Cost Allocation for 2009 STEP, Appendix B: Comparison of Highway/Byway/Local v. Currently Effective Cost Allocation Methods 1/21/2010

2 General Study Notes  Committed ATRRs Include:  Legacy Tariff Rates, Attachment H, Column 3, ATRR $665M/yr  Previously Allocated Projects from the STEP plan, year 2006 to present, ATRR $342M/yr  Balanced Portfolio, E&C $770M, ATRR $131M/yr  Nebraska Transition Projects, E&C $171M, ATRR $23M/yr  Total Committed ATRR $1.16B/yr  2009 STEP Projects Needing NTCs Allocated with Currently Effective Base Plan Funding Method:  4-year economic commitment window: E&C $1.03B, ATRR $172M/yr  2-year economic commitment window: E&C $791M, ATRR $102M/yr  Total ATRR Studied = Committed ATRR STEP ATRR  4-year window: $1.16B/yr + $172M/yr = $1.33B/yr  2-year window: $1.16B/yr + $102M/yr = $1.26B/yr

Cost Allocation Comparison  Currently Effective Rates and Base Plan Funding Method is used to Develop the Base Case  Highway/Byway/Local Method Applied to the 2009 Appendix B Projects is used to Develop the Change Case  Comparisons are calculated between the two 3

Base Case: Currently Effective Method  2009 STEP Appendix B projects are Allocated using the Currently Effective Base Plan Funding Method  Gross ATRR = Project E&C * Host Zone Carrying Charge  Zonal Allocation = 0.67 * Gross ATRR * Project’s MW-mi impact percentage for each Rate Zone  Regional Allocation = 0.33 * Gross ATRR * Load Ratio Share (LRS) for each Rate Zone

Change Case: Highway/Byway/Local Method  Facilities over 300 kV (Highway), 100% Regionalized  Gross ATRR * LRS  Facilities between 100kV and 300kV (Byway), Split Allocation  0.67 * Gross ATRR directly Rate host zone  0.33 * Gross ATRR by LRS Rate region  Facilities under 100kV (Local), 100% Zonal  Gross ATRR directly assigned Rate host zone 5

Change Case Notes (cont.)  Option 7: Comparative Cost Allocation for 2009 STEP Appendix B projects with NTCs needed in years 1 through 4 using the Highway/Byway/Local methodology v. Base.  Option 8: Comparative Cost Allocation for 2009 STEP Appendix B projects with NTCs needed in years 1 and 2 using the Highway Byway Methodology v. Base. Projects with NTCs needed in years 3 and 4 are not included.  Option 9: Comparative Cost Allocation for 2009 STEP Appendix B projects with NTCs needed:  In years 1 and 2 using Base Plan Funding methodology  In years 3 and 4 using the Highway/Byway/Local methodology

Results (see attachments) Graphical results and summary tables are presented for:  % Difference = (Change Case – Base Case) / Base Case * 100%  ATRR by Rate Zone = Committed ATRR + Allocation of the 2009 STEP  Base Case (Base Plan Funding Method)  Option 7: Highway Byway for years 1 through 4 of 2009 STEP, App. B  Option 8: Highway Byway for years 1 and 2 of 2009 STEP, App. B, do not consider years 3 and 4  Option 9: Base Plan Funding years 1 and 2, Highway Byway for years 3 and 4 of 2009 STEP, App. B

List of Attachments 1.Graph: Total ATRR Shown with Committed ATRR 2.Graph: Total ATRR Shown as Zonal and Regional Components 3.Graph: Total ATRR Shown as Highway, Byway, and Local Components 4.Graph: 2009 STEP Appendix B Total ATRR's 4-Year Economic Window: Currently Effective Method v. Highway/Byway/Local Method 5.Graph: % Difference Total ATRR 4-Year Economic Window: Currently Effective Method (Base) v. Highway/Byway/Local (Change) 6.Graph: 2009 STEP Appendix B Total ATRR's 2-Year Economic Window: Currently Effective Method v. Highway/Byway/Local Method 7.Graph: % Difference ATRR 2-Year Economic Window: Currently Effective Method (Base) v. Highway/Byway/Local (Change) 8

List of Attachments, cont. 8.Graph: 2009 STEP Appendix B Total ATRR's 4-Year Economic Window: Year 1-4: Currently Effective Method v. Year 1-2 Currently Effective Method, Year 3-4: Highway/Byway/Local Method 9.Graph: 2009 STEP Appendix B Total ATRR's 4-Year Economic Window: Option 7 v. Option 9 10.Graph: % Difference Total ATRR, 4-Year Economic Window: Currently Effective Method (Base) v. Yr 1-2 Current, Yr 3-4 H/B/L(Change) 11.Summary Table: Base Case 12.Summary Table: Option 7 13.Summary Table: Option 8 14.Summary Table: Option 9 9

List of Attachments, cont. 15.Project Data: 4-Year Window 16.Project Data: 2-Year Window 17.Summary Data for Charts 18.Area Data 10

11 Questions?