8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 22, 2009

NorthWestern Corporation

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation)		1-10499 (Commission File Number)	46-0172280 (IRS Employer Identification No.)
3010 W. 69th Street Sioux Falls, South Dakota (Address of principal executive offices)			57108 (Zip Code)
	(605) 978-2900 (Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On April 23, 2009, NorthWestern Corporation d/b/a NorthWestern Energy (NYSE: NWE) (the “Company”) issued a press release (the “Press Release”) discussing financial results for the three months ended March 31, 2009, and reaffirmed earnings guidance for 2009 in the range of $1.85 - $2.00 per fully diluted share. The Press Release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.

The information in this Current Report on Form 8-K provided under Item 2.02 and Exhibit 99.1 shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information provided under Item 2.02 in and Exhibit 99.1 to this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

(e)On April 22, 2009, following approval by both the Company’s Human Resources Committee (which is comprised of three independent non-employee directors) and the Board of Directors of the Company, the Company adopted the NorthWestern Corporation 2009 Officers Deferred Compensation Plan (the “Plan”). The Plan is unfunded and is intended to meet the requirements for nonqualified deferred compensation under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

The Plan becomes effective on June 1, 2009 and is maintained primarily for the purpose of allowing certain Company executives to defer certain compensation. No new or additional compensation is provided by this Plan. The Company, through the Human Resources Committee, will administer the Plan.

Participation in the Plan is limited to any “Eligible Officer,” which is defined under the Plan to be any officer of the Company or an affiliate who qualifies as a top hat employee under U.S. Department of Labor guidelines. The Plan allows participants to defer (a) any long-term incentive performance cash or stock awards or regular taxable compensation which may be payable to a participant that the participant designates as a deferral on a deferral election form and (b) income taxes on such deferrals in compliance with Code Section 409A.

Under the Plan, the administrator establishes a deferred compensation account for each participant into which deferrals are credited and from which distributions and withdrawals are debited. A participant must designate on his or her deferral election form whether such deferrals will be irrevocably credited to his or her account in cash or deferred Company stock units or some combination of the two. With respect to deferrals credited in cash, the participant must designate one or more investment funds available for designation under the Plan as the measurement fund(s) for the purpose of calculating notional earnings, losses and other relevant amounts to be credited to or deducted from cash deferrals in his or her deferred compensation

account. Each participant’s interest in deferred amounts will be 100% vested and non-forfeitable at all times.

Distributions under the Plan will be made in cash, except to the extent that a participant has elected to (i) defer compensation into deferred share units or (ii) defer compensation that would otherwise be payable in shares of Company common stock, in which case such distributions will be made in shares of Company common stock. In the event of an unforeseeable financial emergency, a participant may make a written request to the Plan administrator for a hardship withdrawal of all or a portion of the participant’s account. Otherwise, distributions are not permitted until there has been a separation of service, a change in control or termination of the Plan. In the event of a separation of service other than on account of death, the Plan permits participants to elect to receive either a single lump sum payment or equal annual installments over a period, not to exceed ten years, which election the participant must designate on his or her distribution election form. In the event of a participant’s death, a change of control, or the termination of the plan (under certain conditions), the participant (or his or her beneficiaries) will receive a single lump sum payment.

The Company may amend or terminate the Plan at any time.

The foregoing description of the Plan does not purport to be complete and is qualified in its entirety by reference to the full text of the Plan, a copy of which is filed as Exhibit 99.2 hereto and incorporated herein by reference.

Item 8.01 Other Information.

On April 23, 2009, the Company also announced in the Press Release that, at its annual meeting of stockholders held on April 22, 2009, NorthWestern’s stockholders:

• Elected the following individuals to a one-year term on the Company’s Board of Directors (the “Board”): E. Linn Draper, Jr., Stephen P. Adik, Dorothy M. Bradley, Dana J. Dykhouse, Julia L. Johnson, Philip L. Maslowe, D. Louis Peoples and Robert C. Rowe;

• Approved a proposal to create the NorthWestern Energy Employee Stock Purchase Plan; and

• Ratified the Company’s independent registered public accounting firm for the year ending December 31, 2009.

In addition, on April 23, 2009, the Company announced in the Press Release that the Board declared a regular quarterly dividend of 33.5 cents per share of common stock payable on June 30, 2009, to common stockholders of record as of June 15, 2009.

Item 9.01 Financial Statements and Exhibits.

EXHIBIT NO.	DESCRIPTION OF DOCUMENT
99.1*	Press Release dated April 23, 2009

99.2* NorthWestern Corporation 2009 Officers Deferred Compensation Plan

* filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	NORTHWESTERN CORPORATION
By:	/s/ Miggie E. Cramblit
	Miggie E. Cramblit
	Vice President, General Counsel and Corporate Secretary

Date: April 23, 2009

Index to Exhibits

EXHIBIT NO.	DESCRIPTION OF DOCUMENT
99.1*	Press Release dated April 23, 2009
99.2*	NorthWestern Corporation 2009 Officers Deferred Compensation Plan

* filed herewith

EX-99

		NorthWestern Corporation d/b/a NorthWestern Energy 3010 W. 69th Street Sioux Falls, SD 57108 www.northwesternenergy.com
NYSE: NWE News Release FOR IMMEDIATE RELEASE	Media Contact: Claudia Rapkoch (866) 622-8081 claudia.rapkoch@northwestern.com Investor Relations Contact: Dan Rausch (605) 978-2902 daniel.rausch@northwestern.com

NORTHWESTERN REPORTS FIRST QUARTER 2009 RESULTS

Reports diluted EPS of $.63/share

Reaffirms guidance for 2009 of $1.85 - $2.00 per fully diluted share

Declares dividend of 33.5 cents per share

Announces the results of the annual shareholder meeting

SIOUX FALLS, S.D. – Apr. 23, 2009 – NorthWestern Corporation d/b/a NorthWestern Energy (NYSE: NWE) reported financial results for the quarter ended March 31, 2009.

Highlights for the quarter include:

• Reports net income of $22.8 million, or $.63/diluted share, compared with net income of $23.5 million in 1Q 2008, or $.59/diluted share;

o The increase in EPS was due primarily to the share buy back concluded in the third quarter of 2008.

• Moody’s Investors Service (Moody’s) upgraded the senior secured to Baa1 from Baa2 and unsecured credit ratings to Baa2 from Baa3;

• Issued $250 million of First Mortgage Bonds at 6.34% due in 2019;

o As of March 31, 2009, total net liquidity was approximately $260.0 million, including $83.2 million of cash and $176.8 million of revolving credit facility availability.

• Total net liquidity increased to approximately $260 million as of March 31, 2009;

• Montana Public Service Commission (MPSC) conducted hearings related to our proposed Mill Creek Generation Station and a decision is expected in the second quarter of 2009;

• Placed our ownership interest in Colstrip Unit 4 into utility rate base at a value of $407 million, pursuant to a 2008 MPSC order; and

• Gross Margin increased to $162.9 million for the first quarter of 2009 compared with $156.9 million for the same period of 2008.

First Quarter Financial Results

Consolidated net income was $22.8 million or $.63 per diluted share for the quarter ended March 31, 2009, compared with consolidated net income of $23.5 million or $.59 per diluted share for the quarter ended March 31, 2008. Computed diluted shares were 36.3 million at March 31, 2009 compared with 39.4 million diluted shares at March 31, 2008. The decrease in the

NorthWestern Reports First Quarter 2009 Financial Results

April 23, 2009

Page 2

number of computed diluted shares is due to a share buyback conducted in the third quarter of 2008.

“During the first quarter of 2009, our gross margin, electric volumes and our customer counts all improved when compared with the first quarter of 2008,” said Bob Rowe, President and CEO. “Also, indicative of our continued improving financial condition and the fact that we have essentially completed our goal of exiting all non-regulated business activities, Moody’s upgraded our debt in January 2009.”

Consolidated gross margin for the first quarter of 2009 was $162.9 million compared with $156.9 million for the first quarter of 2008. The improvement in consolidated gross margin was primarily due to the transfer of our interest in Colstrip Unit 4 to Montana utility rate base and represents our return on rate base. Gross Margin (Revenues less Cost of Sales) is a non-GAAP financial measure due to the exclusion of depreciation from the measure. The presentation of Gross Margin is intended to supplement investors’ understanding of our operating performance.  Our Gross Margin measure may not be comparable to other companies’ Gross Margin measure. 

Consolidated operating, general and administrative expenses increased to $65.4 million for the quarter ended March 31, 2009 as compared with $60.1 million for the quarter ended March 31, 2008. The increase was due primarily to increased insurance reserves, higher pension expense related to our Montana plan, and increased labor and benefit costs due to a combination of compensation increases and severance costs.

Property and other taxes were $24.3 million for the three months ended March 31, 2009 as compared with $23.6 million in the first quarter of 2008. The increase was due to higher estimated property valuations.

