Q2 2026 NorthWestern Corp Earnings Call
Speaker #1: International Results Webinar. After today's prepared remarks, we will host a Q&A session. If you would like to ask a question, please press *1 to raise your hand.
Speaker #1: To withdraw your question, press *1 again. I will now hand the conference over to Travis Meyer, Director of Corporate Development and Investor Relations Officer.
Speaker #1: Travis, please go ahead.
Speaker #2: Thank you, Kendra. Good afternoon, and thank you for joining NorthWestern Energy Group's financial results webcast for the quarter ended June 30, 2026. Joining us on the call today are Brian Bird, President and Chief Executive Officer; and Crystal Lail, Chief Financial Officer.
Speaker #2: Brian and Crystal will walk us through the results and provide an overall update on the great progress we've made this quarter. Before handing the call over, however, a few reminders regarding today's release is available on our website at northwesternenergy.com.
Speaker #2: We also released our 10Q pre-market this morning. Please note that the company's press release, this presentation, comments by presenters, and responses to your questions may contain forward-looking statements.
Speaker #1: Hello, everyone. Thank you for joining us, and welcome to the NorthWestern Energy Q2 2026 financial results webinar. After today's prepared remarks, we will host a Q&A session.
Speaker #2: As such, I will direct you to the disclosures contained within our SEC filings and the safe harbor provisions included on the second slide of this presentation.
Speaker #1: If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. I will now hand the conference over to Travis Meyer, Director of Corporate Development and Investor Relations Officer.
Speaker #2: Also note that this presentation includes non-GAAP financial measures and information regarding the pending merger transaction. See the non-GAAP disclosures definitions and reconciliations in the merger-related disclosures in the appendix of today's materials.
Speaker #1: Travis, please go ahead.
Speaker #2: The webcast is being recorded, and archived replay will be available shortly after the event, and will remain active for 1 year. Please visit the Financial Results section of our website to access the replay.
Speaker #2: Thank you, Kendra. Good afternoon, and thank you for joining NorthWestern Energy Group's financial results webcast for the second quarter ended June 30, 2026. Joining us on the call today are Brian Bird, President and Chief Executive Officer, and Crystal Lail, Chief Financial Officer.
Speaker #2: For those details behind us, I'll hand the presentation over to Brian Bird for his opening remarks.
Speaker #3: Thank you, Travis, for recent highlights for the quarter. We reported GAAP diluted EPS of 40 cents. And non-GAAP diluted EPS of 50 cents. We are also affirming our 2026 earnings guidance range of $3.68 to $3.83.
Speaker #2: Brian and Crystal will walk us through the results and provide an overall update on the great progress we've made this Q2. Before handing the call over, however, a few reminders regarding today's call.
Speaker #2: NorthWestern's results have been released, and the release is available on our website at northwesternenergy.com. We also released our 10-Q pre-market this morning. Please note that the company's press release, this presentation, comments by presenters, and responses to your questions may contain forward-looking statements.
Speaker #3: And also affirming our long-term rate-based EPS growth rate targets of 4 to 6 percent. Regarding the merger, during the quarter we received approvals from the Nebraska PSC, the South Dakota PUC, and FERC.
Speaker #2: As such, I will direct you to the disclosures contained within our SEC filings and the safe harbor provisions included on the second slide of this presentation.
Speaker #3: We also had our Montana hearing and the final briefing is now completed, and we're awaiting the final order. Lastly, in terms of dividend, we declared 67 cents per share payable September 1, 2026.
Speaker #2: Also note that this presentation includes non-GAAP financial measures and information regarding the pending merger transaction. See the non-GAAP disclosures, definitions, and reconciliations in the merger-related disclosures in the appendix of today's materials.
Speaker #3: You might note there's a change in the payment date and August 17 record date to make sure we align with Black Hills Corporation's dividend dates.
Speaker #2: The webcast is being recorded, and an archived replay will be available shortly after the event, and will remain active for one year. Please visit the Financial Results section of our website to access the replay.
Speaker #3: Which was intended to simplify the closing mechanics in the merger. And with that, I'm going to hand it over to Crystal to cover the second quarter financial review.
Speaker #2: With those details behind us, I'll hand the presentation over to Brian Bird for his opening remarks.
Speaker #3: Thank you, Travis, for the recent highlights for Q2, where you reported GAAP diluted EPS of $0.40 and non-GAAP diluted EPS of $0.50.
Speaker #4: Thank you, Brian. I will begin my comments on slide 7. And in my comments today, I will cover our second quarter results, our 2026 earnings outlook, and our capital plan.
Speaker #3: We are also affirming our 2026 earnings guidance range of $3.68 to $3.83, and also affirming our long-term, rate-based EPS growth rate targets of 4% to 6%.
Speaker #4: As Brian mentioned, for the second quarter we delivered GAAP earnings of 40 cents. That 40 cents includes merger-related costs, costs related to incremental cold strip ownership, and weather impacts.
Speaker #4: On an adjusted basis, we delivered 50 cents, which reflects a 10-cent increase from 2025. Moving to slide 8, on a year-to-date basis, we have GAAP earnings of $1.43 versus $1.60 in the prior period.
Speaker #3: Regarding the merger, during Q2 we received approvals from the Nebraska PSC, the South Dakota PUC, and FERC. We also had our Montana hearing, and the final briefing is now completed. We're awaiting the final order.
Speaker #3: Lastly, in terms of dividend, we declared $0.67 per share, payable September 1, 2026. You might note there’s a change in the payment date and August 17 record date to make sure we align with Black Hills Corporation’s dividend dates.
Speaker #4: On an adjusted basis, that's $1.81 versus $1.62. I'll remind you that we started off the year with an unseasonably warm winter, reflecting a significant adjustment to adjust out that weather impact for Q1 impacting our year-to-date results.
Speaker #4: Slide 9 moves to a bit more of the key drivers for the quarter in particular. Key drivers include improved margins, net of weather, offset by higher costs, depreciation, and interest expense.
