Earnings call transcript: NorthWestern beats EPS, stock dips Q1 2025

NorthWestern Corporation reported its Q1 2025 earnings, surprising analysts with an EPS of $1.22, surpassing the forecast of $1.14. However, revenue fell short of expectations at $466.6 million against a forecast of $491.64 million. Despite the earnings beat, the stock dropped 2.2% in after-hours trading to $58.23, reflecting mixed investor sentiment. According to InvestingPro analysis, the company currently appears fairly valued, with three analysts recently revising their earnings estimates upward for the upcoming period.

Key Takeaways

• NorthWestern’s EPS exceeded forecasts by 7%.
• Revenue missed expectations by approximately $25 million.
• Stock declined 2.2% post-earnings despite positive EPS results.
• Increased ownership in Colstrip and data center opportunities highlight growth potential.
• Strong dividend yield of 5% remains attractive to investors.

Company Performance

NorthWestern Corporation demonstrated robust financial performance in Q1 2025, with a GAAP diluted EPS of $1.25, up from $1.06 in the same quarter last year. The company’s strategic initiatives, including increased ownership in Colstrip and exploring data center opportunities, are indicative of its growth trajectory. With a market capitalization of $3.57 billion and revenue growth of 6.45% over the last twelve months, the company shows steady expansion. The company is also advancing its carbon-free initiatives, currently achieving over 60% carbon-free energy in Montana. InvestingPro subscribers can access detailed financial health scores and comprehensive analysis in the Pro Research Report, available for over 1,400 US stocks.

Financial Highlights

• Revenue: $466.6 million, below expectations.
• Earnings per share: $1.22, exceeding expectations.
• GAAP diluted EPS: $1.25, up from $1.06 in Q1 2024.
• Completed $500 million debt financing for 2025.

Earnings vs. Forecast

NorthWestern’s EPS of $1.22 surpassed the forecast of $1.14 by 7%. However, revenue fell short, coming in at $466.6 million compared to the expected $491.64 million. The earnings beat highlights the company’s operational efficiency and strategic growth initiatives, while the revenue miss may raise questions about sales momentum.

Market Reaction

Despite the positive earnings surprise, NorthWestern’s stock fell 2.2% in after-hours trading to $58.23. This decline suggests investor concerns over the revenue miss and potential regulatory challenges with the Colstrip facility. The stock remains near its 52-week high, indicating overall positive performance.

Outlook & Guidance

NorthWestern reaffirmed its long-term EPS growth target of 4-6% and expects Q2 earnings to be approximately 10% of full-year earnings. The company is exploring opportunities with data centers and considering nuclear and natural gas options for future generation.

Executive Commentary

CEO Brian Bird highlighted the company’s strong dividend yield, stating, "Starting with a 5% dividend yield is very, very attractive." He also expressed confidence in the Colstrip facility, saying, "We believe in Colstrip long term." Bird emphasized the company’s carbon-free achievements, noting, "We are currently at over 60% carbon free." InvestingPro data reveals an impressive track record of 20 consecutive years of dividend increases, with a current dividend yield of 4.44% and a sustainable payout supported by consistent profitability over the last twelve months.

Risks and Challenges

• Revenue shortfall may indicate sales growth challenges.
• Regulatory risks associated with EPA guidelines for Colstrip.
• Market volatility could impact stock performance.
• Potential delays in data center projects could affect growth targets.

Q&A

During the earnings call, analysts inquired about data center tariff processes and the potential for large load customers in Montana and South Dakota. NorthWestern confirmed that existing tariffs can support initial data center customers and is exploring future tariff modifications to accommodate growth.

Full transcript - NorthWestern Corp (NWE) Q1 2025:

Eric, Conference Operator: Thank you for standing by. My name is Eric, and I will be your conference operator today. At this time, I would like to welcome everyone to the Northwestern Energy First Quarter twenty twenty five Financial Results Webinar. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.

And I would now like to turn the call over to Travis Meyer. Please go ahead.

