1. October 30, 2014 Terry Wolf, Manager of Transmission Services

2. Agenda Meeting Purpose MRES Profile Attachment O Calculation Question/Answer MMU Profile Attachment O Calculation Question/Answer Regulatory Background and Outstanding Issues

3. Meeting Purpose To provide an informational forum regarding the MRES forecasted Attachment O for 2015. The forecasted Attachment O for 2015 is calculated using the Midwest ISO’s EIA Form 412 Attachment O- MRES template with a projected net revenue requirement and projected load. Rates become effective on January 1, 2015 for joint pricing zone comprised of Otter Tail Power Company, Great River Energy, and MRES. Attachment GG, MM effective January 1, 2015.

4. Missouri River Energy Services MRES Member MRES Generation Resource Planned MRES Generation Resource Federal Hydroelectric Dam Transmission Projects (MBPP, Irv Simmons, ITA, CapX (Fargo, Brookings) - 61 Members served - Transmission: ~239 miles -Generation: ~744 MW -Renewable: ~86 MW

5. MRES FERC Activities Transmission facilities are owned by Western Minnesota Municipal Power Agency (WMMPA) FERC Declaratory Order (EL08-22, 12/08) combines financial statements for ATRR Attachment O effective 6/1/11 Incentive filing (EL11-45, 6/11) CapX; Fargo P2 & P3, and Brookings CWIP, Abandon Plant, Hypothetical cap structure 205 filing (ER12-351, 11/11) FERC Approved ER12-351, and EL 11-45 on January 20, 2012

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

7. Forward Rate Requirement By June 1 of each year, MRES will post on OASIS all information regarding any Attachment O True-up Adjustments for the prior year. 2015 Forward Looking Attachment O will be true-up info will be posted June 2014 from 2013 financials. MRES will post on OASIS its projected Net Revenue Requirement including the True-Up Adjustment and load for the following year, and associated work papers in September. MRES will hold a customer meeting to explain its formula rate input projections and cost detail.

8. Total Rate Base Rate Base Item 2014 Projected (Monthly Average) 2015 Projected (Monthly Average) $ Change % Chang e Explanation Gross Plant in Service $ 107,061,023 $ 163,462,421 $ 56,401,39852.7% The increase is due mainly to the projected energization of CapX Fargo Phase 3 and a portion of CapX Brookings. Accumulated Depreciation $ 37,444,201 $ 40,020,878 $ 2,576,6776.9% Net Plant in Service $ 69,616,822 $ 123,441,543 $ 53,824,72177.3% CWIP $ 45,433,754 $ 12,378,619 $(33,055,135)-72.8% Working Capital, M&S and Prepayments $ 1,545,076 $ 1,709,614 $ 164,53810.6% Total Rate Base $ 116,595,652 $ 137,529,777 $ 20,934,12518.0%Net Plant + CWIP + Working Capital Note: The above numbers are transmission only and general and intangible plant allocated to transmission.

9. Rate Base Earning Hypothetical Capital Structure Return Rate Base Item 2014 Projected (Monthly Average) 2015 Projected (Monthly Average) $ Change % Change Explanation Gross Plant in Service $ 35,271,170 $ 87,233,135 $ 51,961,965147.3% The increase is due mainly to the projected energization of CapX Fargo Phase 3 and a portion of CapX Brookings. Accumulated Depreciation $ 493,553 $ 1,925,723 $ 1,432,170290.2% Net Plant in Service $ 34,777,617 $ 85,307,412 $ 50,529,795145.3% CWIP Projects included in Rate Base $ 45,433,754 $ 12,378,619 $ (33,055,135)-72.8% Working Capital $ - - % Rate Base- Hypothetical Capital Structure $ 80,211,371 $ 97,686,032 $ 17,474,66121.8%Net Plant + CWIP + Working Capital Note: The above numbers are transmission.

10. Operating Expenses Expense Item 2014 Projected 2015 Projected $ Change % Change Explanation O&M $ 5,592,612 $ 5,978,422 $ 385,8106.9% Depreciation Expense $ 1,895,223 $ 3,029,955 $ 1,134,73259.9% Increase in Depreciation Expense is due to projected plant additions. Taxes Other than Income $ 496,027 $ 911,077 $ 415,05083.7% Increase in other taxes is due to projected property taxes on additional transmission plant in service. Operating Expense $ 7,983,862 $ 9,919,454 $ 1,935,59224.2%O&M + Depreciation + Taxes Note: The above numbers are transmission only and A&G expenses, general plant depreciation and taxes allocated to transmission.

