NorthWestern Energy Q1 2026 Earnings Call - Merger Momentum Builds as Data Center Demand Accelerates

Audra, Conference Moderator: Good afternoon, and welcome everyone to the NorthWestern Energy first quarter 2026 financial results webinar. At this time, I would like to turn the conference over to Travis Meyer. Please go ahead.

Travis Meyer, Director of Corporate Development and Investor Relations Officer, NorthWestern Energy: Thank you, Audra. Good afternoon, and thank you for joining NorthWestern Energy Group’s financial results webcast for the quarter ended March 31, 2026. My name is Travis Meyer, and I’m the Director of Corporate Development and Investor Relations Officer for NorthWestern. Joining us on the call today are Brian Bird, President Chief Executive Officer, and Crystal Lail, Chief Financial Officer. They’ll walk you through our financial results and provide an overall update on what great progress we’ve had this quarter. 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.

As such, I’ll direct you to the disclosures contained within our SEC filings and the Safe Harbor provisions included in the second slide of this presentation. Also note that this presentation includes non-GAAP financial measures and information regarding the pending merger transaction. Please note these non-GAAP disclosures, definitions, and reconciliations, and the merger-related disclosures included in the appendix of today’s presentation materials. This webcast is being recorded. The archived replay will be available shortly after the event and will remain active for 1 year. Please visit the Financial Results section on the website to access this replay. With those details behind us, I’ll hand over the presentation to Brian Bird for his opening remarks.

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: Thanks, Travis. On our recent highlights for the quarter, we reported GAAP diluted EPS of $1.03 on a non-GAAP diluted EPS of $1.31. We’re affirming our 2026 earnings guidance range of $3.68-$3.83. We’re also affirming our long-term rate base and EPS growth rate targets of 4%-6%. From a merger progress perspective, I’m sure all of you listening have noted that we received shareholder approval of our pending merger with Black Hills and received approval of all proposals. We’ve also put in place constructive settlements with each of our key interveners in Montana, Nebraska, and South Dakota associated with the merger dockets.

From a regulatory and legislative standpoint, we’ve had constructive wildfire legislation passed in South Dakota, and we recently submitted a Large New Load tariff proposal with the MPSC. Regarding data centers, we’re happy to announce we’ve signed another development agreement, this time with Quantica Infrastructure now for a total of three development agreements associated with data centers. Lastly, for dividend, we declared a dividend of $0.67 per share payable June 30, 2026, with a June 15 record date. With that, I’m gonna pass it over to Crystal for our first quarter financial review.

Crystal Lail, Chief Financial Officer, NorthWestern Energy: Thank you, Brian. In my comments today, I will cover our first quarter results, our 2026 earnings outlook and our capital plan. Then I will turn it back to Brian to give you some of the exciting updates that he mentioned as we started the call. I will begin my comments on slide 7. We delivered GAAP earnings of $1.03, which includes the impacts of a historically warm first quarter, merger-related costs and costs related to incremental Colstrip ownership. On an adjusted basis, we delivered $1.31 or 7.4% increase off of our 2025 first quarter results. Slide 8 provides a bit of detail on these key drivers for the quarter. That includes improved margin, albeit net of the weather I just mentioned, offset by higher operating costs, depreciation, and interest expense.

With regard to those operating costs, that includes $0.12 of an increase from the prior quarter due to our incremental ownership of Colstrip and $0.04 driven by labor and benefits. We talked many times about the rationale for owning additional Colstrip and the importance of that facility to serving our customers in Montana. We expect the annual operating cost to be approximately $48 million related to that incremental ownership. On a quarterly basis, you can think about that generally running about $12 million a quarter. You will see that we have offset approximately $8 million of those costs here in Q1. The recovery of these costs was certainly impacted by low market power prices, impacted by overall conditions, driving power pricing lower than our expectations. Moving to slide 9 to give you more detail with regards to margin.

