NWE - Earnings call transcript Q1 2018 | NorthWestern Corporation

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Operator

Good day, everyone, and welcome to today’s NorthWestern Corporation First Quarter 2018 Financial Results Conference.

Just a reminder that today’s call is being recorded. At this time, I would like to turn the conference over to the Investor Relations Officer, Mr. Travis Meyer. Please go ahead, sir.

Travis Meyer

Laura. you, Thank thank conference and March joining Corporation’s NorthWestern XXXX. Good and you webcast results call ending for financial afternoon for the XX, quarter NorthWestern’s is the at released, results our northwesternenergy.com. on website release have been available and

also this released our We premarket morning. XX-Q,

us with Bob are Officer; call Chief and Chief Rowe, Vice Brian Bird, the President and Financial Executive today On President and Officer.

members to with us room today address We questions. team also in management have of the several your other the

note may please Company’s over and for statements. us this Before comments press I turn presentation, begin, release, the call responses to to contain that by presenters your questions forward-looking

such, of you the will language. As I Safe remind Harbor

Litigation presentation, the the the of Safe of this forward-looking Securities XXXX. be provisions meaning Act there Reform During of of within statements Harbor course Private will the

business in our believes, based often presentation performance expects, and Forward-looking such often information contain plans, on anticipates, current intends, future The statements this financial will. address expected as expectations. words our is seeks or and

future business in any Our for expressed differ to no this We undertake statements our adversely statements. revise or expectations and obligation and reason. forward-looking may actual presentation publicly our forward-looking update from financial any performance or materially

with are XX-K differ and reasonable in XX-Q along may Form based SEC. and actual other results our assumptions, the press filings may of certain expectations our our results Although in disclosed materially. Company’s the beliefs that factors listed The on affect are releases public and with

our again link. the Bob over Relations, hand XXX-XXX-XXXX our the under that’s the now Rowe. beginning Presentations replay at Investor ask XXXXXXX, p.m. presentation again those access today’s then The today XXXX-XXX-XXXX, of our and Company, of northwesternenergy.com access at XXXXXXX. code into will Following archived open will to available found can the be To code Eastern will to presentation, we Our I access questions. X:XX Webcasts be call, on and webcast dialed lines website, dial to up the teleconference phone audio allow the replay CEO,

Bob Rowe

Travis. afternoon, you thank everyone. us. you, Thank Good And for joining

our still, the Office we Butte, the from are finally is mountain, General in out where of in may it there spring. Montana We be think calling window, snow but on looking

start, Board And you we NorthWestern night midlife and of Harley throaty crisis. It’s this had window. had Class, then We Travis’s with It leadership, a meeting Brian this and friend. mentor, the our an for an Linn will through has viable is is that here not annual a growl say long the a to is of development our audit d which news all the he the dinner I sophistication. and of and the programs, also The effective engaged Chair, a last Board has know the Dr. displayed Linn is up Steve serving Draper’s leader the meeting us committee he’s and extraordinary Steve Many continue displayed, has been Steve and chair. XXXX selected as focus Adik. morning, one crisis. Board yesterday. successful your chair since Board his had As last And as Very thank in own very Chair. Board we should you dedication very audit good Bird’s guided midlife Good now certainly meeting way passed overwhelmingly. importantly, of of employee proposals and a step was

with fortunate the leadership enjoy. So, Board we continue that we to be

as highlights. XXXX. $X.X income quarter to million in compared same decreased Operating Turning period to first the

quarter demand for in compared to cold increase winter and Montana was rates, income to the and or remove That primarily operating, X.X%. transmission weather, quarter Cuts $X.X related However, due XXXX. same by revenue The was $X.X Act, if would up income electric million million the actually that X.X% you the recurred increased in for lower adjust an increased was to million, to operating and administrative during Jobs Net as the Tax have natural general deferral period $X expenses. gas

