#1NorthWestern Energy Investor Update 8-K'ed on March 1, 2021 March 2021 NorthWestern Energy Delivering a Bright Future#2L Forward Looking Statements Forward Looking Statements During the course of this presentation, there will be forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often address our expected future business and financial performance, and often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," or "will." The information in this presentation is based upon our current expectations as of the date hereof unless otherwise noted. Our actual future business and financial performance may differ materially and adversely from our expectations expressed in any forward-looking statements. We undertake no obligation to revise or publicly update our forward-looking statements or this presentation for any reason. Although our expectations and beliefs are based on reasonable assumptions, actual results may differ materially. The factors that may affect our results are listed in certain of our press releases and disclosed in the Company's most recent Form 10-K and 10-Q along with other public filings with the SEC. Company Information NorthWestern Corporation dba: NorthWestern Energy Ticker: NWE (Nasdaq) www.northwesternenergy.com Corporate Office 3010 West 69th Street Sioux Falls, SD 57108 (605) 978-2900 Investor Relations Officer Travis Meyer 605-978-2967 [email protected] Boulder River in Montana NorthWestern Energy Delivering a Bright Future 2#3r NorthWestern Energy Value Proposition A pure play electric and natural gas utility serving as stewards of critical energy infrastructure that provides essential services to a broad service territory spanning across Montana, South Dakota, Nebraska and Yellowstone National Park. A Strong Financial Foundation and Investment for the Long Term Over 100 years of operating history • • • • History of strong earnings growth • 3.7% Non-GAAP EPS CAGR from 2011-2020 3%-6% long-term EPS growth going forward. History of annual dividend increases • Growing from $1.00 per share in 2005 to $2.40 in 2020 Competitive current dividend yield of 4.3% Growing capital investment program $400+ million annual investment and approximately 2.4x depreciation in 2021 Significant generation capacity deficit with opportunity for investment Diverse energy supply portfolio - already 65% carbon-free (MWh's delivered) Award winning and best practices corporate governance • Stable and flexible investment grade balance sheet • • • Ample liquidity (>$100 Millions) to weather uncertainty History of stable customer growth, in excess of national average Customer bills well below national average Highest ever customer satisfaction scores 3#4L Pure Electric & Gas Utility Solid Utility Foundation Strong Earnings & Cash Flow Attractive Future Growth Prospects Financial Goals & Metrics Best Practices Corporate Governance NWE - An Investment for the Long Term • • • • · 100% pure electric & natural gas utility business with over 100 years of operating history • Solid economic indicators in service territory • • • . • Diverse electric supply portfolio -65% hydro, wind & solar Residential electric & gas rates below national average Solid system reliability Low leaks per 100 miles of pipe Solid JD Power Overall Customer Satisfaction scores Consistent track record of earnings & dividend growth Strong cash flows aided by net operating loss carry- forwards anticipated to be available into 2021 Strong balance sheet & investment grade credit ratings 4 Black Eagle dam Disciplined maintenance capital investment program to ensure safety and reliability Significant investment in renewable resources (hydro & wind) will provide long-term energy supply pricing stability for the benefit of customers for many years to come • Further opportunity for energy supply investment to meet significant capacity shortfalls • • • Target debt to capitalization ratio of 50%-55% with liquidity of $100 million or greater Target 3%-6% EPS growth plus dividend yield to provide competitive total return Target dividend payout ratio of 60%-70% NYSE Governance Services GOVERNANCE, RISK AND COMPLIANCE LEADERSHIP AWARDS 2015 2015 WINNER UTILITY CUSTOMER CHAMPION RESIDENTIAL COGENT REPORTS BY 2020 2020 WOMEN BOARDS CORPORATT. GOVERNANCE AWARDS ▪2019- corporate secretary corpedia WINNER ETHICS. ELEVATED.#5L KALISPELL MISSOULA BUTTE GREAT ANFALLS HELENA HAVRE MONTANA BILLINGS BOZEMAN About NorthWestern LO 5 South Dakota Operations Electric 63,900 customers 3,622 miles - transmission & distribution lines 411 MW nameplate owned power generation Natural Gas 48,000 customers 1,766 miles of transmission and distribution pipeline ABERDEEN YELLOWSTONE NATIONAL PARK SOUTH DAKOTA HURON Montana Operations Electric 384,700 customers 24,877 miles - transmission & distribution lines 871 MW maximum capacity owned power generation Natural Gas 203,700 customers 7,057 miles of transmission and distribution pipeline 17.75 Bcf of gas storage capacity Own 43.1 Bcf of proven natural gas reserves NEBRASKA BROOKINGS MITCHELL YANKTON- NORTH PLATTE□ GRAND ISLAND KEARNEY D Thermal Generating Plants Nebraska Operations Natural Gas 42,700 customers 813 miles of distribution pipeline Electric Wind Farm Natural Gas Hydro Facilities Data as of 12/31/2020 Natural Gas Reserves Peaking Plants NorthWestern Energy Delivering a Bright Future#6r Gross Margin (1) A Diversified Electric and Gas Utility Rate Base by Service Territory Natural Gas 21% 3,000 ($Millions) 2,773 Total Rate Base Electric 2,500 79% 2,334 4,500 4,031 4,000 3,412 Authorized Rate Base 3,500 Customers Commercial 16% 2,000 Industrial & Other 1% 1,500 Estimated Rate Base $ Millions 3,000 2,500 2,000 1,500 Residential 83% 1,000 1,000 500 627 557 516 500 430 Gross Margin (1) 90 115 South Nebraska Dakota 1% 15% Montana Electric Montana Natural Gas South Dakota Electric So. Dakota/ Nebraska Natural Gas Montana 84% Data as reported in our 2020 10-K NorthWestern's '80/20' rules: Approximately 80% Electric, 80% Residential and 80% Montana. Over $4.0 billion of rate base investment to serve our customers (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. See appendix for additional disclosure. 6#7Highly Carbon-Free Supply Portfolio 2020 Electric Generation Portfolio - Montana Wind Contracted 23.0% 69% Carbon-Free 2020 Electric Generation Portfolio - Total NWE Wind Owned 3.0% Contracted CELP & YELP 11.7% MT Hydro Owned 40.6% Wind Contracted 23.0% Wind Owned 6.6% Natural Gas Contracted 0.9% Natural Gas /- Other Owned 2.8% Coal Owned 15.6% Hydro Contracted Solar 1.8% Contracted <1% Contracted energy from Colstrip Energy Limited Partners (CELP), Yellowstone Energy Limited Partners (YELP) as well as a majority of the contracted wind, hydro and solar are federally mandated Qualifying Facilities, as defined under the Public Utility Regulatory Policies Act of 1978 (PURPA). 2020 Electric Generation Portfolio - South Dakota Wind Owned 23.3% Natural Gas / Other Owned 2.1% 47% Carbon-Free DODDD Contracted CELP & YELP 9.7% Natural Gas Contracted 0.8% Natural Gas / Other Owned 2.7% DOOOO Coal Owned 21.9% Coal Owned 51.1% SD Wind Contracted 23.5% NWE 7 65% Carbon-Free - Hydro Owned 33.5% Hydro Contracted Solar 1.5% Contracted <1% Based upon 2020 MWH's of owned and long-term contracted resources. Approximately 65% of our total company owned and contracted supply is carbon-free. NorthWestern does not own all the renewable energy certificates (RECs) generated by contracted wind, and periodically sells its own RECS with proceeds benefiting retail customers. Accordingly, we cannot represent that 100% of carbon-free energy in the portfolio was delivered to our customers. NorthWestern Energy Delivering a Bright Future#8Minutes L NWE's Overall Customer Satisfaction Scores via JD Power Electric & Gas Residential Studies JD Power Scores 740 720 700 680 660 640 620 600 Strong Utility Foundation $1.20 $100 "Typical Bill" Residential Rate Comparison National Average ($105.05) National Average ($95.20) SD MT 580 97.72 90.84 560 MT 76.05 NE SD 60.84 63.13 $10 5.20 580 560 T T 2011 2012 2013 2014 2015 Electric 2016 2017 2018 2019 2020 Natural Gas System Average Interruption Duration Index (SAIDI) Includes MED's - NWE versus IEEE Reliability Quartiles S- Electric (750 kwh) NWE rates as of 1/1/2021 Natural Gas (100 therms) Llectric source: Laison Llectric Institute Typical Lis and Average Rates Report, 1/1/20 Natural Gas source: US EIA- Monthly residential supply and delivery rates as of January 2020 Leaks per 100 Miles of Pipe Excluding Excavation Damages - 2019 AGA 1st Quartile - 8.1 AGA 2nd Quartile - 17.2 280 240 200 160 2nd Quartile 120 80 1st Quartile 40 0 2014 2015 2016 2017 2018 2019 2020 NWE - 2019 8.8 ☐ 0 2 4 6 Solid and improving JD Power Overall Customer Satisfaction Scores ■ Residential electric and natural gas rates below national average ☐ Solid electric system reliability ▪ Low gas leaks per mile – just outside 1st quartile 00 8 10 12 14 16 18 20 NorthWestern Energy Delivering a Bright Future 8#9L Solid Economic Indicators 9 NWE Electric Customers (Thousands) 450 430 410 390 391 Electric Customers Growth vs National Average Customer Growth CAGR 2008-2019: NWE 1.12% vs National Avg 0.77% Natural Gas NWE Gas Customers (Thousands) 275 285 280 Customer Growth CAGR 2008-2019: NWE 0.92% vs National Avg 0.66% Customers and Growth vs National Average 447 300 292 295 290 270 265 261 370 260 255 350 250 T T '08 '09 '10 '11 "12 '13 '14 '15 '16 "17 '18 '19 120 '08 '09 '10 '11 112 '13 "14 '15 '16 '17 '18 '19 '20 Source: Company 10K's, 2018/2019 EEI Statistical Yearbook - Table 7.1 and EIA.gov 5% Projected Population Growth 2021 - 2026 (cumulative growth) 4% 3% 2% 3.95% 4.04% 2.91% 2.80% 1% 0% US National Average Montana Source: Claritas via S&P Global Market Intelligence 2-18-21 South Dakota Nebraska • Customer growth rates historically exceed National Averages. . Projected population growth in our service territories better than the National Average. Black Eagle Power House#10$2.40 L $4.00 ■GAAP Diluted EPS $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $- $2.53 $2.41 $2.66 $2.37 Non-GAAP "Adjusted" EPS A History of Growth Diluted Earnings Per Share $2.46 $2.50 $2.99 $2.68 $3.17 $3.15 2011 2012 2013 2014 2015 2016 2017 Dividend Per Share and Payout Ratio Annual Dividend Per Share Payout Ratio (based on GAAP EPS) $3.39 $3.30 $3.34 $3.30 $3.92 $2.20 100% $2.00 $1.80 80% 70% 60% $1.60 40% $1.40 20% $1.44 $1.48 $1.52 $1.60 $1.92 $2.00 $2.10 $2.20 $2.30 $2.40 $1.20 0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011-2020 CAGR's: GAAP EPS: 2.1% See appendix for "Non-GAAP Financial Measures" - Non-GAAP EPS: 3.7% Dividend: 5.8% 2018 $3.39 $3.98 $3.42 2019 $3.06 $3.35 2020 120% 10 10#11L Track Record of Delivering Results Return on Average Equity 11 12% 10% 11.0% 11.0% 10.8% 10.5% 10.5% 9.8% 9.5% 9.6% 9.9% 9.9% 10.1% 10.1% 9.8% 9.4% 9.5% 9.3% 9.1% 8% 8.7% 8.3% 7.5% 6% 4% 2% Return on Equity - GAAP Earnings Return on Equity - Non-GAAP Earnings 0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1 Year Total Shareholder Return 1/1/2020 