Annual Meeting of Stockholders
August 2, 2006
Forward-Looking Statement
During the course of this presentation today,
we will be discussing certain subjects including
those pertaining to our strategy, and our
discussions may contain forward-looking
information. Although our expectations and
beliefs are based on reasonable assumptions,
actual results may differ materially. These
factors that may affect our results are listed in
certain of our press releases and disclosed in
the company’s public filings with the SEC.
2
Agenda
1.
Overview and Update
2.
Financial Summary
3.
Proposed Merger with BBI
a)
Description of Merger
b)
Approvals Required
c)
Timeline
4.
Comments/Questions
3
Overview and Update
NorthWestern Energy’s Goals
Provide
high quality
reliable
service
Provide
energy at
reasonable
prices
We have streamlined our operations to
better focus on our energy business
Provide
attractive
return to our
owners
5
Regulated Operations (85%*)
NorthWestern Energy
628,500 customers in Montana, South Dakota and Nebraska
Electric Operations (73%**)
Montana
316,000 customers in 187 communities
7,000 miles of transmission lines
20,300 miles of distribution lines
South Dakota
59,000 customers in 110 communities
3,200 miles of T&D lines
Owns 310 net MW of power generation
Gas Operations (27%**)
Montana
170,000 customers in 105 communities
3,700 miles of underground distribution
pipelines
2,000 miles of transmission pipelines
16.3 Bcf of gas storage
South Dakota/Nebraska
83,500 customers in 59 communities in
SD and 4 communities in NE
2,100 miles of distribution gas mains
Business Overview
Unregulated Operations (15%*)
Electric - Primarily consists of a lease of 30% of Colstrip Unit 4, a 740 MW coal-fired plant in MT
Natural Gas - Gas supply and distribution services to high volume customers in SD/NE
* = % of 2005 consolidated gross margin
** = % of 2005 regulated operations gross margin
6
NorthWestern Energy
Utility Service Territory
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
7
Source: Company reports and SEC filings.
Customer and Volume Statistics
Electric Customers (000)
Electric Volume in MWh (000)
Natural Gas Customers (000)
Gas Volume in Therms Sales (MM MMBtu)
CAGR
’02 to ’05 = 1.6%
CAGR
’02 to ’05 = 3.7%
CAGR
’02 to ’05 = 1.6%
CAGR
’02 to ’05 = -1.0%
Gas customer
growth but offset
by conservation
and warm weather
Electric customer
and volume
growth has been
strong over the
last 3 yrs
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Highlights Since Last
Stockholder Meeting
Operational Achievements
Procured electric supply contract for Montana
7 yr agreement at a substantial price discount to current market rates
Comparing to estimated forward pricing curves, the contract starts
about $22 below market rates and ends about $8 above market rates
with March 2012 being the crossover point
Allows flexibility to pursue more permanent electric supply options
1st quartile for Customer Average Interruption Duration Index
Nationwide survey by PA Consulting for 2004
Using IEEE criteria
Timely response to winter storm in South Dakota
More than 1,000 route miles of electric lines were flattened by
the storm
All electric customers lost service at some point of storm
Initial restoration done sooner than expected and without accident
or injury
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Highlights Since Last
Stockholder Meeting
Customer Service Achievements
Received ServiceOne™ Award for second consecutive year
Conducted community weatherization events to prepare
customers for higher winter gas prices
Established the Challenge Grant of $1 million for customers
10
Highlights Since Last
Stockholder Meeting
Financial Achievements
Completed divestiture of non-core assets
Received $49 million from Netexit bankruptcy settlement
Paid down $94 million of debt to achieve debt to cap ratio of
just under 50%
Debt Refinancings
Amended the secured $250 million credit facility to be an
unsecured $200 million facility and reduced the interest rate
Refinanced $170 million in Pollution Control Bonds lowering the
interest rate more than 1% annually
Improved Credit Ratings
Achieved investment grade credit ratings with two of the three
agencies that rate our secured debt
Increased shareholder dividend from an annual rate of
$1.00/share to an annual rate $1.24/share
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Highlights Since Last
Stockholder Meeting
Resolution of Significant Litigation
All bankruptcy claims resolved except Magten matters
Settled stockholder securities class action and derivative cases
Received $9 million for settlement of NorthWestern v. PPL
Montana breach of contract lawsuit and bankruptcy claims
Provided for PPLM to withdraw and release all of its claims in the
NorthWestern bankruptcy and federal court litigation
Ruling that entitled Company to $9.5 million payment
Relates to 2002 insurance coverage dispute
Proceeds expected in 3rd qtr. 2006
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Highlights Since Last
Stockholder Meeting
Regulatory Achievements
Utility
MPSC approval of the 2005 MT Electric and Natural Gas Default
Supply Costs Trackers
Completed review by the MPSC of the 2005 Electric and Natural Gas
Default Supply Procurement Plans
NWE/BBI Sales Transaction
Filed applications for approval of merger with BBI for FERC, MT,
SD, NE and CFIUS
CFIUS approval on July 31, 2006
HSR and FCC to be filed in next few months
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Financial Highlights
Source: Company reports and SEC filings.