As net the financial XXth same during Brian increased as yesterday per in Board same on Adjusted $X.XX a XXXX. quarterly diluted And to result of of opposed were during the the of the payable than income period XXXX. to to record share will increased a begin share, average XXXX. $X.XX the And as with to as period $X.XX in share share declare non-GAAP June $X.XX compared results. earnings count, acted per earnings shareholders of $X.XX XX, per summary June dividend now less to

Brian Bird

$XX.X the which quarter. summary financials. period. X.X% year-over-year nearly income a or diluted GAAP of than one penny Bob on $X.XX or million better year increase four, $X.X Net on X% share million a basis the earnings mentioned, page prior On was Bob. for is was Thanks, basis per

page on million, X.X% was or the $X.X million year-over-year Moving on for to was five, down Gross margin. quarter. margin gross $XXX.X which basis a

handling X.X X.X at impacts the actually of margin. gross and a performing the gross from $X.X P&L The within decrease, actually that change X.X X.X%, income tax are it that offset gross Those However, a tracker XXXX. the other area had million of we net tax up quarter. deferral in result in income the where business large elsewhere net. our of that changes decrease had two with back law well net consolidated was a $X.X income P&L. margin, electric or margin those we’ll totaled getting receiving terms the both that look We And you that to of benefit how gas work in in of in changes increase deferral change customers offset the $X.X offset elsewhere some that in during net a change gross million decrease in a to margin million our be in revenue in primarily the decrease income was up due when items,

basis, ‘XX folks point slightly prior and and Dakota weather basis. colder Montana and we’ll And benefit to course of year a largest about and more share on in obviously to the favorable than the versus I first pretax million QX million the the versus of the that was to of normal, in on that at year-over-year colder XX% remind colder would compared quarter. were in jurisdictions year-over-year in six, our contributed much as business We’d presentation. page pretax South Moving the historic is Nebraska XXXX. looking in QX approximately for argue on business, that greater -- that average. and $X.X that weather We a all $X.X benefit compared talk later out

an on a million terms expenses Operating of Moving year-over-year of expenses. on $XXX.X increase organic, million, increase in X.X% basis. and page were an operating to of seven, $X.X

of below operating components and the million will or being both the you decrease and other exclude at that benefits, you directors actually The and those one increase, X%. being in comp Looking for if that an expenses. $X actually one administrative down that explanation deferred and employee when shows over though, primarily are non-employee general expenses the were just offset

and and historically. offset property and again help depreciation Company. X% primarily over seen to a to to that both X%, remaining margin we’ve decrease up because the expense, additions continue costs other expense, associated Looking less Below growth we perspective, elimination and respectively, coming labor at at the of due taxes plant maintenance slower of those DSIP in costs are down, than our though, items the amortization well manage with the DSIP from

million, operating million the that eight. down Below million, Top expense, X.X%. $X.X of down to forward -- us million of that, refinancing Moving by other year, $XX.X X.X%, X.X%. of to primarily $XX.X interest and rising or page slightly page, occurred million result income income leads interest $X.X slightly, flat being $X.X offset rates, or last or the decrease to a of leads us before taxes down expenses

basis, result lower compared talk favorable to lower more about that’s of offset the expense, on tax a flow-through a repairs income, Lastly, $X.X And XX% last XX% rate primarily year, deductions. partially moment. income that pretax by so year-over-year tax in million rate I’ll a tax

you income first items margin Lastly, standpoint, in to reconciliation. shown year-over-year. point those to is and then, is company, nine, There from XXXX the of in improvements a $X.X standpoint net expect I’d really $XX.X basis. quarter. X.X% What an expense factors, those I good positive of income then for take pretax again is which at depreciation negatives Page and down taxes increase can decrease. were year-over-year an to, displays goes And to our pointed million, $XX.X the pretax. million here speak a quarter out is year-over-year again income, in think about improvement we XXXX and million of think all consideration way quarter, expense tax that million, you kind a one is from growing as offsetting if on look which it actually blue when That out led a in pretty from all pretax a to us basis a two And largely on I the deferral, property line. $XX.X is