Travis Meyer, Director of Corporate Development and Investor Relations Officer, Northwestern Energy: Thank you, Eric. Good afternoon, and thank you for joining Northwestern Energy Group’s financial results webcast for the quarter ended 03/31/2025. My name is Travis Meyer, and I’m the Director of Corporate Development and Investor Relations Officer for Northwestern. Joining us on the call today are Brian Bird, President and Chief Executive Officer and Crystal Lael, Chief Financial Officer. Brian and Crystal will be walking us through the results and providing a little more color on a very solid quarter.

Northwestern’s results have been released, the release is available on our website at northwesternenergy.com. We also released our 10 Q premarket this morning. Please note that the company’s press release, this presentation, comments by presenters and responses to your question may contain forward looking statements. As such, I will direct you to the disclosures contained in our SEC filings and the Safe Harbor provisions included on the second slide of this presentation. Also note that this presentation includes non GAAP financial measures.

Please see the non GAAP disclosures, definitions and reconciliations included in the presentation. The webcast is being recorded. The archived replay will be available shortly after the event and remain active for one year. Please visit the Financial Results section of our webcast to access the replay. With that, I’ll hand it over to Brian Bird for his opening remarks.

Brian Bird, President and Chief Executive Officer, Northwestern Energy: Thanks, Travis. The recent highlights for the quarter reported GAAP diluted EPS of $1.25 and non GAAP diluted EPS of $1.22 We are affirming our long term rate base and earnings per share growth rate targets of 4% to 6%. We’ve completed our debt financing needs for 2025. And again, we’ll stress we have no planned equity to finance our current five year capital investment. From a dividend declaration standpoint, we declared a $0.66 per share payable 06/30/2025 dividend to shareholders of record as of 06/13/2025.

The Montana rate review is nearing completion. We have a full natural gas settlement reached with major interveners and a partial electric settlement reached as well. And I think you know the hearing starts on June 9. Lastly, the Montana legislature has passed wildfire and other constructive bills now pending the governor’s approval. As we start presentation day before we get into the quarterly results, just remind folks of the value proposition for Northwestern.

Starting with a 5% dividend yield is very, very attractive, as you know. Add to that a 4% to 6% EPS growth, a great investment, as you know, in the next five years over across our total business, provides a 9% to 11% total growth profile. We do believe there are opportunities with data centers and new large load opportunities to actually potentially achieve greater than 6% EPS growth. In addition to that, there’s FERC regional transmission, incremental generating capacity and transmission capacity associated with meeting new large load opportunities, which could result in greater than 11% total growth returns. And with that, I am going to pass it over to Crystal to talk about the first quarter.

Crystal Lael, Chief Financial Officer, Northwestern Energy: Thank you, Brian, and good afternoon, everyone. Thank you for joining us here on our update. In my comments today, I will cover a few things, updates since our we last talked at our year end earnings call in February. As Brian highlighted, we’ve

Speaker 4: been busy. So it’s been a

Crystal Lael, Chief Financial Officer, Northwestern Energy: busy couple of months. So our first quarter twenty twenty five results, I’ll give you more detail on those, also update you and Brian mentioned a couple of our financing execution in the last couple of months, also providing a bit more additional insight into our key regulatory proceedings and update you on our 2025 outlook. We delivered a solid first quarter driven by strong margin contributions from both the Electric and Gas segments and ongoing consistent expense management. Moving to Slide seven, this details the drivers of our earnings per share compared to the same period last year. We reported earnings of $1.25 on a GAAP basis as compared to $1.06 in the first quarter of twenty twenty four.

These higher earnings were driven by rate recovery and colder weather, offset by operating costs, depreciation and interest expense. Moving to slide eight for a bit more detail on how the margin increase breaks down. New rates, both via interim rates and also final base rates drove $0.20 of margin improvement, which reflects impacts notably in all three of our jurisdictions. We also saw favorable loads of $0.13 during the first quarter here due to both colder weather, customer growth and usage on our system. In addition, we continue to see favorable transition revenues of about $05 of contribution in the quarter.

