Transmission Seminar
Shields & Company–Berenson & Co.
Dave Gates
VP – Wholesale Operations
March 11, 2009
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.”
The information in this presentation is based upon our current
expectations 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. We undertake no obligation
to revise or publicly update our forward-looking statements or this
presentation for any reason. 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.
who we are…
(1)
As of 12/31/08
(2)
Book capitalization calculated as total debt, excluding capital leases, plus shareholders’ equity.
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 as of 1/1/09
SD – 312 MW – regulated
Total Assets: $2,762 MM (1)
Total Capitalization: $1,626 MM (1)(2)
Total Employees: 1,385 (1)
Located in relatively stable economies with potential grid expansion in the Northwest.
strong balance sheet…
Plan to maintain a 50%-55% debt to total capitalization ratio.
Audited (Dollars in 000's)
December 31
2008
2007
Cash
11,292
12,773
Restricted Cash
14,727
14,482
Accounts Receivable, Net
155,672
143,482
Inventories
70,741
63,586
Other Current Assets
60,985
44,031
Goodwill
355,128
355,128
PP&E and Other Non-current Assets
2,093,492
1,913,898
Total Assets
2,762,037
$
2,547,380
$
Payables
94,685
91,588
Other Current Liabilities
264,654
209,245
Long & Short Term Capital Leases
37,991
40,391
Long & Short Term Debt
862,056
805,977
Other Non-current Liabilities
739,118
577,155
Shareholders' Equity
763,533
823,024
Total Liabilities and Equity
2,762,037
$
2,547,380
$
Long & Short Term Debt / Total Capitalization
53.0%
49.5%
credit ratings…
Fitch S&P Moody’s
Senior Secured Rating BBB+ A- (MT) Baa2
BBB+ (SD)
Senior Unsecured BBB BBB Baa3
Outlook Stable Stable Positive
Fitch upgraded in January 2009.
6
transmission network summary …
Asked to perform new
functions
Help meet RPS and
other environmental
goals
Transmission
investment driven by
demand for
renewables
Investments with
externality and
coordination
challenges
State, regional national
interests
generation plans shifting to wind…
New generation in Montana mostly wind and will need to find an end user.
limited pathways from supply to demand…
The
pathways
to the
market are
limited:
total rating
– NOT
available
transfer
capability
transmission – Colstrip upgrade…
Line already exists – represents an
upgrade
Upgrades substation capacity
Increases load capacity of existing line by 500-600
MW’s
NorthWestern announced joint
development agreement with others
Portland General
Puget Sound Energy
Pacificorp
Avista
Bonneville Power Authority
Needed to relieve congestion to the West
Market interest is increasing for
Montana’s high quality wind profile
Cost estimate of ourportion of 500 kV
upgrade = $50M - $75M
Anticipated ownership interest of 30% on upgrade
In service January 1, 2012.
Colstrip 500 kV Upgrade
transmission - collector system…
In service date sometime in 2014.
230 kV “Collector System”
Informational meeting with
customers in Spring 2009
Open Season early ‘09 to
determine configuration
Provides gathering system for
new generation to access
MSTI and network system
benefits
Cost estimate of “collector”
project = $200M
transmission - MSTI…
500 Kv line from Townsend,
Mont. to Idaho Power’s
Midpoint Substation near
Twin Falls, ID
Respond to requests for
interconnection
Relieves congestion
Enables high quality wind
power to reach markets in
the West and Southwest
Environmental review,
WECC path rating, and
public consultation all well
underway
Current project cost is $1
billion
MSTI continued...
Purpose
Meet requests for new
transmission service
Provide transmission for
new generation
Benefit
Provide energy
diversification and
market competition
Provide positive
economic impact
Need
Improve system
performance and
flexibility
Meet regional electrical
demand
MSTI timeline…
FERC filing in January 2009
Information meeting spring 2009
Open Season anticipated in summer 2009
Draft EIS published late summer 2009
Final EIS Q1 2010
Record of decision – Q3 2010
Start construction 2011
Target energization Q1 2014
transmission siting and permitting experience…
Good relationship from decades of working together
Experience sets expectations, and results in fewer issues
Regulatory process could be revised to correspond to
today’s transmission world
Recognize regional/national concerns
Shorter development time for wind, a mismatch for
transmission
DEQ staffing is limited
With unprecedented volume of activity will certainly cause
delays
Jurisdictional issues
Conflicting requirements for multi-state facilities and
between state and federal agencies
Need to harmonize state and national law and policy
generation – Mill Creek Station…
120-150 MW plant proposed to
be built near Anaconda, MT
To be built for regulation
services to balance supply and
load for NWE’s Balancing Area
Rate-based cost of service
investment
Estimated to cost approximately
$200 million
Existing services are becoming
more expensive and scarce
Public hearing in front of MPSC
held
Decision expected 2Q ‘09
In service date for Mill Creek Generation Station = Jan 1, 2011
cap ex spending – next few years…
Includes more than $1 billion of potential generation
and transmission growth projects.
Non-discretionary cap
ex is funded 100% by
free cash flow.
Don’t anticipate needing
equity unless we proceed
with MSTI.
We will move forward with
the funding of these projects
only when they make
economic sense.
MSTI project is now slated for
early 2014 and capex has
been modified accordingly.
summary…
Objectives achieved
related to focus on
core business
Strong balance sheet
No equity required for existing core business
Modest debt maturities in short term
Investment grade rated debt
Increasing regulatory clarity
Solid foundation
Growth prospects
Unique geographic location to expand electric
and natural gas infrastructure
Increasing need to move energy through our
service area
Identified projects provide opportunity to nearly
double rate base and earnings
2009 earnings will be entirely from regulated business
Recent rate relief received in all jurisdictions
Outstanding bankruptcy litigation nearly completed