Margins for the first quarter reflect new rates in Montana. You’ll recall the timing of our rate filing last year and not having interim rate recovery in the first quarter, you’ll see that increase here. Also noted are the sales from the Puget Colstrip interest and also continued growth in our transmission revenues in the bulk electric system. This was offset by weather as Montana experienced the warmest winter in over 100 years. Moving to slide 10. That warm weather impacted us as an unfavorable $0.17 versus what we would expect as normal volumetric loads. As I mentioned, very mild weather in Montana, and that continued off of our fourth quarter results as well. The quarter also included $0.05 of merger costs and $0.05 of operating expenses from Holter that were not recovered that I just mentioned.

Those adjustments result in, on an adjusted basis, $1.31 of earnings again for the first quarter of 2026 as compared with $1.22 in the prior quarter. Moving to slide 11, Brian noted that we are reaffirming our guidance for 2026. Looking ahead to the timing of our next rate reviews, which you all typically would expect us to announce our timing of rate reviews here in Q4, or in Q1, excuse me. The settlement agreements that Brian will give you more detail on related to the merger do include some stay out provisions both in Nebraska and South Dakota. For Montana, we have not determined the timing of our next rate review as the 2024 case still remains under reconsideration.

In addition, critical to our long-term earnings profile, as we’ve talked about where we wanna be from a 4%-6% earnings growth perspective are the developments that Brian referred to with relation to development agreements with Quantica and also the Large New Load tariff filing, all underpinning our ability to reaffirm our guidance both for 2026 and beyond. Slide 12 gives you more detail on our capital plan. This remains unchanged from our fourth quarter call of $3.2 billion from 2026 through 2030. I’ll remind you that that is driven by essential investments to meet our customers’ needs. It does not include incremental investments that may be driven by additional regional transmission opportunities that we are very excited about or serving any of these large loads.

It does include, however, what we adjusted for at Q4, which is to include the incremental generating capacity in South Dakota related to the South Dakota or SPP expedited resource adequacy study. We are delivering on our base capital plan without issuing new common equity and have no equity needs in 2026. As we updated you on our Q4 call, incremental capital in 2027 related to the generation capacity in South Dakota will require some equity needs in 2027 and beyond. With that, I will turn it back to Brian for the rest of the update.

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: Thanks, Crystal. On page 14, we’ve got good news in terms of South Dakota wildfire bill. Senate Bill 36 was passed to the South Dakota legislature with broad bipartisan support and has been signed into law. I would just say first and foremost, no strict liability. Strict liability cannot be applied to utility operations alleged to have caused wildfire-related damage. In fact, the legal protections for providers and damages also shown on page 14, you will find it’s extremely similar to what we have in our Montana legislation. Matter of fact, if you wanna go back and compare this page to our Montana page, it’s very, very similar. We’re very excited about the protection that we have in our 2 electric states from a wildfire perspective, some of the best wildfire protection in the U.S. at the state level.

We plan to submit our wildfire mitigation plan for the South Dakota PUC approval in the second half of 2026, and we expect to update that plan every two years going forward. Last thing I would say here from a wildfire perspective, I look back three years ago and what we’ve been able to do from a legislative standpoint and an operational standpoint and a situational awareness standpoint, we feel much better about how we will mitigate wildfire risk in our states, but also acknowledge it is going to be a difficult fire season in front of us, and we need to be cognizant of that as we continue to monitor our systems in those two states. Regarding the merger with Black Hills and how that benefits stakeholders, I think, certainly we spent a lot of time talking to shareholders about this.

Obviously, the increased scale and our ability to go from a 4%-6% EPS grower to a 5%-7% and putting these two companies together, double our rate base on a going forward basis, expanding investment opportunity, having more resources, not only from the financial standpoint, but from a personnel standpoint, putting the right amount of resources at these opportunities. A stronger balance sheet, two strong companies coming together to even have a stronger balance sheet on the other end, and obviously enhanced business diversity in terms of a expanded footprint and a much larger company for both entities. That’s certainly a benefit to shareholders, and that combination represents a highly attractive value creation opportunity, and I think that’s been supported by our shareholders.

Approximately 86% of our shareholders voted, and of those that did, 99.7% voted in support of the merger. Obviously, trying to do the right thing from a shareholder perspective, but this merger will benefit many stakeholders and certainly customers. What I want to say about customers, not just taking two companies that provide great service, and do it in a reliable and a cost-effective manner, but on a going forward basis, any cost savings that these two companies will achieve ultimately accrue back to customers in future rate reviews. We’re excited in this time period when affordability is front and center in front of all of our customers, doing the things that we need to do to help in that regard, and the merger is certainly one of those.

