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Agenda
• Introduction• Disclosure• Meeting purpose• Great River Energy corporate profile• Attachment O calculation• Capital projects • Budget risks• Information exchange procedures• Question/answer
Disclosure
All figures in this document are preliminary and subject to change. Per the revised Formula
Rate Protocols, figures will be finalized after the Information Exchange, Challenge Procedures,
and MISO’s review are complete1.
1 Awaiting FERC’s final decision on Docket ER13-2379 on FERC’s investigation into MISO Formula Rate Protocols
Meeting purpose
FERC requires GRE to hold an annual projected rate meeting by October 31 each year to (i) permit GRE to explain and
clarify it’s projected net revenue requirement and (ii) provide interested parties an opportunity to seek information and clarifications from GRE about the projected net revenue
requirement
Great River Energy’s projected net revenue requirement and associated network rate commencing January 1, 2015 is
calculated using GRE’s Attachment O formula rate template within the MISO tariff
Corporate profile
• 28 member cooperatives – 650,000 member-consumers
• 4th largest Generation & Transmission cooperative in the nation– $3.7 billion assets– $2.8 billion debt– $980 million revenue
• 880 employees (MN and ND)• 3,619 MW generation
– 701 MW renewables• 4,660 miles transmission• 102 transmission substations
Attachment O
• Forward rate requirements• GRE revenue requirement distribution• Rate base• Operating expenses• Rate of return• Revenue requirement• Network rate summary
Forward rate requirements
• By June 1 of each year GRE will post on OASIS all information in regards to our Attachment O, Attachment MM, and Schedule 1 True-Up Adjustment for the prior year including the associated workpapers and supplemental notes
• By August 1 of each year GRE will post on OASIS all information in regards to our Attachment GG True-up Adjustment for the prior year
• By September 1 of each year GRE will post on OASIS our projected Attachment O, Attachment GG, Attachment MM, and Schedule 1 including the True-Up Adjustments, associated work papers, and supplemental notes
• By October 31 of each year, GRE will hold an Annual Projected Rate Meeting to permit GRE to explain and clarify our projected net revenue requirement
GRE revenue requirement distribution
GRE NET ATRR
GRE PRICING
ZONE
ITCM PRICING
ZONE
MP PRICING
ZONE
NSP PRICING
ZONE
OTP PRICING
ZONE
Per Schedules 7,8, & 9 of the MISO Tariff, each Transmission Owner's total revenue requirement is allocated proportionately to each Zone in which the Transmission Owner owns transmission facilities based on the gross plant
value of its facilities located in that Zone relative to the gross plant value of its facilities in all Zones, as reflected in Attachment O
* Per Docket ER10-187, the gross plant value to use is transmission gross plant less the gross plant value of transmission facilities associated with Attachment GG and MM.
Rate base
Rate Base Item2014 Projected
Amount2015 Projected
Amount $ Change % Change Explanation
Gross Plant In Service $ 960,431,604 $ 1,077,306,524 $ 116,874,920 12.17%Remainder of Brookings and Fargo CapX projects going into service
Accumulated Depreciation $ 322,572,983 $ 310,138,514 $ (12,434,469) -3.85%
Net Plant In Service $ 637,858,622 $ 767,168,010 $ 129,309,388 20.27%Remainder of Brookings and Fargo CapX projects going into service
100% CWIP Recovery for Incentive Rate Transmission Projects $ 101,165,538 $ 40,815,524 $ (60,350,014) -59.65%Remainder of Brookings and Fargo CapX projects going into service
