NorthWestern Energy – Serving a Growing Montana
Mike Cashell, Vice President -Transmission - March 21, 2014
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NorthWestern at a Glance
673,200 customers
and 123,000 square
miles of service
territory in Montana,
South Dakota and
Nebraska
•
1,500 employees, including 1,170 in MT
•
412* megawatts of owned MT generation
capacity, including coal, natural gas and wind
(*including DGGS)
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NorthWestern at a Glance
•
6,900 miles of MT electric transmission lines
•
17,500 miles of MT electric distribution lines
•
5,000 miles of MT natural gas distribution pipeline
•
2,000 miles of gas transmission pipeline, plus
gathering and storage
Due to recent purchases, NWE owns about 75
billion cubic feet of natural gas reserves – all
dedicated to serve our MT customers
•
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Key Priorities
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Earn regulatory approval for $900 million
acquisition of PPL Montana hydro facilities
Continuation of seven-year, $370 million electric
and natural gas Distribution System Infrastructure
Project (DSIP)
Complete $36 million Jackrabbit-to-Big Sky
electric transmission upgrade
Continue siting and permitting of $38 million
Carbon-Stillwater electric transmission project in
south-central Montana
A Portfolio for the 21st Century
•
Announced, in September 2013, the acquisition of eleven base load
hydroelectric generating facilities representing 633 megawatts of capacity
and one storage reservoir from PPL Montana
These assets are consistent with our vision of providing safe and reliable
energy
Asset purchase price of $900 million, subject to various regulatory
approvals, including the Montana Public Service Commission
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Overview of Hydro Facilities(1)
Plant
Black Eagle
Cochrane
Hauser
Holter
COD
River Source
Missouri
Missouri
Missouri
Missouri
Flathead
Madison
Missouri
West Rosebud
Creek
Missouri
Missouri
Clark Fork
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69
19
48
194
8
48
100%
100%
100%
100%
100%
100%
100%
1927
1958
1911
1918
1938
1906
1930
Mystic
12
100%
1925
Rainbow
Ryan
Thompson Falls
60
60
94
100%
100%
100%
1910 / 2013
1915
1915
Kerr(3)
Madison
Morony
Total
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Net
Capacity
(MW)
Ownership%
633
5-Yr Avg.
FERC
Capacity
License
Expiration Factor(2)
2040
2040
2040
2040
2035
2040
2040
73.6%
49.1%
79.3%
72.4%
64.5%
89.2%
63.8%
2050
48.2%
2040
2040
2025
77.5%
79.8%
60.1%
Cochrane Dam
66.1%
(1) Hebgen facility (0 MW net capacity) excluded from figures. All facilities are “run-of-river” dams except for Kerr and Mystic, which are “storage generation”
(2) As of June 2013
(3) The Confederated Salish and Kootenai Tribes have an option to purchase Kerr from September 2015 thru 2025
Hydro - A Great Fit at the Right Time
• Existing resources with no development risk.
• Location within the service territory eliminates need for additional
transmission to serve our customers.
• Excellent fit for our portfolio’s needs. Meets off-peak needs but we will
need additional resource to meet our heavy-load requirements
• Non-carbon emitting - reduces environmental compliance cost and risk
compared to other alternatives.
• No fuel costs. Cost of service does not depend on future fuel prices.
• Provides needed capacity, necessary for reliability, at the right time.
• Hydro facilities provide added diversity to existing generation portfolio of
coal, wind and natural gas
• Customers will see more stable future prices
- Projected initial bill increase from hydro investment
of 4.22 percent ($3.53 per month) on typical
residential bill
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Thompson Falls Dam
Montanans’ Perspectives on Hydro Transaction
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Civic leaders, community leaders and customers have
expressed support
Possible questions
-- Is the price right?
Price consistent with existing market values
o Less expensive than new-build options
o Like renting a home vs. owning a home
o
-- Should the utility own generation?
If NWE does not purchase, customers face price volatility,
uncertainty
o Portfolio benefits – renewable resource, price stability, physical
reliability
o
•
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Montanans have a lot at stake – attend PSC listening
sessions in April and May!
Other owned Montana generation
Spion Kop
Wind Farm
Colstrip Unit 4
Dave Gates
Generating
Station
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Owned Gas Production in Montana
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Did you know?
NorthWestern Energy will spend about
$182 million on projects and upgrades in
Montana this year.
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DSIP Investment 2014
• The Distribution System Infrastructure Project (DSIP) is aimed at
proactively maintaining a safe and reliable electric and natural-gas
distribution system. It’s a seven-year, $370 million initiative.
• NorthWestern plans to spend nearly $52 million on DSIP projects
across Montana this year.
• Employing about 300 skilled contract employees along with
NorthWestern crews
• Where does DSIP money go?
• Pole replacements
• New underground electric lines
• Natural-gas system upgrades
• Additional tree trimming
• Substation improvements
• Rural reliability improvements
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Transmission System Infrastructure Plan (TSIP) Initiative
TSIP GOALS
• Arrest aging infrastructure
• Maintain or improve transmission outage
reliability
• Maintain or Reduce local area transmission
capacity congestion
• Continue to proactively address NEW
Compliance notices
• Automation and Technology
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Finding a Balance
Prohibitively
Expensive
Very frequent
replacement
Unacceptable
Operations
Frequency of asset replacement and system
upgrades
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Replace only at failure
Transmission System Components
Major Components of the plan
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Tree trimming/Vegetation Management
Overhead line maintenance (Aerial Patrols)
Airbreak Switches
Poles
Worst Circuits
Compliance Issues
System Segmentation
Local area Capacity issues
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Current Large Transmission Projects
Jack Rabbit – Big Sky 161kV
Carbon - Stillwater 100kV
$Millions
NorthWestern Energy continues
to make significant investments
to upgrade our transmission
system to add capacity and
improve reliability. Two such
projects are: Jack Rabbit – Big
Sky 161kV Line and Carbon Stillwater 100kV line and
substation upgrades. With a
total capital investment of
approximately $80M, these are
two of several projects in our
maintenance capex program
that are necessary to meet
customer needs and load
growth in our service territory.
