Attached files
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| 8-K - 8-K WEST COAST UTILITIES - NORTHWESTERN CORP | ek_121009.htm |
West
Coast Utilities
Seminar
Seminar
Four
Seasons Hotel, Las Vegas, NV
December
10, 2009
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 5.5%
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 $250 million range
¾ Nearly
all long-term debt matures after 2014
positive earnings
and ROE trend…
Mill
Creek and Colstrip Unit 4 ROE’s of
10.25% & 10.00% respectively.
7
8
strong
cash flows…
Earnings
growth, NOLs, and repairs tax deduction provide strong cash flows
to fund future growth projects.
to fund future growth projects.
9
2009
return of approximately 20% year-to-date and expect to be greater than
90% funded.
90% funded.
pension
funding and expense …
competitive
dividend…
10
Goal
for dividend payout ratio of 60% - 70%.
Current dividend yield about 5.5%.
Current dividend yield about 5.5%.
11
regulatory
update…
¾ Montana
» Rate
cases filed October 2009 requesting $17.5 million revenue increase
♦ We
anticipate a rate adjustment to go into effect October 2010
» Mill
Creek Generation Station filed with MPSC
♦ MPSC
approval in 2Q 2009
♦ Under
construction with $40.5 million capitalized CWIP as of 9/30/09
» Colstrip
Unit 4 into rate base starting January 2009
¾ South
Dakota / Nebraska
» Expect
to file natural gas rate cases during 2010
¾ FERC
» Working
with FERC for MSTI rate design
♦ FERC
encouraged Company to develop MSTI on a cost of service basis
by requesting appropriate tariff waivers from existing OATT
by requesting appropriate tariff waivers from existing OATT
» FERC
approved 230kV Renewable Collector System open season as
submitted
submitted
Establishing
positive regulatory regulations in all jurisdictions.
12
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.
13
Balanced
growth opportunities across the business.
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)
14
great
wind potential in our service territory…
MSTI
provides link between supply …
16
and
demand…
our
proposed transmission projects…
18
capex
spending - next few years…
Additional
equity not
anticipated until we proceed
with MSTI or other major
investments.
anticipated until we proceed
with MSTI or other major
investments.
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.
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.
19
growth
project potential…
Opportunity
to double and diversify earnings as compared with our existing
$1.5 billion rate base.
$1.5 billion rate base.
20
growth
project milestones ’09 & ’10…
2009
Mill
Creek
ü Expect
decision from the MPSC
(APPROVED) Q2
ü Begin
construction Q3
500
kV Upgrade
ü Complete
engineering and planning studies Q4
ü WECC
regional planning process begins Q4
¾ Finalize
commercial terms w/partners Q4
230
kV Collector System
ü Information
meeting with customers Q2
ü FERC
ruling allowing “open
season” Q2
¾ Identify
potential anchor tenant Q4
MSTI
ü Work
with FERC to clarify filings process Q3
¾ EIS
admin draft for public review due Q4
2010
Mill
Creek
¾ Complete
construction Q4
¾ Start
up, commissioning and completion Q4
500
kV Upgrade
¾ Complete
detailed engineering Q3
¾ Complete
regional planning process Q4
230
kV Collector System
¾ Conduct
“open season” Q1
¾ Siting
and permitting process begins Q1
¾ WECC
regional planning process Q2
MSTI
¾ Draft
EIS Q1
¾ Conduct
“open season”/commercial terms Q1
¾ EIS
Record of Decision Q3
¾ Begin
right of way procurement Q4
¾ Begin
Final Engineering Q4
21
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
22
2009
guidance change… (appendix)
Earnings
guidance range for 2009 revised to $1.95 - $2.05
23
results
through Q3 2009… (appendix)
Prior
earnings guidance of $1.75 - $1.85 revised upward to $1.95 - $2.05 on
October 28, 2009 due to repairs tax deduction.
October 28, 2009 due to repairs tax deduction.
24
Q4 2009
earnings bridge … (appendix)
25
MPSC
rate request … (appendix)
¾ Requested
revenue increase of $17.5 million
» Electric
T&D = $15.5 million (6.98%)
» Natural
gas T&D = $2.0 million (1.89%)
» Expect
decision within nine months after accepted filing
» Interim
rates requested
» Increase
primarily due to pension and wage increases
¾ Requested
for both Electric and Natural Gas Cases
» ROE
of 10.90%
» Ratio
of 50.55% debt / 49.45% equity
» Cost
of debt of 5.76%
» Resulting
cost of capital of 8.30%
» Electric
and Natural Gas rate base of $632 million and $257 million,
respectively
¾ We
anticipate a rate adjustment to go into effect October 2010
Rate
request excludes power supply costs, Colstrip Unit 4 generation and
the
under- construction Mill Creek Generation Plant.
under- construction Mill Creek Generation Plant.