NorthWestern Energy (NWE) Earnings Transcript

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DATE

Thursday, February 12, 2026 at 3:30 p.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — Brian Bird
• Chief Financial Officer — Crystal Lail
• Director of Corporate Development and Investor Relations Officer — Travis Meyer

TAKEAWAYS

• GAAP Diluted EPS -- $2.94 for the year, including the impact of merger-related costs, a Montana regulatory rate case outcome, and warm Q4 weather.
• Non-GAAP Diluted EPS -- $3.58 for the year, reflecting a 5.3% increase versus 2024 driven by margin improvements offset by regulatory and weather headwinds.
• Q4 Adjusted EPS -- $1.17, compared to $1.13 in Q4 2024, including new rates and regulatory activities, with unfavorable weather lowering results by $0.03.
• Montana Rate Review Disallowance -- $0.38 charge in Q4 due to regulatory disallowance for Yellowstone County generating station costs, with management seeking reconsideration.
• Merger-Related Costs -- $0.15 reduction in annual earnings associated with merger activities and transaction costs.
• Dividend Increase -- Quarterly dividend increased by 1.5% to $0.67 per share.
• 2026 EPS Guidance -- Initiated at $3.68 to $3.83 per share, representing 5% midpoint growth.
• Five-Year Capital Plan -- Updated to $3.21 billion, a 17% increase, with $300 million for a new 131 MW South Dakota gas project included.
• Required Equity -- Management stated that incremental South Dakota generation investment beyond 2026 will require equity issuance at approximately a 50/50 debt-to-equity ratio.
• FFO to Debt -- Finished 2025 below targeted levels due to reduced margins from mild weather and under-collection of Montana supply costs.
• Black Hills Merger -- All-stock merger progressing with regulatory filings completed in Montana, Nebraska, South Dakota, and at FERC; shareholder votes set for April 2, 2026.
• Colstrip Ownership -- Increased from 15% to 55% after acquiring Avista and Puget Sound Energy's ownership interests, enabling greater strategic control and resource adequacy in Montana.
• Colstrip Operating Costs -- Temporary PCAM tariff waiver granted in January 2026 is expected to offset $18 million in incremental annual costs for the Avista portion.
• Contract Revenue -- Puget ownership segment covered by a contract through late 2027, anticipated to offset $30 million in annual operating costs.
• Data Center Agreements -- Third letter of intent signed with Fonica for 500-plus MW; Atlas Power advanced to development agreement status as of February 2026.

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RISKS

• Warm weather in the second half of 2025 negatively impacted margins and cash flows, explicitly driving lower FFO-to-debt ratios at year-end.
• Montana regulatory ruling on the Yellowstone County generating station resulted in a $0.38 one-time charge and ongoing uncertainty, as management noted no clear timeline for reconsideration.
• Merger-related costs reduced annual earnings by $0.15 per share and were cited as a headwind in results.

SUMMARY

The call highlighted explicit market-moving developments including guidance initiation at a 5% midpoint EPS growth, a 17% increase to the five-year capital plan, and detailed progress on the Black Hills Corporation merger, with all required regulatory and shareholder steps on track for 2026 completion. Management emphasized finalized and pending data center development agreements, which may drive significant load and future tariff adjustments but currently face development and regulatory milestones before revenue realization. The acquisition of majority control of Colstrip enhances operational flexibility, with near-term cost recovery solutions in place but contingent on further regulatory approvals signal ongoing compliance risk. Immediate financing needs for expanded South Dakota generation will require equity issuance from 2027 onward under a 50/50 debt-to-equity approach.

• Montana's new House Bill 490 and Senate Bill 301, both signed into law in 2025, clarify and limit wildfire-related risks while supporting greater confidence for transmission investment.
• Property tax increases posed a significant headwind, as the company can only recover a portion between rate cases.
• Dividend yield is now guided at approximately 4% following the increase, down from the prior referenced range of 4%-5%.
• South Dakota data center and generation investments benefit from active infrastructure riders and tariff mechanisms for recovery, with phase-in rate plans and construction cash recovery reducing lag effects.

INDUSTRY GLOSSARY

• PCAM (Power Cost and Adjustment Mechanism): A regulatory mechanism enabling utilities to adjust customer rates based on variances between actual and forecasted power supply costs, subject to commission approval.
• ESA (Energy Services Agreement): A long-term contract specifying the delivery of energy to a large customer, often required to trigger tariff filings and capital recovery related to new load projects.
• SPP (Southwest Power Pool): A regional transmission organization responsible for maintaining resource adequacy and reliability for electric utilities in the Midwestern United States, relevant for project interconnection and resource planning.
• AFUDC (Allowance for Funds Used During Construction): A capitalization of interest and financing costs incurred during the construction of long-term infrastructure assets, credited to earnings but not available as cash until asset completion.
• FFO (Funds From Operations): A financial metric tracking net cash from operating activities before working capital adjustments, used to assess a utility's debt servicing capacity.

