Annual Meeting of
Stockholders
Butte, MT
April 22, 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.
NorthWestern’s attributes…
Increasing earnings
Colstrip Unit 4 into rates effective Jan. 1, 2009
Expected to add $9 million or $.25/share in earnings over 2008
Rate case to be filed in Montana on electric and gas distribution business in 3Q ‘09
Strong cash flows
Steady earnings growth and strong cash flow
NOLs provide an effective tax shield until 2012
Strong debt ratings
Secured credit ratings of A-(MT) BBB+(SD) / BBB+ / Baa1
Moody’s has on “positive” outlook
Growth prospects strong
Electric generation and transmission opportunities
Operationally strong
Cost competitive
Above-average reliability
Award-winning customer service
Solid operations with growth prospects.
earnings of company since ’05…
Earnings profile is improving.
2005
2006
2007
2008
2009 P
GAAP earnings per share
1.73
$
1.06
$
1.45
$
1.77
$
$1.85 - $2.00
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
2005
2006
2007
2008
2009 P
CAGR = 5.98%
2009 income guidance…
Drivers
CU4 increase expected to be approximately $9 million or
$.25/share
Pension expense expected to be flat for 2009 compared to
2008
Retail electric volumes expected to approximate 2008
Wholesale electric volumes in SD expected to decrease
due to a planned outage for regularly scheduled maintenance
in 2009
Natural Gas volumes relatively flat compared to 2008 volumes
Normal weather in our service territories
Expect increase of 5% to 13% over 2008 earnings of $1.77/share.
$1.85 to $2.00 per fully diluted share
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%
liquidity highlights…
Total liquidity currently in the $275 million range
Recently issued $250 million in First Mortgage Bonds
10 year maturity
6.34% interest rate
Refinanced our Colstrip loan maturing in December 2009
Fund utility capital expenditures
Provide funds for general corporate purposes
Finance a portion of the proposed Mill Creek Generation Station,
if approved
Debt maturities in late 2009
Unsecured revolver matures on Nov. 1, 2009
No outstanding borrowings on the revolver facility
Current rate is LIBOR + .75%
Liquidity position remains strong
Nearly all of the long-term debt matures after 2014
credit ratings…
Fitch S&P Moody’s
Senior Secured Rating BBB+ A- (MT) Baa1
BBB+ (SD)
Senior Unsecured BBB BBB Baa2
Outlook Stable Stable Positive
Fitch upgraded in January 2009 and Moody’s upgraded in March 2009.
Debt to total capital ratio is 53%.
Plan to maintain a 50%-55% debt to total capitalization ratio.
growth project potential…
Possibility to double and diversify earnings as compared with our
existing $1.5 billion rate base as of 1/1/09.
(in millions)
Timing
Mill Creek Generation Station
200
$
to
200
$
10.0
$
to
10.0
$
Jan 2011
Colstrip 500 kV transmission upgrade **
50
$
to
60
$
2.5
$
to
3.0
$
Jan 2012
South Dakota Peaking generation
75
$
to
90
$
3.8
$
to
4.5
$
Jan 2013
230 kV Wind Collector system
150
$
to
200
$
7.5
$
to
10.0
$
Jan 2014
MSTI transmission line
750
$
to
1,000
$
37.5
$
to
50.0
$
Jan 2014
Totals
1,225
$
to
1,550
$
61.3
$
to
77.5
$
* For illustrative purposes = Cost of project times 50% equity ratio times estimated ROE of 10%.
** Assumes a 30% ownership of the $200 million project.
Cost of Project
Annual Earnings
Opportunity *
generation growth highlights…
120-150 MW plant 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
Public hearing held in front of MPSC
Decision expected 2Q ‘09
Existing services are becoming
more expensive and scarce
In service date for Mill Creek Generation Station = Jan 1, 2011
Mill Creek Generating Unit in Montana
Mill Creek timeline…
The Mill Creek Generation Station has been filed for pre-approval,
with the MPSC w/decision expected in 2Q ’09.
generation plans shifting to wind…
New generation in Montana is mostly wind and will need to reach customers out of state.
demand – renewable standards…
The current renewable percentage of NorthWestern’s electric
supply in Montana is a little more than 8%.
our transmission developments…
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 date of January 1, 2012.
Colstrip 500 kV Upgrade
transmission project developments…
In service date sometime in 2014.
230 kV “Collector System”
Our project with no partners
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 project developments, cont’d…
Total project cost estimated from
$800 million to $1 billion
Considering strategic partners
Plan to be operational in 2014
FERC filing in January ’09
Information meeting with FERC in
March ‘09
Open Season anticipated in summer ‘09
Draft Environmental Impact Statement
published late summer ‘09
Final EIS Q1 2010
Record of decision – Q3 2010
Start construction 2011
For current information:
www.MSTI500kV.com
Estimated to be on line early 2014.
MSTI
cap ex spending – next few years…
Includes more than $1 billion of potential generation
and transmission growth projects.
Non-discretionary
capex is funded 100%
by free cash flow.
Company doesn’t anticipate
needing equity until major
capital required for MSTI.
We will move forward with
the funding of these projects
only as they make economic
sense.
MSTI project is now slated for
early 2014 and capex has
been modified accordingly.
Non-discretionary
summary…
Value
Dividend yield in excess of 6.0%
Currently trading at approximately book value
Improved regulatory relationships
Opportunity for growth
January 1, 2009 rate basing of our 222 MW interest in CU4
Montana T&D rate case to be filed in 2009
Expecting a rate increase request – effective in 2010
Possibility of increasing rate base on growth projects with investment
in excess of $1 billion
Potential additional annual earnings of more than $60 million post 2014
Strong financial profile
All debt is investment grade rated
2009 earnings expected to increase 5%-13% over 2008
Strong cash flows from increasing earnings and NOLs expected into 2012
Current value with growth opportunities.