Annual Reports [Uk]

2015 ANNUAL REPORT AT A GLANCE SERVICE TERRITORY NorthWestern Energy provides electricity and natural gas in the upper Midwest and Northwest, serving approximately 701,000 customers in Montana, South Dakota and Nebraska. NORTH Our business consists of federal- and state-regulated operations, DAKOTA including electric and natural gas distribution and transmission, MONTANA electric generation and natural gas production. YEAR-END SHARE PRICE SOUTH $35.79 2011 DAKOTA $34.73 2012 WYOMING $43.32 2013 Electric Natural Gas NEBRASKA $56.58 2014 Wind Farm $54.25 2015 Hydro Facilities Electric Generating Plants BASIC EARNINGS Natural Gas Reserves PER SHARE $2.55 2011 MT ELECTRIC MT NATURAL GAS $2.67 2012 $2.46 359,000 191,500 2013 customers in 187 communities customers in 106 communities $3.01 2014 6,700 5,100 miles of distribution pipelines miles of transmission lines 2015 $3.20 2,100 17,650 miles of intrastate transmission pipelines miles of distribution lines DIVIDENDS 18 Bcf PER SHARE 851 MW gas storage $1.44 nameplate owned power generation 2011 66 Bcf $1.48 Owned proven natural gas reserves 2012 $1.52 2013 SD ELECTRIC SD NATURAL GAS $1.60 2014 45,700 2015 $1.92 62,800 customers in 110 communities customers in 60 communities 3,550 1,625 & miles of pipelines NET PROPERTY, PLANT miles of transmission & EQUIPMENT (IN BILLIONS) & distribution lines 55 $2.21 miles of intrastate transmission pipelines 2011 440 MW nameplate owned power generation $2.44 2012 NE NATURAL GAS $2.69 2013 42,000 $3.76 2014 customers in 4 communities 2015 $4.06 750 miles of pipelines On the cover is the Monte Dolack painting commissioned by NorthWestern Energy to commemorate the company’s purchase of the hydroelectric facilities. AT A GLANCE SERVICE TERRITORY NorthWestern Energy provides electricity and natural gas in the upper Midwest and Northwest, serving approximately 701,000 customers in Montana, South Dakota and Nebraska. NORTH Our business consists of federal- and state-regulated operations, DAKOTA including electric and natural gas distribution and transmission, MONTANA electric generation and natural gas production. YEAR-END SHARE PRICE SOUTH $35.79 2011 DAKOTA $34.73 2012 WYOMING $43.32 2013 Electric Natural Gas NEBRASKA $56.58 2014 Wind Farm $54.25 2015 Hydro Facilities Electric Generating Plants BASIC EARNINGS Natural Gas Reserves PER SHARE $2.55 2011 MT ELECTRIC MT NATURAL GAS $2.67 2012 $2.46 359,000 191,500 2013 customers in 187 communities customers in 106 communities $3.01 Bob Rowe, on the left, Missey Klungland and Buck Bonser at our Helena Division walk-in office this autumn. 2014 6,700 5,100 miles of distribution pipelines miles of transmission lines 2015 $3.20 2,100 17,650 miles of intrastate transmission pipelines miles of distribution lines DIVIDENDS 18 Bcf FELLOW PER SHARE 851 MW gas storage $1.44 nameplate owned power generation SHAREHOLDERS: 2011 66 Bcf $1.48 Owned proven natural gas reserves 2012 There is power in water. When its elemental force is In recent years, NorthWestern Energy has invested more $1.52 harnessed appropriately, water provides a healthy habitat than $1 billion in clean energy. The purchase of Montana 2013 SD ELECTRIC SD NATURAL GAS for fish and wildlife, nourishment for the food we eat, hydroelectric facilities from PPL in late 2014, combined $1.60 2014 endless opportunities for recreation, and of course, clean with existing and recently acquired wind generation, $1.92 62,800 45,700 energy renewed by nature. in South Dakota, has allowed us to create an energy 2015 customers in 60 communities customers in 110 communities portfolio dominated by carbon-free resources. These 3,550 1,625 The painting by beloved Montana artist Monte Dolack investments mesh very well with, and complement, our & miles of pipelines that graces the cover of this annual report was NET PROPERTY, PLANT miles of transmission thermal generation, with its very high availability. commissioned in 2015 to celebrate the addition of & EQUIPMENT (IN BILLIONS) & distribution lines 55 11 hydroelectric resources located in western and central We pride ourselves on deliberate and thoughtful long-term $2.21 miles of intrastate transmission pipelines 2011 440 MW Montana to our energy portfolio. Monte’s depiction of planning that carefully balances costs and benefits. Our nameplate owned power generation $2.44 Black Eagle Dam, located on the Missouri River in Great disciplined approach allows us to be flexible enough to 2012 NE NATURAL GAS Falls, highlights our approach to the life cycle of our well move quickly as opportunities arise, yet thoughtful enough $2.69 2013 managed and maintained energy production facilities.1 to objectively evaluate each opportunity in the context of 42,000 $3.76 our vision and values. 