We hope as we move forward with each of the 3 states we’re working with, we ultimately get those approvals. With that, on slide 16, talking about the timeline itself, we did acknowledge here earlier in the call, reaching settlements in each of the 3 states that we filed applications for approval. We actually had a hearing already in Nebraska, and we’ll have hearings in Montana and South Dakota in the May and June timetable, respectively. So continued good progress there. Again, having key intervener settlements are key at this point in time. In addition to from a state perspective, we’ve certainly filed back with FERC way back in December. If you look at the 180-day approval timeline, hope to hear back from FERC by the end of June.

On a FERC perspective, in terms of the S-4 and joint proxy, obviously the shareholder approvals were received here not too long ago. The Hart-Scott-Rodino, we’ve satisfied that based upon the waiting period expiring for that. Really a lot of green checks on this page and this timeline. That’s fantastic. We’re still certainly waiting on not only FERC, but the three states to ultimately make a decision, and obviously we have to have hearings in two of those states. Lots of green checks. We’d like to think we could get something sooner rather than later, but we still believe that an outcome will finally be achieved here, and obviously getting the approvals we need, we expect to have that in the second half of 2026.

Regarding data center process and progress, I would say, we continue to see quite a bit of demand. We actually increased our data center request queue from 6 to 8 since the last time you’ve seen this page. High-level assessments actually come down. 1, I think as people go through the process and understand what they need to do, in essence, to put forward a deposit, think about the costs associated with moving forward. We had 1 of those fall away down to 4 in that high-level assessment. Hopefully, we can continue to move folks there to a development agreement. By the way, speaking of that, you can notice on slide 17, we’ve kinda grayed out letters of intent. When Quantica signed the development agreement, we no longer have any LOIs per se. We’ve moved those to the development agreement stage.

As we move forward with folks in the high-level assessment, we would want to move them directly to a development agreement. That’s the hope there. Of the 3 in the development agreement phase, we’d like to move all of those to an ESA or an energy service agreement. I would say this, instead of guaranteeing a timing of any ESAs, I would put it in this context. All 3 of those parties, those developers would like to have an ESA done by the end of 2026. We on our end, we’re doing everything we possibly can to deliver that we’re ready from a 2026 perspective, but we’d also point out that they need to do certain things on their aspects as well.

The hope is we could bring some of these development agreements to ESA by the end of the year, but certain things certainly must get done. We will work with them and all of us desire to make that happen by the end of the year. On slide 18, from a regulatory front in terms of large load customers, the big news in this quarter is we did submit our Large New Load tariff with the MPSC in March 2026. Certainly, a lot of questions about data centers and protecting customers. If you take a look at our Large New Load tariff, that is definitely what the intent is. Not only protect customers and the company, but also just give the guidelines in terms of where we’re gonna go if in fact we could serve large load.

That was a significant development during the quarter. I think the rest is relatively the same in Montana and South Dakota. We’re ready to move forward if in fact that we get the Large New Load tariff in Montana, but we’re ready today with an ability to serve large load in South Dakota. Regarding that, I mentioned earlier, we’re seeing some demand. We were disappointed we were not able to achieve any sales tax relief from a data center perspective in South Dakota, but we’re still seeing quite a bit of interest in South Dakota nonetheless. We’ll continue to work with folks to see if we can come to any agreements there any time soon.

In terms of the three parties that we’re working with, I’m sure many of you read Sabey has had some issues procuring the land necessary for their data center. They continue to work through that issue, and we’re certainly being patient with them in that process. Atlas continues to move along the process necessary to get from development agreement to ESA. Quantica, of course, the big news as of late is our development agreement with Quantica for their load, which goes from, you know, 25 megawatts ramping up to 1.1 gig with a targeted start date of early 2029.

As is common, in these transactions, and particularly at this phase in the process, a customer’s not been named at this point and will certainly be named at the point in time that we do if in fact we do enter into an ESA with that customer. Colstrip on slide 19. The reason I want to cover this slide just to make sure there’s no confusion about our intent with our two pieces of incremental Colstrip. I think everyone’s aware we acquired the Avista portion of Colstrip to get to resource adequacy with that particular level, 222 MW.