So, if been offset the actual a you income would deferral X% and which again basis. have exclude taxes, up year-over-year in income pretax our on is

our an lastly net things in tax income equated Moving price partially swing, a and lower that with as number. federal of rate, lower million loss by share flow the bonus the $X.X was pretax with big again driven we the is and basis plant deductions, and income in compensation ETR the two income impacted a includes X.X%. tax, in based depreciation taxes, through and terms line on item the on At to the depreciation basis of of of the that year-over-year on course is particular had associated income year-over-year if But lower impacted of primarily tax also calculated lion million tax is negatively XXXX, had typically $X.X us. an at going that the for items the The a with reconciliation. changes to you of negative change share income permanent adjustments, drive million. the the benefit associated slight a in better; and moving bottom statutory rate XX state to and that also million flow or items by page will, and on remember, below also really associated stock repairs through impacting page, $X.X that there, of $X.X impact. The total which rates parts our receive rate improvement lower the also there

you business, balance of the and as program sheet. continue a utilizing continue to bottom at point to focus on there, our the Company. to page, out Primarily, we see other forward to the can Moving the delever ATM the

the of the first capitalization has quarter. end the of from year to of ratio down since Our XX.X% the end debt gone to XX% total at

in collections improved during debt flow costs XX is quarter. by our result provided that million, Moving cash probably flow repayments of similar on to increase the the and the and insurance amount, up proceeds main statement. to in page and primarily during operating there the cash We $XX.X used borrowings moving Two the forward activities cash items up reducing our a supply short-term so, year. almost improvement short-term at obviously of

on continue to Lastly, the before page, of of this our ATM anticipate say end ATM of using were first we I’d the our no program in but XXXX. all there quarter, issuances up

to versus of the adjusted to a times, to earnings. of many non-GAAP of removed slide remove the prior Moving a try of GAAP to XX give and on items, the far center is page, the us towards compare we $X.XX diluted is on of the do you page, side down to weather favorable as Those right XXXX had items. or non-GAAP $X.XX; XXXX side left EPS those for And the page GAAP $X.XX page, the page of we on At bottom hand at non-recurring $X.XX the compared the We non-GAAP $X.XX. then to what of we the on GAAP that XX, far earnings we quarter. basis, earnings year compare look go who’ve .X%. seen

margin Looking remove throughout you or years. out the on At after driver show down P&L. at of fact a -- million gross see two the page, actually We the the gross $X.X down favorable margin If of items primary so adjusting Again, would is the basis, deferral, in there. actually the the weather you top had both we X.X%. the increase an positive X.X%. deferral in non-GAAP in

P&L Moving expense operating continued good the control. standpoint, down from cost

income other and diluted You net total our additional swings taxes, income year-over-year the a and EPS of down to a property $X.X on to the X%, respectively. way see again expenses why basis. to X.X% expect of in basis in income depreciation of X.X%. on or down $X.X minus operating swings diluted non-GAAP is improvement X.X%, continued Operating and minus non-GAAP year-over-year reason can million dilution but tax primary us up gets income basis, X%, you shares increase down a course million, on pre-tax OG&A as Improvement

Reaffirming to it expect will reasonable Cuts slide far XX recovery PCCAM filing to point rate pass And want year diluted to for $X.XX in being Tax of Montana. of our on three for expect filings and normal our tax our our and the I $X.XX Moving treatment over we in out, both XX.X that, I Bob. count We filings Jobs inn jurisdictions million. million remainder talk to our Also, of Act obviously earnings reasonable guidance. the thus remainder for made in with and to a back our with year zero XX share the XXXX weather. per about X% to and see our the share,

Bob Rowe

great, a detail a there come and discuss during several in back Brian. touch discussion and level, I will things are on anticipate the higher Q&A. few at more was in improve That

on First, just following regulatory comments. items, exactly Brian’s

being have and to proceedings. keeping dockets. the We’ve these expenditures good all the providing is to tax long-term three investors the state our back pending system We and bottom-line customers, make benefit in able a to really the had is of necessary are discussions ought some staff on loadstar be the reform Montana focus level in and with at

