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| 8-K - 8-K 01/07/2010 - NORTHWESTERN CORP | ek_010710.htm |
Transmission
Seminar
Hosted
by Shields & Company and
Berenson & Company
Berenson & Company
January
7, 2010
2
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.”
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.”
Except
as noted herein, 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 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.
our current expectations as of the date hereof unless otherwise noted.
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.
3
who we
are…
(1) As
of 9/30/09
(2) Book
capitalization calculated as total debt, excluding capital leases, plus
shareholders’ equity.
¾ 656,000
customers
» 392,000
electric
» 264,000
natural gas
¾ Approximately
123,000 square
miles of service territory in
Montana, Nebraska and South Dakota
miles of service territory in
Montana, Nebraska and South Dakota
¾ Total
generation (mostly
base load coal)
» MT
- 222 MW - regulated beginning 1/1/09
» SD
- 312 MW - regulated
¾ Total
Assets: $2,754 MM (1)
¾ Total
Capitalization: $1,666 MM (1)(2)
¾ Total
Employees: 1,385
Located
in states with relatively stable economies with potential grid
expansion to support renewables.
expansion to support renewables.
¾ Solid
operations
» Cost
competitive
» Above-average
reliability
» Award-winning
customer service
¾ Improving
credit ratings and strong balance sheet and liquidity
» Secured
and unsecured investment grade ratings
» Moody’s
has us on “positive” outlook
¾ Positive
earnings and ROE trend
» Colstrip
Unit 4 into rates effective January 1, 2009
» Delivery
services rate cases for Montana electric and natural gas
¾ Strong
cash flows
» NOLs
and repair tax deduction provide an effective tax shield until likely
2014
¾ Competitive
dividend
» Current
yield approximately 5.1%
¾ Improving
regulatory environment
¾ Realistic
growth prospects
4
NorthWestern’s
attributes…
improving credit
ratings…
5
6
strong
balance sheet and liquidity…
¾ Debt
/ Total capitalization of 53.4% (9/30/09)
¾ October
2009
» $55
million, 30 year First Mortgage Bonds issued at 5.71%
¾ June
2009
» Extended
unsecured revolver maturity to June 30, 2012
» Increased
size from $200 million to $250 million
¾ March
2009
» $250
million, 10 year First Mortgage Bonds issued at 6.34%
¾ Total
liquidity currently in the $190 million range
¾ Nearly
all long-term debt matures 2014 or later
competitive
dividend…
7
Goal
for dividend payout ratio of 60% - 70%.
Current dividend yield about 5.1%.
Current dividend yield about 5.1%.
8
near-term potential
earnings drivers…
¾ 2010
» Expecting
flat volumes
♦ Due
to higher mix of residential/commercial vs. industrial customers as
compared to other utilities
compared to other utilities
● Electric:
67% Residential & Commercial, 33% Industrial
● Natural
Gas: 99% Residential & Commercial, 1% Industrial
» Montana
rate adjustment expected to take effect second half of 2010
¾ 2011
» Full
year effect of Montana rate adjustment
» South
Dakota and Nebraska natural gas rate adjustments expected
» Mill
Creek in rate base
♦ Approximately
$10 million annualized contribution to net income
Near-term
earnings drivers independent of transmission projects.
longer-term
potential earnings drivers …
¾ Distribution
system enhancements
» Exploring
incremental rate based investment (early
stages)
¾ Energy
supply
» Mill
Creek Generation Station
» South
Dakota peaking generation
» Natural
gas reserves (early
stages)
» Wind
projects and other renewable projects (early
stages)
¾ Transmission
projects
» Colstrip
500 kV upgrade
» 230
kV Renewable Collector System
» Mountain
States Transmission Intertie (MSTI)
» Electric
Transmission America (ETA) (early
stages)
» Green
Power Express (ITC) (early
stages)
9
Balanced
growth opportunities across the business.
10
10
transmission network
summary…
¾ Requests
to perform
new functions
new functions
¾ Help
meet RPS and
other environmental
goals
other environmental
goals
» Transmission
investment driven by
demand for
renewables
investment driven by
demand for
renewables
¾ Investments
with
externality and
coordination
challenges
externality and
coordination
challenges
¾ State,
regional national
interests
interests
11
wind
potential in our service territory…
demand
for renewables increasing…
12
Montana
wind development…
13
Xx
x
14
Montana
is between resources & loads…
NWE
proposed transmission projects…
Collector
System
Colstrip
Upgrade
MSTI
15
Colstrip 500 kV
upgrade…
16
¾ NWE,
other Colstrip Transmission owners and BPA
¾ Upgrade
existing 500 kV lines from Colstrip MT to Mid C
¾ Provide
additional access to Northwest markets
¾ May
Add 500-700 MW capacity
¾ In
service 2012
Garrison
Sub
Colstrip
Gen
Bozeman
Missoula
Billings
Great
Falls
Helena
Broadview
Sub
Existing CTS 500
kV
New
500/230 Substation
Existing BPA 500
kV
Butte
Mountain States
Transmission Intertie…
¾ 500
kV AC line from Townsend
MT to Midpoint Substation near
Twin Falls ID
MT to Midpoint Substation near
Twin Falls ID
¾ Approximately
430 miles
depending on final route
depending on final route
¾ 2
major substations in MT; 1
interconnection in Idaho
interconnection in Idaho
¾ Advanced
stages of public
siting and review - began in
2007
siting and review - began in
2007
¾ 1500
MW path rating capacity
expected
expected
¾ Current
project cost is $1
billion
billion
17
18
Collector
project…
¾ Currently
3,700 MW in
generation interconnection
queue
generation interconnection
queue
¾ Provides
a radial gathering
system for new generation
to access MSTI and the ‘grid’
system for new generation
to access MSTI and the ‘grid’
¾ Informational
meeting with
customers in early 2010
customers in early 2010
¾ The
actual project defined
through an Open Season in
early 2010
through an Open Season in
early 2010
¾ Current
project cost is up to
$220 million per line
$220 million per line
¾ The
target in service date is
late 2014
late 2014
New
Townsend
Substation
Townsend
Substation
High
Wind
Area
Wind
Area
Potential
Collector
Lines
Collector
Lines
19
other
proposed transmission projects…
HVDC
Zephyr
TransCanada
SWIP
LS
Power
Chinook
TransCanada
capex
spending - next few years…
We
will move forward with
the funding of these projects
only when they make
economic sense.
the funding of these projects
only when they make
economic sense.
Additional
equity not
anticipated until we proceed
with MSTI or other major
investments.
anticipated until we proceed
with MSTI or other major
investments.
MSTI
project is now slated for
early 2015 and capex has
been modified accordingly.
Capital still shown at 100%
but still evaluating partners.
early 2015 and capex has
been modified accordingly.
Capital still shown at 100%
but still evaluating partners.
Utility
Maintenance
Capex is funded 100%
by free cash flow.
Capex is funded 100%
by free cash flow.
21
growth
project potential…
Opportunity
to double and diversify earnings as compared with our existing
$1.5 billion rate base.
$1.5 billion rate base.
22
in
summary…
¾ Solid
operations
¾ Improving
credit ratings and strong balance
sheet and liquidity
sheet and liquidity
¾ Positive
earnings and ROE trend
¾ Strong
cash flows
¾ Competitive
dividend
¾ Improving
regulatory environment
¾ Realistic
growth prospects