We’ve procured the Puget Sound Energy 370 megawatts to go from 30% with Avista Corporation to 55% to make sure we have control over the Colstrip and the future of Colstrip is in our hands instead of at the hands of some others who may not think about Colstrip in a long-term basis. That’s really important for the state. I think you also know Puget is currently in a FERC-regulated entity and will be there until we have an indication on our Large New Load tariff. If in fact that Large New Load tariff is actually put in place, it would be our desire to move that asset into our Montana state-regulated business. Until we have an outcome on the Large New Load tariff, we will continue to have that as a FERC-regulated asset.

I think many are aware of the NorthWestern value proposition as a standalone business with a 4% dividend yield and our 4%-6% EPS growth, based upon a $3.21 billion capital program, which is divided relatively evenly between our transmission, distribution, and supply businesses. In, you know, executable and low-risk critical capital to our customers, we could still, with that investment, that growth rate can achieve an 8%-10% total return. We do have incremental opportunities we believe that could help us grow faster than 6%, we have to deliver on those. None of these opportunities I’m gonna talk to you about today are in our current plan. There’s no data center in our current plan, off to the left in terms of capital investment, there’s no FERC regional transmission.

There’s no incremental generating capacity other than the South Dakota capacity that we’ve talked about. This would be incremental above and beyond that. Those are not in our plans today. If in fact we were to deliver on that, we could see total returns greater than 10%. The other thing I would say here is back to the merger conversation. We believe we can execute on this plan even better together with our friends at Black Hills. Obviously the merger continues to be important to even maximize more so that value proposition. With that concludes our presentation, and we’ll take any questions at this point in time.

Audra, Conference Moderator: Thank you. We will now begin the question-and-answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. We will take our first question from Shar Pourreza at Wells Fargo.

Whitney Mutalemwa, Analyst, Wells Fargo: Hi, team. This is Whitney Mutalemwa on for Shar. Good afternoon.

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: Hi there.

Whitney Mutalemwa, Analyst, Wells Fargo: ... congratulations on the quarter. Hello.

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: Thank you.

Whitney Mutalemwa, Analyst, Wells Fargo: Andrew and Mark, you stated that there’s a need for large loads to get things done on their end before getting to the ESA stage. Does the recent CV Land situation reinforce the need for stricter milestones just around site control permitting before NorthWestern really begins to treat a project as part of a planning baseline? Then I have a follow-up.

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: I think I would say in this context, you know, initially when we wanted to file the Large New Load tariff, the intent was for us to take an ESA with one of these large load customers and jointly go in and talk about the Large New Load tariff. One of the things we want to do is to make sure that we continue to work with these parties in. It’s gonna take a while, I believe, to get ultimately a resolution of the Large New Load tariff. In the meantime, we’ll be able to continue to work with these three developers on all the necessary things they need to do and we need to do to ultimately bring us to an ESA position.

Whitney Mutalemwa, Analyst, Wells Fargo: That actually sounds pretty good. Just to move on to, just thinking about large load numbers, today’s update was notably stronger just on the aggregate level with demand tied to the three large load customers now scaling to 1,500 by 2030 versus the prior 1.1 gigawatt framing. Can you help bridge what’s actually, like, driving the increase from the prior outlook? I understand that it’s mostly Quantica, but, you know, is it better visibility on existing counter cards or just a broader change in how you’re underwriting the pipeline?

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: Yeah, the primary change here was specifically to Quantica. I think you might see prior, I think we had something in the 500 range for them, obviously 1.1 gig from them today. I think the change is primarily associated with Quantica.

Whitney Mutalemwa, Analyst, Wells Fargo: Okay. Sounds good. Thank you so much.

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: Thank you, Whitney.

Audra, Conference Moderator: We’ll move next to Aidan Kelly at JP Morgan.

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: Hey, Aidan.