We are and through Costs Adjustment continuing to these Power Mechanism Credit Montana. in work

based the to on end hearings of are May in a to we September a year. end by comprehensive and going course filed We’re [ph] XXXX of the general at rate of Montana test electric case be preparing

metering. that very transition grid includes of as gas system natural of approach, side As you system the which talk both new more great on capital distribution, success finance, actually the approach stakeholders building electric successful system. South compliance. supply And our similarly DSIP valuable infrastructure and the big electric about on And a investment And at stakeholder a had to group of system groups valuable was frequently similar our gas system we heavy focus have more Montana as transmission Dakota plan this our evolution scoping operations. in very, our about and we a project. distribution great year. a moving We Montana. Two system provided in gas They we and projects very really our in look on our in infrastructure the about with whole modernization guidance. the we that stakeholder open year, to Last PHMSA within think well and the then, as area thought group, as services both now in

looking will new how considering specific and big the operational plan make Dakota Dakota currently of end is and reasons, South sense South economic First, year. to by electric may A where resource be filing at fleet situations activity replace the and it for our retire a units.

this thinking informed and approach hearing our done coming process of goal long-term South have be plan quarters we cost, and PUC on over the is statute of our end the that. Dakota planning In Montana, next our least that address about reserve and needs. will overall by supply filing least a keeping and all a to Montana intermittent margin job about is be a need have You’ll more does folks focus our the risk the capacity governing year. of

the develop got for Montana the well -- about with to in. a committee public group way several sessions more as plan stakeholder plan. work group, advisory and to also -- tactical We They’ve larger

into And very, as it efforts very we we’re good look and control reserves other that We look benchmark doing we been obviously have at when think acquire companies to cost continue for a natural job. makes sense. opportunities our to gas successful

the Missouri static The Great number Just before, Eagle has -- photograph effectively current also is and is to licenses the of and at talked generation, a Power north heads of really not our the system system with change integrate House Black system operates. Montana electric overall hydro [indiscernible] the consistent note, the chain way beautiful is a have project River opportunities and the where sites year. we Montana we’ve through Falls, system been add supply resources to our hydro and a cost successfully range We’ve static.

regulatory jurisdictions. with Turning both and a Tracker all is and first late simply Brian the Montana, legal far by And as we in in more of Montana start tax I January, actually differences mentioned, detail Montana to let’s largest, in made but tracker. property filings Property over front, in Filing. the a result tax size years. Tax our well, three of In the also investments the some the treatment --

tracker, impacted that as grant consider flip side. We very filed appreciate we and mostly the XXXX. lowered application Montana alternate retroactive that be jurisdictional the both to -- place equally have customers. our ultimately We FERC action retail reconsideration allocation it motion jurisdictional don’t the commission and this, change applying you in Montana. of concern. on XXXX property tax filing additional through the an know, and result by customers that and and simply for mechanism to property to the our is order concerns And filing approach has in of Montana process and rulemaking we were size of as an about as a major $X.X changed went burden, to our So, The unable driver million it ultimately minimum that XXXX property we a result, Commission methodology. tracker tax think to last hearing, went for a tax share that a tax methodology for expressed reconsideration a opposed year, we issued the as tracking commission an as the to recover did was the And was based tracker sincerely on currently commission constructive.

and to Credit Power Adjustment Cost next Mechanism. the Turning

our operation. with replaced had statutory XXXX the the through that in Montana discretion. Ultimately The Montana proposal in that eliminated early Montana of we electric of with worked legislature. commission many the that of the July, Montana December, with tracker that sense issues change, currently filed [indiscernible] you’re in the for commission’s As filed the utility February not in range electric was docket. testimony risk-sharing this to tracker familiar we legislature Commission We’ve complexities features, in additional identified PCCAM. much directed in March. it issues advocacy a issued is party’s On was Intervenor possible filed stages general very with electric parties in I place testimony the sufficient in you alternative referenced issue line PCCAM and stating commission Dakota options believe consider additional in And we the notice think in testimony. -- Xth, that. the the know, and the additional an

Our scheduled possible underway, to July on on Xst decision date on to this XXth May to beginning retroactive of discovery due effective the last which the now to is year rebuttal April change. from hearing and It us of the the XX. variable will legislative with is costs apply basis a go