2014 customers in 4 communities $4.06 2015 750 1One hundred percent of the proceeds from sales of the poster go to support river-related charitable activities, through our Community Works program. miles of pipelines NORTHWESTERN ENERGY | 2015 ANNUAL REPORT | PAGE 1 BEETHOVEN WIND Montana hydroelectric facilities pictured clockwise from the top left include Hauser, Madison, Thompson Falls, Ryan and Holter. This has been a foundational business practice for the In contrast, the EPA’s final rule dramatically raised the last decade. It is even more fundamental as we plan for bar in Montana to what is now the highest percentage a future that incorporates additional carbon-free energy carbon reduction in the country. The proposed rule’s resources and emerging technologies to meet the needs “glide path” to reduce carbon was replaced with a cliff of our customers and communities and to comply with in the final rule, with little explanation and no opportunity state and federal regulations. to comment on the dramatic change. Even more troubling is that, as the rule currently stands, practically In 2015, we added our first South Dakota company- everything NorthWestern has done to this point to invest owned wind farm. The Beethoven Wind Project in renewable and clean energy sources and energy initially came into our portfolio as a Qualifying Facility efficiency won’t count toward helping the state achieve from which we purchased power; when we learned compliance – even though our Montana electric supply that the owner wanted to sell, we worked quickly to portfolio already emits less carbon than the EPA’s 2030 exercise our right of first refusal because owning the statewide target for Montana. facility would save our customers money. Our South Dakota regulators recognized that we could save our For these reasons, we joined with other utilities, business customers approximately $44.4 million over time by interests and labor groups challenging the Plan, and owning the project and including it in our rate base on February 9, 2016, the U.S. Supreme Court issued compared with simply purchasing the project’s power an order, staying the effect of the Plan pending judicial from an independent owner. Plus, Beethoven presented review of legal challenges to the Plan. Separately, in an a carbon-free investment opportunity to add to our effort to help develop a plan for our Montana customers, generation fleet. We celebrated the project with a we have asked the EPA to reconsider its rule as applied wonderful community event in Avon, South Dakota. to Montana, as the EPA never gave Montanans an opportunity to comment on the final rule. We commend the South Dakota Public Utility Commission for seeing the value of Beethoven while In short, if the Plan is ultimately reinstated through judicial the Commission was in the midst of working on our decision, Montana has some very difficult decisions to first electric general rate case in almost 34 years. The make. NorthWestern is committed to working with other Commission approved our stipulated settlement with stakeholders to help develop a state-based approach to staff and intervening parties in October 2015, resulting compliance, but the challenges under the Plan as written in a $20.2 million annual increase in base rates and an cannot be underestimated. NorthWestern Energy owns additional $9.0 million for Beethoven. 30 percent of Colstrip Unit 4, the newest and cleanest of the Colstrip generating units. The electricity dependably The increase was driven mostly by the investments that produced at Unit 4 provides a little more than 25 percent were required to upgrade our jointly owned coal-fired units of the electricity we need to serve our Montana customers. at Big Stone and Neal to comply with the Environmental Protection Agency’s (EPA) Mercury and Air Toxic Standards We are proud of our investments in clean energy and rule issued in December 2011. Although the United States greater efficiency. Today in Montana, NorthWestern’s Supreme Court eventually struck down the rule in October 60 percent carbon-free electricity2 is already better and 2015, the decision came too late to change any of our less expensive than California’s long-term renewable plans to comply within the EPA’s original timeframe. energy goal of 50 percent by 2030. According to recent information from the Edison Electric Institute, electric We also are concerned about the EPA’s more recently rates in Montana are 17 percent below the national announced Clean Power Plan (Plan), especially with average, while California rates are among the highest in respect to its potential impact on our customers. The the nation. We are committed to delivering clean, efficient Plan’s goal is to establish greenhouse gas performance and innovative energy solutions that create value for standards for existing power plants. While South Dakota’s customers, communities, employees and investors. requirement under the rule is significant, the EPA’s final rule addressed some South Dakota concerns and reduced the In 2015, we wrapped up our first full year of hydroelectric potential impact on South Dakota and its citizens.

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