I would also note that the PCAM column here or the non recoverable Montana electric supply costs, while that looks like a small variance for the quarter, when you think about total impact there, we had a Q1 detriment this year of 2,700,000 I almost said $27,000,000 which as many of you who follow us know, that’s what the total amount would be. The 10% sharing would be the $2,700,000 impact of detriment this quarter. And this compared to $3,000,000 of detriment in the prior quarter, so first quarter of twenty twenty four. So comparatively only $300,000 of impact there is slightly favorable. But I would just highlight that we expect to see that as an ongoing trend here in 2025 of headwinds on the TCAM front, again, cost being above that baseline.

And as I’ll get into in a little more detail, that remains an open item in our Montana rate review. So again, concluding the earnings for the quarter on margin, significant improvement there on the backs of rate recovery really necessary to offset the costs that are already in place. Moving to Slide nine. I highlighted already that weather was favorable during the quarter, so weather favorably impacted the first quarter by $03 While in the first quarter of twenty twenty four, we had milder weather, so it was unfavorable by $01

Eric, Conference Operator: So that’s a

Crystal Lael, Chief Financial Officer, Northwestern Energy: $04 swing between first quarter of ’twenty four to first quarter of twenty twenty five. In addition, in the first quarter of twenty twenty four, there was net $02 of favorable adjustments that were backed out for other matters during the first quarter of twenty twenty four that were onetime items. So on an adjusted basis, you’ll see that our GAAP reported results for the quarter of $1.25 removing, again, favorable weather for the quarter of $03 to an adjusted earnings of $1.22 and that’s a $0.13 improvement over the prior year. Those adjusted earnings were $1.9 in the prior year and again on the backs of favorable weather in the first quarter of twenty twenty five. Turning to financing activities on Slide 10.

We are happy to say that during March we priced $500,000,000 of long term debt in two separate transactions. One was included in our disclosures in the 10 Q detail on these, but 144A transaction and also a smaller first mortgage amount transaction in South Dakota. And with a bit of the volatility in the market, I’m glad to say we had solid investor interest, closed those out before maybe some of that volatility hit and those transactions successfully addressed our financing needs for 2025. So in addition to that, I would also note that we consistent with our solid earnings performance in Q1, our cash flows match that. So you’ll see that our FFO to debt metrics on a consolidated basis closed out the quarter just above our 14% threshold.

And again, remaining focused on building cushion there to where we want to be from a long term basis. But again, closing out our financing needs for 2025, and we feel good about having that work done. So with Slide 11, I will transition from talking about the financials for a regulatory update. So you all know that follows that we submitted settlements in the Montana rate review here recently, and it was a partial settlement in the electric case with the remaining key contested issues related to the revenue requirement for the Yellowstone generating station facility and also the PCAM base. But we were able to reach a settlement on the base transition, distribution and base generation costs.

And of course, that was significant investment for us and on customers’ behalf. Importantly, underlying that settlement, it maintains our existing electric ROE and also our as filed capital structure. The slide here gives you significant detail, and I think there’s more in the appendix, on what that settlement looks like and also importantly, the bookends of the intervenor position. So again, the contestant matters detailed as the Yellowstone revenue requirement and also the PCCAM base. And this slide gives you the bookends of what that looks like.

Notably, even with the partial settlement, and if you include our position on those contested issues, the average bill impact is just over 4% to our customers. In addition, with the reduction in PCAM, so putting Yellowstone into base rates and reducing PCAM, the supply mechanism related to that, it’s an overall reduction in customer bills. So we feel really good with our position going into hearing to make that known to both the commission and others the value customers are receiving on the backs of that facility. Moving to Slide 12 to talk about the gas settlement. It is a full settlement, and it has a slight increase in ROE, so 9.55% in the prior case to 9.6% in this one and our as filed capital structure.

