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    NWE
    Earnings call· Mar 2026(Q1 FY26)

    NorthWestern Energy Group Q1 FY26 earnings call NWE

    Apr 30, 2026 Source

    Executive summary

    NorthWestern Energy Q1 FY26 — Strong Earnings and Merger Progress Amidst Warm Weather

    NorthWestern Energy delivered solid first-quarter results, driven by improved margins and strategic progress on its merger with Black Hills, despite significant weather-related headwinds. The company reaffirmed its 2026 earnings and long-term EPS growth guidance, underpinned by regulatory advancements and a growing data center pipeline. Management emphasized the benefits of the merger for all stakeholders and the ongoing efforts to secure regulatory approvals and advance large load opportunities.

    Highlights

    5

    • Non-GAAP diluted EPS increased 7.4% to $1.31 compared to Q1 2025.

    • Shareholders approved the Black Hills merger with 99.7% of votes cast in support.

    • Constructive settlements reached with key interveners in Montana, Nebraska, and South Dakota for the merger dockets.

    • Signed a third data center development agreement with Quantica Infrastructure, bringing total development agreements to three.

    • South Dakota wildfire legislation (Senate Bill 36) passed into law, providing legal protections similar to Montana.

    Concerns

    4

    • Historically warm first quarter resulted in an unfavorable $0.17 impact on EPS due to lower volumetric loads.

    • $0.05 of merger-related costs impacted EPS.

    • $0.05 of operating expenses from incremental Colstrip ownership were unrecovered due to low market power prices.

    • Disappointment in not achieving sales tax relief for data centers in South Dakota.

    Guidance & targets

    10
    CategoryTargetConfidence
    2026 Earnings Guidance
    $3.68 to $3.83
    high materiality
    High
    Long-term Rate Base EPS Growth Rate
    4% to 6%
    high materiality
    High
    Dividend per share
    $0.67
    medium materiality
    High
    Merger Approval Timeline
    second half of 2026
    high materiality
    Medium
    Wildfire Mitigation Plan Submission
    second half of 2026
    low materiality
    High
    Wildfire Mitigation Plan Update Frequency
    every 2 years
    low materiality
    High
    FERC Merger Approval
    by the end of June
    high materiality
    Medium
    Data Center ESA Completion
    by the end of 2026
    high materiality
    Medium
    Quantica Data Center Targeted Start Date
    early 2029
    high materiality
    High
    Quantica Data Center Full Ramp
    2031
    high materiality
    High

    Operational metrics

    15
    GAAP Diluted EPS
    $1.03
    Q1 FY26

    Includes impacts of warm weather, merger-related costs, and incremental Colstrip ownership.

    Non-GAAP Diluted EPS
    $1.31up 7.4% vs Q1 2025
    Q1 FY26

    Adjusted for weather, merger costs, and unrecovered Colstrip operating expenses.

    EPS Impact from Warm Weather
    -$0.17unfavorable versus normal volumetric loads
    Q1 FY26

    Due to very mild weather in Montana, which experienced the warmest winter in over 100 years.

    EPS Impact from Merger Costs
    -$0.05
    Q1 FY26

    Merger-related costs incurred in the quarter.

    EPS Impact from Unrecovered Colstrip Operating Expenses
    -$0.05
    Q1 FY26

    Operating expenses from incremental Colstrip ownership that were not recovered due to low market power prices.

    Colstrip Incremental Ownership Operating Cost Increase
    $0.12increase from prior quarter
    Q1 FY26

    Due to incremental ownership of Colstrip.

    Labor and Benefits Cost Increase
    $0.04increase from prior quarter
    Q1 FY26

    Driven by labor and benefits expenses.

    Annual Operating Costs for Incremental Colstrip Ownership
    $48M
    Annual

    Expected annual operating costs related to the incremental Colstrip ownership. Quarterly run rate is approximately $12M.

    Colstrip Puget Interest Ownership Percentage
    55%up from 30% with Avista
    Current

    Ownership stake after procuring Puget's 370 MW interest, providing control over Colstrip's future.

    Shareholder Vote in Support of Merger
    99.7%of those who voted
    Q1 FY26

    Percentage of shareholders who voted in support of the merger with Black Hills.

