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): February 12, 2019 (February 11, 2019)

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):

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

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

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

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

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging Growth Company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

[ ]

Item 2.02 Results of Operations and Financial Condition

On February 11, 2019, NorthWestern Corporation d/b/a NorthWestern Energy (NYSE: NWE) (the “Company”) issued a press release (the “Press Release”) discussing financial results for the year ended December 31, 2018. 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 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 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 7.01 Regulation FD Disclosure.

As previously announced and as stated in the Press Release, the Company will host an investor conference call and webcast on February 12, 2019, at 3:30 p.m. Eastern time to review its financial results. During the conference call, Robert C. Rowe, president and chief executive officer, and Brian B. Bird, vice president and chief financial officer of the Company, will make a slide presentation (the "Investor Call Presentation") concerning the Company's financial results.

A live webcast of the investor conference call can be accessed from the Company’s website at www.northwesternenergy.com under the "Our Company / Investor Relations / Presentations and Webcasts" heading or by visiting www.webcaster4.com/Webcast/Page/1050/29072. To listen and view the slideshow presentation, 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 and will be available for one year. A telephonic replay of the call will be available for one month, beginning at 6:00 p.m. Eastern time on February 12, 2019, at (888) 203-1112 access code 3377935.

A copy of the Investor Call Presentation is being furnished pursuant to Regulation FD as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference. The information in the presentation shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Furthermore, the presentation shall not be deemed to be incorporated by reference into the Company's filings under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except as set forth with respect thereto in any such filing.

Item 9.01 Financial Statements and Exhibits.

Exhibit No.	Description of Document
99.1*	Press Release, dated February 11, 2019
99.2*	Investor Call Presentation, dated February 12, 2019
* 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/ Timothy P. Olson
	Timothy P. Olson
	Corporate Secretary

Date: February 12, 2019

EX-99.1

NorthWestern Reports Full Year 2018 Financial Results

February 11, 2019

Page 1

NorthWestern Corporation d/b/a NorthWestern Energy 3010 W. 69^th Street Sioux Falls, SD 57108 www.northwesternenergy.com

FOR IMMEDIATE RELEASE

NorthWestern Reports 2018 Financial Results

Company reports GAAP diluted earnings per share of $3.92 for 2018 and announces a 4.5% increase to the quarterly dividend, to $0.575 per share, payable March 29, 2019.

BUTTE, MT / SIOUX FALLS, SD - February 11, 2019 - NorthWestern Corporation d/b/a NorthWestern Energy (NYSE: NWE) reported financial results for the year ended December 31, 2018.  Net income for the period increased 21 percent to $197.0 million, or $3.92 per diluted share, as compared with net income of $162.7 million, or $3.34 per diluted share, for the same period in 2017. This $34.3 million increase in net income in 2018 is primarily due to a gain related to the adjustment of our electric Qualifying Facilities (QF) liability, increased demand for electric transmission, customer growth, favorable weather in South Dakota, and an income tax benefit associated with the impacts of the Tax Cuts and Jobs Act.  These increases were partly offset by an increase in depreciation expense due to higher capital investment.

Non-GAAP Adjusted diluted earnings per share for the period were $3.39; within the $3.35 - $3.50 guidance range communicated for the year.  See “Significant Items Not Contemplated in Prior Period Guidance" and “Non-GAAP Financial Measures” sections below for more information on adjustments.

Additional information regarding this release can be found in the earnings presentation found at www.northwesternenergy.com/our-company/investor-relations/presentations-and-webcasts.

“2018 was a busy year. We had another great year of safety, reliability, and customer satisfaction while delivering on our financial commitment to investors.  It was also a year in which we addressed significant matters that required thoughtful consideration from regulators, intervenors, and our employees to ensure the balance between customer and investor interests. We can all look back on 2018 with a sense of accomplishment,” said Bob Rowe, President and Chief Executive Officer. “With our first Montana general electric rate review in nearly a decade to be decided in 2019, and our issuance of updated electric supply plans in both South Dakota and Montana, we hope all of our stakeholders are looking forward to this year with a similar collaborative spirit.”

NorthWestern Reports Full Year 2018 Financial Results

February 11, 2019

Page 2

	Year Ended December 31,
(in thousands, except per share amounts)	2018			2017 (2)
Revenues	$	1,192,009		$	1,305,652
Cost of sales	272,883			410,349
Gross Margin (1)	919,126			895,303
Operating, general and administrative expense	307,119			294,803
Property and other taxes	171,259			162,614
Depreciation and depletion	174,476			166,137
Total Operating Expenses	652,854			623,554
Operating income	266,272			271,749
Interest expense, net	(91,988		)	(92,263		)
Other income (expense), net	3,966			(3,415		)
Income before income taxes	178,250			176,071
Income tax benefit (expense)	18,710			(13,368		)
Net Income	196,960			162,703
Basic Shares Outstanding	49,985			48,558
Earnings per Share - Basic	$	3.94		$	3.35
Diluted Shares Outstanding	50,237			48,655
Earnings per Share - Diluted	$	3.92		$	3.34
Dividends Declared per Common Share	$	2.20		$	2.10
(1) Gross Margin, defined as Revenues less Cost of Sales, is a non-GAAP financial measure.       See "Non-GAAP Financial Measures" section below for more information.
(2) We adopted ASU 2017-07 on January 1, 2018. As a result, we recorded the non-service cost component of net periodic benefit cost within other income (expense), net. This standard requires retrospective adoption, which resulted in a $10.3 million reclassification from operating, general and administrative expense to other income (expense), net for the twelve month period ended December 31, 2017, to conform to current period presentation.

Significant Regulatory Updates

Montana General Electric Review

In September 2018, we filed an electric rate review with the Montana Public Service Commission (MPSC) requesting an annual increase to electric rates of approximately $34.9 million, which represents an approximate 6.6% increase in annual base revenues. Our request is based on a return on equity of 10.65% and an overall rate of return of 7.42% (except for Colstrip Unit 4 which the MPSC previously set for the life of the facility at a 10% return on equity and an 8.25% rate of return), based on approximately $2.35 billion of electric rate base and a capital structure of 51 percent debt and 49 percent equity.

We also requested that approximately $13.8 million of the rate increase be approved on an interim basis effective November 1, 2018. We expect to receive a decision on our interim request after intervenor testimony is filed. If the MPSC does not issue a final order within nine months of the filing, the new requested rates may be placed into effect on an interim and refundable basis.

Key dates in the procedural schedule are expected to be as follows:

• Intervenor testimony - February 12, 2019

• NorthWestern rebuttal testimony and cross-intervenor testimony - April 5, 2019

• Hearing commences - May 13, 2019

NorthWestern Reports Full Year 2018 Financial Results

February 11, 2019

Page 3

We expect to file a FERC rate case for our Montana transmission assets by the end of the first quarter of 2019. The revenue requirement associated with our Montana FERC assets is reflected in our MPSC jurisdictional rates as a credit to customers.