Aidan Kelly, Analyst, JP Morgan: Good afternoon. Thanks for the time today. Maybe just going back to the large load front. Clearly you’ve demonstrated some good progress on getting your third development agreement, you know, this quarter. I guess ahead of ESAs, I’d be curious to hear what the latest resource planning assumptions are for each of these projects, and if, like, you could comment on what NorthWestern’s ability is to participate in generation opportunities. I think in the past, Brian, you mentioned, like, build-own-transfer as an opportunity, but would appreciate if you could just tee it up, you know, where we are today and kind of walk through the playbook of what utility participation looks like at this time.

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: Geez, Aidan, this is a great question, and I could talk about this for about a half an hour, but I will try to keep it as brief as I can. We definitely would like to participate. I think one of the things I’ve talked about in the past is concerns about the rules, procurement rules in Montana in terms of IRPs, RFPs, and pre-approval. It’s a long process. Our data center partners certainly would like to move faster than that. One of the things that we’re looking to do with them is to say, is there ability to participate in some form or fashion through a build-own-transfer process? They obviously want to be working.

I think you’ve heard data centers say, "We’d rather be served by the utility through a portfolio than stand alone behind the meter resources." That’s ultimately what we’d like to do, the, our procurement rules and their desire to move quicker is going to be tough. I think we’re going to have to work together and try and necessarily find a way to do that. Obviously, you know, the Puget interests are available, if you will, for large load tariffs, that’s certainly helpful. Our existing portfolio is really there to serve our existing customers, the Puget 370 portion certainly can help. Our long-term IRP does have some cases associated with data center build-out, it would have to be in the back half of some of these opportunities.

We will work with each of these developers in their resource planning and ultimately come together where we can participate together, but certainly on a lesser interest maybe than some utilities who have procurement rules that allow them to actually provide all of these resources. I, again, we wanna participate certainly as much as we can from a generation perspective, and we’ll plan to do as much as we can there with the timing we have. Remember, there’s gonna also be a tremendous amount of transmission opportunities associated with this as well. We’re excited about our ability to invest along with our development partners from a data center perspective.

Aidan Kelly, Analyst, JP Morgan: Great. Thanks for going through that. Then just one more question on my end. Wanted to pivot to the regulatory front. Just any thoughts on the upcoming Montana commissioner elections and how this might influence your, you know, your strategy in the state?

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: Well, in terms of our strategy in the state, I would put it this way. We don’t have a strategy in the state in terms of what commissioner is ultimately elected. We’re obviously gonna work with whoever gets elected and want to obviously, with the commission, do the right things for our customers in Montana. If you have a question regarding what the races are looking like, I can certainly go there, but I’m not necessarily sure specifically what your question is there.

Aidan Kelly, Analyst, JP Morgan: I guess just, like, the filing cadence, how you kinda think about that as the election kinda, you know, gains some momentum, you know, into this fall and just thoughts on that.

Crystal Lail, Chief Financial Officer, NorthWestern Energy: Yeah, Aidan, I think there’s always lots of things that go into our filing cadence, and we’ve been very clear with. Obviously being a state with elected commissions, all three of ours actually, that regardless of when elected commissioners may come or go, we’re gonna need to recover our costs. We’re investing significantly to serve our customers in Montana. Those are gonna be fairly frequent cadences. While there is an election, there’s two seats up for this year, one with one terming out and the other with a commissioner running for re-election. Either way, we’re gonna continue our cadence of needing to recover our costs. It’s historic rate making in Montana. I alluded to the fact that 2023 test period, 2024 known and measurable filing. It’s 2026, end of April I think. We still don’t have a final outcome.

We’re going to need to work within that historic ratemaking context and keep filing. While the elections may come and go, it doesn’t necessarily change our broader strategy of recovery.

Aidan Kelly, Analyst, JP Morgan: Great. Makes sense. Appreciate the insight. See you guys at AGA.

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: Thanks, Aidan.

Crystal Lail, Chief Financial Officer, NorthWestern Energy: See you, Aidan.

Audra, Conference Moderator: We’ll move next to Chris Ellinghaus at Siebert Williams Shank.

Chris Ellinghaus, Analyst, Siebert Williams Shank: Hey, everybody. Good morning. Good afternoon.

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: Hey, Chris.

Crystal Lail, Chief Financial Officer, NorthWestern Energy: Hey, Chris.

