COC Utility Monthly 06-01-11.pdf

Please refer to page 12 of this report for detailed disclosure and certification information.
INDUSTRY UPDATE
Institutional Equity Research

June 9, 2011 Utility Monthly

Prices: (6/8/11)

Industry:
Utilities

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

Michael Bates
Research Associate
406.791.7216
[e-mail]

Utility CFO Day Recap

• Our BUY-rated utilities are Alliant Energy Corp., IDACORP, Inc., NorthWestern
Corp., and Westar Energy.
• Since publishing our last Utility Monthly, we initiated coverage on Westar Energy,
Inc. with a BUY rating and raised our rating for NorthWestern Corp. from Neutral
to BUY.
• General rate cases were recently filed by the utility subsidiaries of Avista Corp.,
IDACORP, NorthWestern Corp., and Xcel Energy.
• A final order was handed down by regulators in Minnesota Power’s general rate
case. This ALLETE Inc. utility was authorized an annual revenue increase of
$53.5 million (+11.6%), with new rates taking effect on June 1st.
• Snow water equivalents in key drainages for hydrogeneration used by Avista
Corp., IDACORP, Inc., and Portland General Electric remain far above normal
levels, which has forced the BPA to curtail power generated from both thermal
power plants and wind farms in the Northwest.
• NorthWestern Corp. filed for regulatory approval to purchase and operate the 40
MW Spion Kop Wind Project in Central Montana.

On May 26th we held the D.A. Davidson 2011 Utility CFO Day in Portland, Oregon.
The conference featured presentations by CFOs of investor-owned utilities in our
universe in the Northwest (Avista Corp., IDACORP, Inc., NorthWestern Corp.,
Portland General Electric Co.) and Hawaiian Electric Industries, Inc.

Capital spending remains a focus. Utilities within the group continue to project
significant capital spending opportunities over the next 3-5 years, driven largely by
new power generation, environmental retrofits, and transmission system upgrades. As
shown in Table 5 at the end of this report, we expect NorthWestern Corp.’s capital
spending program through 2013 to be the most aggressive within the group presenting
at the conference, totaling 69% of its current market cap (versus the 46% average
under our coverage). We note that Portland General Electric’s announced capital
spend currently equates to 37% of its market cap, but this number could increase
materially if/when its three generation RFPs, with self-build options, are selected.

Keynote speaker from BPA. The keynote speaker at the conference was Syd
Berwager from the Bonneville Power Administration (BPA), which controls the majority
of the region’s hydroelectric dams and high-voltage transmission system. BPA has
been under fire recently by owners of renewable energy generation assets (including
Portland General Electric) due to its decision to curtail production from wind farms
during off-peak hours in response to near-record spring runoff, which prevented the
owners from banking the Renewable Energy Credits (RECs) and Production Tax
Credits (PTCs) they would have received had there been no curtailments.

Best ideas coming out of the conference. We continue to view IDACORP, Inc. and
NorthWestern Corp. as the most attractive investment opportunities among the
companies presenting, given their strong prospects to grow rate base and receive
adequate regulatory treatment when they seek recovery of and return on these
investments. The recent repeal of Oregon’s SB408 tax law has also led us to a more
favorable bias toward Portland General Electric. Please see our most recent reports
for more information.
D.A. Davidson & Co.
2

On June 1st IDACORP, Inc. filed an application with the Idaho Public Utilities Commission
(IPUC) to increase base rates in that state by ~$83 million (+9.9%) per year. The rate request
is based on a 51.2% equity capital structure, a 10.5% allowed ROE, and a regulated rate base
valued at $2.4 billion. The general rate increase is intended to provide the utility recovery of
over $450 million of infrastructure investments since its last general rate case. This is the
utility’s first general rate case filing since reaching a rate settlement in January 2010 which
included a moratorium on additional general rate increases until January 1, 2012.

