SMMPA Attachment O 2016 Annual Meeting Transmission Formula Rate Update August 18, 2016

Background SMMPA is a not-for-profit, political subdivision of the State of Minnesota SMMPA supplies power to its 18 member municipal utilities SMMPA is governed by its members For more information on SMMPA and its members visit SMMPA’s website at: http://www.smmpa.org

Background Attachment O SMMPA became a Transmission Owning member of MISO April 1, 2006 As a Transmission Owner (TO) SMMPA must annually establish rates for open access use of its transmission assets SMMPA filed with FERC in 2006 for its own Cash Flow Attachment O historical template SMMPA utilizes the Cash Flow Attachment O historical template approved by FERC based on data from EIA 412

Attachment O Timeline June 1st, 2016 publish Attachment O and supporting documentation based on calendar year 2015 actual data September 1st, 2016 deadline to hold annual stakeholders meeting on formula rate update December 1st, 2016 deadline for interested parties to submit information requests January 10th, 2017 deadline for TO to respond information requests January 31st, 2017 deadline for interested parties to submit informal challenges

Attachment O Timeline Continued February 28th, 2017 deadline for TO to respond to informal challenges March 15, 2017 submit informational filing to FERC March 31, 2017 deadline for interested parties to submit formal challenge to FERC

2015 Attachment O Summary Transmission plant $143,348,606 Intangible – Direct Transmission $ 19,461,271 Transmission Revenue Requirements: Operation & Maintenance $ 6,151,589 Debt Service $ 20,257,350 Other Taxes $ 2,102,801 Margin Requirement $ 3,662,931 Attachment GG Revenue Credits ($ 6,513,859) Revenue Credits ($ 1,739,050) Net Revenue Requirements $ 23,921,763 Transmission Rate $7.895/kW-month

Historical Comparison 2014 Actual 2015 Actual Transmission plant $117,924,226 $143,348,606 Intangible – Direct Transmission $ 32,047,312 $ 19,461,271 Transmission Revenue Requirements: Operation & Maintenance $ 5,754,152 $ 6,151,589 Debt Service $ 18,791,748 $ 20,257,350 Other Taxes $ 1,843,295 $ 2,102,801 Margin Requirement $ 3,397,033 $ 3,662,931 Attachment GG Revenue Credits ($ 1,260,782) ($ 6,513,859) Revenue Credits ($ 1,711,011) ($ 1,739,050) Net Revenue Requirements $ 26,814,435 $ 23,921,763 Transmission Rate $5.105/kW-month $7.895/kW-month

2015 Net Revenue Requirements Per MISO Pricing Zone SMMPA has transmission assets and load in 4 different pricing zones in MISO SMMPA has entered into Joint Pricing Zone Agreements with GRE, ITCM and Xcel which have been filed at FERC GRE pricing zone - SMMPA has revenue requirements of $1,555,530 and a load of 42.30 MWs ITCM pricing zone – SMMPA has revenue requirements of $3,541,644 and a load of 28.40 MWs SMMPA/DPC pricing zone – SMMPA has revenue requirements of $7,680,154 and a load of 55.60 MWs – there was a load reduction of 183.30 MWs for inclusion in RPU’s Attachment O load Xcel pricing zone – SMMPA has revenue requirements of $11,144,434 and a load of 126.20 MWs

Contact Information John Winter Jd.winter@smmpa.org Laura Sandwick Lm.sandwick@smmpa.org Richard Hettwer rj.hettwer@smmpa.org MISO Attachment O Rate Data Webpage: https://www.misoenergy.org/MarketsOperations/TransmissionSettlements/Pages/TransmissionOwnerRateData.aspx