Depreciation expense was $22.7 million for the three months ended March 31, 2009 as compared with $21.1 million in the first quarter of 2008. This increase was primarily due to 2008 plant additions.

Interest expense for the three months ended March 31, 2009 was $15.1 million, a decrease of $1.0 million, or 6.2%, from the first quarter of 2008. This decrease was primarily related to lower interest rates on our variable rate debt.

Income tax expense for the three months ended March 31, 2009 was $13.1 million as compared with $13.2 million in the first quarter of 2008. Our effective tax rate for 2009 was 36.4% as compared with 36.0% for 2008.

Results from Operations

Regulated electric gross margin for the quarter ended March 31, 2009 was $113.2 million, up 20.9%, compared with $93.6 million for the same period of 2008. This improvement is primarily due to the transfer of Colstrip Unit 4 to the regulated utility, which is reflected as an increase in retail revenue and a reduction to cost of sales. Prior to the transfer of Colstrip Unit 4, its results were reflected in the unregulated electric segment through December 31, 2008,

Regulated retail electric volumes for the quarter ended March 31, 2009 totaled 2,663,000 megawatt hours compared with 2,634,000 megawatt hours for the quarter ended 2008, a 1.1% increase. The increase was due primarily to residential and commercial customer growth.

NorthWestern Reports First Quarter 2009 Financial Results

April 23, 2009

Page 3

Wholesale electric volumes were 243,000 megawatt hours for the quarter ended March 31, 2009, an increase from 49,000 megawatt hours for the same period in 2008. The increase was primarily due to the transfer of Colstrip Unit 4 to the regulated utility from the unregulated electric segment.

Regulated natural gas gross margin was $49.9 million for the quarter ended March 31, 2009 compared with $50.3 million during the first quarter of 2008. Regulated retail natural gas volumes were 13,870,000 dekatherms for the quarter ended March 31, 2009 compared with 14,172,000 dekatherms for the same period in 2008. The decline in gross margin and volumes is primarily due to warmer winter weather in Montana and Nebraska.

Liquidity and Capital Resources

As of March 31, 2009, cash and cash equivalents were $83.2 million compared with $11.3 million at Dec. 31, 2008. The Company had $176.8 million available from credit facilities at March 31, 2009 compared with $74.9 million at Dec. 31, 2008. The increase in credit revolver availability was due primarily to issuance of $250 million of Montana First Mortgage Bonds in March 2009. The proceeds were used to redeem the $100 million term loan held by Colstrip Lease Holdings LLC and repay outstanding borrowings on the credit facility.

Cash provided by operating activities totaled $65.1 million during the quarter ended March 31, 2009, compared with $78.0 million during the quarter ended March 31, 2008. This decrease in operating cash flows is primarily related to increased pension funding of approximately $21.3 million, offset by improvements associated with the timing of energy supply costs collections in the first quarter of 2009 as compared with 2008.

The Company used $18.2 million for investment activities during the quarter ended March 31, 2009 compared with $14.0 million for the quarter ended March 31, 2008. Capital expenditures for the quarter ended March 31, 2009 were $18.5 million as compared with $14.0 million in 2008.

The Company’s financing activities provided $25.0 million during the quarter ended March 31, 2009 compared with financing activities using $43.0 million for the quarter ended March 31, 2008. During the first quarter of 2009 the Company issued debt of $250 million, made debt repayments of $211.3 million, and paid dividends on common stock of $12.0 million. During the first quarter of 2008, we made debt repayments of $30.0 million and paid dividends on common stock of $12.9 million.

Dividend

NorthWestern’s Board of Directors declared a quarterly common stock dividend of 33.5 cents per share, payable on June 30, 2009, to common shareholders of record as of June 15, 2009.

2009 Earnings Outlook

NorthWestern reaffirms its earnings for 2009 to be $1.85 - $2.00/fully diluted share.

The major assumptions include, but are not limited to, the following expectations:

• 2009 net income will increase by approximately $9 million or $.25 per share as a result of the inclusion of our interest in Colstrip Unit 4 in regulated electric rate base;

• Pension expense is estimated to be flat with the 2008 pension expense;

NorthWestern Reports First Quarter 2009 Financial Results

April 23, 2009

Page 4

• Planned insurance recoveries will offset our Q1 insurance reserve expense increase;

• Retail electric volumes will be flat compared to 2008 volumes;

• Wholesale electric volumes in South Dakota will decrease due to a planned outage in 2009;

• Residential and commercial natural gas volumes will be relatively flat compared with 2008 volumes;

• Fully diluted average shares outstanding of 36.5 million; and

• Normal weather is assumed in the Company’s electric and natural gas service territories for the rest of 2009.

Results of Annual Shareholder Meeting

At its 2009 Annual Meeting of Stockholders held yesterday, NorthWestern’s stockholders elected E. Linn Draper, Jr., Stephen P. Adik, Dorothy M. Bradley, Dana J. Dykhouse, Julia L. Johnson, Philip L. Maslowe, D. Louis Peoples and Robert C. Rowe to a one-year term on the Board.

Stockholders approved a proposal to create the NorthWestern Energy Employee Stock Purchase Plan, or ESPP. The ESPP is a broad-based plan that allows eligible employees to purchase shares of our common stock at a discount (to be determined in accordance with the terms of the ESPP, but not more than 15 percent) to the average high and low price on the date of the purchase. The number of common shares available for purchase under the ESPP will be 500,000 shares.

Stockholders also ratified Deloitte & Touche, LLP as the company’s independent registered public accounting firm for the year ending December 31, 2009.

Company Hosting Investor Conference Call

NorthWestern will host an investor conference call today at 11:00 am Eastern Time to review its financial results for the quarter ended March 31, 2009.

The conference call will be webcast live on the Internet at http://www.northwesternenergy.com under the “Investor Information” heading. To listen, please go to the site at least 10 minutes in advance of the call to register. An archived webcast will be available shortly after the call.

A telephonic replay of the call will be available beginning at noon today through May 22, 2009, at 800-475-6701, access code 996081.

About NorthWestern Energy

NorthWestern Energy is one of the largest providers of electricity and natural gas in the Upper Midwest and Northwest, serving approximately 656,000 customers in Montana, South Dakota and Nebraska. More information on NorthWestern Energy is available on the Company's Web site at www.northwesternenergy.com.

SPECIAL NOTE REGARDING FORWARD—LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including, without limitation, the information under “2009 Earnings Outlook”.  Forward-looking statements often address our expected future business and financial performance, and often contain

NorthWestern Reports First Quarter 2009 Financial Results

April 23, 2009

Page 5

words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” or “will.”  These statements are based upon our current expectations and speak only 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 as a result of various factors and uncertainties, including, but not limited to:

• potential adverse federal, state, or local legislation or regulation or adverse determinations by regulators could have a material adverse effect on our liquidity, results of operations and financial condition;

• unanticipated changes in availability of trade credit, usage, commodity prices, fuel supply costs or availability due to higher demand, shortages, weather conditions, transportation problems or other developments, may reduce revenues or may increase operating costs, each of which would adversely affect our liquidity;

• unscheduled generation outages or forced reductions in output, maintenance or repairs, which may reduce revenues and increase operating costs or may require additional capital expenditures or other increased operating costs; and

• adverse changes in general economic and competitive conditions in the U.S. financial markets and in our service territories.

Our Annual Report on Form 10-K, recent and forthcoming Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K and other Securities and Exchange Commission filings discuss some of the important risk factors that may affect our business, results of operations and financial condition. 

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

# # #

NorthWestern Reports First Quarter 2009 Financial Results

April 23, 2009

Page 6

NORTHWESTERN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(in thousands, except per share amounts)

	Three Months Ended March 31,
	2009			2008
Revenues
Electric	$	207,987		$	196,619
Gas	158,803			171,643
Other	4,113			17,713
Total Revenues	370,903			385,975
Operating Expenses
Cost of sales	208,010			229,084
Operating, general and administrative	65,419			60,071
Property and other taxes	24,289			23,640
Depreciation	22,722			21,091
Total Operating Expenses	320,440			333,886
Operating Income	50,463			52,089
Interest Expense	(15,134		)	(16,080		)
Other Income	591			662
Income Before Income Taxes	35,920			36,671
Income Tax Expense	(13,107		)	(13,220		)
Net Income	$	22,813		$	23,451
Average Common Shares Outstanding	35,934			38,972
Basic Earnings per Average Common Share	$	0.63		$	0.60
Diluted Earnings per Average Common Share	$	0.63		$	0.59
Dividends Declared per Average Common Share	$	0.335		$	0.33