The average bill impact from this gas case is approximately 9% maintaining rates below the national average. For these dockets, a hearing is scheduled in June, and we expect to implement rates in May. Following a hearing, a briefing schedule will be established with a final order, we believe, likely in late Q3 to potentially early Q4. Concluding my comments on the regulatory front and moving to our outlook slide here on Slide 13, we have we believe we’ve made significant progress in 2025, and this provides the foundation for advancing critical customer objectives while balancing the importance of reliability and affordability to our customers, as well as the important part of delivering to our shareholders and supporting our long term growth outlook. We are affirming, and I think Brian mentioned this upfront, our long term earnings and rate based growth outlook.

But as we’ve previously discussed, we don’t expect to provide 2025 earnings guidance until conclusion of a hearing in the Montana rate review. However, we also wanted to be proactive in sharing how the timing impacts of that may affect our quarterly distribution of earnings in 2025. And obviously, many of you already have expectations out there for us for where you think our 2025 will land. And as noted in the regulatory update, we expect to implement updated rates in Montana in May versus, of course, incurring what is already a full year of cost associated with those new investments. This causes more of our quarterly distribution to be weighted in the second half of the year.

As a result, we expect our second quarter to be a lower contribution to overall earnings than you would typically expect from us. And we have provided an indication of that earnings distribution here in the for the second quarter of twenty twenty five to be approximately 10% contribution to the full year. I would also note that the first quarter was solid and slightly ahead of what would have been our expectation. So let me conclude my comments here and the outlook discussion by reinforcing our confidence in delivering on our earnings and rate based growth commitments over the long term, which moves us to Slide 14. And this is the capital slide you’ve seen before from us, our five year capital plan and expected investments on our our customers’ behalf.

We updated this in February, and the slide remains the same as to what you’ve seen before. So we are affirming our capital plan and on track for execution here in ’twenty five. And again, as Brian highlighted, leading in, this is size to need no equity, but also keeping both reliability and affordability for our customers in mind. So with that, I will turn it back to Brian.

Brian Bird, President and Chief Executive Officer, Northwestern Energy: Thanks, Crystal. We had two main objectives going into this legislative session in 2025 and two bills that we want to sponsor. There’s a wildfire bill and a transmission bill. We’re pleased to report that we’ve had success in both of those efforts. The Montana wildfire bill is something we’re extremely excited about.

It’s a significant risk for the company and all of Western utilities. This bill, passed through the House and Senate unanimous bipartisan support, sitting on the governor’s desk, believed to be signed. And so we feel extremely good about this. It provides tremendous protection, which I’ll talk about in a second, but we believe this is one of the strongest wildfire bills in the country from a state perspective. There’s no strict liability.

It confirms strict liability cannot be applied to utility operations related to wildfire. Legal protections, there’s a repletable presumption utility acted reasonably if it substantially followed an MPSC approved wildfire mitigation plan for wildfire ignited what was ignited. From a damages perspective, as we’d expect at any time, there’s property damage and fire control costs, we’d be responsible for those economic damages. But one thing we were extremely concerned about is where we’ve seen in other states where we’ve seen noneconomic and punitive damages assigned. In this case, for us, noneconomic damages can only be applied if there’s bodily injury or death occurs.

And punitive can only be applied where there’s clear and convincing evidence of gross negligence or intent. We feel very, very good about this and we really appreciate the state and all the parties we work with, co ops and all parties associated with getting this done. We’d like to think this will come off the Governor’s desk here relatively soon with a signature. So excited about where that sits and feel really good about legislative session on that item alone. But we also had some success from a transmission perspective.

As you’re well aware, many states have a certificate of public convenience and necessity, CPCNs. We now have established the means to be able to get a CPCN for our large transmission work and at our request. Also there’s some timelines associated with approvals for getting a CPCN and actually the cost recovery of that. Prudency will still be at hand in terms of when the project is complete and appropriate cost recovery. But this is a great step in the right direction.

