2016 Infrastructure Stakeholder Group
Our commitment
“As we have focused on building and maintaining high-quality
infrastructure to serve our customers and communities, the size of
our commitment has grown.“
Bob Rowe, President & CEO NorthWestern Energy
Our company
Electric Operations
MONTANA:
• 353,600 customers in 187 communities
• 24,300 miles of transmission and distribution lines
• 855 MW of baseload generation
*Includes 194 MW from Kerr Dam until Sept. 2015
• 40 MW of wind generation
• 105 MW of generation for regulating our grid
SOUTH DAKOTA:
• 62,500 customers in 110 communities
• 3,500 miles of transmission and distribution lines
• 360 MW of power generation
Natural Gas Operations
MONTANA:
• 189,000 customers in 105 communities
• 7,200 miles of transmission and distribution pipelines
• 70 Bcf of proven natural gas reserves
• 18 Bcf of gas storage capacity
NEBRASKA:
• 42,000 in 4 communities
• 750 miles of distribution pipelines
SOUTH DAKOTA:
• 45,500 customers in 60 communities
• 1,655 miles of transmission and distribution pipelines
1,622
employees
3
OUR VISION: Enriching lives through a safe, sustainable energy future
OUR MISSION: Working together to deliver safe, reliable and innovative
energy solutions
OUR VALUES: SERVICE (Safety, Excellence, Respect, Value, Integrity,
Community, Environment)
Economic impact on our Montana service area
•
•
•
•
•
•
Full/Part-time jobs supported: 10,855
Gross Economic Output: $1.8 billion
Gross County Output: $784 million
Total Labor Income: $371 million
Total Capital Income: $380 million
Indirect business taxes/fees: $33.3
million
Community growth 2012 - 2014
After several years of decline in the rate of growth, tied to the nationwide economic
downturn, we saw continued growth in new connects in 2014 across all our
divisions.
Sustainable energy future
Environmental
Considerations
Economic
Considerations
TODAY
Social
Considerations
ENERGY
TOMORROW
POLICY AND
BUSINESS MODELS
6
Meeting current energy
requirements at a reasonable
and fair cost for today's
customers while ensuring the
ability to meet energy service
needs for tomorrow’s
customers.
Sustainability at NWE
Constructive policy
Enabler not disabler
Financial
Soundness
Financial soundness
Discipline
Constructive environment
Credit ratings
Engaged stakeholders
Balance sheet and liquidity
Constructive
Policy
Sustainability
Cultural
Integrity
Operational Excellence
Cultural Integrity
Long range asset management
Safety
Customer care support
Infrastructure
Workforce planning
Strong internal processes and controls
Operational
Excellence
Compliance
Realistic investment opportunities
Employee development
7
Meeting complex customer expectations
8
INVESTMENTS
FOR OUR
CUSTOMERS
A diversified supply portfolio
Hydro
State of MT DNRC (Broadwater Dam)
Hydrodynamics Inc (South Dry Creek)
Ross Creek Hydro LC
Estate of Mildred Carter (Pine Creek)
Hydrodynamics Inc (Strawberry Creek)
James Walker Sievers (Cascade Creek)
James Walker Sievers (Barney Creek)
Flint Creek Hydroelectric LLC
Lower South Fork LLC
Turnbull Hydro LLC
Tiber Montana LLC
Sleeping Giant Power LLC
Wisconsin Creek LTD LC
Boulder Hydro Limited Partnership
Gerald Ohs (Pony Generating Station)
Donald Fred Jenni (Hanover Hydro)
Thompson Falls
Mystic
Madison
Hauser
Holter
Black Eagle
Rainbow
Cochrane
Ryan
Morony
NorthWestern Energy
68 percent water & wind
Nameplate Capacity MW
Hydro
43%