*****

On June 1st Xcel Energy filed for regulatory approval for a $21.9 million (+3.8%) increase in
electric rates and an $8.1 million (+6.6%) increase in gas rates for customers in its Wisconsin
service territory. The majority of the request is related to recovery of capital spent to enhance
its generation and distribution systems in that state, with the balance being driven by higher
operating and maintenance costs. Although this year’s filing is limited in scope (not requesting
a change to the allowed ROE, capital structure, etc.), the utility indicated that it is likely to file a
full rate case next year to secure recovery of its ongoing capital projects. The Public Service
Commission of Wisconsin (PSCW) is expected to issue its final order in the case in December,
with new rates taking effect on January 1, 2012.

*****

On May 16, 2011 Avista Corp. filed an application with the Washington Utilities and
Transportation Commission (WUTC) to increase annual electric and gas utility rates by
~$38.3 million (+8.7%) and $6.2 million (+4.0%), respectively, for its customers in that
jurisdiction. The rate request is based on a 48.04% equity capital structure, a 10.9% allowed
ROE, and a combined regulated rate base valued at $1.3 billion ($1.1 billion electric and
$200 million gas). The WUTC has up to 11 months to review the filings and issue a decision.

*****

On May 24th the Minnesota Public Utilities Commission’s (MPUC) issued a final order in the
general rate case filed by ALLETE’s primary subsidiary, Minnesota Power. The utility was
authorized an annual revenue increase of $53.5 million (+11.6%), with new rates taking effect
on June 1st. This compares to the utility’s original request for an increase of $71.9 million
(+16.8%) and an interim increase of $48.5 million (+11.3%). The MPUC also authorized the
utility a 10.38% ROE, a 54.3% equity capital structure, and a rate base valued at $1.0 billion.

On June 1st NorthWestern Corp. filed for approval from the Montana Public Service
Commission (MPSC) to purchase and operate the 40 MW Spion Kop Wind Project in central
Montana. If the transaction is approved, the yet-to-be-developed wind farm (being developed
by Compass Wind) and related infrastructure would be included in the utility’s rate base at an
expected value of $86.1 million. If approved, the wind farm is expected to begin commercial
operation by year-end 2012.

*****

On June 7th the Montana Supreme Court ruled that the state’s newly-passed law clarifying the
authority of utilities to exercise eminent domain should be used to determine whether and how
companies can condemn property. The decision related to a state district judge’s ruling last
year that that state law didn't explicitly give the developer of the Montana-Alberta Tie Line
(MATL) that power. (A construction services subsidiary of MDU Resources Group is acting
as lead contractor for the project.) The decision also has positive implications for
NorthWestern Corp., which aspires to develop several high-voltage transmission lines in the
state, including the Mountain States Transmission Intertie (MSTI) and a wind collector system.

On May 24th Oregon Governor John Kitzhaber signed SB 967 into law, effectively repealing
2005’s controversial state income tax law, SB 408. The law has had mixed results for utilities
in Oregon, with Northwest Natural Gas Co. recording a surcharge (benefit) every year since
its passage. On the other hand, the law’s effect on Portland General Electric has been more
unpredictable and resulted in material earnings drags in some years.

Rate Case Developments
Capital Projects
Other Developments
D.A. Davidson & Co.
3
Importantly, SB 967 requires utilities to reverse amounts accrued for the 2010 and 2011 tax
years, which is expected to result in Northwest Natural Gas’ recognition of a one-time after tax
charge of ~$4.4 million ($0.17 per share) related to amounts earned in 2010, taking GAAP
earnings below the company’s previously stated EPS guidance range of $2.45-$2.65, to $2.28-
$2.48.

*****

In late May it was announced that utility subsidiaries of ALLETE and Integrys Energy Group
had entered into power supply agreements with Manitoba Hydro, which is planning
construction of the 695 MW Keevask hydroelectric facility on the lower Nelson River with an
accompanying high-voltage transmission line. Under the agreements, 250 MW will be
allocated to ALLETE between 2020 and 2035 and 100 MW to Integrys’ Wisconsin Public
Service subsidiary between 2021 and 2027 (Integrys has the option of expanding its contract
to 500 MW). Both supply agreements are subject to regulatory approval in both Canada and
the U.S.

