COC Industry Update 10-14-09.pdf

Please refer to page 9 of this report for detailed disclosure and certification information.
INDUSTRY UPDATE
Institutional Equity Research

UTILITY INDUSTRY UPDATE
October 14, 2009

Prices: (10/14/09)

Industry:
Utilities

James L. Bellessa, Jr., CFA
406.791.7230
[e-mail]

Michael Bates
Research Associate
406.791.7216
[e-mail]

Utility Coverage 3Q’09 Earnings Preview

We are generally expecting down earnings from the ten regional utilities under our
coverage for the third quarter of 2009, as a weak economy and mild summer
temperatures took a toll on demand for electricity at several companies.

While temperatures in the service territory of Hawaiian Electric Industries, Inc.
remained near the historical average, cooler than normal summer temperatures were
experienced across much of the Upper Midwest. The Pacific Northwest, however,
experienced above average temperatures, and IDACORP, Inc., and Avista Corp., in
particular, should have benefitted from the weather, although other factors likely held
back results.

As of the printing of this report, some of the utilities have yet to indicate when they
plan to release earnings results for the quarter. However, we believe the majority of
the utilities will report prior to the end of October to situate themselves to speak
freely at the upcoming Edison Electric Institute (EEI) Financial Conference to be held
in Florida from November 1-4.

Summary of 3Q’09 Utilities Earnings Estimates and Comparisons
Name Symbol
3Q'09 EPS
Estimate 3Q'08 Result
Current
Consensus
ALLETE, Inc. ALE $0.47 $0.85 $0.52
Avista Corp. AVA $0.06 $0.13 $0.09
Black Hills Corp. BKH $0.20* $0.51 $0.19
Hawaiian Electric Industries, Inc. HE $0.23 $0.44 $0.27
IDACORP, Inc. IDA $1.06 $1.14 $1.05
MDU Resources Group, Inc. MDU $0.38* $0.64 $0.43
MGE Energy, Inc. MGEE $0.65 $0.78 N/A
NorthWestern Corp. NWE $0.30 $0.35 $0.35
Otter Tail Corp. OTTR $0.24 $0.31 $0.29
Portland General Electric Co. POR $0.17 $0.00 $0.23
*Earnings from continuing operations Source: D.A. Davidson & Co. estimates, company reports, Thomson One

D.A. Davidson & Co.
2
• ALLETE, Inc. is scheduled to report 3Q’09 earnings on Friday, October 30th before
the market opens. A conference call with management will be held the same day at
10:00 AM EDT/7:00 AM PDT.
• 2010 guidance possible. If ALLETE’s utility subsidiary, Minnesota Power, has
filed its 2009 Minnesota Rate Case by October 30th, management expects to launch a
2010 EPS guidance range; otherwise, it will not initiate a 2010 forecast until after the
rate case is filed. Our 2010 EPS forecast is $2.60. This estimate assumes that by
January 1, 2010, Minnesota Power is accorded interim relief in its general rate case
and consummates the purchase of, and starts the rate recovery on, a 465-mile DC
transmission line, as well as experiences some rebound in electric demand from its
taconite producing customers.
• We are forecasting EPS of $0.47 for 3Q’09 versus $0.85 per share reported in the
same quarter a year ago, which included a $0.14 benefit from two IRS decisions.
The consensus estimate among three analysts is $0.52. Our full-year estimate for
2009 earnings is currently $2.10 per share, versus guidance of $2.00-$2.15 and a
$2.13 consensus estimate.
• Regulated Operations expected to provide the majority of quarterly EPS. We
are forecasting the Regulated Operations segment, consisting of the company’s
regulated utilities and investment in American Transmission Company (ATC), will
contribute EPS of $0.50, versus $0.66 in 3Q’08. Although equity earnings from the
company’s investment in ATC are expected to be higher, reduced sales due to the
recession and cool summer temperatures, and higher depreciation & interest
expenses will create a drag. Also contributing to the EPS decline is the dilutive
effect of an estimated 11% increase in outstanding shares due to the company’s
periodic issuance of equity program.
• Investments & Other segment likely to be a drag on results. We are projecting
that ALLETE’s Investments & Other segment, consisting of its real estate business
and nonregulated energy operations, will produce a 3Q’09 loss of $0.02 per share
versus earnings of $0.19 in 3Q’08. The year-ago result included the aforementioned
$0.14 per tax in tax benefits and modest real estate earnings, neither of which are
likely to recur in 3Q’09. Management has indicated it did not expect the real estate
segment to be a significant contributor or detractor to ALLETE’s earnings in 2009.
During 1H’09, the real estate business produced a $0.07 per share loss, and we
expect approximately the same amount of loss in 2H’09.
• We rate the stock NEUTRAL with a price target of $34, which combines an
estimated $3.50 per share real estate business value with a ~11.7x multiple of our
2010 forecast of non-real estate EPS of $2.60.

