1 WELCOME Transmission Formula Rate Customer Meeting Annual Update TFR October 26, 2010

2 Protocols Definitions  “Rate Year”  is defined as January 1 through December 31 (2011)  “True-Up”  is completed on or before June 15 each calendar year.  based on historical (actual) data - primarily Form 1 data from 2009  “Annual Update”  recalculates the ATRR and Formula Rate for new Rate Year (2011)  uses historical data collected during “True-Up” Phase  adds in the projected data  is calculated and posted on or before October 15 each calendar year. Transmission Formula Rate

3 Protocols Timeline *********************************************************************************************  “Rate Year”: January 1 – December 31, 2011 *********************************************************************************************  “True Up” Update: June 15, 2010  “True Up” Customer Meeting: June 22, 2010  This date is kick off for Review Period  “True Up” Information Requests Period – 75 days: August 30, 2010  Issues - Westar Energy Response Date:  Good faith effort to respond within 10 business days from date of information request.  Additional periods for data review resolutions, per Protocols posted on WR OASIS **********************************************************************************************  “Annual Update”: October 15, 2010  “Annual Update” Customer Meeting: October 26, 2010  Potential Repost of Annual Update: November 30, 2010 ********************************************************************************************** Transmission Formula Rate

4 Protocols OASIS Postings and Data Requests  OASIS Posting Requirements:  Updated Calculation  Protocols  Accounting Manual and changes  Data Request Submission Address  Submission of Data Requests to: Sheila Gropp Westar Energy 818 Kansas Avenue Topeka, KS Please also cc:  Please provide all Data Requests in writing via or letter. Transmission Formula Rate

5 Key Data Locations FERC Form 1 Data : FERC.gov (Westar Energy Form 1) (Kansas Gas & Electric Form 1) Formula Rate Postings: Westar Energy Oasis (select WR) Southwest Power Pool Oasis (select SWPP) Transmission Formula Rate

6 Westar Energy’s Oasis Site Locating Site Click on SPP Icon. It’s a hyperlink to SPP Oasis Node that contains SPP Transmission Owners Oasis Sites. Transmission Formula Rate

7 Westar Energy’s Oasis Site Locating Site - 2 SPP Transmission Owners Oasis Sites: Click on Westar Icon. It’s a hyperlink to new Westar Energy Oasis Site. Transmission Formula Rate

8 Westar Energy’s Oasis Site Finding Documents The Annual Update is under this Document Directory. Click on the file folder icon or name to open. The sub-folders will appear. Click on the Oct 15, 2010 Update – Annual Folder. Any documents for that update will be displayed. Update Results Transmission Formula Rate

9 Westar Energy’s Oasis Site Locating Accounting Manual Accounting Manual Login Accounting Data User ID:AFSReader Accounting Data Password:AFSReader#1 Under the Transmission Formula Rate (TFR) 2011 Rates Folder, is the sub-folder – “Accounting Information as of 12/31/2009” Select this folder to see available files. Under the Accounting Information as of 12/31/2009 Folder are several files. For the Accounting Manual, click on: “Accounting Manual as of 12/31/2009” Transmission Formula Rate

10 SPP Transmission Provider Oasis Sites: Click on SPP Icon. It’s a hyperlink to Southwest Power Pool Oasis Site. Southwest Power Pool Selecting SPP Oasis Site Transmission Formula Rate

11 Southwest Power Pool Oasis Site Member Related Postings Transmission Formula Rate

12 Formula Inputs Index of Template Pages Tab IDSchedule/Worksheet DesignationDescriptionDate to be Posted Actual Net Rev ReqSchedule Actual Net Rev ReqActual net revenue requirements for most recent calendar yearJune 15 Gross Rev ReqSchedule Actual Gross Rev ReqActual gross revenue requirements for most recent calendar yearJune 15 A-1Revenue CreditActual revenue creditsJune 15 A-2Actual transmission loadWE RevenuesJune 15 A-3Actual Retail AdderWE DivisorJune 15 A-4Actual O&M Exclusions (WEN)WE Retail AdderJune 15 A-5Actual Accum Deferred Income Taxes (WEN)WEN O&M ExclusionsJune 15 A-6Actual O&M Exclusions (WES)WEN ADITJune 15 A-7Actual Accum Deferred Income Taxes (WEN)WES O&M ExclusionsJune 15 A-8Actual Depreciation Rate CalculationWES ADITJune 15 A-9Actual Base Plan Funded ProjectsDepreciation AdjustmentJune 15 A-10Actual Wages and SalariesPlant Additions for Upcoming YearJune 15 A-11Actual Incentive Return on Incentive PlantIncentive Plant AdditionsJune 15 A-12Actual Economic Portfolio Funded ProjectsBase Plan Funded AdditionsJune 15 TUTrue-upTrue-up Adjustment and Interest CalculationOct 15 BPFBPF SummaryTotal Actual and Projected BPF projectsOct 15 EPPEPP SummaryTotal Actual and Projected EPP projectsOct 15 Projected Net Rev ReqProjected Net Rev RequirementProjected net revenue requirements for next calendar yearOct 15 Projected Gross Rev Req Projected gross revenue requirements for next calendar yearOct 15 P-1Transmission PlantProjected transmission plant for next calendar yearOct 15 P-2Exp. & Rev. CreditsProjected expenses and revenue credits for next calendar yearOct 15 P-3Trans. Network LoadProjected transmission load for next calendar yearOct 15 P-4BPF ProjectsProjected Base Plan Funded ProjectsOct 15 P-5Econ. ProjectsProjected Economic Portfolio Funded ProjectsOct 15 Transmission Formula Rate