Full Conference Call Transcript

Travis Meyer: financial results webcast for the full year ended 12/31/2025. As Jordan said, my name is Travis Meyer. I am the Director of Corporate Development and Investor Relations Officer for Northwestern Energy Group Inc. Joining us on the call today are Brian Bird, President and Chief Executive Officer, and Crystal Lail, Chief Financial Officer. They will walk you through our financial results and provide an overall update on progress this quarter. Northwestern Energy Group Inc's results have been released, and the release is available on our website at northwesternenergy.com. We also released our 10-K 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 will direct you to the disclosures contained in our SEC filings and the safe harbor provisions included on the second slide of this presentation. Also note that this presentation includes non-GAAP financial measures and information regarding the pending merger transaction. Please see the non-GAAP disclosures, definitions, and reconciliations and the merger-related disclosures included in the appendix of the presentation material. This webcast is being recorded. The archived replay will be available shortly after the event and remain active for one year. Please visit the financial results section of our website to access the replay. With that behind us, I will hand the presentation over to Brian Bird for his opening remarks. Thanks, Travis.

Speaking about 2025, first and foremost, I want to talk about how we have done in terms of executing on our strategic initiatives. First and foremost, we announced our agreement with Black Hills Corporation, an all-stock merger of equals. We patiently waited and ultimately closed our acquisition of the Avista and 1126. We recently submitted a $300,000,000 or 131 megawatt South Dakota natural gas project to SPP's expedited resource adequacy study, and we are now including that project in our ongoing capital plan. And we acquired the Energy West and Cutbank Gas natural gas distribution

Operator: assets.

Brian Bird: On the legislative and regulatory front, we have very, very good outcomes in 2025. On the legislative front, Montana Senate Bill 301 was signed into law, providing greater confidence for transmission investment in Montana, and Montana House Bill 490, signed into law, which clarifies and limits wildfire-related risks, protecting our customers, communities, and investors. So, again, a very good legislative outcome in 2025. On the regulatory front, speaking of wildfire, we also, as part of that legislation, we need to get our wildfire plan approved, and we did get that approval from the Montana Commission in 2025. And then also on the regulatory front, we did complete our Montana Electric and Natural Gas general rate reviews.

And then moving forward, thinking about the data center growth opportunities, during the year we signed our third letter of intent with Fonica for 500-plus megawatts. Data center, and we progressed with Sebi from a letter of intent to a development agreement. So that is 2025. More recently, in talking about financial results, and Crystal will get into that here shortly, but the financial results for the full year we reported GAAP diluted EPS of $2.94 and our non-GAAP diluted EPS of $3.58. We are increasing our quarterly dividend by 1.5% to $0.67 per share.

We are initiating our 2026 earnings guidance range of $3.68 to $3.83, and we are updating our five-year capital plan to $3,210,000,000, a 17% increase over our prior plan. Speaking of the merger with Black Hills, which we anticipate closing in 2026, we filed joint requests for merger approval in the states of Montana, Nebraska, and South Dakota, but we also filed with FERC. And we recently filed also our Form S-4 and joint proxy. Regarding the Montana IRP, we submitted our draft 2026 Integrated Resource Plan about a month ago. And from a Montana data center perspective, as of yesterday, we advanced our friends at Atlas Power from a LOI perspective to a development agreement.

And I will speak to all of these topics a bit more after Crystal's presentation. With that, Crystal.

Crystal Lail: Thank you, Brian. In my comments today, I will cover our fourth quarter and year-to-date results. I will also cover, as Brian mentioned, our outlook for 2026 and our updated capital and financing plan. After listening to Brian there, it has been a really, really busy 2025 with a lot of accomplishments, and our team has worked super hard to also deliver on our results 2025, achieving 5.3% growth off of 2024 on a non-GAAP basis. We delivered GAAP earnings of $2.94, which included impacts of merger-related costs, the regulatory outcome rate case in Montana, and a very warm fourth quarter. I will describe those adjustments in a bit further detail here on a later slide.

Adjusting for those items, as I mentioned, we delivered $3.58, and that is the efforts after quite a few headwinds during the year to deliver upon our commitments to our shareholders. Moving on to Slide 8. On an adjusted basis for the fourth quarter, we delivered $1.17. Our improved margin reflects new rates, a lot of regulatory execution involved in getting to those numbers, which were offset a bit by mild weather, as I alluded to in this fourth quarter, very warm for us, and impacts of market prices in our Montana PCCAM mechanism.

That margin improvement was offset by a one-time charge in the Montana rate review, higher operating costs, and operating costs certainly include merger-related costs as well, and then depreciation and interest expense increases as well. Moving to Slide 9 to talk about some of the adjustments for the quarter. Weather for the quarter was unfavorable by $0.03, but when you compare that to a very mild 2024, however, compared to normal, weather represented a $0.13 impact to us in Q4.

