T.O. Highway/Byway Recommendations Dennis Reed, Westar Jake Langthorn, OG&E May 21, 2009 11/10/2018

Disclaimer Prepared for the May 27, 2009 CAWG meeting Not vetted with full TO group Does not necessarily represent the views of all TOs 11/10/2018

Current OATT Has 3 buckets of cost recovery Regional Zonal Direct Assigned All Methods of Cost recovery use these 3 buckets Base Plan Funding can use all three. 11/10/2018

Existing Cost Recovery Facilities built prior to 2006 : 100% Zonal Transmission upgrades built on or after Jan 1, 2006 Reliability Upgrades: BPF-33% Regional, 67% Zonal Zonal Reliability Upgrades: 100% Zonal Upgrades for Service Requests: Default to direct assigned, but can qualify for BPF Special allocation for upgrades related to wind generators Upgrades for Generation Interconnection: Direct Assigned to Generator Economic Upgrades: Direct assigned to Sponsor unless part of a Balanced Portfolio, then 100% Regional 11/10/2018

Highway/Byway Structure Highway: Regional Cost Recovery 345kV and above Byway: Zonal Cost Recovery 100 kV and below Outstanding question: What to do with the facilities between 100 kV and 345 kV? There are multiple ties between various B.A.s and Pricing Zones inside SPP at 115 kV, 138 kV and 230 kV. Do we allocate the facilities by function? only put tie facilities into the highway Bright line at some other level? Some other methodology? 11/10/2018

Allocating Costs For New Upgrades Existing Facilities All facilities as of a set point in time Cost allocations for those facilities will remain the same New Facilities Modify BPF to HWBW: Eliminate the 1/3, 2/3 split and allocate upgrade cost either to Highway or Byway depending on criteria Maintain Safe Harbor limits Direct assign costs in excess of Safe Harbor 11/10/2018

Allocation of Cost of New Upgrades ITP Upgrades NERC Reliability: HWBW Service Upgrades: Direct Assigned unless for DR, then HWBW with Safe Harbor [see next slide] Economic: HWBW Question: Do we keep the Balanced Portfolio or does this type of upgrade go away? Zonal Reliability: Byway Generation Interconnection Interconnection Facilities: Direct Assigned Other network upgrades? Can be addressed in ITP process Requested Upgrades: Sponsored or Direct Assigned unless incorporated with the ITP upgrades 11/10/2018

Service Upgrades PTP Requests NITS Requests Costs direct assigned to customer If Request is for a new Designated Resource serving load in the SPP: HWBW NITS Requests Upgrades in host zone: HWBW Upgrades in other zones: If Highway – Goes to Highway If Zonal, gets Direct assigned to NITS customer (“and” pricing) Related to a new DR (w/safe harbor): HWBW 11/10/2018

Other Related Issues Through and Out Rates PtP revenue allocation Go to System Average Rate? PtP revenue allocation Maintain allocation of revenues to TOs or try and split the revenue between customers and TOs Existing Facilities Do we maintain the current cost allocation forever? Or, do we transition to HWBW rates? Transition period to new Cost Allocation Going to HWBW FERC position regarding existing facilities?? May have an opinion. 11/10/2018

Why this approach? Simplifies the accounting for both TOs and SPP May Minimize Regulatory Concern Minimizes Changes to the Tariff Leaves in place most of the compromises made over the past 10 years on certain issues Quicker to implement and probably get through FERC Minimizes Rate impacts to customers 11/10/2018

Schedule MAKE THE OCT 27 DATE!!! 11/10/2018