BUTTE, Mont. and SIOUX FALLS, S.D., July 30, 2024 (GLOBE NEWSWIRE) -- NorthWestern Energy Group, Inc. d/b/a NorthWestern Energy (NASDAQ:NWE) reported financial results for the three months ended June 30, 2024. Net income for the period was $31.7 million, or $0.52 per diluted share, as compared with net income of $19.1 million, or $0.32 per diluted share, for the same period in 2023. "We are pleased to report solid earnings growth this quarter, a clear testament to our team's dedication and hard work," said Brian Bird, President and CEO. "We are also happy to announce two strategic transactions that position us for future success. First, we have entered into an agreement to acquire Energy West Montana's natural gas distribution system, which serves 33,000 customers, most of whom are already our electric customers. Second, we also entered an agreement to acquire Puget's 370 megawatt ownership in Colstrip at no cost. The agreement features the same structure and December 31, 2025 transfer date as we currently have in place in the previously announced deal with Avista. The no-cost acquisition of Puget's share of Colstrip will allow us to leverage existing infrastructure that is well established, dependable, reliable and consistently available when our customers need energy the most. Additionally, over the last two months we filed rate reviews in all three of our service territories to enable us to continue to make critical infrastructure investments. All of these actions highlight our commitment to providing reliable, affordable and sustainable energy services to our valued customers while providing a reasonable return on invested shareholder capital." SECOND QUARTER 2024 COMPARED TO SECOND QUARTER 2023 The increase in net income was primarily due to new base rates in Montana and South Dakota, electric transmission revenues, Montana property tax tracker collections, and electric and natural gas retail volumes. These were offset in part by a less favorable Qualifying Facility (QF) liability adjustment in the current year, non-recoverable Montana electric supply costs, depreciation, operating, administrative and general costs, and interest expense. Diluted earnings per share also increased as a result of higher net income but was partially offset by increased average shares outstanding due to equity issuances during 2023. Adjusted non-GAAP diluted earnings per share for the quarter ended June 30, 2024 was $0.53 as compared to $0.35 for the same period in 2023. See "Adjusted Non-GAAP Earnings" and "Non-GAAP Financial Measures" sections below for more information on these measures. COMPANY UPDATES Acquisition of Energy West Montana Assets On July 29, 2024, we entered into an Asset Purchase Agreement with Hope Utilities to acquire its Energy West natural gas utility distribution system and operations serving approximately 33,000 customers located near Great Falls, Cut Bank, and West Yellowstone, Montana for approximately $39.0 million in cash, subject to certain working capital and other agreed upon closing adjustments. The transaction is subject to a number of customary closing conditions, including Montana Public Service Commission (MPSC) approval, and we expect the acquisition to be completed by the end of the first quarter of 2025. Colstrip – Puget Sound Energy Transaction On July 30, 2024, we entered into a definitive agreement (the Agreement) with Puget Sound Energy (Puget) to acquire Puget's 25 percent interest in each of Units 3 and 4 (collectively representing 370 megawatts) at the Colstrip Generating Station for $0. The acquisition would be effective December 31, 2025, subject to the satisfaction of the closing conditions contained within the Agreement. Under the terms of the Agreement, we will be responsible for operating costs starting on January 1, 2026; while Puget will retain responsibility for its pre-closing share of environmental and pension liabilities attributed to events or conditions existing prior to the closing of the transaction and for any future decommission and demolition costs associated with the existing facilities that comprise Puget's interest. The Agreement is subject to customary conditions and approvals, including approval from the Federal Energy Regulatory Commission (FERC). Acquisition of Puget's ownership interest, in addition to the previously disclosed acquisition of Avista's 15 percent interest in each of Colstrip Units 3 and 4 (collectively representing 222 megawatts), will result in our ownership of 55 percent of the facility with the ability to guide operating and maintenance investments. This provides capacity to help us meet our obligation to provide reliable and cost effective power to our customers in Montana, while allowing opportunity for us to identify and plan for newer lower or no-carbon technologies in the future. Regulatory Update Rate reviews are necessary to recover the cost of providing safe, reliable service, while contributing to earnings growth and achieving our financial objectives. We regularly review the need for electric and natural gas rate relief in each state in which we provide service. Our ongoing rate review activity includes the following: Montana Rate Review - On July 10, 2024, we filed a Montana electric and natural gas rate review with the MPSC. The filing requests a base rate annual revenue increase of $156.5 million ($69.4 million net with Property Tax and Power Cost and Credit Adjustment Mechanism (PCCAM) tracker adjustments) for electric and $28.6 million for natural gas. Our request is based on a return on equity of 10.80 percent with a capital structure including 46.81 percent equity, and forecasted 2024 electric and natural gas rate base of $3.45 billion and $731.9 million, respectively. The electric rate base investment includes the 175-megawatt natural