Please stand by. We’re about to begin. Good day, ladies and gentlemen, and welcome to today’s NorthWestern Energy’s Second Quarter 2012 Financial Results Call. As a reminder, today’s call is being recorded. At this time, for opening remarks and introduction, it is my pleasure to turn the call over to Mr. Dan Rausch. Please go ahead, sir.

Thank you. Good afternoon and welcome to the NorthWestern Corporation’s financial results conference call and webcast for the quarter ended June 30, 2012. NorthWestern's results have been released and that release is available on our website at www.northwesternenergy.com. We also filed our 10-Q after the market closed yesterday. Joining us on the call today are Bob Rowe, the President and CEO; Brian Bird, Chief Financial Officer; Kendall Kliewer, Controller; and Heather Grahame, General Counsel. This presentation contains forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon our current expectations and speak only as of this date. Our actual results may differ materially and adversely from those expressed in our forward-looking statements as a result of various factors and uncertainties, including those listed in our Annual Report on Form 10-K, our recent and forthcoming 10-Qs, recent 8-Ks and other filings with the SEC. We undertake no obligation to revise or publicly update our forward-looking statements for any reason. Following our presentation, those of you joining by teleconference will be able to ask questions. A replay of today’s call will be available beginning at 5:00 Eastern Time today, through August 23, 2012. To access that replay, dial (888) 203-1112 and then access code 3759413. A replay of today’s webcast will also be available on our website for about the next month. I will now turn over to President and CEO, Bob Rowe.

Thank you, Dan. We are joining you all this afternoon from our Billings, Montana division office and Billings is one of the most dynamic areas in our service territory. We’ve completed our 2 days of board meetings, an employee meeting this morning and then a great community meeting last night. Good conversations with community leaders and some of our important customers here. Our earnings in the second quarter of 2012 were $0.31 a share and that was right in line with our expectations. We continue to focus on investments to serve our customers while working with our employees to control costs and this has allowed us to maintain our financial results despite an unseasonably mild spring in our service territory. During the quarter, we continued construction on the Spion Kop Wind Project in Montana. Also in the area of electric supply, we continued construction on the 60 megawatt peaking facility in Aberdeen, South Dakota, which we expect to achieve commercial operation before the 2013 summer season. To help us fund our growth projects, we have issued $23 million from our equity dribble program and we also priced $90 million of first mortgage bonds at 4.15% and $60 million of first mortgage bonds at 4.30%. We plan to issue the bonds later during the third quarter of '12. On the operations side, we are happy to report that the Dave Gates Generating Station is back up and running as intended and we’ll talk about that more later. And last but not least, yesterday the Board of Directors declared a common stock dividend of $0.37 per share payable on September 30 to common shareholders of record as of September 14, 2012. And now our Chief Financial Officer, Brian Bird, will discuss our second quarter '12 financial results in much more detail. Brian?

Thanks, Bob. As Bob said, we reported net income of $11.4 million or $0.31 per fully diluted share for the quarter ended June 30, 2012 compared with consolidated net income of $11 million or $0.30 per fully diluted share for the quarter ended June 30, 2011. So for the most part, we were flat year-over-year. However, our pre-tax earnings improved by $3.5 million compared with the quarter ended June 30, 2011. Our income tax for 3 months ended June 30, 2012 was $2.6 million as compared with the income tax benefit of $0.5 million in the same period of 2011. The $3.1 million increase in income tax expense is primarily due to the absence of a benefit during the second quarter of 2011, which released $1.6 million of state net operating loss or NOLs carryforward reserves and also $1.3 million attributable to higher taxable income in 2012. Digging a bit in the details, our gross margin increased by $6.8 million during the quarter ending 2012 compared to the same period of 2011. The primary drivers were an increase in demand-side management lost revenues recovered in our supply tracker. And on those, demand-side management lost revenues are -- as our company sponsored energy saving measures, these are primarily more efficient residential and commercial lighting. These measures are implemented. We are allowed recovery of DSM or demand-side management lost revenues. During the second quarter of 2012, we recognized approximately $6.6 million of DSM lost revenues as compared with approximately $2.1 million during the second quarter of 2011. The 2012 amount includes $3.3 million in DSM lost revenues for the July 2010 through June 2011 tracker period, which we recognized as revenue when we received MPSC approval in April of 2012. In addition to the demand-side management lost revenues, we also had an…