Quarter was also impacted by $0.03 of merger costs, the one-time charge for the Montana rate review outcome related to the Yellowstone County generating station and the disallowance of certain costs related to that was $0.38, and $0.03 related to the PCAM reflecting the final order there reflecting cessation of the sharing amount there, offset by a $0.12 tax benefit. You will see that resulted in the $1.17 of adjusted earnings compared to $1.13 in 2024. On a year-to-date basis, moving to Slide 10, our performance is driven by, again, that improved margin driven by regulatory execution offset by detriments of PCAM within of $0.09 from a full-year basis.

On an O&M perspective, certainly higher given new maintenance at the Yellowstone County generating facility, the maintenance at our other electric generation, the amount we are spending importantly on wildfire mitigation, and also insurance that has increased in labor and benefits. We also incurred higher depreciation expense of $0.27 and interest expense of $0.23. What I might highlight on this slide is that taxes in the current period include a $0.12 benefit, while 2024 included a $0.39 benefit, which is a good segue to the next Slide 11 to hopefully give you clarity on quite a few things that moved within our earnings from a 2025 full-year basis.

Weather, again, was unfavorable by $0.05 compared to normal weather that was $0.18 of detriment for us as we think about our impact to results for 2025. It was a very mild back half of 2025. Most of you will not recall, but we actually started the year through first quarter with favorable weather. So that reversal was really significant for us and impacts also, as we will talk about later, cash and the impact to financing plans. In addition, merger-related costs were $0.15 and the Montana rate review disallowance I spoke to was $0.38.

Which notably we have sought reconsideration of that disallowance, but we do not have a clear timeline as to when we might see any impact of that. But that would certainly be a 2026 item, if so. In addition, I spoke to tax benefits and quite a bit of noise within our tax number between last year and this year. There was $0.12 of discrete items benefit in 2025. And that compares to, if you will recall, 2024, we had $0.28 in the prior period. All of that, if you will follow this slide along, gets us to $3.58 of adjusted earnings for our 2025 number, which, as I alluded to earlier, was 5.3% of an increase over 2024.

My comment there is, given the significant headwinds we have talked about, the headwinds in our financials from our PCAM mechanism, which, again, I will take a positive out of the Montana rate review outcome indicating that the sharing part of that will be suspended on an ongoing basis. That is important, but that was about $0.09 of impact to us in 2025 total, which we have adjusted out of the fourth quarter here. And then also property taxes being higher, we collect a significant amount of property taxes through our rates. Those increase, and we only recover a certain portion of that between the rate cases.

Those were pretty significant headwinds for us during the year, so we are pleased on top of the mild weather that I talked about and the ongoing impact to our financials, we are pleased that delivering $3.58 for 2025. Slide 12, looking forward, from a guidance perspective, we are initiating earnings guidance in the range of $3.68 to $3.83 per share, which represents 5% growth at the midpoint off of our 2025 results and remains anchored to our 2024 base. A significant part of that is moving to Slide 13 and updating our capital plan. Brian mentioned the inclusion of the 131 megawatt generating facility in South Dakota. And also, we have updated to include our incremental full strip ownership.

We are very proud of closing those transactions effective 01/01/2026 and being resource adequate to make sure that we can serve our customers. Those two things drive a 17% increase in our overall capital plan over what we have reflected before. You will recall our dedication to having a self-funded capital plan and only issuing equity when it is accretive. On an ongoing basis, I would tell you that the base capital plan that underlies $3,200,000,000 you see here continues to be self-funded.

With the incremental South Dakota generation investment reflected here, we do expect to need equity beyond 2026 to fund that investment, which we expect to, if you think about that to be on a 50/50 debt to equity basis, that we would manage that incremental capital. And that is consistent with our overall commitment to maintaining high credit quality in our ongoing plan. Moving to Slide 14 to talk about financing for 2026. Again, I just mentioned that the incremental South Dakota generation investment, that would be beyond 2026. We expect to issue debt to refinance existing maturities and fund our existing capital plan. We closed out 2025 at a lower FFO to debt.

That was driven by the things I mentioned earlier of the combination of lack of margins from very mild weather affecting our cash flows and also being significantly under-collected as supply costs on the Montana side. Those two things really drove us closing out the year at a lower level than we would like to. But we remain committed to getting above and staying above our downside threshold. And with that, I will turn it back to Brian.

Brian Bird: Alright. Thanks, Crystal. On Slide 16, we speak to the merger with Black Hills and the benefits really to all stakeholders. And obviously, the strategic combination represents a highly attractive value creation opportunity for both companies. On this slide, it really speaks to, certainly going to share all the perspective but also customers. So let me start with shareholders. It increases scale position and growth. Think of moving two companies from a 4% to 6% EPS growth to 5% to 7%. Doubling of each company's rate base totaling approximately $11,000,000,000, both companies having significant growth opportunities and ability to take advantage of this merger today to truly capture those.