Adjustments To Rate Base $ (13,256,507) $ (18,023,811) $ (4,767,304) 35.96%AFUDC offset increasing due to remainder of CapX projects going into service
Land Held For Future Use 0 0 0 0
Working Capital $ 29,996,231 $ 28,950,392 $ (1,045,839) -3.49%
Rate Base $ 755,763,883 $ 818,910,115 $ 63,146,231 8.36%= Net Plant + CWIP + Adjustments + LHFFU + Working Capital
Operating expenses
Expense Item2014 Projected
Amount2015 Projected
Amount $ Change % Change Explanation
O&M $ 38,190,787 $ 46,592,008 $ 8,401,221 22.00%
Increasing O&M costs associated with: regulatory compliance activities (NERC), CapX capital additions, vegetation management expense
A&G $ 10,973,064 $ 11,301,656 $ 328,592 2.99%
Depreciation Expense $ 25,901,568 $ 26,070,575 $ 169,008 0.65%Increasing due to remainder of CapX projects going into service
Taxes Other Than Income Taxes $ 2,226,382 $ 2,240,317 $ 13,935 0.63%
Income Taxes $ - $ - $ - 0.00%GRE doesn't pay income taxes
Operating Expenses $ 77,291,800 $ 86,204,556 $ 8,912,756 11.53%= O&M + A&G + Depreciation + Taxes
Rate of return
2014 Projected
Amount2015 Projected
Amount Change % Change Explanation
Long Term Debt 86.60% 83.82% -2.78% -3.21%
Proprietary Capital 13.40% 16.18% 2.78% 20.75%GRE is working on a corporate strategy to raise our equity to 20% by 2020
Total 100% 100% = Debt + Equity
Weighted Cost of Long Term Debt 4.52% 4.70% 0.18% 3.99%
Weighted Cost of Proprietary Capital 1.66% 2.00% 0.34% 20.75%
Rate of Return 6.18% 6.70% 0.52% 8.49%= (LT Debt * Cost) + (Equity * Cost)
Revenue requirement
2014 Projected
Amount2015 Projected
Amount $ Change % Change Explanation
Rate Base $ 755,763,883 $ 818,910,115 $ 63,146,231 8.36%From "Rate Base" Calculation
Return $ 46,689,363 $ 54,885,110 $ 8,195,747 17.55%= Rate of Return * Rate Base
Operating Expenses $ 77,291,800 $ 86,204,556 $ 8,912,756 11.53%From "Operating Expense" Calculation
Attachment GG Adjustment $ (22,556,884) $ (31,752,332) $ (9,195,448) 40.77%Attachment GG Revenue Requirement
Attachment MM Adjustment $ (9,983,045) $ (14,079,982) $ (4,096,937) 41.04%Attachment MM Revenue Requirement
Gross Revenue Requirement $ 91,441,234 $ 95,257,351 $ 3,816,117 4.17%= Return + Operating Expenses - Adjustments
Revenue Credits $ (4,005,472) $ (3,304,621) $ 700,851 -17.50%
Revenue Requirement w/o True-Up $ 87,435,762 $ 91,952,730 $ 4,516,968 5.17%
Attachment O True-Up $ 2,807,652 $ 2,851,351 $ 43,699 1.56%2013 True-Up included in 2015 rate may change pending MISO's review.
Net Revenue Requirement $ 90,243,415 $ 94,804,082 $ 4,560,667 5.05%= Gross Rev Req - Rev Credits + True-Up
Network rate summary$/
kW/M
o
$(0.75)
$(0.25)
$0.25
$0.75
$1.25
$1.75
$2.25
$2.75
$3.25
$3.75
$4.25
2014 Projected Rate$3.71
Return $0.27
Op Exp $0.25
GG$(0.34)
MM $(0.15)
Rev Cr $0.03
True-Up $(0.01)
2015 Projected Rate $3.76
$0.05 Rate Increase
2015 GRE revenue requirement distribution
GRE NET ATRR $94,804,082
100%
GRE PRICING ZONE
$52,005,900
54.9%
ITCM PRICING ZONE $2,920,963
3.1%
MP PRICING ZONE $9,228,091
9.7%
NSP PRICING ZONE
$25,301,984
26.7%
OTP PRICING ZONE $5,347,144
5.6%
Total Attachment O, GG and MM Revenue Requirement = $139,928,601*
Attachment GG $31,300,043
Attachment MM
$13,824,476
Attachment O
*Inclusive of 2013 True-Up Amounts
2015 Capital additions
Attachment O $31.5M
GRE PRICING
ZONE
$17.7M
MP PRICING
ZONE
$0.8M
NSP PRICING
ZONE
$10.4M
OTP PRICING
ZONE
$2.3M
Attachment GG $117.4M
Attachment MM $49.5M = $198.4M+ +
• Attachment O facilities do not include “excluded facilities” per page 4 of Attachment O
ITCM PRICING
ZONE
$0.3M
2015 Capital additionsAttachment “O” projects > $100K
GRE Project ID
