West Coast Utilities
Seminar
Wall Street Access and Berenson & Co.
December 13, 2007
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 performance, and often contain
words such as “expects,” “anticipates,” “intends,” “plans,”
“believes,” “seeks,” or “will.”
These statements are based upon our current expectations and
speak only as of the date hereof. Our actual future business and
financial performance may differ materially and adversely from
those expressed in any forward-looking statements. Although our
expectations and beliefs are based on reasonable assumptions,
actual results may differ materially. The 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.
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who we are…
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
(1) As of 9/30/07.
(2)
Book capitalization calculated as short-term debt plus long-
term debt plus shareholders’ equity.
640,000 customers
382,000 electric
258,000 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 – unregulated
SD – 310 MW – regulated
Total Assets: (1) $2,386 MM
Total Capitalization: (1)(2) $1,445 MM
Total Employees: (1) 1,350
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contribution of segments…
$662
$359
83
77
$119
*EBITDA = Op. Inc. + Depr
(trailing twelve months)
Gross Margin Contribution
EBITDA* Contribution
Approximately 90% of gross margin is
provided by the regulated businesses.
Approximately 90% of EBITDA is provided
by the regulated businesses.
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NorthWestern moving forward…
Company moving forward as a stand alone
company
Proposed merger terminated in July 2007
Regulated electric and natural gas business
Strong financial profile
Rate case settlements pending
Earnings accretive
Allow NWE to earn normal utility return
Avoid expensive and time consuming hearing process
Poised to grow the company
Transmission development
Generation development
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summary of business drivers…
Organic growth
Customer base and load growth continues
Natural gas pipelines to serve ethanol plants
Other value drivers
Colstrip Unit 4 under valued
NOL value may not be considered by market
Transmission and generation opportunities
Opportunity to double rate base
Opportunity for annual net income of approx $56 million
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rate case settlements…
Montana*
Rate increase of $15 million annually
Electric increase $10 million annually
Nat. Gas increase $5 million annually
Rate effective the earlier of Jan 1, 2008
or date of approval by the MPSC
Confidential settlement on specific
rate elements, such as capital
structure and the authorized ROE
NWEC foregoes a rate base return on
$19.4 million of capital expenditures
per year for each of 2008 and 2009
NWEC recoups the return of capital
investment over 30 years
An additional 21 MWs of CU4
contracted to default supply **
Contracted price of “Mid C” minus
$19/MWh
Current equivalent of approx. $45/MWh
Period of 78 months
* Subject to approval by the MPSC
** Subject to approval by the FERC
South Dakota*
Revenue increase = $3.1 million
annually
Rates effective December 1, 2007
Confidential agreement on capital
structure and authorized ROE
Nebraska**
Revenue increase = $1.5 million
annually
Rates effective December 1, 2007
ROE of 10.4%
Capital Structure as filed
* Subject to approval by the SDPUC
** Subject to approval by the NPSC
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rate case impact…
Montana (subject to approval by the MPSC):
Earnings accretive
NWEC and MCC request and support interim rates effective January 1, 2008
Avoids an expensive and time consuming process
Allows company to continue maintenance programs and infrastructure improvements, while
providing normal utility returns
Company can move forward with generation and transmission projects
South Dakota (subject to approval by the SDPUC):
Earnings accretive
$3.1 million annual revenue granted ($3.7 million request)
Rates effective December 1, 2007
Nebraska (subject to approval by the NPSC):
Earnings accretive
$1.5 million annual revenue granted ($2.8 million request)
Rates effective December 1, 2007
Authorized ROE of 10.4%, capital structure as filed
FERC (case not yet settled)
Interim rates in effect since June 1, 2007
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undervalued assets…
Colstrip Unit 4
Buyout values were repurchased at approximately
$860/kW
Mellon buyout approximately $743/kW
GE buyout approximately $933/kW
Market value today is likely at least double
Net Operating Losses
Balance of approximately $400 million at 12/31/06
FIN 48 reserve of approximately 50%
NPV of tax benefit, net of the FIN 48 reserve is approx.