Thank you. And I'm hoping everyone on the call will sing afterwards, you're talking. And again, thank you for joining us this afternoon. As we previously mentioned that during our first quarter call, the Montana Public Service Commission has approved the Spion Kop project to be included in rate base in serving our customers. This is an $86 million, a wind project which will provide 25-year levelized cost to customers at approximately $54 a megawatt hour. And it’s under construction with an expected completion date to be included in our rate base in October of this year. As of June 30, we've capitalized about $4 million in costs associated with the project. Concerning natural gas reserves, we've filed with the Montana Commission to place our Battle Creek property into rates and we expect the commission will process that filing by the end of this year. Because that asset is already being recovered through a tracker, there would be no increase in rates should the PSC decide to allow Battle Creek into rates that are requested, 10% ROE and 52% debt-to-total capital ratio. In the meantime, we plan to continue to explore investments in proven natural gas reserves for inclusion in rate base and dedicate it to serve our customers. While we did not previously anticipate any general rate filings in 2012, we do continue to evaluate each of our utility costs of the service which will in turn determine the schedule for such filings. Now I’ll provide you an update on some of our strategic initiatives as we continue to invest and grow our business. First, in our distribution system, over the past several quarters, we have been discussing with you our implementation of our distribution system infrastructure plan or DSIP. During the second quarter, our capital expenditures for DSIP…

[Operator Instructions] And we’ll hear first from Paul Ridzon with KeyBanc Capital Markets.

I had a quick question on the ins and outs on the property taxes. You had a $0.04 benefit from a tracker and then you had a $0.09 to the bad [ph] and just kind of wonder kind of how to think about these 2 and how are they going to interact through the rest of the year?

Yes. As property taxes go up, you’d expect that in our property tax tracker, and that show up in our revenue and ultimately our margin, it also goes up. And remember, we’re able to collect $0.60 on every property tax dollar and that can be -- flows through the tracker. And so that’s pretty equivalent in terms of that change there. And there can be some ins and outs don’t make exactly for that particular quarter right at 60%, but those are the primary drivers for both margin and property tax expense.

So that there -- the $0.09 and the $0.04 are roughly equivalent period impacts?

Roughly for the second quarter, yes.

A little bit of delay, I would imagine.

And we will take our next question from Brian Russo with Ladenburg Thalmann.

Just -- I’m not sure if I missed this. But when are you going to decide on whether you’ll abandon the MSTI project after the BPA makes a decision?

Sure. We can’t control exactly when BPA does make a decision, but that would be the next key step. We hope for a decision by fall, and at that point, BPA could decide on one of the several options or could decide to keep several options in play. If BPA decides to move ahead with MSTI, that would be sufficient to insure the project’s viability. If BPA decides to pursue an option other than MSTI, then we would have to evaluate the project in terms of the significant ongoing monthly expenditures coupled with the delay and the effect that, that delay would have on the market for the project. So this is something where, again as you know having followed the company, we try to be very, very transparent about for a number of years and we’ll continue to do so.

Okay. And the Battle Creek Reserve acquisition, I believe the MCC testified that the acquisition was prudent about a month ago. So are all we waiting for now is a commission decision? Will they hold a hearing or are we just looking for the filing?

No, we’d certainly expect that the commission will look at the matter closely and we would expect a hearing.

Okay. And that will likely conclude by the end of the year?

We hope so, yes.

Okay. And I think you mentioned earlier that your total equity needs for this year is $50 million. Can you give us a sense, given your current capital budget of projects that are defined, approved and that you’re spending on, are you going to need additional equity above that $50 million to manage the 50% to 55% targeted debt to cap?

No. Our expectation for 2012 is up to a total of $50 million or approximately $25 million more than what we’ve done to date. That’s our current expectation.

Okay. So, no insight whether you’re going to need all $100 million to satisfy -- to support the capital budget as is?