12/31/2020 3 Year Total Shareholder Return 1/1/2018 12/31/2020 5 Year Total Shareholder Return 1/1/2016 - 12/31/2020 10 Year Total Shareholder Return 1/1/2011-12/31/2020 S&P 500 267.0% 20% 15% 10% 5% 50% S&P 500 40% 18.4% DJUA 30% 1.6% 120% 300% S&P 500 48.9% 100% 250% S&P 500 8.0% 103.0% 200% 0% DJUA 60% DJUA 76.6% 150% 31.8% NWE 194.8% 12 Peer -5% 20% Avg. -10% NWE -15.1% 12 Peer Avg. * NWE 9.4% 12 Peer 40% NWE 29.0% 12 Peer 181.6% 100% 10% -16.8% -15% Avg. * 5.2% Avg. * 51.8% 20% 50% -20% 0% 0% 0% * Peer Group: ALE, AVA, BKH, IDA, MGEE, NWN, OGE, OGS, OTTR, PNM, POR & SR DJUA 206.7% Return on Equity on Non-GAAP Earnings within 8.3% - 10.5% band over the last 10 years with average of 9.4%. Total Shareholder Return is in line or better than our 12 peer average for the 1, 3 & 10 year periods but lags in the 5 year period, due in part to regulatory concerns in Montana during this period. See appendix for "Non-GAAP Financial Measures"#12Rate Base - Millions L 12 $4,500 $4,000 $4.00 $3,500 $3,000 0 $3.50 Investment for Our Customers' Benefit Rate Base and Earnings per Share $4.50 Typical Residential Electric and Natural Gas Bill (average Montana, South Dakota and Nebraska monthly residential customer bill) NWE Electric (750 kW) NWE Natural Gas (10 Dkt) US Average Electric (750 kW)* US Average Nat. Gas (10 Dkt) ** $150 $140 $3.00 $2,500 $2.50 $2,000 $2.00 Diluted EPS - Dollars $130 $120 $110 $100 $1,500 $1.50 $90 $1,000 $1.00 $80 $500 $0.50 $70 $0 $- $60 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Estimated Rate Base (Millions) -GAAP Diluted EPS * Electric - EEI Typical Bills and Average Summer and Winter Rates Report (2008-2020) ** Natural Gas - EIA U.S. Price of Natural Gas Delivered to Residential Customers (2008-2019) Over the past decade we have been reintegrating our Montana energy supply portfolio and making additional investments across our entire service territory to enhance system safety, reliability and capacity. We have made these enhancements with minimal impact to customers' bills while maintaining bills lower than the US average. As a result we have also been able to deliver solid earnings growth for our investors. 2011-2020 CAGRS 2008-2020 CAGRS 2008-2020 CAGRS Estimated Rate Base: 8.9% NWE typical electric bill: 1.9% US average electric bill: 1.3%* GAAP Diluted EPS: 2.1% NWE typical natural gas bill: (5.7%) US average natural gas bill: (2.5%)**#13Millions L Net Operating Losses & Effective Tax Rate $500 $450 $400 $350 $300 $250 $200 Net Operating Loss (NOL) Carryforward Balance $457 $429 $201 $255 Federal $216 $244 $264 $326 $351 $154 $276 $365 $421 ■State (Montana) $316 $258 $182 $182 $121 $79 $150 $100 $50 $38 $0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Cash Taxes: We anticipate NOLS to be available into 2021 with production tax and other credits to largely offset any federal cash tax obligations until 2024. Effective Tax Rate: We anticipate the effective tax rate (ETR) for 2021 to be approximately (2.5%) to 2.5% of pre-tax income. The ETR is expected to gradually approach 10% - 12% by 2025. 13 NorthWestern Energy Delivering a Bright Future#14L Balance Sheet Strength and Liquidity Credit Ratings Liquidity --->$100M Target* 14 Fitch Moody's S&P Actual $400 Senior Secured Rating A A3 A- $350 $300 Senior Unsecured Rating A- Baa2 BBB Commerical Paper F2 Prime-2 A-2 Millions $250 $200 $150 Outlook Stable Stable Stable $100 A security rating is not a recommendation to buy, sell or hold securities. Such ratings may be subject to revisions or withdrawl at any time by the credit rating agency and each rating should be evaluated independently of any other rating. Debt to Capital Ratio $50 $0 '16 '17 '18 '19 '20 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Long-Term Debt Maturity Schedule 60% 50% 40% 54.7% 54.2% 53.8% 55.1% 55.7% 54.8% 54.1% 51.5% 51.5% 52.4% Millions $500 $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 30% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Target: 50% - 55% - Annual ratio based on average of each quarter's debt/cap ratio Excludes Basin Creek capital lease and New Market Tax Credit Financing Investment grade credit ratings, liquidity in excess of $100 million target, debt to cap within our targeted 50%-55% range and no long-term debt maturities until 2023. Year *Liquidity target increased to $200 million due to uncertain economic conditions brought about by COVID-19. '44 '46 '50 '52 NorthWestern Energy Delivering a Bright Future#15L $4.25 $4.00 $3.75 $3.50 $3.25 GAAP Diluted EPS Diluted Earnings Per Share Original Guidance Range -Non-GAAP "Adjusted" EPS Revised Guidance Earnings Growth $3.00 $2.75 $2.50 $2.25 $2.46 $2.99 $3.17 $3.39 $3.34 $3.92 $3.98 $3.06 $2.00 2013 2014 2015 2016 2017 2018 2019 2020 2021 Non-GAAP Adjusted EPS Growth Averaged 4.3% from 2013-2020 NorthWestern affirms its 2021 earnings guidance range of $3.40 to $3.60 per diluted share based upon, but not limited to, the following major assumptions and expectations: • • COVID-19 related reduction in our commercial and industrial sales volumes, offset in part by an increase in usage by residential customers through the second quarter of 2021; Normal weather for the remainder of the year in our electric and natural gas service territories; • A consolidated income tax rate of approximately (2.5%) to +2.5% of pre-tax income; and Diluted shares outstanding of approximately 51.5 million to 51.8 million. Continued investment in our system to serve our customers and communities is expected to provide annualized 4% -5% growth in rate base and a targeted long-term earnings per share growth rate of 3% - 6%. Maintaining our 60% - 70% targeted dividend payout ratio, we anticipate the dividend growth rate to be in line with the EPS growth rate going forward. See "Non-GAAP Financial Measures" slide in appendix for "Non-GAAP Adjusted EPS". 15#16L 2020 Non-GAAP to 2021 EPS Bridge 16 2020 Non-GAAP Adjusted Diluted EPS 2021 Earnings Drivers (after-tax and per share) 2021 Guidance Bridge High Low $3.35 $3.35 Gross Margin 0.39 OG&A expense (0.05) 0.54 (0.03) Property & other tax expense (0.14) (0.12) Depreciation expense (0.13) (0.12) Interest expense 0.01 Other income 0.04 0.05 Incremental tax impact* (0.01) (0.02) Subtotal of anticipated changes 0.10 0.31 2021 EPS guidance range prior to potential equity dilution Dilution from higher outstanding shares $3.45 $3.66 (0.05) (0.06) EPS guidance range after potential equity dilution $3.40 $3.60 文 2021 earnings drivers shown above are calculated using a 25.3% effective tax rate. The incremental tax impact line included above reflects anticipated changes in discrete tax items (such as tax repairs and meter deductions, production tax credits, and other permanent or flow-through items) from 2020 actual earnings to 2021 forecast. We anticipate narrowing the 20 cent guidance range (to the standard 15 cent range) in the 2nd or 3rd quarter when we have a better sense Covid-19 impacts. Non-GAAP 2020 to 2021 midpoint EPS growth rate of 4.5%. $2.48 annualized dividend is expected to be at the upper end of our 60%-70% targeted payout of EPS. Assumptions included in the 2021 Guidance includes, but not limited to, the following major assumptions: · • Normal weather in our electric and natural gas service territories; Continued Covid-19 related reduction in our commercial and industrial sales volumes, offset in part by an increase in usage by residential customers through the second quarter of 2021; A consolidated income tax rate of approximately (2.5%) to +2.5% of pre-tax income; and Diluted average shares outstanding of approximately 51.5 million to 51.8 million. Note: Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure See appendix for additional disclosure.#17L 17 COVID-19: Margin Impact Electric: High-Level COVID Load Impacts vs Planned 2020 Loads Second Quarter Third Quarter Fourth Quarter Forecast Actual Forecast Actual Forecast Actual Residential 4.0% 3.3% 1.5% 5.4% 0.3% 0.3% Commercial (12.0%) (11.0%) (4.5%) (8.9%) (0.8%) (7.7%) Industrial (4.0%) (1.2%) (1.5%) (17.3%) (0.3%) (22.8%) Electric Retail Customer Count Mix Electric Retail Revenue Mix by Customer Class 78.3% 18.1% 41.7% 3.6% Natural Gas Customer Count Mix 87.4% 50.0% 8.3% Natural Gas Retail Revenue Mix by Customer Class 64.0% 35.2% 12.4% Ind. <1% Ind. <1% Residential Commercial Industrial/Other Covid-19 impacts on gross margin continued into the fourth quarter with commercial and industrial customer classes impacted more than forecasted (residential in line with forecast). Industrial load was incrementally impacted by non-Covid related closures of a few industrial customers. These customers, who do not procure supply from NorthWestern, account for a significant potion of volumes but have a less material impact on gross margin. For the fourth quarter, we estimate the gross margin detriment of Covid-19 to be $3 million - $4 million and $8 million to $11 million for the full year 2020.#18L COVID-19: Expense Impacts 18 Estimate of Covid Impacts Second Quarter Third Quarter Fourth Quarter Full Year 2020 (millions) Low High Low High Low High Low High Gross Margin ($3.0) ($4.0) ($2.0) ($3.0) ($3.0) ($4.0) ($8.0) ($11.0) Operating Expense Medical (0.9) (0.9) 0.0 0.0 0.0 0.0 (0.9) (0.9) Labor (0.7) (0.7) (0.4) (0.4) (0.7) (0.7) (1.8) (1.8) Travel & training (1.2) (1.2) (0.8) (0.8) (0.8) (0.8) (2.8) (2.8) Uncollectible accounts 3.1 3.1 2.4 2.4 (2.4) (2.4) 3.0 3.0 Total Operating Expense 0.3 0.3 1.2 2 1.2 (3.9) (3.9) (2.4) (2.4) Operating Loss (3.3) (4.3) (3.2) (4.2) 0.9 (0.1) (5.6) (8.6) Interest expense (0.7) (0.7) 0.0 0.0 0.0 0.0 (0.7) (0.7) Pretax Loss (4.0) (5.0) (3.2) (4.2) 0.9 (0.1) (6.3) (9.3) Income tax benefit 1.0 1.3 0.8 1.1 (0.2) 0.0 1.6 2.4 Net Loss ($3.0) ($3.7) ($2.4) ($3.1) $0.7 ($0.1) ($4.7) ($6.9) ETR 25.3% 25.3% 25.3% 25.3% 25.3% 25.0% 25.3% 25.3% Diluted Shares 50.6 50.6 50.7 50.7 51.7 51.7 Diluted EPS ($0.06) ($0.07) ($0.05) ($0.06) $0.01 $0.00 50.7 ($0.09) 50.7 ($0.14) Expenses that increased: Bad debt expense • Expenses that decreased: • Regulatory recovery in SD only . Covid-19 related charitable contributions · • Distribution customer work Contract services and material costs Fleet fuel costs Travel and employee education Lower medical expense & incentive pay Areas unchanged but will monitor and manage appropriately in 2021 . Capital spending at our expected level of approximately $400 million in 2020 • Supply chain - No significant issues - nearly all vendors in USA . Staffing levels - No layoffs and we still hired for critical positions Covid-19 related expense reductions were generally in line with our expectations. However, without an approved recovery mechanism in place in Montana, increased uncollectable accounts expense and increased interest expense from higher liquidity needs more than offset Covid related savings.