11. Return on Rate Base (Actual Capital Structure) 2014 Projected 2015 Projected $ Change % ChangeExplanation Long Term Debt75%78% $-4.00% Proprietary Capital25%22% $--12.0% Total100.00% $- - % Cost of Debt5.43%4.88% N/A -10.1%Lower cost of 2014 debt issue MISO Equity Return12.38% N/A 0.0% Equity return approved for MISO Transmission Owners. Rate of Return7.18%6.53% N/A -9.1% (LTD*Cost of Debt) + (Proprietary Capital * MISO Equity Return) Total Rate Base $ 116,595,652$137,529,777 $ 32,957,15218.0%From Rate Base Calculation Allowed Return – Actual Capital Structure $ 8,373,575 $ 8,979,168 $ 2,228,6747.2% Increase largely due to additional transmission investment. See Rate Base slide for additional detail.

12. Return on Rate Base (Hypothetical Capital Structure) 2014 Projected 2015 Projected Comments Long Term Debt55% Capital Structure approved in docket EL 11-45-000. Proprietary Capital45% Total100.00% Weighted Cost of Debt5.43%4.88%See previous slide. MISO Equity Return12.38% Rate of Return – Hypothetical Capital Structure 8.56%8.26% 55% * Cost of Debt plus 45% * 12.38% Rate of Return - Actual Capital Structure7.18%6.53%See previous slide. Difference between Hypothetical and Actual Capital Structure 1.375%1.727% Rate Base - Hypothetical Capital Structure $ 80,211,371$ 97,686,032 Additional Return – Hypothetical Capital Structure $ 1,102,658$ 1,687,476 Hypothetical and actual capital structure difference * Hypothetical Capital Structure Rate Base

13. Revenue Requirements, Excluding Prior Year True-Up 2014 Projected 2015 Projected $ Change % Change Explanation Return - Actual Capital Structure $ 8,373,575$ 8,979,168 $ 605,5937.2% Increase due to additional investment in CapX transmission plant. Additional Return – Hypothetical Capital Structure $ 1,102,658$ 1,687,476 $ 584,81853.0% Increase due to additional investment in CapX transmission plant. Operating Expense $ 7,983,862$ 9,919,454 $ 1,935,59224.2% See Operating Expense slide for details. Total Revenue Requirement Before Prior Year True-Up $ 17,460,096$ 20,586,098 $ 3,126,00217.9% Attachment GG Adjustments $ (8,086,829)($ 9,742,309) $ (1,655,480)-20.5% Projected credit for the CapX Fargo Project. Attachment MM Adjustments $ (3,129,634)($ 4,445,882) $ (1,316,248)-42.1% Projected credit for the CapX Brookings Project. Attachment O Revenue Requirement Before credits $ 6,243,633$ 6,397,908 $ 154,2752.5% Revenue Credits $ 135,153 $ -0.0% Revenue credits assumed to remain unchanged from 2014 to 2015. Net Attachment O Revenue Requirement Before Prior Year True-Up $ 6,108,480$ 6,262,755 $ 154,2752.5% Revenue Requirement before credits less Revenue Credits

14. Revenue Requirements, Including Prior Year (2013 Actual) True-Up 2014 Projected 2015 Projected $ Change % Change Attachment O Before True-Up $ 6,108,480 $ 6,262,755 $ 154,2752.5% Attachment O True-up, Including Interest $ (1,489,607) $ 339,555 $ 1,829,162-122.8 Attachment O Revenue Requirement Including True-Up $ 4,618,873 $ 6,602,310 $ 1,983,43742.9% Attachment GG Before True-Up $ 8,086,829 $ 9,742,309 $ 1,655,48020.5% Attachment GG True-up, Including Interest $ (1,368,055) $ 56,044 $ 1,424,099-104.1% Attachment GG Revenue Requirement Including True-Up $ 6,718,774 $ 9,798,353 $ 3,079.57945.8% Attachment MM Before True-Up $ 3,129,634 $ 4,445,882 $ 1,316,24842.1% Attachment MM True-up, Including Interest $ (273,057) $ 302,570 $ 575,627-210.8 Attachment MM Revenue Requirement Including True-Up $ 2,856,577 $ 4,748,452 $ 1,891,87566.2%