Tax Cuts and Jobs Act

In December 2017, the Tax Cuts and Jobs Act was signed into law, which enacts significant changes to U.S. tax and related laws. The primary impact to us is a reduction of the federal corporate income tax rate from 35% to 21% effective January 1, 2018. Dockets were opened in each of our jurisdictions to investigate the customer benefit of this reduction in the federal corporate income tax rate. During 2018, we received approval of settlement agreements regarding the customer benefit of the Tax Cuts and Jobs Act, as described below.

• In Montana the settlement provides a one-time credit of approximately $20.5 million to customers in early 2019. This includes a $19.2 million credit to electric customers and $1.3 million credit to natural gas customers.

• In addition to eligible customers receiving a one-time bill credit, the settlement also reduces rates for all natural gas customers by approximately $1.3 million annually beginning January 1, 2019, and provides funds for low-income energy assistance and weatherization programs.

• The settlement also reflects the agreement of the intervening parties not to oppose our request to include up to $3.5 million of costs to address hazard tree removal in our current Montana rate case.

• Issues related to the revaluation of deferred income taxes will be addressed in our current Montana rate case.

• In South Dakota we credited electric and natural gas customers approximately $3.0 million in the fourth quarter of 2018, and agreed to a two-year rate moratorium until January 1, 2021.

Our 2018 results include a net benefit related to the impact of the Tax Cuts and Jobs Act, which includes:

• An income tax benefit of approximately $19.8 million due to the finalization of the revaluation of deferred income tax liabilities upon completion of the associated regulatory dockets; offset by

• A net loss of approximately $6.1 million including a reduction in revenue of approximately $23.5 million, due to customer credits in the above regulatory settlements, offset in part by a reduction in income tax expense, of approximately $17.4 million due to the reduction in federal tax rate.

In addition, we reflected the costs of our hazard tree program in the consolidated income statement as we agreed in our Montana settlement to request recovery of these costs in base customer rates in our 2018 filing, as discussed above, rather than using a portion of the reduction in customer rates associated with the change in tax rate as proposed in our Montana Tax Cuts and Jobs Act filing.

We expect a consolidated reduction in our cash flows from operations ranging from $20 million to $22 million in 2019, as a result of the customer credits discussed above while we are not a cash taxpayer. We currently estimate that our effective income tax rate will range from 0% to 5% in 2019.

NorthWestern Reports Full Year 2018 Financial Results

February 11, 2019

Page 4

Cost Recovery Mechanisms

Effective July 1, 2017 the Montana legislature granted the MPSC discretion whether to approve an electric supply tracking mechanism. After considering our application in a contested case proceeding, the MPSC issued a final order in January 2019 approving a Power Cost and Credit Adjustment Mechanism (PCCAM) with the following provisions:

• A baseline of power supply costs;

• Annual adjustment of customer prices to reflect a portion of the difference between the established base revenues and actual costs, to the extent such difference is outside a +/- $4.1 million "deadband" from the base, with 90 percent of the variance above or below the deadband collected from or refunded to customers; and

• Retroactive implementation to the effective date of the new legislation (July 1, 2017).

Our 2018 results include a net reduction in the recovery of supply costs from customers of approximately $1.5 million in the Consolidated Statements of Income, which includes the following:

• For the 2017/2018 period, actual costs were below base revenues by approximately $3.4 million, resulting in no refund to customers.

• For the 2018/2019 period, actual costs were above base revenues by approximately $11.8 million, resulting in a regulatory asset for collection from customers of approximately $6.9 million as of December 31, 2018 and an approximately $4.9 million reduction in recovery of supply costs for the first six months of the period.

Significant Earnings Drivers

Gross Margin

Consolidated gross margin for the twelve months ended December 31, 2018 was $919.1 million compared with $895.4 million for the same period in 2017. This $23.7 million increase was a result of a $30.0 million increase to items that have an impact on net income and $6.3 million decrease to items that are offset in operating expenses, property tax expense and income tax expense with no impact to net income.

Consolidated gross margin for items impacting net income increased $30.0 million, including:

• $25.1 million increase due to the reduction in the electric QF liability due to the combination of (i) a periodic adjustment of the liability for price escalation, which was less than modeled resulting in a liability reduction of approximately $17.5 million; and (ii) the annual reset to actual output and pricing resulting in approximately $7.6 million in lower QF related supply costs due to outages at two facilities;

• $6.2 million increase due to higher demand to transmit energy across our transmission lines due to market conditions and pricing;

• $3.6 million increase due to higher electric and natural gas retail volumes due primarily to customer growth and favorable weather in South Dakota;

• $0.4 million increase in our Montana natural gas rates effective September 1, 2017; and

• $2.3 million increase related to other miscellaneous margin items.

These increases were partly offset by a $6.1 million reduction in revenue due to the impacts of the Tax Cuts and Jobs Act jurisdictional settlements and a $1.5 million reduction in recovery of

NorthWestern Reports Full Year 2018 Financial Results

February 11, 2019

Page 5

Montana electric supply costs (PCCAM), as discussed in the Cost Recovery Mechanisms section above.

The change in consolidated gross margin for items that had no impact on net income represented a $6.3 million decrease primarily due to the following:

• $17.4 million reduction in revenue in 2018 to reflect the pass-through of the Tax Cuts and Job Act related benefits to customers, which is offset by a decrease in income tax expense;

• $0.5 million decrease in natural gas gathering fees which are offset by reduced operating expenses;

• $0.4 million decrease in natural gas production taxes which are offset by reduced property and other taxes;

• $11.7 million increase in revenues for property taxes included in trackers, which are offset by increased property tax expense; and

• $0.3 million increase in revenue due to decreased production tax credit benefits passed through to customers in our tracker mechanisms, which is offset by increased income tax expense.

Operating, General and Administrative Expenses

Consolidated operating, general and administrative expenses for the twelve months ended December 31, 2018 were $307.1 million compared with $294.8 million for the same period in 2017. This $12.3 million increase was a result of a $2.1 million increase to items that have an impact on net income and $10.2 million increase to items that are offset in gross margin and other income (expense) with no impact to net income.

Consolidated operating, general and administrative expenses for items impacting net income increased $2.1 million, including:

• $7.2 million increase in employee benefit costs, primarily due to higher medical and employee incentive expense;

• $3.3 million increase to costs incurred in 2018 to remove hazard trees outside of our electric transmission and distribution lines rights of way; and

• $1.2 million increase to other miscellaneous expense items.

These increases were partly offset by the following:

• $3.7 million lower expenses related to the Distribution System Infrastructure Project, which concluded in 2017;

• $3.3 million reduction in labor costs due primarily to fewer employees and more time being spent by employees on capital projects rather than maintenance projects (which are expensed); and

• $2.6 million lower maintenance costs at electric generating facilities.