#19• • Maintaining Capital Investment Forecast $2.1 billion of total capital investment over the five year period. We expect to finance this capital with a combination of cash flows from operations, first mortgage bonds and equity issuances. We anticipate initiating a 3-year $200 million At-the-Market (ATM) offering during 2021 and begin issuing equity under that program. The ATM issuances will be sized to maintain and protect our current credit ratings. Capital investment in response to our Montana electric supply resource planning would be incremental to these amounts. Millions Regulated Utility Five Year Capital Forecast 19 $500 $451 $456 $450 18.0 14.0 $418 $400 $400 13.2 $400 81.5 89.8 15.6 15.7 55.3 41.4 42.0 $350 $300 65.9 104.0 65.7 94.9 70.6 $250 $200 $150 277.4 277.4 256.2 254.8 271.2 $100 $50 $0 2021 2022 2023 2024 2025 MT Electric MT Gas SD Electric ISD/NE Gas 2021 2022 2023 2024 2025 $367 $338 $310 $319 $313 Natural Gas $84 $118 $108 $81 $87 Total Capital Forecast $451 $456 $418 $400 $400 Financing plans are subject to change, depending on capital expenditures, regulatory outcomes, internal cash generation, market conditions and other factors. $ Millions Electric Based on the results of the competitive solicitation process in South Dakota, approximately $100 million of incremental investment for SD generation is included in the projections above (2021-2023). This level of capital investment is anticipated to result in annualized rate base growth of 4%-5%. The projections do not include investment necessary to address generation capacity shortages in Montana. We are reviewing the independent administrators analyses in the current all-source competitive solicitation and expect to announce the selection of multiple projects during the first quarter of 2021. We anticipate that at least one of our projects will be among those selected resulting in owned capacity generation investment in excess of $200 million over the next three years.#2020 20 ୮ Montana . Generation Portfolio Update Initial bids from the February 2020, 280 MW, competitive solicitation were submitted in July 2020. Bid submissions were evaluated by an independent party. We are reviewing the analyses from the administrator and expect to announce the selection of multiple projects during the first quarter of 2021. Bids were submitted on our behalf for generating facilities providing long-duration flexible capacity in excess of 200 MWs. We anticipate that at least one of our projects will be among those selected resulting in owned capacity generation investment in excess of $200 million over the next 3 years, assuming we receive approval from the MPSC. • Extremely cost-effective upgrades planned and underway for our owned hydro-electric facilities. Generator rewinds, turbine upgrades and other improvements are expected to add more than 40 MWs of hydro capacity over the next 5 years in addition to preparing for FERC relicensing of Thompson Falls (94 MWs) in 2025. • Entry into the Western Energy Imbalance Market (EIM) • Anticipated entry in the second quarter of 2021. Real-time energy market could mean lower cost of energy, more efficient use of renewables and greater power grid reliability. South Dakota • Western Energy Imbalance Market Construction continues for a 60MW flexible reciprocating internal combustion engines in Huron, SD to be online in late 2021 with construction costs of approximately $80 million (~$40 million invested in 2020). Page Sound Egy Chy ligh lacono- Towe Fordond General Bra fa BANC Tedack Da Colonie 50 • An additional 30-40 MW of flexible generation in Aberdeen, SD is in the planning stages and expected to be online in 2023 with a cost of approximately $60 million. Arons R Serve Las Arg W T Emeric Market Operat Calforse 50 Active participare Porned E entry 2001 Planed Eety 2022 Kad Egy Colle Compony New Manice Significant investment opportunities identified to address critical generation capacity shortfall, including cost- effective hydro upgrades.#21r 21 Transmission System Update . Electric Transmission: • • Continue planned retirements of generating resources in Montana in conjunction with increasing demand is placing more stress on the transmission system (two record peaks in the last three seasons). As a result, we are experiencing less available transmission capacity throughout the system. Continued investment is critical to address aging infrastructure, capacity concerns, reliability and compliance requirements. Gas Transmission: Continued investment is critical to address aging infrastructure, capacity concerns, reliability and compliance (including the Pipeline and Hazardous Materials Safety Administration proposed rules). • Three primary factors leading to the need for additional investment to address: · • Overall reliability and capacity on the gas transmission system to withstand single large contingencies and to address the decline in on- system gas production; The need to provide additional capacity for existing gas-fired electric generation (given expected growing dependence); and The need to serve new gas-fired capacity generation in South Dakota. Significant investment needs identified for transmission reliability, capacity and gas/electric interdependence. NorthWestern Energy Delivering a Bright Future#22L Accomplishments •Emergency Management System (EMS) •Mobile Work Force Management (MWM) •Advanced Distribution Management System (ADMS) •SD/NE Advanced Meters Infrastructure (AMI) •Distribution Operations Center (DOC) •Smart Switch •Program Missoula Educational Solar Pilot Project •Community Solar Pilots Projects in Bozeman, Helena, Missoula and Yellowstone National Park. •Smart Grid Demonstration Project Distribution Grid Update 5 Year Projects Grid of the Future System Efficiencies •ADMS Enhancements •Fault Location, Isolation and Service Restoration (FLISR) Implementation •Distribution Energy Resource (DER) Integration Operational Efficiencies •DOC Transitions to Control •Montana AMI Customer Experiences •Customer Portals •Smart Apps Actionable Data •Key Performance Indicators •Predictive Analytics •Enterprise Connectivity New Technology ⚫EV Charging •Micro Management System (MGMS) •Advanced DER Integration •Smart Cities Customer Experiences •Advanced Apps & Controls •Predictive Analytics (i.e. Customer Bills) •Home Area Network •Customized Solutions Data Sharing •Multitenant Solutions •Transactive Controls Maximizing PW Assets Customer Services Energy Efficiency Demand Charge Reduction Customer Analytics Backup Power Reliability Time-of- use Bill Management Distribution Deferral Generation Energy Arbitrage Frequency Regulation & Spin/ Non-Spin Reserves AMI ADMS Voltage EMS Support 22 22 Transmission Services Black Start Transmission Deferral Transmission Congestion Relieft Maximize Existing Resources Distribution Services VISION: Turning risks into opportunities by evolving the business and adding new value systems.#23. . • L Looking Forward (Regulatory) The MPSC recently approved a pilot Fixed Cost Recovery Mechanism (FCRM) effective July 1, 2020. We asked the MPSC to delay the start of the pilot for one year until July 1, 2021 due to the uncertainty created by the Covid-19 pandemic. The MPSC granted the requested one-year delay. In May 2019, we filed proposed revisions to our FERC transmission rates. In November 2020 we reached a settlement with intervenors establishing formula rates. The settlement, and a motion to implement settlement rates, were filed on November 16th. The motion was granted on November 25th and we began charging settlement rates on December 1st. As of December 31st, 2020 we had cumulative deferred revenue of approximately $31.3 million that is expected to be refunded. We refunded approximately $20.5 million to our wholesale and choice customers in January 2021 and expect to submit a compliance filing with the MPSC adjusting the FERC credit in our retail rates upon receipt of a final order. Each year we submit filings for recovery of purchased power, natural gas and property tax costs. The respective state commissions review these tracker filings and make cost recovery determinations based on prudency. The MPSC voted in October to disallow recovery of approximately $9.4 million in prior period purchased power costs*. We issued refunds of these disallowed costs to customers in January 2021, with interest calculated from October 1, 2019 when interim rates went into effect. * Of which $5.6 million related to a period in 2018 when Colstrip generation was operating intermittently to ensure it remained in compliance with environmental emission standards and $3.8 million related to the prorated application of the change in state law that eliminated the deadband component of the Power Cost and Credit Adjustment Mechanism. This disallowance was recorded as a $9.4 million reduction to revenues in the fourth quarter 2020. 23 23 NorthWestern Energy Delivering a Bright Future#24• L NorthWestern has a new Environmental, Social and Governance landing page. The new page: • . • Consolidates existing ESG information; Includes disclosures of 19 new and existing policies and standards necessary for a best- practices ESG program; and Includes a new, easy reference, Sustainability Statistics Report to disclose 5-year trend of operational and financial ESG data and statistics. We continue to make progress on several ESG ratings with the most substantial improvement at MSCI (from BB to A in the latest report). Along with investment in a system-wide electric vehicle charging infrastructure, we are also committed to a transition in our fleet starting in 2021. We are targeting 30% of light duty and bucket trucks and 20% of medium and heavy duty to be electric by 2030. ESG Advancements ESG Rating history MSCI ESG RATINGS AAA AA A BBB BB BB B B B B CCC Jul-16 Jul-17 Aug-18 Dec-19 ESG Rating history shows five most recent rating actions ESG Rating distribution Universe: MSCI ACWI Index constituents, Utilities, n=141 22% 19% 18% 18% 11% 5% Jan-21 7% CCC B BB BBB A AA AAA 24 24 THE USE BY NORTHWESTERN CORP OF ANY MSCI ESG RESEARCH LLC OR ITS AFFILIATES ("MSCI") DATA, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT, RECOMMENDATION, OR PROMOTION OF NORTHWESTERN CORP BY MSCI. MSCI SERVICES AND DATA ARE THE PROPERTY OF MSCI OR ITS INFORMATION PROVIDERS, AND ARE PROVIDED 'AS-IS' AND WITHOUT WARRANTY. MSCI NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI. www.northwesternenergy.com/our-company/investor-relations/ESG-Sustainability www.north#25L Environmental Social NorthWestern Energy 2019 ENVIRONMENTAL REPORT CODE OF CONDUCT -AND ETHICS - Environmental Report http://www.northwesternenergy.com /environment/our-environment Code of Conduct ESG Publications Governance 2020 COMMUNITY REPORT SORT-VRSTERN RAFROY http://www.northwesternenergy.com/docs/default- source/documents/corporate governance/code-of-conduct.pdf Community Works Report http://www.northwesternenergy.com/communi ty-works/community-works 2019 ANNUAL REPORT 25 25 2020 AUTHENTENENTORY PROXY STATEMENT NORTHWESTERN ENERGY Annual Report http://www.northwesternenergy.com/our- company/investor-relations/annual-reports Proxy Statement http://www.northwesternenergy.com/our- company/investor-relations/proxy-materials These five documents provide valuable insight in NorthWestern Energy's Environmental, Social and Governance (ESG) Sustainability practices. NorthWestern Energy Delivering a Bright Future#2626 26 r 2020 Electric Generation Portfolio - Total NWE Wind Contracted 23.0% Wind Owned 6.6% ESG - Environmental 2020 Carbon-Free Owned & Long Term Contracted Nameplate Generation Resources (As a Percentage of Total Nameplate MW Capacity) 65% Carbon-Free 70% Geothermal/Other Pumped Storage GOOOO Contracted CELP & YELP 9.7% Natural Gas Contracted 0.8% Natural Gas/- Other Owned 2.7% Coal Owned 21.9% DOODD NWE 60% Hydro Montana & Owned Solar South Dakota combined 33.5% 50% Hydroelectric Wind 40% Nuclear Hydro Contracted 1.5% 30% Solar Contracted <1% Based upon 2020 MWH's of owned and long-term contracted resources. 