What changed in this filing

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Item 1A. Risk Factors

2025-02-13 compared with 2024-02-15 · 24 added, 35 removed, 278 unchanged (18% of the section changed)

28 unchanged sentences

Our operations are subject to laws and regulations imposed by federal, state and local government authorities regarding energy policy, permitting/siting for energy projects, climate change, the environment, air and water quality, GHG emissions, protection of natural resources, migratory birds and other wildlife, solid waste disposal, coal ash and other environmental considerations.

We believe that we are in compliance with environmental regulatory requirements.

In response to recent regulatory and judicial decisions and international accords, GHG emissions, most significantly CO 2 , could be restricted in the future as a result of federal or state legal requirements or litigation relating to GHG emissions.

No rules are currently in effect that require us to reduce our GHG emissions.

However, laws and regulations to which we must adhere change, and the Biden Administration’s agenda includes a significant shift in environmental and energy policy, focusing on reducing GHG emissions and addressing climate change issues.

Together, these actions reflect climate change issues and GHG emissions as central areas of focus for domestic and international regulations, orders and policies.

In addition, a parallel focus on reducing GHG emissions is reflected in legislation introduced in Congress.

These initiatives could lead to new and revised energy and environmental laws and regulations, including tax reforms relating to energy and environmental issues.

Any such changes, as well as any enforcement actions or judicial decisions regarding those laws and regulations, could result in significant additional compliance costs that would affect our future financial position, results of operations and cash flows if such costs are not recovered through regulated rates.

Recently promulgated federal rules under the Biden Administration will potentially impose requirements on fossil fuel assets, but the Trump Administration is evaluating energy-related regulations impacting reliability and affordability.

It is currently unclear whether the promulgated GHG or MATS Rules will be enforced, revised, or repealed.

If these promulgated GHG and

MATS Rules are implemented and enforced as currently written, they may affect our ability to reliably serve our customers and we could be subject to significant additional compliance costs that would affect our future financial position, results of operations, and cash flows if such costs are not recovered through regulated rates.

Such changes also could affect the manner in which we conduct our business and could require us to make substantial additional capital expenditures or abandon certain projects.

Although previous attempts by the EPA to regulate GHG emissions from coal-fired plants have not succeeded, if GHG and/or methane regulations are implemented, compliance with carbon dioxide (CO 2) emission performance standards, and with other future environmental rules, may make it economically impractical to continue operating all or a portion of our jointly owned facilities or for individual owners to participate in their proportionate ownership of the coal-fired generating units.

This could lead to significant impacts to customer rates for recovery of plant improvements and / or closure related costs and costs to procure replacement power.

In addition, these changes could impact system reliability due to changes in generation sources.

To the extent that costs exceed our estimated environmental liabilities, or we are not successful in recovering remediation costs or costs to comply with the proposed or any future changes in rules or regulations, our results of operations and financial position could be adversely affected.

3 unchanged sentences

We are also at risk of unfavorable litigation outcomes related to zoning and environmental permits.

See discussion related to our Yellowstone County Generating Station below in “Management’s Discussion and Analysis – Significant Trends and Regulation.” Adverse litigation outcomes could cause us to delay or terminate projects, increase costs and impact our ability to service our customers.

See discussion related to YCGS below in “Management’s Discussion and Analysis – Significant Trends and Regulation.” Adverse litigation outcomes could cause us to delay or terminate projects, increase costs and impact our ability to service our customers.

Early closure of our owned and jointly owned electric generating facilities due to environmental risks, litigation or public policy changes could have a material adverse impact on our results of operations and liquidity.

10 unchanged sentences

The remaining depreciable life of our investment in Colstrip Unit 4 is through 2042.

Talen and Puget Sound Energy (Puget), a co-owner of Colstrip, have entered into a transaction in which Puget will transfer its 25% project share in Units 3 and 4 to Talen.

The anticipated closing date of the transaction is December 31, 2025.

On January 16, 2023 we entered into an agreement with Avista Corporation pursuant to which it will transfer to us its 15% project share in Units 3 and 4 on December 31, 2025.

