10/22/20101 Westar Formula Rate and your bill

10/22/20102 What we will be going over Transferring the results from the Westar Formula Rate to the SPP tariff. The SPP Tariff –Basic Cost Recovery –Cash flow through the SPP tariff –Base Plan Funding (BPF) –What goes into a Customers bill Results from the 2010 projection Customer bills

10/22/20103Overview Westar ATRR TO 2 ATRR TO 2 ATRR TO 17 ATRR SPP Tariff Each Transmission Owner in the SPP reports its authorized Annual Transmission Revenue Requirement (ATRR) SPP bills its customers based upon these ATRRs and its FERC approved Tariff

10/22/20104 Westar Formula Rate Annual Transmission Revenue Requirement Based on a fully projected 2010 Rate Year –Projection based on 13 month average rate base for 2010 –Beginning balance: 2008 Form 1 adjusted for projected 2009 –Ending Balance: Beginning balance plus 2010 projections –Add in any True-up balance (plus interest) from 2008 True-up based on actual 2008 cost vs Projected 2008 ATRR for the period from June 1 to December 31 Most Projections based on internal formulas –Projected O&M is based upon the change in Net Plant –Other factors held at 2008 levels New Capital based on 2010 Construction Budget –Based on Projects required by SPP

10/22/20105 The SPP Tariff - Rates SPP is broken up into 17 different Pricing Zones –The Transmission Rates for each Zone are calculated by SPP –Annual Transmission Revenue Requirements (ATRR) from each Transmission Owner are used –Cost of Transmission Service for each Zone are based on the sum of all the ATRR allocated to that Zone (ZATRR) –Network Customers pay a Load Ratio share of the allocated ATRR The Load Ratio shares are calculated in January each year based on the previous Calendar year period (Customer 12 mo. Avg.. Peak / Zonal 12 mo Avg. Peak) –PTP rates are shown in Attachment T of the SPP Tariff Total Allocated ATRR / Zonal 12 mo Avg. Peak from formula = Annual Rate.

10/22/20106 SPP Tariff – Cost Recovery Zonal charges Transmission Plant in existence prior to Jan. 1, 2006 Reliability Upgrades needed to meet local area criteria Costs of new transmission projects assigned to the Zone by SPP Regional charges ATRR of each project is allocated to all Zones on a load ratio share basis –12 mo. Zonal Avg. Load / (Σ 12 mo. Zonal Avg. Load for all zones) –Based on previous calendar year load values Direct Assigned Costs Costs assigned to specific transmission customers or Transmission Project Sponsors

10/22/20107 SPP Tariff – Cost Recovery Certain Transmission Projects can also qualify for Base Plan Funding (BPF) –Costs of BPF projects are recovered: 33% Regionally; 67% Zonally –Zonal costs are primarily allocated to the zone where the upgrade is built Zonal Costs may be allocated to other Zones based upon benefit

10/22/20108 SPP Tariff – Cost Recovery of New Transmission Upgrades Reliability Projects –Normally BPF –If needed to meet local area reliability criteria that are more strict that SPP criteria, then its costs are assigned to the specific Zone Upgrades related to requests for Transmission Service –Costs may qualify for Base Plan Funding –Otherwise, costs direct assigned to Customer Economic Balanced Portfolio Upgrades –Regional Sponsored Upgrades –Costs direct assigned to Sponsor Generation Interconnection Service –Upgrades assigned to Generator, with credits from Attachment Z

10/22/20109 Regional Charge 33% of Total Westars Total ATRR Westar Zone OGE Zone All Other SPP Price Zones OGEs Total ATRR BPF Projects Westar Zonal ATRR OGE Zonal ATRR BPF Zonal Charges 67% All Other SPP TOs Total ATRR Zonal ATRR SPP Tariff BPF ATRR Revenue Requirements from Transmission Owners to SPP Pricing Zones

10/22/ $4.80 (20%) $8.00 (100%) $1.20 (5%) BPF Projects Project 1 33% Regional 67% Zonal Allocation Project 2 33% Regional 67% Zonal Allocation Westar Pricing Zone LRS=20% Regional Rate Rev. Req. Allocated By Load Ratio Share Zonal Rate Rev. Req. Allocated By Zonal Benefit (This is Done by Project) SPP Pricing Zone 2 LRS=30% SPP Pricing Zone 3 LRS=50% Zonal Rate Rev. Req. Allocated By Zonal Benefit (This is Done by Project) BPF ATRR=$12 BPF ATRR=$36 $4 $12 $16 $3.20 (20%) $4.80 (30%) $8.00 (50%) $8 $24 $18.00 (75%) $3.20 $8.00 $ $12.40 Total BPF Allocated Costs $ $9.60 $8.00 $ $26.00 Total BPF ATRR for all Projects = $48.00Sum of Allocated BPF ATRR = $48.00 Example of BPF Cost Allocation

10/22/ Total Westar Zonal ATRR Customer Bill Make up Customer 1 Westar Retail = Acct Other Whsle. bus. = Acct SPP Admin Charge (Schedule 1A) Ancillary 4 - EIS Ancillary 2 - RV Ancillaries 3, 5 & 6 Supplied on behalf of SPP by Westar as necessary Ancillaries Supplied by SPP SPP Westar Generation Ancillary Services Westar Transmission Cost Recovery BPF ATRR Allocated To Westar Zone Westars Share of BPF Schedule 11 Schedule 9 SPP pays suppliers for Ancillaries 2 & 4 SPP keeps Admin fees to support the RTO (Anc. 1A) Other Transmission Owners in SPP Other TOs Share of BPF Ancillary 1 - SC

10/22/ Looking at

10/22/ Comparison between 2010 and 2009

10/22/ BPF Transmission Projects Westar –41 BPF Projects totaling over $19.3 million (Rev. Req.) $126 million E&C. –Second phase of Wichita-Reno-Summit 345 kV line $101.4 million AEP –17 BPF Projects, Total=$12.6 million –Westars direct Zonal share, $0 OGE –10 BPF Projects, Total = $3.3 million –Westars direct Zonal Share, $296,630 SPS, NPPD –6 BPF Projects, Total = $2.0 million –Westars direct Zonal Share, $0

10/22/ Estimated Westar Zonal Costs for Zonal ATRR $115,050, Zonal ATRR $128,879,788 Estimated 12% Increase

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