And I think this, everyone knows, is extremely important from a build out and being able to serve customers nationwide is to be able to have better means and more assurance around transmission build out. So really, really happy with the outcomes of our legislative session here in 2025. Moving on to slide 18, just the reason nothing really has changed on I think it’s extremely important to talk about the importance of Colstrip. The no cost acquisition of the incremental pieces from both Vista and Puget, it certainly provides energy independence for the state and improves our reliability and certainly integrity. It moves our portfolio from a short capacity position to a long capacity.

And obviously, a zero upfront cost, it maintains affordability while insulating customers from volatile capacity and energy market pricing. That increased ownership, and I think you might recall when we talked about this the very first time, we were very concerned about being as a 15% owner having other state policies drive the likelihood that the plant could be shut down. Now at 55% ownership, we can protect our existing ownership in Colstrip and provide Montana control to keep the plant open beyond the Washington, Oregon mandated closure deadlines. And significant capacity surplus provides opportunity for new large load customers, spreading fixed costs over more kilowatt hours, lowering and stabilizing the cost per unit for all our customers. I’d also point out here, I think you may have seen and we certainly press released it, there’s been some good outcomes from the EPA that also gives us more time to address masks and other issues at the Colstrip facility and what I’d argue is a more realistic timetable to make decisions for the long term health of Colstrip and ultimately give us potentially more time to decisions for the ultimate closure of Colstrip.

As we like to think, that could be certainly in the late 2030s and the 2040s depending on economic commercially available resources to replace it. And we believe in Colstrip long term, be it Colstrip coal plant or whatever is there to replace it, we want to do at or around Colstrip. The far right on this page shows our existing ownership, then the incremental five ninety two megawatts from the Avista and Puget Sound. Collectively, those would be larger than the average load in Montana, but certainly substantially less than our peak load. But obviously, we have a full portfolio of resources.

And again, remind folks in Montana, we’re currently at over 60% carbon free, but our all of the above approach, and this incremental allows us to be, as I mentioned earlier, not only energy independent but protects our customers from those peak days when the wind’s not blowing and the sun’s not necessarily shining. So really excited about what’s happening at Colstrip and how it can certainly help our customers and us from a planning perspective going forward to certainly support economic development in the state. Speaking of economic development, large load customers with a full portfolio and now being long capacity, we have the ability to serve large load customers. Starting out in Montana, as you know, we’ve signed LOIs with Sabee and Atlas. And up to the right, you can see how those megawatts are expected to grow over time.

We’re in a letter of intent with those parties at this point in time. And we continue to work on various aspects to ultimately get to contracts with these parties, hopefully sometime in the second quarter or third quarter to have that happen. And we expect to serve those two customers under existing Montana tariffs. In addition to that, we are actually working with quite a few other parties at various stages of development in both Montana and South Dakota. And even though we have incremental capacity from Colstrip, remember that as a regulated utility, these customers are receiving our full portfolio, not just resources off of coal strip.

So again, 60% carbon free in Montana. In South Dakota, in addition to having to add resources like we would in Montana above and beyond our first two announced data centers, in South Dakota we already have a deviated rate tariff that could certainly help us there and a means for quicker recovery. Montana, we would have to work on incremental tariffs associated with anything beyond Sabey and Atlas at this point in time. So really excited about that opportunity, but definitely a lot of work yet to do. Lastly, not much more to report on the regional transmission opportunities.

We continue to work with Grid United and the other utilities looking at that opportunity. And also with Grid United on opportunities working with us to move power out of Southwest Montana. Those discussions continue, working ultimately to get further down the contracting process. One thing I guess I would also mention is we’ve announced in the past, as have others, there was a $700,000,000 GRIP financing associated with this project, and I think that’s still in question, 70,000,000 of which would be used for the transmission excuse me, the coal strip transmission system upgrade. I would say one thing I would argue about what the federal government is doing at this point in time, I also think they see the opportunity that transmission provides to all resources and also to keep customers’ bills as low as possible longer term in order for us to move power around in between markets.

