1 RTWG Tariff update to the BOD, MOPC, SPC, and RSC January 4, 2005.

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RTWG Tariff update to the BOD, MOPC,

SPC, and RSCJanuary 4, 2005

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RTWG Tariff Update

Where are we in the process

What is the expected timeline for completion

Review of the proposed tariff changes

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Overview RTWG is making changes to the

tariff to implement the RSC approved Participant Funding plan

Clarifications or fundamental questions regarding the plan are referred back to the RSC/CAWG

RTWG is NOT discussing the merits of the plan

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A Review of the RSC Plan

100% of the costs of approved Base Plan upgrades are recovered through the tariff

The Plan defines the rules for how an upgrade is included in the Base Plan

RTO approved reliability upgrade

Upgrades required by a Network Customers to receive power from a new DNR if upgrades meet certain criteria

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RSC Plan (cont) Conditions for Base Plan Treatment of

upgrades for new DNRs

Minimal cost (<$100,000)

DNR must be a 5yr or longer firm entitlement

Customer can not exceed a 125% reserve margin

Upgrade costs capped at $180,000/MW

The Plan does allow for SPP to waive some or all of the above conditions

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RSC Plan (cont) Waiver requirements

Customer must request the waiver and give supporting documentation

SPP staff will review the waiver request

SPP staff will then present the waiver request and its recommendation to the MOPC

MOPC will pass the waiver, the SPP staff recommendation and its recommendation to the BOD

SPP BOD will decide on the waiver request

The customer has the right to present their position at all levels

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Required Tariff Changes The RSC Plan calls for major changes in rate design

Will have a two tiered rate:

Current Zonal Charge – For customers that take service under the tariff

Base Plan Charge –applied to all load in SPP for recovery of Base Plan upgrade costs with regional and zonal components

Facilities not eligible for Base Plan treatment directly assigned with revenue credits

A new schedule is required to implement the plan

The remaining changes are primarily in rewriting Attachments H, J, L & S

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Issues Still Before the RTWG Outstanding questions posed to the

RSC/CAWG

Can a customer recover any directly assigned costs as a credit pursuant to Attachment Z?

How should the Credits for delayed or deferred Base Plan Projects be calculated? (RR or Cost)

Should project costs of < $100,000 be directly assigned to the host zone or split between the Regional and zonal rates?

Finalize remaining tariff language

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Possible Reasons forDelaying a Filing

Delayed response from RSC/CAWG to outstanding questions

Responses from RSC/CAWG require major changes to proposed language

A problem in the proposed tariff language is discovered at the last minute

RSC/CAWG request changes to the proposed tariff language

Proposed Language is not approved by the MOPC and/or the BOD

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Time Table

RTWG meets this week to try and finalize the tariff language

Targeted to get language to MOPC and BOD for their review and approval at their respective January meetings

December FERC filing provides for January policy review and February implementation of any directives

SPP committed to file by March 1

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Questions???

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Transmission Cost Allocation Proposal –

SPP Tariff Modifications January 4, 2005

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Implementation of Proposal

Need to modify the Tariff to:

Allocate costs for new transmission upgrades

Establish rates for collecting the costs

Recover and distribute the TOs revenue requirement

Document new defined terms

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Major Tariff Changes for Implementation of Cost Allocation

Proposal Modify Attachment J – Recovery of Costs

Associated with New Facilities

Presently includes sunset provision for roll-in

Allocates costs for new upgrades

Add Part V & Schedule 11 – Base Plan Charge

Establishes rates and applicability of the rates to recover TOs revenue requirement for new upgrades

Modify Attachment L – Treatment of Revenues

Distributes revenues collected under Schedule 11 to the TOs

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Attachment JCost Allocation Provisions Base Plan Upgrades

Economic Upgrades

Requested Upgrades

Provides a link to existing Attachment Z, Aggregate Transmission Service Study Procedures

Generation interconnection related Network Upgrades

Provides a link to existing Attachment V, Large Generator Interconnection Procedures

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Attachment JOther Provisions

Review of the regional allocation factor & zonal allocation methodology at least once every 5 years

Conditions for including future DNRs as Base Plan Upgrades (Safe Harbor)

Waiver process for DNRs that do not meet the Safe Harbor conditions

Intra-zonal allocation review process

Cost allocation provision for Network Upgrades that defer or displace the need for a Base Plan Upgrades

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New Part V – Recovery of Costs for Base Plan Upgrades

Establishes a “new” charge (Base Plan Charge) to collect the revenue requirement for Base Plan Upgrades & any portion of other Network Upgrades that are eligible for Base Plan Upgrade treatment

Sets out applicability of the charge

Provides a link to new Schedule 11 that sets out the rate/charge

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Applicability of Base Plan Charge

The intent is to apply this charge to ALL load within the SPP footprint:

Load currently taking network service under the SPP Tariff; and

To all other load that is not currently taking service under the SPP Tariff

Bundled retail load for which Transmission Owners have not requested service under the SPP Tariff

All load being served under Grandfathered Agreements

To Transmission Customers taking P-to-P under the SPP Tariff

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New Schedule 11 – Base Plan Charge

Charge to Network Customers & TOs for load is assessed on a load ratio share basis

Charge to Transmission Customers taking P-to-P under the SPP Tariff is based on Reserved Capacity

Zonal component & regional component assessed for load & for P-to-P

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Attachment L – Treatment of Revenues

Currently establishes distribution of revenues to TOs collected by SPP for transmission service and other services

Adds new provision for distribution of revenues to TOs collected by SPP under new Schedule 11

In proportion to their respective ATRRs for new transmission upgrades

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Other Tariff Changes Section 1 – Definitions

Attachment H – Annual Transmission Revenue Requirement

Attachment S – Procedure for Calculation of MW-Mile Impacts

Provisions governing revenue distribution in the event of customer non-payment