The change in consolidated operating, general and administrative expenses for items that had no impact on net income increased $10.2 million primarily due to the following:

• $10.3 million increase due to the regulatory treatment of the non-service cost components of pension and postretirement benefit expense, which is offset in other income;

• $1.1 million higher operating expenses included in trackers and recovered in revenue;

• $0.7 million decrease in the value of non-employee directors deferred compensation due to the change in our stock price, which is offset in other income; and

NorthWestern Reports Full Year 2018 Financial Results

February 11, 2019

Page 6

• $0.5 million decrease in gas gathering fees and production taxes, which is offset by lower margin discussed above.

Property and Other Taxes

Property and other taxes were $171.3 million for the twelve months ended December 31, 2018, as compared with $162.6 million in the same period of 2017. This increase was primarily due to plant additions and higher estimated property valuations in Montana. Under Montana law, we are allowed to track the changes in the actual level of state and local taxes and fees and recover 74% of the increase in taxes and fees, which is net of the associated income tax benefit.

Depreciation and Depletion Expense

Depreciation and depletion expense was $174.5 million for the twelve months ended December 31, 2018, as compared with $166.1 million in the same period of 2017. This increase was primarily due to plant additions.

Operating Income

Consolidated operating income for the twelve months ended December 31, 2018 was $266.3 million as compared with $271.7 million in the same period of 2017. This decrease was primarily due to the overall increase in operating expenses offset in part by higher gross margin, as discussed above.

Interest Expense

Consolidated interest expense for the twelve months ended December 31, 2018 was $92.0 million, as compared with $92.3 million in the same period of 2017.

Other Income and Expense

Consolidated other income was $4.0 million for the twelve months ended December 31, 2018 as compared to consolidated other expense of $3.4 million during the same period of 2017. This $7.4 million improvement includes a $10.3 million decrease in other pension expense (which is offset in operating, general, and administrative expenses), partly offset by lower capitalization of AFUDC (allowance for funds used during construction).

Income Tax

Consolidated income tax benefit for the twelve months ended December 31, 2018 was $18.7 million as compared with $13.4 million expense in the same period of 2017. Our effective tax rate for the twelve months ended December 31, 2018 was (10.5)% as compared with 7.6% for the same period of 2017. The decrease in income tax expense in 2018 is primarily due to the impact of the lower federal rate and a benefit of approximately $19.8 million associated with the final measurement of excess deferred taxes.

The following table summarizes the differences between our effective tax rate and the federal statutory rate for the periods:

NorthWestern Reports Full Year 2018 Financial Results

February 11, 2019

Page 7

(in millions)	Year Ended December 31,
	2018					2017
Income Before Income Taxes	$	178.3				$	176.1
Income tax calculated at federal statutory rate	37.4			21.0	%	61.6			35.0	%
Permanent or flow-through adjustments:
State income, net of federal provisions	1.6			0.9	%	(3.3		)	(1.9	)%
Impact of Tax Cuts and Jobs Act	(19.8		)	(11.1	)%	—			—	%
Flow-through repairs deductions	(19.3		)	(10.8	)%	(30.5		)	(17.3	)%
Production tax credits	(10.9		)	(6.1	)%	(11.0		)	(6.3	)%
Prior year permanent return to accrual adjustments	(3.0		)	(1.7	)%	(0.6		)	(0.3	)%
Plant and depreciation of flow-through items	(2.2		)	(1.2	)%	(2.2		)	(1.3	)%
Shared-based compensation	0.2			0.1	%	(0.4		)	(0.2	)%
Other, net	(2.7		)	(1.6	)%	(0.2		)	(0.1	)%
Subtotal	(56.1		)	(31.5	)%	(48.2		)	(27.4	)%
Income Tax Expense	$	(18.7	)	(10.5	)%	$	13.4		7.6	%

Net Income

Consolidated net income for the twelve months ended December 31, 2018 was $197.0 million as compared with $162.7 million for the same period in 2017. This increase was due to a gain related to the adjustment of our electric QF liability, demand for electric transmission, customer growth, favorable weather in South Dakota, and an income tax benefit associated with the impacts of the Tax Cuts and Jobs Act, partly offset by an increase in depreciation expense.

NorthWestern Reports Full Year 2018 Financial Results

February 11, 2019

Page 8

Reconciliation of Primary Changes from 2017 to 2018

		Year Ended December 31,
	($millions, except EPS)	Pre-tax Income		Net (1) Income		Diluted EPS
	2017 reported	$176.1		$162.7		$3.34
Gross Margin
	Electric QF liability adjustment	25.1		18.7		0.37
	Electric transmission	6.2		4.6		0.09
	Natural gas retail volumes	3.3		2.5		0.05
	Montana natural gas supply rates	0.4		0.3		0.01
	Impact of Tax Cuts and Jobs Act (settlements)	(6.1	)	(4.6	)	(0.09	)
	Electric retail volumes	0.3		0.2		—
	PCCAM supply cost recovery	(1.5	)	(1.1	)	(0.02	)
	Other	2.3		1.7		0.03
	Sub: Items impacting net income	30.0		22.3		0.44
	Impacts of Tax Cuts and Jobs Act	(17.4	)	(13.0	)	(0.26	)
	Natural gas gathering fees	(0.5	)	(0.4	)	(0.01	)
	Operating expense recovered in trackers	—		—		—
	Property taxes recovered in trackers	11.7		8.7		0.17
	Natural gas production taxes	(0.4	)	(0.3	)	—
	Production tax credits flowed-through trackers	0.3		0.2		—
	Sub: Items not impacting net income	(6.3	)	(4.8	)	(0.10	)
	Total Gross Margin	23.7		17.5		0.34
OG&A Expense
	Employee benefits	(7.2	)	(5.4	)	(0.11	)
	Hazard trees	(3.3	)	(2.5	)	(0.05	)
	Distribution System Infrastructure Project expenses	3.7		2.8		0.06
	Labor	3.3		2.5		0.05
	Maintenance costs	2.6		1.9		0.04
	Other miscellaneous	(1.2	)	(0.9	)	(0.02	)
	Sub: Items impacting net income	(2.1	)	(1.6	)	(0.03	)
	Pension and other postretirement benefits	(10.3	)	(7.7	)	(0.15	)
	Operating expenses recovered in trackers	(1.1	)	(0.8	)	(0.02	)
	Non-employee directors deferred compensation	0.7		0.5		0.01
	Natural gas production gathering expense	0.5		0.4		0.01
	Sub: Items not impacting net income	(10.2	)	(7.6	)	(0.15	)
	Total OG&A Expense	(12.3	)	(9.2	)	(0.18	)
Other items
	Depreciation and depletion expense	(8.4	)	(6.2	)	(0.12	)
	Property and other taxes	(8.7	)	(6.5	)	(0.13	)
	Interest expense	0.3		0.3		0.01
	Other income	7.4		5.6		0.11
	Change in tax rate and Permanent  & flow-through adjustments to income tax			32.8		0.65
	Impact of higher share count	—		—		(0.10	)
	Total Other items	(9.2	)	26.0		0.42
	Total impact of above items	2.2		34.3		0.58
	2018 reported	$178.3		$197.0		$3.92
(1) Income Tax Benefit (Expense) calculation on reconciling items assumes normal effective tax rate of 25.3%.