And as it points out, a little bit lower on the slide, as a larger company, we will be able to expand our investment opportunity. And I should also acknowledge it reduces risk. As a larger company with risks like wildfire risk and other risks that we have in our business, we certainly can sustain those as a larger organization. Also, strengthen the balance sheet and the credit metrics. You heard Crystal speak to that just a moment ago. Obviously, as a combined entity, we have the financial wherewithal to invest more in our businesses as a larger company and do that cost effectively for our customers. And lastly, enhance business diversity.

Not one entity will have more than a third in terms of ownership, in terms of representation by a jurisdiction. I think the largest would be approximately 31% for a particular jurisdiction. But also a very, very good mix of electric and gas. And what makes these two great companies, both combo utilities, even stronger on a combined entity. And then the center of this page, and this is really the center of all we do certainly in Northwestern Energy Group Inc, we will speak for our friends at Black Hills. We think about our customers and the substantial long-term value for our customers for bringing these two teams together who are very complementary.

We both provide excellent customer service to our customers and are great operators. And I will tell you the savings generated from putting these two companies together ultimately improve the customers in future rate review proceedings. And so, obviously, when people are thinking about affordability, our two companies are thinking about that certainly as we contemplate this merger on a going-forward basis. Moving forward in terms of a timeline, I mentioned earlier that we filed joint applications for approval in three states, Montana, Nebraska, and South Dakota. We did that in Q4, and we have hearings expected in the second quarter of 2026 for those states. We also filed at FERC in 2025.

We filed the S-4 joint proxy statement on January 30. And we have shareholder votes both scheduled for April 2. Beyond that, we have also started our integration planning effort. And we do expect anticipated approvals and closing in 2026. Moving forward, thinking about large load customers, and obviously that leads you to discussions around data centers. On Slide 18, I mentioned the far right, you see the Montana large load opportunities. First and foremost, Sadie, I am sure you have been reading about. They have had some issues in terms of property, in terms of their project.

They have two sites certainly that they are considering, and right now they continue to, they got a favorable vote here recently to move forward, but they are still looking at the land concerns, and they are dealing with those issues. They have land both in Butte and Anaconda that they are considering. So we continue to work through them as they work through those challenges. We have a development agreement, and we expect to get to an ESA here, hopefully, by 2026. Also, we announced here recently Atlas Power. We have moved from an LOI to a development agreement, and they have been moving much, much quicker, which is good signs.

We think from an off-taker or a customer from their perspective, they are getting ready to move forward. That is good news for us. With that development agreement, I would just tell you the benefit of development agreements, these two entities now are putting skin in the game. They put upwards of $500,000 of investment, if you will, for all the studies that are necessary that we need to complete as a utility. And so skin in the game, if you will, for those two entities as we move forward. And I expect at least one of those ESAs to be completed for those two by 2026. Quantica, also making great progress.

And hopefully, we will see a development agreement from them relatively soon. As I think about the two states that we provide electric business off to the left, the thing I would say about Montana, we ultimately hope to serve these large load customers on a state jurisdictional basis. And when we have an ESA with one of these parties, we would like to make a filing with the MPSC along with a large load tariff that protects customers, and we are going to do that here in 2026. Regarding South Dakota, there is a significant indication of interest by data centers in the state.

The benefit there is any new large load customers that require internal capacity, we have infrastructure riders that can help us with that generation cost recovery. And also the South Dakota PUC has established process for large load customers with a deviated rate tariff. Last thing I would say about South Dakota is during this legislative session we are waiting on sales tax reform in the state, which is something that is very, very important to data centers before they move forward in South Dakota. So watch that in the coming weeks. The second slide I have on data center, Slide 19.

The middle of that slide shows letter of intent and development agreements, obviously moving from two letter of intents and the one development agreement to one letter of intent, two development agreements, shows progress there. We would like to move all of those over into the ESA category to the right here relatively soon in 2026. To the far left, I would also talk about data center requests and high-level assessments. You may note that the queue count is actually down a little bit there.

And I think what happens, there are a lot of developers here, and they get to a certain point, and if they cannot move forward fast enough, cannot find an off-taker or a customer, that count can reduce. Not necessarily surprised. I think from a high-level assessment, there are some in there we believe certainly could move into that middle category of letter of intent to development agreement. So we are excited there. If we do see some sales tax movement in South Dakota, I expect both of those queue counts to actually go up in 2026. Moving forward on Colstrip.

Happy to announce, as I announced earlier, that we closed those two portions of Colstrip, and in addition to our owned 222 megawatts, we have added the Avista 222. That not only allowed us to achieve resource adequacy in Montana, but increased our ownership from 15% to 30%. But knowing that we have not as much control certainly as a 30% owner, we did not have control of the facility as a whole. The incremental Puget piece did two things for us. It moved us from 30% to 55%, giving us that ability to drive strategic direction for the overall facility, but also gave us the ability now to serve large load customers.