The closure by third parties of Billings area generation (Corette) and Colstrip Units 1 and 2 reducing supply, together with increased customer load and the lack of dispatchable replacement generation in eastern Montana, has accelerated concerns about potential difficulties in physically serving parts of Montana including the Billings area.

We are executing on multi-year plans for upgrades to the Billings area substations and other delivery infrastructure, but the addition of dispatchable generation in the area is also critical to reliable service in eastern Montana.

On July 30, 2024, we entered into an agreement with Puget Sound Energy pursuant to which it will transfer to us its 25% project share in Units 3 and 4 on December 31, 2025.

Increased risks of regulatory penalties could negatively impact our business.

48 unchanged sentences

Our need to acquire flexible energy supply and capacity in the market to meet our electric and natural gas load serving obligations exposes us to certain risks including the ability to reliably serve customers and significant uncertainty in the cost of supply, which may not be recoverable.

We rely upon a combination of base-load supply from our owned generation and market purchases to serve customers.

The accredited capacity of our Montana portfolio of owned and long-term contracted electric generation resources covers 75 percent of our recent peak electric requirements, with remaining needs, including additional reserve margin, served through market purchases.

In the past, Montana had been a net exporter of electric generation and we have relied upon Montana's excess generation for grid reliability and to physically serve customers.

However, that situation in Montana has changed and we are predominantly a net importer, especially during peak demand.

We rely upon a combination of base-load supply from our owned and long-term contracted generation and market purchases to serve customers.

During peak periods, power demand could exceed, and has exceeded, the available capacity of our owned and long-term contracted generation capacity, requiring us to purchase capacity and energy from the market.

In the past, we have relied upon both in-state and out-of-state power purchase agreements for grid reliability and to physically serve customers.

A significant number of base-load generation facilities, which may also serve to meet peak requirements, in the state and region have been retired or are scheduled to be retired in the next five to ten years.

31 unchanged sentences

Climate change and the costs that may be associated with its impacts have the potential to affect our business in many ways, including increasing the cost incurred in providing electricity and natural gas, impacting the demand for and consumption of electricity and natural gas (due to change in both costs and weather patterns), and affecting the economic health of the regions in which we operate.

Extreme weather conditions, especially those of prolonged duration, create high energy demand on our own and/or other systems and increase the risk we may be unable to reliably serve customers, causing brownouts and/or blackouts of our electric systems, and loss of gas supply.

systems, and loss of gas supply.

Risk of losing electricity or gas supply during extreme weather carries significant consequences as without our services our customers may be subjected to dire circumstances.

26 unchanged sentences

Demand for our Montana transmission capacity fluctuates with regional demand, fuel prices and weather related conditions.

The levels of wholesale sales depend on the wholesale market price, market participants, transmission availability, the availability of generation, and the ongoing development of the Western Energy Imbalance Market (EIM), among other factors.

Declines in wholesale market price, availability of generation, transmission constraints in the wholesale markets, or low wholesale demand could reduce wholesale sales.

11 unchanged sentences

We and our third-party vendors have been subject to, and will likely continue to be subject to, attempts to gain unauthorized access to systems, to confidential data, or to disrupt operatio ns.

With the continuing rise in ransomware and other cyber-based threats we have been analyzing our technology platforms and monitoring for signs of potential intrusions.

We have also been reaching out to our vendors, suppliers and contractors requesting that they take appropriate measures.

With the continuing rise in ransomware and other cyber-based threats we continuously analyze our technology platforms and monitoring for signs of potential intrusions.

There is also a risk of exposure of confidential or proprietary data through the inadvertent use of open artificial intelligence tools.

We periodically engage with our vendors, suppliers and contractors to establish that they are taking appropriate measures.

None of these attempts has individually or in the aggregate resulted in a security incident with a material impact on our financial condition or results of operations.

12 unchanged sentences

As a result of current macroeconomic conditions, both nationally and globally, we have recently experienced issues with our supply chain for materials and components used in our operations and capital project construction activities.