NorthWestern Reports Full Year 2018 Financial Results

February 11, 2019

Page 9

Liquidity and Capital Resources

As of December 31, 2018, our total net liquidity was approximately $124.7 million, including $7.9 million of cash and $116.8 million of revolving credit facility availability. This compares to total net liquidity one year ago at December 31, 2017 of $88.9 million.

Equity Distribution Agreement

In September 2017, we entered into an Equity Distribution Agreement with Merrill Lynch, Pierce, Fenner, & Smith, Incorporated and J. P. Morgan Securities LLC, collectively the sales agents, pursuant to which we offered and sold shares of our common stock from time to time, having an aggregate gross sales price of up to $100 million. We concluded this program during the second quarter of 2018. During 2018, we issued 835,765 shares of our common stock at an average price of $54.45, for net proceeds of $44.9 million. Since inception of the program, we sold 1,724,703 shares of our common stock at an average price of $57.98 per share. Net proceeds received were approximately $98.5 million, which are net of sales commissions and other fees paid of approximately $1.4 million.

Dividend Declared

NorthWestern's Board of Directors declared a quarterly common stock dividend of $0.575 per share (a 4.5% increase), payable March 29, 2019 to common shareholders of record as of March 15, 2019.

NorthWestern Reports Full Year 2018 Financial Results

February 11, 2019

Page 10

Significant Items Not Contemplated in Prior Period Guidance

A reconciliation of items not factored into our 2018 adjusted non-GAAP earnings guidance range of $3.35 - $3.50 and final 2017 adjusted non-GAAP earnings of $3.30 per diluted share are summarized below. The amount below represents a non-GAAP measure that may provide users of this data with additional meaningful information regarding the impact of certain items on our expected earnings. More information on this measure can be found in the "Non-GAAP Financial Measures" section below.

(in millions, except EPS)
	Twelve Months Ended December 31, 2018
	Pre-tax Income		Net(1) Income		Diluted EPS
2018 Reported GAAP	$178.3		$197.0		$3.92
Non-GAAP Adjustments:
Remove impact of favorable weather	(1.3	)	(1.0	)	(0.02	)
Remove gain on Qualifying Facility liability reduction	(17.5	)	(13.1	)	(0.26	)
Remove Impact of Tax Cuts and Jobs Act Jurisdictional Settlements (2)	9.4		(12.8	)	(0.25	)
2018 Adjusted Non-GAAP	$168.9		$170.1		$3.39
	Twelve Months Ended December 31, 2017
	Pre-tax Income		Net(3) Income		Diluted EPS
2017 Reported GAAP	$176.1		$162.7		$3.34
Non-GAAP Adjustments:
Remove impact of favorable weather	(3.4	)	(2.1	)	(0.04	)
2017 Adjusted Non-GAAP	$172.7		$160.6		$3.30
(1) Income tax calculation on reconciling adjustments assumes updated federal plus state statutory effective tax rate of 25.3%.
(2) Impact of Tax Cuts & Jobs (TCJA) Jurisdictional Settlements includes the addback of $6.1M pretax revenue deferred for customer refunds in excess of the income tax benefits realized in 2018 and $3.3M of pretax expense related to hazard tree removal that was originally proposed to be funded with 50% of TCJA benefits (in lieu of customer refunds). This treatment was ultimately conceded in the settlement in exchange for agreement by the stipulating parties to not oppose a known-and-measurable adjustment equal to the actual 2018 expenditures for hazard tree removal included in our Montana electric rate review 2017 test year. This $9.4M (or $6.1M + $3.3M) increase to Non-GAAP earnings was more than offset by the removal of a $19.8M income tax benefit in 2018 related to the final adjustment of excess deferred taxes and $2.4M of increased tax expense related to the two pretax items previously discussed (($6.1M + $3.3M ) x 25.3% = $2.4M). These sum to $22.2M (or $19.8M + $2.4M) increase to income tax expense and ultimately result in $12.8M (or $9.4M - $22.2M) reduction to GAAP Net Income.
(3) Income tax calculation on reconciling adjustments assumes previous federal plus state statutory effective tax rate of 38.5%.

NorthWestern Reports Full Year 2018 Financial Results

February 11, 2019

Page 11

Company Hosting Investor Conference Call

NorthWestern will host an investor conference call and webcast tomorrow, February 12, 2019, at 3:30 p.m. Eastern time to review its financial results for the year ending December 31, 2018. The conference call will be webcast live on the Internet at www.northwesternenergy.com under the “Our Company / Investor Relations / Presentations and Webcasts” heading or by visiting www.webcaster4.com/Webcast/Page/1050/29072. To participate, please go to the site at least 10 minutes in advance of the webcast to register. An archived webcast will be available shortly after the call and remain active for one year.

A telephonic replay of the call will be available for one month, beginning at 6:00 p.m. Eastern time on February 12, 2019 at (888) 203-1112 access code 3377935.

About NorthWestern Energy

NorthWestern Corporation, doing business as NorthWestern Energy, provides electricity and / or natural gas to approximately 726,400 customers in Montana, South Dakota and Nebraska. We have generated and distributed electricity in South Dakota and distributed natural gas in South Dakota and Nebraska since 1923 and have generated and distributed electricity and distributed natural gas in Montana since 2002. More information on NorthWestern Energy is available on the company's Web site at www.northwesternenergy.com.

Non-GAAP Financial Measures

This press release includes financial information prepared in accordance with GAAP, as well as other financial measures, such as Gross Margin and Adjusted Non-GAAP Diluted EPS, that are considered “non-GAAP financial measures.” Generally, a non-GAAP financial measure is a numerical measure of a company’s financial performance, financial position or cash flows that exclude (or include) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP.

We define Gross Margin as Revenues less Cost of Sales as presented in our Condensed Consolidated Statements of Income. Management believes that Gross Margin (revenues less cost of sales) provides a useful measure for investors and other financial statement users to analyze our financial performance in that it excludes the effect on total revenues caused by volatility in energy costs and associated regulatory mechanisms. This information is intended to enhance an investor's overall understanding of results. Under our various state regulatory mechanisms, as detailed below, our supply costs are generally collected from customers, and as a result do not typically impact operating or net income. In addition, Gross Margin is used by us to determine whether we are collecting the appropriate amount of energy costs from customers to allow recovery of operating costs, as well as to analyze how changes in loads (due to weather, economic or other conditions), rates and other factors impact our results of operations. Our Gross Margin measure may not be comparable to that of other companies' presentations or more useful than the GAAP information provided elsewhere in this report.