Turning to Dave Gates Generating Station.

received we and between customers. wholesale, allocation The know adverse concerned cost jurisdictional XXXX. federal state order April you retail an order from in As FERC and

decision we for consider decision and was U.S. required of in following to denied appealed a affirming Our rehearing matter FERC the were Court request $X.X make million. received XXXX closed. to and decision we -- negative And the now March. did -- that the Appeals in refunds We

Montana the the District XXXX issued May order to In year, arbitrary decision to of XXXX, disallowing state a the costs. Montana recovery September Colstrip. associated and arguing of violation Unit the was Colstrip and outage of capricious with with in and power XXXX final appealed Commission costs Court of disallowance In the replacement Turning order we that law. certain X the

on this the next decision appeal within expect sometime months. the We nine

of impact estimated Tax the the Act. Jobs to turning Cuts and Now,

filed cases all in we jurisdictions. have we As three mentioned,

an be approximately adjustment. the could to million a could $XX a tax year. case, our this million appropriate flow adopt would million that have been in been that yet which if change of and we year we result proposal Montana result was current procedural by $XX associated a revenue the year full and additional calculation, will We’ve million a account, result consider again, books don’t to minimal for similar independent adjustment, result, obviously, the serve harmed established. reduction intended in on deferred Commission filed of cash be Brian we tax methodology and pretax act. As as be the liability an of schedules, would impact the be the in goes deferral specific XXXX. earnings regulatory we would request liability $X.X based we by possibly case an revenue planning it passing historic and be with essentially and to and tax on making the income. the this method. be that between in [ph] a don’t $XX to Again, -- also to appropriate [Ph] of do and And of $X dockets million for to impact. believe last the anticipated expense reform. In it was determined result federal this into our were restated congress offset have the to net -- not At rate would the deferred because back Utilization intent a nor is income the of should our methodology a the that But updated commissions, the not the that And is calculation. historic been as have that And shareholders restated regulatory of

not XXXX tax in offset are at reduced NOLs As guidance liability And through a and we now and XX, deferred and zero appropriate our we we -- available on additional believe to tax barring would equity be be XXXX, be the by the credit of was that to to downgrades our and by of our coverage X%, will to previously were this tax based ratios as existing of could regulatory X% XXXX. and and also regulators anticipated result reduction important actions further our do actions, that It’s XX%. $XXX liabilities. from December result. million could updated XXXX, an in assumptions effective we Negative and regulatory issue negative rate reform, included between necessitate to we lead previously assets debt to ratings. that note adequate credit believe that filling maintain

to the described Montana. What the questions. $XXX our this business pending have year. infrastructure investment and capital of is, for $XX before and resource have we open stable generation of million. capital discussed that of with of automated Dakota $XXX plans Nebraska, as really be part Previously important is the we by that’s removed included for you approximately modernization by by were been added earlier investment investment Turning your the spending year. and what Notable it update similar balanced of in we previously updates, see we forecast Montana, end in before, And for South expenses and we and I capacity and have believe very should million metering South Dakota that done approximately included grid associated million

flows by We billion. period, almost equity issuances. investments that important included anticipate to And for questions. could projections we’ll $X.X remainder negative that not through with regulatory debt the are and capital issuances. up open is the aided necessitate current that, of fund if these cash or cumulatively, capital actions significant occur, investments the long-term above our equity with of five-year NOLs further If in for your spend program distribution combination do So and XXXX additional

Operator

we’ll Instructions] Credit first And go Weinstein to [Operator Michael at Suisse.