• Avista Corp. is scheduled to report 3Q’09 earnings on Wednesday, October 28th
before the market opens. A conference call with management will be held the same
day at 10:30 AM EDT/7:30 AM PDT. Also, we expect management will be
initiating EPS guidance for 2010, for which we have been carrying an estimate of
$1.70.
• We are forecasting overall EPS of $0.06 for 3Q’09, the seasonally lowest quarter,
versus $0.13 per share reported in the same quarter a year ago. The consensus of
three analysts is $0.09. Our full-year 2009 earnings estimate is currently $1.54 per
share, which compares to management’s guidance of $1.45-$1.60 and a consensus
estimate among five analysts of $1.56.
• Utility results held back by absence of tax benefit and likely ERM drag. We are
forecasting quarterly utility earnings of $0.04 versus $0.12 a year ago, when results
were helped by an income tax settlement (+$0.05) and a small Energy Recovery
Mechanism (ERM) benefit stemming from better-than-normal hydro conditions. As
is typical in the third quarter, the company should absorb ERM expenses in 3Q’09 as
favorable hydro conditions were absent this year (although natural gas prices for
thermal generation were lower). Also, the extended outage of Colstrip Unit 4, in
ALLETE, Inc. (ALE – NEUTRAL
- $33.84)
Avista Corp. (AVA – BUY -
$20.41)
D.A. Davidson & Co.
3
which Avista holds a 15% ownership interest, probably pushed up the ERM
absorption, as higher replacement power costs than are built into rates were likely
required.
• Boosts from rate relief and weather partially offset by recessionary drags.
Helping results should be a rate increase in Washington (+9.5%) that became
effective on January 1, 2009 and two rate increases in Idaho. New electric rates in
Idaho went into effect on October 1, 2008 (+12.0%) and August 1, 2009 (+5.7%).
We also expect benefits from a higher air conditioning load due to a 34% increase in
cooling-degree days from a year ago and from modest growth in customer accounts.
However, these benefits were likely offset by the recession’s impacts on electric
demand.
• Advantage IQ EPS likely to be flat. We are forecasting Avista’s utility bill
processing unit, Advantage IQ, will contribute $0.03 per share (rounded up from
2.62 cents), which is slightly improved from the year-ago quarter’s $0.02 (rounded
down from 2.47 cents). Although 3Q’09 operating revenues are likely higher in the
segment than a year ago due to Advantage IQ’s marketing efforts and the acquisition
of Ecos Consulting, Inc. on September 1st, results are likely to be held back by higher
operating expenses, amortizations of intangibles, lower revenues from interest on
customer float, and some customer and store-count attrition during the recession.
• We are maintaining a 12-18 month target price of $22, or ~13x our 2010 EPS
estimate of $1.70, and a BUY rating for total return prospects.

• Black Hills Corporation expects to report 3Q’09 earnings on Thursday or Friday,
October 29th or 30th. Typically, a conference call with management is held the
following business day at 11:00 AM EDT/8:00 AM PDT.
• We are forecasting EPS of $0.20 from continuing operations for the quarter
versus $0.51 per share reported in the same quarter a year ago and the $0.19
consensus of three analysts. Our full-year estimate for 2009 earnings from
continuing operations is $2.17 per share versus the $1.87 consensus estimate of four
analysts (earnings guidance has been suspended by this company during the current
transitional period).
• Earnings weakness expected from nonregulated businesses. We are forecasting a
21% decline in revenues from nonregulated operations compared to the year-ago
quarter, with the most significant decline coming from the oil & gas segment (-36%).
Production of natural gas has slowed considerably due to persistently low prices for
natural gas—the commodity the business depends on most.
• Earnings from utility segment likely to be down slightly. Black Hills’ regulated
electric and gas utility operations for the quarter will likely be the main earnings
contributors for the quarter ($0.17 per share), although electric volumes were likely
lower than a year ago ($0.20 per share) due to the mild summer temperatures and
weak economy.
• Our 12-18 month target price is $24, or 14.5x our 2010 EPS estimate of $1.66 per
share. Over the past decade, BKH has traded at a median 14.3x year-forward EPS
estimates. We continue to rate the stock NEUTRAL.