Speaker #3: Which was intended to simplify the closing mechanics in the merger. And with that, I'm going to hand it over to Crystal to cover the Q2 financial review.
Speaker #4: Thank you, Brian. I will begin my comments on slide 7. In my comments today, I will cover our Q2 results, our 2026 earnings outlook, and our capital plan.
Speaker #4: Increased operating costs includes 12 cents from incremental cold strip ownership, which we spoke about a lot on our Q1 call as to the impact of us owning those assets and the importance to resource adequacy.
Speaker #4: As Brian mentioned, for Q2, we delivered GAAP earnings of $0.40. That $0.40 includes merger-related costs, costs related to incremental cold strip ownership, and weather impacts.
Speaker #4: Moving to slide 10, I'll discuss in more detail our margin impact, including the 38 cents improvement over the prior period. Margin for the second quarter reflects new rates in Montana.
Speaker #4: On an adjusted basis, we delivered $0.50, which reflects a $0.10 increase from 2025. Moving to slide 8, on a year-to-date basis, we have GAAP earnings of $1.43 versus $1.60 in the prior period.
Speaker #4: We'll remind you that we implemented rates in the rate review from 2024 and May of 2025 toward the end, so you can see the continued improvement from that and impacting the first half of the year for us.
Speaker #4: On an adjusted basis, that's $1.81 versus $1.62. I'll remind you that we started off the year with an unseasonably warm winter, reflecting a significant adjustment to normalize that weather impact for Q1, which is impacting our year-to-date results.
Speaker #4: It also interest and growth in transmission revenues. Moving to slide 11, to to adjust our adjusted second quarter earnings. Again, as I alluded to, while the first quarter had a very significant weather impact, we returned to a closer to normal impact here.
Speaker #4: Slide 9 moves to a bit more of the key drivers for Q2 in particular. Key drivers include improved margins, net of weather, offset by higher costs, depreciation, and interest expense.
Speaker #4: You'll see weather was unfavorable by 1 cent versus normal. The quarter also included 4 cents of merger costs. And 5 cents of operating expenses from cold strip that were not recovered.
Speaker #4: Increased operating costs include $0.12 from incremental cold strip ownership, which we spoke about a lot on our Q1 call as to the impact of us owning those assets and the importance to resource adequacy.
Speaker #4: These adjustments move from a 40 cent on a GAAP basis to 50 cents delivered on a non-GAAP adjusted basis versus 40 cents and the prior quarter of 2025 as compared and again noting that that growth was really driven off of improved base rate recovery versus last year.
Speaker #4: Moving to slide 10, I'll discuss in more detail our margin impact, including the $0.38 improvement over the prior period. Margin for Q2 reflects new rates in Montana.
Speaker #4: Moving to slide 12, as Brian indicated, we are pleased with our start to 2026, and it is in line with our expectations, and we are reaffirming our guidance.
Speaker #4: We'll remind you that we implemented rates in the rate review from 2024 and May of 2025 toward the end, so you can see the continued improvement from that and how it impacts the first half of the year for us.
Speaker #4: We have executed any financing plans for the year, and expect that to not have an impact in the back part of the year. Moving to slide 13, and concluding my comments, our capital plan of $3.2 billion from 2026 through 2030 remains on track and unchanged and is driven by the essential investments we need to meet our customers' needs.
Speaker #4: It also reflects the sales from the Puget Cold Strip interest and growth in transmission revenues. Moving to slide 11, to adjust our adjusted Q2 earnings.
Speaker #4: Again, as I had alluded to, while the first quarter had a very significant weather impact, we returned to a closer-to-normal impact here.
Speaker #4: This plan does not include any incremental investment that may be driven by additional opportunities related to regional transmission growth or serving large loads, and we're excited to continue pursuing those opportunities.
Speaker #4: You'll see weather was unfavorable by $0.01 versus normal. The quarter also included $0.04 of merger costs, and $0.05 of operating expenses from Cold Strip that were not recovered.
Speaker #4: With that, I will turn it back to Brian for a further business update.
Speaker #3: Thanks, Crystal. My comments on page 15, you know, specific to the merger with Black Hills and the benefits to stakeholders. We certainly have talked quite a bit about the benefits to shareholders and certainly want to thank all of those who voted on the approval from a shareholder perspective of the transaction.
Speaker #4: These adjustments move from a 40 cent on a GAAP basis to 50 cents delivered on a non-GAAP adjusted basis versus 40 cents and the prior quarter of 2025 as compared and, again, noting that that growth was really driven off of improved base rate recovery versus last year.
Speaker #3: And acknowledge the overwhelming support. That also took place in the second quarter. And also, opportunity on this page in the center of the page, also remind folks that there's also substantial long-term value for customers, not only bringing together two strong teams from a service perspective.
Speaker #4: Moving to slide 12, as Brian indicated, we are pleased with our start to 2026. It is in line with our expectations, and we are reaffirming our guidance.
Speaker #4: We have executed any financing plans for the year and expect that to not have an impact in the back part of the year. Moving to slide 13 and concluding my comments, our capital plan of $3.2 billion from 2026 through 2030 remains on track and unchanged, and is driven by the essential investments we need to meet our customers' needs.
Speaker #3: We're going to continue to provide great service on a going-forward basis, on a combined basis. Not only that, any benefits that are accrued for putting these two companies together from a cost savings perspective, that'll ultimately accrue to customers in future rate reviews.
Speaker #4: This plan does not include any incremental investment that may be driven by additional opportunities related to regional transmission growth or serving large loads, and we're excited to continue pursuing those opportunities.
Speaker #3: Moving forward to page 16, if you think about the timeline, we now have all the necessary approvals other than the MPSC commissions approval. As you note, on this page, you see a lot of green checks.
Speaker #4: With that, I will turn it back to Brian for a further business update.
Speaker #3: As a matter of fact, like we said earlier, shareholder approval, FERC, Nebraska South Dakota. And you think about what was all done in the second quarter, what's pretty busy quarter from a merger perspective, we also as we sit here today, we're working extremely hard with our friends at Black Hills from an integration planning perspective.