gas-fired Yellowstone County Generating Station (YCGS), which is expected to be in service during the third quarter of 2024. We requested interim base rates to be effective October 1, 2024. South Dakota Natural Gas Rate Review - On June 21, 2024, we filed a natural gas rate review with the South Dakota Public Utilities Commission. The filing requests a base rate annual revenue increase of $6.0 million. Our request is based on a return on equity of 10.70 percent, a capital structure including 53.13 percent equity, and rate base of $95.6 million. If a final order is not received by December 21, 2024, interim base rates may go into effect. Nebraska Natural Gas Rate Review - On June 6, 2024, we filed a natural gas rate review with the Nebraska Public Service Commission. The filing requests a base rate annual revenue increase of $3.6 million. Our request is based on a return on equity of 10.70 percent, a capital structure including 53.13 percent equity, and rate base of $47.4 million. Interim base rates are not anticipated to be implemented prior to October 1, 2024. Yellowstone County 175 MW plant Construction of the new generation facility continues to progress and we expect the plant to be in service during the third quarter of 2024. The lawsuit challenging the YCGS air quality permit, which required us to suspend construction activities for a period of time, as well as additional related legal and construction challenges, delayed the project timing and have increased costs. As of June 30, 2024, total costs of approximately $288.9 million have been incurred, with expected total costs of approximately $310.0 million to $320.0 million. Environmental Protection Agency (EPA) Rules On April 25, 2024, the EPA released final rules related to Greenhouse Gas (GHG) emission standards (GHG Rules) for existing coal-fired facilities and new coal and natural gas-fired facilities as well as final rules strengthening the Mercury Air Toxics Standard (MATS) requirements (MATS Rules). Compliance with the rules will require expensive upgrades at Colstrip Units 3 and 4 with proposed compliance dates that may not be achievable and / or require technology that is unproven, resulting in significant impacts to costs of the facilities. The final MATS and GHG Rules require compliance as early as 2027 and 2032, respectively. Affirming 2024 Earnings Guidance, Capital Plan and Long-Term EPS Growth We are affirming 2024 diluted earnings guidance of $3.42 - $3.62 per diluted share and our $500 million capital plan. This guidance is based upon, but not limited to, the following major assumptions: Normal weather in our service territories; Interim rates in Montana in the fourth quarter; An effective income tax rate of approximately 12%-14%; and Diluted average shares outstanding of approximately 61.4 million. We are also affirming our long-term (5 year) diluted earnings per share growth guidance of 4% to 6% from a 2022 base year of $3.18 diluted earnings per share on a non-GAAP basis. We expect rate base growth of 4% to 6%. Our current capital investment program is sized to provide for no equity issuances. Future generation capacity additions or other strategic opportunities may require equity financing. Dividend Declared NorthWestern Energy Group's Board of Directors declared a quarterly common stock dividend of $0.65 per share payable September 30, 2024 to common shareholders of record as of September 13, 2024. Over the longer-term, we expect to maintain a dividend payout ratio within a targeted 60-70% range. Additional information regarding this release can be found in the earnings presentation at https://www.northwesternenergy.com/investors/earnings  CONDENSED CONSOLIDATED STATEMENT OF INCOME (in millions) Three Months Ended June 30,   Six Months Ended June 30, Reconciliation of gross margin to utility margin:   2024       2023       2024       2023         Operating Revenues $ 319.9     $ 290.5     $ 795.3     $ 745.1   Less: Fuel, purchased supply and direct transmission expense (exclusive of depreciation and depletion shown separately below)   76.5       67.6       251.2       233.1   Less: Operating and maintenance   57.4       54.9       111.6       110.7   Less: Property and other taxes   36.2       40.1       83.4       89.3   Less: Depreciation and depletion   57.0       52.4       113.7       105.6   Gross Margin   92.8       75.5       235.4       206.4   Operating and maintenance   57.4       54.9       111.6       110.7   Property and other taxes   36.2       40.1       83.4       89.3   Depreciation and depletion   57.0       52.4       113.7       105.6   Utility Margin(1) $ 243.4     $ 222.9     $ 544.1     $ 512.0   (1) Non-GAAP financial measure. See "Non-GAAP Financial Measures" below.   Three Months EndedJune 30,   Six Months EndedJune 30, (in millions, except per share amounts)   2024       2023       2024       2023   Revenues $ 319.9     $ 290.5     $ 795.3     $ 745.1   Fuel, purchased supply and direct transmission expense(1)   76.5       67.6       251.2       233.1   Utility Margin(2)   243.4       222.9       544.1       512.0                   Operating and maintenance   57.4       54.8       111.5       110.7   Administrative and general   31.3       30.0       71.7       64.7   Property and other taxes   36.3       40.1       83.4       89.3   Depreciation and depletion   56.9       52.4       113.7       105.6   Total Operating Expenses(3)   181.9       177.3       380.3       370.3   Operating income   61.6       45.6       163.7       141.7   Interest expense, net   (31.9 )     (28.4 )     (62.9 )     (56.4 ) Other income, net   6.2       4.1       10.5       8.8   Income before income taxes   35.9       21.3       111.3       94.0   Income tax expense   (4.2 )     (2.1 )     (14.6 )     (12.4 ) Net Income   31.7       19.1       96.7