Management also believes the presentation of Adjusted Non-GAAP Diluted EPS is more representative of normal earnings than GAAP EPS due to the exclusion (or inclusion) of certain impacts that are not reflective of ongoing earnings. The presentation of these non-GAAP measures is intended to supplement investors' understanding of our financial performance and not to replace other GAAP measures as an indicator of actual operating performance.Our measures may not be comparable to other companies' similarly titled measures.

NorthWestern Reports Full Year 2018 Financial Results

February 11, 2019

Page 12

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 "Significant Items Not Contemplated in Guidance". 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.”  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:

• adverse determinations by regulators, as well as potential adverse federal, state, or local legislation or regulation, including costs of compliance with existing and future environmental requirements, could have a material effect on our liquidity, results of operations and financial condition;

• changes in availability of trade credit, creditworthiness of counterparties, 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 could adversely affect our liquidity and results of operations;

• unscheduled generation outages or forced reductions in output, maintenance or repairs, which may reduce revenues and increase cost of sales 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 2018 Annual Report on Form10-K, Quarterly Reports on Form10-Q, reports on Form8-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.

Investor Relations Contact:                    Media Contact:

Travis Meyer (605) 978-2967                    Jo Dee Black (866) 622-8081

travis.meyer@northwestern.com                jodee.black@northwestern.com

EX-99.2

Madison Dam near Ennis, MT 2018 Earnings Webcast February 12, 2019

Presenting Today Forward Looking Statements During the course of this presentation, there will be forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking Bob Rowe, statements often address our expected future business President & CEO 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 of this document unless otherwise noted. Our actual future business and financial performance may differ materially and adversely from our expectations expressed in any forward-looking statements. We undertake no obligation to revise or publicly update our forward-looking statements or this presentation for any reason. Although our expectations and beliefs are based on reasonable Brian Bird, assumptions, actual results may differ materially. The Vice President & CFO factors that may affect our results are listed in certain of our press releases and disclosed in the Company’s 10-K and 10-Q along with other public filings with the SEC. 2

2018 Highlights • Net income for the year increased $34.3 million, or 21.1%, as compared to the same period in 2017. This increase was primarily due to a gain related to the adjustment of our electric Qualifying Facilities (QF) liability, demand for electric transmission, customer growth and favorable weather in South Dakota, and the net impact of the Tax Cuts and Jobs Act. These improvements were partly offset by an increase in depreciation expense. • Diluted earnings per share increased $0.58, or 17.4%, as compared to the same period in 2017. o After adjusting to remove benefits of the QF gain, TCJA and a small amount of favorable weather, Non-GAAP* earnings per share increased $0.09, or 2.7%, as compared to the same period in 2017. • We filed an electric general rate review with the Montana Public Service Commission at the end of September. We are requesting a $34.9 million, or 6.6% annual increase to base revenues primarily as a result in increased property taxes and capital investment. • The Board of Directors declared a quarterly dividend of $0.575 per share payable March 29th to shareholders of record as of March 15th, 2019. * See slides 12, 30, 35 & 36 for additional information and Non-GAAP disclosures. 3

Summary Financial Results (Full Year) (1) 4 (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure See appendix for additional disclosure.

Gross Margin (Full Year) (dollars in millions) Twelve Months Ended December 31, 2018 2017 Variance(1) Electric $ 726.5 $ 703.1 $ 23.4 3.3% Natural Gas 192.6 192.3 0.3 0.2% Total Gross Margin (1) $ 919.1 $ 895.4 $ 23.7 2.6% Increase in gross margin due to the following factors: $ 25.1 Electric QF liability adjustment 6.2 Electric transmission 3.3 Natural gas retail volumes 0.4 Montana natural gas rates 0.3 Electric retail volumes (6.1) Impacts of Tax Cuts and Jobs Act (jurisdictional settlements) (1.5) PCCAM supply cost recovery 2.3 Other $ 30.0 Change in Gross Margin Impacting Net Income $ (17.4) Impacts of Tax Cuts and Jobs Act (0.5) Natural gas gathering fees (0.4) Natural gas production taxes 11.7 Property taxes recovered in trackers 0.3 Production tax credits flowed-through trackers $ (6.3) Change in Gross Margin Offset Within Net Income $ 23.7 Increase in Gross Margin 5 (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure See appendix for additional disclosure.

Weather (Full Year) We estimate favorable weather in 2018 has contributed approximately $1.3M pretax benefit as compared to normal and $2.1M pretax detriment as compared to 2017. 6

Operating Expenses (Full Year) (dollars in millions) Twelve Months Ended December 31, 2018 2017 Variance Operating, general & admin. $ 307.1 $ 294.8 $ 12.3 4.2% Property and other taxes 171.3 162.6 8.7 5.4% Depreciation and depletion 174.5 166.1 8.4 5.1% Operating Expenses $ 652.9 $ 623.5 $ 29.4 4.7% Increase in Operating, general & admin expense due to the following factors: $ 7.2 Employee benefits 3.3 Hazard trees (3.7) Distribution System Infrastructure Project expenses (3.3) Labor (2.6) Maintenance costs 1.2 Other $ 2.1 Change in OG&A Items Impacting Net Income $ 10.3 Pension and other postretirement benefits 1.1 Operating expense recovered in trackers (0.7) Non-employee directors deferred compensation (0.5) Natural gas gathering fees $ 10.2 Change in OG&A Items Offset Within Net Income $ 12.3 Increase in Operating, General & Administrative Expenses $8.7 million increase in property and other taxes due primarily to plant additions and higher annual estimated property valuations in Montana. $8.4 million increase in depreciation and depletion expense primarily 7 due to plant additions.

Operating to Net Income (Full Year) (dollars in millions) Twelve Months Ended December 31, 2018 2017 Variance Operating Income $ 266.3 $ 271.8 ($ 5.5) (2.0%) Interest Expense (92.0) (92.3) 0.3 0.3% Other Income / (Expense) 4.0 (3.4) 7.4 217.6% Income Before Taxes 178.3 176.1 2.2 1.2% Income Tax Benefit / (Expense) 18.7 (13.4) 32.1 239.6% Net Income $ 197.0 $ 162.7 $ 34.3 21.1% $0.3 million decrease in interest expenses was primarily due to refinancing of debt in 2017, partly offset by rising interest rates. $7.4 million improvement in other income was due to a $10.3 million decrease in other pension expense (which is offset in OG&A expense) partly offset by lower capitalization of AFUDC. $32.1 million decrease in income tax expense due primarily to a benefit of approximately $19.8 million associated with the final measurement of excess deferred taxes and the impact of the lower federal tax rate of 21.0% compared to 35.0% in 2017. 8