Issues include higher prices, scarcities/shortages, longer fulfillment times for orders from our suppliers, workforce availability, and wage increases.

Issues include higher prices, potential tariffs, scarcities/shortages, longer fulfillment times for orders from our suppliers, workforce availability, and wage increases.

Should these economic conditions and issues continue, we could have difficulty completing the operational activities necessary to serve our customers safely and reliably, and/or achieving our capital investment program, which ultimately could result in higher customer utility rates, longer outages, and could have a material adverse impact on our business, financial condition and operations.

8 unchanged sentences

Future negotiation of these collective bargaining agreements could lead to work stoppages or other disruptions to our operations, which could adversely affect our financial condition and results of operations.

A pandemic or similar widespread public health concern could have a material negative impact on our business, financial condition and results of operations.

The actual or perceived effects of a disease outbreak, epidemic, pandemic or similar widespread public health concern, such as COVID-19, will likely negatively affect our business, financial condition and results of operations.

The COVID-19 pandemic has had widespread impacts on people, economies, businesses and financial markets.

While the COVID-19 pandemic did not cause material disruptions to our operations, we could experience such disruptions in the future as a result of a pandemic (or a similar widespread public health concern) due to, among other things, quarantines, increased cyber risk due to employees working from home, worker absenteeism as a result of illness or other factors, social distancing measures and other travel, health-related, business or other restrictions.

If a significant percentage of our workforce is unable to work, including because of illness, travel restrictions, or government mandates in connection with pandemics or disease outbreaks, our operations may be negatively affected.

Any such workforce implications and / or limitations or closures impact our ability to achieve our capital investment program and could have a material adverse impact on our ability to serve our customers and on our business, financial condition and results of operations.

Liquidity and Financial Risks

21 unchanged sentences

We access long-term capital markets to finance capital expenditures, repay maturing long-term debt and obtain additional working capital from time-to-time.

For example, we have $100 million of 1% Montana secured debt maturing in 2024.

For example, we have $300 million of secured long-term debt and $100 million of short-term borrowings maturing in 2025.

Our ability to access capital on reasonable terms is subject to numerous factors and market conditions, many of which are beyond our control.

7 unchanged sentences

Potential regulation associated with climate change legislation could pose financial risks to us.

is a party to the United Nations' "Paris Agreement" on climate change, and that agreement along with other potential legislation and regulation discussed above, could result in enforceable GHG emission reduction requirements that could lead to increased compliance costs for us.

For example, the EPA has indicated that it is currently "evaluating additional opportunities" to reduce GHG emissions from existing power plants.

Although the U.S.

is no longer a party to the United Nations' "Paris Agreement" on climate change, other potential legislation and regulation discussed above, could result in enforceable GHG emission reduction requirements that could lead to increased compliance costs for us.

For example, during the Biden Administration, the EPA indicated that it was "evaluating additional opportunities" to reduce GHG emissions from existing power plants.

Although the Trump Administration has directed federal executive agencies to

review all energy related regulations implicating reliability and affordability, it is not yet clear what the impact will be on existing regulations or future legislation or regulations affecting GHG.

As we expand our energy generation asset mix, the ability to integrate renewable technologies into our operations and maintain reliability and affordability is a risk.

44 unchanged sentences

Without sustained growth in the plan assets over time and depending upon interest rate changes as well as other factors noted above, the costs of such plans reflected in our results of operations and financial position and cash funding obligations may change significantly from projections.

NorthWestern Energy Group is a holding company and relies on cash from its subsidiaries to pay dividends.

Through completion of a reorganization on January 1, 2024, NorthWestern Energy Group is a holding company parent entity and thus its primary assets are its subsidiaries, NW Corp and NWE Public Service.

We have a holding company structure and rely on cash from our subsidiaries to pay dividends.

As a holding company, our primary assets are our investments in our subsidiaries, NW Corp and NWE Public Service.

Substantially all operations are conducted by NW Corp (and its subsidiaries) and NWE Public Service.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors