NorthWestern Energy Group, Inc. · NASDAQ:NWE
NorthWestern Energy — Shareholder Meeting (April 2010)
26 slides from NorthWestern Energy's shareholder meeting presentation, Apr 22, 2010
Slide 1: Annual Meeting of Stockholders
Annual Meeting of Stockholders Huron, SD April 22, 2010
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… 661,000 customers » 396,000 electric » 265,000 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 Total generation (m
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
Slide 5: Low single A secured credit ratings
low single A secured 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 April 15, 2010 Agency Secured Unsecured Outlook Standard & Poor's A- BBB Stable Moody's Investor Services A3 Baa
Slide 6: Strong balance sheet and liquidity
strong balance sheet and liquidity… Total Debt / Total capitalization of 54.3%(1) May 2010 » We anticipate refinancing 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% with closing expected in May. October
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: » A consolidated income tax rate of approximately
Slide 8: Positive earnings and ROE trend
positive earnings and ROE trend… 12.0% $100 Authorized ROE's in Utility Industry 11.0% $90 10.0% $80 9.0% $73.4 $70 $67.6 $71-77 Net Income (millions) 8.0% Return on Equity 7.0% $59.5 $60 6.0% $53.2 $50 5.0% $40 $37.9 4.0% $30 3.0% $20 2.0% 1.0% $10 0.0% $- 2005 2006 2007 2008 2009 2010 Est.* NWE Re
Slide 9: 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 growth projects. (2) 2009 Cash Flow
Slide 10: 2010 cash flow freed up for investment
2010 cash flow freed up for investment… $100 Pension Expense $90 Pension Funding $80 $70 $60 (millions) $50 $40 $30 $20 $10 $- 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Estimates Note: Expense and funding estimates are revised annually based upon actuarial assumptions and actual return on as
Slide 11: 12/31/09 pension funded status
12/31/09 pension funded status… 100% 95% NWE 94% 90% 85% POR 83% 80% VVC UNS 78% 75% 76% AVA ALE 72% 70% BKH 70% PNM 68% 69% 65% MGEE EDE IDA 64% 63% WR 62% 60% 60% 55% Size of bubble represents relative size of pension plan assets 50% Timing of 2009 pension investment and great market returns allow
Slide 12: Competitive total shareholder return
competitive total shareholder return… 80% BBI Transaction Terminated NWE added to S&P Small Cap 60% 600 Index TSR BBI Transaction NWE 40.5% announced Start of economic UNS 56.6% 40% downturn MGEE 44.1% WR 43.4% AVA 41.4% IDA 40.2% 20% BKH 39.7% ALE 30.9% VVC 27.4% EDE 24.8% 0% POR -23.7% PNM -32.7%
Slide 13: 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
Slide 14: Constructive regulatory environment: Montana
constructive regulatory environment… Montana » Rate cases filed October 2009 requesting $17.5 million revenue increase ♦ November 2009 the MPSC determined the initial filing failed to comply with minimum filing requirements related to allocated cost of service and rate design ♦ February 2, 2010 ou
Slide 15: Constructive regulatory environment: FERC
constructive regulatory environment… FERC » Working with FERC for MSTI rate design ♦ FERC encouraged Company to develop MSTI on a cost of service basis by requesting appropriate tariff waivers for existing OATT » FERC approved 230kV Renewable Collector Open Season » Initial Open Season information
Slide 16: Economic status of service territory
economic status of service territory… Unemployment rates in Montana, South Dakota , and Nebraska are the best in the nation. However the national recession still impacts NorthWestern through: » Lower OASIS sales to the west » MAPP pricing to the east » Industrial losses » Slower customer growth 16
Slide 17: Near-term potential earnings drivers
near-term potential earnings drivers… In 2010 we anticipate » Due to higher ratio of residential/commercial vs. industrial customers and a relatively healthy economy within our service territory we anticipate modest recovery in volumes and economic activity in 2010 ♦ Electric: 69% Residential & Co
Slide 18: Long-term balanced growth opportunities
long-term balanced growth opportunities… Distribution system enhancements » Exploring 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 St
Slide 19: Great wind potential in our service territory
great wind potential in our service territory… 19
Slide 20: Service territory is a link between supply and demand
service territory is a link between supply… 20
Slide 21: Incremental electricity demand and renewable standards
and demand... Incremental Electricity Demand 2007-2020 and 2007-2030 (GWh/yr) Demand 2007 - 2030 (GWh) Califomia 92,108 Mi ; Arizona 79,396 Ml Renewable Portfolio Standards inthe West Washington 40,421 Ml [Estate clean Energy Standard Colorado 25,017 © WA 15% by 2020 Utah 22,749 © MT 15% by 2015 Ore
Slide 22: Our proposed transmission projects
our proposed transmission projects… 22
Slide 23: 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 500 kV Upgrade $40 to $75 $2 to $4 Q
Slide 24: Capex spending – next few years
capex spending – next few years… MSTI ($1,070M) $600 Colstrip 500 kV Upgrade ($38M) Utility First 230 kV Collector - ($211M) Maintenance South Dakota peaking generator ($55M) Capex is funded $500 Mill Creek Generation Station ($114M) 100% by free Utility Maintenance Capex - ($846M) cash flow. $400 $
Slide 25: Growth project milestones '10 & '11
growth project milestones ’10 & ’11… 2010 2011 Mill Creek Mill Creek Test “fire” the turbines Q3 Providing regulating services Q1 Periodic filings with MPSC / FERC Q3/Q4 Completion of MPSC prudence review Q1 Complete Construction Q4 500 kV Upgrade Commercial operation date Q4 WECC phase 2 rat
Slide 26: 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 growing dividend Constructive regulatory environment Realistic growth prospects 26