Financial Analysis

(2) Pending Merger with Black Hills Corporation On August 18, 2025, we entered into a Merger Agreement with Black Hills and River Merger Sub, Inc., a Delaware corporation and direct wholly owned subsidiary of Black Hills (Merger Sub). The Merger Agreement provides for an all-stock merger of equals between NorthWestern and Black Hills upon the terms and subject to the conditions set forth therein. The Merger Agreement provides for Merger Sub to merge with and into NorthWestern, with NorthWestern continuing as the surviving entity and a direct wholly owned subsidiary of Black Hills, which would assume the new corporate name of Bright Horizon Energy as the resulting parent company of the combined corporate group. Under the provisions of ASC Topic 805, which requires the identification of an acquirer in a business combination, Black Hills is the accounting acquirer. Pursuant to the Merger Agreement, at the effective time of the Merger, each share of NorthWestern, par value $0.01 per share, issued and outstanding as of immediately prior to closing will be converted into the right to receive 0.98 validly issued, fully paid and non-assessable shares of Black Hills Common Stock. In connection with this pending merger, we have incurred merger-related costs. During the three and six months ended June 30, 2026, we have incurred $3.3 million and $6.7 million, respectively, of merger-related costs, which are included in our Administrative and general expenses. Regulatory and Shareholder A …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

Commitments and Contingencies Parent Guarantee NorthWestern Energy Group, Inc. has guaranteed the contractual obligations of its wholly-owned subsidiary, NorthWestern Colstrip 370Pu, LLC (NW Colstrip 370), to its counterparty to an agreement for the sale of capacity and energy from our recently acquired 370 megawatt ownership interest in the Colstrip facility. The guarantee exists during the January 2026 through September 2027 term of the agreement. The guarantee is unconditional and irrevocable, covering all payment obligations of the subsidiary under the contract up to a maximum amount of $15.0 million. The guarantee is triggered in an event where NW Colstrip 370 fails to pay any amounts that could come due under the agreement. As of June 30, 2026, no demand has been made under the guarantee and management believes that risk of material payment under this guarantee is remote. ENVIRONMENTAL LIABILITIES AND REGULATION The circumstances set forth in Note 20 - Commitments and Contingencies to the financial statements included in the NorthWestern Energy Group Annual Report on Form 10-K for the year ended December 31, 2025 appropriately represent, in all material respects, the current status of our environmental liabilities and regulation. LEGAL PROCEEDINGS We are subject to various legal proceedings, governmental audits and claims that arise in the ordinary course of business. In our opinion, the amount of ultimate liability with respect to these other actions will not materiall …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

The following tables disaggregate our revenue by major source and customer class (in thousands): Three Months Ended June 30, 2026 June 30, 2025 Electric Natural Gas Total Electric Natural Gas Total Montana $ 98,447 $ 19,711 $ 118,158 $ 81,824 $ 17,968 $ 99,792 South Dakota 17,983 5,776 23,759 16,235 5,566 21,801 Nebraska 4,196 4,196 4,523 4,523 Residential 116,430 29,683 146,113 98,059 28,057 126,116 Montana 110,833 12,211 123,044 93,910 10,499 104,409 South Dakota 30,341 4,141 34,482 27,737 3,920 31,657 Nebraska 1,994 1,994 2,346 2,346 Commercial 141,174 18,346 159,520 121,647 16,765 138,412 Industrial 10,831 844 11,675 9,888 144 10,032 Lighting, governmental, irrigation, and interdepartmental 14,144 268 14,412 9,421 270 9,691 Total Retail Revenues 282,579 49,141 331,720 239,015 45,236 284,251 Regulatory Amortization (3,645) 5,925 2,280 10,325 5,189 15,514 Transmission 29,141 29,141 28,147 28,147 Transportation, wholesale and other 16,179 13,279 29,458 1,981 12,820 14,801 Total Revenues $ 324,254 $ 68,345 $ 392,599 $ 279,468 $ 63,245 $ 342,713 Six Months Ended June 30, 2026 June 30, 2025 Electric Natural Gas Total Electric Natural Gas Total Montana $ 218,885 $ 67,849 $ 286,734 $ 196,801 $ 69,386 $ 266,187 South Dakota 41,212 20,300 61,512 38,527 21,136 59,663 Nebraska 15,357 15,357 17,732 17,732 Residential 260,097 103,506 363,603 235,328 108,254 343,582 Montana 217,315 39,088 256,403 190,862 37,257 228,119 South Dakota 61,738 15,895 77,633 57,051 15,095 72,146 Nebraska 8,50 …