65% of NorthWestern Energy's 2020 Electric Generation Portfolio Delivered was Carbon-Free Mystic Dam 20% 10% 29% 34% 65% 57% (based on megawatt hours) 0% Beethoven Wind Farm United States (2019) NorthWestern (South Dakota) NorthWestern (Montana) NorthWestern (Total Company) 57% Carbon Free Nameplate Portfolio VS 29% National Average in 2019 (based nameplate megawatts)#27J Community $2.3 Billion Economic Output in 2020 ($2.013B in Montana & Customers Typical Residential Bills Lower than National Average ESG - Social Employees Safety Culture Transformation 27 Over $5 million Donations, $249M in SD/NE) CIRCLE ANALYTICS "Typical Bill" Residential Rate Comparison Lost Time Incident Rate 3.0 SPI National Average ($105.05) 2.5 National Average ($95.70) $100 Sponsorships, Economic 2.0 Development, Scholarship SD 580 MT 90.84 97.72 $60 MT 76.05 1.0 SD 60.84 NE 63.13 0.5 $40 1.5 Funding, Public Recreation Support, Safety Awareness and Volunteer Program Grants in 2020 411 Number of nonprofits that received grants through Employee Volunteer Program $9.4 Million Low-Income Energy Assistance in 2020 Low-Income Assistance We work closely with the federal Low Income Energy Assistance programs to provide critical short- term aid to our community's most vulnerable citizens SXI 7.0 $ Electric (750 kwh) Natural Gas (100 therms) Building on Our Best - Improved Customer Satisfaction Scores 6.0 5.0 4.0 3.0 NWE's Overall Customer Satisfaction Scores 2.0 via JD Power Electric & Gas Residential Studies 1.0 740 720 700 680 660 640 620 600 580 560 JD Power Scores 1.20 1.00 1.10 '07 '08 '09 10 11 12 13 14 15 16 17 18 19 20 OSHA Recordable Rate LD 6.20 3.70 3.00 2.60 2.81 2.68 2.23 1.88 1.78 ECT 1.87 '07 '08 '09 '10 11 12 13 14 15 16 17 18 19 "20 Diverse Employment $5.96M in MT $2.19M in SD $1.28M in NE 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Electric Natural Gas Over the last 13 years, our energy efficiency programs have helped customers save 685,041 MWh's of energy - enough to power 76,000 homes for a year. Represented 2015 2020 Females as % of 22% 26% Total Management 42% NorthWestern Energy Delivering a Bright Future Employees as % of 41% Total Employees#2828 28 r 5th the Best Score Among 50 Publicly Traded North American Utility and Power Companies by Moody's Investment Services on Best Governance Practices Corporate Governance What We Do: • • • • . • Annual election of all directors. Majority vote plus resignation standard in uncontested elections. If a director receives more "WITHHOLD AUTHORITY" votes than "FOR" votes, the director must submit a resignation for the Board to consider. Allow shareholders owning 25 percent of our shares to call a special meeting. Independent Board of Directors, except our CEO. Independent Board Chair. Each of our Board committees (audit, compensation, and governance) is made up solely of independent directors. Committee authority to retain independent advisors, which will be paid for by the company. Code of Conduct and Ethics. Applies to all employees and Board, with a separate Code of Ethics for Chief Executive Officers and Senior Financial Officers concerning financial reporting and other related matters. Robust stock ownership guidelines for executive officers and directors. What We Don't Do: • Poison pill or a shareholder rights plan. • Hedging of company securities. • Corporate political contributions. combinations or mergers. Supermajority voting, except to approve certain business ESG - Governance Diverse Leadership Executive Team 10+ yrs 5 yrs 4 1 Board of Directors 10+ yrs <2 yrs 2 30-69 70+ 1 40-45 2 GO-GO Age Diversity 50-59 Tenure Diversity Female 3-9 yrs 40-49 Age Diversity Female 4 Tenure Diversity 50-55 4 5-9 yrs 4 On exec team Male Male G Gender Ethnic Diversity Gender 5 Diversity Ethnic Diversity White B Diversity Other Recent Governance Recognition BY 2020 2020 WOMEN OARDS NYSE Governance Services GOVERNANCE RISK AND COMPLIANCE LEADERSHIP AWARDS WINNER CORPORATE GOVERNAME: -2019- WINNER 20/20 Women on Boards - Recognized for gender diversity on its board of directors by 2020 Women on Boards. Four of the company's ten directors are female. Corporate Governance Award Winner NorthWestern Corporation's proxy statement has won governance awards - Best Proxy Statement (Small to Mid-Cap) by Corporation Secretary magazine (2014 & 2019) and Exemplary Compensation Discussion and Analysis from NYSE Governance Services (2014) and NorthWestern was recognized as a finalist by Corporate Secretary magazine in the same category for our '12, '13, '16, '17 & '18 statements White CEO Pay Ratio To Average Employee Salary NWE 25:1 All Utilities Average 58:1 Peer Group Average 37:1#2929 1 Our Carbon Reduction Vision for NorthWestern Energy in Montana 2 3 90% carbon reduction by 2045 NorthWestern Energy commits to reduce the carbon intensity of our electric energy portfolio for Montana 90% by 2045.* As compared with our 2010 carbon intensity as a baseline Already over 60% carbon free Today, NorthWestern Energy serves Montana with an electric portfolio that is over 60% carbon free and more than two times better than the total U.S electric power industry (28% carbon free - 2018 metric). Over the last decade, we have already reduced the carbon intensity of our energy generation in Montana by more than 50%. How we're going to get there Our vision for the future builds on the progress we have already made. Already, the foundation of our energy generation is our hydro system, which is 100% carbon free and is available 24 hours a day, 365 days a year. Wind generation is a close second and continues to grow. While utility-scale solar energy 1.12 Tons of CO2 Emitted per Megawatt Hour Generated 52% Reduction Acheived 0.54 0.42 0.37 0.30 - 90% Reduction Projected 0.14 2010 2015 2020 2030 2040 2045 is not a significant portion of our energy mix today, we expect it to evolve along with advances in energy storage. We are committed to working with our customers and communities to help them achieve their sustainability goals and add new technology on our system.#30L Conclusion 30 Pure Electric & Gas Utility Solid Utility Foundation Best Practices Corporate Governance Attractive Future Growth Prospects Strong Earnings & Cash Flows#31Delivering a bright future NorthWestern Energy 31#32Appendix 32 ▼ NWE Capacity as compared to Regional Peers Percent of Peak +Reserve Margin 140% 120% 32% 100% 80% 1% 10% 9% 6% 24% 46% %2 60% 101% 93% 88% 87% 85% 40% 64% 42% 20% 0% Avista Portland General Electric Idaho Power Rocky Mountain Power Pacific Power Puget Sound NorthWestern Energy Energy Utility-Owned NWE's capacity deficit exposes our customers to greater market exposure (price and availability) than any of our regional peers. PPA/Long-Term Contract Market Exposure NorthWestern Energy Delivering a Bright Future#33L MegaWatts 1,800 1,600 Appendix 33 Significant Capacity Deficit in Montana Winter Peak Loads and Capacity Contributions of Existing and Needed Resources Peak Load Forecast plus 16% Reserve Margin 1,400 1,200 1,000 Capacity Shortfall 46% 800 600 400 200 Peak Load Forecast Capacity Shortfall Targeted Resource Additions to Without Fill Need (Peak Capability) Resource Additions -60% 2018 2019 2020 2021 2022 2023 2024 2025 Needed Resources 2026 Existing Resources NorthWestern Energy's current resources provide about 755 MW of peaking capacity, which is the energy available during periods of our customers' highest demand. An additional 645 MW of peaking capacity must currently be purchased from the market to meet our needs. Without new capacity, the market exposure will increase to about 725 MW by 2025 (including reserve margins). This need assumes continued development of cost effective demand side management (conservation) and small distributed generators (net-metering). Meeting peak load with market purchases means being exposed to the market at the worst possible time - when the market is most volatile and prices are high. Capability) Existing Resource (Peak 2027 2028 2029 2030 2031 -Winter Peak Plus 16% 2032 2033 2034 2035 2036 2037 Retail Winter Peak 2038 2039#34L MegaWatts (MW) Appendix 34 Accredited Capacity Contribution in Montana NorthWestern Energy Montana - Accredited Capacity Contribution of Resources (2020 Resource Mix of Owned and Long-Term Contracted Resources) 60% 600 Total Nameplate Capacity (MW): 1,467 Total Accredited Capacity Contribution (MW): 2020 Peak Load (MW): 835 Capacity Contribution 13% 1,200 Capacity Contribution 484 500 455 400 98% 92% Capacity Contribution Capacity 300 Contribution 222 202 197 97% 204 200 100 Capacity Contribution 87 84 0 Natural Gas Thermal - Long- Term Contracted Coal - Owned 290 Hydro Wind 5% Capacity Contribution 59 17 1 Solar ■Nameplate Capacity (MW) ■Accredited Capacity Contribution (MW) Accredited Capacity Contribution is the ability of each resource fuel-type to contribute to meet demand during peak energy usage by customers. Accredited Capacity Contribution or Peak Load Contribution is based on Effective Load Carrying Capability (ELCC) E3 Study on Peak Load Measurement included in North Western Energy's 2020 Supplement to the 2019 Montana Electric Supply Resource Procurement Plan. Note: 2020 Nameplate Capacity MW's include resources that are on-line or in service as of 12/31/2020. Thermal long-term contracted resources of Yellowstone Energy Limited Partnership (YELP) and Colstrip Energy Limited Partnership (CELP) are listed at their contracted capacity rather than nameplate capacity. On a megawatt basis, wind generation comprises a very significant portion of our electric generation portfolio. However, based upon its 13% accredited capacity, it provides a much less significant contribution to our overall capacity deficit.