Speaker #3: Thanks, Crystal. Specific to the merger with Black Hills and the benefits to stakeholders, we certainly have talked quite a bit about the benefits to shareholders and certainly want to thank all of those who voted on the approval from a shareholder perspective of the transaction and acknowledge the overwhelming support.
Speaker #3: And so we're prepared. We will be prepared if, in fact, we do get approval from the Montana Commission to close and actually start providing the benefits to the merger to our customers and other stakeholders.
Speaker #3: That also took place in Q2. And also, the opportunity on this page—in the center of the page—also reminds folks that there's substantial long-term value for customers, not only in bringing together two strong teams from a service perspective.
Speaker #3: Speaking of the decision, waiting on decision from the Montana Public Service Commission, we note on this slide that that's in the fourth quarter. I think people understand from the timing that is in front of the commission, that we believe that upon our filing our briefing in mid-July, that we would see a decision sometime in 90 days to extend another 30 days.
Speaker #3: We're going to continue to provide great service on a going-forward basis, on a combined basis. Not only that, any benefits that are accrued from putting these two companies together from a cost savings perspective—that'll ultimately accrue to customers in future rate reviews.
Speaker #3: Moving forward to page 16, if you think about the timeline, we now have all the necessary approvals other than the MPSC commission's approval. As you note on this page, you see a lot of green checks.
Speaker #3: So 90 to 120 days we should see a decision. That should mean a decision sometime between mid-October and mid-November. And so we are certainly cautiously optimistic about that decision and working really hard so that we're prepared to provide benefits to stakeholders on a going-forward basis.
Speaker #3: In matter of fact, like we said earlier: shareholder approval, FERC, Nebraska–South Dakota. And if you think about what was all done in Q2, it was a pretty busy Q2 from a merger perspective.
Speaker #3: If, in fact, we get that approval. Moving forward to data centers, we continue to work hard on the data center process on page 17.
Speaker #3: As we sit here today, we're working extremely hard with our friends at Black Hills from an integration planning perspective, and so we're prepared.
Speaker #3: I think you can see some change in the high-level assessments. We're still very active in terms of folks looking at primarily Montana and South Dakota.
Speaker #3: We will be prepared if, in fact, we do get approval from the Montana Commission to close and actually start providing the benefits of the merger to our customers and other stakeholders.
Speaker #3: From a data center perspective, more importantly, we continue to work for those with those folks that we have developed an agreement with. And striving to get to ESAs with those parties.
Speaker #3: Speaking of the decision—waiting on a decision from the Montana Public Service Commission—we note on this slide that that's in Q4. I think people understand from the timing that is in front of the commission that we believe, upon our filing of our briefing in mid-July, we would see a decision sometime in 90 days, plus possibly an extension of another 30 days.
Speaker #3: As I mentioned on the prior quarter's call, I noted no guarantees, but I mentioned on that call, I do it again, no guarantees here.
Speaker #3: We still expect to have ESAs with that two of those three parties. And reason two of those three said three, the last quarter, two parties, Quantic and Atlas, we still believe by year-end.
Speaker #3: The issue where we sit here today, with SABE, is they still are dealing with land procurement items and so until that happens, it's difficult to say we would have an ESA done with them by the end of the year as we sit here today.
Speaker #3: So, 90 to 120 days—we should see a decision. That should mean a decision sometime between mid-October and mid-November. And so, we are certainly cautiously optimistic about that decision and working really hard so that we're prepared to provide benefits to stakeholders on a going-forward basis.
Speaker #3: But we continue to work with all three parties and those parties in the both the data center request and high-level assessment to continue to move forward to ultimately have data center load that we can provide in Montana and South Dakota.
Speaker #3: If, in fact, we get that approval. Moving forward to data centers, we continue to work hard on the data center process on page 17.
Speaker #3: Moving forward, just a little bit more on large load customers. I think you're also aware, in March, of this year, we did submit our large new load tariff, the hope at that time when we filed it, we were filing it with an ESA.
Speaker #3: I think you can see some change in the high-level assessments. We're still very active in terms of folks looking at primarily Montana and South Dakota.
Speaker #3: From a data center perspective, more importantly, we continue to work through those folks that we have developed an agreement with, and we're striving to get to ESAs with those parties.
Speaker #3: We did not. We wanted to make sure that people were aware that we're trying to protect customers with this large load tariff, so we wanted to get that in front of the commission and it's there for people to see.
Speaker #3: As I mentioned on the prior quarter's call, I noted there were no guarantees. But I mentioned on that call, and I'll do it again—no guarantees here.
Speaker #3: In addition, we'd like to, when we do sign an ESA, file that ESA with the large load tariff and ultimately have a decision on that ESA as well.
Speaker #3: We still expect to have ESAs with two of those three parties. And the reason I said "two of those three"—last quarter, two parties, Quantic and Atlas—we still believe by year-end.
Speaker #3: In South Dakota, any new large load customers, we'd require incremental capacity, but we do have an infrastructure rider there to help us with generation cost recovery.
Speaker #3: And the South Dakota PUC already has an established large load tariff that we can serve a large load customers with. The one issue in South Dakota continues to be the sales tax issue on equipment purchase, and we're hopeful in the upcoming legislative session that issue will be dealt with.
Speaker #3: The issue where we sit here today with SABE is they still are dealing with land procurement items, and so until that happens, it's difficult to say we would have an ESA done with them by the end of the year as we sit here today.
Speaker #3: But we continue to work with all three parties, and those parties in both the data center request and high-level assessment, to continue to move forward to ultimately have data center load that we can provide in Montana and South Dakota.
Speaker #3: On the right-hand side of the slide here, I continue to show from a megawatt perspective, each of those three entities in the development stage, nothing's necessarily changed there.
Speaker #3: So we continue to forge ahead with them on their current plans. Lastly, on slide 19, is our standalone value proposition within an approximate 4% dividend yield with our base capital plan.