• We expect Hawaiian Electric Industries, Inc. (HEI) to report 3Q’09 earnings on or
about Monday, November 2nd before the market opens. A conference call with
management has not yet been scheduled.
• We are forecasting 3Q’09 EPS of $0.23 versus $0.44 reported a year ago and the
$0.27 per share (adjusted) consensus estimate of two analysts. Besides specific
reasons in each of the segments, the EPS decline is partially caused by an expected
8% increase in average common shares outstanding due to last December’s
secondary offering. Our full-year estimate for 2009 earnings is currently $0.84 per
share, versus a $0.92 (adjusted) consensus estimate of three analysts.
Black Hills Corp. (BKH –
NEUTRAL - $25.58)
Hawaiian Electric Industries, Inc.
(HE – UNDERPERFORM -
$18.61)
D.A. Davidson & Co.
4
• Utility earnings expected to be down sharply. Our 3Q’09 electric utility EPS
projection of $0.17 compares to $0.31 per share in 3Q’08. The decline in per share
earnings from the utility stems primarily from lower demand caused by recessionary
pressures and unrecovered costs due to delayed rate relief and absence of rate basing
of a new generating plant. High fuel oil prices a year-ago that were passed on to
electric users lowered 3Q’08 electric results by $3.2 million, or $0.04 per share. We
believe a tough recession has caused more of a reduction in usage than was caused a
year ago by high fuel prices, which have since subsided.
• We expect American Savings Bank to post 3Q’09 EPS of $0.11 versus $0.18 in
3Q’08. Although we anticipate a relatively mild decline in net interest income
compared to the year-ago quarter, our expectation of an earnings decline is based on
a significant increase in the bank’s provision for loan losses, which we forecast to be
$8.5 million versus $2.0 million a year ago, and other-than-temporary impairment of
$4.0 million versus none a year earlier.
• No material difference in “Other” segment earnings drag expected. The “Other”
segment is expected to continue to be a drag on earnings, matching the loss of $0.05
per share posted a year ago.
• We are maintaining an UNDERPERFORM rating due to a weak Hawaiian
economy, regulatory uncertainties, and less-than-desirable confidence in our 2010
EPS estimate of $1.75. Our target price for HE remains $16. This target is a
composite of ~12x our 2010 utility earnings of $1.22, plus the tangible book value of
the bank ($4.30), less parent company debt ($2.97).

• IDACORP, Inc. is scheduled to report 3Q’09 earnings on Thursday, October 29th
before the market opens. A conference call with management will be held on the
same day at 4:30 PM EDT/1:30 PM PDT.
• We are looking for EPS of $1.06, down from $1.14 a year ago. The consensus
estimate of three analysts is $1.05 per share. Our full-year estimate for 2009
earnings is $2.34 per share, versus the $2.37 consensus of five analysts.
• Utility results expected to be weaker than year-ago comparison. We expect
3Q’09 utility segment EPS of $1.04, down from $01.05 a year ago, driven primarily
by decreased volume due to recessionary pressures, partially offset by the benefit of
rate relief. In addition to slackening demand from the weak economy, we believe
weather conditions had an offsetting effect on retail power demand, as above average
summer temperatures likely boosted usage. However, this benefit was at least
partially offset by precipitation levels which were significantly better than last year,
likely resulting in a decrease in demand from irrigation customers.
• Our forecast of the non-regulated earnings contribution is $0.02 per share,
down from last year’s strong net contribution of $0.10, which was driven largely by
high prices and volumes at Bridger Coal.
• Maintaining rating and price target. We are maintaining our 12-18 month target
price of $29, or ~12x our 2010 EPS estimate of $2.39. At the current share price, we
are maintaining a NEUTRAL rating.