#35L In early February, 2019, NorthWestern 1000 experienced a 800 nearly five day span* when the wind didn't blow and the sun was scant. We were forced to rely upon an already strained market and transmission system for a significant amount of our required capacity (shown in red hatch). Megawatts 600 We had an average need of 327 MW and 544 MW peak need when the market prices were also peaking. * 6am on Feb. 3rd - 10pm on Feb. 7th 600 400 200 Appendix 35 A Recent Example Load, Generation and Deficit During February 2019 Total Hydro Total Natural Gas Total Solar ■Total Thermal ■Total Wind Deficit Load 1200 1000 800 600 400 200 0 0 1st 5th 10th 15th 20th 25th 28th#36Appendix 36 Significant Capacity Retirements in the Pacific NW 1,000 Installed Nameplate Capacity (MW) 600 600 400 200 0 Klamath Hydro Solar Natural gas Petroleum Coal (retirement) Hydro (retirement) Wind Hydro Energy Storage Biomass (retirement) Natural gas (retirement) 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 -200 Hardin -400 North Valmy 1 -600 -800 -1,000 -1,200 Boardman Centralia 1 -1,400 Colstrip 1,2 Retired ahead of schedule (Jan '20) Centralia 2 North Valmy 2 Jim Bridger 1 Jim Bridger 2 Source: Northwest Power and Conservation Council. Note: Hardin is idle, but has not been retired. Planned retirements in the Pacific Northwest region exceed 3,600 MW and the Northwest Power and Conservation Council forecasts regional capacity shortfalls as early as 2021. NorthWestern's continued reliance on the market to purchase energy to fill the gap during peak customer demand will significantly increase price and reliability risk for North Western's customers because of the reduced energy supply availability.#37L 00000 Colstrip Power Plant Appendix 37 Existing Colstrip Ownership 1!!! 罪 Colstrip Transmission System Facility Owner (%) Unit 1 Unit 2 Unit 3 Unit 4 AVISTA Corporation 15% 15% NorthWestern Energy 30% PacifiCorp 10% 10% BPA & Eastern Intertie Portland General 20% 20% Puget Sound Energy 50% 50% 25% 25% Townsend Broadview B A Colstrip Talen Energy 50% 50% 30% Total 100% 100% 100% 100% Facility Owner (MW) Unit 1 Unit 2 Unit 3 Unit 4 System Owner Segment A Segment B AVISTA Corporation 10.2% 12.1% AVISTA Corporation 111.0 111.0 NorthWestern Energy 36.4% 24.3% NorthWestern Energy 222.0 PacifiCorp 6.8% 8.1% PacifiCorp 74.0 74.0 Portland General 13.6% 16.2% Portland General 148.0 148.0 Puget Sound Energy 33.0% 39.3% Puget Sound Energy 153.5 153.5 185.0 185.0 Talen Energy 153.5 153.5 222.0 Total 307.0 307.0 740.0 740.0 NorthWestern Energy Delivering a Bright Future#38L Appendix 38 Timeline of Montana Generation Portfolio Owned and Long-Term Resource Portfolio Timeline Only Carbon-Free Resources (780 MW) Added Since 2011 Owned Resources Long-Term 88 Colstrip Unit 4 222 MW DGGS Spion Kop Hydro Dams 150 MW 40 MW 446 MW** 2 MW Hydro Two Add Dot Add Reduction 11 MW 2.7 MW (3.5) MW Hydro Hydro Prior to '08 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E 2022E Contracted CELP & Basin Judith Gap Various Various Turnbill Gordon Musselshell Fairfield Resources YELP Creek 87 MW* 52 MW & Horse- 21.5 MW 3.7 MW shoe & various 15.4 MW Butte 9.6 MW 20 MW 10 MW Greenfield Various 25 MW 17 MW 144 MW + + Stillwater, Big Timber & Various 114.7 MW South Peak 80 MW Grizzly, Apex 1 & ConEd, Black Bear, MT Sun Wheatland, Caithness & 160 MW Pondera & Beaver Creek Teton 113 MW 278 MW * CELP (Colstrip Energy Limited Partnership) contract expires in 2024 and YELP (Yellowstone Energy Limited Partnership) expires in 2028 ** Hydro dams 446 MW of normal max generation capability (439 MW Nameplate Capacity) excludes 194 MW of Kerr dam which was tonsferred to the Salish & Kootenai Tribes in 2015 NorthWestern Energy Montana - Cumulative Timeline of Owned and Contracted Electric Resources 900 Coal Natural Gas ■Hydro ■Wind ■Solar 800 700 MegaWatts 600 500 400 300 200 100 0 Clean (Hydro, Wind & Solar) vs Total Resources % Prior to 2008 2009 2008 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E 2022E 54.4% 31.9% 31.9% 31.9% 26.5% 31.4% 33.2% 58.2% 58.2% 59.0% 59.6% 63.3% 65.3% 65.4% 73.3% 74.8% Since 2011, we have added 780 MW of generation, both owned and long-term contract, to our generation portfolio, all of which is from carbon-free resources.#39L Appendix 39 Comparison of Installed Capacity Comparison of Installed Capacity (MW) - Dispatchability and Carbon Emitting NorthWestern Energy (Montana) 2019 MW QF Adds Proforma 2021 of Total Percent Dispatchable Non-Carbon 309 309 15.3% 15.3% 0 0 0.0% 0 0.0% 202 10.0% 10.0% 486 24.1% 24.1% 0 0.0% 0 0.0% 17 160 177 8.8% 8.8% 455 391 846 41.9% 41.9% 1,469 551 2,020 100.0% 25.3% 74.7% California MW Percent 2019 of Total Dispatchable Non-Carbon Coal / Coke 91 0.1% 0.1% Oil 351 0.4% 0.4% Nuclear 2,393 3.0% 3.0% Natural Gas 40,382 50.6% 50.6% 202 Hydro 14,039 17.6% 17.6% 486 Biomass 1,308 1.6% Geothermal 2,760 3.5% 3.5% Solar 12,527 15.7% 15.7% Wind 5,973 7.5% 7.5% 79,824 100.0% 54.1% 44.2% California ■ Coal / Coke ■ Oil 54.1% Dispatchable ■ Nuclear ■ Natural Gas ■ Hydro ■ Biomass ■ Geothermal ■ Solar ■Wind North Western (Montana) 25.3% Dispatchable 22.7% Semi- dispatchable 24.1% Semi- dispatchable California is dealing with significant capacity issues DESPITE having a greater amount of dispachable generation and fewer renewables than NorthWestern Energy in Montana (as a percentage of the total). NorthWestern Energy Delivering a Bright Future#40L Appendix 40 Summary Financial Results (Fourth Quarter) Three Months Ended December 31, (in millions except per share amounts) 2020 2019 Variance % Variance Operating Revenues 313.6 $ 328.1 $ (14.5) (4.4%) Cost of Sales 86.0 82.3 3.7 4.5% Gross Margin (1) 227.6 245.8 (18.2) (7.4%) Operating Expenses Operating, general & administrative 73.1 79.3 (6.2) (7.8%) Property and other taxes 42.7 38.7 4.0 10.3% Depreciation and depletion 45.3 43.1 2.2 5.1% Total Operating Expenses 161.1 161.1 (0.0) (0.0%) Operating Income Interest Expense 66.5 84.7 (18.3) (21.5%) (24.5) (24.1) (0.4) (1.7%) Other Income (Expense) 5.8 (0.5) 6.3 (1386.0%) Income Before Taxes 47.8 60.1 (12.3) (20.5%) Income Tax Benefit (Expense) 5.8 (0.1) 5.9 5900.0% Net Income 53.6 60.0 (6.4) (10.7%) Effective Tax Rate (12.1%) 0.2% -12.3% Diluted Shares Outstanding 50.7 50.8 (0.1) (0.1%) Diluted Earnings Per Share $1.06 1.18 $ (0.12) (10.2%) Dividends Paid per Common Share 0.60 0.575 0.025 4.3% NorthWestern Energy (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure See appendix for additional disclosure. Delivering a Bright Future#41L (dollars in millions) Electric Natural Gas Total Gross Margin (1) Appendix 41 Gross Margin (Fourth Quarter) Three Months Ended December 31, 2020 2019 Variance(1) $ 170.8 $ 186.1 $ (15.3) (8.2)% 56.8 59.7 (2.9) (4.8)% $ 227.6 $ 245.8 $ (18.2) (7.4)% (1) Decrease in gross margin due to the following factors: $ (9.4) Disallowance of prior period supply costs (4.5) Electric retail volumes and demand (2.3) Natural gas retail volumes (0.9) Electric transmission (0.4) Montana natural gas production rates 0.5 (4.0) $ (21.0) $ 2.8 1.1 (1.0) (0.1) $ 2.8 $ (18.2) Montana electric supply cost recovery Other Change in Gross Margin Impacting Net Income Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure See appendix for additional disclosure. Property taxes recovered in revenue, offset in property tax expense Operating expenses recovered in trackers, offset in operating expense Production tax credits reducing revenue, offset in income tax expense Gas production taxes recovered in revenue, offset in property & other taxes Change in Gross Margin Offset Within Net Income Decrease in Gross Margin NorthWestern Energy Delivering a Bright Future 41#42L Heating Degree - Days Montana South Dakota Nebraska Appendix 42 Weather (Fourth Quarter) Qtr 4 Degree Days Q4 2020 as compared with: Historic Historic 2020 2019 Average 2,798 3,043 2,956 2019 8% warmer Average 5% warmer 1,881 2,128 2,016 12% warmer 7% warmer 1,426 1,705 1,681 16% warmer 15% warmer We estimate unfavorable weather for the 4th quarter 2020 has contributed approximately $5.7M pretax detriment as compared to normal and $5.0M pretax detriment as compared to the same period in 2019. Difference from Average Temperatures October 2020 November 2020 December 2020 -15 -12 -3 0 3 12 15 Degrees Fahrenheit from Average NorthWestern Energy Delivering a Bright Future#43J (dollars in millions) Appendix 43 Operating Expenses (Fourth Quarter) Three Months Ended December 31, 2020 2019 Variance Operating, general & admin. $ 73.1 $ 79.3 $ (6.2) (7.8%) Property and other taxes 42.7 38.7 4.0 10.3% Depreciation and depletion 45.3 43.1 2.2 5.1% Operating Expenses $ 161.1 $ 161.1 $ 0.0 0.0% Decrease in Operating, general & admin expense due to the following factors: $ (4.4) Employee benefits (2.5) Uncollectible accounts (1.2) Environmental costs (1.1) Labor (1.0) Travel and training (0.7) Hazard tree trimming 1.2 Generation maintenance (2.0) $ (11.7) $ 2.9 Other Change in OG&A Items Impacting Net Income Non-employee directors deferred compensation, offset in other income 1.4 1.2 $ 5.5 Pension and other postretirement benefits, offset in other income Operating expense recovered in trackers, offset in revenue Change in OG&A Items Offset Within Net Income $ (6.2) Decrease in Operating, General & Administrative Expenses $4.0 million increase in property and other taxes was primarily due to plant additions and higher estimated property valuations in Montana. $2.2 million increase in depreciation and depletion expense was primarily due to plant additions NorthWestern Energy Delivering a Bright Future#44L (dollars in millions) Appendix 44 Operating to Net Income (Fourth Quarter) Three Months Ended December 31, 2020 2019 Variance Operating Income $ 66.5 $ 84.7 $ (18.2) (21.5)% Interest Expense (24.5) (24.1) (0.4) (1.7)% Other Income / (Expense) 5.8 (0.5) 6.3 1,386.0% Income Before Taxes 47.8 60.1 (12.3) (20.5)% Income Tax Benefit / (Expense) Net Income 5.8 (0.1) 5.9 5,900.0% $ 53.6 $ 60.0 $ (6.4) (10.7)% $0.4 million increase in interest expenses was primarily due to higher borrowings. $6.3 million increase in other expense was due to a $2.9 million decrease in other pension expense, a $1.4 million increase in the value of deferred shares held in a trust for non-employee directors deferred compensation and higher AFUDC. These changes to both pension and value of deferred shares are offset in operating expense with no impact to net income. $5.9 million increase in income tax benefits was primarily due to lower pre-tax income in 2020 as well as higher flow-through repairs deductions and higher production tax credits. NorthWestern Energy Delivering a Bright Future#45L (in millions) Appendix 45 Income Tax Reconciliation (Fourth Quarter) Three Months Ended December 31, 2020 2019 Income Before Income Taxes $47.8 $60.1 Variance ($12.3) Income tax calculated at federal statutory rate 10.0 21.0% 12.6 20.8% (2.6) Permanent or flow through adjustments: State income, net of federal provisions (1.6) (3.3%) (1.6) Flow-through repairs deductions (8.9) (18.7%) (7.1) (11.8%) (1.8) Production tax credits (5.5) (11.6%) (4.2) (7.1%) (1.3) Share-based compensation 0.6 1.3% (0.2) (0.3%) 0.8 Amortization of excess deferred income taxes (0.3) (0.6%) 0.2 0.4% (0.5) Release of unrecognized tax benefit Impact of Tax Cuts and Jobs Act (0.2) (0.3%) 0.2 Plant and depreciation of flow-through items Prior year permanent return to accrual adjustments (0.2) (0.4%) (1.5) (2.4%) 1.3 0.0 0.1% 0.0 0.1% Other, net 0.1 0.1% 0.4 0.7% (0.3) Sub-total (15.8) (33.1%) (12.5) (20.7%) (3.3) Income Tax (Benefit) Expense $ (5.8) (12.1%) $ 0.1 0.2% $ (5.9) NorthWestern' Energy Delivering a Bright Future#46r (dollars in millions) Cash and cash equivalents Restricted cash Accounts receivable, net Inventories Other current assets Goodwill PP&E and other non-current assets Total Assets Payables Current Maturities - debt and leases Other current liabilities Long-term debt & capital leases Appendix 46 Balance Sheet As of December 31, As of December 31, 2020 2019 $ 5.8 $ 5.1 11.3 6.9 168.2 167.4 61.0 53.9 Debt to 62.3 68.3 Capitalization 357.6 357.6 remains within 5,723.2 5,424.2 our targeted 的 6,389.4 6,083.5 50% -55% range. 