Good afternoon and thank you for joining NorthWestern Corporation's Financial Results Webcast for the First Quarter of 2021. My name is Travis Meyer, I'm the Director of Corporate Finance and Investor Relations Officer for NorthWestern. Joining us today to walk you through the results are Bob Rowe, Chief Executive Officer; Brian Bird, President and Chief Operating Officer; and Crystal Lail, Vice President and Chief Financial Officer. We also have other members of the management team on the line with us to address questions as appropriate. All participants’ lines are currently muted, after the presentation we have lot of time for our Q&A session. I will provide instructions for asking questions at that time. However, if you intend to ask a question and are joining us by computer, please set your Zoom identity to your first name, the last name and firm name, so we can call you by name to let you know when your line is open. Regarding the results, NorthWestern's results have been released and this release is available on our website. We have released our 10-K, or excuse me, 10-Q premarket 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. As such I'll direct you to the disclosures contained in our SEC filings and the safe harbor provisions included on the second slide of this presentation. Please also note this presentation includes non-GAAP financial measures. Please see the non-GAAP disclosures, definitions and reconciliations also included in this presentation today. The webcast is being recorded. The archive of -- the archived replay of today's webcast will be available for one year beginning at 6:00 p.m. Eastern Time today and can be found at our website at northwesternenergy.com under our company, Investor Relations Presentations and Webcast link. With that, I'll hand the presentation over to NorthWestern CEO, Bob Rowe.

Travis thank you very much. Just a couple of quick comments to start. First, happy Earth Day. If you haven't, I really do encourage you to take a look at our environmental stewardship report on our webpage. Today the electric industry has made some good announcements about progress and do be mindful that from a carbon perspective, our overall company portfolio and particularly our Montana portfolio is in just exceptionally good shape. Brian will come back and discuss ESG and we'll also talk about steps we've taken to address our substantial and critical capacity shortage in Montana. Second, just very quickly, two tremendous Board members Board Chair Steve Adik; and Governance Committee Chair, Julia Johnson have stepped down after tremendous 16-year careers. They've led this company effectively on a remarkable journey. They've done a great job too of leaving behind a Board of Directors that is as effective as engaged as possible. Third, this is Crystal Lail's first quarter, fully at the helm. Crystal has spent her entire career preparing to take over as Chief Financial Officer is doing a great job. And then your old friend Brian Bird has jumped into a new role as President and Chief Operating Officer. And again he's doing a fantastic job, really helping to focus our entire operations part of the business on the future and really again pulling that whole part of the company together. So congratulations and thanks both to Crystal and to Brian. Now in terms of significant events, net income for the first quarter increased $12.4 million as compared to the same period last year. Diluted EPS increased $0.24 or 24% as compared to last year. Then after adjusting for weather, non-GAAP adjusted EPS increased $0.20 or about 18.9% as compared to last year. The Board of Directors has…

Thank you, Bob. And as Bob mentioned, my first call earnings call as CFO at the helm and it's not lost on me that it's nice to have my first call be after a solid quarter and also to have important news on our capacity deficit and how we're going to address that. The thing I will say is as Brian is transitioning into his operating role, he seems to be gaining new religion on how to spend dollars. However, certain things will never go away and I don't think you'll be you'll find him buying drinks at the bar and that his frugal ways will go away anytime soon. But with that on slide five, you'll see the P&L for the quarter and again a solid quarter from that perspective. On a net income basis, Bob mentioned $63.1 million for Q1 2021 compared to $50.7 million in Q1 2020. That's a $12.4 million improvement or 24.5% driven by improvement really at the margin line and some lower operating costs. On a GAAP basis, diluted earnings per share of $1.24 versus $1 in the first quarter of 2020. As we move into slide six to give you a bit more details on the gross margin breakout really the performance there was driven by colder weather in Q1 2021 as compared with Q1 2020. While that was still a bit warmer than normal we have seen strong residential usage in the quarter. That's $6.9 million of electric natural gas retail volumes. We also saw an improvement in electric transmission. Those are partially offset by Montana Electric supply costs being a little bit higher. And then you'll also recall in Q1 of 2020 we had some other non-recurring items that were detrimental in that period here in Q1 2021 the absence of…