    Shareholder Participation in Merger Vote
    86%
    Q1 FY26

    Approximately 86% of shareholders voted on the merger.

    Customer Benefit from Merger
    $10M
    Post-merger

    Expected benefit to accrue to customers shortly after merger approval.

    Colstrip Avista Portion Capacity
    222
    Current

    Acquired to achieve resource adequacy for existing customers.

    Colstrip Puget Portion Capacity
    370
    Current

    Procured to increase ownership and control over Colstrip; available to serve large new loads, thereby avoiding burdening existing customers with $330M in operating costs for assets they don't currently need.

    Quantica Data Center Initial Load
    25
    Early 2029

    Initial load for Quantica's data center, ramping up to 1.1 GW.

    Industry KPIs

    7
    MetricValueDetails
    Adjusted operating EPS$1.31USD/share
    Multi year capital plan$3.2BUSD
    Dividend per share growth$0.67USD/share
    Regulatory rate base growth4% to 6%%
    Allowed ROE equity layer rate cases—
    Combined electric gas framework mandatesSenate Bill 36 passed
    Major regulated project construction progress—

    Orderbook & backlog

    4
    Data Center Request Queue8Q1 FY26

    up from 6

    Includes 3 development agreements; 4 in high-level assessment (down from 6); no LOIs remaining.

    Data Center Development Agreements3Q1 FY26

    up from 2 (since last update)

    Includes Quantica Infrastructure, Sabey, and Atlas. Aiming for ESAs by end of 2026.

    Quantica Data Center Load1.1 GWQ1 FY26

    up from ~500 MW (prior estimate)

    Ramping from 25 MW with a targeted start date of early 2029, full ramp by 2031.

    Total Data Center Demand (3 customers)1.5 GWQ1 FY26

    up from 1.1 GW (prior framing)

    Demand tied to the three large load customers (Quantica, Sabey, Atlas) by 2030.

    Deals & partnerships

    2
    Quantica InfrastructureDevelopment agreement for data center load25 MW ramping to 1.1 GW

    Third development agreement for data centers. Customer not yet named.

    Black HillsMerger transaction to combine companies

    Received shareholder approval (99.7% of votes cast in support by 86% of shareholders). Constructive settlements reached with key interveners in MT, NE, SD. FERC approval expected by end of June.

    Capital programs

    1
    Multi-year Capital Planunderway$3.2B
    Funding: No new common equity in 2026; equity needs in 2027 and beyond for incremental capital related to SD generation capacity
    Start: 2026

    Benefit: Essential investments to meet customer needs; includes incremental generating capacity in South Dakota related to SPP Expedited Resource Adequacy Study.

    Unchanged from Q4 call. Does not include incremental investments for additional regional transmission opportunities or serving large loads beyond the adjusted SD generation capacity.

    Risks & headwinds

    7
    Unfavorable weather conditionsQ1 FY26

    -$0.17 EPS impact in Q1 FY26

    Mitigation: None explicitly stated for Q1, but company notes it's a factor in earnings outlook.

    Low market power prices impacting cost recovery for incremental Colstrip ownershipQ1 FY26

    -$0.05 EPS impact in Q1 FY26; $8M of quarterly costs offset, $4M unrecovered

    Mitigation: Company expects annual operating costs of $48M related to incremental ownership, implying future recovery mechanisms or market price improvements are needed.

    Costs associated with pending merger transactionQ1 FY26

    -$0.05 EPS impact in Q1 FY26

    Mitigation: These are one-time costs associated with a strategic transaction.

    Lack of sales tax relief for data centers in South DakotaOngoing

    Disappointed, but still seeing interest

    Mitigation: Continue to work with folks to see if agreements can be reached.

    Difficult fire season aheadUpcoming fire season

    Acknowledged, but no specific financial quantification for the upcoming season

    Mitigation: Legislative protections in SD (SB 36) and MT; improved operational and situational awareness; plan to submit wildfire mitigation plan for SD PUC approval in H2 2026 and update every 2 years.

    Developer issues procuring necessary land for data centersOngoing

    Sabey has had some issues

    Mitigation: NorthWestern is being patient and working with Sabey through the process.