Wind
25%
Coal
19%
Natural Gas
5%
QF Thermal
8%
Wind
Musselshell Wind Project LLC
Musselshell Wind Project Two LLC
Fairfield Wind LLC
Two Dot Wind Farm LLC
Gordon Butte Wind LLC
Judith Gap Energy LLC
New Colony Wind LLC
Greycliff Wind Prime LLC
Spion Kop Wind
United Materials of Great Falls Inc
Two Dot Wind LLC (Martinsdale Colony South)
Two Dot Wind LLC (Martinsdale Colony)
Two Dot Wind LLC (Sheep Valley Ranch)
Two Dot Wind LLC (Moe Wind)
Two Dot Wind Energy LLC (Montana Marginal Energy)
Mr. Thomas G. Agnew (Agnew Ranch)
Two Dot Wind Energy LLC (Mission Creek)
Natural Gas
Basin Creek Equity Partners
Dave Gates Generating Station at Mill Creek
QF Thermal
Yellowstone Energy Limited Partnership (BGI)
Colstrip Energy Limited Partnership
10.000
1.200
0.450
0.300
0.190
0.068
0.060
2.000
0.455
13.000
7.500
8.000
0.550
0.510
0.400
0.240
94.000
12.000
8.000
19.000
48.000
21.000
60.000
69.000
60.000
48.000
483.923
10.000
10.000
10.000
9.720
9.600
135.000
25.000
20.000
40.000
9.000
2.000
0.750
0.455
0.450
0.195
0.065
0.065
282.300
52.000
7.000
59.000
52.000
35.000
87.000
Coal
10
Talen Energy’s recently announced sale of 292 MW of hydro generation
for $860 million ($2,945 per KW) to Brookfield Renewables is
significantly higher cost than the 439 MW of hydro generation
we purchased for $870 million ($1,982 per KW).
Colstrip Unit 4
222.000
Hydro Resources
Montana Annual Production
(Excludes Kerr Dam1)
NorthWestern Owned Facilities1
Coal
(Colstrip 4)
29%
Missouri
Missouri
Missouri
River
River
Missouri
Missouri
MissouriRiver
River
River
River
Clark
Clark
ClarkFork
Fork
Fork
Fork
Clark
Clark
Clark
Fork
Fork
River
River
River
River
River
River
Hydro
42%
Thermal
(QF /
contracted)
13%
Natural Gas
1%
Approximately
56% water
and wind
Thompson
Thompson
Thompson
Thompson
Thompson
Thompson
Falls
Falls
Falls
Falls
Falls
Wind
(QF /
contracted)
11%
Hydro
(QF /
Wind
(Spion Kop) contracted)
1%
2%
Owned and contracted hydro and wind now
represents over 56% of our generation
portfolio in Montana.
Flathead
Flathead
FlatheadLake
Lake
Lake
Lake
Flathead
Flathead
Flathead
Lake
Ryan
Ryan
Ryan
Ryan
Ryan
Ryan
Morony
Morony
Morony
Morony
Morony
Morony
Rainbow
Rainbow
Rainbow
Rainbow
Rainbow
Great
GreatFalls
Falls
Falls
Great
Falls
Great
Great
Falls
Black Eagle
Holter
Missoula
Missoula
Missoula
Missoula
Missoula
Spion Kop
Hauser
Hauser
Hauser
Hauser
Hauser
MONTANA
Helena
Helena
Helena
Helena
Helena
Helena
Cochrane
Cochrane
Cochrane
Cochrane
Cochrane
Cochrane
Kerr
Kerr
Kerr
Kerr
Kerr
Kerr
Dave Gates
Yellowstone
Yellowstone
Yellowstone
Yellowstone
Yellowstone
Yellowstone
River
River
River
River
River
River
Glendive
Glendive
Glendive
Glendive
Glendive
Glendive
Colstrip
Missouri
Missouri
MissouriRiver
River
River
Yellowstone
Yellowstone
YellowstoneRiver
River
River
River
Butte
Butte
Butte
Yellowstone
Yellowstone
Yellowstone
River
River
Butte
Butte
Butte
Madison
Madison
Madison
River
River
River
Madison
Madison
MadisonRiver
River
River
Madison
Madison
Madison
Madison
Madison
Madison
Colstrip
Colstrip
Colstrip
Colstrip
Colstrip
Colstrip
Billings
Billings
Billings
Billings
Billings
Billings
Mystic
Mystic
Mystic
Mystic
Mystic
Mystic
Hebgen
NWE Hydro Facilities
NWE Gas Facilities
NWE Coal Facilities
NWE Wind Facilities
Assets are a great fit within our service
territory to serve our customers needs.
1.) The confederated Salish and Kootenai Tribes purchased Kerr Dam in September 2015.