So I think there’s quite a bit of support for transmission, and I’d like to think that the script financing will be looked upon favorably. We will continue to work with others to certainly try and achieve that for this project. And with that, that concludes our comments, and we’ll turn it back to Mr. Meyer to drive the Q and A process.

Travis Meyer, Director of Corporate Development and Investor Relations Officer, Northwestern Energy: Yes. We’ll open it up for questions,

Eric, Conference Operator: The first question comes from the line of Nicholas Campanella with Barclays. Please go ahead.

Nicholas Campanella, Analyst, Barclays: Hey. Good afternoon.

Speaker 4: Hey, Nick. Hi, Nick.

Nicholas Campanella, Analyst, Barclays: Hopefully, I’m coming through. Yeah. Hey. Hope everything’s good. So

Eric, Conference Operator: just on the, on

Nicholas Campanella, Analyst, Barclays: the tariff proceeding, it sounds like you are having conversations with, you know, customers other than the ones that you’ve identified so far.

Eric, Conference Operator: And just how long do you

Nicholas Campanella, Analyst, Barclays: think the tariff proceeding could, could go for? And is that you know, do you need that to

Brian Bird, President and Chief Executive Officer, Northwestern Energy: be finished before you announce anything incremental here on data center side, I guess? I think I’d put it to you in this context, Nick. We have five levels, if you will, of process for data centers. And let me just tell you the five real quick. There’s a data center request.

There’s a high level assessment. There’s a contractual estimate, a completed contract and then construction. Those are your five. We are at various stages of the first three with parties. So on your data center request, there’s currently nine parties.

This is between both Montana and South Dakota that are in the very early stages. They’ve provided a data center request, if you will. And in addition to that, there are three parties that are currently in what’s called a high level assessment. They’ve gotten past the request. We’ve shared information between the two parties, and we’re moving on to a high level assessment.

And there are two parties, the LOI parties, Atlas and Seby, that are in the contractual estimate. We are doing transmission service agreement studies to calculate total costs, if you will, necessary to finalize the contract. Once those studies are completed, we believe we’ll get those two parties to a contract sometime in the second quarter, hopefully by the end of the second quarter, but could go into the July time period as well. So those studies take some time. And so once those get resolved, we believe we can get to contracts with those two parties.

But as you heard also, there are 12 other parties at various levels prior to that. I’m sure there are a lot of folks, a lot of utilities talking to many different parties in that process. So hard to say on those in the early stages. And obviously, in the Q, Atlas and Sabey, there’s we have a full portfolio to serve those two customers. We have to build generation for folks that come in behind those.

I don’t know, Chris, do you have anything to add there?

Crystal Lael, Chief Financial Officer, Northwestern Energy: Yes. Just layering on and Nick, your question as to the tariff under which we literally serve them and how do we move forward. So today we have an existing tariff that we believe these initial ones and Brian was talking about the process were unique in being long energy. So we can serve them under that. And the important part of that is underlying our current rate design is that commercial and industrial customers subsidize residential.

So I know that’s not the same everywhere, but that exists today and will continue outside of or as we continue through this rate case, that underlying rate design sits there. So we believe we can serve them under existing tariff. And then in a future filing, we certainly think there’s modifications that can make that even better and then lay the foundation for what Brian was alluding to there as to when you get past the megawatts we have available today and need to build or have incremental infrastructure investment that there likely could be modifications to the tariff there to further continue to protect the other customers even though those productions already exist today. And that would be in an upcoming filing. But again, I would just say we believe we can serve them under our existing tariffs that those tariffs will continue through this rate review to provide subsidization quite candidly of the residential customer group.

And that’s obviously large load can be good broadly for the system in that regard and that we can find them out as it is today. But Brian alluded to the process we’re working through to get them there. And I think, again,

Brian Bird, President and Chief Executive Officer, Northwestern Energy: to reiterate, South Dakota tariffs already established, we can move forward there. I was

Crystal Lael, Chief Financial Officer, Northwestern Energy: talking about Montana. Should

Brian Bird, President and Chief Executive Officer, Northwestern Energy: in Montana, Chris was absolutely right, there’s going be some work that needs to be done from the tariff development for further data centers beyond the first two in Montana.