• MDU Resources Group, Inc. is scheduled to report 3Q’09 earnings on Friday,
October 30th before the market opens. A conference call with management will be
held the same day at 1:00 PM EDT/10:00 AM PDT.
• We are forecasting EPS from continuing operations of $0.38 for the quarter
versus $0.64 per share reported in the same quarter a year ago and the $0.43
consensus estimate of seven analysts. Our full-year estimate for 2009 earnings is
$1.24 per share, versus a wide guidance range of $1.05-$1.30 and a $1.24 consensus
estimate of nine analysts.
IDACORP, Inc. (IDA – NEUTRAL
- $28.81)
MDU Resources Group, Inc. (MDU
NEUTRAL - $21.12)
D.A. Davidson & Co.
5
• Natural gas & oil production remains weak. We are forecasting average realized
energy prices of $5.31/mcfe in 3Q’09 versus $9.39/mcfe a year ago, accompanied by
a 9.8% reduction in natural gas & oil production due to the current unfavorable
prices for the commodities and the company’s aims to remain cash flow positive in
the present environment. The resulting estimated earnings contribution from the
Natural Gas & Oil Production segment equates to approximately $0.09 per share
(~25% of our total 3Q’09 earnings forecast). In the same quarter a year earlier, the
natural gas & oil segment contributed $0.31 per share (49% of total earnings).
• Expecting weaker utility results. We expect earnings from the company’s Electric
segment to decline slightly ($0.03 per share, versus $0.04 a year ago), while earnings
from the Natural Gas Distribution division should post a loss of $0.05 per share,
compared to a $0.02 loss last year. Although gas utility revenues are expected to be
higher than they were last year, due primarily to the October 1, 2008 acquisition of
Intermountain Natural Gas, higher operating expenses will likely produce a greater
loss in the typical seasonal loss period.
• Earnings from Construction Services segment likely subsided. We are projecting
3Q’09 Construction Services revenues of $230 million, down from 3Q’08 revenues
of $329 million, translating into earnings of approximately $0.05 per share for the
quarter, versus $0.09 in 3Q’08. The estimated revenue decline is a function of
recessionary impacts, although we believe an improvement in future quarters as
many planned projects that have been waiting for federal stimulus money will likely
start to receive funding over the next 3-6 months.
• Other segments expected to be flat to up. We believe 3Q’09 earnings from
MDU’s remaining segments were held back by recessionary pressures. Our model
calls for EPS of $0.04 from the Pipeline & Energy Services segment (a penny above
3Q’08) and $0.20 contribution from Construction Materials & Contracting segment
(up two cents from last year).
• We are maintaining our current NEUTRAL rating and target price of $19,
which equates to 13.8x our 2010 EPS forecast.

• MGE Energy, Inc. is scheduled to report 3Q’09 earnings on Thursday, November 5th
during market hours. The company is not expected to conduct a conference call.
• We are forecasting EPS of $0.65 for the quarter versus $0.78 per share reported in
the same quarter a year ago. We are the only domestic sell-side research analyst
currently following MGEE. Our full-year 2009 EPS estimate is $2.25.
• Electric utility results likely to be lower. We are forecasting down earnings from
the electric utility as difficult economic conditions most likely weighed on electric
volumes. Also contributing to the earnings decline are the effects of a weak
wholesale power market and below-normal usage as temperatures in the region
remained below historical averages in each of the summer’s three months.
• Nonregulated and Transmission segments likely to show earnings growth. We
anticipate that the company’s ongoing capital investment in the Elm Road
Generating Station and its ownership interest in American Transmission Company
(ATC) will continue to show earnings growth. However, we note that the absence of
nonrecurring investment gains which were realized in the year ago quarter will likely
lead to lower other income for the period.
• Likely updates with quarterly report. Although MGEE does not hold a quarterly
conference call to discuss earnings, we will be looking for disclosures relating to the
construction disputes at the Elm Road Generating Station that may be discussed in
the Form 10-Q.
• We are maintaining our NEUTRAL rating and $37 price target, which equates to
15.2x our 2010 EPS estimate of $2.44.