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30.0
25.0
20.0
15.0
10.0
5.0
-
Estimated Capital Expenditures
2012
2013
2014
Jack Rabbit - Big Sky
2015
2016
2017
Carbon - Stillwater
Jack Rabbit – Big Sky 161kV
• Project Budget /
Schedule
36 Miles in Length
o Estimated Cost: $36
Million
o Spent on Project to
date - $17.86 Million
o Started: Fall of 2012
o Finish: Fall of 2015
o
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Jack Rabbit – Big Sky 161kV
• Permitting
Special Use Permit (SUP) with Gallatin
National Forest – acquired on November 26,
2013. Started on SUP the first quarter of
2008.
o Storm Water Pollution Prevention Plans
(SWPPP) acquired for timber clearing and
line construction.
o
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Jack Rabbit – Big Sky 161kV
• Summary
19 Miles of new 161kV line has been
constructed out of total of 36 miles
o Crews will start up their work this spring on
the toughest stretch of the project.
o Meadow Village Substation will be upgraded
to 161/69 in the summer/fall of 2015.
o The new line is expected to be energized to
161kV in the fourth quarter of 2015.
o
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Carbon – Stillwater 100kV
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Project Summary
o First phase of 10-year project to improve
reliability and capacity in Carbon and
Stillwater counties
o Construction of 54 Miles of new 100kV line
and several substation upgrades.
o Phase One estimated cost - $38 million
o Right-of-way acquisition is under way.
o Line construction expected to start in 2015
o The line is expected to be energized to
100kV in 2017.
Carbon – Stillwater 100kV
• Regulatory Approval
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o
NorthWestern anticipates building the new line
under a statutory exclusion from Montana
Major Facility Siting Act (MFSA)
o
Federal NEPA for BLM & USFS Lands
o
Other Local & State Construction related
Permits Required
Did you know?
NorthWestern Energy paid $94.7
million in property taxes in 2013, far
more than any other taxpayer in
Montana.
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2013 Montana Estimated Property Taxes
NorthWestern
pays 29% of
the Total
Centrally
Assessed
Property Taxes
and 3.5x as
much as the
number two
contributor,
BNSF Railway
Co.
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Strong Corporate Governance
Fortnightly 40
NorthWestern Energy was recently recognized as one of the top 40 best energy companies in the United States by
Fortnightly 40. The report compares shareholder value performance by looking at uniform data sets among the leading
publicly traded electric and gas companies across a range of metrics.
NYSE Ethics
NorthWestern Energy earned an "A" from the New York Stock Exchange's Corpedia, for its Code of Conduct and
Ethics, putting it in the top 2 percent of all energy and utility companies reviewed.
Forbes America's Most Trustworthy Companies 2013
For the 3rd consecutive time, NorthWestern Corporation was recognized by Forbes as one of "America's Most
Trustworthy Companies," which identifies the most transparent and trustworthy businesses that trade on the American
exchanges. In the past, Forbes turned to Audit Integrity who recently merged with Corporate Library and Governance
Metrics International to form GMI Ratings (GMI). GMI's quantitative and qualitative data analysis looks beyond the raw
data on companies' income statement and balance sheets to assess the true quality of corporate accounting and
management practices. Each year Forbes recognizes 100 companies out of over 8,000 for this foremost honor.
NWE was one of only three utilities to be distinguished with this honor, by Forbes, in 2013.
New York Stock Exchange Century Index
Created in 2012 to recognize companies that have thrived for over a century while demonstrating the ability to innovate,
transform and grow through the decades of economic and social progress.
Glass Lewis
NorthWestern was recognized by Glass Lewis, a leading investment research and global proxy advisory firm, as one
of the top 42 companies in the US for its 2011 “Say on Pay” proposals, which recognizes companies with clear
disclosure and conservative policy with regards to compensation.
Corporate Governance Award Finalist
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In 2013, for the second straight year, Northwestern Corporation was named a finalist in the category of "Best Proxy
Statement (small cap)" given by the Corporate Secretary - Governance, Risk & Compliance organization.
Strong Corporate Citizenship
Montana Business of the Year
NorthWestern Energy was recently selected as the 2012 Business of the Year by the Montana Ambassadors. The
Ambassadors are a group of 120 business leaders from across Montana, the Pacific Northwest and the Bay Area of
California who work to increase the economic vitality of Montana.
Community Works
Community Works encompasses NorthWestern Energy's tradition of funding community activities, charitable efforts
and economic development within its service territory. NorthWestern Energy's Community Works programs currently
provide more than $1.5 million annually in funds for community sponsorships, charitable contributions and economic
development organizations in Montana, South Dakota and Nebraska.
Worksite Health
In May 2012 NorthWestern Corporation was recognized, by the Montana Worksite Health Promotion Coalition, for
excellence in promoting worksite health and earned the Gold Award, for our wellness program "Energize Your Life."
NorthWestern Energy works to help build strong communities everywhere we serve.
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Community Works
NorthWestern Energy contributes almost $2 million annually in
charitable, economic development and community engagement
activities.
This includes charitable donations; college and trade school
scholarships; economic development initiatives and contributions,
and community sponsorships. Nearly all of this money is
contributed to organizations residing within our three-state service
area, meaning the investments directly, and indirectly, flow
through to our customers.
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