Thank you, Crystal. Great job. We did pull up this one slide, if you're looking at an older version of the deck. This was slide 20. So we're maintaining our capital forecast, $2.1 billion over the next five years. We expect to finance this with a combination of cash from operations, first mortgage bonds and equity. We do anticipate initiating a $200 million ATM in the second quarter. And any equity issuances will be sized of course to maintain and protect our current credit ratings. As you probably all know, I'm extremely excited about this capital plan. This is investing across all aspects of the company, across all jurisdictions, really doing the right thing for our customers. This does include about $100 million of incremental investment for South Dakota generation in 2021 through '23. This does not include the results of the Montana request for proposals which we have announced. But all-in, we expect this will result in an annualized rate base growth of 4% to 5%. Very good. And then as you saw the Laurel plant will be right around 20 -- $250 million for the plant proper. On the regulatory front, there's always questions about will we be filing a general rate case. We do not expect to make any general rate case filings in 2021. We do have a number of other extremely important filings either pending or anticipated. On the 15th, we filed a request to further delay implementation of the fixed cost recovery mechanism pilot in Montana for another year. We -- and this is because of the ongoing uncertainty and disparate impact on load from the COVID-19 pandemic. So, the mechanism really doesn't align terribly well with what we've seen in the business over the last year. Second, we've now filed a request in…

Thanks, Bob. I've been known to actually pick up a check now right now and then, but I'll take that praise you guys provide.

Fiscally prudent.

By the way, I appreciate Bob setting up. I think everybody on this call understands the capacity issue, we've been speaking about for years, and particularly during 2020, and into 2021 as we kicked off our RP in Montana in early 2020 and received bids midyear that year, we finally have come to the conclusion of that. And we're very pleased to announce a very strong portfolio that will provide great capacity to our customers and effectively help us achieve kind of halfway there, if you will at least to get to 2025-2026 time period of really putting capacity in place to help us with our capacity shortfall that we've been explaining, to investors and other stakeholders for years. That portfolio, first and foremost, we're pleased to announce the Laurel Generation Station construction of 175 megawatts of flexible reciprocating internal combustion engines. You've heard us speak to RICE units before. Those will be located near Laurel Montana, and we will own those units in fact if we're able to get proper approval from the Montana Public Service Commission. The cost to construct this plan is expected to be approximately $250 million and should be available for commercial operation in late 2023 or early 2024. The second component of the portfolio is a Powerex transaction, a five-year power purchase agreement for 100 megawatts capacity and energy projects. And as Bob pointed out earlier originally predominantly from hydroelectric resources. The third and Bob let the cat out of the bag a bit, we did sign contracts today and we're pleased to announce we have signed a 20-year battery energy storage agreement with esVolta on a 50-megawatt facility to be located near Billings and expected to be in operation on October 1, 2023. We expect to request MPSC approval of the Laurel contract,…

And I'll pass it over to Travis.

Thank you, Bob and Brian and Crystal. [Operator Instructions]

Travis if they're using the raise hand emoji, they should be sure to select the all five-finger emoji, right?

Thank you for the reminder Bob. We'll take our first question from Brian Russo. Brian, your line should be open.

Hi. Good afternoon.

Hey, Brian.

Hey. Just any more details you could provide on the Laurel Generating Station. Is this a new site? Or is it brownfield development or greenfield development? And is there kind of additional space for more units maybe in the next RFP?

Brian, I don't believe we have specifically disclosed the site.

Okay.

We haven't Brian, but it is a greenfield site. And we'll disclose that here shortly. A matter of fact many of the questions associated with Laurel and esVolta will be covered of course in our filing that we're going to make in mid-May.

Okay. Understood. Is there any discussion at the commission or the legislature regarding earnings or sort of imputed return on PPAs going forward?

Yes. There has been discussion on both sides of the subject. Commissioners have spoken to it over a number of years favorably. It was a point of debate in the legislature and a number of legislators spoke up against it. As you know, it's something that a number of electric companies are now requesting and receiving and picking particularly in Michigan and Hawaii.

Okay. Great. And then hypothetically speaking assuming the Montana Commission approves -- pre-approves the filing, what are the scenarios of cost recovery and the return on the investment? Could it be a one-off filing, where it's added to base rates and reflecting customer rates? Or would you need to file an actual general rate case to get that included once it's operational? And then just remind me, what was the treatment for the hydro transaction and the pre-approval?