Chris Ellinghaus, Analyst, Siebert Williams Shank: Crystal, was that the largest weather deviation from normal you’ve ever had?

Crystal Lail, Chief Financial Officer, NorthWestern Energy: Funny you ask that question, Chris. We’re actually prepared for that one. I think first quarter of 2019 we actually had a slightly larger deviation, that one happened to be a colder weather event. We actually saw incredibly cold weather that winter. We did go back and take a look. It isn’t the most material weather impact, but overall average warmth, I would tell you between both Q4 and Q1, I would suggest that was probably the most significant we’ve seen.

Chris Ellinghaus, Analyst, Siebert Williams Shank: Sure. Brian, you said you would discuss how the races are going. How are they going?

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: I think, I would say that we have a commissioner up for election in both South Dakota and Nebraska, in terms of primaries there, relatively quiet. I can see in Montana, I know Commissioner Bukacek has got 2 Republicans running against her in the primary there, and I think an unchallenged Democrat. It’s early innings here, in terms of what we can say there. The Pinocci Chair seat is open, and there are, I know, a couple Democrats running for that seat, and I think an unchallenged Democrat. Again, regardless, Chris, obviously whoever gets elected, we’re comfortable working with. You know, we’ll continue to watch.

As we sit here today, I think the primaries, and I think you know are coming up in the June timetable, and the time period for others to get into those races in Montana I think is passed. Stay tuned.

Chris Ellinghaus, Analyst, Siebert Williams Shank: Okay. Given, you know, the speed that Montana sort of operates at, I think when I look at your sort of diagram of merger approval expectations, you know, certainly the other states operate in sort of a more normal kind of timeline for decisions, but Montana is particularly slow. Given that the hearings are the middle of next month, if you just took a rate case, for instance, as an example, it could be many, many months following the hearing before you get orders. Is there any reason you have some confidence in getting approvals in Montana by the end of the year?

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: Thanks, Chris. That’s a good question. Obviously, we say the latter half of 2026. I’d say I’m confident. First of all, you know, we don’t know what the ultimate, and we hope to acquire certainly the appropriate amount of votes in order to get a good outcome. The reason I think the speed of that outcome should be relatively quickly. For 2 reasons. One, the important interveners, if you will, a large customer group, obviously the Montana Consumer Counsel, obviously you saw a handful of other interveners have agreed and settled here. In essence, we’ve gotten to a point where people are comfortable with the merger, such to be in settlement with us. That’s the first reason. I think we’ve taken a lot of the issues, if you will, off the table.

We have two interveners that really remain that we need to have a hearing with, have a contested issue. I think the fact that we’ve got a lot of progress from these settlements should help them to speed. The second thing I’d say is there’s a $10 million benefit that will accrue to customers shortly after the merger. I think if that benefit, I would expect that the commission would want that benefit to get to customers as quickly as it possibly can. I would think taking those things into consideration, I’d like to think this would move faster than slower.

Chris Ellinghaus, Analyst, Siebert Williams Shank: Okay. You were talking about wanting to take, you know, an ESA with you to the commission to talk about the large load filing. Is there not enough precedent in other states? You know, there have been some really good mechanisms built into particularly southern states and some of the Midwest for adding new resources. Is that not enough to be able to take some of that precedential evidence to the commission good enough relative to being able to pick a customer specifically?

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: Yeah. Two things, Chris. First and foremost, the nice thing about the utility space is we do see what our neighbors do, and we think we’ve taken really the best of all of the large load tariffs that we’ve seen out there, and I think you’ve seen kind of a middle-of-the-fairway proposal that’s in line with what you’re seeing elsewhere in the industry, and one that’s in such a position that it protects customers. The second thing I’d say is that we were at a point in time, I believe, that we would’ve had an ESA some time ago. As you know, Sabey’s run into some land issues that we were not aware of until here most recently.

I think the timing of a Large New Load tariff and that ESA, we thought they would be about the same time, and why not bring that ESA with it into that Large New Load tariff? From our perspective, there’s a lot of questions out there, Chris, about, you know, how we’re thinking about data centers and how we’re going to protect customers. We felt it was in the best interests of everybody for that dialogue to make this Large New Load tariff filing. You’re right, if you think about it’s very similar to the other protections utilities are seeking for their customers. That, we certainly had an opportunity to look at what others are doing.