MGE Energy, Inc. (MGEE –
NEUTRAL - $36.48)
D.A. Davidson & Co.
6
• NorthWestern Corp. is scheduled to report 3Q’09 earnings on Wednesday, October
28th before the market opens. A conference call with management will be held the
following day at 11:00 AM EDT/8:00 AM PDT.
• We are forecasting EPS of $0.30 for the quarter versus $0.35 per share reported in
the same quarter a year ago. Our estimate is the lowest of three analysts included in
the consensus estimate of $0.35 per share. Our full-year estimate for 2009 earnings
is $1.78 per share, versus guidance of $1.75-$1.85, which compares to the $1.74
consensus estimate of six analysts.
• Regulated utility revenues likely to be lower year-over-year. We believe that
earnings will be lower for the quarter as weak demand was the likely result of a weak
economy and cooler than normal summer temperatures. However, these drags have
likely been partially offset as the utility has been able to collect a return on its
ownership in Colstrip Unit 4, as the asset was included in regulated rate base at the
beginning of the year.
• Likely updates with quarterly report. On the earnings conference call hosted by
senior management, we hope to receive details about how the planned development
of the MSTI line has been affected by the recently-announced open season for Trans
Canada’s Chinook transmission line. We will also be listening for an update on the
filing of NorthWestern’s 2009 test year general rate case, which is expected to be
filed by the end of October.
• We are maintaining our BUY rating and $27 price target, which equates to 12.2x
our 2010 EPS estimate of $2.00 plus ~$2.50 per share present value of the
company’s net operating loss carryforward.

• Otter Tail Corporation is scheduled to report 3Q’09 earnings on Thursday, October
29th, after the market closes. The company is not expected to conduct an earnings
release conference call.
• We are forecasting 3Q’09 EPS of $0.24, compared to $0.31 a year ago and the
$0.29 consensus of three analysts. Weighing on the year-over-year comparison will
be an estimated 16% increase in outstanding shares primarily due to last September’s
secondary offering of 5.0 million shares. Our full-year estimate for 2009 earnings is
$0.82 per share, versus guidance of $0.70-$1.10 and the $0.88 consensus estimate of
three analysts.
• Decline in electric utility earnings likely. We expect the utility to contribute $0.18
versus $0.21 a year ago, with the decline mainly attributable to lower demand due to
a weak economy and mild summer temperatures, higher depreciation expense in
connection with the build out of the Ashtabula Wind Energy Center (placed into
service in late 2008), and the increase in share count. These negative pressures will
be partially offset by rate relief in Minnesota and North Dakota. Although the
company does not hold a quarterly conference call for investors, we will be seeking
an update on the utility’s plans to secure needed power in the future, which would
have been provided by the Big Stone II project that Otter Tail Power abandoned in
September.
• Manufacturing segment earnings expected to show continued weakness. We
expect break-even results from the manufacturing segment versus an earnings
contribution of $0.01 last year. Although revenues in this segment are expected to
be significantly lower year-over-year due to economic pressure on each of the
businesses in this segment, reductions in operating expenses associated with last
year’s expansion of DMI Industries’ manufacturing facilities and two waves of
workforce reductions in 1H’09 are expected to offset some of the manufacturing
segment’s earnings decline. We will be seeking an update on whether DMI
Industries has begun seeing an up-tick in order flow associated with the release of
federal stimulus funding.
• Other segments expected to be flat to up. We are forecasting EPS of $0.02 in
3Q’09 from the plastics segment (down from $0.05), and a contribution of $0.01
NorthWestern Corporation (NWE
BUY - $24.70)
Otter Tail Corporation (OTTR –
UNDERPERFORM - $24.32)
D.A. Davidson & Co.
7
from the health services segment (flat with last year), $0.04 per share from food
ingredient processing (versus a loss of $0.04 last year), and a $0.07 loss from
corporate and intersegment eliminations, versus a loss of $0.08.
• We are maintaining our 12-18 month target price of $16, which equates to ~13x
our 2010 EPS estimate of $1.23. We are maintaining an UNDERPERFORM
rating.

• Portland General Electric Co. is scheduled to issue details of its 3Q’09 earnings
report on Thursday, October 29th before the market opens. A conference call with
management will be held on the same day at 11:00 AM EDT/8:00 AM PDT.
• We are forecasting 3Q’09 EPS of $0.17, compared to breakeven results a year ago
(including a $0.41 charge associated with the Trojan refund order and a $0.07 write-
down of benefit plan assets) and the $0.23 per share consensus estimate of five
analysts. Our full-year estimate for 2009 earnings is $1.39 per share, which is flat
with last year and compares with a $1.40 consensus of eight analysts.
• Certain boosts and drags expected. In addition to the benefit of rate relief which
was granted in January, we are modeling a $4 million benefit from Senate Bill 408.
These benefits were likely offset by extended outages at Colstrip Unit 4 (of which
POR owns 20%) and the Boardman plant (65% owned). We believe the earnings
drags caused by these outages were likely compounded by a decline in demand for
electricity, as the Oregon economy has remained very weak. Although summer
temperatures were warmer than normal and air conditioning load has been growing
over time, we do not believe weather was a major 3Q’09 factor.
• We are maintaining our NEUTRAL rating and target price of $19, which
equates to ~10.6x our 2010 EPS forecast.