Speaker #3: Moving forward, just a little bit more on large load customers. If you're also aware, in March of this year we did submit our large new load tariff. The hope at that time when we filed it, we were filing it with an ESA.
Speaker #3: We did not. We wanted to make sure that people were aware that we're trying to protect customers with this large load tariff, so we wanted to get that in front of the Commission.
Speaker #3: We can achieve a 4 to 6% EPS growth, ultimately today provide an 8 to 10% total return. If we're able to take an opportunity and execute on data center and other large load opportunities, FERC regional transmission, and any incremental generating capacity, we should be able to grow at a faster rate in that above the 6% range.
Speaker #3: It's there for people to see. In addition, we'd like to, when we do sign an ESA, file that ESA with the large load tariff and ultimately have a decision on that ESA as well.
Speaker #3: In South Dakota, for any new large load customers, we've required incremental capacity, but we do have an infrastructure rider there to help us with generation cost recovery.
Speaker #3: That plus that dividend yield I talked about earlier, around 4%, we could see total returns greater than 10%. Obviously, that's our standalone proposition. As we sit here today, we think we could be able to deliver a 5 to 7% EPS growth on a combined basis in a merger with Black Hills.
Speaker #3: And the South Dakota PUC already has an established large load tariff that we can serve large load customers with. The one issue in South Dakota continues to be the sales tax issue on equipment purchases, and we're hopeful in the upcoming legislative session that issue will be dealt with.
Speaker #3: That's ultimately what we believe is the best thing we can do. From a shareholder perspective, but as I mentioned earlier, another thing we really want to do for customers in particular this day and age where affordability is a key issue, we want to make sure we continue to be as efficient as we can and even more so on a merged basis to provide those cost-saving benefits to customers on a going-forward basis.
Speaker #3: On the right-hand side of the slide here, I continue to show, from a megawatt perspective, each of those three entities in the development stage. Nothing's necessarily changed there.
Speaker #3: So we continue to forge ahead with them on their current plans. Lastly, on slide 19 is our standalone value proposition, with an approximately 4% dividend yield under our base capital plan.
Speaker #3: And with that, I'll turn it back over to Kendra to conduct the Q&A session.
Speaker #3: We can achieve 4 to 6% EPS growth, ultimately providing an 8 to 10% total return today. If we're able to take advantage of opportunities and execute on data center and other large load opportunities for regional transmission, as well as any incremental generating capacity, we should be able to grow at a faster rate, above that 6% range.
Speaker #1: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand.
Speaker #1: To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.
Speaker #1: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question from the line of Aiden Kelly, with JP Morgan Securities.
Speaker #3: That, plus that dividend yield I talked about earlier—around 4%—means we could see total returns greater than 10%. Obviously, that's our standalone proposition. As we sit here today, we think we could be able to deliver 5% to 7% EPS growth on a combined basis in a merger with Black Hills.
Speaker #1: Aiden, your line is open. You may now go ahead.
Speaker #3: That's ultimately what we believe is the best thing we can do from a shareholder perspective. But as I mentioned earlier, another thing we really want to do for customers—particularly in this day and age, where affordability is a key issue—is to make sure we continue to be as efficient as we can, and even more so on a merged basis, to provide those cost-saving benefits to customers on a going-forward basis.
Speaker #4: Thanks. Hey guys, good afternoon. Thanks for the time today.
Speaker #3: Thanks, Aiden.
Speaker #4: Yeah, just want to hone in on the Quantica project first. I think many are focused on the quoted 7.2 gigawatt interconnection request laid out there, which is clearly a substantial number.
Speaker #4: And I understand when you capacity adjust, it could be closer to like the 3 gigawatt range. But still clearly implies some upside beyond phase one what you disclosed.
Speaker #3: And with that, I'll turn it back over to Kendra to conduct the Q&A session.
Speaker #4: So would just be curious to hear your take on the probability of realizing the full 7 gigawatts and any physical considerations that come to mind here.
Speaker #1: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand.
Speaker #3: I put in this context, Aiden, I don't want to speak for Quantica here. I think, as you noted on the document we shared here, 1.1 gig is what we're talking about from a Quantica perspective.
Speaker #1: To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.
Speaker #1: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Aiden Kelly with JPMorgan Securities.
Speaker #3: I think we all need to have success at these lower gigawatt levels. And if we're ultimately in an ESA perspective and we're moving forward with Quantica, we'll let them talk about their relative success and how to ultimately build up to that level.
Speaker #1: Aiden, your line is open. You may now go ahead.
Speaker #3: But as we sit here today, we're focused on the 1.1 gig.
Speaker #4: Thanks. Hey guys, good afternoon. Thanks for your time today.
Speaker #4: Understood. Understood. Thanks, Brian. And then just maybe wanted to ask a high-level question on the coal strip ownership pieces. In the 10Q, you guys lay out that the PCAM tariff waiver was insufficient to contribute to the recovery of the O&M for the Avista share.
Speaker #3: Thanks, Aiden.
Speaker #4: Yeah, just want to hone in on the Quantica project first. I think many are focused on the quoted 7.2 gigawatt interconnection request laid out there, which is clearly a substantial number.
Speaker #4: Could you just remind us on the action plan for getting better protection on these costs? And how are you thinking about the timing there?
Speaker #4: And I understand when you capacity adjust, it could be closer to the 3-gigawatt range. But still, it clearly implies some upside beyond phase one, what you disclosed.
Speaker #5: Hi, Aiden. I'll take that one. Fair question. We've laid out the impact year to date, and we do have a tariff waiver currently for how that the impact of those sales flows through PCAM.
Speaker #4: So I would just be curious to hear your take on the probability of realizing the full 7 gigawatts, and any physical considerations that come to mind here.
Speaker #5: If you listen to the merger hearing, you would have heard a lot of commentary from the commission on their overall support for coal strip.
Speaker #3: I'll put it in this context, Aiden. I don't want to speak for Quantica here, but I think, as you noted in the document we shared, 1.1 gig is what we're talking about from a Quantica perspective.