Yeah. Actually we used to include – before our last general rate case, we used to include a table that showed the authorized ROE by asset for assets that came in through the approval process. And so typically, the approval filing is first of all it's subject to an after-the-fact prudence review just to be sure we did a good job with what we said, we were going to do. But it does include an authorized ROE. And typically that will be picked up from whatever the most recent authorized ROE is. Crystal, do you want to add some color to that?

Sure. If you look at, how our approval filings have worked in the past is what will happen there is subject to the commission's approval, when that asset is placed into service to think us in useful it is added to customer rates at that time. It has its own cap structure and return calculated based off the revenue requirement for that asset. But it does allow for immediate rates in place upon used and useful. And then it's captured in the following rate case and layered into our broader rates. But certainly, it allows for adjustment to regulatory lag there of not experiencing the lag between use and useful and when you do a next rate case.

Okay. Thanks. That's helpful. And then, there wasn't much discussion on Colstrip. Can you just provide us an update there? I think you have a coal supply contract coming due in 2025 around the same time where some of the co-owners are looking to exit. Just curious, if there's any update there that you can provide?

Yeah. What I could say, there is that, our existing ownership at Colstrip continues to be extremely important to serve our customers. Absent that the capacity gap would be just that much greater. You're right, we certainly have been talking to Westmoreland about terms of the coal contract and we're focused on price, but also say a contract that is more accommodating to a resource that's being used for capacity.

Okay. Thank you very much.

Thank you, Brian. We'll take our next call from the line of Jonathan Reeder. Jonathan, your line should be open.

And you're on mute Jonathan. We all need T-shirts with that slogan. That was the motto for the past year. You're on mute.

Star 6, Jonathan, if that helps.

Can you hear me now?

Now we can.

Good work.

Sorry about that. Sorry. Maybe I should have raised the [indiscernible] for you Bob. Thanks for taking my question. Since we're just on Colstrip might as well stay there. I saw Senate Bill 379. It's related to potentially acquire more interest and had passed the Senate earlier this month. I saw it was tabled in the House committee yesterday. Does this mean efforts to potentially acquire more Colstrip interest are like definitively dead? I kind of thought it was dead last year after the future deal fell through, but then this kind of somewhat unexpectedly crept up.

Yes. What I would say there to be clear, our interest at Colstrip was always tied to our ability to serve our retail customers and not more. But certainly as things stand as of 1:30 Mountain today after 379 was tabled, we have no interest in owning an additional share at Colstrip.

Okay. Great. I appreciate you clearing that up. And then could you expand upon your decision not to file a rate case this year in South Dakota? Was it to just be mindful of kind of the customer bill impact given the recovery of the higher February gas costs? I think previously you kind of indicated South Dakota was likely in 2021 in part to incorporate the new gas plant into rates. And then kind of following on that, do you expect to be able to get the new gas plant still into rates when it enters service through kind of alternative stand-alone recovery filing? Or will it have to wait until the 2020 -- 2022 rate case filing?

Crystal, this is your first shot to answer the rate case question.

Sure. I'll take the South Dakota rate case question. The one thing I would point out about 2020 is certainly I think Jonathan where you went is there's a lot of sensitivity around the country that customer bill impacts and where you go from there. The other thing I would say is 2020 isn't the greatest test period for a lot of reasons. One is we certainly had cost control in the South Dakota jurisdiction. And the other thing I would say is, South Dakota is quite flexible in the sense of we have a couple of options for how we can come in and seek recovery of the capacity investments we're making in the state. So while we're not filing based off a 2020 test period, I'm certain that from a regulatory perspective and with minimal regulatory lag we can bring those assets in when needed.

Okay. I understand that. And then on the $70 million PCCAM request, is that just a standard like kind of annual update that goes every year under the way the PCCAM mechanism process works? Or is this some sort of one-off request that you're trying to update the baseline outside of a rate case?

Crystal, you're on top of that as well.