And so both of those interests, or closing those interests, are operating well for us. And we are excited to have them in the fleet. I will tell you what, I sleep much sounder when cold weather does come to us in Montana and South Dakota. One thing I will say real quickly about Avista and Puget, I think you are well aware. We acquired both of those units for zero, which is a fantastic thing for our customers certainly from affordability and reliability, but we did need to cover our operating costs.

And in Montana for the Avista portion, we filed a temporary PCAM tariff waiver with the MPSC in August, and that would provide a near-term cost recovery that is expected to largely offset the approximately $18,000,000 of incremental annual operating costs. That waiver, by the way, was temporarily granted in January 2026. So, hopefully, we will learn more about that waiver in 2026. Hopefully, get full recovery for the full year of those operating costs at some point in the future. From the Puget perspective, we signed a contract in October 2025 to sell that electricity through late 2027. Think of when data centers could come on in the state.

And that revenue from that contract is expected to largely offset the $30,000,000 of incremental annual operating costs resulting from the transfer. I think you are well aware we filed with FERC for cost-based rates in October 2025, and we expect approval from that filing in 2026. Lastly, the Northwestern Energy Group Inc value proposition slide, you might have noticed two changes on this slide. The first, Crystal talked to, is the 17% increase in investment over on the right-hand side up to the $3,210,000,000. Second is noting the dividend yield at the top of the page. You might recall that used to say 4%, 5%. I would argue today, we are saying approximately 4%.

Keep that in mind as you think about our base plan on the left and our incremental opportunities there in the center. From a base plan, taking that dividend yield plus our 4% to 6% EPS growth, you are looking at an 8% to 10% total return just doing, and I would argue, what utilities are typically doing from electric and gas distribution, transmission, supply investments. This is a kind of bread-and-butter utility investment. And so even with that, thinking about an 8% to 10% total return, and obviously if we are able to capture any data center growth, any work regional transmission, any incremental generating capacity, that return can certainly go over 10%.

And so with that, I am going to, from a conclusion perspective, I think you have seen this conclusion slide for many years, I am just going to turn it over for Q&A perspective.

Operator: A reminder, if you would like to ask a question during the question and answer session, simply press star followed by the number 1 on your telephone keypad. Your first question comes from the line of Shar Pourreza from Wells Fargo. Your line is live.

Brian Bird: Hello?

Crystal Lail: Hi. Thank you for the update and great capital plan roll forward. My first question is,

Shar Pourreza: previously, you indicated that you file a large load tariff in 4Q. To this ring fence cost for new data center loads, can you update us on the timing and scope? What has changed versus the five, and stakeholders should expect a file tariff at

Operator: PS.

Crystal Lail: Yes. Whitney, you are cutting out a little bit, but I will take the question. We had said we will file a large load tariff, but I would note that was tied to signing an ESA. So we want to go hand in hand to file a tariff with a specific contract. Part of that conversation, we have an existing GS2 tariff today. We think we could serve customers off of that tariff, but you want to strengthen that tariff and certainly get ahead of this argument that data centers are not paying their fair share, etcetera.

We expect to file that once we have a signed ESA that we can walk through the specific mechanics with the Montana Commission of what that looks like and why indeed they pay their fair share and likely contribute broadly to the system benefit. So once we have a signed ESA, we will plan to file that large load tariff in sync with that.

Brian Bird: Yes. The only thing I would add to that is, as I said in the presentation, there is an expectation we would do that by the end of the second quarter. And the reason being, that is when I expect an ESA to occur. And I would say that tariff is ready to go. We are waiting for an ESA.

Shar Pourreza: Okay. Sounds good. Hopefully, I become much more audible now. Just for another follow-up, on the merger, there has been focus on large flow data cost, I am sorry, data center cost causation. Stakeholders need or want education, not just on the process. Can you give us an update on how the education plan to stakeholders to demonstrate no harm and affordability has been so far? That is it for me.

Brian Bird: I think you are talking from a public process perspective. I think in, yes, you know, where data centers have gotten quite a bit of attention, as you are well aware, throughout the country. And I would argue in Montana, in the community of, obviously, most of the discussion, because Seifi is furthest along in there. And I think the Butte-Silver Bow allowed a lot of conversation. The community ultimately voted 9 to 3 in favor of letting Seifi move forward. So I think I would argue that the data centers are getting to be more vocal. It is talking to the benefits. We, the utility, certainly have been supportive of that effort.

And I think what we need to demonstrate, all of us need to demonstrate, is from a tariff perspective, that is our plan, and allow the MPSC to approve a tariff that we would put a tariff in front of them that is going to protect customers. And I think when customers understand that, they are going to feel much, much better about it. Obviously, they are reading what is happening in other parts of the country and how customers have been impacted by data centers, and it is easy to jump to conclusions. And so I think there has been a decent dialogue about this topic.