Another noteworthy aspect of ALLETE’s agreement is a quasi-energy storage provision
allowing its Minnesota Power subsidiary to send power into Manitoba’s system during times of
excess production at its wind farms, in return for access to hydro power from the Manitoba
system when wind production subsides.

D.A. Davidson & Co.
4

As displayed in Table 1, temperatures in 2Q’11 have been colder than normal and colder than
the same period last year in the territories served by utilities under our coverage, which
generally bodes well for demand. This is particularly true for gas distributors, though this
benefit could be offset in some cases by the fact that revenues for several gas utilities within
our coverage universe are weather normalized or decoupled.

Table 1: Heating Degree Day* Data (HDD) – 2Q’11 QTD Totals
Parent Company & Utility Location
ALLETE, Inc. (ALE)
Minnesota Powe Duluth, MN 465 10% 35% 1235 2% 36%
Alliant Energy, Inc. (LNT)
Interstate Power & Light Cedar Rapids, IA 215 19% 8% 738 12% 52%
Wisconsin Power & Light Madison, WI 297 14% 40% 869 4% 49%
Avista Corp. (AVA)
Avista Utilities Spokane, WA 402 19% -4% 1094 22% 15%
Black Hills Corp. (BKH)
Black Hills Power Rapid City, SD 436 39% 4% 1067 18% 11%
Cheyenne Light Fuel & Power Cheyenne, WY 544 31% 7% 1225 11% 4%
Black Hills Energy - Colorado Electric & Gas Colorado Springs, CO 335 7% 5% 824 -7% 1%
Black Hills Energy - Iowa Gas Des Moines, IA 159 4% 1% 558 -6% 50%
Black Hills Energy - Kansas Gas Wichita, KS 113 27% 33% 319 -18% 36%
Black Hills Energy - Nebraska Gas Lincoln, NE 171 11% -13% 570 -2% 18%
IDACORP, Inc. (IDA)
Idaho Power Company Boise, ID 297 21% -16% 848 22% 3%
Integrys Energy Group, Inc. (TEG)
Peoples Gas Light and Coke Co. Chicago, IL 271 17% 51% 786 6% 56%
Wisconsin Public Service Corp. Green Bay, WI 335 11% 41% 1014 8% 49%
MDU Resources Group, Inc. (MDU)
Cascade Natural Gas Co. Tri Cities, WA 263 38% -9% 774 37% 18%
Great Plains Natural Gas Co. Fergus Falls, MN 313 4% 6% 1083 0% 26%
Intermountain Natural Gas Boise, ID 297 21% -16% 848 22% 3%
Montana-Dakota Utilities Co. Bismarck, ND 382 25% 9% 1122 16% 29%
MGE Energy, Inc. (MGEE)
Madison Gas & Electric Co. Madison, WI 297 14% 40% 869 4% 49%
Portland General Electric Co. (POR)
Portland General Electric Portland, OR 321 32% 8% 821 28% 15%
Northwest Natural Gas Co. (NWN)
NW Natural Portland, OR 321 32% 8% 821 28% 15%
NorthWestern Corp. (NWE)
NorthWestern Energy Billings, MT 453 45% 13% 1111 25% 19%
NorthWestern Energy Great Falls, MT 454 11% -15% 1223 15% 3%
NorthWestern Energy Sioux Falls, SD 280 16% -4% 905 12% 36%
Otter Tail Corp. (OTTR)
Otter Tail Power Co. Fargo, ND 321 18% 18% 989 7% 46%
Questar Corp. (STR)
Questar Corp. Salt Lake City, UT 355 65% -2% 928 40% 11%
Westar Energy, Inc. (WR)
Westar Energy, Inc. Topeka, KS 138 30% 13% 394 -11% 33%
Xcel Energy, Inc. (XEL)
NSP-Minnesota Minneapolis, MN 229 3% 9% 785 0% 56%
NSP-Wisconsin Eau Claire, WI 290 10% 16% 926 7% 49%
PSCo Denver, CO 367 37% 5% 855 8% 0%
SPS Clovis, NM 91 14% -1% 242 -30% -30%
% From
Average
May
Total
% From
2010
% From
Average
2Q'11
QTD
% From
2010
Source: National Weather Service’s Climate Prediction Center

In terms of cooling degree days (see Table 2) second quarter temperatures in the service
territory of Hawaiian Electric Industries have remained close to those recorded last year,
being 9%-16% warmer than the historical average.