Eric, Conference Operator: Okay. That’s all helpful context.

Nicholas Campanella, Analyst, Barclays: I appreciate that. And then thanks for the info on the quarterly distribution. I guess just kind of taking into account you had a good start to the year. You have this partial settlement that’s out there, if that’s approved. Do you kind of still see yourself within that 4% to 6% EPS range as we think through 2025?

Crystal Lael, Chief Financial Officer, Northwestern Energy: Nick, that is a very nice way of asking about our ’25 guidance that we haven’t given you a specific range on. I’ll acknowledge that. And the only thing I would just say is on the long term, I would expect that we would stay within that 46% range, but also acknowledging that we’ve had some years here where we didn’t hit it, that it may not be entirely linear. And we’ll update you more after the hearing.

Nicholas Campanella, Analyst, Barclays: All right. Hey. Thanks.

Eric, Conference Operator: Thanks, Nick. Your next question comes from the line of Chris Ellinghaus with Hubert, William Shank and Company.

Crystal Lael, Chief Financial Officer, Northwestern Energy: Hi, Chris. Hey, Chris.

Chris Ellinghaus, Analyst, Hubert, William Shank and Company: A couple of esoteric questions to start with. Did I detect that you changed the electric average customer counts? And was that really just lighting portion? And what was that all about?

Crystal Lael, Chief Financial Officer, Northwestern Energy: I believe so Chris, as usual, you know us well. And so Travis is feeding me this answer currently, and I believe lighting

Travis Meyer, Director of Corporate Development and Investor Relations Officer, Northwestern Energy: Chris, it was just that it was really boils down to the way we were counting our street lighting districts and the new system we have that handles that. And so, yes, it was we still saw our kind of 1.5 ish percent customer growth. But beyond that, it was the street lighting.

Chris Ellinghaus, Analyst, Hubert, William Shank and Company: Okay. And also, I was a little surprised by this, and maybe I just didn’t detect this. But your average historic heating degree days in Montana actually went up. Has it actually been getting colder in Montana the last few years?

Crystal Lael, Chief Financial Officer, Northwestern Energy: I would that average is over the long term, Chris, so I don’t know that there’s anything changing there. There’s nothing changed in our methodology that I’m aware of.

Travis Meyer, Director of Corporate Development and Investor Relations Officer, Northwestern Energy: Methodology is the same. We do use a a rolling ten year average, and so that may have worked up over the last ten years. I I haven’t drilled in deep enough to know if we had a real warm year fall off, but it may have moved up slightly.

Chris Ellinghaus, Analyst, Hubert, William Shank and Company: Either either a yeah. A warm year rolled off or something recent was colder. Yeah. So the it it certainly sounds like you’ve got a lot in the queue for possibilities, And you can’t tell us today when some of those things might get at least to the LOI stage. But do you have a sense of when you might need to begin the process of advancing some new capacity?

And do you have any kind of sense of what that magnitude might be for long term planning purposes?

Brian Bird, President and Chief Executive Officer, Northwestern Energy: Yes. I’ll start I’ll work backwards. You’re not going to see us talk megawatts until we have LOIs, right? I’m really nervous about counting chicks before they hatch, as they say. But I think what we’d like to do is have a real good idea.

I talked about those three layers in the process and as we continue to think about our resource planning perspective, I mean, we’re going to work with these parties. Obviously, time is of the essence, and we’re going work with these parties to meet their needs as best we can from a timing perspective. So we could get at things pretty quickly, but we want to make sure, not just protect the company but protect our customers, we don’t wanna get ahead of our skis in terms of starting too far down the process in terms of resources until we know people were lined up signed up with contracts with parties. So, Chris, you won’t see us front running numbers here.