NorthWestern Reports First Quarter 2009 Financial Results

April 23, 2009

Page 7

NORTHWESTERN CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

		March 31,  2009		December 31, 2008
		(unaudited)
ASSETS
Current Assets	$	349,151	$	313,417
Property, Plant, and Equipment, Net		1,839,603		1,839,699
Goodwill		355,128		355,128
Regulatory Assets		226,190		233,102
Other Noncurrent Assets		21,777		20,691
Total Assets	$	2,791,849	$	2,762,037
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Maturities of Long-term Debt and Capital Leases	$	21,494	$	229,238
Current Liabilities		349,685		359,339
Long-term Capital Leases		36,499		36,798
Long-term Debt		880,464		634,011
Noncurrent Regulatory Liabilities		231,924		222,969
Deferred Income Taxes		133,634		114,707
Other Noncurrent Liabilities		363,639		401,442
Total Liabilities		2,017,339		1,998,504
Total Shareholders’ Equity		774,510		763,533
Total Liabilities and Shareholders’ Equity	$	2,791,849	$	2,762,037

NORTHWESTERN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

	Three Months Ended March 31,
	2009			2008
Operating Activities
Net income	$	22,813		$	23,451
Non-cash items	37,447			35,181
Changes in operating assets and liabilities	4,870			19,323
Cash Provided by Operating Activities	65,130			77,955
Cash Used in Investing Activities	(18,189		)	(13,954		)
Cash Provided by (Used In) Financing Activities	25,013			(43,019		)
Net Increase in Cash and Cash Equivalents	$	71,954		$	20,982
Cash and Cash Equivalents, beginning of period	$	11,292		$	12,773
Cash and Cash Equivalents, end of period	$	83,246		$	33,755

NorthWestern Reports First Quarter 2009 Financial Results

April 23, 2009

Page 8

NORTHWESTERN CORPORATION

REGULATED ELECTRIC SEGMENT

(Unaudited)

	Results
	2009		2008		Change			% Change
	(in millions)
Retail revenue	180.5		181.3		(0.8		)	0.4	%
Transmission	11.9		11.2		0.7			6.3
Wholesale	11.1		2.1		9.0			428.6
Other	4.5		2.1		2.4			114.3
Total Revenues	208.0		196.7		11.3			5.7
Total Cost of Sales	94.8		103.1		(8.3		)	(8.1	)
Gross Margin	$	113.2	$	93.6	$	19.6		20.9	%

	Revenues					Volumes MWH		Avg. Customer Counts
	2009		2008			2009	2008	2009	2008
	(in thousands)
Retail Electric
Montana	$	66,094		$	67,294	679	668	269,003	266,104
South Dakota	13,547			12,631		171	160	48,194	47,908
Residential	79,641			79,925		850	828	317,197	314,012
Montana	68,892			69,852		796	799	60,202	59,148
South Dakota	16,673			15,684		228	222	11,475	11,331
Commercial	85,565			85,536		1,024	1,021	71,677	70,479
Industrial	10,947			11,490		765	761	72	72
Other	4,311			4,367		24	24	4,643	4,653
Total Retail Electric	$	180,464		$	181,318	2,663	2,634	393,589	389,216
Wholesale Electric	11,131			2,066		243	49	N/A	N/A

NorthWestern Reports First Quarter 2009 Financial Results

April 23, 2009

Page 9

NORTHWESTERN CORPORATION

REGULATED NATURAL GAS SEGMENT

(Unaudited)

	Results
	2009		2008		Change			% Change
	(in millions)
Retail revenue	144.4		151.9		(7.5		)	(4.9	) %
Wholesale and other	14.4		19.7		(5.3		)	26.9
Total Revenues	158.8		171.6		(12.8		)	(7.5	)
Total Cost of Sales	108.9		121.3		(12.4		)	(10.2	)
Gross Margin	$	49.9	$	50.3	$	(0.4	)	(0.8	)%

	Revenues				Volumes (Dkt)		Customer Counts
	2009		2008		2009	2008	2009	2008
	(in thousands)
Retail Gas
Montana	$	55,524	$	60,744	5,383	5,568	157,395	155,758
South Dakota	18,690		18,688		1,577	1,607	37,105	36,912
Nebraska	15,443		15,167		1,316	1,405	36,813	36,888
Residential	89,657		94,599		8,276	8,580	231,313	229,558
Montana	28,271		30,265		2,735	2,757	22,046	21,685
South Dakota	14,296		13,934		1,497	1,378	5,887	5,839
Nebraska	10,942		11,311		1,231	1,284	4,582	4,593
Commercial	53,509		55,510		5,463	5,419	32,515	32,117
Industrial	803		1,289		79	119	299	306
Other	476		505		52	54	142	141
Total Retail Gas	$	144,445	$	151,903	13,870	14,172	264,269	262,122

	2009ascomparedwith:
Heating Degree-Days	2008	Historic Average
Montana	2% warmer	2% warmer
South Dakota	1% colder	5% colder
Nebraska	8% warmer	4% warmer

NorthWestern Reports First Quarter 2009 Financial Results

April 23, 2009

Page 10

NORTHWESTERN CORPORATION

SEGMENT INFORMATION

(Unaudited)

(in thousands)

Three months ended,	Regulated
March 31, 2009	Electric			Gas			Other			Eliminations			Total
Operating revenues	$	207,987		$	158,803		$	4,651		$	(538	)	$	370,903
Cost of sales	94,748			108,938			4,324			—			208,010
Gross margin	113,239			49,865			327			(538		)	162,893
Operating, general and administrative	42,979			21,815			1,163			(538		)	65,419
Property and other taxes	18,017			6,227			45			—			24,289
Depreciation	18,391			4,323			8			—			22,722
Operating income (loss)	33,852			17,500			(889		)	—			50,463
Interest expense	(11,150		)	(3,068		)	(916		)	—			(15,134		)
Other income	291			268			32			—			591
Income tax (expense) benefit	(8,067		)	(5,475		)	435			—			(13,107		)
Net income (loss)	$	14,926		$	9,225		$	(1,338)		$	—			22,813
Total assets	$	1,956,083		$	824,058		$	11,708		$	—		$	2,791,849
Capital expenditures	$	14,846		$	3,663		$	—		$	—		$	18,509

Three months ended,	Regulated						Unregulated
March 31, 2008	Electric			Gas			Electric			Other			Eliminations			Total
Operating revenues	$	196,619		$	171,643		$	20,404		$	7,922		$	(10,613	)	$	385,975
Cost of sales	103,055			121,308			7,032			7,764			(10,075		)	229,084
Gross margin	93,564			50,335			13,372			158			(538		)	156,891
Operating, general and administrative	35,370			17,924			3,677			3,638			(538		)	60,071
Property and other taxes	16,429			6,328			879			4			—			23,640
Depreciation	15,395			3,883			1,805			8			—			21,091
Operating income (loss)	26,370			22,200			7,011			(3,492		)	—			52,089
Interest expense	(9,306		)	(3,230		)	(3,176		)	(368		)	—			(16,080		)
Other income	257			309			13			83			—			662
Income tax (expense) benefit	(5,687		)	(7,290		)	(1,715		)	1,472			—			(13,220		)
Net income (loss)	$	11,634		$	11,989		$	2,133		$	(2,305	)	$	—		$	23,451
Total assets	$	1,532,317		$	748,111		$	250,229		$	17,649		$	—		$	2,548,306
Capital expenditures	$	10,738		$	2,726		$	493		$	—		$	—		$	13,957

EX-99

NORTHWESTERN CORPORATION

2009 OFFICERS DEFERRED COMPENSATION PLAN

Effective June 1, 2009

Approved by the Board of Directors

April 22, 2009

TABLE OF CONTENTS

				Page
ARTICLE 1			DEFINITIONS	1
ARTICLE 2			ELIGIBILITY	4
	2.1	Requirements for Participation		4
	2.2	Enrollment Procedure		4
ARTICLE 3			PARTICIPANTS' DEFERRALS	5
	3.1	Deferral of Qualified Compensation		5
	3.2	Modification of Deferral Elections		5
ARTICLE 4			DEFERRED COMPENSATION ACCOUNTS	5
	4.1	Deferred Compensation Accounts		5
	4.2	Account Elections		6
	4.3	Crediting of Deferred Compensation		6
	4.4	Crediting of Earnings		6
	4.5	Applicability of Account Values		6
	4.6	Vesting of Deferred Compensation Accounts		6
	4.7	Assignments, Etc. Prohibited		6
ARTICLE 5			DISTRIBUTION OF ACCOUNTS	7
	5.1	Distributions upon a Participant’s Separation from Service		7
	5.2	Distributions upon a Participant’s Death		7
	5.3	Distributions upon a Change in Control		7
	5.4	Election of Manner and Time of Distribution		7
	5.5	Applicable Taxes		8
	5.6	Nature and Sources of Benefit Payments		8
ARTICLE 6			WITHDRAWALS FROM ACCOUNTS	8
	6.1	Hardship Distributions from Accounts		8
	6.2	Payment of Withdrawals		9
	6.3	Effect of Withdrawals		9
	6.4	Applicable Taxes		9
ARTICLE 7			ADMINISTRATIVE PROVISIONS	9
	7.1	Administrator’s Duties and Powers		9
	7.2	Limitations Upon Powers		10
	7.3	Final Effect of Administrator Action		10
	7.4	Delegation by Administrator		10
	7.5	Indemnification by the Company; Liability Insurance		10
	7.6	Recordkeeping		10

TABLE OF CONTENTS

(continued)

				Page
	7.7	Statement to Participants		11
	7.8	Inspection of Records		11
	7.9	Identification of Fiduciaries		11
	7.10	Procedure for Allocation of Fiduciary Responsibilities		11
	7.11	Claims Procedure		11
	7.12	Conflicting Claims		13
	7.13	Service of Process		13
	7.14	Fees		13
ARTICLE 8			MISCELLANEOUS PROVISIONS	13
	8.1	Termination of the Plan		13
	8.2	Limitation on Rights of Participants		13
	8.3	Consolidation or Merger; Adoption of Plan by Other Companies		14
	8.4	Errors and Misstatements		14
	8.5	Payment on Behalf of Minor, Etc		14
	8.6	Amendment of Plan		14
	8.7	Governing Law		15
	8.8	Pronouns and Plurality		15
	8.9	Titles		15
	8.10	References		15
Deferral Election Form				EXHIBIT A
Investment Election Form				EXHIBIT B
Distribution Election Form				EXHIBIT C

NORTHWESTERN CORPORATION

2009 OFFICERS DEFERRED COMPENSATION PLAN

PREAMBLE

NorthWestern Corporation (the “Company”), a Delaware corporation, by resolution of its Board of Directors dated April 22, 2009 adopted this NorthWestern Corporation 2009 Officers Deferred Compensation Plan (the “Plan”), for a select group of officers of the Company and its Affiliates (“Eligible Officers”) effective June 1, 2009.

The Plan is a nonqualified deferred compensation plan which is unfunded and is maintained primarily for the purpose of providing deferred compensation for Eligible Officers of the Company and its Affiliates as defined herein.

ARTICLE 1

Definitions

Whenever the following terms are used in the Plan with the first letter capitalized, they shall have the meaning specified below unless the context clearly indicates to the contrary.

1.1“Account” of a Participant shall mean the Participant’s individual deferred compensation account established for his or her benefit pursuant to Section 4.1 hereof that is credited with amounts equal to (a) the portion of the Participant's Qualified Compensation that he or she elects to defer pursuant to Section 3.1, and (b) earnings and losses pursuant to Section 4.5.

1.2“Administrator” shall mean NorthWestern Corporation, acting through the Board’s Human Resources Committee (the “Committee”). If the Committee appoints any Delegate under Section 7.4 hereof, the term “Administrator” shall mean the Delegate as to those duties, powers and responsibilities specifically conferred upon the Delegate. Notwithstanding any delegation of authority, the Board shall, with respect to any matter arising under this Plan, have the authority to act in lieu of the Administrator, any Delegate, a sub-committee or any other person.

1.3“Board” shall mean the Board of Directors of NorthWestern Corporation. The Board may delegate any power or duty otherwise allocated to the Administrator to any other person or persons, including a sub-committee or sub-committees, appointed under Section 7.4 hereof.

1.4“Change in Control” means, for purposes of the interpretation of this Plan in conformance with section 409A of the Code and the applicable guidance issued by the Department of the Treasury with respect to the application of section 409A, with respect to a Plan Participant, a Change in Control event must relate to: (i) the corporation for which the Participant is performing services at the time of the Change in Control event, (ii) the corporation that is liable for the payment of the deferred compensation (or all corporations liable for the

payment if more than one corporation is liable), or (iii) a corporation that is a majority shareholder of a corporation identified in part (i) or part (ii) above, or any corporation in a chain of corporations in which each corporation is a majority shareholder of another corporation in the chain, ending in a corporation identified in part (i) or part (ii) above. For purposes of this provision, a majority shareholder is a shareholder owning more than fifty percent (50%) of the total fair market value and total voting power of such corporation. Also, for purposes of this

1

provision, section 318(a) of the Code applies to determine stock ownership. Additionally, for purposes of this provision and in conformance with section 409A and the applicable guidance issued by the Department of the Treasury with respect to the application of section 409A, a change in the ownership of a corporation or a change in the effective control of a corporation is determined in accordance with the provisions described below in this definition.

a)                    A change in the ownership of a corporation shall occur on the date that any one person, or more than one person acting as a group, in one transaction or a series of transactions, directly or indirectly, acquires ownership of stock of the corporation that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the corporation. However, if any one person or more than one person acting as a group, is considered to own more than fifty percent (50%) of the total fair market value or total voting power of the stock of the corporation, the acquisition of additional stock by the same person or persons shall not be considered to cause a change in the ownership of the corporation (or to cause a change in the effective control of the corporation). An increase in the percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction, in one transaction or a series of transactions, directly or indirectly, in which the corporation acquires its stock in exchange for property shall be treated as an acquisition of stock for purposes of this provision.

b)                    For purposes of paragraph (i) above, persons will not be considered to be acting as a group solely because they purchase or own stock of the same corporation at the same time, or as a result of the same public offering. However, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the corporation. If a person, including an entity, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a group with other shareholders in a corporation prior to the transaction giving rise to the change and not with respect to the ownership interest in the other corporation.

c)                     A change in the effective control of a corporation shall occur on the date that either:

i) any one person, or more than one person acting as a group, in one transaction or a series of transactions, directly or indirectly, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the corporation possessing thirty-five percent (35%) or more of the total voting power of the stock of the corporation; or

ii) a majority of members of the board of directors of the corporation is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the board of directors of the corporation prior to the date of the appointment or election, provided that for purposes of this subparagraph (B) the term “corporation” shall be determined in accordance with the requirements of section 409A of the Code and the applicable guidance issued by the Department of the Treasury with respect to the application of section 409A of the Code.

d)                    A change in the ownership of a substantial portion of the assets of a corporation shall occur on the date that any one person, or more than one person acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the corporation that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the corporation immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the corporation, or

2

the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

The provisions of this section 1.4 regarding the definition of the term “Change in Control,” shall be determined and administered in accordance with Code Section 409A and the applicable guidance issued by the Department of the Treasury with respect to the application of section 409A.”

1.5“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, together with regulations there under.

1.6“Company” shall mean NorthWestern Corporation and all of its Affiliates (subsidiaries or other common controlled entities described in Code Section 414), and any entity which is a successor in interest to the Company.

1.7“Deferred Share Units” shall have the meaning set forth in Section 9 of the Company’s 2005 Long-Term Incentive Plan (the “LTIP”).

1.8“Delegate” shall mean each Delegate appointed in accordance with Section 7.4.

1.9“Disability” means, with respect to a Participant, the Participant is: (i) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; (ii) by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Company; or (iii) determined to be totally disabled by the Social Security Administration.

1.10“Eligible Officer” shall mean any officer of the Company or an affiliate who qualifies as a top hat employee under U.S. Department of Labor guidelines.

1.11“Enrollment Documents” shall mean the Deferral Election Form, the Investment Election Form, and the Distribution Election Form in the form attached hereto as Exhibits A, B, and C, respectively. The Administrator shall have the discretion to change the terms and conditions of any Enrollment Document at any time prior to the date on which it becomes a legally binding agreement pursuant to the terms of Section 3.1 below. The use of Enrollment Documents may also be administered electronically.

1.12“ERISA”shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, together with regulations thereunder.

1.13“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

1.14“Hardship” means an unforeseeable emergency resulting in financial hardship of the Participant or beneficiary due to an illness or accident of the Participant or beneficiary, a spouse of the Participant or beneficiary or of a dependent (as defined in Code Section 152(a)) of a Participant or beneficiary; loss of the Participant’s or the beneficiary’s property due to casualty, or other similar or extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant or beneficiary. Whether a Participant or beneficiary is faced with an unforeseeable emergency permitting a distribution under the Plan shall be determined based upon the relevant facts and circumstances of each case, but in any case, its distribution shall not be allowed to the extent that such hardship is or may be relieved

3

through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant’s assets to the extent liquidation of such assets would not cause a severe financial hardship or be cessation of deferrals under the Plan. The amount of a distribution on account of a hardship shall be limited to the amount reasonably necessary to satisfy the emergency need plus amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from the distribution.”

1.15“Investment Fund” shall mean any of the investment funds that the Administrator so designates on the Investment Election Forms as available investment vehicles for measuring the return on Accounts under the Plan.

1.16“Participant” shall mean each Eligible Officer who elects to participate in the Plan as provided in Article 2 and who defers Qualified Compensation pursuant to Article 3 of the Plan. Each of such persons shall continue to be a “Participant” until they have received all benefits due under the Plan.