Table 2: Cooling Degree Day* Data (CDD) – 2Q’11 QTD Totals
Hawaiian Electric Industries, Inc. (HE)
Hawaiian Electric Co. Honolulu, HI 433 14% 2% 808 16% 5%
Maui Electric Co. Kahului, HI 362 10% -2% 663 9% -1%
Hawaiian Electric Light Co. Hilo, HI 286 7% -6% 538 10% 4%
Parent Company / Utility Location
% From
AverageMay Total
% From
2010
% From
Average
2Q'11
QTD
% From
2010
Source: National Weather Service’s Climate Prediction Center
May and 2Q’11 QTD Temperature
Data Point to Healthy Demand for
Utilities
D.A. Davidson & Co.
5

As displayed in Figure 1, the National Weather Service is forecasting hot temperatures
between June and August this year in the southern and Rocky Mountain regions of the
country, which bodes well for the electric utility operations of Black Hills and Xcel Energy’s
PSCo and SPS subsidiaries (based in Colorado and New Mexico, respectively), as well as the
southern portion of IDACORP’s territory. In contrast, the current forecast calls for below-
normal temperatures in portions of the Great Lakes and Great Plains regions, which could
have a negative impact on ALLETE, Alliant Energy, MGE Energy, Otter Tail, Corp.,
Integrys Energy Group, and Xcel Energy’s Northern States Power subsidiaries (serving
Minnesota, Wisconsin, and eastern portions of the Dakotas) if the forecast is accurate.

Figure 1: Jun-Jul-Aug 2011 Official Temperature Forecast

33% to 40% Chance of Above Normal Temperature 33% to 40% Chance of Below Normal Temperature
40% to 50% Chance of Above Normal Temperature 40% or Greater for Below Normal Temperature
50% or Greater for Above Normal Temperature Means Equal Chances for Above, Normal, or Below Normal Temperature Source: National Weather Service Climate Prediction Center
3-Month Temperature Forecast
Calls for a Mixed Comparison
D.A. Davidson & Co.
6

Heavy precipitation levels through most of 1H’11 have been a major departure from 2010’s
mostly dry winter, which brought relatively light levels of precipitation in the Northwestern
region. As of June 3rd, and as seen in Figure 2, the snow water equivalents in key drainages
for hydrogeneration used by Avista Corp., IDACORP, Inc., and Portland General Electric
remain far above normal levels. This has created problems for the Bonneville Power
Administration (BPA), which markets power from federal dams and controls the majority of the
region’s high-voltage transmission system. The near-record spring runoff within BPA’s hydro
system had led to a decision to sharply curtail production from thermal power plants, and to
turn off wind farms during off-peak hours. Wind farm owners have challenged BPA]s decision
to curtail production from their renewable power facilities, as the curtailments eliminated the
assets’ ability to earn Renewable Energy Credits (RECs) and Production Tax Credits (PTCs).

Figure 2: Western Region Snow Water Equivalents Remain Far Above Normal Levels

Source: United States Department of Agriculture
The Northwest River Forecast Center’s projection released on June 2nd calls for streamflows in
the Northwest to be far above normal through the spring and summer months of 2011, as seen
in Table 3. Streamflows in the region are expected to show a significant improvement over
2010’s hydrogeneration season, which had an extremely slow start but gradual recovery to
near-normal levels by the end of the year.