Note: Full year 2004 results show combined results for NWEC’s predecessor company from January 1, 2004 to October 31, 2004 and for
NWEC from November 1, 2004 to December 31, 2004.
(1) Before reorganization expenses and impairment charge.
(2) Excludes cash used in acquisitions.
(3) 2002 other capital expenditures include $10 million related to Montana’s utility acquisition stipulation, $20 million related to the buyout
of the automatic meter reading lease and $28 million related to MFM.
(4) Cash flow from continuing operations (excludes change in restricted cash).
Financial Highlights
EBITDA(1)
Interest Expense
Cash Flow from Operations(4)
Capital Expenditures(2)
($ in millions)
($ in millions)
($ in millions)
($ in millions)
15
Stronger Balance Sheet
Debt Ratings
Debt to total capitalization ratio is down to 48.7%
(from 50.2% at 12/31/05)
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Proposed Transaction
Proposed Transaction Summary
$37/share
Cash to shareholders
Buyer is Babcock &
Brown Infrastructure
* Enterprise value of $2.2 billion
18
Best Value and Risk Profile for
NorthWestern Stockholders
Fairness opinions from widely
recognized firms Credit Suisse
and Blackstone
Positive outcome
for stockholders
Offer does not
increase NWEC debt
and includes
adequate protection
for stockholders
All-cash price a
15.3% premium to
our closing share
price prior to
announcing merger
Best value for stockholders
of proposals received during
the process
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Who is Babcock and Brown Infrastructure?
Listing: ASX: BBI (on Australian Stock Exchange)
Total Assets: $4,500 million
2005 Revenue: $745 million
Headquarters: Sydney, New South Wales, Australia
Website: www.bbinfrastructure.com
BBI is a long-term, conservative, utility asset owner
with a proven track record of owning energy
distribution, transmission and other regulated assets.
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Why BBI?
Access to
Capital
Stability
In addition to providing the highest
shareholder value, BBI is the type of owner
who will support NorthWestern’s
commitment to service excellence and
community growth in the future.
Access to
Expertise
21
Approvals Required
Stockholder approval
Federal Energy Regulatory
Commission (FERC)
Montana Public Service
Commission (MPSC)
South Dakota Public Utilities
Commission (SDPUC)
Nebraska Public Service
Commission (NPSC)
Clearance under Hart-Scott-
Rodino Act (HSR)
Federal Communications
Commission (FCC)
Committee on Foreign
Investment in U.S. (CFIUS)
We have filed, or will be filing in the
near future, in all required jurisdictions
to gain merger approval
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Approval Steps for
Regulatory Commissions
File regulatory
applications
Procedural
Schedules and
Data Exchange
Hearings
Regulatory
approval
The procedural schedules have
suggested timelines to effect
approval mid-2007
45 days
120 - 180 days
75 - 90 days
Approval 240 - 315 days
after announcement
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Comments/Questions
