Good day and welcome to the NorthWestern Corporation Third Quarter 2016 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Travis Meyer, Director of Investor Relations. Please go ahead.

Thank you, Liz. Good afternoon, and thanks for joining NorthWestern Corporation's financial results conference call and webcast for the quarter ended September 30, 2016. 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. On the call today with us are Bob Rowe, our President and Chief Executive Officer; Brian Bird, Vice President and Chief Financial Officer, as well as several other members of our Management Team with us today to address your questions. Before I turn the call over for us to begin, please note that the company's press release, this presentation, comments by presenters, and responses to your questions may contain forward-looking statements. As such, I will remind you of our Safe Harbor language. During the course of this presentation, there will be forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often address our expected future business and financial performance and will contain words such as expects, anticipates, intends, plans, believes, seeks or will. The information in this presentation is based upon our current expectations of the date hereof, unless otherwise noted. Our actual future business and financial performance may differ materially and adversely from our expectations expressed in any forward-looking statements. We undertake no obligation to revise or publicly update our forward-looking statements or this presentation for any reason. Although, our expectations and beliefs are based on reasonable assumptions, actual results may differ materially. The factors that may affect our results are listed in certain of our press releases and disclosed in the company's Form 10-K and 10-Q, along with other public filings with the SEC. Following our presentation today, those who are joining us by teleconference will be able to ask questions. The archived replay of today's webcast will be available, beginning at 6:00 PM Eastern Time today, and can be found on our website, again, at northwesternenergy.com, under the Our Company, Investor Relations, Presentations and Webcasts link. To access the audio replay of the call, please dial 888-203-1112, and access code 1371505. I'll now turn it over to our President and CEO, Bob Rowe.

Good afternoon, everyone. And thank you for joining us, and we are posting this call today from the board room in our building Montana service center. Our Board met today and yesterday and that is always the case when we meet in the service territory. I had a great community reception last night and then an employee breakfast out on the service bay this morning. And last night our Board got really great exposure to the exciting and solid growth in this area and we heard how much local, civic, and economic leaders really do appreciate the partnership that they have with Northwestern and we with them. Billings is where the Rocky Mountains meet the Great Plains and what Charles called the most beautiful drive in the lower 48 is just an hour away from here. The Chamber of Commerce thanks me for sharing that information with you so we hope you come out and visit. Turning to recent significant activities, net income for the quarter was 44.6 million or $0.92 per diluted share and that is as compared with net income of 23.8 million or $0.51 per diluted share for the same period last year. This is at 20.8 million increase in net income and is primarily due to the 15.5 million tax benefit as part of a tax accounting change related to cost to repair electric generation property that’s along with improved gross margin which is driven again by the South Dakota electric rate increase. Non-GAAP adjusted earnings per share increased $0.17 to $0.68 as compared with $0.51 for the same period in 2015. And the Board approved a quarterly dividend of $0.50 per share payable on December 30th, of this year. On September 30th, we filed the Montana Natural Gas rate case requesting an annual increase in base rates of approximately 10.9 million. We’ll come back and discuss that in more detail. Another highlight for the quarter is our continued success producing interest costs. In August we redeemed 170 million in pollution control revenue bonds with the 144.7 million issuance of PCRBs plus other available funds, and a coupon was reduced from 4.65% to 2%. And then in September we issued $45 million of South Dakota first mortgage bonds with a 2.66% coupon and with that I will turn over to Brian Bird to give the financial results. Brian?

Thanks Bob. As Bob pointed out on page 5 the summary of financial results for the third quarter. We had a very good quarter and net income was up to $20.8 million and our diluted per share up $0.41 was an 80% improvement on a year-over-year basis for the quarter. Starting at the top of the P&L we did see an improvement in gross margin up 5.7 million primarily driven by our rate increase in South Dakota. We did see our overall operating expenses down 1.9 million with improvements in our operating, general, and administrative cost offsetting the increases in property and taxes and depreciation. The net benefit of those drove operating income to a 7.6 million improvement. And ultimately drove the 20.8 million improvement in net income and one of the primary drivers that helped in that regard was a 16.1 million improvement in income tax benefit. Of that 15.5 million was associated with an accounting change association with generation of repairs and we’ll talk more about that in a moment. Regarding gross margin on page 6, as I mentioned gross margin is up 5.7 million primarily driven by improvements in our electric business. And that as I mentioned earlier was primarily associated with the 9.2 million improvements in South Dakota electric rate increase and if you remember we are also able to include the Beethoven project with that rate increase. On the electric side we did continue to see as a result of elimination of loss revenue adjustment mechanism an impact on a year-over-year basis to our gross margin. Also electric retail volumes in our electric transmission think oasis revenues were also down a bit for the quarter. On the gas side we did see an improvement in natural gas retail volumes being up 1.4 million slightly offset…