Table 3: Streamflow Projections for Key Hydrogeneration Measurement Locations
Location of Forecasted % Forecast as %
Company Streamflow Forecast Period of Normal - 6/2/11 of Prior-Year Steamflows
Avista Corp. Coeur d'Alene Lake Inflow, ID April-July 165% 204%
Avista Corp. Whitehorse Rapids, ID April-Sept. 152% 197%
IDACORP, Inc. Brownlee Reservoir Inflow April-July 176% 242%
Portland General Electric Grand Coulee, WA April-Sept. 125% 156%
Portland General Electric Clackamas River, OR April-Sept. 128% 106%
Portland General Electric Deschutes River, OR April-Sept. 122% 148%
Portland General Electric The Dalles, OR April-Sept. 133% 158% Source: National Weather Service Northwest River Forecast Center

Hydrogeneration Outlook
D.A. Davidson & Co.
7

The upper portion of Chart 1 depicts an overall ~49% advance in the price of FactSet’s market-
weighted index of 100 domestic investor-owned utilities since reaching a trough in early 2009.
The middle portion of the chart depicts the group’s 14.4x P/E ratio on year-forward earnings
estimates, or half a multiple point below the 5-year average. The bottom panel of Chart 2
shows utilities trading at a 12% premium P/E valuation relative to the S&P 500. Although this
is above the 5-year average relative valuation of parity with the broad index, it represents a
return to the premium accorded to the group prior to the 2009-2010 period.

Chart 2 provides two additional measurements of value (EV/EBITDA and P/BV), showing that
utility valuations have risen moderately above the 5-year average 8.0x EV/EBIDTA multiple but
remain below the 1.8x average P/BV.

As shown in the top panel of Chart 3, the sector’s current average dividend yield of 4.1%
remains above the 5-year average of 3.6%. The bottom panel depicts the yield of the utility
group relative to the yield of the S&P 500 is currently at ~2.2x. After a prolonged relative
downtrend, utilities’ relative yields trended upward through 2009 until turning sideways early in
the second quarter of 2010 and leaving the current relative yield near the 5-year high.

As depicted in Chart 4, yields in the group relative to 5-year Treasury Bonds sharply improved
from mid-2007 to the end of March 2009, due to the flight to quality during the worldwide
financial crisis, reaching 203% of parity with T-bonds in December 2008, when the flight to
quality left the yield on T-bonds at their lowest level since the U.S. Treasury started selling
them. The current 134.7% relative yield for the sector compares to the 5-year average of
102%.

150
200
250
300
350
400
Utilities
09-Jun-2006 to 08-Jun-2011 (Weekly) High: 388.51 Low: 203.66 Latest: 304.30
Price (USD)
5
10
15
20 Average: 14.8 High: 18.8 Low: 9.5 Latest: 14.4
Price to Earnings - FY1
'06 '07 '08 '09 '100.6
0.8
1
1.2
1.4
©FactSet Research SystemsData Source: FactSet Aggregates, FactSet Aggregates,
Average: 1.00 High: 1.20 Low: 0.69 Latest: 1.12
Price to Earnings - FY1 - Relative to S&P 500
Source: FactSet
Valuation Metrics
Chart 1: Utility Price Index,
Forward P/E Ratios, and P/E
Relative to the S&P 500
D.A. Davidson & Co.
8

6
6.5
7
7.5
8
8.5
9
9.5
Utilities
09-Jun-2006 to 08-Jun-2011 (Weekly) Average: 8.0 High: 9.2 Low: 6.6 Latest: 8.3
Enterprise Value to EBITDA
'06 '07 '08 '09 '101
1.2
1.4
1.6
1.8
2
2.2
2.4
2.6
©FactSet Research SystemsData Source: , FactSet Aggregates
Average: 1.8 High: 2.5 Low: 1.1 Latest: 1.5
Price to Book
Source: FactSet

2
2.5
3
3.5
4
4.5
5
5.5
6
Utility
09-Jun-2006 to 08-Jun-2011 (Weekly) Average: 3.6 High: 5.5 Low: 2.4 Latest: 4.1
Dividend Yield
'06 '07 '08 '09 '101.2
1.4
1.6
1.8
2
2.2
2.4
©FactSet Research SystemsData Source: FactSet Aggregates,
Average: 1.76 High: 2.31 Low: 1.25 Latest: 2.15
Dividend Yield - Relative to S&P 500
Source: FactSet
Chart 2: Utility Ratios of
EV/EBITDA and P/BV
Chart 3: Utility Dividend Yields and
ield Relative to Yield on S&P 500