1.17“Plan”shall mean the NorthWestern Corporation 2009 Officers Deferred Compensation Plan.

1.18“Plan Year” shall mean the 12-month period beginning on January 1st and ending on December 31st.

1.19“Qualified Compensation” shall mean anyLTIP cash or stock awards or regular taxable compensation which may be payable to a Participant that may be designated as a deferral on a Deferral Election Form.

1.20“Separation from Service” shall mean a Participant’s termination of service to the Company and all of its affiliates, including the Participant’s involuntary termination, resignation, death, Disability, or retirement. Separation from Service shall be interpreted consistent with the regulations under Code Section 409A.

1.21“Trust” shall mean a grantor trust established by the Company meeting the requirements of IRS Rev. Proc. 92-65 designed to hold investments to fund future liabilities under this and any other designated deferred compensation plans of the Company.

1.22“Trustee”shall mean the trustee of the Trust, and shall refer to the successor of any trustee who resigns or is removed in accordance with the terms of the Trust.

ARTICLE 2

Eligibility

2.1Requirements for Participation. Any Eligible Officer who executes the Enrollment Documents shall become a Participant on the date on which the Administrator receives and accepts such documents.

2.2Enrollment Procedure. The Company will be deemed to have accepted an Eligible Officer’s Enrollment Documents as of the date of their delivery to the Company’s Corporate Secretary or Delegate, unless the Administrator sends the Eligible Officer a written notice of rejection within ten (10) business days after receiving the Enrollment Documents.

4

ARTICLE 3

Participant Deferrals

3.1Deferral of Qualified Compensation. To the extent allowed by the Administrator, each Eligible Officer may elect to defer into his or her Account up to 100% of any Qualified Compensation that would otherwise be payable to him or her for any Plan Year, subject to any conditions or limitations that the Administrator may implement for a Plan Year through a written notice delivered to Eligible Officers at least thirty (30) days before the Plan Year begins.

An Eligible Officer shall make any election pursuant to this Section 3.1 by completing and delivering his or her Enrollment Documents to the Administrator no later than the December 15th preceding the Plan Year to which they relate. Notwithstanding the foregoing, with respect to the initial Plan Year for this Plan or in the case of the first year in which an Eligible Officer becomes eligible to participate in the Plan (as defined in section 1.409A-1(c) of the Final Regulations or the corresponding provision in subsequent guidance issued by the Department of the Treasury to include any other plan that would be considered together with this Plan as the same plan), the Eligible Officer may make an initial deferral election within thirty (30) days after the date the Eligible Officer becomes eligible to participate in the Plan, with respect to Qualified Compensation for services to be performed by the Eligible Officer subsequent to the election.With respect to qualified performance compensation as described in Code Section 409A, an election to defer payment of performance compensation to be earned at the end of a performance period may be made at least six (6) months prior to the end of the performance period.

3.2 Irrevocability of Deferral Elections. A Participant shall make an election to defer Qualified Compensation for a Plan Year during the time established by the Administrator, but in no event later than the December 15th preceding such Plan Year or in the case of an election to defer qualified performance compensation, the election is irrevocable as of the date that is six (6) months prior to the end of the performance period.

Once an election to defer Qualified Compensation has been made on an Enrollment Document, it may not be changed during the Plan Year; provided, however, that a Participant's Qualified Compensation deferrals for a Plan Year shall be suspended if the Participant receives a distribution due to a Hardship pursuant to Section 6.1 during such Plan Year.

Once the particular Plan Year specified on the election form has begun, the salary reduction election with respect to such Plan Year shall become irrevocable.

At the time the Participant makes an election to defer Qualified Compensation for a Plan Year according to the provisions of this section, the Participant must elect the time and form of payment of benefits for the Qualified Compensation deferred under the applicable Enrollment Documents, from among the alternatives described in Section 5.1.

ARTICLE 4

Deferred Compensation Accounts

4.1    Deferred Compensation Accounts. The Administrator shall establish and maintain for each Participant an Account to which shall be credited pursuant to Section 4.3 hereof, and from which shall be debited the Participant’s distributions and withdrawals under Articles 5 and 6. Such Account may be a simple bookkeeping account payable in the Company’s financial records.

5

4.2    Account Elections.

(a)       At the time of making the deferral elections described in Section 3.1, the Administrator may in its discretion permit one or more Participants to designate whether such deferral shall be irrevocably credited to his or her Account in cash or DSUs, or some combination of the two. Notwithstanding the foregoing, to the extent a Participant defers Qualified Compensation that would otherwise be paid in shares of the Company’s common stock, those shares (and any earnings thereon) shall be credited to the Participant’s Account and shall be used to settle that portion of the Participant’s Account.

(b)       With respect to deferrals credited in cash to a Participant’s Account, the Participant must designate, on the Investment Election Form provided by the Administrator as part of the Enrollment Documents, the Investment Funds in which the Participant's Account will be deemed to be invested for purposes of determining the amount of earnings to be credited to his or her Account. In making the designation pursuant to this Section 4.2(b), the Participant may specify that all or any fraction of his or her Account be deemed to be invested, in whole percentage increments, in one or more of the Investment Funds selected by the Administrator. If the Participant fails to designate one or more funds, the Participant’s Account will be deemed to be invested in the default money market option as utilized by the Company’s 401(k) plan administrator. Participant investment directives must comply with all federal and state securities laws and regulations if a designation to or from Company stock or derivatives of Company stock are part of the directive.

4.3Crediting of Deferred Compensation. As of the first day of each calendar month that begins after the Plan takes effect, each Participant’s Account shall be credited with an amount that is equal to the amount of the Participant’s Qualified Compensation which such Participant has elected to defer under Article 3 and which would otherwise have been paid in cash to the Participant during the preceding month.

4.4Crediting of Earnings. With respect to each Participant’s Account, beginning with the first day of the month after the Plan takes effect, earnings, if any, shall be credited at a rate equal to the earnings experience of the Investment Fund(s) selected (or deemed selected) by the Participant on his or her Investment Election Form for that percentage of the Participant’s Accounts that are invested in each selected Investment Fund. Earnings shall be credited on such valuation dates as the Administrator shall determine, but not less frequently than once per calendar year.

4.5Applicability of Account Values. The value of each Participant’s Account as determined as of a given date under this Article, plus any amounts subsequently allocated thereto under this Article, and less any amounts distributed or withdrawn under Articles 5 or 6 shall remain the value thereof for all purposes of the Plan until the Account is revalued hereunder.

4.6Vesting of Deferred Compensation Accounts. Each Participant’s interest in his or her Account (deferrals and credited earnings) shall be 100% vested and non-forfeitable at all times.

4.7Assignments, Etc. Prohibited. No part of any Participant’s Account shall be liable to anyone other than the Company for the debts, contracts or engagements of the Participant, or the Participant’s beneficiaries or successors in interest, or be taken in execution by levy, attachment or garnishment or by any other legal or equitable proceeding, nor shall any such person have any rights to alienate, anticipate, commute, pledge, encumber or assign any benefits or payments hereunder in any manner whatsoever except to designate a beneficiary as provided in Section 5.3.

6

ARTICLE 5

Distribution of Accounts

5.1Distributions upon a Participant’s Separation from Service. The Account of a Participant who incurs a Separation from Service other than on account of death shall be paid to the Participant as elected in accordance with Section 5.4. The Participant may choose from among the following forms of distribution on his or her deferral election form:

(a)        A lump sum distribution payable within thirty (30) days following his or her Separation from Service.

(b)       Approximately equal annual installments over any designated number of years (not to exceed ten (10)) from the date the payments commence, which shall commence --

(1) a date that is within thirty (30) days following the date of the Participant’s Separation from Service;

(2) on a specified anniversary of the date of such Separation of Service;

(3) on a specified date, such as the Participant attaining a specified age or a specific date not less than two years from the year of deferral (but not an occurrence such as a child commencing college); or

(c)      Notwithstanding any provision of the Plan (or any Participant Deferral Election) to the contrary, no payment on account of a Separation from Service shall be made to a Participant who is a specified employee (within the meaning of Code Section 409A and the applicable guidance issued by the Department of the Treasury with respect to the application of Section 409A) as of the date of such Participant’s Separation from Service, within the six-month period following such Participant’s Separation from Service. Installment payments, if elected, will begin in the seventh month following the Participant’s Separation from Service.

A Participant may elect a distribution pursuant to this Section 5.1 in such other forms, or payable upon such other commencement dates, as are specified by the Administrator in the Enrollment Documents; provided, however, that no such election shall provide for payments to be made more than ten (10) years after such Participant’s Separation from Service.

5.2Distributions upon a Participant’s Death. Notwithstanding anything to the contrary in the Plan, the remaining balance of the Account of a Participant who dies shall be paid to the persons and entities designated by the Participant as his or her beneficiaries within 90 days of notification of the Participant’s of death.