100.4 96.7 102.7 2.5 263.4 235.1 2,330.0 2,250.7 1,513.9 1,459.4 2,079.1 2,039.1 $ 6,389.4 $ 6,083.5 Other non-current liabilities Shareholders' equity Total Liabilities and Equity Capitalization: Short-Term Debt & Short-Term Finance Leases 102.7 2.5 Long-Term Debt & Long-Term Finance Leases 2,330.0 2,250.7 Less: Basin Creek Finance Lease (17.4) (19.9) Less: New Market Tax Credit Financing Debt (27.0) (27.0) Shareholders' Equity 2,079.1 2,039.1 balance. Total Capitalization 4,467.4 $ 4,245.4 Ratio of Debt to Total Capitalization 53.5% 52.0% In 2020, we netted our excess deferred income taxes in regulatory liabilities. This reclassification had no effect on previously reported Net income or Shareholders Equity NorthWestern Energy Delivering a Bright Future#47L Appendix 47 Cash Flow (dollars in millions) Operating Activities Net Income December 31, 2020 2019 $ 155.2 202.1 Non-Cash adjustments to net income 174.3 165.8 Cash from operating activities increased by $55.4M primarily due to Changes in working capital 48.1 (53.0) improved collections of Other non-current assets & liabilities (25.5) (18.2) Cash provided by Operating Activities Investing Activities PP&E additions Investment in equity securities Cash used in Investing Activities Financing Activities Issuance of long-term debt Issuance of short-term borrowings Line of credit repayments, net Dividends on common stock Financing costs 352.1 296.7 energy supply costs in the current period, as (405.8) (316.0) (0.0) (405.8) (0.1) (316.1) 150.0 150.0 100.0 (67.0) (19.0) (120.4) (115.1) (2.6) (1.1) Other (1.3) 1.4 Cash Provided by Financing Activities 58.7 16.2 Increase (Decrease) in Cash, Cash Equiv. & Restricted 5.0 (3.2) Beginning Cash, Cash Equiv. & Restricted Cash 12.1 15.3 Ending Cash, Cash Equiv. & Restricted Cash $ 17.1 $ 12.1 compared with higher procured supply costs and payments reducing cash flows in 2019, including TCJA credits to Montana customers of approximately $20.5 million and transmission generation interconnection refunds. These improvements were offset in part by reduced net income. NorthWestern Energy Delivering a Bright Future#48L Appendix 48 Adjusted Non-GAAP Earnings (Fourth Quarter) GAAP Non Non-GAAP Non GAAP Variance GAAP Three Months Ended Dec. 31, 2020 (in millions) Unfavorable Weather Move Pension Expense to OG&A (disaggregated with ASU 2017-07) Non-employee Deferred Compensation Disallowance of prior period supply costs Three Months Ended Three Months Ended Dec. 31, Variance 2020 Dec. 31, 2019 % Non-employee Deferred Compensation Move Pension Expense to OG&A (disaggregated with ASU 2017-07) Unfavorable Weather Revenues $313.6 5.7 9.4 $328.7 ($0.1) 0.0% $328.8 Cost of sales 86.0 86.0 3.7 4.5% 82.3 Gross Margin 227.6 5.7 9.4 242.7 (3.8) -1.5% 246.5 GAAP Three Months Ended Dec. 31, 2019 0.7 $328.1 82.3 0.7 245.8 The adjusted non-GAAP measures presented in the table are being shown to reflect significant items that are non- recurring or variance from normal weather, Op. Expenses however they OG&A 73.1 0.2 (2.1) 71.2 (10.4) -12.7% 81.6 0.7 1.6 79.3 should not be Prop. & other taxes 42.7 42.7 4.0 10.3% 38.7 38.7 considered a Depreciation 45.3 45.3 2.2 5.1% 43.1 43.1 substitute for Total Op. Exp. 161.1 - 0.2 (2.1) 159.2 (4.2) -2.6% 163.4 0.7 1.6 - 161.1 financial results Op. Income 66.5 5.7 (0.2) 2.1 9.4 83.5 0.4 0.5% 83.1 (0.7) (1.6) 0.7 84.7 and measures Interest expense (24.5) 0.5 (24.0) 0.1 0.4% (24.1) (24.1) Other (Exp.) Inc., net 5.8 0.2 (2.1) 3.9 2.1 113.6% 1.8 0.7 1.6 - (0.5) Pretax Income 47.8 5.7 9.9 63.4 2.6 4.3% 60.8 0.7 60.1 Income tax (Exp)/Ber 5.8 (1.4) (2.5) 1.9 2.2 793.9% (0.3) (0.2) (0.1) determined or calculated in accordance with GAAP. Net Income $53.6 4.3 7.4 $65.3 $4.8 7.9% $60.5 0.5 $60.0 ETA -12.1% 25.3% 25.3% -2.9% 0.5% 25.3% 0.2% Diluted Shares 50.7 50.7 (0.1) -0.2% 50.8 50.8 Diluted EPS $1.06 0.08 0.15 $1.29 $0.10 8.4% $1.19 0.01 $1.18 (1) As a result of the adoption of Accounting Standard Update 2017-07 in March 2018, pension and other employee benefit expense is now disaggregated on the GAAP income statement with portions now recorded in both OG&A expense and Other (Expense) Income lines. To facilitate better understanding of trends in year-over-year comparisons, the non-GAAP adjustment above re-aggregates the expense in OG&A - as it was historically presented prior to the ASU 2017-07 (with no impact to net income or earnings per share). NorthWestern Energy Delivering a Bright Future#49L Appendix 49 Summary Financial Results (Full Year) (in millions except per share amounts) Twelve Months Ended December 31, 2020 2019 Variance % Variance Operating Revenues Cost of Sales 1,198.7 $ 1,257.9 (59.2) (4.7%) 306.2 318.0 (11.8) (3.7%) Gross Margin (1) 892.5 939.9 (47.4) (5.0%) Operating Expenses Operating, general & administrative 297.1 318.2 (21.1) (6.6%) Property and other taxes 179.5 171.9 7.6 4.4% Depreciation and depletion 179.7 172.9 6.8 3.9% Total Operating Expenses Operating Income 656.3 663.0 (6.7) (1.0%) 236.2 276.9 (40.7) (14.7%) Interest Expense (96.8) (95.1) (1.7) (1.8%) Other Income, net 4.8 0.4 4.4 (1237.0%) Income Before Taxes 144.2 182.2 (37.9) (20.8%) Income Tax Benefit 11.0 19.9 (8.9) (44.7%) Net Income 155.2 202.1 $ (46.9) (23.2%) Effective Tax Rate (7.6%) (10.9%) 3.3% Diluted: Average Shares Outstanding 50.7 50.8 (0.1) (0.2%) Diluted Earnings Per Share 3.06 3.98 (0.92) (23.1%) Dividends Paid per Common Share 2.40 2.30 0.10 4.3% (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. See appendix for additional disclosure. NorthWestern Energy Delivering a Bright Future#50L (dollars in millions) Appendix 50 Gross Margin (Full Year) Twelve Months Ended December 31, Electric Natural Gas 2020 2019 Variance $ 704.2 $ 741.6 $ (37.4) (5.0)% 188.3 198.3 (10.0) (5.0)% $ 892.5 $ 939.9 $ (47.4) (5.0)% (1) (1) Total Gross Margin $ (11.0) (10.6) (9.4) Decrease in gross margin due to the following factors: Electric retail volumes and demand Natural gas retail volumes Disallowance of prior period supply costs (3.3) Lower electric QF liability adjustment (2.7) Montana electric supply cost recovery Montana natural gas production rates Montana electric retail rates (2.7) Electric transmission (1.2) 1.6 (9.2) $ (48.5) $ 6.3 (5.0) (0.1) (0.1) $ 1.1 $ (47.4) Other Change in Gross Margin Impacting Net Income Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure See appendix for additional disclosure. Property taxes recovered in trackers, offset in property tax expense Production tax credits flowed-through trackers, offset in income tax expense Operating expenses recovered in trackers, offset in operating expense Gas production taxes recovered in revenue, offset in property & other taxes Change in Gross Margin Offset Within Net Income Decrease in Gross Margin NorthWestern Energy Delivering a Bright Future 50#51L Appendix 51 Weather (Full Year) Full Year 2020 as compared with: Historic Average 4% warmer Heating Degree - Days YTD thru 12/31 Degree Days 2020 2019 Historic Average Montana 7,505 8,647 7,819 South Dakota 7,445 8,478 7,702 Nebraska 5,676 6,571 6,359 2019 13% warmer 12% warmer 14% warmer 3% warmer 11% warmer Cooling Degree-Days 2020 2019 YTD thru 12/31 Degree Days Historic Average Montana South Dakota 398 370 405 2019 8% warmer 879 715 734 23% warmer Full Year 2020 as compared with: Historic Average 2% cooler 20% warmer Difference from Average Temperatures We estimate overall unfavorable weather in 2020 resulted in a $9.8 million pretax detriment as compared to normal and a $17.1 million detriment as compared to 2019. January 2020 February 2020 March 2020 April 2020 May 2020 June 2020 July 2020 August 2020 September 2020 October 2020 November 2020 December 2020 -15 -12 12 15 Degrees Fahrenheit from Average#52(dollars in millions) Appendix 52 Operating Expenses (Full Year) Twelve Months Ended December 31, 2020 2019 Variance Operating, general & admin. Property and other taxes $ 297.1 179.5 $ 318.2 $ (21.1) (6.6)% 171.9 7.6 4.4% Depreciation and depletion 179.6 172.9 6.7 3.9% Operating Expenses $ 656.2 $ 663.0 $ (6.8) (1.0)% Decrease in operating, general & administrative expense due to the following factors: $ (10.1) Employee benefits (4.1) Labor (3.2) Hazard tree removal (3.0) (1.2) (0.9) 3.0 (3.2) $(22.7) Travel and training Environmental costs Generation maintenance Uncollectible Accounts Other miscellaneous Change in OG&A Items Impacting Net Income $ 7.0 (0.1) Pension and other postretirement benefits, offset in other income Operating expenses recovered in trackers, offset in revenue (5.3) $ 1.6 $ (21.1) Non-employee directors deferred compensation, offset in other income Change in OG&A Items Offset Within Net Income Decrease in Operating, General & Administrative Expenses $7.6 million increase in property and other taxes was primarily due to plant additions and higher estimated property valuations in Montana. $6.7 million increase in depreciation and depletion expense was primarily due to plant additions NorthWestern Energy Delivering a Bright Future#53L (dollars in millions) Operating Income Interest Expense Other Income, net Income Before Taxes Income Tax Benefit Net Income Appendix 53 Operating to Net Income (Full Year) Twelve Months Ended December 31, 2020 2019 Variance $ 236.2 $ 276.9 $ (40.7) (14.7)% (96.8) 4.8 (95.1) (1.7) (1.8)% 0.4 4.4 1,237.0% 144.2 182.2 (38.0) (20.8)% 11.0 19.9 (8.9) (44.7)% $ 155.2 $ 202.1 $ (46.9) (23.2)% $1.7 million increase in interest expenses was primarily due to higher borrowings issued as a precautionary measure in order to increase our cash position and preserve financial flexibility in light of the uncertainty in the markets, partially offset by lower interest rates on our revolving credit facilities. $4.4 million increase in other income was primarily due to a $7.0 million decrease in pension expense that was partly offset by a $5.3 million decrease in the value of deferred shares held in trust for non-employee directors deferred compensation (both of which are offset in operating, general and administrative expense with no impact to net income), and higher capitalization of AFUDC. $8.9 million decrease in income tax benefit due primarily due to the release of approximately $22.8 million of unrecognized tax benefits in 2019, including $2.7 million of accrued interest and penalties, due to the lapse of statutes of limitation in the second quarter of 2019. NorthWestern Energy Delivering a Bright Future#54L (in millions) Appendix 54 Income Tax Reconciliation (Full Year) Twelve Months Ended December 31, 2020 2019 Variance Income Before Income Taxes $144.2 $182.2 ($38.0) Income