I can take that one. So the PCCAM, we certainly can update that base. And just as a reminder of how that mechanism works right is, you set a base and there's a couple of buckets of costs -- part of the buckets of cost you share above or below the baseline on a 90%, 10% basis. So we reset that for the last time in our last general rate case. You can file outside of a rate case to reset that base. That's what we're doing here. And the thing that I would mention there is, I think as what's seen in February and all across the country capacity is more expensive. And having those types of contracts we're certainly seeing that as assets shut down in the Pacific Northwest particularly in Montana. Montana, I think of it as a net exporting state. It's becoming more of an importing generation at peak times when needed. We're seeing those cost pressures on our PCCAM as to -- as you all know, the amount of capacity that we have to go out into the market and purchase. So with that we're filing separately to reset that base and assist what you'll see is certainly an under collection and cash flow lag in the amount that's currently in the base.

Okay. Great. That's very helpful. And then last question, I think probably for you again Crystal. Just the miscellaneous beneficial drivers of growth margin on both the revenue and the expense side during this quarter. It's actually just -- I think you said this, but it's just the absence of those miscellaneous headwinds during the same period last year. Is that right?

Right. If you recall Jonathan, last year unfortunately, we had to talk about our other. And Brian as a very experienced CFO covered it well. But we had some items in last year that were non-recurring. They were detrimental in the prior period. So the absence of those in this year provides a middle lift.

Great. Thank you so much. Appreciate for taking the questions. Great job, Crystal.

Thanks, Jonathan.

We'll take our next call from the line of Shar Pourreza. Shar, your lines should be open.

Hey, guys can you hear me?

Yes. Perfect.

Thanks. Travis made this way too technological.

Not at all.

Congrats, you can handle it.

And Bob don't worry about it Brian usually makes me buy him drinks, so we're in the same page.

Good, good, good.

So just real quick around -- just with the Montana generation the $250 million in CapEx, can you just remind us if you can hit the high-end of your growth rate on it? I think you guys seem to have alluded to that on the fourth quarter call. And then just maybe how you're thinking about financing the $250 million?

Sorry, Bob, were you tossing that one to me?

That's a totally CFO question. Absolutely.

So I think Shar you said two things. One where would that put us from an earnings growth rate perspective. The thing that I would remind you of course would be the in-service date would be 1/1/'24. That's the time you would see rates in place. And that's a long-term growth rate on an average. The other thing I would say is certainly there'd be some AFUDC during construction there from that perspective. Of course, that's an important piece to achieving what we've said before is kind of pushing us to the higher past the midpoint of that range is certainly our capacity piece and moving forward on those investments. And I think I forgot the back half for your question Shar.

It's just how to think about financing should we assume sort of a balance?

Financing?

Yeah. Yeah. Please.

Yeah. Certainly, we're -- and as you've seen we're spending $450 million in CapEx this year. We're launching an at-the-market equity program coming out of -- or in Q2 this year. And the thing I would think about are ongoing capital needs. We're certainly investing in our system at a high rate. And from a Laurel perspective subject to approval by the Montana Commission, we certainly would be looking to finance that probably in a normal 50-50 type structure.

Okay. That's perfect. And congrats guys on the transitionings. And Brian best of luck.

Thanks, Shar.

Thanks, Shar. We'll take our next call. I do not have a name here, but it's from the line ending in 5990.

Hi, guys. This is Sophie Karp with KeyBanc. Can you hear me?

Yes.

We can Sophie.

Great. Thank you for taking my question. So maybe a lot has been discussed already. Maybe if you could just talk a little bit about following the kind of results of this RFP in Montana. Where does -- with the addition of these new resources, where does it leave you in terms of resource adequacy? And how do you think about the cadence of new -- additional RFPs and additional resources moving forward?

Brian, let's get you back in the discussion.

Yeah, Bob, thanks. Sophie, I'd say this. We're not going to be explicit on exactly what the next RFP is going to be. We'll continue to evaluate as we move forward. I like to say from a rounding perspective we're 50% there with this particular RFP. And the timing is as we stated in the 10-Q late this year, early next year to release that second RFP with the hopes to have something in this. I said earlier in the call, in the 2025, potentially 2026 -- 2026 timetable. And then, obviously even beyond that, Sophie, as certain contracts roll off over time and other things get addressed, we won't be -- our quest to capture capacity just doesn't end in 2025. 2026. We believe going certainly beyond that the 2028 and in the 2030 time period, we'll be looking for more capacity at that time as well.