$68 million
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poised for significant growth…
Strong balance sheet
debt to cap ratio of 48%
Experienced management team to execute plan
Average 25 years of utility experience
Earnings and cash flow growth from existing businesses
Existing regulated and unregulated businesses provide
stable predictable earnings
Continued customer and load growth
Capital investments continue to increase
Approximately $1 billion of growth capex opportunities
over the next 6 years
All regulated projects (state and FERC )
$1.2 billion rate base as of December 31, 2006
(88% growth potential)
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growth opportunities…
Existing Business
Service territory
Customer growth –
1.6% annually
Load growth in electric segment –
2%-3% annually
Capital investments have
increased an average of
$4.2 million per year since 2004
Natural gas pipelines – serve the
growing ethanol industry
Assumes a capital deployment of
approximately $20 million in the
next 3 years
Equity investment protected by
letters of credit
Growth Opportunities
Transmission development
Upgrade Colstrip 500kV
transmission line
Mountain States Transmission
Intertie line (MSTI)
Potential generation development
in Montana
Effect of House Bill 25 –
2007 Montana legislative session
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Colstrip 500 kV upgrade…
“Traditional” pathway to
West Coast and California
markets
New substations near
Townsend and Missoula, MT
Upgrade to existing stations
No new line construction
necessary
Capacity increase: 500-700 MW
Working with other Colstrip
transmission owners
NWEC’s ownership share of
upgrade project is assumed
to be 50%
Capital cost: $250 Million
NWEC’s share dependant on
other owners participation
Assumed ROE: 10%-11%
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next steps on Colstrip 500 kV upgrade…
Assumes 50% ownership in the project.
The costs represent NorthWestern’s pro rata portion of the capital invested.
Go/No Go
Operation
Cumulative Dollars Spent:
$1-2M
$20-30M
$100-125M
2011
2007
2008
2009
2010
Substation design
WECC planning
Land acquisition
Construction
Engineering studies
Rates with BPA
Tx agreements
WECC approval
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Mountain States Transmission Intertie Line…
500 kV AC Line
Southwestern Montana
to Southeastern Idaho
Length: approx. 400 miles
Capacity: 1,500 MW
Deposits from subscribers
of approx. 1,050 MW
Capital Cost: $800 million
Assumed ROE 10%-13%
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MSTI timeline…
Go/No Go
Test
Operation
Cumulative Dollars Spent:
$3-5M
$200M
$500M
$800M
2011
2012
2013
Open Season
2007
2008
2009
2010
Rights of Way
Construction
Support of Agencies
Major facility Siting
Contracts
EIS
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potential for generation development…
2007 Montana Legislature passed House Bill 25:
Allows ownership of rate base generation
Prior legislation didn’t allow generation in rate base
Provides for project approval by PSC prior to construction
NorthWestern is considering a 100-150 MW gas fired
generation facility for wind firming and high demand periods
Go/No Go
Testing
Operation
Cumulative Dollars Spent:
$1-2M
$12-$15M
$100-$125M
Economic analysis
2007
2008
2009
2010
Construction
Reserve equip.
Feasibility study
MPSC review process
Major engineering design
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cap ex spending – next few years…
Includes more than $1 billion of potential generation
and transmission growth projects
(includes Colstrip 500KV upgrade at 50% ownership of new project)
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value of growth potential…
Possible earnings capacity of future opportunities
Significant financial opportunity long term
(in millions)
Annual Earnings
Opportunity
On-line
MSTI transmission line
$800 million times 50% equity ratio times estimated ROE of 11%
$44.0
Jan 2013
Colstrip 500 kV transmission upgrade
$120 million times 50% equity ratio times estimated ROE of 10%
$6.0
Jan 2011
Montana Nat Gas generator
$110 million times 50% equity ratio times estimated ROE of 10%
$5.5
July 2010
Ethanol pipelines - SD/NE
$20 million times 50% equity ratio times estimated ROE of 10%
$1.0
Thru 2009
***Disclaimer*** – not intended to be guidance or a prediction of share price.
Intended to be an estimation of intrinsic value drivers of possible outcomes.
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investment highlights…
Attractive Transmission and Distribution Business
Strong, Predictable Growth in Earnings
Significant Investment Potential in
Transmission and New Generation
Experienced Team Committed to
Shareholder Value
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