About NorthWestern Energy Group

NorthWestern Energy Group, Inc., doing business as NorthWestern Energy, provides essential energy infrastructure and valuable services that enrich lives and empower communities while serving as long-term partners to its customers and communities. The company works to deliver safe, reliable, and innovative energy solutions that create value for customers, communities, employees, and investors. The company does this by providing low-cost and reliable service performed by highly-adaptable and skilled employees. The company provides electricity and / or natural gas to approximately 764,200 customers in Montana, South Dakota, Nebraska, and Yellowstone National Park. The company provides its service in South Dakota and Nebraska, as well as in Montana. The company operates principally through three business segments: Electric Utility Operations, Natural Gas Utility Operations, and All Other. The company’s Electric Utility Operations segment includes the generation, purchase, transmission and distribution of electricity. The company’s Natural Gas Utility Operations segment includes the production, purchase, transmission, storage, and distribution of natural gas. The company’s customer base consists of a mix of residential, commercial, and diversified industrial customers. The company is a fully regulated provider of critical infrastructure and essential services. Montana Electric Operations The company’s regulated electric utility business in Montana includes generation, transmission and distribution. The company’s service territory covers approximately 107,600 square miles, representing approximately 73 percent of Montana's land area. During 2022, the company delivered electricity to approximately 398,200 customers in 221 communities and their surrounding rural areas, 11 rural electric cooperatives and, in Wyoming, to the Yellowstone National Park. In 2022, by category, residential, commercial, industrial, and other sales accounted for approximately 45%, 46%, 5%, and 4%, respectively, of the company’s Montana retail electric utility revenue. Transmission and Distribution In addition to delivering energy to distribution systems to serve customers, the company transmits electricity for nonregulated entities owning generation, and utilities, cooperatives, and power marketers serving the Montana electricity market. The company’s total control area peak demand reached a new all-time peak of approximately 2,073 MWs on December 22, 2022. The company’s control area average demand for 2022 was approximately 1,379 MWs per hour, with total energy delivered of more than 12.08 million MWHs. The company’s transmission system is directly interconnected with Avista Corporation; Idaho Power Company; PacifiCorp; the Bonneville Power Administration; WAPA; and Montana Alberta Tie Ltd. Such interconnections, coupled with transmission line capacity made available under agreements with some of the above entities, permit the interchange, purchase, and sale of power among all major electric systems in the west interconnecting with the winter-peaking northern and summer-peaking southern regions of the western power system. The company provides wholesale transmission service and firm and non-firm transmission services for eligible transmission customers pursuant to its FERC Open Access Transmission Tariff. Electric Supply The company’s annual retail electric supply load requirements average approximately 750 MWs, with a peak load of approximately 1,250 MWs, and are supplied by owned and contracted resources and market purchases with multiple counterparties. Owned generation resources supplied approximately 65 percent of the company’s retail load requirements for 2022. The company expects that approximately 65 percent of its retail obligations will be met by owned generation resources in 2023. In addition, the company has contracts with QFs totaling 469 MWs of nameplate capacity, including 87 MWs from waste petroleum coke and waste coal, 268 MWs from wind, 17 MWs from hydro, and 97 MWs from solar projects. The company has several other long-term power purchase agreements, including contracts for 135 MWs nameplate capacity from wind generation, 100 MWs from the British Columbia hydro system, 52 MWs of natural gas generation, and 21 MWs of seasonal base-load hydro supply. On average, the company’s owned and long-term contracted resources are expected to provide enough energy to meet its retail energy load requirements in 2023. Load requirements during peak demand in excess of the company’s owned and long-term contracted resources will be satisfied with market purchases. Owned Generation Facilities Colstrip Unit 4 provides base-load supply and is operated by Talen Montana, LLC (Talen). Talen has a 30 percent ownership interest in Colstrip Unit 3. The company has a reciprocal sharing agreement with Talen regarding the operation of Colstrip Units 3 and 4, in which each party receives 15 percent of the respective combined output and is responsible for 15 percent of the respective operating and construction costs, regardless of whether a particular cost is specified to Colstrip Unit 3 or 4. However, each party is responsible for its own fuel-related costs. Colstrip Unit 4 is supplied with fuel from adjacent coal reserves under a coal supply agreement in effect through 2025. Resource Planning Resource planning is an important function necessary to meet the company’s customers' future energy needs and is used to guide resource acquisition activities. The company filed its latest IRP with the MPSC in August 2019 and supplemented that plan in December 2020. Both filings projected generation capacity deficits and negative reserve margins. Since that time, the company has been working to address the deficit with a combination of owned resources and