5.3Distributions upon a Change in Control. If a Change in Control occurs, the vested Account of each affected Participant as of the date of the Change in Control shall in all events be valued and payable in a lump sum in cash as soon as practicable thereafter.

5.4Election of Manner and Time of Distribution. At the time a Participant elects to defer Qualified Compensation under Article 3, he or she shall make distribution elections on the Enrollment Documents and deliver such forms to the Administrator. Such elections shall apply to the portion of the Participant’s Account that is attributable to Qualified Compensation deferred under the applicable Enrollment Documents while such Enrollment Documents are in effect. A Participant may change such elections through one or more “subsequent elections” that in each case (i) do not take effect until at least twelve (12) months after the date on which such election is made, (ii) are delivered to the Administrator at least one (1) year before the date on which distributions are otherwise scheduled to commence pursuant to the Participant’s election from the choices set forth in Section 5.1(b)(2)

7

through 5.1(b)(5) hereof, and (iii) defer the commencement of distributions by at least five (5) years from the originally scheduled commencement date (except for distributions that commence because of the Participant’s death, Disability, or Hardship). The right to a series of installment payments upon the distribution of an amount deferred pursuant to the Plan shall be treated as a right to a single payment.

5.5Applicable Taxes. All distributions under the Plan shall be subject to withholding for all amounts that the Company is required to withhold under federal, state or local tax law.Amounts deferred are subject to FICA and/or Medicare withholding taxes under Code Section 3121(v) at the time deferred as such amounts are fully vested at all times.

5.6Nature and Sources of Benefit Payments.

(a)       The Company shall make distributions of Accounts in cash, except to the extent a Participant has elected pursuant to Sections 3.1 and 4.2 above either (i) to defer compensation into Deferred Share Units (as defined in the Company’s 2005 Long-Term Incentive Plan (the “LTIP”)) that shall be issued pursuant to the LTIP, in which event that distribution shall occur in shares of the Company’s common stock, or (ii) to defer Qualified Compensation that would otherwise be paid in shares of the Company’s common stock.

(b)       The Company shall make cash distributions to Participants and their beneficiaries only from its general assets, provided that if the Company maintains the Trust, it shall contribute liquid assets to the Trust in an amount equal to (1) the amount deferred and elected to be credited in cash by each Participant; and (2) net of any distributions paid pursuant to Article 6. Notwithstanding the creation of a Trust, Participants shall at all times have the status of general unsecured creditors with respect to their rights under the Plan.

(c)       Notwithstanding the foregoing, as soon as practicable following a Change in Control, the Company shall create a Trust with the Trustee unless the Trust already exists for Plan deferrals. The Company shall contribute liquid assets to the Trust in an amount equal to the sum of (i) the aggregate Account balances of all Participants at the time the Change in Control occurred, and (ii) the reasonable costs expected to be necessary in order for the Trust proceeds to pay for the Trust’s administration until its final termination.

(c)       Although the principal of the Trust and any earnings thereon shall be held separate and apart from other funds of the Company and shall be used exclusively for the uses and purposes of Participants and beneficiaries as set forth therein, neither the Participants nor their beneficiaries shall have any preferred claim on, or any beneficial ownership in, any assets of the Trust prior to the time such assets are paid to the Participants or beneficiaries as benefits and all rights created under this Plan shall be unsecured contractual rights of Participants and beneficiaries against the Company. Any assets held in the Trust will be subject to the claims of Company's general creditors under federal and state law in the event of insolvency as defined in the Trust.

ARTICLE 6

Withdrawals From Accounts

6.1Hardship Distributions from Accounts. In the event a Participant suffers a Hardship, the Participant may apply to the Administrator for an immediate distribution of all or a portion of the Participant’s Account. The amount of any distribution hereunder shall be limited to the amount necessary to relieve the Participant’s Hardship, plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the

8

extent to which the Hardship is or may be relieved through reimbursement or compensation by insurance or otherwise, by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship), or by cessation of the Participant’s deferrals under the Plan. The Administrator will require evidence of the purpose and amount of the need and may establish such application forms or other procedures deemed appropriate.

6.2Payment of Withdrawals. All withdrawals under this Article 6 shall be paid within thirty (30) days after a valid election to withdraw is delivered to the Administrator. The Administrator shall give prompt notice to the Participant if an election is invalid and is therefore rejected, identifying the reason(s) for the invalidity. If the Administrator has not paid but has not affirmatively rejected an election within the thirty (30) day deadline, then the election shall be deemed rejected on the thirtieth (30^th) day. If a withdrawal election is rejected, the Participant may bring a claim for benefits under Section 7.11.

6.3Effect of Withdrawals. If a Participant receives a withdrawal under this Article 6 after payments have commenced under Section 5.1, the remaining payments shall be recalculated, by reamortizing the remaining payments over the remaining term and applying the method used to credit earnings under Section 4.3.

6.4Applicable Taxes. All withdrawals under the Plan shall be subject to withholding for all amounts which the Company is required to withhold under federal, state or local tax law at the time of withdrawal.

ARTICLE 7

Administrative Provisions

7.1Administrator’s Duties and Powers. The Administrator shall conduct the general administration of the Plan in accordance with the Plan and shall have all the necessary power, authority and discretion to carry out that function. Among its necessary powers and duties are the following:

(a)       To delegate all or part of its function as Administrator to others and to revoke any such delegation.

(b)       To determine questions of eligibility of Participants and their entitlement to benefits, subject to the provisions of Section 7.11.

(c)       To select and engage attorneys, accountants, actuaries, trustees, appraisers, brokers, consultants, administrators, physicians, or other persons to render service or advice with regard to any responsibility the Administrator or the Board has under the Plan, or otherwise, to designate such persons to carry out fiduciary responsibilities under the Plan, and (together with the Administrator, the Company, the Board and the officers and Employees of the Company) to rely upon the advice, opinions or valuations of any such persons, to the extent permitted by law, being fully protected in acting or relying thereon in good faith.

(d)       To interpret the Plan and any relevant facts for purposes of the administration and application of the Plan in a manner not inconsistent with the Plan or applicable law including, but not limited to, Code Section 409A and the Regulations thereunder.

(e)       To conduct claims procedures as provided in Section 7.11..

(f)       To select and make changes to the available Investment Funds described in Section 4.2(b).

9

7.2Limitations Upon Powers. The Plan shall be uniformly and consistently administered, interpreted and applied with regard to all Participants in similar circumstances. The Plan shall be administered, interpreted and applied fairly and equitably and in accordance with the specified purposes of the Plan.

7.3Final Effect of Administrator Action. Except as provided in Section 7.11, all actions taken and all determinations made by the Administrator shall, unless arbitrary and capricious, be final and binding upon all Participants, the Company, and any person interested in the Plan.

7.4Delegation by Administrator.

(a)       The Administrator may, but need not, appoint a Delegate which may be a single individual or a sub-committee or sub-committees consisting of two or more members, to hold office during the pleasure of the Administrator. The Delegate shall have such powers and duties as are delegated to it by the Administrator. The Delegate and/or sub-committee members shall not receive payment for their services as such.

(b)       Appointment of the Delegate and/or sub-committee members shall be effective upon the filing of written acceptance of appointment with the Administrator.

(c)       The Delegate and/or sub-committee member may resign at any time by delivering written notice to the Administrator.

(d)       Vacancies in the Delegate and/or sub-committee shall be filled by the Administrator.

(e)       If there is a sub-committee, the sub-committee shall act by a majority of its members in office; provided, however, that the sub-committee may appoint one of its members or a delegate to act on behalf of the sub-committee on matters arising in the ordinary course of administration of the Plan or on specific matters.

7.5Indemnification by the Company; Liability Insurance. The Company shall pay or reimburse any of the Company’s officers, directors, Administrator, sub-committee members, Delegates, or Employees who are fiduciaries with respect to the Plan for all expenses incurred by such persons with respect to, and shall indemnify and hold them harmless from, all claims, liability and costs (including reasonable attorneys’ fees) arising out of the performance of their duties under the Plan, provided that such persons do not act negligently in the performance of such duties. The Company may obtain and provide for any such person, at the Company’s expense, liability insurance against liabilities imposed on such person by law.

7.6Recordkeeping

(a)       The Administrator shall maintain suitable records of each Participant’s Account which, among other things, shall show separately, deferrals and the earnings and/or dividends credited thereon, as well as distributions and withdrawals therefrom and records of its deliberations and decisions.

(b)       The Administrator shall appoint a secretary, and at its discretion, an assistant secretary, to keep the record of proceedings, to transmit its decisions, instructions, consents or directions to any interested party, to execute and file, on behalf of the Administrator, such documents, reports or other matters as may be necessary or appropriate under ERISA and to perform ministerial acts.

10

(c)       The Administrator shall not be required to maintain any records or accounts which duplicate any records or accounts maintained by the Company.