Thank you, Brian. I will start with a quick regulatory update and this is in attempt to give you a status of key regulatory activity just on one page. First as you all recall and hid below 2014 we received what we consider to be negative cost allocation order on the federal side from FERC concerning the generating station in terms of allocation between retail and wholesale. We have filed a request for rehearing which just this year was denied. We need refunds in June of this year and then at the same time we filed a petition for review at the U.S. Circuit Court of Appeals for the District of Columbia. A briefing schedule has not been established yet, has been established with final brief studied by the end of the first quarter of 2017. And we just don’t expect a decision until the second half of 2017 at the earliest and that would be in Italics. Concerning the lost revenue adjustment mechanism that Brian mentioned, we did receive an order in October of 2015 eliminating the lost revenue adjustment mechanism not as a number of impacts but on a going forward basis rate filings will be set to recover test your cost and the return and we’re evaluating what other revenue based regulatory mechanism such as decoupling should be pursued. And very significantly the Montana Public Service Commission has set a workshop to address the subject of decoupling for a week from tomorrow and we consider that very positive and are looking forward to attending and participating. On the natural gas side in October of 2015 we received a natural gas tracker order revising interim rates for our two or three major gas production asset acquisitions and then requiring a filing prior to this October to formally put…

[Operator Instructions]. We will go first to Brian Russo, with Ladenburg Thalmann.

Hi, good afternoon.

Hi, Brian.

I may have missed this but it doesn’t seem like there was a CAPEX slide in the presentation?

Well, yeah Brian we got some feedback sometimes that we don’t allow enough time for questions and we have a lot of remarks to make and we are going to see you in two weeks at EEI, so we figured we could leave those two slides or several slides out, that is the only reason to not include it. Plus we wanted Bob to have an adequate time to talk about the rate case filing which was the most important thing during the quarter.

But Brian the key is for the EEI meeting.

I got you. So, as of now we should just rely on your latest CAPEX disclosure?

We don’t expect those slides to change.

Okay, great. And then is the SG&A cost cuts, are those prominent or just temporary?

Yeah I think -- I would say this we are going to always experience increasing cost pressures at the company. But we also have to also try and find ways to be more efficient and effective in our costs. So I don’t expect that our costs are going to keep coming down from a cost control perspective. We are going to try and maintain our cost structures as best as we can and on a percentage of margin if you will try and improve that. But I think there is going to be continued focus on cost control but I will not expect to see cost to keep coming down, I expect us to try and maintain it. We owe that to our customers to try and keep our cost as well as we possibly can.

Okay and then lastly just to clarify, on one slide it shows the repairs tax deduction benefit of 90 million and then you guys have mentioned 15.5 million adjustment to GAAP earnings and then on slide 13 it shows 12.5 million, I am just wondering if you can reconcile that?

Brian in addition to on the flow through repairs deductions remember this generation repairs is kind of Phase II. We have been doing repairs deductions associated with our T&D business as well. Now inclusive in that number which has historically just been T&D is going to be generation's repairs as well. So the incremental amount about the 15.5 million I talked about is the T&D component.

Okay, so that’s included in your adjusted EPS?

In the adjustment that we took out the 12.5 million, that’s the prior year component associated with just the generation repairs.

Okay, so included in adjusted EPS is 3 million of deductions?

Absolutely that’s the current year component of the generation repairs and everything else that would be included in our adjusted would be all of the existing T&D repairs expense we’ve had and then we’ll have it on an ongoing basis.

Just repeat that, what’s ongoing?

Like on an ongoing basis we are going to see both T&D and generation repairs. What we just excluded for guidance is things from year 2015 and prior that we are able to capture in this particular quarter. We’re excluding any prior year adjustments much like we’ve done in any other adjustments we’ve done from a GAAP to non-GAAP basis.

Okay, thanks for the clarification.

[Operator Instructions]. We’ll go next to Paul Ridzon with KeyBanc.

Just on the generation repairs Bob, is that benefit, can we just assume that’s about million a quarter?

Yes, I am glad you asked that Paul because the 3 million that you have seen this year we do see that as about a million per quarter. Okay, but the amount of repairs that you have in any particular year could be different from one year to the next. So I don’t want to get you situated as always going to be a million per quarter but our expectations from a repairs perspective and how things are laid out, we don’t expect them to be materially different on a year-over-year basis.

Thank you, that’s all my questions.

We’ll go next to Jonathan Reeder [ph] with Wells Fargo.

Hey, just a follow up on the repairs for the guidance that you issued this year did you contemplate that generation I guess an incremental benefit?

It’s a great question Jonathan. Initially in the beginning of the year we did not but you may recall after the first quarter when we revised our income tax range downward we had an idea about generation repairs on early stages but I will tell you that where we ended up at the time that we completed our review we came in with a little bit higher generation repairs then we expect.

Okay so when you initially set the range it wasn’t thought when you adjust it in Q1 you kind of knew it was coming down the pipe and it have been little higher than you were thinking?