11
Fort
Fort
Fort
Peck
Peck
Lake
Lake
Fort
Fort
Fort Peck
Peck
Peck
PeckLake
Lake
Lake
Lake
Meeting Montana customer demands
Light Load Hours (MWh's)
400,000
MWh's
300,000
Conveyance of Kerr Dam to Confederated Salish and Kootenai Tribes
200,000
100,000
-
Hydro
Contracted
Owned Generation
Light Load Demand
Heavy Load Hours (MWh's)
500,000
Conveyance of Kerr Dam to Confederated Salish and Kootenai Tribes
MWh's
400,000
300,000
200,000
100,000
-
Hydro
12
Contracted
Owned Generation
Heavy Load Demand
We expect to be able to provide nearly all the power during the light load periods with some flexibility to use
market purchases or other resources to meet demand during heavy load periods. The addition of the hydro
generation assets into our Montana electric portfolio aligns well with forecasted customer demand.
NWE Portfolio needs dispatchable resources
13
1)
NWE portfolio has
high variability,
due to lack of
industrial
customers
2)
Portfolio has lots
of nondispatchable
renewable and QF
resources
3)
Hydro has limited
dispatchability
4)
Portfolio needs
highly
dispatchable
resources
NWE Controls Only A Small Slice of MT Generation
Montana Affected Generation Ownership and
Capacity
Colstrip - Puget
Colstrip - PPL
Colstrip - PGE
Colstrip - Avista
Colstrip - NorthWestern
Colstrip - Pacificorp
J E Corette Plant - PPL
Hardin Plant - Rocky Mtn Power
Yellowstone Energy LP
Lewis & Clark - MDU
Colstrip Energy LP
677
529
296
222
222
128
153
120
65
44
42
0
14
100 200 300 400 500 600 700 800
NWE Emissions as portion of MT emissions
CO2 Mass Emissions (lbs in billions)
Montana Carbon Dioxide Mass Emissions
Compared to NWE’s 2016 Energy Supply Portfolio:
15
35.9
In 2015 NorthWestern beat the EPA’s 2030 carbon target
NWE’s
Portfolio CO2
emissions
decreased 41%
in 2015, well
ahead of the
EPA 2030
statewide
target
16
Montana’s efficiency leader
•
11 megawatts = The
annual efficiency savings
yield in MT
8.7 megawatts = Yield
from NWE efficiency
programs
2.3 megawatts = Yield
from BPA efficiency
programs
•
•
17
At lower current power
prices, opportunities for
additional cost-effective
efficiency are limited
NWE participates in
regional efforts to identify
next generation of
efficiency
NWE responsible for 80% of MT’s
efficiency acquisition, despite lack of
adequate policy for this work
Renewables & Efficiency
$1.3 Billion of Cumulative Renewable Resource and Demand Side
Management Expenditures
Renewable Energy
Purchases $1,175
Million
Integration of Wind
$55 Million
Other Allocated Wind
Costs
$28 Million
DSM Investment
$46 Million
NorthWestern has invested and spent over $1 Billion for clean power and energy efficiency. Current policy
does not adequately support what we are doing now.
18
Hierarchy of (Energy Supply) Needs
Apologies to Abraham Maslow
Planning and investing in long-term infrastructure
“Platform grid” – from the Institute for Energy Innovation
Platform grid – from Institute for Energy
Innovation
http://www.edisonfoundation.net/iei/Pages/IEIHome.asp
x
21
NWE Vision Summary
Expanded Energy Options
– Customers want choices and options for energy
Customer Focused
–
–
–
–
Robust e-business platform
Data analytics providing customer insights
Consistent stakeholder engagement
Value added relationships
Emerging Technologies
– Invest to support intelligent energy infrastructure
– High reliability
– Affordability
22
NWE’s Legacy
We want to provide essential energy
infrastructure and valuable services that enrich
lives and empower communities –
and be long-term partners to our customers
and communities
23
HEALTH &
SAFETY
IN OUR
COMMUNITIES
Employee safety and well being
Employee safety programs
Employee wellness program
CHANGE PICTURE
Relay employees in Butte discus their daily safety plan before
beginning work.
We want every employee to go home after
work as healthy as they were when they
arrived.