7.7Statement to Participants. By March 15 of each year, the Administrator shall furnish to each Participant a statement setting forth the value of the Participant’s Account as of the preceding December 31 and such other information as the Administrator shall deem advisable to furnish.

7.8Inspection of Records. Copies of the Plan and records of a Participant’s Account shall be open to inspection by the Participant or the Participant’s duly authorized representative at the office of the Administrator at any reasonable business hour.

7.9Identification of Fiduciaries. The Administrator shall be the named fiduciary of the Plan and, as permitted or required by law, shall have exclusive authority and discretion to operate and administer the Plan.

7.10Procedure for Allocation of Fiduciary Responsibilities. Fiduciary responsibilities under the Plan are allocated as follows:

(i) The sole duties, responsibilities and powers allocated to the Board, any Administrator and any fiduciary shall be those expressly provided in the relevant Sections of the Plan.

(ii) All fiduciary duties, responsibilities, and powers not allocated to the Board, any Administrator or any fiduciary, are hereby allocated to the Administrator, subject to delegation.

Fiduciary duties, responsibilities and powers under the Plan may be reallocated among fiduciaries by amending the Plan in the manner prescribed in Section 8.6, followed by the fiduciaries’ acceptance of, or operation under, such amended Plan.

7.11Claims Procedure

(a)       Any Participant or beneficiary has the right to make a written claim for benefits under the Plan. If such a written claim is made, and the Administrator wholly or partially denies the claim, the Administrator shall provide the claimant with written notice of such denial, setting forth, in a manner calculated to be understood by the claimant:

(i)       the specific reason or reasons for such denial;

(ii)        specific reference to pertinent Plan provisions on which the denial is based;

(iii)       a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and an

(iv)       explanation of the Plan’s claims review procedure and time limits applicable to those procedures, including a statement of the claimant’s right to bring a civil action under ERISA Section 502(a) if the claim is denied on appeal.

(b)       The written notice of any claim denial pursuant to Section 7.11(a) shall be given not later than ninety (90) days after receipt of the claim by the Administrator, unless the Administrator determines that special circumstances require an extension of time for processing the claim, in which event:

11

(i)        written notice of the extension shall be given by the Administrator to the claimant prior to ninety (90) days after receipt of the claim;

(ii)        the extension shall not exceed a period of ninety (90) days from the end of the initial ninety (90) day period for giving notice of a claim denial; and

(iii)       the extension notice shall indicate (A) the special circumstances requiring an extension of time and (B) the date by which the Administrator expects to render the benefit determination.

(c)       The decision of the Administrator shall be final unless the claimant, within sixty (60) days after receipt of notice of the claims denial from the Administrator, submits a written request to the Board, or its delegate, for an appeal of the denial. During that sixty (60) day period, the claimant shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim for benefits. The claimant shall be provided the opportunity to submit written comments, documents, records, and other information relating to the claim for benefits as part of the claimant’s appeal. The claimant may act in these matters individually, or through his or her authorized representative.

(d)       After receiving the written appeal, if the Board, or its delegate, shall issue a written decision notifying the claimant of its decision on review, not later than sixty (60) days after receipt of the written appeal, unless the Board or its delegate determines that special circumstances require an extension of time for reviewing the appeal, in which event:

(i)        written notice of the extension shall be given by the Board or its delegate prior to sixty (60) days after receipt of the written appeal;

(ii)        the extension shall not exceed a period of sixty (60) days from the end of the initial sixty (60) day review period; and

(iii)       the extension notice shall indicate (A) the special circumstances requiring an extension of time and (B) the date by which the Board or its delegate expects to render the appeal decision.

The period of time within which a benefit determination on review is required to be made shall begin at the time an appeal is received by the Board or its delegate, without regard to whether all the information necessary to make a benefit determination on review accompanies the filing of the appeal. If the period of time for reviewing the appeal is extended as permitted above, due to a claimant’s failure to submit information necessary to decide the claim on appeal, then the period for making the benefit determination on review shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information.

(e)       In conducting the review on appeal, the Board or its delegate shall take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. If the Board or its delegate upholds the denial, the written notice of decision from the Board or its delegate shall set forth, in a manner calculated to be understood by the claimant:

(i)        the specific reason or reasons for the denial;

(ii)        specific reference to pertinent Plan provisions on which the denial is based;

12

(iii)       a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim for benefits; and

(iv)       statement of the claimant’s right to bring a civil action under ERISA 502(a).

(f)        If the Plan or any of its representatives fail to follow any of the above claims procedures, the claimant shall be deemed to have duly exhausted the administrative remedies available under the Plan and shall be entitled to pursue any available remedies under ERISA Section 502(a), including but not limited to the filing of an action for immediate declaratory relief regarding benefits due under the Plan.

7.12Conflicting Claims. If the Administrator is confronted with conflicting claims concerning a Participant’s Account, the Administrator may interplead the claimants in an action at law, or in an arbitration conducted in accordance with the rules of the American Arbitration Association, as the Administrator shall elect in its sole discretion, and in either case, the attorneys’ fees, expenses and costs reasonably incurred by the Administrator in such proceeding shall be paid from the Participant’s Account.

7.13Service of Process. The Corporate Secretary of NorthWestern Corporation is hereby designated as agent of the Plan for the service of legal process.

7.14Fees. Any fees associated with ongoing plan administration shall be paid by the Company.

ARTICLE 8

Miscellaneous Provisions

8.1Termination of the Plan

(a)       While the Plan is intended as a permanent program, the Board shall have the right at any time to declare the Plan terminated completely as to the Company or as to any group, division or other operational unit thereof or as to any affiliate thereof.

(b)       The Separation from Service of any Eligible Officer without such a declaration shall not result in a termination of the Plan.

(c)       In the event of any termination, the Board, in its sole and absolute discretion may elect:

(i)        to maintain Participants’ Accounts, payment of which shall be made in accordance with Articles 5 and 6; or

(ii)        to the extent the Administrator determines that such action would not violate Section 409A of the Code, liquidate the portion of the Plan attributable to each Participant as to whom the Plan is terminated and distribute each such Participant’s Account in a lump sum or pursuant to any method which is at least as rapid as the distribution method elected by the Participant under Section 5.1.

8.2Limitation on Rights of Participants. The Plan is strictly a voluntary undertaking on the part of the Company and shall not constitute a contract between the Company and any Eligible Officer. Inclusion under the Plan will not give any Eligible Officer any right or claim to

13

any benefit hereunder except to the extent such right has specifically become fixed under the terms of the Plan. The doctrine of substantial performance shall have no application to Eligible Officers, Participants or any other persons entitled to payments under the Plan.

8.3Consolidation or Merger; Adoption of Plan by Other Companies.

(a)       In the event of the consolidation or merger of the Company with or into any other entity, or the sale by the Company of substantially all of its assets, the resulting successor may continue the Plan by adopting it in a resolution of its Board of Directors. If within ninety (90) days from the effective date of such consolidation, merger or sale of assets, such successor corporation does not adopt the Plan, the Plan shall be terminated in accordance with Section 8.1.

(b)       There shall be no merger or consolidation with, or transfer of the liabilities of the Plan to, any other plan unless each Participant in the Plan would have, if the combined or successor plans were terminated immediately after the merger, consolidation, or transfer, an account which is equal to or greater than his or her corresponding Account under the Plan had the Plan been terminated immediately before the merger, consolidation or transfer.

8.4Errors and Misstatements. In the event of any misstatement or omission of fact by a Participant to the Administrator or any clerical error resulting in payment of benefits in an incorrect amount, the Administrator shall promptly cause the amount of future payments to be corrected upon discovery of the facts and shall cause the Company to pay the Participant or any other person entitled to payment under the Plan any underpayment in cash or Company stock (whichever shall be applicable to the situation) in a lump sum, or to recoup any overpayment from future payments to the Participant or any other person entitled to payment under the Plan in such amounts as the Administrator shall direct, or to proceed against the Participant or any other person entitled to payment under the Plan for recovery of any such overpayment.

8.5Payment on Behalf of Minor, Etc. In the event any amount becomes payable under the Plan to a minor or a person who, in the sole judgment of the Administrator, is considered by reason of physical or mental condition to be unable to give a valid receipt therefor, the Administrator may direct that such payment be made to any person found by the Administrator in its sole judgment, to have assumed the care of such minor or other person. Any payment made pursuant to such determination shall constitute a full release and discharge of the Company, the Board, the Administrator, the Administrator and their officers, directors and employees.

8.6Amendment of Plan. The Plan may be wholly or partially amended by the Board from time to time, in its sole and absolute discretion, including prospective amendments which apply to amounts held in a Participant’s Account as of the effective date of such amendment and including retroactive amendments necessary to conform the Plan to the provisions and requirements of ERISA or the Code; provided, however, that no amendment shall decrease the amount of any Participant’s Account as of the effective date of such amendment. Notwithstanding the foregoing, this Section 8.6 shall not be amended in any respect on or after a Change in Control and no amendment to this Plan shall reduce, limit or eliminate any rights of a Participant to withdrawals pursuant to Article 6 for deferrals for which elections under Section 3.1 occurred prior to the effective date of the amendment, without the Participant’s prior written consent, except for amendments necessary to conform to the provisions and requirements of ERISA or the Code.