Income Tax Reconciliation (Full Year) 9

Balance Sheet Improvement in debt to capitalization ratio; which is now closer to bottom end of 50%-55% targeted range. 10

Cash Flow Cash from operating activities improved by $59.3 million primarily due to higher net income, improved customer receipts, the receipt of insurance proceeds during the current period. 11

Adjusted Non-GAAP Earnings (Full Year) The adjusted non- GAAP measures presented in the table above are being shown to reflect significant items that were not contemplated in our original guidance, however they should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. Note: Additional information on Tax Cuts and Jobs Act Non-GAAP adjustment can be found on slide 35 of this presentation. (1) During the first quarter of 2018, we revised our presentation of revenues associated with being a market participant in the Southwest Power Pool to net them with the associated cost of sales. These revenues were previously recorded gross in electric revenues in the Condensed Consolidated Statement of Income. This results in a decrease in electric revenue and a corresponding decrease in cost of sales. There was no impact to operating or net income. We assessed the materiality of this change in presentation, taking into account quantitative and qualitative factors, and determined it to be immaterial. We applied the change in presentation prospectively. (2) Impact of Tax Cuts & Jobs (TCJA) Jurisdictional Settlements includes the addback of $6.1M pretax revenue deferred for customer refunds in excess of the income tax benefits realized in 2018 and $3.3M of pretax expense related to hazard tree removal that was originally proposed to be funded with 50% of TCJA benefits (in lieu of customer refunds). This treatment was ultimately conceded in the settlement in exchange for agreement by the stipulating parties to not oppose a known-and-measurable adjustment equal to the actual 2018 expenditures for hazard tree removal included in our Montana electric rate review 2017 test year. These increases to Non-GAAP earnings were more than offset by the removal of a $19.8M income tax benefit in 2018 related to the final adjustment of excess deferred taxes and $2.4M of increased tax expense related to the two pretax items previously discussed (($6.1M + $3.3M ) x 25.3% = $2.4M). These sum to equal the $22.2M increase to income tax expense ($19.8M + $2.4m) and ultimately result in $12.8M reduction to GAAP Net Income. (3) As a result of the adoption of Accounting Standard Update 2017-07 in March 2018, pension and other employee benefit expense is now disaggregated on the 2017 and 2018 GAAP income statement with portions now recorded in both OG&A expense and Other (Expense) Income lines. To facilitate better understanding of trends in year-over-year comparisons, the non-GAAP adjustment above re- 12 aggregates the expense in OG&A - as it was historically presented prior to the ASU 2017-07 (with no impact to net income or earnings per share).

Looking Forward Regulatory • MPSC to review Montana general electric rate review, filed in September 2018. $3.30$3.30-$3.45-$3.50 • We expect to file an associated FERC rate case for $3.10 - $3.30 our Montana transmission assets in the first quarter 2019. $2.60$3.20 - $2.75-$3.40 Continue to Invest in our T&D infrastructure • Comprehensive infrastructure capital investment program to ensure safety, capacity and reliability. • Natural gas pipeline investment (SAFE PIPES Act, Integrity Verification Process and Pipeline & Hazardous Materials Safety Administration proposed regulations). • Grid modernization, advanced distribution management system and advanced metering infrastructure investment NWE plans to join Western Energy Imbalance Market (EIM) • Real-time energy market could mean lower cost of energy for Montana customers, more efficient use of renewables and greater power grid reliability. Cost Control Efforts • Continue to monitor costs, including labor, benefits and property tax valuations to mitigate increases. Advance Electricity Resource Planning efforts in South Dakota and Montana 13

Montana Electric Tracker Update The MPSC issued a final order in January 2019 approving a Power Cost & Credit Adjustment Mechanism (PCCAM) with the following provisions: • A baseline of power supply costs; • Symmetrical deadband of +/- $4.1 million from the established baseline. Supply cost variances above or below the deadband are shared 90/10 with customers/shareholders, respectively; and • Retroactive implementation to the effective date of the new legislation (July 1, 2017). Our 2018 results include a net reduction in the recovery of supply costs from customers of approximately $1.5 million in the Consolidated Statements of Income, which includes the following: • For the 2017/2018 period, actual costs were below base revenues by approx. $3.4 million, resulting in no refund to customers. • For the 2018/2019 period, actual costs were above base revenues by approx. $11.8 million, resulting in a regulatory asset for collection from customers of approx. $6.9 million and a $4.9 million reduction in recovery of supply costs for the first six months of the period. 14

Estimated Impacts of the Tax Cuts & Jobs Act Montana: In December 2018, the MPSC approved a settlement agreement providing a $20.5 million one-time customer credit to electric and natural gas customers. In addition, the settlement provides: • A $1.3 million annual reduction in natural gas rates beginning 2019 and funds for low-income energy assistance and weatherization. • Agreement of the parties not to oppose our request to include up to $3.5 million of costs to address hazard tree removal in our 2018 O’Dell Creek in the Madison River Valley electric rate review filing. • Issues related to the revaluation of deferred income taxes will also be addressed in rate review. South Dakota: In September 2018, the SDPUC approved a settlement that resulted in a $3.0 million customer credit in the fourth quarter of 2018 and a two-year rate moratorium (until January 1, 2021). Nebraska: In August 2018, the NPSC approved a settlement to evaluate the impact of the TCJA on an annual basis and had no impact on our financial statements. Consolidated Impact: 2018 results include a net benefit related to the impact of the TCJA, which includes: • An income tax benefit of $19.8 million due to final revaluation of deferred income tax liabilities. • A net loss of $6.1 million resulting from $23.5 million in customer credits from approved tax settlements partially offset by a $17.4 million reduction in income tax expense due to the reduction in federal tax rate. • $3.3 million of expense related to our hazard tree program as agreed in our Montana settlement. Our initial filing with the MPSC instead proposed using a portion of the TCJA benefits to fund this expenditure. We expect a reduction in our cash flows from operations ranging from $20 - $22 million in 2019, as a result of customer credits. Due to our existing NOL position and other tax credits, we expect to be a cash tax payer during 2020, with credits reducing our cash tax obligation into 2022. We estimate that our effective income tax rate will range from 0% to 5% in 2019. 15