DisaggregationOfRevenueTableTextBlock · excerpt; the full note is in the filing

Income Taxes We compute income tax expense for each quarter based on the estimated annual effective tax rate for the year, adjusted for certain discrete items. Our effective tax rate typically differs from the federal statutory tax rate due to the regulatory impact of flowing through the federal and state tax benefit of repairs deductions, state tax benefit of accelerated tax depreciation deductions (including bonus depreciation when applicable) and production tax credits. The regulatory accounting treatment of these deductions requires immediate income recognition for temporary tax differences of this type, which is referred to as the flow-through method. When the flow-through method of accounting for temporary differences is reflected in regulated revenues, we record deferred income taxes and establish related regulatory assets and liabilities. During the three months ended June 30, 2026 income tax expense was $3.5 million compared to $3.4 million for the same period in 2025. For the three months ended June 30, 2026, the effective tax rate was 12.2% compared to 13.7% for the same period in 2025. The lower effective tax rate was primarily due to higher flow through repairs deductions partly offset by higher plant depreciation flow through items. During the six months ended June 30, 2026 income tax expense was $17.3 million compared to $18.6 million for the same period in 2025. For the six months ended June 30, 2026, the effective tax rate was 16.3% compared to 15.9% for the …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Employee Benefit Plans We sponsor and/or contribute to pension and postretirement health care and life insurance benefit plans for eligible employees. Net periodic benefit cost (credit) for our pension and other postretirement plans consists of the following (in thousands): Pension Benefits Other Postretirement Benefits Three Months Ended June 30, Three Months Ended June 30, 2026 2025 2026 2025 Components of Net Periodic Benefit Cost (Credit) Service cost $ 1,145 $ 1,167 $ 48 $ 66 Interest cost 2,853 6,104 93 129 Expected return on plan assets (2,902) (5,734) (403) (355) Recognized actuarial gain (182) (68) Net periodic benefit cost (credit) $ 1,096 $ 1,537 $ (444) $ (228) Pension Benefits Other Postretirement Benefits Six Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Components of Net Periodic Benefit Cost (Credit) Service cost $ 2,243 $ 2,362 $ 102 $ 128 Interest cost 5,744 12,149 195 256 Expected return on plan assets (5,825) (11,476) (806) (709) Recognized actuarial gain (343) (138) Net periodic benefit cost (credit) $ 2,162 $ 3,035 $ (852) $ (463) We contributed $4.9 million to our pension plans during the six months ended June 30, 2026. We expect to contribute an additional $6.6 million to our pension plans during the remainder of 2026. …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

Revenue from Contracts with Customers Nature of Goods and Services We provide retail electric and natural gas services to three primary customer classes. Our largest customer class consists of residential customers, which includes single private dwellings and individual apartments. Our commercial customers consist primarily of main street businesses, and our industrial customers consist primarily of manufacturing and processing businesses that turn raw materials into products. Electric Segment - Our regulated electric utility business primarily provides generation, transmission, and distribution services to customers in our Montana and South Dakota jurisdictions. We recognize revenue when electricity is delivered to the customer. Payments on our tariff-based sales are generally due 0-30 days after the billing date. Natural Gas Segment - Our regulated natural gas utility business primarily provides production, storage, transmission, and distribution services to customers in our Montana, South Dakota, and Nebraska jurisdictions. We recognize revenue when natural gas is delivered to the customer. Payments on our tariff-based sales are generally due 0-30 days after the billing date. Disaggregation of Revenue The following tables disaggregate our revenue by major source and customer class (in thousands): Three Months Ended June 30, 2026 June 30, 2025 Electric Natural Gas Total Electric Natural Gas Total Montana $ 98,447 $ 19,711 $ 118,158 $ 81,824 $ 17,968 $ 99,792 South Dakota 17 …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

Segment Information Our reportable segments are engaged in the electric and natural gas utility businesses. Our Chief Operating Decision Maker (CODM), who is our Chief Executive Officer, uses segment net income to evaluate if our operating segments are earning their authorized rate of return and in the annual budget and forecasting process. Our CODM also uses segment net income to determine how to allocate capital resources between our operating segments and when to allocate the resources necessary to file for rate reviews. Segment asset and capital expenditure information is not provided for our reportable segments. As an integrated electric and gas utility, we operate significant assets that are not dedicated to a specific reportable segment. Financial data for the reportable segments are as follows (in thousands): Three Months Ended June 30, 2026 Electric Gas Total Operating revenues $ 324,254 $ 68,345 $ 392,599 Fuel, purchased supply and direct transmission expense (exclusive of depreciation and depletion shown separately below) 72,836 16,987 89,823 Operating, general, and administrative 91,739 25,551 117,290 Property and other taxes 39,056 11,044 50,100 Depreciation and depletion 55,562 11,416 66,978 Interest expense, net (30,589) (8,086) (38,675) Other income, net 2,941 1,167 4,108 Income tax (expense) benefit (5,451) 304 (5,147) Segment net income (loss) $ 31,962 $ (3,268) $ 28,694 Reconciliation to consolidated net income Other, net (1) (3,700) Consolidated net income …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing