter before losses, forecast includes DSM & NEM 2,900,000 0.4% Forecast Growth 2,700,000 2,500,000 2015 Frcst 2,300,000 2016 Frcst 2017 Frcst MWh 2018 Frcst 2,100,000 1,900,000 Actual - Not Weather Forecast - Weather Normalized Normal
Slide 52: GS1 Secondary forecast
GS1 Secondary forecast GS1 Secondary Load - Actual & Forecast At the meter before losses, forecast includes DSM & NEM 3,800,000 0.3% Forecast Growth 3,600,000 3,400,000 3,200,000 2015 Frcst 2016 Frcst 3,000,000 2017 Frcst MWh 2018 Frcst 2,800,000 2,600,000 2,400,000 Actual - Not Weather Forecast - W
Slide 53: Default supply load and DSM/NEM forecast
Default supply load and DSM/NEM forecast 53
Slide 54: Residential use per customer
Residential use per customer Residential Weather Normalized Use Per Customer Forecast Includes DSM & NEM 10 9 8 MWh / Customer 7 6 5 4 3 2 1 0 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 54
Slide 55: Residential use per customer
Residential use per customer Residential Actual Use Per Customer 9.0 8.8 8.6 MWh / Customer 8.4 8.2 8.0 7.8 7.6 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 55
Slide 56: GS1 Secondary use per customer
GS1 Secondary use per customer GS1 Sec Weather Normalized Use Per Customer Forecast Includes DSM & NEM 60 50 MWh / Customer 40 30 20 10 0 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 56
Slide 57: GS1 Secondary use per customer
GS1 Secondary use per customer GS1 Secondary Actual Use Per Customer 55.0 50.0 MWh / Customer 45.0 40.0 35.0 30.0 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 57
Slide 58: Delivering a bright future
Upelivering a bright future NorthWestern Energy
NorthWestern Energy — Technical Presentation (February 2018) on 6ix