NWE Energy Supply Resource Plans South Dakota Electricity Supply Resource Plan Ryan Dam Upgrade • Published fall of 2018, the plan focuses on modernization of our fleet to improve reliability and flexibility, maintain compliance in Southwest Power Pool, and lowering operating costs. Check The plan identifies 90MWs of existing generation that should be language to retired and replaced over the next 10 years (in addition to 8MWs match 10K of mobile generation that will be installed by end of 2019). • We expect to issue a all-source request for proposal in the second quarter of 2019 to replace 60 MW of combustion turbine generation by late 2021. Montana Electricity Supply Resource Plan • Draft plan to be filed in the first quarter of 2019 and expected to be finalized mid-2019 after a 60 day public comment period. The plan will address our significant generation capacity deficits and negative reserve margin. • Our current peak requirement for energy is about 1,400 MW. We are currently 630 MW short, which is subject to market purchases. We forecast that our generation portfolio will be 725 MW short by 2025. • Planned regional retirements of 3,500 MW of coal-fired generation are forecasted by the Northwest Power and Conservation Council causing regional energy shortages as early as 2021. • We expect to solicit competitive all-source proposals in 2019 for up to 200 MW of peaking capacity available by 2022. • These supply additions would meet ~25% of our projected need in 2025. • We expect the process will be repeated in subsequent years to provide a resource-adequate energy and capacity portfolio (~200 MWs of capacity per year from 2022 to 2025) . The all-source capacity additions discussed above are subject to a competitive solicitation process administered by independent evaluators. As a result, we have not included the necessary capital investment in our current five year capital forecast. These additions could increase our capital spending in excess of $200 million over the next five years. 16

Montana Electric Rate Case Background • First general electric rate case in Montana since 2009. Two Dot Wind Farm - MT • While we have efficiently managed operating and administrative costs, increased Montana property taxes and significant investment in the system have compelled the request for rate relief. Filing (Docket D2018.2.12) • Filed with the MPSC in September 2018 based on 2017 test year and $2.34 billion of rate base. • Requesting $34.9 million annual increase to electric rates. This reflects a 6.6% increase to Montana electric revenues and a 7.4% increase to the typical residential bill. • 10.65% return on equity, 4.26% cost of debt, 49.4% equity and 7.42% return on rate base1 • Requested $13.8 million interim increase effective Nov. 1, 2018. We expect to receive a decision on our interim request after intervenor testimony is filed. If the MPSC does not issue an order within nine months of the filing, new rates may be placed into effect on an interim and refundable basis. • Requests the following additional items • Approval to capitalize Demand Side Management Costs • Establish a new baseline for PCCAM costs • Place Two Dot Wind in rate base • Approval of new net metering customer class and rate for new residential private generation customers Timeline • Intervenor testimony – February 12, 2019 (extended from February 8) • NorthWestern Rebuttal testimony and cross-intervenor testimony – April 5, 2019 • Hearing commences – May 13, 2019 17 1. Except for Colstrip Unit 4 which has an lifetime ROR of 8.25% per D2008.6.69 (Order No. 6925f)

Capital Investment Forecast $1.6 billion of total capital investment over five years. Increased investment in first three years primarily as a result of advanced metering infrastructure (AMI). We anticipate funding the expenditures with a combination of cash flows (aided by NOLs available into 2020) and long-term debt issuances. Significant capital investments that are not in the above projections or further negative regulatory actions could necessitate additional equity funding. Capital projections above do not include investment necessary to address capacity issues as identified in the South Dakota and pending* Montana Electricity Supply Resource Procurement Plans. *Draft plan to be release by end of first quarter 2019. 18

Conclusion Best Attractive Pure Strong Solid Utility Practices Future Electric & Earnings & Foundation Corporate Growth Gas Utility Cash Flows Governance Prospects 19

Appendix 20

Appendix Segment Results (Full Year) (1) (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. 21 See appendix for additional disclosure.

Appendix Electric Segment (Full Year) (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. 22 See appendix for additional disclosure.

Appendix Natural Gas Segment (Full Year) (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. 23 See appendix for additional disclosure.

Appendix Summary Financial Results (Fourth Quarter) (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. 24 See appendix for additional disclosure.

Appendix Gross Margin (Fourth Quarter) (dollars in millions) Three Months Ended December 31, 2018 2017 Variance(1) Electric $ 176.6 $ 175.0 $ 1.6 0.9% Natural Gas 59.8 60.5 (0.7) (1.2%) Total Gross Margin $ 236.4 $ 235.5 $ 0.9 0.4% Increase in gross margin due to the following factors: $ (6.1) Impacts of Tax Cuts and Jobs Act (jurisdictional settlements) (1.6) Montana natural gas supply rates 2.1 Electric transmission 1.0 Natural gas retail volumes 0.3 PCCAM supply cost recovery 2.0 Other $ (2.3) Change in Gross Margin Impacting Net Income (1) Gross Margin, $ 4.6 Property taxes recovered in trackers defined as revenues less cost 0.5 Production tax credits flowed-through trackers of sales, is a non- GAAP Measure. (1.0) Impacts of Tax Cuts and Jobs Act See appendix for (0.5) Operating expenses recovered in trackers additional (0.4) Natural gas production taxes disclosure. $ 3.2 Change in Gross Margin Offset Within Net Income $ 0.9 Increase in Gross Margin 25

Appendix Weather (Fourth Quarter) We estimate unfavorable weather in fourth quarter 2018 resulted in a $1.0M pretax detriment as compared to normal and $2.8M pretax detriment as compared to period in 2017. 26

Appendix Operating Expenses (Fourth Quarter) (dollars in millions) Three Months Ended December 31, 2018 2017 Variance Operating, general & admin. $ 85.2 $ 76.2 $ 9.0 11.8% Property and other taxes 43.0 44.1 (1.1) (2.5%) Depreciation and depletion 43.6 41.7 1.9 4.6% Operating Expenses $ 171.8 $ 162.0 $ 9.8 6.0% Increase in operating, general & admin expense due to the following factors: $ 5.3 Employee benefits 2.1 Hazard trees 0.7 Maintenance costs (1.1) Distribution System Infrastructure Project expense (0.5) Labor 0.2 Other $ 6.7 Change in OG&A Items Impacting Net Income $ 2.4 Pension and other postretirement benefits 0.6 Operating expenses recovered in trackers (0.7) Non-employee directors deferred compensation $ 2.3 Change in OG&A Items Offset Within Net Income $ 9.0 Increase in Operating, General & Administrative Expenses $1.1 million decrease in property and other taxes due primarily to an accrual true up in 2017 partially offset by plant additions and higher annual estimated property valuations in Montana. $1.9 million increase in depreciation and depletion expense primarily due to 27 plant additions.