    Slow regulatory process in Montana for rate cases and tariff approvalsOngoing

    2024k still under reconsideration; '23 test period, '24 no measurable filing, '26 end of April no final outcome

    Mitigation: Continue frequent filings to recover costs; hope merger settlements and customer benefits will expedite merger approval.

    What to watch in Q2 FY26

    5

    FERC Merger Approval

    by the end of June
    CurrentPending
    TargetApproval decision

    Why it matters

    FERC approval is a key milestone for the merger with Black Hills, which is central to the company's long-term growth strategy and rate base expansion.

    And if you look at the 180-day approval time line, hope to hear back from FERC by the end of June.

    Q&A highlights

    5

    Does Sabey's land issue reinforce the need for stricter milestones (site control, permitting) before treating a project as part of the planning baseline, especially given the slow pace of the Large New Load tariff approval?

    Brian Bird stated that the initial intent was to file the large load tariff jointly with an ESA. While the tariff resolution might take time, they will continue working with developers on necessary steps to reach an ESA. He implied that the Sabey situation highlights the challenges but didn't explicitly state a change to "stricter milestones" in their process, rather emphasizing continued collaboration.

    “One of the things we want to do is to make sure that we continue to work with these parties in -- it's going to take a while, I believe, to get ultimately a resolution of the large load tariff. In the meantime, we'll be able to continue to work with these 3 developers on all the necessary things they need to do and we need to do to ultimately bring us to an ESA position.”

    asked by Whitney Mutalemwa · answered by Brian Bird

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 Financial Performance

    NorthWestern Energy reported GAAP diluted EPS of $1.03 and non-GAAP diluted EPS of $1.31 for Q1 FY26. The adjusted EPS represents a 7.4% increase over Q1 2025. This performance was achieved despite a historically warm first quarter, which negatively impacted volumetric loads by $0.17 per share, and unrecovered operating costs from incremental Colstrip ownership. Improved margins from new rates in Montana and growth in transmission revenues partially offset these headwinds.

    02

    Merger Progress and Stakeholder Benefits

    The pending merger with Black Hills received overwhelming shareholder approval, with 99.7% of votes cast in support. Constructive settlements have been reached with key interveners in Montana, Nebraska, and South Dakota, streamlining the regulatory approval process. Management highlighted the merger's benefits, including increased scale, expanded investment opportunities, a stronger balance sheet, and enhanced business diversity, which are expected to accrue to shareholders and customers through cost savings in future rate reviews.

    03

    Data Center Development

    NorthWestern Energy announced a third development agreement with Quantica Infrastructure, adding to its growing large load pipeline. The total data center request queue has increased from 6 to 8, with 3 now in development agreements. Quantica's project alone is expected to ramp from 25 MW to 1.1 GW by 2031, with a targeted start date of early 2029. The company is actively working to convert these development agreements into Energy Service Agreements (ESAs) by the end of 2026, though this depends on developers meeting their obligations.

    04

    Regulatory and Legislative Environment

    South Dakota passed Senate Bill 36, providing significant wildfire liability protections for utilities, similar to existing Montana legislation. The company plans to submit its wildfire mitigation plan for South Dakota PUC approval in H2 2026. NorthWestern also submitted a Large New Load tariff proposal with the MPSC in March 2026, aiming to protect existing customers while enabling the service of large industrial loads like data centers.

    05

    Capital Plan and Equity Needs

    The company's $3.2 billion capital plan for 2026-2030 remains unchanged, focused on essential investments for customer needs. This plan does not include incremental investments for regional transmission or large loads, beyond the South Dakota generation capacity adjusted for in Q4. NorthWestern expects to fund its base capital plan without issuing new common equity in 2026, though incremental capital for South Dakota generation will require equity needs in 2027 and beyond.

    06

    Colstrip Ownership Strategy

    NorthWestern clarified its strategy for incremental Colstrip ownership. The Avista portion (222 MW) was acquired to achieve resource adequacy for existing customers. The Puget portion (370 MW) was acquired to gain control over Colstrip's future and is currently FERC-regulated. This 370 MW is available to serve large new loads, and the company intends to move it into the Montana state-regulated business if the Large New Load tariff is approved.

    AI-generated summary of the company’s earnings call. Not investment advice.