Speaker #5: And their view on what that asset means to Montanans and keeping costs low. So our action plan eventually is to file a rate review and put that asset into base rates where it should be.
Speaker #3: I think we all need to have success at these lower gigawatt levels. And if we're ultimately in an ESA perspective and we're moving forward with Quantica, we'll let them talk about their relative success and how to ultimately build up to that level.
Speaker #5: The thing I would mention and remind you all of is we are awaiting for a motion for reconsideration on our 2024 rate review. And by my clock here, we're close to the last day of July of 2026.
Speaker #3: But as we sit here today, we're focused on the 1.1 gig.
Speaker #5: So we need to see that order and we're continuing to invest significantly in Montana and to your point on action plan for ultimately adjudicating that piece of coal strip with the commission.
Speaker #4: Understood. Understood. Thanks, Brian. And then just maybe wanted to ask a high-level question on the coal strip ownership pieces. In the 10-Q, you guys lay out that the PCAM tariff waiver was insufficient to contribute to the recovery of the O&M for the Avista share.
Speaker #5: I think we'll need to file a rate review to address that. And that is something that we're considering timing of. And meanwhile, the PCAM docket where that tariff waiver sits, progresses that was granted on an interim basis and we expect that docket to move through probably timeline of Q4 of this year and maybe into early of 2027.
Speaker #4: Could you just remind us of the action plan for getting better protection on these costs? And how are you thinking about the timing there?
Speaker #5: Hi, Aiden. I'll take that one. Fair question. We've laid out the impact year-to-date, and we do have a tariff waiver currently, so the impact of those sales flows through PCAM.
Speaker #4: Great. That's helpful. Thanks, Crystal. I'll leave it there.
Speaker #5: Thank you, Aiden.
Speaker #3: Thanks, Aiden.
Speaker #5: If you listened to the merger hearing, you would have heard a lot of commentary from the Commission on their overall support for Colstrip.
Speaker #1: Your next question from the line of Shahriar Pourreza, from Wells Fargo Securities. Shahriar, your line is open. You may now go ahead.
Speaker #5: And their view on what that asset means to Montana, and then keeping costs low. So, our action plan eventually is to file a rate review and put that asset into base rates where it should be.
Speaker #6: Good afternoon, Brian and Crystal. This is Whitney Mutalemo on for Shahriar.
Speaker #5: The thing I would mention and remind you all of is we are waiting for a motion for reconsideration on our 2024 rate review. And, by my clock here, we're close to the last day of July 2026.
Speaker #3: Yep. Hi there.
Speaker #6: Hey. So I'm looking through the IRP materials and they show available import capacity on your transmission path declining through 2028, even before accounting for the large load pipeline.
Speaker #5: So we need to see that order. We're continuing to invest significantly in Montana. And to your point on the action plan for ultimately adjudicating that piece of Colstrip with the commission, I think we'll need to file a rate review to address that.
Speaker #6: Obviously, there's the North Plains connector and the utility has 10% stake that's still contingent on permits. Is that 300 megawatts enough to matter given how much load you're now discussing?
Speaker #5: And that is something that we're considering the timing of. And meanwhile, the PCAM docket, where that tariff waiver sits—progressive that was granted on an interim basis—we expect that docket to move through, probably on a timeline of Q4 of this year and maybe into early 2027.
Speaker #6: Or does the real transmission answer have to be a bigger price horizons-led project rather than a minority position in someone else's line?
Speaker #4: Great, that's helpful. Thanks, Crystal. I'll leave it there.
Speaker #3: So I would I feel bad now. I didn't include our regional transmission materials in our presentation, in which we've certainly spoken about in the past.
Speaker #5: Thank you, Aiden.
Speaker #3: Thanks, Aiden.
Speaker #1: Your next question comes from the line of Shah Peruza from Wells Fargo Securities. Shah, your line is open. You may now go ahead.
Speaker #3: North Plains connector is certainly something that we think is necessary. Our Montana to Idaho line that we're working with, we think is also crucial to provide capacity on a going forward basis.
Speaker #6: Good afternoon, Brian and Crystal. This is Whitney Mutalemo on for Shah.
Speaker #3: Yep. Hi there.
Speaker #3: Those are in addition to some other opportunities. On path eight, which is our current coal strip line that we share with other partners that serve the west, there are opportunities to expand the capacity on that line.
Speaker #6: Hey, so I'm looking through the IRP materials, and they show available import capacity on your transmission path declining through 2028, even before accounting for the large load pipeline.
Speaker #3: And that, as you would expect, is a little easier to do than other greenfield and projects and even reconductoring. So there's some work on that line that we think is extremely easy to do on a relative basis to other opportunities, but we're going to pursue those.
Speaker #6: Obviously, there's the North Plains Connector, and the utility has a 10% stake that's still contingent on permits. Is that 300 megawatts enough to matter, given how much load you're now discussing?
Speaker #3: We're also looking at path 80 as an opportunity. But I'd argue that there's a lot of transmission capacity that we're going to need, particularly if there's going to be growth in the Pacific Northwest and certainly in Montana.
Speaker #6: Or does the real transmission answer have to be a bigger Price Horizons-led project, rather than a minority position in someone else's line?
Speaker #3: So we're excited about that opportunity and our ability to invest in transmission in the going forward basis.
Speaker #3: So, I feel bad now. I didn’t include our regional transmission materials in our presentation, which we’ve certainly spoken about in the past.
Speaker #6: Sounds good. Well said. And then just to squeeze in a tiny question. There have been a run of local pushback this quarter. There were the moratorium discussions in a couple of counties, a couple of ballot petitions, just zooming out.
Speaker #3: The North Plains Connector is certainly something that we think is necessary. Our Montana to Idaho line that we're working with, we think is also crucial to provide capacity on a going-forward basis.
Speaker #6: Is that changing how you and developers approach siting more pre-engagement, more flexibility on location, that kind of thing? Or do you see it as pretty contained to a handful of communities that will be all?
