West Coast Financial Update
February 29 - March 1, 2012
Financial Update
February 29 - March 1, 2012
Financial Update
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Who we are
Financial update
Investment opportunity outlook
Appendix
- Financial statements
- Regulatory update
Financial update
Investment opportunity outlook
Appendix
- Financial statements
- Regulatory update
Outline
3
Forward looking statements
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.”
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 unless otherwise noted. Our actual
future business and financial performance may differ materially and
adversely from our expectations 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.
expectations as of the date hereof unless otherwise noted. Our actual
future business and financial performance may differ materially and
adversely from our expectations 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.
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Who we are
ð Our Vision: Enriching lives through a safe, sustainable
energy future
energy future
ð Our Mission: Working together to deliver safe, reliable
and innovative energy solutions
and innovative energy solutions
ð Our Values:
Safety
Excellence
Respect
Value
Integrity
Community
Environment
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Geographically positioned for success
ð Our service territory covers some of the
best wind regimes in the nation
best wind regimes in the nation
ð We have the opportunity to provide
transmission services into two different
markets (West and Midwest)
transmission services into two different
markets (West and Midwest)
Low unemployment rates
ð A fully-regulated utility located in states
with relatively stable economies with
opportunity for system investment and
grid expansion
with relatively stable economies with
opportunity for system investment and
grid expansion
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Note: Statistics above are as of 12/31/2011
(1) Nebraska is a natural gas only jurisdiction
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A multi-state electric & natural gas utility
The “80 / 20” rules of NorthWestern. We are approximately 80% electric / 20% natural gas
Note: Data above reflects full year 2011 results .
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A diverse distribution customer base
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With competitive customer rates
Typical
Customer
bills
Customer
bills
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Who we are
Financial update
Investment opportunity outlook
Appendix
- Financial statements
- Regulatory update
Financial update
Investment opportunity outlook
Appendix
- Financial statements
- Regulatory update
Outline
11
8.1% Cash From
Operations
Operations
6.5% Dividend Growth
Compounded Annual
Growth Rate (CAGR)
Growth Rate (CAGR)
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Solid pension funding
NorthWestern Energy’s Pension Assumptions
ð Target allocation 50% equity and 50% fixed
income
income
ð Expected long-term rate of return of 7.00%
ð Discount rate of 4.40 - 4.55%
Six remaining identified peers had not yet filed year-end 2011 financial information as of 02/27/12 and are not included above.
These companies include AVA, BKH, EE, GXP, PNM, and UNS.
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A strong credit profile
A security rating is not a recommendation to buy, sell or hold securities. Such rating may be subject to revision or withdrawal
at any time by the credit rating agency and each rating should be evaluated independently of any other rating.
at any time by the credit rating agency and each rating should be evaluated independently of any other rating.
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A history of earnings and dividend growth
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Reaffirming 2012 earning guidance
Reaffirming 2012 guidance range of $2.35-$2.50 based upon, but not limited to, the following
major assumptions and expectations:
major assumptions and expectations:
• A consolidated income tax rate of approximately 18% - 20% of pre-tax income;
•No significant scheduled, or unscheduled, maintenance at Colstrip Unit 4, Neal or Big Stone Plants;
•No expected increase in insurance reserves or insurance recoveries in 2012;
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Investment opportunity outlook
ð Energy Supply
– Big Stone/Neal pollution control
– South Dakota natural gas peaking generation
– Montana Spion Kop Wind facility
– South Dakota Titan Wind facility buyout
– Other vertical integration opportunities in Montana
including gas reserves or base load generation
including gas reserves or base load generation
ð Transmission
– Network upgrades and large generation
interconnections
interconnections
– Colstrip 500kV upgrade
– Mountain States Transmission Intertie (MSTI)
– 230kV Renewable Collector System
– South Dakota transmission opportunities
ð Distribution
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Montana base load opportunity
Our post PPL supply
opportunity is
approximately
200 GWh / month or
about 280 MWs of
capacity
opportunity is
approximately
200 GWh / month or
about 280 MWs of
capacity
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Hard assets providing value
2005-07 valuation affected by pending and
ultimately terminated acquisition
ultimately terminated acquisition
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Growing investment in our existing system
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Great investment growth opportunities
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Investment project summary
Several opportunities exist to further increase and diversify earnings as compared to our
approximately $1.8 billion of rate base today. Additional Montana base load opportunities are
currently being evaluated and may be incorporated at the appropriate time.
approximately $1.8 billion of rate base today. Additional Montana base load opportunities are
currently being evaluated and may be incorporated at the appropriate time.
Note: Color / label indicate NorthWestern Energy's current probability of execution and timing of expenditures.
Adjustments to the project summary since last presented at EEI in November 2011 include:
- Spion Kop changed from Yellow to Green based upon MPSC pre-approval and timing delays in all 4 transmission projects
Changed to Green with MPSC pre-approval granted Feb ‘12
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Another way to slice the pie
(at midpoint of range)
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Who we are
Financial update
Investment opportunity outlook
Appendix
- Financial statements
- Regulatory update
Financial update
Investment opportunity outlook
Appendix
- Financial statements
- Regulatory update
Outline
25
Consolidated statement of income
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Consolidated statement of cash flows
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Consolidated balance sheet
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Earnings reconciliation
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Other miscellaneous earnings items
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Our Commissioners
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Environmental compliance