tax calculated at federal statutory rate 30.3 21.0% 38.3 21.0% (8.0) Permanent or flow through adjustments: State income, net of federal provisions (1.5) (1.1%) 1.2 0.7% (2.7) Flow-through repairs deductions (23.8) (16.5%) (19.7) (10.8%) (4.1) Production tax credits (13.1) (9.1%) (11.5) (6.3%) (1.6) Amortization of excess deferred income taxes (1.0) (0.7%) (1.7) (0.9%) 0.7 Release of unrecognized tax benefit (22.8) (12.5%) 22.8 Impact of Tax Cuts and Jobs Act (0.2) (0.1%) 0.2 Plant and depreciation of flow-through items 0.1 0.1% (4.0) (2.2%) 4.1 Prior year permanent return to accrual adjustments Other, net (1.7) (1.2%) 0.6 0.3% (2.3) (0.3) (0.1%) (0.1) (0.1%) (0.2) Sub-total (41.3) (28.6%) (58.2) (31.9%) 16.9 Income Tax Benefit $ (11.0) (7.6%) $ (19.9) (10.9%) 8.9 NorthWestern Energy Delivering a Bright Future#55L GAAP (in millions) Twelve Months Ended Dec. 31, 2020 Appendix 55 Adjusted Non-GAAP Earnings (Full Year) o Unfavorable Weather Move Pension Expense to OG&A (disaggregated with ASU 2017-07) Non-employee Deferred Compensation Disallowance of prior period Osupply costs Non Non-GAAP Non GAAP Variance GAAP Twelve Months Ended Twelve Months Ended Dec. 31, 2020 Variance Dec. 31, 2019 Remove Benefit Related to Unrecognized Tax Benefits Release of Previously Non-employee Deferred Compensation Move Pension Expense to OG&A (disaggregated with |ASU 2017-07) Favorable Weather GAAP Twelve Months Ended Dec. 31, 2019 Revenues $1,198.7 9.8 9.4 $1,217.9 ($32.7) -2.6% $1,250.6 Cost of sales 306.2 306.2 (11.8) -3.7% 318.0 Gross Margin 892.5 9.8 9.4 911.7 (20.9) -2.2% 932.6 1 (7.3) $1,257.9 318.0 (7.3) 939.9 Op. Expenses OG&A 297.1 0.6 2.9 300.6 (22.8) -7.0% 323.4 (2.4) 7.6 318.2 Prop. & other taxes 179.5 179.5 7.6 4.4% 171.9 . 171.9 Depreciation 179.7 179.7 6.8 3.9% 172.9 172.9 Total Op. Exp. 656.3 0.6 2.9 659.8 (8.4) -1.3% 668.2 (2.4) 7.6 663.0 Op. Income 236.2 9.8 (0.6) (2.9) 9.4 251.9 (12.5) -4.7% 264.4 2.4 (7.6) (7.3) 276.9 Interest expense (96.8) 0.5 (96.3) (1.2) -1.3% (95.1) (95.1) Other Inc. (Exp.), net 4.8 0.6 2.9 8.3 2.7 47.8% 5.6 (2.4) 7.6 0.4 Pretax Income 144.2 9.8 9.9 163.9 (11.0) Income Tax Ben.(Exp.) 11.0 (2.5) (2.5) 6.0 Net Income $155.2 7.3 7.4 $169.9 7.1 ($3.9) -6.3% 674.2% -2.2% 174.9 (7.3) 182.2 $173.8 (1.1) (22.8) (22.8) 1.8 19.9 (5.5) $202.1 ETR -7.6% 25.3% 25.3% Diluted Shares Diluted EPS 50.7 $3.06 0.14 0.15 -3.7% 50.7 $3.35 0.6% 25.3% -10.9% (0.1) -0.2% ($0.07) -2.0% 50.8 50.8 $3.42 (0.45) (0.11) $3.98 The adjusted non-GAAP measures presented in the table are being shown to reflect significant items that are non-recurring or variance from normal weather, however they should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. (1) As a result of the adoption of Accounting Standard Update 2017-07 in March 2018, pension and other employee benefit expense is now disaggregated on the GAAP income statement with portions now recorded in both OG&A expense and Other (Expense) Income lines. To facilitate better understanding of trends in year-over-year comparisons, the non-GAAP adjustment above re-aggregates the expense in OG&A - as it was historically presented prior to the ASU 2017-07 (with no impact to net income or earnings per share). NorthWestern Energy Delivering a Bright Future#56L Appendix Qualified Facility Earnings Adjustment 56 56 Liability Adjustment due to underlying change in contract pricing assumptions Actual Cost less than expected (due to price and volumes) Total Jun-15 ($6.1) 1.8 ($4.3) Jun-16 $0.0 1.8 $1.8 Jun-17 $0.0 2.1 $2.1 The gain in 2020 for our QF liability was $3.1 million in total, it was comprised of $2.2 million adjustment to the liability and $0.9 million lower actual costs over last 12 months (QF Jun-18 $17.5 9.7 $27.2 contract year). This Jun-19 $3.3 3.1 $6.4 $3.1 million benefit is $3.3 million less than the Jun-20 $2.2 0.9 $3.1 $6.4 million total benefit we Year-over-Year Better (Worse) Jun-16 $6.1 0.0 $6.1 Jun-17 $0.0 0.3 $0.3 Jun-18 $17.5 7.6 $25.1 Jun-19 ($14.2) (6.6) ($20.8) Jun-20 ($1.1) (2.2) ($3.3) recognized in Q2 last year. Due to our expectations regarding the remeasurement frequency of our QF liability, we no longer reflect this adjustment as a non-GAAP measure. Our electric QF liability consists of unrecoverable costs associated with contracts covered under PURPA that are part of a 2002 stipulation with the MPSC and other parties. Risks/losses associated with these contracts are born by shareholders, not customers. Therefore, any mitigation of prior losses and/or benefits of liability reduction also accrue to shareholders. NorthWestern Energy Delivering a Bright Future#57L Pretax Millions Appendix Quarterly PCCAM Impacts 57 57 Q1 QZ Q3 Q4 Full Year '17/'18 Tracker Full year recorded in Q3 $3.3 $3.3! '18/"19 Tracker ($5.1) $0.3 (4.8); 2018 (Expense) Benefit $0.0 $0.0 ($1.8) $0.3 ($1.5); Full Year '18/'19 Tracker ($1.6) $4.6 $3.0 '19/'20 Tracker $0.1 ($0.7)! (0.6)! 2019 (Expense) Benefit ($1.6) $4.6 $0.1 ($0.7)! $2.4! Year-to-Date CU4 Disallowance ('18/19 Tracker) ($9.4); ($9.4)i '19/"20 Tracker $0.1 $0.2 $0.3 i '20/'21 Tracker ($0.4) ($0.2)! (0.6)! 2020 (Expense) Benefit $0.1 $0.2 ($0.4) ($9.6) ($9.7); Year-over-Year Variance $1.7 ($4.4) ($0.5) ($8.9) ($12.1) In 2017, the Montana legislature revised the statute regarding our recovery of electric supply costs. In response, the MPSC approved a new design for our electric tracker in 2018, effective July 1, 2017. The revised electric tracker, or PCCAM established a baseline of power supply costs and tracks the differences between the actual costs and revenues. Variances in supply costs above or below the baseline are allocated 90% to customers and 10% to shareholders, with an annual adjustment. From July 2017 to May 2019, the PCCAM also included a "deadband" which required us to absorb the variances within +/- $4.1 million from the base, with 90% of the variance above or below the deadband collected from or refunded to customers. In 2019, the Montana legislature revised the statute effective May 7, 2019, prohibiting a deadband, allowing 100% recovery of QF purchases, and maintaining the 90% / 10% sharing ratio for other purchases.#58L 58 Appendix 58 NorthWestern Energy Profile Authorized Jurisdiction and Service Montana electric delivery and production (1) Montana - Colstrip Unit 4 Implementation Date April 2019 Rate Base Estimated Rate Base Authorized Overall Rate Authorized Return on (millions) (millions) of Return Equity Authorized Equity Level 2,030.1 2,500.9 6.92% 9.65% 49.38% April 2019 304.0 272.4 8.25% 10.00% 50.00% Montana natural gas delivery and production (2) September 2017 430.2 516.1 6.96% 9.55% 46.79% Total Montana South Dakota electric (3) South Dakota natural gas (3) Total South Dakota Nebraska natural gas (3) Total NorthWestern Energy 2,764.3 3,289.4 December 2015 557.3 626.8 7.24% n/a n/a December 2011 65.9 77.4 7.80% n/a n/a 623.2 704.2 December 2007 24.3 3,411.8 37.8 4,031.4 8.49% 10.40% n/a (1) The revenue requirement associated with the FERC regulated portion of Montana electric transmission and ancillary services are included as revenue credits to our MPSC jurisdictional customers. Therefore, we do not separately reflect FERC authorized rate base or authorized returns. (2) The Montana gas revenue requirement includes a step down which approximates annual depletion of our natural gas production assets included in rate base. (3) For those items marked as "n/a," the respective settlement and/or order was not specific as to these terms. Note: Data as reported in our 2020 10-K We anticipate current capital investment projections to result in annualized rate base growth of 4%-5% NorthWestern Energy Delivering a Bright Future#59L Appendix 59 2020 System Statistics Owned Energy Supply Transmission Distribution Electric (MW) MT SD Total Trans for Others MT SD Total Demand MT SD/NE (1) Total Base load coal 222 210 432 Electric (GWh) 11,432 26 11,457 Daily MWs 750 200 950 Wind 51 80 131 Natural Gas (Bcf) 42.0 31.2 73.2 Peak MWs 1,200 328 1,528 Hydro 448 448 Other resources (2) 150 121 271 Annual GWhs Annual Bcf 6,600 1,750 8,350 21.3 10.3 31.7 871 411 1,282 System (miles) MT SD Total Electric Natural Gas (Bcf) MT SD Total Natural gas 6,809 1,308 2,165 55 8,117 Customers 2,220 Electric Proven reserves Annual production Storage 43.1 3.5 43.1 3.5 Total 8,974 1,363 10,337 Natural gas MT 384,700 203,700 SD/NE Total Total 588,400 63,900 448,600 90,700 294,400 154,600 743,000 17.8 17.8 System (miles) Electric Natural gas MT SD/NE Total 18,068 4,892 2,314 20,382 2,523 Total 22,960 4,837 Note: Statistics above are as of 12/31/2020 except for electric transmission for others which is 2019 data (1) Nebraska is a natural gas only jurisdiction (2) Dave Gates Generating Station (DGGS) in Montana is a 150 MW nameplate facility but consider it a 105 MW (60 MW FERC & 45MW MPSC jurisdictions) peaker 7,415 27,797 NorthWestern Energy Delivering a Bright Future#60L Appendix 60 Experienced & Engaged Board of Directors Stephen P. Adik • • Chairman of the Board Independent • Director since Nov. 2004 Anthony T. Clark • . Committees: Governance, Human Resources Independent • Director since Dec. 2016 • Dana J. Dykhouse . • Committees: Human Resources (chair), Audit Independent Director since Jan. 2009 Jan R. Horsfall • Committees: Operations (chair), Audit, • Independent • Director since April 2015 Britt E. Ide • • Committees: Governance, Operations Independent ⚫ Director since April 2017 Linda G. Sullivan Committees: Audit (Chair), Operations Independent Director since April 2017 Mahvash Yazdi Committees: Human Resources, Operations • Independent • Director since December 2019 Jeff W. Yingling • Committees: Audit, Governance • Independent • Director since October 2019 Julia L. Johnson • • Committees: Governance (chair), Human Resources • Independent • • Director since Nov. 2004 Robert C. Rowe • Committees: None • CEO and President Director since August 2008 • •#61L Appendix 61 Strong Executive Team Robert C. Rowe • Chief Executive Officer Current position since 2008 Heather H. Grahame • General Counsel and Vice President of Regulatory • and Federal Government Affairs Current position since 2010 Brian B. Bird • President and . Chief Operating Officer Current position since 2021 (formerly Chief Financial Officer since 2003) Michael R. Cashell . • Vice President - Transmission Current Position since 2011 Curtis T. Pohl • • Vice President Distribution - Current position since 2003 John D. Hines • Vice President - Supply/Montana Affairs Current Position since 2011 • Bobbi L. Schroeppel Vice President - Customer Care, Communications and Human Resources • Current Position since 2002 Crystal D. Lail . • Vice President and Chief Financial Officer Current position since 2021 (formerly VP and Chief Accounting Officer since 2020) Jeanne M. Vold • Vice President - Technology • Current Position since 2021 (former Business Technology Officer since 2012) NorthWestern Energy Delivering a Bright Future#62L Commissioners are elected in statewide elections from each of five districts. Chairperson is elected by fellow Commissioners. Commissioner