Project Name kV Type ISDControl Area
Forecasted Capital Addition
200229 Ortman to Big Fork 69 kV 20 mi Transmission Line 69KV TRANS.LINE 7/8/2015 GRE $7,808,783201128 Ramsey-Grand Forks (80 mi.) 230 kV Rebuild - Str. 227-307 (2) 230KV TRANS.LINE 3/19/2015 GRE $4,002,29675591 Ortman 230/69 kV Substation 69KV TRANS.SUBST 7/16/2015 GRE $3,643,809200209 Wirt 69 kV 3-way motor operated switch 69KV TRANS.LINE 10/8/2015 GRE $344,935202975 Dickinson (S062) - 345 kV Breaker Fail/Bus Differential Replacement 345KV TRANS.SUBST 5/27/2015 GRE $286,149203210 Dickinson - Install 345kV Line CCVT's 345KV TRANS.SUBST 5/11/2015 GRE $220,688202104 Cromwell Distribution Switch (SS2912) 69KV TRANS.LINE 3/2/2015 GRE $176,79682821 Highland 3-Way Manual Load Break 1200A Tap Switch 69KV TRANS.LINE 5/27/2015 GRE $164,999200208 Jessie Lake 69 kV 1-way manual switch 69KV TRANS.LINE 10/8/2015 GRE $127,047
203031 Heron Lake Relay Replacement 69KV TRANS.SUBST 10/6/2015 ITCM $148,896
201719 New Market to Veseli 115kV Double Circuit (6 mi) 115/69kV TRANS.LINE 12/11/2015 NSP $6,096,04750401 Ravenna Distribution Substation (DEA) 115KV TRANS.DISTSUB 3/16/2015 NSP $794,744202118 CDX Line - Tree Easement Reclamation 345kV TRANS.LINE 11/25/2015 NSP $669,909203081 Benton County - Replace Bus Diff, Add Sec Diff 345KV TRANS.SUBST 10/16/2015 NSP $637,038202418 Elrosa Switch Upgrade 69 kV 1200A, MOD's, FLB 69KV TRANS.LINE 4/13/2015 NSP $327,756203034 Dickinson 115kV RTU Replacement 115/69kV TRANS.SUBST 12/8/2015 NSP $298,115202450 Benton County RTU's 345KV TRANS.SUBST 1/22/2015 NSP $258,719202005 New Market 3-Way Manual Quick Whip 115kV Sw. 115/69kV TRANS.LINE 8/21/2015 NSP $199,998203082 Hader 69 kV 3-Way Switch Replacement 69KV TRANS.LINE 10/8/2015 NSP $198,154202419 Grove Switch Upgrade 69 kV 1200A, FLB 69KV TRANS.LINE 10/19/2015 NSP $176,292203122 Miesville DA-MIT Tap Realignment 69KV TRANS.LINE 11/11/2015 NSP $122,450
202378 Miltona - 115/41.6kV Spare Transformer 115/41.6kV TRANS.SUBST 4/28/2015 OTP $1,102,422203007 Cormorant Jct SS2813 115 kV Switch Replacement 115KV TRANS.LINE 10/8/2015 OTP $297,449203212 Gorton Dist Sub - 3-Way Tap Switch 41.6KV TRANS.LINE 7/9/2015 OTP $230,000203033 Kerkhoven RTU Replacement 115/41.6kV TRANS.SUBST 10/27/2015 OTP $197,929203032 Marsh Lake RTU Replacement 115/41.6kV TRANS.SUBST 10/27/2015 OTP $197,929202444 Roseville Switch - Replace RTU and Transient Study 41.6KV TRANS.SUBST 4/17/2015 OTP $148,975
2015 Capital additions Attachment “GG” projects
MISO Project ID
Project NameEstimated
ISDForecasted Capital
Addition286 CapX 2020 Monticello to Fargo 345kV Line 05/31/15 $103,350,7142634 Gowan Dist.-Cromwell 115kV Line (21mi double circuit) 4/10/2015 $13,060,6042634 Savanna-Gowan Dist. 115kV Line (9mi single circuit) 3/23/2015 $3,253,9312634 Cromwell Breaker Addition 6/11/2015 $679,805
2015 Capital additions Attachment “MM” projects
MISO Project ID
Project NameEstimated
ISDForecasted Capital
Addition
1203 CapX 2020 - Brookings -SE Twin Cities 345KV 03/31/15 $49,465,037
Budget risks
Revenue
Demand/weather
Regulatory filings
Financing
Outages
Timing of capital projects
Tight budgets
Information exchange procedures
• Interested parties can submit information requests until December 1, 2014
• GRE will make a good faith effort to respond within 15 business days of receipt of such requests
• Any information request must be submitted in writing to [email protected]
• GRE will post on the MISO website and OASIS all information requests from interested parties and GRE’s responses
Questions?
Additional questions may be submitted in writing to
Todd [email protected] or
Seth [email protected]