Speaker #3: Those are in addition to some other opportunities. On Path 8, which is our current Colstrip line that we share with other partners that serve the West, there are opportunities to expand the capacity on that line.
Speaker #3: And that, as you would expect, is a little easier to do than other greenfield projects and even reconductoring. So there's some work on that line that we think is extremely easy to do on a relative basis to other opportunities, but we're going to pursue those.
Speaker #6: Thank you.
Speaker #3: Yeah. I could spend a half an hour talking on this topic. I would say it this way. We as an industry, and certainly the data centers themselves, and the developers that maybe between the utilities and the data centers, we all need to do a better job in terms of communicating and working with communities to find out what the communities want, not necessarily what we think they want.
Speaker #3: We're also looking at Path 80 as an opportunity. But I'd argue that there's a lot of transmission capacity that we're going to need, particularly if there's going to be growth in the Pacific Northwest, and certainly in Montana.
Speaker #3: And I think there is a lot of misinformation about data centers. We believe data centers are going to be a great thing for our service territory, and we think it's going to help our communities in so many ways.
Speaker #3: So we're excited about that opportunity and our ability to invest in transmission on a going-forward basis.
Speaker #3: We're going to continue to be supportive of their efforts. But we have to work collectively as a group and demonstrate benefits in a more concise way so they understand that these are actually a good projects that are going to help their communities.
Speaker #6: Sounds good. Well said. And then, just to squeeze in a tiny question—there has been a run of local pushback this quarter. There were the moratorium discussions in a couple of counties, a couple of ballot petitions. Just zooming out—
Speaker #3: And so there's work to be done. I'd argue that's something that's in needs to be done in all states, not just the two states that we operate in from an electric perspective.
Speaker #6: Is that changing how you and developers approach siting—more pre-engagement, more flexibility on location, that kind of thing? Or do you see it as pretty contained to a handful of communities that will be all?
Speaker #3: I think it's more of an industry issue than just a Northwestern Energy issue. There are certain states, of course, that support this, support data centers.
Speaker #6: Thank you.
Speaker #3: And we can certainly name those states. But even those are running into some public pushback. I think as we continue to educate folks around energy use, and we're walking around water use, I think what has been recently done here in terms of an acknowledgement by utilities and data centers that we're not going to pass on higher cost to customers that data centers are going to pay their own way those commitments are going to help deal with some of these issues.
Speaker #3: Yeah. I could spend half an hour talking on this topic. I would say it this way: We as an industry—and certainly the data centers themselves, and the developers that may be between the utilities and the data centers—we all need to do a better job in terms of communicating and working with communities to find out what the communities want, not necessarily what we think they want.
Speaker #3: And I think there is a lot of misinformation about data centers. We believe data centers are going to be a great thing for our service territory, and we think it's going to help our communities in so many ways.
Speaker #3: But this is going to be continuing an issue for the industry for some time.
Speaker #6: All set. Thank you.
Speaker #3: We're going to continue to be supportive of their efforts, but we have to work collectively as a group and demonstrate benefits in a more concise way so they understand that these are actually good projects that are going to help their communities.
Speaker #3: Thank you.
Speaker #1: Your next question from the line of Chris Ellinghouse, with Seibert Williams-Shank. Chris, your line is open. Please go ahead.
Speaker #4: Hey, everybody.
Speaker #3: Hey, Chris.
Speaker #7: Hey, Chris.
Speaker #4: Crystal, can you give us a breakdown of the weather adjustment by segment?
Speaker #3: And so, there's work to be done. I'd argue that's something that needs to be done in all states, not just the two states that we operate in from an electric perspective.
Speaker #3: I think it's more of an industry issue than just a NorthWestern Energy issue. There are certain states, of course, that support this—support data centers.
Speaker #3: Chris, I think that's in our appendix, but I'd remind you for Q2, it's only one sent. So it's pretty small as it relates to the quarter.
Speaker #3: Obviously, a much bigger impact for Q1, as we saw really mild weather there. Travis might have it off the top of his head.
Speaker #3: And we can certainly name those states, but even those are running into some public pushback. I think as we continue to educate folks around energy use and as we're walking around water use, what has been recently done here in terms of an acknowledgment by utilities and data centers—that we're not going to pass on higher costs to customers, that data centers are going to pay their own way—those commitments are going to help deal with some of these issues.
Speaker #2: Yeah. And we haven't disclosed that, Chris, by segment. So I assume you're looking between electric gas, South Dakota, Montana. We don't disclose that. That's something we can consider in the future, but.
Speaker #4: Okay. That'd be helpful. The weather seems like it was pretty warm for July, certainly across Montana anyway. I saw Crystal, can you give us any sense of how you see the progression of the two Puget and Nevista coal strip pieces through the rest of the year, particularly with what the third quarter weather looks like so far?
Speaker #3: But this is going to continue to be an issue for the industry for some time.
Speaker #6: Well said. Thank you.
Speaker #3: Thank you.
Speaker #1: Your next question is from the line of Chris Ellinghouse with Seibert Williams Shank. Chris, your line is open. Please go ahead.
Speaker #3: Sure. Chris, and by the way, I will comment that I did see that you've come around to our way of thinking on the weather.
Speaker #7: Hey, everybody. Hey, Chris. Crystal, can you give us a breakdown of the weather adjustment by segment?
Speaker #3: So I don't know if that's been a 10 or 15-year running conversation, but glad to see we finally got to there. The next question is, after a super mild kind of winter weather in the whole Pacific Northwest, and it's normal call it Q2 shoulder, what that had done.
Speaker #3: Chris, I think that's in our appendix. I'd remind you for Q2, it's only one cent, so it's pretty small as it relates to the quarter.
Speaker #3: Obviously, a much bigger impact for Q1, as we saw really mild weather there. Travis might have it off the top of his head.
Speaker #3: And we had talked a lot about market prices and the impact to finally being resource adequate in Montana. Having assets where we could sell into the market and seeing really low market prices that obviously continued through the first and second quarters.