Certainly, I and others have been out talking about it, and I am not saying it is going to be easy either for data centers, but I think thus far, we are making good progress with Xavien, Atlas, and Quantico, as I know, is out there talking about this as well. So I feel pretty good about where we are.

Operator: Your next question comes from the line of Aidan Charles Kelly from JPMorgan. Your line is live.

Brian Bird: Hey. Good afternoon. Just wanted to touch on the load fund first if I could. It seems like there have been a number of quarters in the past that we have been waiting for an ESA. And, Brian, you mentioned in your prepared remarks some friction on the land considerations with Sabie perhaps going longer than expected. Do you see this issue kind of percolating to other prospective loads such as Atlas and others? Just in general, what do you think is needed to push these development agreements into the goal line at this time? Yes. I think you have seen, I will take a bit of a mea culpa here myself.

I think in thinking about ESAs, we at times were the holdup to getting these ESAs done, and we are ready to go from our perspective. And then unfortunately, for Sabie, they ran into this land issue, and they are working through that. So I think this is not just on the utilities to get these things done. In many cases, developers also need to find customers, and before they are ready to sign an ESA, sometimes they need to have that done. It is much easier for hyperscalers, of course, who do not need to find customers. So I do think that Zavie is working awfully hard to get to an ESA.

Atlas, obviously, moving to a development agreement, the next step is to get to an ESA. So I have seen that it has taken a bit longer nationally for this process, and certainly, it has impacted us a bit here. But I am also very confident in terms of where we sit with these three providers today or these potential data centers. I feel very good about where we ultimately will get. Got it. Makes sense. And then just turning to the growth outlook, if I could. I see you affirmed the 4% to 6% rate base CAGR post the South Dakota plant, which I believe is directionally around maybe $300,000,000 in CapEx.

And then, obviously, you mentioned in the remarks that it is perhaps 50% equity sourced. So I guess my question would be, do you see as the offsetting factors to that share dilution that kind of gives you the confidence of that reaffirmed 4% to 6% EPS CAGR.

Crystal Lail: Sure. The great thing about, and we have talked about this, what are the incremental opportunities to that total return, the incremental opportunities to the right side. The incremental generation in South Dakota, we recover cash during, there is a phase-in rate plan rider that allows us to recover. AFUDC is great. It is accretive to earnings, but it is not accretive to cash. As we have talked about how do you finance those things along time, so that opportunity that presents itself with meeting the resource adequacy requirements at SPP, owning that generation here and building that facility, that is the right kind of incremental CapEx that we have looked to layer into our plan.

We are excited to do that. That is certainly the kind of stuff that gives us confidence to maintain or even push upward on our earnings range while also financing that in terms that make sense. So that is where we have been pretty clear. That is the type of incremental CapEx we were looking for. That is incremental to our base plan, so we will fund that in a fifty-fifty kind of approach. We will recover cash during construction with the phase-in rates rate plan and then, obviously, ultimately see growth off of earnings out of that once it is in service.

Brian Bird: Great. For the insight. I will leave it there. Take care.

Shar Pourreza: Thanks, Amy.

Shar Pourreza: Thanks, Amy.

Operator: Your next question comes from the line of Nicholas Joseph Campanella from Bank of America. Your line is live.

Brian Bird: Hey there. Hey. Thanks for, how are you? Thanks for taking the questions. Just wanted to kind of clarify on the overall ESA strategy. Is also my prior understanding was that the system is long, so you may not need for the first couple deals a dedicated framework to pay for the depreciation, the interest, and what would be associated with new build. But just this ESA will inform how you propose an overall tariff for all of that in this upcoming first half here. Is that just the general strategy? I am sorry to make you go back and repeat yourself. Yes. I think as an example for how we want to make sure we are protecting customers.

And I think the discussions we are having with data centers, they want to protect customers too, the folks that we are certainly talking to. And so going hand in hand with them with an ESA and a tariff, that is the plan, and that is in the plan by 2026.

Crystal Lail: And, Nick, I would add on to that. Just every data center is site-specific. Some of them, to your point, we are long generation. What is the transmission needs? Maybe some of them are not much CapEx. All of that, we do have an existing tariff. I know we talked about that a year ago. We felt like we can serve customers under that. We do still today. As you know, the national narrative on data centers has changed a bit, and there is a lot of what I would call misinformation about what they can do to certainly help shoulder the cost of the grid and, in fact, subsidize some of your other customers.

I think everywhere you are going to see commissions want to understand that better. We got feedback from the Montana Commission, and we certainly want to be transparent with them and bring that forth so that you have a positive construct under which you are doing that.