term is four years, Chairperson term is two years. Appendix Our Commissioners 62 62 Montana Public Service Commission Began Term 2020 Election Name Party Serving Ends Koopman termed out. Roger Koopman R Jan-13 Jan-21 James Brown (R) defeated Brad Johnson (Chairperson) R Jan-15 Jan-23 Tom Woods (D) Bob Lake (Vice Chairperson) R Jan-13 Jan-21 Lake termed out. Tony O'Donnell R Randy Pinocci R Jan-19 Jan-17 Jan-21 Jan-23 Jennifer Fielder (R) defeated Monica Tranel (D) O'Donnell (R), incumbent, defeated Valarie McMurty (D) Commissioners ore elected in statewide elections. Chairperson is elected by fellow Commissioners. Commissioner term is six years, Chairperson term is one year. South Dakota Public Utilities Commission Name Party Began Term Serving Ends 2020 Election Kristie Fiegen Aug-11 Jan-25 Hanson (R), incumbent, defeated Remi Bald Eagle (D) Gary Hanson (Chairperson) R Jan-03 Jan-21 and Devin Saxon (L) Chris Nelson (Vice Chairperson) R Jan-11 Jan-23 Commissioners are elected in statewide elections. Chairperson is elected by fellow Commissioners. Commissioner term is six years, Chairperson term is one year. Nebraska Public Service Commission Began Term Name Party Serving Ends 2020 Election Rod Johnson (Vice Chairperson) R Jan-93 Jan-23 Rhoades (D), incumbent, defeated Tim Davis (R) Crystal Rhoades D Jan-15 Jan-21 Mary Ridder (Chairperson) R Jan-17 Jan-23 Tim Schram R Jan-07 Jan-25 Dan Watermeier R Jan-19 Jan-25#63L Pre-Tax Adjustments ($ Millions) Reported GAAP Pre-Tax Income Non-GAAP Adjustments to Pre-Tax Income: Weather Release of MPSC DGGS deferral Appendix 63 Non-GAAP Financial Measures (1 of 3) Use of Non-GAAP Financial Measures - Reconcile to Non-GAAP diluted EPS Lost revenue recovery related to prior periods DGGS FERC ALJ initial decision - portion related to 2011 MSTI Impairment Favorable CELP arbitration decision Remove hydro acquisition transaction costs Exclude unplanned hydro earnings Remove benefit of insurance settlement QF liability adjustment Electric tracker disallowance of prior period costs Transmission impacts (unfavorable hydro conditions) Settlement of Workers Compensation Claim Income tax adjustment 13.2 15.2 (14.2) (7.3) 144.2 S 2011 102.6 2012 2013 2014 2015 $ 116.5 S 108.3 S 110.4 S 2016 2017 181.2 $ 156.5 $ 176.1 2018 2019 2020 178.3 $ 182.2 $ (3.0) 8.4 (3.7) (1.3) (3.4) (1.3) (3.0) (3.0) (1.0) 7.2 24.1 (47.5) 6.3 15.4 (8.7) 3.0 3.0 (20.8) 6.1 9.8 (17.5) 12.2 9.9 $ 163.9 (10.1) (3.6) 9.4 Unplanned Equity Dilution from Hydro transaction Adjusted Non-GAAP Pre-Tax Income S 95.5 $ 99.1 $ 109.8 $ 115.8 S 179.7 169.7 S 172.7 S 168.9 $ 174.9 Tax Adjustments to Non-GAAP Items ($ Millio 2011 2012 2013 2014 2015 92.6 $ 98.4 $ 94.0 $ 120.7 S 151.2 $ 2016 164.2 $ 2017 162.7 2018 $ 197.0 S 2019 202.1 S (1.8) (5.5) GAAP Net Income Non-GAAP Adjustments Taxed at 38.5% (08-17) and 25.3% (18-currrent): Weather Release of MPSC DGGS deferral Lost revenue recovery related to prior periods DGGS FERC ALJ initial decision - portion related to 2011 MSTI Impairment Favorable CELP arbitration decision Remove hydro acquisition transaction costs Exclude unplanned hydro earnings Remove benefit of insurance settlement QF liability adjustment Electric tracker disallowance of prior period costs 5.2 (2.3) - (1.9) (1.9) (0.6) 4.4 14.8 (29.2) (0.8) 9.5 (5.4) 8.1 9.3 - (8.7) (2.1) (1.0) (12.8) 3.8 (13.1) 7.5 Transmission impacts (unfavorable hydro conditions) 1.8 Settlement of Workers Compensation Claim 1.8 Income tax adjustment (6.2) (2.2) (18.5) (12.5) (12.8) (22.8) Unplanned Equity Dilution from Hydro transaction Non-GAAP Net Income S 88.2 $ 87.7 $ 94.9 S 105.5 S 150.3 $ 159.8 $ 160.6 $ 170.1 S 173.8 Non-GAAP Adjustments: Weather (0.02) 0.17 2020 155.2 7.3 7.4 $ 169.9 (0.11) 0.14 Non-GAAP Diluted Earnings Per Share 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Diluted Average Shares (Millions) 36.5 37.0 Reported GAAP Diluted earnings per share S 2.53 2.66 $ 38.2 2.46 $ 40.4 2.99 47.6 48.5 48.7 50.2 50.8 $ 3.17 $ 3.39 S 3.34 3.92 $ 3.98 50.7 3.06 (0.05) 0.14 (0.05) 0.19 (0.04) (0.02) (0.05) (0.05) (0.02) (0.18) 0.12 0.40 (0.79) 0.11 0.24 (0.14) (0.27) 0.08 (0.26) 0.16 Release of MPSC DGGS deferral Lost revenue recovery related to prior periods DGGS FERC ALJ initial decision - portion related to 2011 MSTI Impairment Favorable CELP arbitration decision Remove hydro acquisition transaction costs Exclude unplanned hydro earnings Remove benefit of insurance settlements & recoveries QF liability adjustment Electric tracker disallowance of prior period costs Transmission impacts (unfavorable hydro conditions) 0.05 Settlement of Workers Compensation Claim 0.05 Income tax adjustment (0.17) (0.06) Unplanned Equity Dilution from Hydro transaction (0.47) 0.08 (0.26) (0.25) (0.45) Non-GAAP Diluted Earnings Per Share 2.41 $ 2.37 $ 2.50 2.68 $ 3.15 $ 3.30 $ 3.30 3.39 $ 3.42 $ 3.35 0.15 These materials include financial information prepared in accordance with GAAP, as well as other financial measures, such as Gross Margin and Adjusted Diluted EPS, that are considered "non-GAAP financial measures." Generally, a non-GAAP financial measure is a numerical measure of a company's financial performance, financial position or cash flows that exclude (or include) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. Gross Margin (Revenues less Cost of Sales) is a non-GAAP financial measure due to the exclusion of depreciation from the measure. Gross Margin is used by us to determine whether we are collecting the appropriate amount of energy costs from customers to allow recovery of operating costs. Adjusted Diluted EPS is another non- GAAP measure. The Company believes the presentation of Adjusted Diluted EPS is more representative of our normal earnings than the GAAP EPS due to the exclusion (or inclusion) of certain impacts that are not reflective of ongoing earnings. The presentation of these non-GAAP measures is intended to supplement investors' understanding of our financial performance and not to replace other GAAP measures as an indicator of actual operating performance. Our measures may not be comparable to other companies' similarly titled measures.#64L Appendix Non-GAAP Financial Measures (2 of 3) Use of Non-GAAP Financial Measures - Dividend Payout Ratio to GAAP and Non-GAAP diluted EPS 44 64 (per share) Dividend per Share Reported GAAP diluted EPS 2011 2012 2013 2014 2015 2016 2017 $ 1.44 $ 1.48 $ 1.52 $ $ 2.53 $ 2.66 69 $ 2.46 $ Dividend Payout Ratio - GAAP diluted EPS 56.9% 55.6% 61.8% 1.60 $ 1.92 $ 2.00 2.99 $ 3.17 $ 3.39 53.5% 60.6% 59.0% 69 69 69 69 69 2018 2020 $ 2.40 3.98 $ 3.06 57.8% 2.10 $ 2.20 $ 2.30 3.34 $ 3.92 $ 62.9% 56.1% 2019 78.4% Reported Non-GAAP diluted EPS $ Dividend Payout Ratio - Non-GAAP diluted EPS 2.41 59.8% $ 2.37 62.4% $ 2.50 $ 60.8% 2.68 $ 59.7% 3.15 $ 61.0% 3.30 60.6% $ 3.30 S 3.39 $ 63.6% 64.9% 3.42 67.3% $ 3.35 71.6% Use of Non-GAAP Financial Measures - Return on Average Equity for GAAP and Non-GAAP Earnings (per share) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 GAAP Net Income ($M's) $ Average Quarterly Equity (SM's) $ Return On Average Equity (ROAE) - GAAP Earnings 11.0% 92.6 $ 98.4 $ 94.0 842.8 $ 895.9 $ 991.1 11.0% 9.5% $ 120.7 $ 1,119.3 10.8% 9.9% $ 151.2 $ 164.2 S 162.7 $ 1,520.2 $ 1,632.3 $ 1,720.4 10.1% $ 197.0 $ 202.1 $ 155.2 $ 1,875.7 $ 1,998.8 $ 2,056.9 9.5% 10.5% 10.1% 7.5% Reported Non-GAAP diluted EPS $2.41 $2.37 $2.50 $2.68 $3.15 $3.30 $3.30 $3.39 $3.42 $3.35 Average Diluted Shares (M) 36.5 37.0 38.2 39.3 47.6 48.5 48.7 50.2 50.8 50.7 Calculated Non-GAAP Adjusted Net Income (SM's) $88.2 $87.7 $94.9 $105.3 $150.3 $160.2 Return on Average Equity (ROAE) - Non-GAAP Earnings 10.5% 9.8% 9.6% 9.4% 9.9% 9.8% $160.6 9.3% $170.8 $174.3 $170.4 9.1% 8.7% 8.3% Net Operating Losses (NOL's): The expected tax rate and the expected availability of NOLS are subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and are based upon assumptions with respect to future decisions, which are subject to change. Actual results will vary and those variations may be material. For discussion of some of the important factors that could cause these variations, please consult the "Risk Factors" section of our most recent 10-K filed with the SEC. NorthWestern Energy Delivering a Bright Future#65L Appendix Non-GAAP Financial Measures (3 of 3) 65 Use of Non-GAAP Financial Measures - Free Cash Flow - 2011 to 2020 (in millions! 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total Capital Spending 188.7 322.5 299.1 1,174.0 430.4 287.9 276.4 305.0 316.2 405.8 Less: Infrastructure Programs (DSIP/TSIP) (15.2) (18.7) (47.4) (52.0) (51.6) (47.8) (37.3) Less: Investment Growth (43.9) (170.5) (126.6) (964.2) (195.9) (7.5) (3.9) (31.3) (13.7) (84.8) Maintenance Capex Free Cash Flow 129.7 133.2 125.2 157.8 182.9 232.6 235.3 273.7 302.5 321.0 Cash Flow from Operations 233.8 251.2 193.7 250.0 339.8 286.8 322.7 382.0 296.7 352.1 Less: Maintenance Capex (129.7) (133.2) (125.2) (157.8) (182.9) (232.6) (235.3) (273.7) (302.5) (321.0) Less: Dividends (51.9) (54.2) (57.7) (65.0) (90.1) (95.8) (101.3) (109.2) (115.1) (120.4) Free Cash Flow 52.2 63.7 10.9 27.2 66.9 (41.5) (13.8) (0.9) (120.9) (89.2) Use of Non-GAAP Financial Measures - Gross Margin Full Year Thru December 31, 2020 (in millions) Electric Gas Other Total Operating Revenues Cost of Sales Gross Margin $ 940.8 $ 257.9 $ $ 236.6 $ 69.6 $ $ 704.2 $ $ 1,198.7 $ 306.2 188.2 $ 69 $ 892.5 Use of Non-GAAP Financial Measures - Gross Margin Full Year Thru December 31, 2020 (in millions) Montana South Dakota Nebraska Eliminations Total Operating Revenues $ Cost of Sales Gross Margin $ $ 966.0 $ 211.8 216.8 $ 79.4 749.2 $ $ 27.7 $ $ 1,205.4 16.7 $ 312.9 132.4 $ 10.9 $ $ 892.5 The data presented in this presentation includes financial information prepared in accordance with GAAP, as well as other Non-GAAP financial measures such as Gross Margin (Revenues less Cost of Sales), Free Cash Flows (Cash flows from operations less maintenance capex and dividends) and Net Debt (Total debt less capital leases), that are considered "Non-GAAP financial measures." Generally, a Non-GAAP financial measure is a numerical measure of a company's financial performance, financial position or cash flows that exclude (or include) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. The presentation of Gross Margin, Free Cash Flows and Net Debt is intended to supplement investors' understanding of our operating performance. Gross Margin is used by us to determine whether we are collecting the appropriate amount of energy costs from customers to allow recovery of operating costs. Net Debt is used by our company to determine whether we are properly levered to our Total Capitalization (Net Debt plus Equity). Our Gross Margin, Free Cash Flows and Net Debt measures may not be comparable to other companies' similarly labeled measures. Furthermore, these measures are not intended to replace measures as determined in accordance with GAAP as an indicator of operating performance. NorthWestern Energy Delivering a Bright Future#6666 Delivering a bright future NorthWestern Energy