Again for 2012, our expectation is that in order to meet our targets from a total debt to cap perspective, we’d only need $50 million in total for 2012.

Okay, understood. And the South Dakota peaker, if it comes online in mid '13, will you be earning a return of it on that when it becomes commercially available?

There isn’t a preapproval process in South Dakota, but we would expect that it would be included in our next rate case and subsequently would earn a return there.

So it will earn a return at the time it goes in service, meaning you’re not going to experience a regulatory lag with net plant expenses before that’s recovered in rates?

Well, there would be lag until we get a rate case outcome, yes.

When would you expect the rate case outcome?

We’ll be filing, again, sometime next year. The South Dakota Commission tends to be pretty efficient in processing cases, but it would be premature to estimate a date at this point.

Our next question comes from Chris Ellinghaus with Williams Capital.

Can you give us any feeling for how DSM will be recorded in the future?

Yes, Chris. I think what I’d say that you noticed that there is an adjustment that we recorded in 2012, $3.3 million of that was associated with the 2010 to 2011 tracker. And then, we did record a portion of the 2011 to 2012 tracker in this year. So on a going-forward basis, I think relative to the $6.6 million that we recorded in the second quarter, our expectation is that we would record at least that amount and expectation is that if we continue to see increased demand-side management revenues go up, it could be higher than that, but it’s too early to tell. And also I would point out, as we noted in our disclosure that there has been a study that’s been conducted on that and we will evaluate, based upon that study, our needs in terms of our thoughts, if you will, in terms of revenues on a going-forward basis, based upon that study.

And the time of year, the timing, you expect this to continue to be sort of a second quarter kind of event?

Yes, I would say we’d expect -- if there's any -- based upon that study, we could have some additional thoughts by the end of this year even. But our expectation is you’d expect to see this every second quarter on each and every year going forward.

Okay. As far as gas reserve, gas assets go, I’m a little perplexed at why the commission has been so slow on this one, particularly since you have a very ripe opportunity with gas prices being where they are to do something for customers here. Can you give us a little feeling for what’s taking the commission so long and are they aware that this is a pretty good environment for you to be doing things, but you need an answer?

I have no criticisms on the commission’s handling in this matter at all. They have 9 months within which to make a decision. It is a matter of first impression. But again to your point, I think they understand, the Consumer Counsel understands and we obviously agree that this is a great time to be in the market acquiring long-term resources. Obviously, there’s a relatively slight downside risk that prices could hedge down a little bit compared to a tremendous opportunity on the upside to protect our customers from where prices could go. And I think we -- there’s actually in this case, pretty good alignment between all of our views. And we do continue to actively look for attractive investments.

Okay. Is -- Bob, is MSTI -- the decision to be made there -- is BPA the big trigger on what they decide?

BPA is a critical gating factor. And again, if BPA decides to go with MSTI, depending on how specific they are in their decision that could well be enough for the project to move ahead. If BPA elects another alternative or doesn’t take a clear action, then we will have to reevaluate the project in terms of the ongoing costs and uncertainties and the idea that the goalpost, as we’ve -- as you know, we’ve continued to make tremendous amount of progress on multiple fronts with MSTI that the goalpost seems to keep receding.

Right. Can you give us a little bit of flavor for what’s going on with the collector system right now?

Sure. The collector really depends on MSTI. What we’ve talked about before is that we had an awful lot of activity with Large Generator Interconnection Agreements in our transmission department. And to some extent these LGIAs are building increments of a collector system, but in terms of a true collector -- a full collector system, that would depend on MSTI and would depend on a much further development of resources in Montana.

Right. And isn’t that a little bit of a chicken and the egg problem in terms of generators and the transmission too?

It won’t surprise you to hear I’ve used that analogy myself, yes. And that’s a classic challenge within the non-organized western market. However, there isn’t a mechanism to allocate these projects and to provide all the market participants some certainty. That’s just simply the market that we work in. Whenever -- and probably most of you have heard me do this, whenever we talk about our transmission projects for export, I have to come back and emphasize that the core of what our transmission department does is build, maintain and operate truly extensive natural gas and electric transmission systems that serve our acquired [ph] customers. And we continue to focus on investments in safety and reliability of our gas and electric transmission systems. In fact over the next several days, our Transmission Vice President, Mike Cashell, and I are meeting with one of our major customers who has some significant transmission needs here in our Montana service territory.