Portland General Electric Co.
(POR – NEUTRAL - $20.04)
D.A. Davidson & Co.
8
Table 1: D. A. DAVIDSON UTILITY COVERAGE COMPARISON

Company Name Symbol Rating Stock Price
10/14/09
Target Price
(12-18 month)
Market Value
($Millions)
2008 EPS 2009E EPS 2010E EPS PE '08 PE '09E PE '10E PE '10E to 10-yr
median P/E of
yr. fwd. estimate
Price/ Book
Value
Price/ Tangible
Book Value
Dividend Yield % on
2009E Dividend
Estimated 2009
Payout Ratio %
2009E EBITDA
($Millions)
Ratio of EBITDA to
Interest/Pfd. Expense
2009E
Price/ 2009E EBITDA
Ratio
Total Debt / Total Capital
%
EV/EBITDA (2009E)Return on Average
Equity (ttm)
Return on Average
Assets (ttm)
ALLETE INCORPORATED1 ALE N $33.84 34.00 $1,154 2.82 2.10 2.60 11.0 13.5 11.7 88% 1.30 1.30 5.2% 84% $178 5.3 5.8 41.7% 9.1 9.7% 4.0%
AVISTA CORPORATION AVA B $20.41 22.00 $1,116 1.36 1.54 1.70 15.0 13.3 12.0 82% 1.07 1.11 4.1% 55% $300 4.5 3.7 45.7% 6.5 8.1% 2.4%
BLACK HILLS CORPORATION BKH N $25.58 24.00 $903 -1.37 2.17 1.66 NA 11.8 15.4 107% 0.84 1.28 5.6% 66% $272 3.1 3.3 48.6% 6.6 -2.6% -0.9%
HAWAIIAN ELECTRIC INDUSTRIES HE U $18.61 16.00 $1,704 1.48 0.84 1.75 12.6 22.2 10.6 73% 1.22 1.29 6.7% 148% $344 4.7 5.0 53.6% 9.1 6.6% 1.0%
IDACORP INCORPORATED IDA N $28.81 29.00 $1,362 2.17 2.34 2.39 13.3 12.3 12.1 82% 1.03 1.03 4.2% 51% $342 4.6 4.0 52.2% 8.2 8.3% 2.7%
MDU RESOURCES GROUP INC MDU N $21.12 19.00 $3,885 2.05 1.24 1.38 10.3 17.1 15.3 111% 1.62 2.22 2.9% 50% $777 8.9 5.0 40.9% 7.1 13.6% 5.6%
MGE ENERGY INC3 MGEE N $36.48 37.00 $843 2.38 2.25 2.44 15.3 16.2 14.9 78% 1.71 1.71 4.0% 64% $134 9.8 6.3 42.7% 8.9 11.4% 4.5%
NORTHWESTERN CORPORATION2,3 NWE B $24.70 27.00 $888 1.77 1.78 2.00 12.6 12.5 11.1 80% 1.04 1.93 5.4% 75% $256 3.2 3.1 54.1% 6.5 7.9% 2.4%
OTTER TAIL CORPORATION3 OTTR U $24.32 16.00 $865 1.09 0.82 1.23 22.4 29.7 19.8 125% 1.30 1.65 4.9% 145% $129 4.8 6.7 43.9% 10.9 5.0% 1.8%
PORTLAND GENERAL ELECTRIC POR N $20.04 19.00 $1,506 1.39 1.39 1.79 14.4 14.4 11.2 84% 0.98 1.12 4.9% 71% $445 4.4 3.4 50.8% 6.8 4.8% 1.4%
Median -- 10 Regional/Diversified Utilities $25 $1,135 1.48 1.54 1.75 13.3 14.0 12.0 83% 1.14 1.30 4.9% 68% 4.7 4.5 47.2% 7.6 8.0% 2.4%
Mean -- 10 Regional/Diversified Utilities $25 $1,423 1.62 1.66 1.77 14.1 16.3 13.4 91% 1.21 1.46 4.8% 81% 5.3 4.6 47.4% 8.0 7.3% 2.5%
2Stock price used in P/E , P/EBITDA, and EV/EBITDA ratios has been adjusted downward by $2.50 for valuation of net operating loss (NOL).3D.A. Davidson & Co. makes a market in this security.
B = BUY; N = NEUTRAL; U = UNDERPERFORM
Sources: Company reports and D.A. Davidson & Co. estimates
D.A. DAVIDSON UTILITY COVERAGE COMPARISON
1For purposes of calculating P/E, P/EBITDA, and EV/EBITDA ratios, the stock price of ALE has been reduced by our $3.50/sh point estimate of the value of ALLETE Properties. Our 2009 EPS estimate removes a $0.14 per share loss from this segment and we assume no contribution from this business in