13 Formula Components Annual Update True-Up and Projected Plant  Data Included  Historical 2009 financial data Westar Energy Form 1 Kansas Gas & Electric Form 1  FERC Approved Incentive Plant – Actual  SPP Projects – Actual  True-Up data (FERC Interest, true-up between Projected 2009 and Actual 2009)  Projected Construction development  Includes Plant Projected to be in-service in 2011  Template References:  Template Form 1 Reference format: Page, Line, Column  Worksheet Reference format: Worksheet P-1 (with section if applicable)  Yellow areas are change areas References and Clarifications: If you see any references that are not correct or if you have any suggestion, please let me know. Transmission Formula Rate

October 15, 2010 Annual Update Key Data Impacts 14 Transmission Formula Rate

2007 Ice Storm –Amortization schedule will be completed in 2011 –Therefore, there will be a zero balance for EOY 2011 (Line 9a) –Reserve will continue until used in the future. (Line 9b) 15 Transmission Formula Rate Projected Update Gross Proj Rev Reqm 2007 Ice Storm and Reserves

16 Transmission Formula Rate Projected Update Gross Proj Rev Reqm Plant Additions The Projected Plant Additions - Compare 2010 vs SPP Funded Plant Additions Projected $92,280,137$29,061,692 Zonal Additions Projected $67,999,050$63,004,308 Projected Transmission Plant Additions 2010 $160,279, $92,066,000

17 TU “True-Up” with Interest June 15, 2010 “True-Up” Update (posted June 15, 2010) During this update, a comparison of the 2009 Projected ATRR and 2009 Actual ATRR was calculated. The difference was ($16.612,099) During this update, the interest is applied to the “True-Up”. After the application of FERC Interest, the total “true-up” amount was ($17,822,290). October 15, 2010 “Annual Projected” Update (posted October 15, 2010) Transmission Formula Rate

18 Transmission Formula Rate “True-Up” with Interest Net Projected Revenue Requirement The 2009 True-Up with Interest is applied = ($17,822,230). Net Westar Energy Revenue Requirement is determined = $147,871,037.

19 Transmission Formula Rate Zonal vs. Regional Net ATRR True-Up Net Projected Revenue Requirements BPF Projects Summary >> T9 Col q = NPRR Line 9

SPP Regional Net ATRR will be allocated by SPP –SPP will allocate this ATRR to the zones according to benefit and Load Ratio Share –SPP is planning a FERC Filing around November 15, 2010 which will include the new allocations by zone. Zonal Net ATRR –This ATRR will allocated at 100% to the Westar Zone Total Net ATRR = $147,871, Transmission Formula Rate SPP Attachment H Zonal Net ATRR and SPP Regional Net ATRR SPP Regional Net ATRR

21 Revenue Requirements Comparison Transmission Formula Rate 2010 Westar Net ATRR Zonal $115,503,530 SPP BPF Funding $19,256, Westar Net ATRR Zonal $132,056,555 SPP BPF Funding $16,159,077 ~14% ~16%

22 Cost Estimates Transmission Formula Rate ~9% Increase for Zonal ATRR

23 Transmission Formula Rate SPP Current OATT Attachment H Values as of June 19, 2010 Cost Estimate These values can change at any time during a calendar year. Modifications are based on any new Transmission Owner ATRR. SPP files updates with FERC for inclusion in SPP OATT Rates.

24 Transmission Formula Rate Meeting Questions - Responses Researched Q1 from Kathy Brinker, NMEC Q1: Is there a Storm Reserve Limit? A1:There is no limitation. Q 2 and Q3 from Larry Holloway, KPP Q2: Can Storm Reserve be a negative value? A2:The Transmission Reserve is only a positive value or zero. Q3: Is Storm Reserve a part of Return? A3: Yes. Storm Reserve is a reduction to Rate Base. Q4 from Michael Wegner, KCC Q4: Was the 69 kV storm damage in SE Kansas this year a reduction to the Storm Reserve? A4: Yes.

25 Thank You! Transmission Formula Rate