1. Northern States Power Companies (NSPM & NSPW)
MISO Attachment O-NSP
Transmission Customer Meeting
June 26, 2018
Discussion: Attachment O Actual Costs 2017

2. Meeting Purpose / Objective
The purposes of today’s meeting are to:
Comply with the Attachment O-NSP Formula Rate Protocol requiring
a Customer Meeting to discuss the Actual 2017 Attachment O Cost
Information
Present the 2017 True-Up calculation that will be included in the
development of the projected rates that will be effective January 1
through December 31, 2019, and
Recap the 2017 Actual Attachment O cost information relative to the
2017 budget information upon which the 2017 Attachment O-NSP
estimated rates were calculated.
The dates and schedules, and even the projects themselves, represent our best estimates for projects to be initiated and completed. Please be aware that many factors could alter those schedules, including regulatory approvals, construction resources, availability of materials, weather, and other unforeseen events.

3. Attachment O-NSP Actual 2017 Revenue Requirement
Submitted to MISO and posted to OASIS on June 1, 2018
MISO is still performing their review on this submission
The 2017 True-Up plus interest will be included in the development
of the 2019 Attachment O-NSP Annual Transmission Revenue
Requirement (ATRR) and rates
The information currently on OASIS is incorporated in this presentation.

4. Attachment O-NSP 2017 True-Up Recap
Based upon total blended NSPM and NSPW Revenue Requirements
Actual Budget Difference
Net Revenue Requirement $350.3M $355.0M $ (4.7M) A
Projected Year Divisor True-Up
Divisor M M (0.118M)
Annual Cost ($/KW/Yr) * $ $ (0.0351)
Divisor True-Up * (Divisor Difference x Budget Rate) $ (5.0M) B
Total True-Up (Revenue Requirement & Divisor True-Up) $ 0.3M (A – B)
* Actual calculation performed on whole numbers

5. Comparison of 2017 True-Up to Prior Years
Test Year Rev Req Divisor Total
(A) (B) (A-B)
2017 True-Up $ (4.7M) $ (5.0M) $ M
2016 True-Up $(16.1M) $ (0.7M) $(15.4M)
2015 True-Up $(34.5M) $(15.2M) $(19.3M)
2014 True-Up $(18.9M) $(10.0M) $ (8.9M)
2013 True-Up $(16.8M) $ 7.7M $(24.5M)
2012 True-Up $(12.3M) $ (3.2M) $ (9.1M)
2011 True-Up $ M $ (1.4M) $ M
2010 True-Up $ 20.6M $ (0.5M) $ 21.1M

6. Comparison of 2017 Budget Revenue Requirement to 2017 Actual Revenue Requirement
Budgeted Net 2017 Revenue Requirement $355.0M
Cost Deviations for 2017:
Higher Operating Costs $ M
Lower Revenue Credits $ M
Lower Return Requirement $ (5.5M)
Higher Attachment GG & MM Credits $ (3.3M)
Actual Net 2017 Revenue Requirement $350.3M

7. Comparison of 2017 Budget Revenue Requirement to 2017 Actual Revenue Requirement
Budgeted Net 2017 Revenue Requirement $355.0M
Cost Deviations for 2017:
Higher Operating Costs $ M
Lower Revenue Credits $ M
Lower Return Requirement $ (5.5M)
Higher Attachment GG & MM Credits $ (3.3M)
Actual Net 2017 Revenue Requirement $350.3M

8. Change in Operating Costs Detail
Budgeted Operating Costs in 2017 Rate $315.1M
Higher O&M costs (Transmission and A&G) $ 2.4M
Higher depreciation expense $ 3.8M
Lower incurred taxes other than income $ (1.3M)
Lower income taxes $ (1.3M)
Net Decrease in Operating Costs $ M
Actual Operating costs for $318.7M

9. Comparison of 2017 Budget Revenue Requirement to 2017 Actual Revenue Requirement
Budgeted Net 2017 Revenue Requirement $355.0M
Cost Deviations for 2017:
Higher Operating Costs $ M
Lower Revenue Credits $ M
Lower Return Requirement $ (5.5M)
Higher Attachment GG & MM Credits $ (3.3M)
Actual Net 2017 Revenue Requirement $350.3M

10. (Other revenue received that offsets total revenue requirement)
Change in Net Revenue Credits
(Other revenue received that offsets total revenue requirement)
Estimated Revenue Credits in 2017 Rate $11.6M
Actual Revenue Credits in $11.1M
Difference which increased 2017 Revenue Req $ (0.5M)
Components of Revenue Credits:
Rental Revenues higher than budget $ 0.4M
Point to Point usage lower than budget $(0.9M)
$(0.5M)

11. Comparison of 2017 Budget Revenue Requirement to 2017 Actual Revenue Requirement
Budgeted Net 2017 Revenue Requirement $355.0M
Cost Deviations for 2017:
Higher Operating Costs $ M
Lower Revenue Credits $ M
Lower Return Requirement $ (5.5M)
Higher Attachment GG & MM Credits $ (3.3M)
Actual Net 2017 Revenue Requirement $350.3M

12. Annual Revenue Requirement Determination Function of: Rate Base x
Weighted Cost of Capital

13. Change in Rate Base Total Budgeted Rate Base – 2017 $2,609.6M
Lower Average Net plant in service $ (6.7M)
Higher Average CWIP $ M
Higher Accumulated Deferred Taxes $ M
(deducted from rate base)
Lower Other Working Capital $ (1.3M)
Net Decrease in rate base $ (44.7M)
Total Actual Rate Base – $2,564.9M

14. Change in Cost of Capital
Weighted Cost of Capital
2017A 2017B
D/E Ratio Cost * D/E Ratio Cost *
LTD % 2.16% % %
Equity % 5.67% % %
7.83% %
* Actual calculation performed on whole numbers

15. Reconciliation of Change in Return for 2017
Change in Rate Base* $(44.7M) x 7.83% $ (3.5M)
PY Rate base x decrease in WCC* $2,609.6M x (0.08)% $ (2.0M)
Net change in return $ (5.5M)
Overall lower Return was a function of lower Rate Base and the decrease in Weighted Cost of Capital
* Actual calculation performed on whole numbers

16. Comparison of 2017 Budget Revenue Requirement to 2017 Actual Revenue Requirement
Budgeted Net 2017 Revenue Requirement $355.0M
Cost Deviations for 2017:
Higher Operating Costs $ M
Lower Revenue Credits $ M
Lower Return Requirement $ (5.5M)
Higher Attachment GG & MM Credits $ (3.3M)
Actual Net 2017 Revenue Requirement $350.3M

17. Components of Attachment GG & MM
Attachment GG Attachment MM
Rev Req Budget for $ 79.0M $ 55.5M
Operating expenses (1) $ 0.4M $ 0.4M
Depreciation expense $ 2.2M $ 0.5M
Taxes other $ (0.2M) $ 0.2M
Income taxes $ (0.4M) $ 0.6M
Return $ (1.2M) $ 0.8M
Rev Req Actual $ 79.8M $58.0M
Higher 2017 Actuals $ 0.8M $ M $ 3.3M
Attachment GG & MM revenue requirements are deducted from Attachment O,
higher credits reduce Attachment O revenue requirements
(1) Includes Common & General depreciation calculation

18. Principal Rate Analyst
Questions?
Contacts:
Carolyn M Wetterlin
Sr. RTO Manager
Thomas E Kramer
Principal Rate Analyst