Michael Weinstein

do sales weighted year or for think you no million will remaining spread evenly the in on can ATM, why or it backend be elaborate will of $XX frontend And issuances, remainder the sales quarter? in the On of equity for way? weighted some be you the Hey. first the

Brian Bird

start the your I’ll first of part on question. Well,

the share We’re our quarter. price in crazy about first really

impact pricing. significant As you reform know, has share our tax on

noted, Michael. we I’ll we’ll on have the the year we And it probably get that. basis, with do would expectations leave and And throughout the down XX going program, so, forward full a is

Michael Weinstein

how outcomes you block unfavorable be require or And equity -- are stated that ATM would the of that you think thinking if that an about might regulatory that? you issuances. Do issuances, expansion any just

Brian Bird

That’s thinking still a that, good question. we’re through Michael. And

talking think and one is time, about of plan some capital above any require the may thing program I ATM been that’s our beneficial we’ve beyond growth equity. for

so, Bob helpful is that. certainly front generation some could And one in that expanded out an are some as pointed ATM investing There And equity about perspective. an capital. that we we thing having from things on be think the that’s

our associated looking in may that. to the perspective. we’re with the we million continued that, remainder at difficult at may have impacts go additional be debt But But, there to it determined. We [ph] to XX%. such Hopefully, And addition the that flows not our and in decisions so below were is equity have to how utilizing based program there $XX regulatory ATM look from that for be cash equity of yet we it’s impact rating and needs necessary. credit do upon

Michael Weinstein

Just one last question.

to cause tax income many docket, to terms And million going XX what prior amortized of they’re be by million $X proposals to tax tax, handling harm that? would that also, is revenues in of the On historic are $X -- out? both the exact years deferred the created for million methodology how calculation the or income $XX restated how be period

Brian Bird

first in on years, been down. of doing I say, lot your to part lower a we’ve experiencing for the tax a question, would of keep number rates the our rates tax of tax things front

a give experienced in and of Our a year tax would perspective. tax tax benefit spirit results that with to if of revenue to make are is Having customers, lower tax reform that customers. net rates What want we line you the that whatever we lower rate grossed to would associated income in would we afterwards, tax over trying to go up reform belief was course that do rate to full in this from the change. the gift back, sure years is will, ourselves make whatever after the that your

had you In have we back those particular go filings, higher filings. tax may rates in fact if previous into

we’ve these so, lower because cases And The reasons with at that tax years, been would recovery haven’t the invested one over $XXX we’ve problem has for rates be increase coming investment, incremental throughout of in businesses, is now will in benefit that if we’ve our that passed offset plus DSIP. million a costs even the is asked experiencing we’ve for [ph] of the capital the to which rate been on we had customers. you

from tax over you asking So not test already lower benefited the customers only them year, historical if rates we’re by using to will double years. have dip, the the these

receive what do current are the So, again, spirit give of our deserved is they what only trying in rates. tax to we our tax based are to year customers to in change upon reform the

Operator

will go from next Merrill We of Dumoulin-Smith Bank America to Julien Lynch.

Julien Dumoulin-Smith

just AMI how on on the you do here on I could little the flip think Can dig piece negatives? kind how about on some question that timeline suppose just positives kind some a and would side the of on little for the that other of the elaborate follow-up walk more bit bit Montana and Could through that we it you I -- on approval up. see is, more and point, that have the takes So, and to a a that? you could of last puts the CapEx? of

Brian Bird

timing ‘XX as end with our and depending to doing with what programs. ‘XX total think right into ramp early And that’s that. side But you and ‘XX Dakota I of we Montana, Dakota. investments South now think for you I relating could the those the the we in the start ‘XX up if will plan And really and start associated amount is South at course saw ‘XX capital move in how to and will are we things on today. those Well, into then the sit vary of

Julien Dumoulin-Smith

you think me then, budget here? capital do And let mean, this. ask you I how the about

the up on points there’s So, if you equity, and the brought other to few of elaborate. call potential the and respect that I XX% income debt you suppose cash the with could flows

So, to tax perhaps could right? and impacts you of on decisions I July the X the additional reform timeline well that potential in -- to just you I want with of then, million First, cash as two retroactivity, too And into, PCCAM? equity retroactive as don’t a much understand potential are -- presumably I separately, to potential potential million to of those comment putting piece CapEx? I comment the you’re suppose the of earnings reduction, light the supposed want and potential read XX on flow back can the pre-tax of