long-term capacity contracts, as well as short-and-intermediate term capacity contracts. The company expects to file an updated IRP during the first quarter of 2023. The company issued an all-source competitive solicitation request in January 2020 for peaking and flexible capacity to be available for commercial operation beginning in 2023. The competitive solicitation resulted in a 100 MW, 5-year purchase of capacity from a market participant and the development of the 175 MW Yellowstone County Generating Station, which is under construction. In addition to the company’s responsibility to meet peak demand, national NERC reliability standards increased the need for it to have greater dispatchable generation capacity available and be capable of increasing or decreasing output to address intermittent generation, such as wind and solar. The company’s generation portfolio is a balanced mix of energy and capacity resources having different operating characteristics and fuel sources designed to provide energy at the lowest possible cost to meet its obligation to serve retail customers while maintaining reliability. Western Energy Imbalance Market The company entered the Western Energy Imbalance Market (EIM), operated by the California Independent System Operator, on June 16, 2021. The company added EIM transfer capability with Bonneville Power Administration, Avista Corp, and Tacoma Power in 2022, in addition to its existing EIM transfer capability with PacifiCorp and Idaho Power Company. South Dakota Electric Operations The company’s South Dakota electric utility business operates as a vertically integrated generation, transmission and distribution utility. It has the exclusive right to serve an area in South Dakota consisted of 25 counties. The company provides retail electricity to more than 64,700 customers in 116 communities in South Dakota. In 2022, by category, residential, commercial and other sales accounted for approximately 38%, 60%, and 2%, respectively, of the company’s South Dakota retail electric utility revenue. Transmission and Distribution The company’s South Dakota system is interconnected with the transmission facilities of Otter Tail Power Company; Montana-Dakota Utilities Co.; Xcel Energy Inc.; and WAPA. The company also has emergency interconnections with the transmission facilities of East River Electric Cooperative, Inc. and West Central Electric Cooperative. The company is a transmission-owning member in the Southwest Power Pool (SPP), with its transmission facilities residing in zone 19 of the SPP footprint. Each year, the company reviews all new or modified transmission assets and transfer functional control of assets that qualify under the SPP Tariff to the SPP. This annual update goes into effect on April 1st each year. As of December 31, 2022, the company transferred control of 333 line miles of 115 kilovolt (kV) facilities and over 158 line miles of 69 kV facilities. Along with SPP, the company’s South Dakota facilities have ties to MISO. The company has grandfathered agreements in Midcontinent Independent System Operator (MISO), which provide the company the access to move the power from the Coyote, Big Stone, and Neal power plants to its customers. Along with operating the transmission system, SPP also coordinates regional transmission planning for all of its members on an annual basis through its Integrated Transmission Planning (ITP) process. The company’s annual participation in the ITP process includes model development, system needs assessment, and solution development to address identified needs. Electric Supply The company’s annual retail electric supply load requirements average approximately 200 megawatts (MWs), with a peak load of 340 MWs, and are supplied by owned and contracted resources and market purchases. The company uses market purchases and peaking generation to provide peak supply in excess of its base-load capacity. The company is a member of the SPP. As a market participant in SPP, the company buys and sells wholesale energy and reserves in both day-ahead and real-time markets through the operation of a single, consolidated SPP balancing authority. The company and other SPP members submit into the SPP market both offers to sell its generation and bids to purchase power to serve its load. Marketing activities in SPP are handled for the company by a third-party provider acting as its agent. Electric supply resources include 211 MWs from jointly owned coal plants and 138 MWs from two natural gas-fired plants. Additional resources include several peaking units and an 80 MW wind facility. The company also purchases the output of four wind projects, three of which are QFs, under power purchase agreements. Owned Generation Facilities The company completed the construction of the 58 MW Bob Glanzer Generating Station in the summer of 2022. This plant includes flexible reciprocating internal combustion engines near Huron, South Dakota. The Big Stone, Coyote and Neal plants are owned jointly with unaffiliated parties. Each of the jointly owned plants is subject to a joint management structure, and the company is not the operator of any of these plants. The fuel for the company’s jointly owned base-load generating plants is provided through supply contracts of various lengths with several coal companies. Coyote is a mine-mouth generating facility. Neal Unit No. 4 and Big Stone receive their fuel supply via rail. Resource Planning The company has a resource plan that includes estimates of customer usage and programs to provide for the economic, reliable and timely supply of energy. The company continues to update its load forecast to identify the future electric energy needs of its customers, and the company evaluates additional generating capacity requirements on an ongoing basis. The company submitted