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Pollution Control Bond Financing
Investor Presentation
April 2006
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NEW STRENGTH. NEW STRATEGY. NEW ENERGY.
NorthWestern Energy Today
Utility Service Territory
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• 628,500 customers
• NWEC electric: 375,000
• NWEC gas: 253,500
• Approximately 123,000 square miles of service territory in South Dakota, Montana and Nebraska
• Total Assets: (1) $2,400 MM
• Total Capitalization: (1)(2) $1,480 MM
• Total Employees: (1) 1,353
(1) As of 12/31/05.
(2) Book capitalization calculated as short-term debt plus long-term debt plus shareholders’ equity.
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Business Overview
Regulated Operations
NorthWestern Energy
• One of the largest providers of electricity and natural gas in the Upper Midwest and Northwest, serving approximately 628,500 customers in Montana, South Dakota and Nebraska
Unregulated Operations
• Electric - - Primarily consists of a lease of 30% of Colstrip Unit 4, a 740 MW coal-fired plant in Montana
• Gas - - Gas supply and distribution services to high volume customers in SD/NE
Electric Operations
Montana
• Transmits and distributes electricity to 316,000 customers
• Revenue by customer class(1): 38.4% residential, 49.2% commercial, 8.1% industrial and 4.3% other
• Approximately 7,000 miles of transmission lines and 20,300 miles of distribution lines
South Dakota
• Generates, transmits and distributes electricity to 59,000 customers
• Revenue by customer class(1): 41.6% residential, 56.5% commercial/industrial and 1.9% other
• Approximately 3,200 miles of T&D lines
• Owns 310 net MW of power generation
Gas Operations
Montana
• 170,000 customers (residential and commercial)
• 3,700 miles of underground distribution pipelines
• 2,000 miles of transmission pipelines
• 16.2 Bcf of gas storage
South Dakota/Nebraska
• 83,500 customers (residential and commercial)
• 2,100 miles of distribution gas mains
(1) Data as percent of total electric rate schedule revenue for 2005A.
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Significant Accomplishments in 2005
Operational Achievements
• Maintained high reliability service
• Received ServiceOne Award for second consecutive year
Financial Achievements
• Gross margin increased by 10.3% to $524 million during 2005 over 2004 reflecting growth in all four operating segments
• Operating income, excluding reorganization expenses and impairment charge, increased 31.7% to $152 million driven by gross margin growth
• Achieved targeted debt to capitalization ratio of 50%
• Completed divestiture of non-core assets
Regulatory Achievements
• Stipulation reached with Montana PSC to recover $4.6 million in natural gas costs previously disallowed
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Resolution of Significant Litigation
• Bankruptcy case has almost all unsecured claims resolved except Magten matters
• Settled prior shareholder securities class action and derivative cases within policy limits
• Netexit plan of reorganization confirmed resulting in distributions to NWEC of $42 million in 2005 and additional $5 million in February 2006
• Settled NorthWestern v. PPL Montana breach of contract lawsuit and bankruptcy claims for payment by PPLM of $9 million
• Milltown Dam consent decree – Federal court approval granted
• Company obligation of $11.4 million fully funded
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Investment Highlights
• Premier regional T&D utility with strong and predictable cash flows
• Attractive and well-diversified mix of electric and natural gas customers provide stable growth
• Non-core asset sales completed
• Strong balance sheet driven by accelerated debt reduction and continued growth in earnings
• Improved capital structure and liquidity provides tremendous financial flexibility
• Proven management track record in successfully executing financial and operational strategies
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