Brian Bird

there. a lot it Julien, think, I depends

would think gauge from It’s PCCAM. the to I pretty a I impact difficult is at be. that argue aspect laid put come XXXX how in range context. we those start dollar really on be. out, the of the it reform, PCCAM point. what know where on would I the much this perspective, the with pretty could will based I’d And can’t out and methods, nebulous two that I’ll amount answer tax large what and much

obviously, also be going those within And And we’ll an earnings a idea have know as year rate our have that on a to XXXX. in flow outcome two with pretty will cases. what well. XXXX, we’ll the from We’re and outcomes case following cash good

have may our cash impact rate in than FFO? two So, flow explain a that, those impact it And we earnings other case. short-term understanding both the on the don’t two of and from will better to those know have until the and the how and look the also, filings to up outcomes Julien. understand be at filings how what XXXX, impact I

Bob Rowe

a application or a overall I those later regime mechanism our a you do possible most as think important characterize again, is, to additional Brian The talked case only The point be obviously know they we’ve would And same. on new the lot timeline. that could but make in issues forward and mechanism take the level consumer the of we’ll to accounts, a -- results was the want do that’s decisions. result the that that quite the at high about made addition the of added going changes a to track PCCAM different will We I whenever during the a results also the suggest that inform have basis. then to retroactive year are

Julien Dumoulin-Smith

for you’re lines, piece to a of time outcome here. for Got not the well as If little the piece bit it. know read can reform going the as PCCAM the tax I between

So equity for further that might little delay bit... any needs a

Brian Bird

I would this. argue

of to We’re equity what ATM remainder at other program. all than we in issuing our do additional the not any have

of of is these outcome regulatory the the two matters. know You one

Julien Dumoulin-Smith

Right, yes, at. trying That’s exactly. to get what I’m

up bring be a Colstrip we anything comment your read wanted recently. on elsewhere? was to the Can case potentially potential quickly Is District any mean, should applied applicability? I could there that say Another be through around real the side. that point you was Court certainly, I else case case win one context of could on how your in the thinking about that and court

Bob Rowe

and We due good focused and practice how process. very the significant has welcome was and on now it. Commission court very open process proceeding positive we look on decision It obviously administrative And to I due consider that conducts much proceedings. consider its it to decided the and

Julien Dumoulin-Smith

Excellent.

the additional in talk renewables on there? you in if a And down a be And squeeze pursue first the the on the then, a XX-megawatt things. base wind convert I sorry, there of of a context perhaps project QF to which can megawatts. QF was Obviously, XX-megawatts here. side rate saw you also able there you the about the light line? and projects we Can for quick I prospects one last context -- two opportunity was think rate separate into would I under X out suppose base

Bob Rowe

going while significant Any opportunistic an paying to we get same state acquisition We customers to are be before at were This a shareholders. the FERC producing to the are cost lowering driven our on get through for resource process opportunity and we to for side. need that additions time customers [indiscernible] the process opportunistic. resource an that our that able by existing are in plan was take to

those Commission’s contract made has good XX-year that related of for to about terms very QF; contract news and a the we you’re do good applicability favorable. on resources, customers significantly Commission the you and pricing was The QF was straight of referring decisions know other customers. a extremely And rule base focus costs rate to were the for more that the although owned forward

Brian Bird

add, a we of result that is, QF Bob, I’d right of as build the contracts. of first thing One into course [indiscernible] is these refusals there opportunity

future perspective. opportunities we customers effective And so as rate we arise those, can result cost evaluate a that an that, to base help and also more of make as from how

have opportunities. fall -- in place become things to these so And capture

Operator

Fargo. next we’ll instructions] go [Operator And Jonathan to at Reeder Wells

Jonathan Reeder

to get of wanted bit a background. guess just I little I

calculation of like prompted this this to you abundance requested as of what back historic present or kind kind given methodology, So, the just perspective caution tax of of reform? did MPSC out this well? restated the Is benefits of an

Brian Bird

how perspective. instructions, in calculation at calculation they a look us No. from it will, you for to ignore a filing if would that taking and that was If important in methodology not we we this terms consideration, saw into felt an that to

Jonathan Reeder

Okay.

kind they applicable So, rate back guess it last see wanted to from basically order business each or asset? the restating I from for to of

Brian Bird

Correct.