Appendix Operating to Net Income (Fourth Quarter) (dollars in millions) Three Months Ended December 31, 2018 2017 Variance Operating Income $ 64.6 $ 73.5 $ (8.9) (12.1%) Interest Expense (23.8) (22.3) (1.5) (6.7%) Other Income / (Expense) 2.2 - 2.2 - Income Before Taxes 43.0 51.2 (8.2) (16.0%) Income Tax Benefit / (Expense) 23.4 (3.3) 26.7 809.1% Net Income $ 66.4 $ 47.9 $ 18.5 38.6% $1.5 million increase in interest expenses was primarily due to rising interest rates in 2018 compared to 2017. $2.2 million improvement in other income was due to a decrease in other pension expense partly offset by a decrease in the value of deferred shares held in trust for non- employee directors deferred compensation (both of which are offset in operating, general, and administrative expenses with no impact to net income). $26.7 million decrease in income tax expense due primarily to a $19.8 million benefit associated with a final measurement of excess deferred taxes and lower federal tax rate (21.0% compared to 35.0% in 2017) as a result of the TCJA. 28

Appendix Income Tax Reconciliation (Fourth Quarter) 29

Appendix Adjusted Non-GAAP Earnings (Fourth Quarter) The adjusted non- GAAP measures presented in the table above are being shown to reflect significant items that were not contemplated in our original guidance, however they should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. Note: Additional information on Tax Cuts and Jobs Act Non-GAAP adjustment can be found on slide 35 of this presentation. (1) During the first quarter of 2018, we revised our presentation of revenues associated with being a market participant in the Southwest Power Pool to net them with the associated cost of sales. These revenues were previously recorded gross in electric revenues in the Condensed Consolidated Statement of Income. This results in a decrease in electric revenue and a corresponding decrease in cost of sales. There was no impact to operating or net income. We assessed the materiality of this change in presentation, taking into account quantitative and qualitative factors, and determined it to be immaterial. We applied the change in presentation prospectively. (2) Impact of Tax Cuts & Jobs (TCJA) Jurisdictional Settlements includes the addback of $6.1M pretax revenue deferred for customer refunds in excess of the income tax benefits realized in 2018 and $3.3M of pretax expense related to hazard tree removal that was originally proposed to be funded with 50% of TCJA benefits (in lieu of customer refunds). This treatment was ultimately conceded in the settlement in exchange for agreement by the stipulating parties to not oppose a known-and-measurable adjustment equal to the actual 2018 expenditures for hazard tree removal included in our Montana electric rate review 2017 test year. These increases to Non-GAAP earnings were more than offset by the removal of a $19.8M income tax benefit in 2018 related to the final adjustment of excess deferred taxes and $2.4M of increased tax expense related to the two pretax items previously discussed (($6.1M + $3.3M ) x 25.3% = $2.4M). These sum to equal the $22.2M increase to income tax expense ($19.8M + $2.4m) and ultimately result in $12.8M reduction to GAAP Net Income. (3) As a result of the adoption of Accounting Standard Update 2017-07 in March 2018, pension and other employee benefit expense is now disaggregated on the 2017 and 2018 GAAP income statement with portions now recorded in both OG&A expense and Other (Expense) Income lines. To facilitate better understanding of trends in year-over-year comparisons, the non-GAAP adjustment above re- 30 aggregates the expense in OG&A - as it was historically presented prior to the ASU 2017-07 (with no impact to net income or earnings per share).

Appendix Segment Results (Fourth Quarter) (1) (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. 31 See appendix for additional disclosure.

Appendix Electric Segment (Fourth Quarter) (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. 32 See appendix for additional disclosure.

Appendix Natural Gas Segment (Fourth Quarter) (1) (1) Gross Margin, defined as revenues less cost of sales, is a non-GAAP Measure. 33 See appendix for additional disclosure.

Appendix Qualified Facility Earnings Benefit The $25.1 million earnings improvement, recorded in the 2nd quarter of 2018, related to certain Qualified Facilities (QF) contracts is a result of: • A $17.5 million benefit resulting from the reduction of the estimated future liability of unrecoverable QF costs. The primary driver of the reduction is due to price escalation that was lower than the three percent assumption in the liability, which was also adjusted in 2015. Due to the periodic nature of this estimated liability adjustment, this benefit has been excluded from non-GAAP earnings. • A $7.6 million benefit due to the annual adjustment to reflect lower actual output and pricing of QF related supply costs driven largely by outages at two QF facilities. Due to the annual nature of this adjustment to actual costs, this benefit has NOT been excluded from non-GAAP earnings. Our electric QF liability consists of unrecoverable costs associated with contracts covered under PURPA that are part of a 2002 stipulation with the MPSC and other parties. Risks / losses associated with these contracts are born by shareholders, not customers. Therefore, any mitigation of prior losses and / or benefits of liability reduction also accrue to shareholders. 34

Appendix 2018 Non-GAAP Adjustment for TCJA Non GAAP (1) (2) (3) Revenue Deferred for Impact of Tax Cuts & Jobs (in millions) Settlements in excess of Expense for Hazard Tree Final Adjustment of Excess Act Jurisdictional Tax Benefit Program Deferred Taxes Settlements Revenues $6.1 - - $6.1 Cost of sales - - - - Gross Margin 6.1 - - 6.1 Op. Expenses - OG&A - (3.3) - (3.3) Prop. & other taxes - - - - Depreciation - - - - Total Op. Exp. - (3.3) - (3.3) Op. Income 6.1 3.3 - 9.4 Interest expense - - - - Other (Exp.) Inc., net - - - - Pretax Income 6.1 3.3 - 9.4 Income tax (1.5) (0.8) (19.8) (22.2) Net Income $4.6 2.5 (19.8) ($12.8) ETR 25.3% 25.3% - 235.9% Diluted Shares 50.2 50.2 50.2 50.2 Diluted EPS $0.09 0.05 (0.39) (0.25) (1) Impact of Tax Cuts & Jobs (TCJA) Jurisdictional Settlements includes the addback of $6.1M pretax revenue deferred for customer refunds in excess of the income tax benefits realized in 2018; and (2) $3.3M of pretax expense related to hazard tree removal that was originally proposed to be funded with 50% of TCJA benefits (in lieu of customer refunds). This treatment was ultimately conceded in the settlement in exchange for agreement by the stipulating parties to not oppose a k nown-and-measurable adjustment equal to the actual 2018 expenditures for hazard tree removal included in our Montana electric rate review 2017 test year. (3) These increases to Non-GAAP earnings were more than offset by the removal of a $19.8M income tax benefit in 2018 related to the final adjustment of excess deferred taxes. 35

Appendix Non-GAAP Financial Measures These materials include financial information prepared in accordance with GAAP, as well as other financial measures, such as Gross Margin and Adjusted Diluted EPS, that are considered “non-GAAP financial measures.” Generally, a non-GAAP financial measure is a numerical measure of a company's financial performance, financial position or cash flows that exclude (or include) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. Gross Margin (Revenues less Cost of Sales) is a non-GAAP financial measure due to the exclusion of depreciation from the measure. Gross Margin is used by us to determine whether we are collecting the appropriate amount of energy costs from customers to allow recovery of operating costs. Adjusted Diluted EPS is another non-GAAP measure. The Company believes the presentation of Adjusted Diluted EPS is more representative of our normal earnings than the GAAP EPS due to the exclusion (or inclusion) of certain impacts that are not reflective of ongoing earnings. The presentation of these non-GAAP measures is intended to supplement investors' understanding of our financial performance and not to replace other GAAP measures as an indicator of actual operating performance. Our measures may not be comparable to other companies' similarly titled 36 measures.

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