Crystal Lail, Chief Financial Officer, NorthWestern Energy: Chris, I would just add on our filing, for those who don’t read the devil in detail of the filings, It is a good spot to be in because you can reference all these others that states that have always already found a path to making sure there’s not cost shifting, reasonable stranded asset protections. Our framework does exactly that and does specifically benchmark all those other tariff filings that have gotten there.

I think it brings us to a point that there’s a great basis to your question there that the Commission can consider without having a specific customer contract to look at, and hopefully we will have one of those soon, that they can consider that that tariff framework provides adequate protections for customers in the state while allowing for the great benefits that you could see on needed system investment that large load customers pay for that.

Chris Ellinghaus, Analyst, Siebert Williams Shank: Maybe I could rephrase the question a little bit. Obviously you guys see what everybody else is doing, but sort of the rhetoric that you’ve heard throughout certainly last year quite a bit seemed to suggest that maybe some of the commissioners in Montana had not sort of been filing how these other jurisdictions were going and the protections that are provided and the customer benefits provided. You know, do you think they’re watching?

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: Yeah. I can’t speak for the commissioners. My expectation, they and the staff are, you know, following what’s happening in other states. I certainly would hope so. I’d just like them to understand that what we’re trying to do, and as Crystal also pointed out, we’re trying to do something similar protections that have already been done and accepted in various states. I think testimony is certainly provided to give examples of that.

Chris Ellinghaus, Analyst, Siebert Williams Shank: Sure. Like you said, with the settlement in Montana for the merger has benefits. It’s not just protections. There’s customer benefits that come from these as well that you would think they would wanna speed along to customers.

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: Anyway.

Yeah, Chris, I’d argue in all three states. It’s obviously it’s credit in Montana, but even the moratorium in South Dakota and Nebraska provides protections for customers in all three of those states.

Chris Ellinghaus, Analyst, Siebert Williams Shank: Right. Okay, appreciate the call.

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: Thank you.

Crystal Lail, Chief Financial Officer, NorthWestern Energy: Thanks, Chris.

Audra, Conference Moderator: We’ll take our next question from Paul Fremont with Ladenburg.

Paul Fremont, Analyst, Ladenburg: Thanks a lot. Congratulations on the good quarter. Starting with sort of Quantica, over what period of time would it take for them to reach 1,100 megawatts?

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: Yeah, that’s a good question, Paul. From a ramping perspective, I think about two years. Starting at 29 and about two years.

Crystal Lail, Chief Financial Officer, NorthWestern Energy: Yeah, I think our material says around 2031, they’d be at full ramp.

Paul Fremont, Analyst, Ladenburg: Okay, great. When I think about your 4%-6% and the fact that no data centers are included in the current 4%-6%, would Sabey and Atlas keep you within the 4%-6%, or would you expect that Sabey and Atlas could put you above sort of the 4%-6% EPS growth?

Crystal Lail, Chief Financial Officer, NorthWestern Energy: Paul, the way I would answer that is each of these deals are gonna be specific to the needs of the customer and what’s the needed investment that will be driven by where that customer is located, where they wanna be. We’ve consistently said, A, we can’t specifically quantify it until we get to an agreement with them and can then clarify what that impact is to earnings. All things considered equal, it certainly pushes us upwards in the range.

Paul Fremont, Analyst, Ladenburg: Should we assume that the Avista portion of Colstrip would likely be the source of generation that would serve, Sabey and Atlas?

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: No, you shouldn’t assume that. The Avista portion, I think you may recall, and Paul, we talked about this for some time at this company. We certainly did not have the appropriate reserve margin in our business. We’re not resource adequate. The Avista piece got us to resource adequate to serve our existing customer needs. The Puget piece, remember that, as I described earlier in the call, that got us from an ownership perspective at Colstrip that made us more comfortable that we had control, certainly over the future of Colstrip. That 370, not necessary for customers today, and nor did we want to burden our customers with $30 million of operating costs for an asset they don’t need today. That 370 is available to serve large load customers.