In 2014, NorthWestern Energy received
a gold-level award from the Montana
Worksite Health Promotion Coalition for
excellence in promoting worksite health.
Committed to safety
NorthWestern Energy Company
OSHA Recordable Incidence Rates
Lost Time
3.50
Other Recordable
3.00
2.50
1.15
0.98
0.96
1.07
2.00
0.87
0.52
0.60
1.36
1.27
1.50
1.00
1.94
1.83
1.57
1.71
1.41
0.50
0.00
2009
26
2010
2011
2012
2013
2014
2015 YTD
Our safety strategy
•
Continued Focus and Refinement on Safety Plans
– Involvement at all levels, particularly the field
•
Continued Utilization of HPI training and
implementing HPI techniques
– Currently 422 employees trained in the 8 hour session
– Currently 133 employees trained as practitioners, 32 hour
session
27
INVESTMENTS
IN OUR
COMMUNITIES
Operations Overview
 Montana Operations
 6 Divisions and 2 District Operations
39 Other Manned Small Towns
 South Dakota and Nebraska Operations
 5 Areas in South Dakota
 24 Other Manned Small Towns
 3 Areas in Nebraska
 Gas Transmission
 Cut Bank/Mainline Operations
 West line Crew (Deer lodge)
 Cobb, Box Elder and Dry Creek Storage
Operations
29
Focused on long-term asset management
Data
System information
Analyze
Evaluate
Asset Management
&
Planning & Engineering
Organizational Performance
Execute
Operations
&
Construction
30
Committed to high-quality service
31
Committed to high-quality service
32
Strong Gas System Performance
33
Strong Gas System Performance
34
Investing in Montana
Significant Base Capital Investments System Wide and in
Montana (excludes major projects)
35
Financial summary
Our communities rely on us
to build and maintain the
energy infrastructure they
need to thrive. We believe
that when our communities
thrive, so do we.
$3.5 billion
Total Assets – Montana
Total Assets – South Dakota & Nebraska $701 million
_____________________________
$4.97 billion
Total Assets
Total Capitalization
$3.4 billion
Montana Capital Investment
South Dakota & Nebraska Capital
Investment
_____________________________
Total
$202 million
Total Non-Payroll Expenditures
$197 million
$68 million
$270 million
T&D system infrastructure projects
• In Montana, our Distribution System Infrastructure
Project (DSIP) and Transmission System
Infrastructure Project (TSIP), both of which are
currently in process, are to maintain a safe and reliable
electric and natural gas distribution and transmission
system.
– The primary goals:
–
–
–
–
arrest and/or reverse the trend in aging infrastructure;
maintain/improve reliability and safety;
build capacity into the system; and
prepare our network for the adoption of
new technologies.
– Capital Investment
– DSIP: approximately $348 million ($133 million
already spent through 2014) of capital investment into the
multiyear project through 2019.
– TSIP: approximately $128 million projected through 2019
37
Planning background
A range of potential outcomes was
initially defined:
“Brave New Grid”
“Ready for the Future”
“More Aggressive Asset
Management”
“Stay the Course”
“Slow Decline”
Less Investment
Further ageing
Cost of catch-up
becomes too high
Spiral with recovery
nearly impossible
38
38
Same Investment
Investment now above
depreciation
Some continued
ageing
Higher maintenance
costs
Declining reliability
Cost of catch-up grows
Modest New
Investment
Arrest the ageing
New Generation of
Asset ManagementHigher Quality of
Information
More Proactive Less
Reactive Investment
and Maintenance
costs
Maintain reliability
Smart Grid
Near-term widespread
Smart Grid deployment
Significant New
Investment
Reverse the trend in
ageing
Optimize maintenance
costs
Improve reliability
Position for Smart Grid
“No barriers to future
deployment”
“No regrets about deployment”
proactive vs. reactive…
(what is the least cost replacement rate?)