Okay, one last question. In terms of the base load options for Montana which is in 2014, is coming up pretty soon at this rate. What’s your thinking there? And included in that, have you had many discussions with PPL about the buy option?

In terms of actually buying their facilities?

Yes.

I wouldn’t comment on any specific possible transaction. But again we evaluate -- continue to evaluate a range of options including buying facilities, building facilities and then the extent to which we would remain on the market. And as you know, we’ve had an awful lot of activity on the supply side, both in South Dakota and in Montana. And I have to say that our supply and generation operation does a tremendous job with project managements. We got a lot of good things going on in that area too.

Our next question comes from Michael Klein with Sidoti & Company.

Did I hear you correctly that Spion Kop is expected to go into rates in October or is that just when you expect to transfer control?

No. In that case, we did get advance approval from the Montana Commission.

Okay. So as soon as you take control of it, it’s going to rates?

Yes.

And in just general trends, I know commercial and industrial is -- it’s small part of your business. But what’s that outlook looking like? Can you give some color just about the local economy and expectations for the rest of the year there?

Generally, relatively flat. And again, there are areas within our service territory where there is some significant activity. I’ve mentioned we are in Billings, Montana today and we’re seeing an awful lot of activity in Billings, much of that associated with development in the Bakken to the North. So there certainly are individual firms across the service territory that are growing. And most of the larger communities we serve are really quite healthy, but in terms of the kind of much more dynamic growth that we would have been seeing a number of years ago, overall things are relatively flat.

And have your expectations for just overall load growth -- has there been any change in that over the past 6 to 9 months or so or does it still remain what it was?

There really haven’t been -- and what we’ve seen that’s been the most disruptive certainly over that period of time has been the weather.

Our next question comes from Jonathan Reeder with Wells Fargo.

Bob, did I hear you correctly regarding the collector system’s viability that if you guys abandon MSTI, is that project essentially dead?

We’re -- the collector has been a project that has been more segment-by-segment. So we have, again, built what are effectively collector segments in response to Large Generation Interconnection Agreement requests. So as the LGIAs come in, we build parts of the line. But on the kind of large scale that a collector system would normally be conceived, you -- to build collector, you require MSTI. If MSTI is built, that would be in response to demand of some sort and depending on what that demand looks like that would support the collector.

So the full build out of the collector isn’t really possible obviously because you can’t get the power essentially out of the region? Is that how to look at it?

In terms of access to the Southwest, yes. In terms of access to the Pacific Northwest, the key would be the upgrade to the 500 -- to the Colstrip 500 kV. And we do expect to see -- have seen in fact LGIA requests to support moving power into the Pacific Northwest.

And then can you just talk a little bit on the future natural gas acquisition? What’s kind of the timing and magnitude of potential future deals there?

We actively examine the market, don’t have anything to announce today certainly, but we are out in the market. The -- a goal might be to get -- well, I should say Montana Power had about 50% of its own natural gas needs met by its own supply and it would be probably up to a figure of around $200 million or so over time. The market we’re looking at is one that will obviously where the ability to do a transaction depends on properties being for sale that match up with not just price, but with the characteristics that we’re looking for in terms of proven reserves with reasonably long asset lives.

Okay. So $200 million is still kind of the upper end of the range where you’re seeing current prices and everything?

I think that’s fair, yes.

And then do you interpret, I guess, the NCC’s testimony as a green light to pursue more deals given the commentary of a low natural gas price environment?

We’ve had very positive discussions with the Consumer Counsel around this area and they do recognize the value of continuing to acquire gas, again, at appropriate prices.

And then did you mention when you’d be filing the next Montana rate case, and if not, are you thinking about a 2013 filing as well, kind of like South Dakota?