14

8.7Governing Law. All disputes relating to or arising from the Plan shall be governed by ERISA and to the extent applicable the internal substantive laws (and not the laws of conflicts of laws) of the State of Delaware, to the extent not preempted by United States federal law. If any provision of this Plan is held by a court of competent jurisdiction to be invalid and unenforceable, the remaining provisions shall continue to be fully effective.

8.8Pronouns and Plurality. The masculine pronoun shall include the feminine pronoun, and the singular the plural where the context so indicates.

8.9Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Plan.

8.10References. Unless the context clearly indicates to the contrary, a reference to a statute, regulation or document shall be construed as referring to any subsequently enacted, adopted or executed statute, regulation or document.

15

NorthWestern Corporation

2009 Officers Deferred Compensation Plan

Deferral Election Form

Page 1

NORTHWESTERN CORPORATION

2009 OFFICERS DEFERRED COMPENSATION PLAN

Deferral Election Form for 20___ Plan Year

_____________________________

AGREEMENT, made this __ day of ________ 20__, by and between me, as a Participant in the NorthWestern Corporation 2009 Officers Deferred Compensation Plan (the “Plan”), and NorthWestern Corporation (the "Company").

WHEREAS, the Company has established and maintains the Plan and the NorthWestern Corporation 2005 Long-Term Incentive Plan (the “LTIP”), and I am eligible to participate in the Plan and the LTIP on the terms and conditions set forth therein; and

WHEREAS, I understand that terms herein that begin with initial capital letters will have the defined meaning set forth in the Plan (unless the context clearly indicates a different meaning).

NOW THEREFORE, it is mutually agreed as follows:

1.         By the execution hereof, I agree to participate in the Plan upon the terms and conditions set forth therein, and, in accordance therewith, make the elections set forth herein effective –

___ on the January 1st that follows the Administrator’s acceptance of my Enrollment Documents.

___ on the first day of the next calendar month, but only if this election occurs within the 30-day period after I first become eligible for Plan participation in this Plan or any other non-qualified account balance plan of the Company.

For the duration of this election (as determined under paragraph 4 below), I hereby elect to defer the receipt of the following percentage(s) of Qualified Compensation that the Company will withhold and credit to my Deferral Account pursuant to the Plan:

____% of my LTIP cash award payable in 20___ (up to 100%).

____% of my gross base salary.

____% of my 20___ LTIP award otherwise payable in shares of the Company’s common stock.

1

NorthWestern Corporation

2009 Officers Deferred Compensation Plan

Deferral Election Form

Page 2

2.         I hereby elect to have any cash-based Qualified Compensation that I defer pursuant to paragraph 2 above credited to my Account for future distribution, in accordance with Section 5.5 of the Plan, in the form of –

___% cash to be credited with earnings determined in accordance with Section 4.4 of the Plan.

___% shares of common stock of the Company, which shall be credited, prior to their distribution, in the form of deferred share units (“DSUs”) granted under the LTIP.

Note that any DSUs or stock-based Qualified Compensation will be settled in common stock of the Company issued pursuant to the LTIP or other arrangement identified by the Administrator.

3.         By the execution hereof, I further recognize and agree to participate in the Plan upon the terms and conditions set forth therein, including but not limited to the following terms:

(a) This election is irrevocable with respect to any Qualified Compensation that is deferred during the term of this election.

(b) I may change this election with respect to future Qualified Compensation effective on the next following January 1st by filing a superseding election using Enrollment Documents accepted by the Administrator.

(c) Unless arbitrary and capricious, any decisions of the Administrator with respect to the operation, interpretation, or administration of the Plan or my Account will be final and binding on me and all other interested parties.

IN WITNESS WHEREOF, the parties hereto have hereunto set their hands the day and year first above-written.

Witnessed by:	PARTICIPANT
________________________________	_________________________________________
Witnessed by:	NORTHWESTERN CORPORATION
________________________________	By_______________________________________

2

Exhibit B

NORTHWESTERN CORPORATION

2009 OFFICERS DEFERRED COMPENSATION PLAN

Investment Election Form

_____________________________

WHEREAS, NorthWestern Corporation (the "Company") has established the NorthWestern Corporation 2009 Officers Deferred Compensation Plan (the "Plan"), and I am eligible to make an investment election pursuant to Section 4.2(b) of the Plan.

NOW THEREFORE, I hereby elect as follows:

1.         I direct that any amounts credited in cash to my Account under the Plan will appreciate or depreciate from the effective date hereof, as though they were invested as follows:

___% ________________________.

___% ________________________.

___% ________________________.

___% ________________________.

___% ________________________.

___% ________________________.

___% ________________________.

___% ________________________.

____

100%

2.         The investment election I made in the prior paragraph shall be effective on the first day of the month next following the effective date of this Investment Election Form (or such earlier date as determined by the Administrator), and shall remain in effect until the effective date of a properly executed superseding investment election form.

IN WITNESS WHEREOF, I have executed this form on the ____ day of __________________________ 20__.

Witnessed by:	PARTICIPANT
________________________________	________________________________

Exhibit C

NORTHWESTERN CORPORATION

2009 OFFICERS DEFERRED COMPENSATION PLAN

Distribution Election Form

______________________________

AGREEMENT, made this ___ day of ___________________ 20___, by and between me, a Participant in the NorthWestern Corporation 2009 Officers Deferred Compensation Plan (the “Plan”), and NorthWestern Corporation (the "Company"). The parties agree that any term that begins herein with initial capital letters shall have the special meaning defined in the Plan, unless the context clearly requires otherwise.

NOW THEREFORE, it is mutually agreed as follows:

1.         Form of Payment Generally. By the execution hereof, I agree to participate in the Plan, subject to the terms and conditions set forth therein, and, in accordance therewith, elect to have my Account distributed in cash as follows:

o in a lump sum payable within thirty (30) days from the date of my Separation from Service with the Company.

o in substantially equal annual payments over a period of ___ years (not to exceed 10 years from the date of my Separation from Service with the Company).

2.         Timing of Payment. If I elected to receive my Account in substantially equal annual payments in paragraph 1 hereof, I direct that my Account begin to be distributed to me as follows:

o within thirty (30) days following my Separation from Service with the Company.

o on the ____ (not more than 10th) anniversary of my Separation from Service with the Company.

o on the ____ anniversary of the effective date of this Distribution Election Form.

o on the first date of the month next following my ____ birthday.

1

Exhibit C

3.         Designation of Beneficiary. In the event of my death before I have collected all of the benefits payable under the Plan, I hereby direct that any remaining benefits payable under the Plan be distributed to the beneficiary or beneficiaries designated under subparagraphs a and b of this paragraph pursuant to Section 5.2 of the Plan:

a.         Primary Beneficiary. I hereby designate the person(s) named below to be my primary beneficiary and to receive the balance of any unpaid benefits under the Plan.

Name of Primary Beneficiary	Social Security Number	Mailing Address	Percentage of Death Benefit
			%
			%

b.         Contingent Beneficiary. In the event that the primary beneficiary or beneficiaries named above are not living at the time of my death, I hereby designate the following person(s) to be my contingent beneficiary for purposes of the Plan:

Name of Contingent Beneficiary	Social Security Number	Mailing Address	Percentage of Death Benefit
			%
			%

4.         Effect of Election. The elections made in paragraphs 1 and 2 hereof shall apply to any deferred compensation that is deferred pursuant to the deferral election to which this Distribution Election Form relates.

With respect to the elections in paragraph 4 hereof, I may, by submitting an effective superseding Distribution Election Form at any time and from time to time, prospectively change the beneficiary designation and the manner of payment to a Beneficiary. Such elections shall, however, become irrevocable upon my death.

7.         Mutual Commitments. The Company agrees to make payment of all amounts due to me in accordance with the terms of the Plan and the elections I make herein. I agree to be bound by the terms of the Plan, as in effect on the date hereof or properly amended hereafter. 

8.         Tax Consequences to Participant. I acknowledge that I am solely responsible for the satisfaction of any taxes that may arise under the Plan (including any taxes arising under Sections 409A or 4999 of the Code). I understand that neither the Company nor the Administrator shall have any obligation whatsoever to pay such taxes or to prevent me from incurring them.

2

Exhibit C

IN WITNESS WHEREOF, the parties hereto have hereunto set their hands the day and year first above written.

Witnessed by:	PARTICIPANT
________________________________	_____________________________________
Witnessed by:	NORTHWESTERN CORPORATION
________________________________	By___________________________________

3