Prohibitively
Expensive
Very frequent
replacement
39
Unacceptable
Operations
Frequency of asset replacement
Replace only at failure
2009 ISG vision for the “future” i.e. now
Our vision, which we developed with the input of the 2009 ISG, is a distribution
system that is:
– Safe for our employees and the public
– Reliable – consistent with the needs of a society that is increasingly
dependent on electricity
– Able to grow – to accommodate the needs of new customers and
potential quantum growth from new electric applications
– Optimized – an optimum mix of investment in new plant and
maintenance of existing facilities
– Responsive to all customers – minimizes the service gap between
urban and rural customers
– Energy efficient – a system that provides the platform to achieve the
efficient use of energy resources
– Cost effective – a system designed, built and operated for least, longterm cost while achieving the above objectives
– State-of-the-art – a system that employs effective technologies to
further the above objectives
40
40
electric plan components
100
5 year
costs
(millions)
Poles
Accelerated inspection
and replacement
5 Year cycle
Substations & Automation
Accelerated inspection and
replace
Install communications
U/G Cable
50
Accelerated
replacement (10 years)
Collect data
Capacity Margins
Tree Trimming
Overhead Equip.
Accelerated inspection and
replacement (3 years)
Collect data
41
Maintain current
Improve transfer
capabilities
Accelerated trimming
(5 years)
Cut beetle kill trees
Rural Reliability
Eliminate all 4Q circuits
Natural gas plan components
Mitigation of Safety Threats
Gas Distribution
Infrastructure
Plan
5 Projects
DIMP-guided threat
analysis of system
components
(5 projects)
$Evaluation and ranking of components
for leak potential
Operational and
administrative initiatives
to reduce third party leaks
System operational
improvement initiatives
(e.g., zone valves now
under study)
Tactics to minimize third party damage
leading to excavation-related leaks
Long-term data needs to
facilitate DIMP
implementation
Operational Review
Appropriate actions to improve
operations
42
Damage Prevention
Data Acquisition
The foundation of the process
Future Infrastructure Plan Blueprint
Distribution Base – includes Reactive and Normal Maintenance
Transmission Base – includes Reactive and Normal Maintenance
Overall Infrastructure
Electric
Capacity
• Distribution, Substations,
Transmission
Capacity
• Distribution
• Transmission
Reliability
• Distribution, Substations,
Transmission
Reliability
• Distribution
• Transmission
Asset Life
• Distribution, Substations,
Transmission
43
Gas
Compliance
• Distribution, Substations,
Transmission
Automation
&
Technology
Asset Life
• Distribution,
• Transmission
Safety/Compliance
• Distribution
• Transmission
Current Major Initiatives
•
•
44
T&D – Development of a Comprehensive Infrastructure Plan
Distribution
– Continued Process Improvement (refined work planning and
execution, Construction and Operations
– Continued In-Service refinement
o Mobile Workforce Management
o Outage Management
– Distribution System Infrastructure Project (DSIP) execution
– Workforce Planning
– Other Technology Evaluation and Testing
o Smart Grid Pilot – Distribution Automation
o Volt / Var Optimization
o AMI
o LED Lighting
o Solar and other Distributed Generation Applications
Major Initiatives (Continued)
•
•
T&D – Development of a Comprehensive Infrastructure Plan
Transmission
– Large Project Completion
o Big Sky Jackrabbit 161 kV conversion (MT)
o Columbus Chrome – Stillwater 100 kV (MT)
o NERC Alert Facilities Rating Project (MT)
o Various Large Substation Projects (MT/SD)
o Gas Transmission Growth – Compression/Pipeline Looping
– Continued refinement of Project Management Processes
– Further Implementation of Substation Maintenance Plans and
Data Bases
– Grid Operations – Enhanced Same Day/Real Time System
Diagnostics
– Gas Transmission System Operations (Gas/Electric System ops
split)
– Regulatory Compliance Activities
45
EMPLOYEES
IN OUR
COMMUNITIES
Employee name and location
Photo by S. Malee
Employees in the local workforce
Employee summary 2014
Montana
This many
Working out
employees… of this many
locations…
Were paid…
1,290
57
$108.4 million
24
$27.6 million
South Dakota 332
& Nebraska
Employees represented by unions
Montana
465
South Dakota & Nebraska
196
Payroll for union employees
Montana
$37.9 million
South Dakota & Nebraska
$12.3 million
Retiree summary 2014
Retiree count
Montana
1,514
South Dakota & Nebraska
268
Annual pension payments to retirees
Montana
$19.2 million
South Dakota & Nebraska
$3.9 million
Location
Photo by S. Malee
Community support
Community giving
We are proud of our
Community Works program
that last year provided close
to $2.25 million to support
and promote community
development.
