1. 2016 ATTACHMENT O CUSTOMER MEETING OCTOBER 30, 2015

2. 2 Meeting Purpose Otter Tail Power Company Profile Attachment O Calculation Capital Projects Budget Risks Pending Updates to the Formula Template Question/Answer

3. LEGAL DISCLOSURE 3 All numeric data provided in this presentation is preliminary and subject to change. All information will be finalized by 12/31/15.

4. 4 To provide an informational forum regarding Otter Tail’s forecasted Attachment O for 2016. The forecasted Attachment O for 2016 is calculated using the FERC Form 1 Attachment O template under the MISO Tariff with a projected net revenue requirement and projected load. Rates become effective on January 1, 2016 for the joint pricing zone comprised of Otter Tail, Great River Energy, and Missouri River Energy Services, Benson Municipal Utilities, Detroit Lakes Public Utilities, and Alexandria Light & Power.

5. NORTH DAKOTA SOUTH DAKOTA Garrison Rugby LANGDON WIND ENERGY CENTER COYOTE STATION Jamestown LEGEND Headquarters Customer service center HOOT LAKE PLANT Fergus Falls Wahpeton Oakes Morris LAKE PRESTON COMBUSTION TURBINE BIG STONE PLANT LUVERNE WIND FARM ASHTABULA WIND ENERGY CENTER ASHTABULA III Milbank SOLWAY COMBUSTION TURBINE Crookston Devils Lake Bemidji JAMESTOWN COMBUSTION TURBINE 70,000 Square miles 130,200 Customers 422 Communities Avg. population about 400 785 Employees 495 Minnesota 200 North Dakota 90 South Dakota About 800 MW owned generation About 245 MW wind generation About 5,400 miles of transmission lines SERVICE AREA 5

6. 6 Forward Rate Requirements Rate Base Operating Expenses Revenue Requirement and Rate Network Rate Summary

7. 7 By June 1 of each year, Otter Tail will post on OASIS all information regarding any Attachment O True-up Adjustments for the prior year. By September 1 each year, Otter Tail will post on OASIS its projected Net Revenue Requirement including the True-Up Adjustment and load for the following year, and associated work papers. Otter Tail will hold a customer meeting by October 31 each year to explain its formula rate input projections and cost detail.

8. RATE BASE Rate Base Item 2016 Projected 2015 Projected $ Change% ChangeExplanation Gross Plant in Service $ 429,186,735 $ 386,778,026 $ 42,408,70911.0% The increase is primarily due to NERC work, Brookings being finished and other system improvements. Accumulated Depreciation $ 118,546,386 $ 112,631,484 $ 5,914,9025.3% The increase is primarily due to Fargo Phase III and the remainder of Brookings in service all of 2016. Net Plant in Service $ 310,640,349 $ 274,146,542 $ 36,493,80713.3%= Gross Plant - A/D Adjustments to Rate Base $ (62,249,278) $ (62,362,196) $ 112,918(0.2%) CWIP for CON Projects $ 69,953,095 $ 40,886,235 $ 29,066,86071.1% Upcoming construction of Brookings to Big Stone and Big Stone to Ellendale; both are classified as MVP projects. Land Held for Future Use $ 9,038 $ -0.0% Working Capital $ 6,995,332 $ 5,894,170 $ 1,101,16218.7%Higher CWC related to higher O&Ms. Rate Base $ 325,348,536 $ 258,573,789 $ 66,774,74725.8%= Net Plant + Adj + CWIP + Land + Working Capital Note: The above numbers are Transmission only 8

9. 9 Expense Item 2016 Projected 2015 Projected $ Change% ChangeExplanation O&M $ 16,746,015$ 14,024,094$ 2,721,92119.4% The increase is mainly due to higher Schedule 26 and 26A expenses. Depreciation Expense $ 7,875,761$ 7,140,892$ 734,86910.3% More plant is in service with the energization of Fargo III and remainder of Brookings. Taxes Other than Income $ 3,358,563$ 3,133,563$ 225,0007.2% An increase in Total Company Property Tax Expense as a result of higher assessed values. Income Taxes $ 11,938,039$ 9,822,603$ 2,115,43621.5% Higher rate base results in a higher return and subsequently more income tax expense. Operating Expense $ 39,918,378$ 34,121,152$ 5,797,22617.0% = O&M + A&G + Depreciation + Taxes Note: The above numbers are Transmission only

10. 10 2016 Projected 2015 Projected $ Change% ChangeExplanation Long Term Debt 46.68%48.35% (1.67%) Haven’t had a need to increase our LT Debt from year over year. Common Stock 53.32%51.65% 1.67% Total 100.00% = Debt + Equity Weighted Cost of Debt 5.56%5.54% 0.02% Close to last year. Cost of Common Stock 12.38% 0.00% Unchanged Rate of Return 9.19%9.07% 0.12% = (LTD*Cost)+(Preferred Stock*Cost)+(Common Stock*Cost) Rate Base $ 325,348,536 $ 258,573,789$ 66,774,74725.82% From "Rate Base" Calculation Allowed Return $ 29,914,500 $ 23,465,923$ 6,448,57727.48% = Rate of Return * Rate Base Operating Expenses $ 39,918,378 $ 34,121,152$ 5,797,22616.99% From "Operating Expense" Calculation Attachment GG Adjustments $ 18,550,354 $ 18,208,328$ 342,0261.88% Close to last year. Attachment MM Adjustments $ 13,285,520 $ 6,603,848$ 6,681,672101.18% Upcoming construction of CAPX Brookings and Big Stone to Ellendale; both are classified as MVP projects. Gross Revenue Requirement $ 37,997,004 $ 32,774,899$ 5,222,10515.93% = Return + Expenses - Adjustments Revenue Credits $ 6,509,939 $ 6,283,694$ 226,2453.60% Close to last year. 2014/2013 True-up (Including Interest) $ (3,117,851) $ (1,181,325) $ (1,936,526)163.93% Net Revenue Requirement $ 28,369,215 $ 25,309,881 $ 3,059,33412.09% = Gross Revenue Requirement - Revenue Credits + True-up