D.A. Davidson & Co.
9
'06 '07 '08 '09 '1040%
60%
80%
100%
120%
140%
160%
180%
200%
220%
Utility Industry Yield Relative to 10-Year T-Bond Launch full data release
Max: 208.15Min: 50.50Last: 134.73
FDSAGG United States / Utilities -SEC - Dividend Yield / US Treasury Constant Maturity - 10 Year - Yield * 100
Source: FactSet
Chart 4: Utility Dividend Yield
Relative to Yield on U.S. 10-Year
Treasury Bonds
D.A. Davidson & Co.
10

Table 4: D.A. Davidson Utility Coverage Relative Performance
Price Price Ex-Dividend Monthly Year-to-Date
12/31/2010 5/31/2011 in May Total Return Total Return
ALLETE, Inc. (ALE) $35.26 $39.88 $0.45 -0.4% 14.4%
Alliant Energy Corporation (LNT) 36.77 41.13 4.0% 11.9%
Avista Corp. (AVA) 22.52 24.93 0.28 3.5% 11.9%
Black Hills Corporation (BKH) 30.00 31.02 0.37 -9.7% 4.6%
Hawaiian Electric Industries (HE) 22.79 24.83 0.31 -1.4% 10.3%
IDACORP, Inc. (IDA) 36.98 39.37 0.30 1.2% 7.3%
Integrys Energy Group, Inc. (TEG) 48.51 52.34 0.68 1.3% 9.3%
ITC Holdings Corp. (ITC) 61.98 72.29 0.34 2.4% 17.2%
MDU Resources Group, Inc. (MDU) 20.27 23.63 -1.1% 16.6%
MGE Energy, Inc. (MGEE) 42.76 41.64 0.38 0.0% -1.7%
Northwest Natural Gas Co. (NWN) 46.47 45.17 -2.3% -2.8%
NorthWestern Corporation (NWE) 28.83 33.07 1.6% 14.7%
Otter Tail Corp. (OTTR) 22.54 21.92 0.30 -5.0% -1.4%
Portland General Electric Co. (POR) 21.70 25.97 4.0% 19.7%
Questar Corp. (STR) 17.41 17.33 -1.4% -0.5%
Westar Energy, Inc. (WR) 25.16 27.19 -0.1% 8.1%
Xcel Energy Inc. (XEL) 23.55 24.74 1.7% 5.1%
Median 0.0% 9.3%
Mean -0.1% 8.5%
Dow Jones Industrial Average (.DJIA) $11,577.51 $12,569.79 $41.45 -1.6% 8.9%
Standard & Poors 500 (.SPX) 1,257.64 1,345.20 2.95 -1.1% 7.2%
Dow Jones Utility Average (.UTIL) 404.99 436.37 2.42 2.3% 8.3%
FactSet U.S. Utilities Index 1,158.70 1,262.25 0.6% 8.9%
FactSet U.S. Electric Utilities Index 1,151.63 1,256.66 1.8% 9.1%
FactSet U.S. Gas Utilities Index 986.33 1,080.78 -2.4% 9.6% 1Prices for Questar Corp. prior to 7/1/10 are adjusted for the spin-off of QEP Resources.
*Ex-Dividend amount incorporated in index
Sources: Bloomberg and SNL Interactive

As shown in Table 4, FactSet’s broad index of 100 utilities advanced 0.6% on a total return
basis in May, compared to declines of 1.6% and 1.1% by the Dow Jones Industrials and the
S&P 500, respectively. The average return by our universe of mostly small to mid-cap utilities
generally outperformed these benchmarks by posting flat average monthly returns, with the
best performers being Alliant Energy, Inc. (+4.0%) and Portland General Electric (+4.0%).
This performance by two mostly plain vanilla utilities stands in contrast to declines in the stock
of Black Hills Corp. (-9.7%), and Otter Tail Corp. (-5.0%), which have diversified business
structures.