15. 15 MRES Total ATRR Attachment O, GG, MM $21,149,115 Attachment O $6,602,310 31% Non-MISO IS PRICING ZONE $3,338,091 51% of Att O MISO OTP PRICING ZONE $ 3,264,219 49% of Att O MISO Attachment GG CapX Fargo $ 9,798,353 46% MISO Attachment MM CapX Brookings $ 4,748,452 23% 2015 MRES Annual Transmission Revenue Requirement Distribution

16. Marshall Municipal Utilities - Located in SW MN - Load ~ 85 MW - Transmission - ~ 15 miles - 6 HV substations -Generation: -CT and Wind Interconnected

17. MMU FERC Activities Transmission facilities are owned by Marshall Municipal Utilities Commission (MMU) MMU is a member of MRES MRES has an agency agreement with MMU (6 th agency agreement in MISO) MRES will be signatory to JPZ in NSP zone MISO made FLTY filing on October 21, 2014, asking for effective date of 1/1/15, ER15- 142

18. Forward Looking Attachment O Forward Rate Requirements Rate Base Operating Expenses Revenue Requirement and Rate Network Rate Summary

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

20. Total Rate Base Rate Base Item 2014 Projected (Monthly Average) 2015 Projected (Monthly Average) $ Change % Change Explanation Gross Plant in Service $ 17,071,419 Accumulated Depreciation $ 8,774,764 Net Plant in Service $ 8,296,655 Working Capital, M&S and Prepayments $ 102,143 Total Rate Base $ 8,398,798 Note: The above numbers are transmission only and general and intangible plant allocated to transmission.

21. Operating Expenses Expense Item 2014 Projected 2015 Projected $ Change % Change Explanation O&M $ 558,847 Depreciation Expense $ 557,718 Taxes Other than Income $ 291,577 Operating Expense $ 1,408,143Sum of prior 3 items Note: The above numbers are transmission only and A&G expenses, general plant depreciation and taxes allocated to transmission.

22. Return on Rate Base 2014 Projected 2015 Projected $ Change % Change Explanation Long Term Debt33% Proprietary Capital67% Total100.00% Cost of Debt4.09% MISO Equity Return12.38% Equity return approved for MISO Transmission Owners. Rate of Return9.6% (LTD*Cost of Debt) + (Proprietary Capital * MISO Equity Return) Total Rate Base $ 8,398,798From Rate Base Calculation Return $ 806,637

23. Revenue Requirements, Excluding Prior Year True-Up 2014 Projected 2015 Projected $ Change % Change Explanation Return$ 806,637 Operating Expense$ 1,408,143 Total Revenue Requirement Before Prior Year True-Up $ 2,214,780 Attachment GG AdjustmentsNA Attachment MM AdjustmentsNA Attachment O Revenue Requirement Before credits $ 2,214,780 Revenue Credits$ 0 Assumed zero because no basis to estimate. Net Attachment O Revenue Requirement Before Prior Year True-Up $ 2,214,780

24. Regulatory / FERC Issues Complaint against MISO TOs regarding ROE and certain TOs regarding capital structure ( ER14-12) Unknown timing and impacts Resolved in 2015?? Complaint against MISO TOs regarding Protocols (Docket EL12-35) Required changes in timing and info shared MMU FERC Filing ER15-142

25. Regulatory / FERC Issues, Procedures and Timing By June 1st Post actual calculations and true-ups based on prior year’s Rate Information By September 1st Meet with Interested Parties to discuss the actual prior year’s Rate information December 1st Deadline for information requests By January 10th Must respond to information requests January 31st Deadline for informal challenges March 15th Annual Informational filing March 31st Deadline for formal challenges

26. Questions If you have any additional questions after the meeting, please submit via e-mail to Terry Wolf: twolf@mrenergy.com All questions and answers will be distributed by e-mail to all attendees. Additionally, the questions and answers will be posted on the MRES OASIS website (http://oasis.midwestiso.org/OASIS/MRET) within two weeks from the date of inquiry.