11. 11 $0.25 or 8.4% increase

12. TOTAL TRANSMISSION REVENUE REQUIREMENT BREAKDOWN 12 Total Rev. Req. = $60,205,088 Net Attch. O ATRR = $28,369,214 Attch. GG Rev. Req. = $18,550,354 Attch. MM Rev. Req. = $13,285,520

13. 2016 TRANSMISSION PROJECTS

14. ProjectVoltage In Service Date 2016 Forecasted Spend (with AFUDC) Description of Project Repair/Replace Existing Transmission Structures ≥ 115 kV12/31/2016$ 252,000 Replace existing 230 kV and 115 kV transmission structures due to water damage. Proactive-Worst Performing 41.6 kV Lines 41.6 kV 12/30/2016$ 321,000 Enhancements and/or rebuild of worst performing 41.6 kV lines. Relocate Colgate 41.6 kV Line41.6 kV12/31/2016$ 302,000 Relocate existing 41.6 kV line near Colgate, ND due to rising water in existing ROW. Martin – Anamoose 41.6 kV Line Reroute 41.6 kV12/20/2016$ 201,000 Relocate existing 41.6 kV line between Martin – Anamoose in ND due to rising water in existing ROW. 14

15. 15 ProjectVoltage In Service Date 2016 Forecasted Spend (with AFUDC) Description of Project Rebuild Harvey – Rugby 115 kV Line 115 kV12/31/2021$ 268,000 Rebuild existing line by replacing structures due to age and condition using new framing with shield wire. Upgrade Max – Ryder 41.6 kV Line 41.6 kV 12/31/2018$ 399,000 Reconductor and rebuild existing transmission line due to age and condition. Substation Security (CIP Ver. 5)≥ 115 kV12/31/2017$ 255,000 Install necessary security equipment at applicable substations to comply with NERC standards. Clearbrook Area 115 kV Line115 kV10/31/2018$ 2,500,000 Construct a new, approximately 16-18 mile 115 kV transmission line in the Clearbrook area of north central MN with new 230/115 kV substation near Bagley.

16. 16 ProjectVoltage In Service Date 2016 Forecasted Spend (with AFUDC) Description of Project NERC Facility Ratings Alert≥ 115 kV12/31/2016$ 4,100,000 Line upgrades to numerous transmission facilities across the OTP service territory that violate NESC clearance requirements. Rolette 230/69/41.6 kV Substation 230 kV 7/31/2017$ 692,000 Install a new 230/69/41.6 kV substation near Rolette, ND. Voltaire 115/41.6 kV Substation115 kV12/31/2016$ 3,600,000 Install a new 115/41.6 kV substation near Minot, ND. Rugby 41.6 kV Switching Station41.6 kV6/30/2017$ 2,200,000 Install a new 41.6 kV switching station near Rugby, ND.

17. 17 Project Voltage In Service Date 2016 Forecasted Spend (with AFUDC) Description of Project Attachment GG J262/J263 Courtenay Wind Farm Interconnection Project 345 kV10/31/2016$ 4,700,000 Expand Jamestown 345/115 kV Substation and replace two existing 345/115/41.6 kV transformers to accommodate Generator Interconnection Project J262/J263. Buffalo 345/115 kV Transformer (Buffalo – Casselton Line) 345 kV4/30/2017$ 3,500,000 Underlying System improvements for 115 kV line from Casselton – Buffalo. Add more transformer capacity at Buffalo, ND. J290 Border Winds Generator Interconnection Project 230 kV12/31/2015$ 204,000 Expand Rugby 230/115 kV Substation and add a second 230/115 kV transformer to accommodate Generator Interconnection Project J290. Attachment MM Big Stone South – Brookings Line345 kV9/30/2017$ 53,400,000 Build new 345 kV line from Big Stone South – Brookings with Big Stone South Substation in SD. Big Stone South – Ellendale Line345 kV9/30/2019$ 37,400,000 Build new 345 kV line from Big Stone South – Ellendale in SD and ND.

18. Revenue Demand/ Weather Regulatory Filings Financing Outages Timing of Capital Projects Tight Budgets 18

19. PENDING UPDATES TO FORMULA TEMPLATE 19 Otter Tail anticipates making a change to its Attachment O rate template concerning the treatment of accumulated deferred income taxes (“ADIT”) based on recent IRA Private Letter Rulings. The revisions modify the method used to calculate average ADIT balances. Otter Tail is working with other MISO Transmission Owners to file an updated formula template with FERC and will request this update become effective January 1, 2016. Otter Tail is still working through the calculations and does not have a final impact at this time. Otter Tail will post the updated 2016 revenue requirements for Attachment O, GG and MM on OASIS once the calculation is completed and the template change request filing has been filed with FERC. The information in this presentation is based on the currently effective rate template.

20. 19 If you have any additional questions after the meeting, please submit via e-mail to: Stacie Hebert shebert@otpco.com Questions and answers will be posted on Otter Tail’s OASIS website (http://www.oasis.oati.com/OTP/index.html) within two weeks from the date of inquiry.