Paul Fremont, Analyst, Ladenburg: Okay. If, if the Puget piece serves those customers, what potential other spending would you see that would be associated with Sabey and Atlas if they were to come online?

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: Yeah, you’re speaking specifically here from a generation perspective. Obviously, there’s gonna be transmission investment and other investment necessary to support that. I think as Crystal pointed out, when we have an ESA, we’ll be able to talk a little bit more about that.

Crystal Lail, Chief Financial Officer, NorthWestern Energy: Paul, I would also add that our Large New Load tariff filing in that framework, the premise is that each customer would pay the current embedded rate in the Large New Load tariff and that you would surcharge for any incremental investment such as transmission or generation. The other way to think about that is they would come on paying the rate that is set at each base rate case, then that sets the floor of rates they would pay and contribute to the system. Then beyond that, we would be able to surcharge based off each individual customer needs, and that’s where you get to the question you’re going to of how do you think about this and model the opportunity, which is when we are able to sign a specific ESA, we’ll know what that needed incremental investment might be.

Paul Fremont, Analyst, Ladenburg: Great. Then how realistically would you serve the Quantica load if it were to ramp beyond sort of what’s available out of the Puget piece of Colstrip?

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: In that timetable that they’re talking about, as we talked about in our current IRP, we talked about the ability to certainly in a base load. Our base plan didn’t talk about serving data centers, but we had scenarios where data centers are included. In essence for us to participate on the back end of that, we’re gonna have to, you know, maybe catch the back half of that 2031 with some generation. In our discussions with them, they’re gonna have to bring their own generation, and particularly for the 29 and 30, and I’m gonna guess from their needs, all of that load, certainly a good portion to 31 as well. We’d like to participate, but it’s gonna be in the back end.

We like to make sure in what they do build, we would like to have the opportunity from a build-own-transfer in anything they might build.

Paul Fremont, Analyst, Ladenburg: Great. My last question has to do with, I think the large customers suggested that they wanted to see you pursue greater integration of your system with Black Hills’, post-merger. Can you maybe give us an idea of the type of integration work that you think would make sense to better serve the customers of both systems?

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: Yeah, I would think from a generation needs to serve our customers, I think the generation closest to our customers are likely to continue to be built in our service territory. The biggest opportunity out of the blocks would be looking at Path 80 from a transmission interconnection perspective. I shared that in the past of one of those paths. I think, you know, as we continue to look at North Plains Connector and other opportunities for regional transmission, being able to be combined with Black Hills certainly, I think, gives us better opportunities to participate in all of the regional opportunities we’re looking at.

Paul Fremont, Analyst, Ladenburg: Like the kV size of that line and how many miles roughly would that be in terms of construction?

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: Well, North Plains Connector, we’re talking about a 10% or a 300 megawatt interest. You know, I’m not sure what’s publicly stated in terms of the dollar amount associated with that project as we sit here today. It was a pretty sizable investment for us. We’re evaluating that. We’re evaluating, of course, continue to invest in the Colstrip transmission line and the upgrades associated there. Paul, we’re looking at our Montana to Idaho opportunity in terms of investment there and also Path 80, obviously, being able to connect ourselves between Black Hills and our system. We have a slide associated with that regional transmission we’ve shared in the past. In terms of the dollars associated with that, we’re still in relatively early phases of development.

Until we get to certain stages there, we’re gonna probably stay away from sharing what dollar amounts would be, we think those investments would be.

Paul Fremont, Analyst, Ladenburg: Great. Thank you so much.

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: Appreciate it, Paul. Thanks, Paul.

Audra, Conference Moderator: That concludes our Q&A session. I will now turn the conference back over to Brian Bird for closing remarks.

Brian Bird, President and Chief Executive Officer, NorthWestern Energy: I appreciate the comment earlier about a great quarter. I just want to say this, I think you think of the progress thus far on the merger, the shareholder vote, the three settlements. I just wanted to thank my team, and I want to thank the Black Hills team. Great coordination to make that happen in the timetable that we have. Great work here at NorthWestern to not only be able to make progress on the merger, but to deliver all the other things we’re talking about here on this quarter and to continue to serve our customers as well as we do each and every day. Really proud of our group and the great quarter we’ve had. Thank you very much.

Audra, Conference Moderator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.