Leading our coverage universe from a year-to-date total return perspective are Portland
General Electric Co., ITC Holdings Corp., and MDU Resources Group, Inc., which have
risen 19.7%, 17.2%, and 16.6%, respectively, through May 31, 2011. We attribute the strong
performance of these companies’ shares relative to their peers to their above average
prospects to grow their asset bases and earnings despite the prevailing uncertainties on the
regulatory and economic fronts.

As depicted in Table 5, the mean 2012 price-earnings ratio has declined to 13.8x, down from
14.2x on April 4th (the pricing date of our last utility monthly), while the mean EV/EBITDA ratio
based on our 2012 forecast and the average current dividend yield in our coverage universe
are currently 7.5x and 4.2%, respectively. Otter Tail Corp. sports the highest yield in the
group (currently 5.7%) with a payout ratio of 87.2% of our asset sale gain-assisted 2011
earnings projection.

Relative Performance
D.A. Davidson & Co.
11
Table 5: D.A. Davidson & Co. Utilities Comparison

Price EPS EPS EPS P/E P/E P/E
6/8/11 2010 2011E 2012E 2010 2011E 2012E
ALLETE Inc.1,2 ALE N $38.53 $41.00 $1.4 $2.31 $2.60 $2.65 15.4 13.7 13.4 94% 1.3 43.9% $1.78 4.6% 69% 8.8% 3.4% 29% 19% 8.8 8.5
Alliant Ener Corp.1 LNT B $40.00 $44.00 $4.4 $2.75 $2.95 $3.05 14.5 13.5 13.1 106% 1.5 46.4% $1.70 4.3% 58% 11.6% 3.6% 65% 39% 8.3 8.0
Avista Corp.1 AVA N $24.23 $26.00 $1.4 $1.65 $1.80 $1.92 14.7 13.4 12.6 96% 1.2 49.9% $1.10 4.5% 61% 8.3% 2.5% 31% 18% 6.9 6.5
Black Hills Corp.1 BKH N $29.28 $32.00 $1.2 $1.81 $1.82 $2.49 16.2 16.1 11.7 85% 1.0 57.0% $1.46 5.0% 80% 6.2% 1.9% 79% 35% 7.7 6.2
Hawaiian Electric Industries, Inc.1 HE N $23.73 $25.00 $2.3 $1.21 $1.41 $1.83 19.6 16.9 12.9 93% 1.5 52.4% $1.24 5.2% 88% 7.8% 1.3% 24% 15% 8.0 7.0
IDACORP Inc.1 IDA B $38.56 $44.50 $1.9 $2.95 $2.86 $3.00 13.1 13.5 12.8 94% 1.2 50.2% $1.20 3.1% 42% 9.6% 3.2% 30% 17% 8.9 8.0
Integrys Energy Group, Inc.1 TEG N $50.45 $50.00 $3.9 $3.13 $3.30 $3.53 16.1 15.3 14.3 108% 1.3 43.8% $2.72 5.4% 82% 8.6% 2.5% 43% 27% 8.0 7.4
ITC Holdings Corp.1 ITC N $69.15 $75.00 $3.5 $2.84 $3.30 $4.10 24.3 21.0 16.9 81% 3.0 68.7% $1.34 1.9% 41% 14.0% 3.6% 62% 37% 12.1 10.2
MDU Resources Group, Inc.1 MDU N $22.22 $24.00 $4.2 $1.29 $1.30 $1.48 17.2 17.1 15.0 112% 1.6 34.8% $0.65 2.9% 50% 9.3% 4.0% 37% 28% 6.8 6.2
MGE Energy Inc.1 MGEE U $40.18 $37.00 $0.9 $2.43 $2.70 $2.70 16.6 14.9 14.9 103% 1.7 40.6% $1.50 3.7% 56% 11.8% 4.7% 33% 24% 7.9 7.9
Northwest Natural Gas Co.1 NWN N $44.00 $46.00 $1.2 $2.58 $2.54 $2.70 17.0 17.3 16.3 104% 1.6 52.1% $1.74 4.0% 69% 9.9% 2.8% 37% 22% 8.9 8.1
