Transmission Seminar
Shields & Company–Berenson & Co.

Dave Gates

VP – Wholesale Operations

March 11, 2009

forward-looking statement…

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. Our actual future business and
financial performance may differ materially and adversely from those
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 public filings with the SEC.

who we are…

(1)

As of 12/31/08

(2)

Book capitalization calculated as total debt, excluding capital leases, plus shareholders’ equity.

656,000 customers

392,000 electric

264,000 natural gas

Approximately 123,000 square
miles of service territory in
Montana, Nebraska and South Dakota

Total generation (mostly base load coal)

MT – 222 MW – regulated as of 1/1/09

SD – 312 MW – regulated

Total Assets: $2,762 MM ⁽¹⁾

Total Capitalization: $1,626 MM ⁽¹⁾⁽²⁾

Total Employees: 1,385 ⁽¹⁾

Located in relatively stable economies with potential grid expansion in the Northwest.

strong balance sheet…

Plan to maintain a 50%-55% debt to total capitalization ratio.

Audited (Dollars in 000's)

December 31

2008

2007

Cash

11,292

12,773

Restricted Cash

14,727

14,482

Accounts Receivable, Net

155,672

143,482

Inventories

70,741

63,586

Other Current Assets

60,985

44,031

Goodwill

355,128

PP&E and Other Non-current Assets

2,093,492

1,913,898

Total Assets

2,762,037

2,547,380

Payables

94,685

91,588

Other Current Liabilities

264,654

209,245

Long & Short Term Capital Leases

37,991

40,391

Long & Short Term Debt

862,056

805,977

Other Non-current Liabilities

739,118

577,155

Shareholders' Equity

763,533

823,024

Total Liabilities and Equity

2,762,037

2,547,380

Long & Short Term Debt / Total Capitalization

53.0%

49.5%

credit ratings…

Fitch S&P Moody’s

Senior Secured Rating BBB+ A- (MT) Baa2
BBB+ (SD)

Senior Unsecured BBB BBB Baa3

Outlook Stable Stable Positive

Fitch upgraded in January 2009.

transmission network summary …

Asked to perform new
functions

Help meet RPS and
other environmental
goals

Transmission
investment driven by
demand for
renewables

Investments with
externality and
coordination
challenges

State, regional national
interests

Supply - potential wind development in MT…

generation plans shifting to wind…

New generation in Montana mostly wind and will need to find an end user.

Demand - Western renewable standards…

limited pathways from supply to demand…

The
pathways
to the
market are
limited:
total rating
– NOT
available
transfer
capability

transmission construction over time…

export “delivery” system for MSTI…

transmission – Colstrip upgrade…

Line already exists – represents an
upgrade

Upgrades substation capacity

Increases load capacity of existing line by 500-600
MW’s

NorthWestern announced joint
development agreement with others

Portland General

Puget Sound Energy

Pacificorp

Avista

Bonneville Power Authority

Needed to relieve congestion to the West

Market interest is increasing for
Montana’s high quality wind profile

Cost estimate of ourportion of 500 kV
upgrade = $50M - $75M

Anticipated ownership interest of 30% on upgrade

In service January 1, 2012.

Colstrip 500 kV Upgrade

transmission - collector system…

In service date sometime in 2014.

230 kV “Collector System”

Informational meeting with
customers in Spring 2009

Open Season early ‘09 to
determine configuration

Provides gathering system for
new generation to access
MSTI and network system
benefits

Cost estimate of “collector”
project = $200M

transmission - MSTI…

500 Kv line from Townsend,
Mont. to Idaho Power’s
Midpoint Substation near
Twin Falls, ID

Respond to requests for
interconnection

Relieves congestion

Enables high quality wind
power to reach markets in
the West and Southwest

Environmental review,
WECC path rating, and
public consultation all well
underway

Current project cost is $1
billion

MSTI continued...

Purpose

Meet requests for new
transmission service

Provide transmission for
new generation

Benefit

Provide energy
diversification and
market competition

Provide positive
economic impact

Need

Improve system
performance and
flexibility

Meet regional electrical
demand

MSTI timeline…

FERC filing in January 2009

Information meeting spring 2009

Open Season anticipated in summer 2009

Draft EIS published late summer 2009

Final EIS Q1 2010

Record of decision – Q3 2010

Start construction 2011

Target energization Q1 2014

transmission siting and permitting experience…

Good relationship from decades of working together

Experience sets expectations, and results in fewer issues

Regulatory process could be revised to correspond to
today’s transmission world

Recognize regional/national concerns

Shorter development time for wind, a mismatch for
transmission

DEQ staffing is limited

With unprecedented volume of activity will certainly cause
delays

Jurisdictional issues

Conflicting requirements for multi-state facilities and
between state and federal agencies

Need to harmonize state and national law and policy

generation – Mill Creek Station…

120-150 MW plant proposed to
be built near Anaconda, MT

To be built for regulation
services to balance supply and
load for NWE’s Balancing Area

Rate-based cost of service
investment

Estimated to cost approximately
$200 million

Existing services are becoming
more expensive and scarce

Public hearing in front of MPSC
held

Decision expected 2Q ‘09

In service date for Mill Creek Generation Station = Jan 1, 2011

cap ex spending – next few years…

Includes more than $1 billion of potential generation
and transmission growth projects.

Non-discretionary cap
ex is funded 100% by
free cash flow.

Don’t anticipate needing
equity unless we proceed
with MSTI.

We will move forward with
the funding of these projects
only when they make
economic sense.

MSTI project is now slated for
early 2014 and capex has
been modified accordingly.

summary…

Objectives achieved
related to focus on
core business

Strong balance sheet

No equity required for existing core business

Modest debt maturities in short term

Investment grade rated debt

Increasing regulatory clarity

Solid foundation

Growth prospects

Unique geographic location to expand electric
and natural gas infrastructure

Increasing need to move energy through our
service area

Identified projects provide opportunity to nearly
double rate base and earnings

2009 earnings will be entirely from regulated business

Recent rate relief received in all jurisdictions

Outstanding bankruptcy litigation nearly completed