So while each one is unique, bringing something forth that demonstrates the value that a data center can have, a large load facility can have on the grid, and that they are indeed paying their fair share while we would be comfortable serving them under an existing tariff, I think there is also a lot of value to making sure your regulators are understanding that and, of course, then the public sentiment around that remains positive. Yes. One thing on that too, Kristi,

Brian Bird: sparked a thought for me. I think this issue of protecting customers, I think there is a confusion around why the Puget portion was put into a FERC-regulated entity. Our intent here is actually to protect customers. The need here really for the future piece, we needed it to get control of the facility, but from an energy perspective, we certainly did not need it until the 2027 timetable. So instead of imposing $30,000,000 of costs on our existing customers, we found a means to deal with that and protect customers while that is in a FERC-regulated entity.

And where our hope is, as I mentioned earlier, ultimately to move that into a state-regulated entity when we have large load customers we can serve through that. And so that is ultimately what we are trying to do. We would love to see everything on a state-regulated basis. But we do want to serve large load customers in any way that is best to serve our customers today. Okay. Thank you. Thanks for the updated thoughts there. I appreciate it. And then maybe just going back to the financing plan quick. In the prepared, you just kind of mentioned the 13% FFO to debt. Is all incremental CapEx at this point going to require some equity now?

And just can you talk a little bit about if these ESAs materialize and you get this load on the system, how that changes the equation around the financing for you guys?

Crystal Lail: Sure. We have said repeatedly that we size our base capital plan based off our cash flow availability and to hit our credit quality metrics. Obviously, I mentioned 2025. The key drivers there are falling below the 14% FFO with lack of cash, and that comes from the very mild weather and the margins we would have expected to

Operator: I think that is around $80,000,000. So we expect that to come back in 2026. But we are always planning our capital plan to maintain a solid balance sheet and have credit quality. So your question of what happens with incremental capital, and, again, as I alluded to the Aberdeen generating station, we recover cash during construction of that. If you think about the ramp period of any data center and incremental capital that would be required there, you would have a very similar funding mechanism that you see cash during construction. And that is the kind of stuff that is accretive, and we certainly would look to issue equity for that kind of accretive growth.

So that is where we have had a dividing line all along, is we will be very disciplined about our base capital plan, and that is a regulatory lag that is 18 to 24 months off of putting that in the ground to recovery for that kind of stuff. We need ongoing cash flows to support that. For stuff that drives growth, as anything large load would, that is the type of stuff we would look to maintain equity issuances where that makes sense. But, again, nothing until 2026. Just to make sure I was clear. We have received 2027 and beyond. Nothing in 2026. Thanks for the time.

Brian Bird: Thank you. Thanks, man. Your next question comes from the line of Paul Fremont from Ladenburg. Your line is live.

Operator: Thank you very much. My first question has to do with the, for the South Dakota plant, do you have a

Crystal Lail: are you in the queue for a turbine, and what would be the commercial operation date of that plant? I will start with the commercial operation date. We are looking at, first of all, we have a plant in construction now. I think you are speaking to the 131 megawatts. That is a $300,000,000 investment. We are already making an investment in 2026 for turbines. Right. And so I would say approximately a third of that will be made in 2026 to get our turbines in place, and the plant is expected to be completed in 2030.

Brian Bird: Okay. And you are in the queue where you have, if the turbines are lined up, for that 2030 in-service date,

Crystal Lail: Well, we are buying turbines.

Brian Bird: Okay.

Operator: My next question has to do with, if the endangerment finding

Brian Russo: is reversed at EPA, what is that, does that change the potential investment in environmental upgrades at Colstrip? And can you also update us on where things stand in terms of environmental upgrades?

Crystal Lail: Yes. I think obviously, we will do whatever we need to, in essence, to keep Colstrip open as long as it is economic. And, obviously, if we are forced to do something we think is not necessary, we would probably invest in a gas plant if we are required to do something sooner rather than later. It has always been our hope here with this investment in Colstrip we can keep that plant open and operating through the depreciable life that we expected in the 2040 timetable. And, again, hopefully, technology, possibly nuclear, possibly long-duration storage, whatever that is, helps us replace Colstrip with something that is cleaner.

But if we are forced to do something sooner, either investing in environmental controls, if you will, or ultimately building a gas plant, we will do that too. We need to serve our customers with Colstrip or its replacement. And so it is hard to answer that question today, Paul, until we see ultimately what is happening, but I have to say, what we are expecting out of the administration is certainly helpful for our long-term plans for Colstrip at this point in time.

Operator: I would also just clarify our five-year capital plan. We did roll in related CapEx, but that is maintenance CapEx, Paul, is how I would refer to that.

Brian Russo: Right. There is no material environmental CapEx in that number. So if something changes over time, certainly, we would talk about that at the time. We had talked about the MATS ruling previously and how that might impact Colstrip, but we never had any numbers in our capital plan related to that.

Brian Bird: And

Brian Russo: is there, I mean, is there any update in terms of whether those rules will be voted on or applied by the EPA? Or for the time being, should we just assume that nothing is moving forward along those fronts?