NorthWestern Corp.1 NWE B $32.00 $36.00 $1.2 $2.07 $2.35 $2.45 15.5 13.6 13.1 95% 1.4 55.1% $1.44 4.5% 61% 9.6% 2.7% 69% 36% 8.1 7.6
Otter Tail Corp.1 OTTR N $20.95 $22.00 $0.8 $0.62 $0.94 $1.53 33.6 22.4 13.7 89% 1.2 46.3% $1.19 5.7% 87% 3.0% 1.1% 35% 20% 7.8 6.3
Portland General Electric Co.1 POR N $25.21 $25.50 $1.9 $1.66 $2.05 $1.88 15.2 12.3 13.4 109% 1.2 52.2% $1.04 4.1% 51% 10.2% 3.0% 37% 19% 6.8 6.7
Questar Corp.1 STR N $17.60 $18.50 $3.1 $1.12 $1.11 $1.19 15.7 15.8 14.8 102% 2.9 51.7% $0.61 3.5% 55% 8.0% 3.1% 32% 23% 8.0 7.6
Westar Energy, Inc.1 WR B $26.36 $30.00 $3.0 $1.81 $1.75 $2.05 14.6 15.1 12.9 95% 1.2 56.0% $1.28 4.9% 73% 8.7% 2.6% 80% 39% 7.9 7.0
Xcel Energy, Inc.1 XEL N $24.20 $24.00 $11.7 $1.62 $1.71 $1.79 15.0 14.2 13.5 108% 1.4 54.4% $1.01 4.2% 59% 9.8% 2.9% 63% 34% 8.1 7.7
Median, 17 Utilities $1.9 15.7 15.1 13.4 96% 1.4 51.7% 4.3% 61% 9.3% 2.9% 37% 24% 8.0 7.6
Mean, 17 Utilities $2.8 17.3 15.7 13.8 98% 1.5 50.3% 4.2% 64% 9.1% 2.9% 46% 27% 8.2 7.5
EV /
EBITDA
2011E
'11E-'13E
CapEx/
Mkt Cap
EV /
EBITDA
2012E
Annual
Dividend
Dividend
Yield
11E-'13E
CapEx/
EV
Payout
Ratio
2011E
ROAA
(ttm)
ROAE
(ttm)
Price
Target
Mkt Cap
($B)
1D.A. Davidson & Co. makes a market in this security.
2For purposes of calculating P/E, P/EBITDA, and EV/EBITDA ratios, the stock price of ALE has been reduced by our $3.00/sh point estimate of the value of ALLETE Properties.
Sources: Company reports and D.A. Davidson & Co. estimates
Company Name P / BVRating Debt /
Capital
PE '12E /
10 yr
Median
Symbol

D.A. Davidson & Co.
Two Centerpointe Drive, Suite 400 • Lake Oswego, Oregon 97035 • [phone] • [phone] • www.dadavidson.com
Copyright D.A. Davidson & Co., 2011. All rights reserved.
12
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.’s Institutional Research Rating Scale (maintained since 7/9/02): Buy, Neutral, Underperform

D.A. Davidson & Co. Institutional Research Ratings Buy Neutral Underperform
Risk adjusted return potential azbycx 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 3/31/11) Buy Hold Sell
Corresponding Institutional Research Ratings Buy Neutral Underperform
and Distribution 54% 41% 5%
Corresponding Individual Investor Group Ratings Outperform Market Perform Underperform
and Distribution 65% 35% 0%
Distribution of Combined Ratings 55% 40% 5%
Distribution of companies from whom D.A. Davidson & Co. has received compensation for investment banking services in last 12 mos.
Institutional Coverage 5% 4% 14%
Individual Investor Group Coverage 0% 11% 0%
Distribution of Combined Investment Banking 5% 4% 14%

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 reports 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.