Chris Ellinghaus, Analyst, Hubert, William Shank and Company: Okay. Fair enough. So you sort of alluded to, you know, the long term replacement of Colstrip for whatever the next commercially available capacity is. I presume that that the only real long term commercial capacity that you’d be waiting for is nuclear. Is in your view at coal strip, is there an adequate space at the plant to sort of contemporaneously construct a replacement capacity while maintaining coal strip in the future?

Is there just enough acreage there to be able to do that and sort of just flip a switch?

Brian Bird, President and Chief Executive Officer, Northwestern Energy: Yes. Chris, let’s just say this. At or around Colstrip, there’s adequate, we’ll call, sections, as they say. I grew up in Wisconsin where you talked acres. We talked about sections in Montana.

There’s adequate land for, I’d argue, a gas plant, a coal plant or both near or around our transmission facilities in Montana. Gas or nuclear? Gas or nuclear. What did I say? Coal.

I did say coal. The gas or nuclear. Thank you, Travis. There’s plenty of coal already there. Gas or nuclear, thank you, at or around Colstrip.

And matter of fact, I’ll be at Colstrip on Friday. They’re having a study that’s been done by one of the labs talking about nuclear at Colstrip. And so they’ll be presenting at Colstrip to the community. And so that’s the long term solution, Chris. Obviously, if federal government decides that we don’t have adequate time and we need to close down coal strips sooner, let’s say, in the early 2030s, well, I think we’ve said this before, we’re likely to have to replace that plant with natural gas.

And so longer term, we’re going to look at nuclear. That’s, as you know, that’s something closer to the 2040s. But if we have to do something sooner, we’re going to look at natural gas. And the issue being here, we’re certainly going to continue to think about renewables and storage. Don’t get me wrong.

But to replace a plant like that from a base load perspective, we have to look at like kind type resources. And unfortunately, as we sit here today, it’s natural gas. And there may be other technologies beyond nuclear we can look at. But as we sit here today, we think SRMRs make a ton of sense.

Chris Ellinghaus, Analyst, Hubert, William Shank and Company: Okay. Great. One more question on SB301.

Eric, Conference Operator: The the

Chris Ellinghaus, Analyst, Hubert, William Shank and Company: three hundred days makes a lot of sense in terms of sort of the strategic approval process for

Eric, Conference Operator: a c 10.

Chris Ellinghaus, Analyst, Hubert, William Shank and Company: 90 day cost prudency review seems kind of short. Is there any portion of the bill that allows for any kind of overlapping of the approval process, or does it have to be after the the first three hundred day process is over? And or can you just do the sort of intervener education process throughout that?

Brian Bird, President and Chief Executive Officer, Northwestern Energy: I think the ninety days is appropriate. I think primarily from a prudence perspective, I’m expecting that really comes into play if there’s any overages associated with the project. And so I think that timing is appropriate. I don’t think there’s any overlapping that comes into play here with those two timetables. So I think they’re appropriate.

Chris Ellinghaus, Analyst, Hubert, William Shank and Company: Okay. All right. Thanks a bunch. Appreciate the clarity.

Brian Bird, President and Chief Executive Officer, Northwestern Energy: Chris. Thanks, Chris. Chris, we’re not going to build any coal plants, just so you know.

Chris Ellinghaus, Analyst, Hubert, William Shank and Company: Got you.

Eric, Conference Operator: I will now turn the call over to Brian Bird for closing remarks. Please go ahead.

Brian Bird, President and Chief Executive Officer, Northwestern Energy: Understand from Travis. We may have no further questions. I appreciate everyone’s attendance here and staying abreast of what’s happening at Northwestern. We feel like it’s been a very good effort in terms of the regulatory front to negotiate a full settlement on gas and partial settlement on electric. I think it’s been a great outcome.

We’ve got a great legislative outcome. Feel real good about the first quarter as we sit here today, and so real excited about how things are looking for us for the remainder of the year. So thanks, everybody.

Eric, Conference Operator: Ladies and gentlemen, this concludes today’s call. Thank you all for joining and you may now disconnect.

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