Yes. We’re evaluating for basically all 5 jurisdictions, gas and electric Montana, gas and electric South Dakota, gas Nebraska and do that on an annual basis. And clearly we’re, as I’ve discussed, because of the environmental compliance expenses, are looking at an electric filing in South Dakota next year.

But Montana, you haven’t come to the conclusion yet?

We haven’t made that decision yet.

And then, just last question, Brian, for the guidance range, you’re talking about Q2, your view of ongoing EPS staying right at $0.31 when you net the 2 items. Does your guidance range reflect normal weather for the first half of the year or is it the actually observed weather?

Yes, it’s -- from our perspective on guidance, we’re talking about -- in the disclaimer, if you were talking about on a going-forward basis, the assumption of normal weather. I think you’ve seen what we’ve talked about today and for the first quarter, weather has impacted our business. And we do exclude that, if you will, from the guidance that we share.

So the $235 million to $250 million would be adding back the adverse first half weather?

That’s correct.

[Operator Instructions] We’ll hear next from James Bellessa with D.A. Davidson.

It’s actually Mike here with Jim. I wanted to ask a couple that I didn’t hear an answer to yet. It’s my understanding that in South Dakota, when you want to place the Aberdeen plant into rate base, you’ll be able to make a request for interim rates. Is there a rule of thumb in that state that would give us an idea of how or what size that interim rate increase could be?

No. And we haven’t had that -- there hasn’t been enough activity in South Dakota to really answer that. Again, our expectation is we’ll be having discussions with the commission staff and come up with an approach to the filing that makes sense for the commission and for us.

Okay. And then one last one is, with this potential write-down from MSTI, assuming that the stars don’t align, would any portion of that amount that you’ve accumulated so far be recoverable or would the full weight of that be borne by shareholders?

To be very clear, we have not made a decision one way or the other concerning a write-down. And where we can make that decision then we would have to look at options to mitigate that cost. So we -- what we have done at this point is tried to be as transparent as possible about the challenges we’re facing, the decisions that may be ahead of us, but those decisions have not been taken. And very importantly, as we’ve been clear all along, this, whatever decisions we make, there will be no impact on our Montana retail customers.

We’ll take another question from Paul Ridzon with KeyBanc Capital Markets.

How many megawatts are rolling off in '14 of PPAs?

Right around 200 at peak.

So is that kind of what you look to backfill with as far as any capacity additions?

Potentially, although an actual decision is likely to have more elements to it than that, and again certainly possible to enter into bridge contracts, for example. So it’s not at all a binary choice between market and a known resource.

And given the way things are unfolding on the Battle Creek front, if the commission were to act and issue a positive order, I would imagine you’ve been kicking tires, you think you could be in a position to do something really quickly?

That depends on what’s available in the market, but you’re right, we have been certainly out on the car lots on Sunday afternoon kicking tires, yes.

Okay. Happy birthday, Bob.

And we’ll move on to Jonathan Reeder with Wells Fargo.

I thought I withdrew the question but happy birthday, Bob. And I guess just a follow-up, quickly to that last one, I guess, did you indicate prior that you’re waiting for the Montana Public Service Commission to rule on Battle Creek before doing any other deals or did you say you would actually strike a deal if you found one that was the right size and the right price?

No, we’re not waiting for a commission decision. And as I said, we are actively out on the lots kicking the tires.

We’ll hear now from Brian Russo with Ladenburg Thalmann.

Thanks for the follow-up. I’m just curious and I may have missed this, but what was the year-to-date impact of weather that’s being excluded from your guidance?

Yes, I think it’s -- again this is versus normal weather, we said $0.05 for this quarter. And if you remember in the first quarter, it was, and again first quarter being a pretty heavy month for us, particularly for gas loads, we forecasted about $0.09 in the first quarter, milder versus normal.

Okay, so just to be clear, the guidance range excludes $0.14 of weather -- of negative weather impact.

Correct.

There appear to be no further questions or comments at this time.

Okay, well, thank you very much. The one key number that we didn’t disclose in our filing or on this call is how old I am and that’s how it will remain, but thank you all for joining us and talk to you all next quarter, if not before.

Thank you. Ladies and gentlemen, that will conclude today’s presentation.