Jonathan Reeder

following the regarding of Okay. or I remember know, the to than right of you quarter time. if about plant the hydro the $X than addition particularly were fully $X those originally correctly, million And to believe necessary DGGS, the then, differently you operating gaps revenues been million of at recover contemplated, third have assets. is plan I lowering

case it you there? can shortfall of Is now get even upcoming full Montana via and recovery kind case, part the of the or So, what’s for the forward? kind to of the perhaps trying your as for strategy strategy DGGS FERC rate the going talk what’s

Bob Rowe

about Brian, talk you why first. don’t shortfall

Brian Bird

shortfall, Yes, absolutely you are correct. think I the

we’re you and do both both we the In Our and demonstrate expectation that plant differently. would order that gap, course with in jurisdictions, capture FERC, are to Montana have gap will, of viewing to is, associated the and both expectation fillings we of how hydro to the that capture be commissions to using and if smaller. plant differently

also been it’s I a a put bit depreciated will significantly passed, say I the to -- since service has but in been Jonathan, we’ve other of it’s ‘XX. quite back think on -- thing think depreciated it, in time about lot that asset,

Jonathan Reeder

Sorry, go ahead.

Bob Rowe

but is will allocation jurisdiction will on significantly still costs state depreciated integrating fully issues obviously between books, include of relatively jurisdictions. Key cases nowhere it’s depreciated. that substantial there rate No, resources and the our near assets between of between is studies it the be and FERC

Jonathan Reeder

Okay.

bridge side? the federal to there have back Montana don’t go completely that you to is So, hopefully still on some to gap;

Bob Rowe

correct. That’s Yes. Sure.

Operator

KeyBanc. to next go we’ll Paul at Ridzon And

Paul Ridzon

the Just on historical rate case, I mean, at tax will right? be look reform, this fixing

Brian Bird

it’s Well, point, Paul. an excellent

Our time things benefit until that is if that going view do is point something the the on wait going on current ‘XX, case. rate point ask go for here out, benefit we’re up of rate up we’re the to back standpoint, and not like and the to why the as us receiving you’re historical method case. providing that do we we’re until customers, to provide And

And so, that’s viewpoint. our

go that use have and just until method the rate case, of to back we time displayed. let’s take If care but the want you historical, let’s in everything

Paul Ridzon

timeline And new seeing then, capital just generation, incremental on kind what’s that out? potentially of and potential the for

Bob Rowe

assigning No. would I want really on to back push number.

removed As from million highlighted over the we presentation, in forecast. $XXX we the capital

the into some is the plans. of be the But talked outcome Now, plans really, and going we’ve new South we’re any opportunistic by deep about of bulk and activities. investment driven Montana, in Dakota to

Brian Bird

And the this by plan [ph] of is expected to be year. out end

Operator

Bank back we’ll to go And Instructions] of Dumoulin-Smith, Julien [Operator America.

Julien Dumoulin-Smith

XX want is and XXXX that clarify Is X already historic earnings to the just wanted restated make to this. up impact that million. we of upside reflected? sure understand just I follow or I to million guidance

Brian Bird

pre-tax be year -- in where current That million we’re That our guidance saying our whole our guidance. a utilizing income including is reform. We in That’s would our what $XX is $X our current into not to take utilizing million hit. additional result net guidance, of we’re stayed as method. tax method of

Bob Rowe

earnings be There on year. would this pressure downside our

Operator

And to I’ll the over program gentlemen, time. you. back turn this no at additional questions

Bob Rowe

you the to of and at for two throughout next many over interest and the conferences hopefully you talking quarter. visiting quarter. or of you Thank Okay. couple We’ll your be coming you. months Thank with support

Operator

thank And like for joining ladies today’s and Again, conference. gentlemen, everyone I’d to again, does once conclude today. us that

NorthWestern (NWE) 25 Apr 182018 Q1 Earnings call transcript