You might recall we also as an overall basis reduced the top end of our range at the first quarter. So that was one pleasant thing that we saw for the remainder of the year certainly more than offset by some negative things that we saw for the remainder of the year.

Right, okay. Well, thank you and I look forward to seeing all of you at EEI.

Thanks Jonathan.

We’ll go next to Jingren Zhou with Avon Capital Advisors. I think he might have disconnected. We’ll go next to Michael Weinstein [ph] with Credit Suisse.

Hi guys. Just to follow up on Brian’s questions for the cost cutting, he was trying to say how much of the 11 million of G&A has been cut is ongoing rather than just one time for 2016?

And just want to be clear maybe that didn’t come across very well, that 11 million decrease in OG&A about 7 million of that is really associated with the fact we don’t have hydro operations cost on a going forward basis. And that’s 4 million, 3 million of it is associated with the non-employee directors deferred comp has offset another income. So you’d argue then what remains is about 4 million right to get to your 11 million. And I think it’s a fair question we’d like to think that we’ll be able to maintain a cost control but I’d expect that some of that certainly will remain but I think we’ll see continued cost pressure in the fourth quarter as well so I don’t necessarily want to say that as a sustainable 4 million each and every quarter.

Right and of the repairs deductions is there any going impact to rate base growth going forward as a result of taking higher deductions?

No that’s one thing that from our repairs deduction standpoint we have -- it does not impact rate base like it does in other jurisdictions.

And are you saying that, what can you say about the expected tax rate in 2017 and beyond?

I’m glad that you ask that question because I think there is probably two questions there that some other folks that might have asked. As a result of generation repairs what’s going to happen to your effective tax rate and what’s going to happen to the NOL usage, and so if I could Michael I’ll answer both of those to your question. An effective tax rate we do think it helps a little bit but we still also see that we’re going to be around that 20% by 2020. We still see a tax rate creeping up and remember think of it this way if you have a constant level of generation repairs on a dollars perspective but your earnings continue to go up on a pre-tax basis your overall effective tax rate is going to start creeping up. And we expect based upon our forecasting that we’d see tax rates creep towards 20% by 2020. So no change from that regard even though we’d argue that it could have some of the positive benefit but not material enough to change our thoughts there. Regarding NOLs I would say the same thing, our expectation is that even though this helps a little bit we do expect to run through NOLs probably by 2020.

Got you and just one last question did I hear you right that you’re contemplating Montana electric rate case April next year is that…?

Yes, wow, great question by the way. What I said was the gas case is bifurcated by the revenue requirement case this Fall then we will be filing a natural gas allocated cost of service and rate design by April.

The rate design for gas case, okay, got you. Do you have any comments on timing of electric rate case at this point?

No. Michael if you recall just real quickly there every April we give our thoughts on our next rate filing that would be the earliest we would talk about it.

Okay, got you, alright. Thank you.

Thank You.

We’ll go next to Chris Ellinghaus with Williams Capital.

Hey guys, how are you? This benefit for the deferred comp, the non-employee comp is that just a timing issue, where did that come from?

No its an accounting issue that any increase or decrease in your stock price has an impact in terms of your carrying cost associated with those assets. So any increase you’d have in your operating expenses you’d have a decrease in other income and vice versa. So it is from a P&L perspective no impact whatsoever.

Got you. Bob as far as the gas case goes have you gotten any feedback thus far from either Montana or their commissioners or politician?

We’d had some initial discovery which has been just very straightforward without looking at the data underlying the case and there has been really almost no public discussion about the case that we are obviously communicating what we’re doing and why. But there really has not been much conversation about it. I would like to think that in part that’s simply a result of the fact that gas bills have been trending down so consistently for the last 10 years and we’ve done a very good job managing those cost for customers.

Okay, I assume that you guys did a review of recent ROE results from cases in Montana, can you just share with us what some of the most recent ROEs approved might be?

I think we will speak from our perspective the most recent ROE from our perspectives hydro case was 9.8% ROE.

Okay, were you trying to insinuate Brian that weren’t going to change CAPEX?

Well, Bob was just referring to don't worry about it until EEI. No, what I wanted to be very, very clear on that is just because we didn’t include the slides this time that they are going to change, they are not going to change. We just -- we didn’t really have anything incrementally to tell you on this call associated with that and so that is why they want to include it. And now that I have known there has been this many questions I would have Travis keep them in.

Okay, great. Thanks a bunch.

Thank you Chris.

[Operator Instructions]. We will go next to Paul Ridzon with KeyBanc.

Just a follow-up, we should expect to see some tradition of giving guidance yet?

Paul it has been a tradition everyone loves every year now and yes, we will give you the we call them the drivers, we will give you the drivers at EEI.

Thank you.

That is self explained [ph].

There are no other questions at this time.

Okay, well thank you all again for your interest here into the quarter which we are pleased with where we are right now. It sounds like we will be seeing many of you in just a couple of weeks. Take care.

Thanks.