And you're assuming that Colstrip will remain available to you throughout this decade? Would that be accurate to say? Or is it still sort of a consideration in future RFPs?

We certainly are assuming in the next RFP that we released that Colstrip is going to be considered during that time period.

Got it. Thank you so much. That’s all I have.

Thanks, Sophie. Our next question comes from the line ending in 4404.

Good afternoon, everyone. It's Ryan Greenwald.

Hey, Ryan. How are you?

Appreciate it. Sorry, I didn’t register my name there.

That's okay. No problem.

No problem.

So, in terms of the -- I appreciate that. And congratulations to you and Crystal again, on completing your first quarter here in the new roles.

Thanks, Ryan.

Thank you.

In terms of the three to six and the new generation kind of getting you above the midpoint, is 2020 the right way to think about the base kind of into the outer years here?

Crystal?

Yes. 2020 is the base.

Awesome. And in terms of the decoupling and the efforts there to kind of delay another year potentially further, just kind of curious how you guys are framing the reason for that in terms of -- I mean seemingly relative to most of your peers, you guys are one of the more sensitive to load impacts. So, just kind of curious if you can elaborate on the efforts there.

Yes. The...

Sure Ryan. I...

Go ahead Crystal.

Go ahead Bob.

No, after you.

Well, the thing Ryan, I would say is just from a decoupling perspective, this is something we agreed upon our last rate case. And I think as you think about what happened in 2020 we saw certainly a fundamentally different load pattern as we are moving into that initial period. And so, we had the pilot with the shadow accounting. What we've seen from that initial period is something quite different from how that was designed. So think about test period loads when the design was agreed to. As a reminder that FCRM handles our residential cost and a small slice of our commercial but not all of our commercial and industrial. And so with that and what we've seen out of that first period, and where we're still seeing fundamentally a different load pattern than we would have seen think pre-pandemic, we've suggested to the commission that they either continue it in pilot form or extend a pilot truly being with just shadow accounting or extend the implementation another year. And again, I would say, it's because we're seeing different load patterns than what we saw in the test loads that that is based on. And of course, as you think of any decoupling mechanism those are typically comparing back to a load period. And with that what we've seen in the initial period of shadow accounting, we've requested the commission delay impact. Bob, would you add to that?

That was perfect.

Got you. And then, in terms of legislative items, so with SB 379 getting tabled and I know there was HB 99 looking to remove pre-approval earlier in the year, but anything else that's kind of on your radar at this point?

Yes. We would say, again other than 379 -- which have not been part of our original agenda, it was a good -- it was a busy, but a good legislative session in Montana despite all the challenges with COVID. One other item that was certainly important was to eliminate the CRP Program -- the Community Renewable Program. And that was very problematic for us because it was almost impossible for a resource to thread the needle of being low-cost and community based. There are substantial penalties potentially associated with that as well. So we work very, very hard on compliance. It ultimately was unworkable. So we're pleased to see that requirement go away with retroactivity. That's a big, big positive. We will quite separately from anything that the legislature is doing we're moving ahead on a subscription green program, which we think is a much better approach to achieving a similar set of goals in terms of giving customers the opportunity to subscribe to a resource that they choose. So again an overall good and busy session in Montana, Nebraska and South Dakota very quiet as is typically the case and also positive.

Great. I will leave it there. Thank you all for the time.

Thanks, Ryan.

Thanks, Ryan.

It looks like Brian Russo has raised his hand one more time. I don't know if Brian has another question or not, Brian?

No. I'm all set. Thank you.

Okay. Thanks, Brian.

Let me add one other legislative outcome, which was eliminating what are essentially speculative carbon adders. And the concern we have there is effectively our customers could have been put in a position where they have to pay a QF developer for a value that is not received. So just in terms of computing and avoided cost, kind of, non-quantifiable costs may not be added to the avoided cost. So we think that's a good outcome for our customers and for us as well.

Thank you, Bob. With that we've exhausted our question queue. So I'll hand it back to Bob for any closing remarks you might have.

Just as always, we appreciate you being with us this quarter in this new format. And we are very, very eager to get to spend some time with you in person in the coming months.

Thanks again for joining us. This brings the webcast to a close. You may now disconnect.