Major sponsorships
and donations
NorthWestern makes
significant donations in the
civic, educational and
nonprofit sectors across the
service territory in every
year. The donations in 2014
totaled approximately
$950,000.
Volunteerism
About 80 percent of our
employees volunteer their time
to various community activities.
In 2014, our employees
reported volunteering
approximately 9,000 hours of
their time to community
organizations in a variety of
ways.
2015 COMMUNITY WORKS REPORT // p6
Other community activities
Scholarships
In 2014, NorthWestern Energy
donated $107,250 for scholarships to
students attending 16 universities,
colleges, tribal and trade schools in
Montana, Nebraska and South
Dakota.
Associations and dues
In 2014, NorthWestern Energy paid
more than $160,000 in state and local
Chamber of Commerce dues and
close to $126,000 in association fees.
Energy assistance
programs
We work closely with the federal Low
Income Energy Assistance programs
– LIEAP in Montana and South
Dakota and LIHEAP in Nebraska – to
deliver critical short-term aid to our
community’s most vulnerable citizens.
Public safety education programs
Public safety education
programs
K-9 classroom materials and
presentations
Education materials available
to the public, all listed on our
website
Public safety awareness
programs to the general
public, schools, civic
organizations
A NorthWestern Eneregy safety professional provides students with a demonstration of the
company's electricity safety model.
Safety education programs at
county fairs, special events
ENERGY
DELIVERY
IN OUR
COMMUNITIES
Customer relationships
Customer care by the numbers
• Walk in customer Service Centers in all 3 states
• Customer access: 24/7 by phone and internet
• Call in contact Centers: 2 (Butte/Huron)
• Average calls per month: 89,760
• Average talk time: 4 min. 8 sec.
• Our employees read about 416,809 electric and
277,741 natural gas meters each month,
estimating only about 2 percent of the reads
Electric operations reliability
•
•
•
Average service interruption on our MT/SD
system in 2014 lasted 108.3 minutes.
The average number of outages per customer
1.09.
Average wait time to get power restored was 99.6
minutes
Environmental stewardship
• Environmental permitting and
compliance
• Clean Power Plan
• Avian protection program
• Manufactured gas plant remediation
• Power plant environmental upgrades
• Clean Water Act – stream and
Wetland mitigation
• Environmental inspection during
construction
• Hydroelectric license compliance and
river and reservoir stewardship
COMMUNITIES
Right of way management
NorthWestern Energy has
7,200 miles of electric
transmission right of way
(ROW) and about 15,000
miles of electric distribution
ROW in Montana alone. We
spend more than $8 million
annually on transmission and
distribution ROW
maintenance.
ROWs provide excellent
habitat for wildlife like elk,
deer, bears, small mammals
and many songbirds, and play
a strategic role in controlling
wild land fires.
Recreation
NorthWestern Energy participates in a public-private partnership River Trust Fund to meet public
recreation needs along the Madison and Missouri rivers. The River Fund supports ongoing efforts
to protect and enhance recreation. A combination of $51,278 from NorthWestern and $583,895
from the the Missouri-Madison River Fund will be combined with $142,110 from agency and
private partners to complete eight recreation projects in 2015.
Promoting energy efficiency
For 30 years, we have worked to design
and refine programs that help Montana,
and now South Dakota, customers use
energy more wisely.
In 2014, our energy efficiency programs
saved energy to power nearly 6,800
homes for one year.
Home audits include a door blower test to see where
heat is escaping in your home.
Photo by S. Malee
Our new LEED certified general operations building
We are excited about the opening
of our new five-story, 100,000square foot office building on the
corner of Park and Main streets in
uptown Butte.
Recent Awards
CONTACT
• Public Utilities Fortnightly recognized
NorthWestern as one of the top 40 best energy
companies in the United States
• Top-tier brand honor from Cogent
• An A rating from the New York Stock Exchange’s
Corpedia for the Code of Conduct and Ethics
• Leadership award from NYSE Governance
Services
• High honor from the Corporate Secretary
Corporate Governance Award program
• 2014 Montana Worksite Health Promotion
Coalition gold-level award for excellence in
promoting worksite health
Questions?