Speaker #8: Yeah. And we haven't disclosed that, Chris, by segment. So I assume you're looking between electric, gas, South Dakota, Montana. We don't disclose that. That's something we can consider in the future, but...
Speaker #3: I will tell you here in July that we have seen, I think we said in new balancing area records again. So we've seen warmer temps and demand on our systems.
Speaker #7: Okay, that'd be helpful. The weather seems like it was pretty warm for July—certainly across Montana anyway, I saw. Crystal, can you give us any sense of how you see the progression of the two, Puget and the Vista Colstrip pieces, through the rest of the year, particularly with what the third quarter weather looks like so far?
Speaker #3: I will tell you the market prices that for a variety of reasons that our supply folks could get into haven't necessarily there haven't been kind of those big peaking events that you sometimes see in the market, but certainly an improvement as you're about through July here as to what we've seen for prices and the ability to cover our costs of those assets.
Speaker #3: What that continues into late summer and fall, I don't know that I'll be on the record for predicting the weather. Since meteorologists can't seem to do it for the next day or so, but I will say we did see some improvement here in July based off that demand and temps being higher across the west.
Speaker #3: Sure. Chris, and by the way, I will comment that I did see that you've come around to our way of thinking on the weather.
Speaker #3: So, I don't know if that's been a 10- or 15-year running conversation, but glad to see we finally got there. The next question is: After a super mild kind of winter weather in the whole Pacific Northwest, and its normal—call it—Q2 shoulder.
Speaker #3: And hope to see that continue as we go through the year. Obviously, we'd like to see those market sales impact our ability to cover those costs that coal strip and hopefully earn back a bit of what happened in the first half of the year.
Speaker #3: What that had done—and we had talked a lot about market prices and the impact of finally being resource adequate in Montana—having assets where we could sell into the market and seeing really low market prices, that obviously continued through the first and second quarters.
Speaker #3: But I won't give you any predictions as to where that might be.
Speaker #4: Okay. That's helpful. That's helpful. Brian, one more thing. Now that we're involved and more is gone from the MPSD, do you still stick to the sort of 90 to 120-day expectation?
Speaker #3: I will tell you here in July that we have seen, I think we set new balancing area records again. So we've seen warmer temps and demand on our systems.
Speaker #4: Does that sort of slow or speed the process of the merger approval? And how does that affect the large tariff docket also?
Speaker #3: I will tell you, the market prices, for a variety of reasons that our supply folks could get into, haven't necessarily—there haven't been kind of those big peaking events that you sometimes see in the market, but certainly an improvement as you're about through July here as to what we've seen for prices and the ability to cover our costs of those assets.
Speaker #2: Yeah. Chris, I assume you're talking about commissioner Muammar. I don't think that has bearing on the timing here. So I think the 90 to 120 days still should hold.
Speaker #3: As for what continues into late summer and fall, I don't know that I'll be on the record predicting the weather, since meteorologists can't seem to do it for the next day or so. But I will say, we did see some improvement here in July, based off that demand and temps being higher across the West.
Speaker #2: And my expectation is as folks know, there are many times when commissioners aren't present to vote. And as long as there's a quorum, they can continue to vote on any matters.
Speaker #2: And I expect that to be the case here as we move forward.
Speaker #3: And hope to see that continue as we go through the year. Obviously, we'd like to see those market sales impact our ability to cover those costs at Colstrip and hopefully earn back a bit of what happened in the first half of the year.
Speaker #4: Okay. Thanks. Appreciate it.
Speaker #3: Thanks, Chris.
Speaker #1: Thank you, Chris. Your next question from the line of Paul Fremont, from Luttenberg. Paul, your line is open. Please go ahead.
Speaker #3: But I won't give you any predictions as to where that might be.
Speaker #7: Okay, that's helpful. That's helpful. Brian, one more thing. Now that we're at the point where Voldemort is gone from the MPSD, do you still stick to the sort of 90- to 120-day expectation?
Speaker #5: Thanks. I guess I'd like to start with the high-level assessment pool. Which seemed to have doubled to eight customers. Can we get a sense of sort of the megawatt size of demand that's in that queue?
Speaker #7: Does that sort of slow or speed the process of the merger approval? And how does that affect the large tariff docket also?
Speaker #3: Paul, no, we haven't shared nor do we share who's in that queue, nor do we share the megawatts that folks are talking about at this point in time.
Speaker #8: Yeah. Chris, I assume you're talking about Commissioner Molnar. I don't think that has bearing on the timing here. I think the 90 to 120 days should still hold.
Speaker #5: Well, how about in terms of with the customers doubling, should we assume that that also represents a doubling of the megawatt demand in that bucket?
Speaker #8: And my expectation is, as folks know, there are many times when commissioners aren't present to vote. And as long as there's a quorum, they can continue to vote on any matters.
Speaker #3: I'd say it this way. I wouldn't concern yourself too much with megawatts until you see development agreements.
Speaker #5: And then it looks like two may have come from the data center request bucket. And that two of those customers are would have come from somewhere else, like is that a fair way to look at it?
Speaker #8: And I expect that to be the case here as we move forward.
Speaker #7: Okay. Thanks. Appreciate it.
Speaker #8: Thanks, Chris.
Speaker #1: Thank you, Chris. Your next question comes from the line of Paul Fremont from Luttenberg. Paul, your line is open. Please go ahead.
Speaker #3: Yeah. I'd say what happens many times when you get to assessment, some people fall away because they find out they've got a preliminary idea of what the costs are going to be.
Speaker #9: Thanks. I guess I'd like to start with the high-level assessment pool, which seems to have doubled to eight customers. Can we get a sense of the megawatt size of demand that's in that queue?
Speaker #3: And so they may fall away. So I can't speak to how the bucket shifted from requests to the high-level assessment. But typically, what happens when you get to a certain point, you actually know your costs.
Speaker #3: You do see some folks fall away. You also see some folks that work pretty quickly through that process.