Crystal Lail: Along that front? Yes. I think we have been expecting to hear something on this any day now. And I guess until we actually see what the rules say, I will hold off on how to respond to that.

Brian Russo: And then lastly, any updates on the remaining portion of Colstrip ownership where the parties most likely will need to divest their ownership interests.

Brian Bird: You know,

Crystal Lail: Paul, we just grabbed these two pieces from Puget and Avista. That 592, we are extremely happy with those. We would like to certainly understand how the commission looks at it and ultimately how things are working out with data centers. You know, we are extremely happy with being able to get to 55% ownership, and I will stop there.

Brian Russo: Right. But, I mean, theoretically, how would those costs be picked up if the other owners were forced to exit.

Crystal Lail: Are you talking environmental costs that have to be applied?

Brian Bird: What are you talking about? Like, if

Brian Russo: exit the plant ownership because of state laws, then what would happen to their share of the operating costs? So would they, I guess, would they still be up on the hook for that? Or how would that work? Yes. I think they would be in a tough spot.

Crystal Lail: I am guessing, and I am guessing all of them are looking for means to exit other than Talend does not need to exit. But I am sure they are talking to folks about

Brian Bird: Great. That is it. Thank you very much. Your next question comes from the line of Rex Savage from Clear Street. Your line is live.

Brian Russo: Hi. Thank you. I wanted to ask

Crystal Lail: just quickly on merger state regulatory. We have seen a bit of a delay in South Dakota. I was curious if there is anything to be concerned about there. In the Montana review, it looks like some of the intervenors have made the claim that the application is incomplete, perhaps because there is not a benefits study that is in there, maybe for other reasons. So do you feel comfortable with the Montana timeline as it stands, or might we also see a delay in Montana? Thank you.

Operator: Sure. I will take that one. So first, your question with regard to South Dakota and the timeline there. South Dakota has a six-month statute, which I would acknowledge is a bit of a quick shot clock on getting through all the process and procedure and making sure they are comfortable with that. We are working with staff on resetting a bit of an extension to that procedural schedule. I do not have any concerns there. They are asking the right questions and going through the right process. They just need a little bit more time, and they would have been in front of both Nebraska and Montana. So we are working with them on resetting the procedural.

I still think that they will

Brian Russo: likely

Operator: in the end, be well ahead of a Montana order even with the revised procedural schedule. So no concern there. You have also seen it progress in Montana in what I would say is a bit normal given the nature of the intervenors there and who they are. So we have responded to the motions there. You have intervenors’ testimony when they come in, and overall, again, exactly as we would expect the docket to progress.

Brian Russo: There are the

Operator: comments as to maybe commitments that we could make, what they would like to see to better understand that. We do certainly recognize that in each of the jurisdictions we serve, not just the ones we are in, a big part of your local commitment is your utility, and we want to make sure through that the right sorts of ways. So I would not say there is any concern in how those dockets are progressing. The concerns expressed are, I think, typical for each of those intervenors. And the intervenor testimony, I think, paints the path towards the direction of the things they want to make sure are considered in an eventual outcome.

Crystal Lail: Thank you. And as a follow-up on Montana, I believe you are going through this IRP process now as well. How does that, if at all, fit in to the review? Maybe not necessarily the review directly, but

Ross Allen Fowler: the timing of the review for the deal versus the review of the IRP. I believe the final draft is due in maybe a couple of months, but please correct me if I am wrong.

Brian Russo: Yes. The IRP is

Crystal Lail: out, and we will have a chance to see. I do not anticipate there is any connection between the IRP and the merger process.

Ross Allen Fowler: Thank you.

Brian Bird: That concludes the question and answer session. I will now turn the call over to Brian Bird for closing remarks.

Crystal Lail: Well, I think Crystal pointed out earlier on the call, we actually had a really very, very good 2025. I mean, obviously, we ran into some issues in terms of the rate review, and I will come there. But remember, I think we need to think about the revenue requirement associated with that. That continues to help us invest as those things we need to continue to provide good service to our customers. But if you think about our ability to certainly announce the merger and all the work we are doing with our friends at Black Hills to get that across the goal line.

Think about our ability now to have Colstrip to be resource adequate in Montana, and certainly in this age when people are certainly very, very concerned about reliability and affordability. I feel much, much better about that in terms of how we serve our customers. And also thinking about longer term, how can we continue to make the investment we have, but also earn the appropriate returns we have for our shareholders. And I think 2025 set us up very, very good for that on a going-forward basis.

And with that, I just want to continue to thank all of you for your support of the company and your interest in what we are doing here at Northwestern Energy Group Inc. And we certainly want to thank everyone at Northwestern Energy Group Inc for all the hard work in 2025 as well. So with that, I want to say thanks.

Brian Bird: That concludes today’s meeting. You may now disconnect.

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