D.A. Davidson & Co.
Two Centerpointe Drive, Suite 400 • Lake Oswego, Oregon 97035 • [phone] • [phone] • www.dadavidson.com
Copyright D.A. Davidson & Co., 2009. All rights reserved.
9
Required Disclosures
D.A. Davidson & Co. expects to receive, or intends to seek, compensation for investment banking services from the companies
mentioned in this report in the next three months.
D.A. Davidson & Co. is a full service investment firm that provides both brokerage and investment banking services. James L.
Bellessa, Jr., CFA and Michael Bates the research analysts principally responsible for the preparation of this report, will receive
compensation that is based upon (among other factors) D.A. Davidson & Co.’s investment banking revenue. However, D.A.
Davidson & Co.’s analysts are not directly compensated for involvement in specific investment banking transactions.
We, James L. Bellessa, Jr., CFA and Michael Bates, attest that (i) all the views expressed in this research report accurately reflect our
personal views about the common stock of the subject company, and (ii) no part of our compensation was, is, or will be, directly or
indirectly, related to the specific recommendations or views expressed in this report.

Ratings Information

D.A. Davidson & Co. Ratings Buy Neutral Underperform
Risk adjusted return potential x Over 15% total return
expected on a risk adjusted
basis over next 12-18 months
>0-15% return potential
on a risk adjusted basis
over next 12-18 months
Likely to remain flat or lose
value on a risk adjusted basis
over next 12-18 months
Distribution of Ratings (as of 9/30/09) Buy Hold Sell
Corresponding Institutional Research Ratings Buy Neutral Underperform
and Distribution 48% 45% 7%
Corresponding Private Client Research Ratings Outperform Market Perform Underperform
and Distribution 78% 22% 0%
Distribution of Combined Ratings 51% 43% 6%
Distribution of companies from whom D.A. Davidson & Co. has received compensation for investment banking services in last 12 mos.
Institutional Coverage 8% 3% 13%
Private Client Coverage 0% 0% 0%
Distribution of Combined Investment Banking 7% 3% 13%

D.A. Davidson & Co.’s Institutional Research Rating Scale (maintained since 7/9/02): Buy, Neutral, Underperform

Target prices are our Institutional Research Department’s evaluation of price potential over the next 12-18 months and 5 years, based
upon our assessment of future earnings and cash flow, comparable company valuations, growth prospects and other financial criteria.
Certain risks may impede achievement of these price targets including, but not limited to, broader market and macroeconomic
fluctuations and unforeseen changes in the subject company’s fundamentals or business trends.

For a copy of the most recent report containing all required disclosure information for covered companies referenced in this report,
please contact your D.A. Davidson & Co. representative or call 1-800-755-7848.

Other Disclosures
Information contained herein has been obtained by sources we consider reliable, but is not guaranteed and we are not soliciting any
action based upon it. Any opinions expressed are based on our interpretation of data available to us at the time of the original
publication of the report. These opinions are subject to change at any time without notice. Investors must bear in mind that inherent
in investments are the risks of fluctuating prices and the uncertainties of dividends, rates of return and yield. Investors should also
remember that past performance is not necessarily an indicator of future performance and D.A. Davidson & Co. makes no guarantee,
express or implied, as to future performance. Investors should note this report was prepared by D.A. Davidson & Co.’s Institutional
Research Department for distribution to D.A. Davidson & Co.’s institutional investor clients and assumes a certain level of investment
sophistication on the part of the recipient. Readers, who are not institutional investors or other market professionals, should seek the
advice of their individual investment advisor for an explanation of this report’s contents, and should always seek such advisor’s advice
before making any investment decisions. Further information and elaboration will be furnished upon request.