a plan to the South Dakota Public Utilities Commission (SDPUC) in September of 2022 to provide for the modernization of its generating fleet, which is focused on improving reliability and flexibility. Natural Gas Operations Montana The company’s regulated natural gas utility business in Montana includes production, storage, transmission and distribution. During 2022, the company distributed natural gas to approximately 209,100 customers in 118 Montana communities over a system that consists of approximately 5,100 miles of underground distribution pipelines. The company also serves several smaller distribution companies that provide service to approximately 37,000 customers. The company transmits natural gas in Montana from production receipt points and storage facilities to distribution points and other nonaffiliated transmission systems. The company transported natural gas volumes of approximately 47 billion cubic feet (Bcf) during the year ended December 31, 2022. The company has connections in Montana with four major, unaffiliated transmission systems: Williston Basin Interstate Pipeline, NOVA Gas Transmission Ltd., Colorado Interstate Gas, and Spur Energy. Twelve compressor sites provide more than 46,000 horsepower on the transmission line and an additional 15,000 horsepower at its storage fields, capable of moving more than 360,000 dekatherms per day. In addition, the company owns and operates two transmission pipelines through its subsidiaries, Canadian-Montana Pipe Line Corporation and Havre Pipeline Company, LLC. The company’s Montana retail natural gas supply requirements for the year ended December 31, 2022, were approximately 23.2 Bcf. Its Montana natural gas supply requirements for electric generation fuel for the year ended December 31, 2022, were approximately 5.7 Bcf. The company has contracted with several major producers and marketers with varying contract durations to provide the anticipated supply to meet ongoing requirements. The company’s natural gas supply requirements are fulfilled through third-party fixed-term purchase contracts, short-term market purchases and owned production. The company’s portfolio approach to natural gas supply is intended to enable it to maintain a diversified supply of natural gas sufficient to meet its supply requirements. The company benefits from direct access to suppliers in significant natural gas producing regions in the United States, primarily the Rocky Mountains (Colorado), Montana, and Alberta, Canada. Owned Production and Storage - Since 2010, the company has acquired gas production and gathering system assets as a part of an overall strategy to provide rate stability and customer value: as the company owns these assets, which are regulated, its customers are protected from potential price spikes in the market. As of December 31, 2022, these owned reserves totaled approximately 35.1 Bcf and were estimated to provide approximately 3.0 Bcf in 2023, or approximately 13 percent of the company’s expected annual retail natural gas load in Montana. In addition, the company owns and operates three working natural gas storage fields in Montana with aggregate working gas capacity of approximately 17.85 Bcf and maximum aggregate daily deliverability of approximately 194,000 dekatherms. South Dakota and Nebraska The company provides natural gas to approximately 49,200 customers in 80 South Dakota communities and approximately 43,000 customers in 4 Nebraska communities. In South Dakota, the company also transports natural gas for nine gas-marketing firms and three large end-user accounts. In Nebraska, the company transports natural gas for four gas-marketing firms and one large end-user account. The company delivered approximately 31.0 Bcf of third-party transportation volume on its South Dakota distribution system and approximately 3.8 Bcf of third-party transportation volume on the company’s Nebraska distribution system during 2022. The company’s South Dakota natural gas supply requirements for the year ended December 31, 2022, were approximately 6.3 Bcf. The company contracts with a third party under an asset management agreement to manage transportation and storage of supply to minimize cost and price volatility to its customers. In Nebraska, the company’s natural gas supply requirements for the year ended December 31, 2022, were approximately 4.4 Bcf. The company contracts with a third party under an asset management agreement that includes pipeline capacity, supply, and asset optimization activities. To supplement firm gas supplies in South Dakota and Nebraska, the company contracts for firm natural gas storage services to meet the heating season and peak day requirements of its customers. Municipal Natural Gas Franchise Agreements The company has municipal franchises to provide natural gas service in the communities it serves. The terms of the franchises vary by community. The company’s Montana franchises typically have a fixed 10-year term and continue for additional 10-year terms unless and until canceled, with 5 years notice. The maximum term permitted under Nebraska law for these franchises is 25 years while the maximum term permitted under South Dakota law is 20 years. During the next five years, nine of the company’s Montana franchises could expire by action taken by the franchises' city or town, which account for approximately 9,077 or four percent of its Montana natural gas customers. Six of the company’s South Dakota franchises and one franchise in Nebraska, which account for approximately 27,104 or 29 percent of its South Dakota and Nebraska natural gas customers, are scheduled to reach the end of their fixed term during the next five years. The company does not anticipate termination of any of these franchises. Nature of Goods and Services The company provides retail electric and natural gas services to three primary customer classes. The company’s largest customer class consists of residential customers, which include single private dwellings and individual apartments. The company’s commercial customers consist primarily of main street businesses, and its industrial customers consist primarily of manufacturing and processing businesses that turn raw materials into products. Electric Segment - The company’s regulated electric utility business primarily provides generation, transmission, and distribution services to its customers in its Montana and South Dakota jurisdictions. Natural Gas Segment - The company’s regulated natural gas utility business primarily provides production, storage, transmission, and distribution services to its customers in its Montana, South Dakota, and Nebraska jurisdictions. Government Regulation The company’s provision of utility service is regulated by the Montana Public Service Commission (MPSC), the South Dakota Public Utilities Commission (SDPUC), the Nebraska Public Service Commission (NPSC), and the Federal Energy Regulatory Commission (FERC). The company is also regulated by many other state and federal agencies. For example, because the company’s operations impact land, waterways and the air, the company is subject to a wide range of regulations administered by the federal Environmental Protection Agency, the U.S. Fish & Wildlife Service, and parallel state agencies regulating environmental and natural resources in Montana, South Dakota and Nebraska. Another example relates to the company’s provision of natural gas service. The U.S. Department of Transportation through the Pipeline and Hazardous Materials Safety Administration, along with its state partners, regulates natural gas pipeline and natural gas storage field safety. As a publicly-traded company, the company is subject to the Securities and Exchange Commission’s requirements regarding financial reporting, disclosures, and laws and regulations protecting investors. The company is subject to the Occupational Safety and Health Administration (OSHA), which regulates workplace safety. The company is also subject to local zoning laws and regulations. MPSC Regulation The company’s Montana operations are subject to the jurisdiction of the MPSC with respect to rates, terms and conditions of service, accounting records, electric service territorial issues and other aspects of its operations, including when the company issues, assumes, or guarantees securities in Montana, or when it creates liens on the company’s regulated Montana properties. SDPUC Regulation The company’s South Dakota operations are subject to SDPUC jurisdiction with respect to rates, terms and conditions of service, accounting records, electric service territorial issues and other aspects of its electric and natural gas operations. The company’s retail electric rates, approved by the SDPUC, provide several options for residential, commercial and industrial customers, including dual-fuel, interruptible, special all-electric heating, and other special rates. NPSC Regulation The company’s Nebraska natural gas rates and terms and conditions of service for residential and smaller commercial customers are regulated by the NPSC. The company’s tariffs have been approved by the NPSC, and the NPSC has adopted certain rules governing the terms and conditions of service of regulated natural gas utilities. FERC Regulation The company is subject to FERC's jurisdiction and regulations with respect to rates for electric transmission service and electricity sold at wholesale, hydro licensing and operations, the issuance of certain securities, incurrence of certain long-term debt, and compliance with mandatory reliability standards, among other things. Under FERC's open access transmission policy, as owners of transmission facilities, the company is required to provide open access to its transmission facilities under filed tariffs at cost-based rates. In addition, the company is required to comply with FERC's Standards of Conduct for Transmission Providers. The company’s Montana wholesale transmission customers, such as cooperatives, industrial customers, and other customers that have third-party commodity supply providers, are served under its Open Access Transmission Tariff (OATT), which is on file with FERC. The company’s South Dakota transmission operations are in the SPP, and transmission service is provided under the SPP OATT. The company’s natural gas transportation pipelines are generally not subject to FERC's jurisdiction, although the company is subject to state regulation. The company conducts limited interstate transportation in Montana and South Dakota that is subject to FERC jurisdiction, and FERC has allowed the MPSC and SDPUC to set the rates for this interstate service. The company has capacity agreements in South Dakota and Nebraska with interstate pipelines that are also subject to FERC jurisdiction. The company’s hydroelectric generating facilities are licensed by the FERC and operated under the terms of those licenses and FERC regulations. In connection with the relicensing of these generating facilities, applicable law permits the FERC to issue a new license to the existing licensee, to a new licensee, or alternatively allows the U.S. government to take over the facility. Reliability Standards - The company must comply with the standards and requirements that apply to the North American Electric Reliability Corporation (NERC) functions for which it has registered in both the Midwest Reliability Organization (MRO) for the company’s South Dakota operations and the Western Electricity Coordination Council (WECC) for its Montana operations. History NorthWestern Energy Group, Inc. was founded in 1923. The company was incorporated in Delaware in 1923.