Speaker #3: Paul, no, we haven't shared. Nor do we share who's in that queue, nor do we share the megawatts that folks are talking about at this point in time.
Speaker #5: And then maybe last question for me, are is there sort of anything you can tell us about the geography of where those new high-level assessment customers are looking?
Speaker #9: Well, how about in terms of, with the customers doubling, should we assume that also represents a doubling of the megawatt demand in that bucket?
Speaker #5: Is it South Dakota or is it Montana?
Speaker #3: I'd say it this way: I wouldn't concern yourself too much with megawatts until you see development agreements.
Speaker #3: I mean, I will say it this way. I think in those two earlier buckets, we're seeing interest in both states.
Speaker #9: And then, it looks like two may have come from the data center request bucket, and that two of those customers would have come from somewhere else. Is that a fair way to look at it?
Speaker #5: Great. That's it for me. Thank you.
Speaker #3: Thank you.
Speaker #2: Thanks, Paul.
Speaker #1: Thanks, Paul. Your final question comes from the line of Rex Savage with Clearstreet. Rex, your line is open. Please go ahead.
Speaker #3: Yeah, I'd say what happens many times is, when you get to assessment, some people fall away because they find out they've got a preliminary idea of what the costs are going to be.
Speaker #6: Hi. Thank you. I wanted to ask a version of a prior question on the commissioner status and so forth. It appears that commissioner is challenging his removal in Lewis and Clark State Court.
Speaker #3: And so, they may fall away. So, I can't speak to how the bucket shifted from requests to the high-level assessment, but typically, what happens when you get to a certain point and you actually know your costs, you do see some folks fall away.
Speaker #6: I was wondering if you had any thoughts about that, plus it appears the governor is maybe moving to replace him for this one-year period.
Speaker #6: Does that potentially change the 90 to 120 days and then related question is, hey, on Quantica, which was brought up, I believe on the first question, that 7.2 in the filing, did seem to activate one of the opposers on the merger docket.
Speaker #3: You also see some folks that work pretty quickly through that process.
Speaker #9: And then maybe last question for me. Is there sort of anything you can tell us about the geography of where those new high-level assessment customers are looking?
Speaker #6: To ask to reopen the record, are we past that point? Do you believe that is a commission that's going to look at it as is?
Speaker #9: Is it South Dakota, or is it Montana?
Speaker #3: I mean, I'll say it this way: I think in those two earlier buckets, we're seeing interest in both states.
Speaker #3: From my understanding, I think the commission's forging a head here. I don't think I think they've done a good enough job through this process to say that this transaction's not about data centers.
Speaker #9: Great, that's it for me. Thank you.
Speaker #3: Thank you.
Speaker #8: Thanks, Paul.
Speaker #1: Thanks, Paul. Your final question comes from the line of Rex Savage with ClearStreet. Rex, your line is open. Please go ahead.
Speaker #3: I think with that conversation was had frequently, during the hearing, and so I do not believe we're going to see a delay as a result of anything that's happening with commissioner Muammar at this point in time or any incremental information that may have happened since the hearing.
Speaker #10: Hi, thank you. I wanted to ask a version of a prior question on the Commissioner's status and so forth. It appears that the Commissioner is challenging his removal in Lewis and Clark State Court.
Speaker #10: I was wondering if you had any thoughts about that. Plus, it appears the governor is maybe moving to replace him for this one-year period.
Speaker #6: Thank you.
Speaker #2: Thanks, Rex.
Speaker #1: There are no further questions at this time. I will now turn the call back to Brian Bird for closing remarks.
Speaker #10: Does that potentially change the 90 to 120 days? And then a related question is, on Quantica—which was brought up, I believe, in the first question—that 7.2 in the filing did seem to activate one of the opposers on the merger docket.
Speaker #3: From a closing remarks perspective, I just want to say this again. I think we think about what we need to do as a company to grow and what's changing in the energy space.
Speaker #3: This merger is really important, not only obviously to the folks listening to this call today, but our customers and ultimately our employees. We need to be bigger.
Speaker #10: To ask to reopen the record, are we past that point? Do you believe that is a commission that's going to look at it as is?
Speaker #3: We need it's more of a competitive environment that we sit in today. Then utilities have seen and certainly their first 100 years of existence.
Speaker #3: From my understanding, I think the commission's forging ahead here. I don't think they've done a good enough job through this process to say that this transaction's not about data centers.
Speaker #3: And so it's critical that we move forward. We've become bigger. It allows us to better serve our customers and all of you. We continue to be very, very focused on that as do our friends at Black Hills.
Speaker #3: I think that conversation was had frequently during the hearing, and so I do not believe we're going to see a delay as a result of anything that's happening with Commissioner Molemar at this point in time, or any incremental information that may have happened since the hearing.
Speaker #3: And we hope to be talking about that with you if not in October, sometime shortly thereafter. And until that next time, I want to continue to thank you for your support of Northwestern Energy and obviously our friends at Black Hills.
Speaker #3: Thank you very much.
Speaker #10: Thank you.
Speaker #8: Thanks, Rex.
Speaker #1: There are no further questions at this time. I will now turn the call back to Brian Bird for closing remarks.
Speaker #3: From a closing remarks perspective, I just want to say this again: I think, as we consider what we need to do as a company to grow and what's changing in the energy space...
Speaker #3: This merger is really important, not only, obviously, to the folks listening to this call today, but to our customers and, ultimately, our employees. We need to be bigger.
Speaker #3: We need—it's more of a competitive environment that we sit in today than utilities have seen in, certainly, their first 100 years of existence.
Speaker #3: And so it's critical that we move forward. We've become bigger. It allows us to better serve our customers—and all of you. We continue to be very, very focused on that, as do our friends at Black Hills.
Speaker #3: And we hope to be talking about that with you, if not in October, then sometime shortly thereafter. Until that next time, I want to continue to thank you for your support of NorthWestern Energy and, obviously, our friends at Black Hills.
Speaker #3: Thank you very much.
