Westar Formula Rate and your bill

1. Westar Formula Rate and your bill

2. What we will be going over • Transferring the results from the Westar Formula Rate to the SPP tariff. • The SPP Tariff • Basic Cost Recovery • Cash flow through the SPP tariff • Base Plan Funding (BPF) • What goes into a Customer’s bill • Results from the 2010 projection • Customer bills

3. Overview Westar ATRR TO 2 ATRR TO 2 ATRR TO 17 ATRR SPP Tariff SPP bills its customers based upon these ATRRs and its FERC approved Tariff Each Transmission Owner in the SPP reports its authorized Annual Transmission Revenue Requirement (ATRR)

4. Westar Formula Rate • Annual Transmission Revenue Requirement Based on a fully projected 2010 Rate Year • Projection based on 13 month average rate base for 2010 • Beginning balance: 2008 Form 1 adjusted for projected 2009 • Ending Balance: Beginning balance plus 2010 projections • Add in any “True-up” balance (plus interest) from 2008 • True-up based on actual 2008 cost vs Projected 2008 ATRR for the period from June 1 to December 31 • Most Projections based on internal formulas • Projected O&M is based upon the change in Net Plant • Other factors held at 2008 levels • New Capital based on 2010 Construction Budget • Based on Projects required by SPP

5. The SPP Tariff - Rates • SPP is broken up into 17 different Pricing Zones • The Transmission Rates for each Zone are calculated by SPP • Annual Transmission Revenue Requirements (ATRR) from each Transmission Owner are used • Cost of Transmission Service for each Zone are based on the sum of all the ATRR allocated to that Zone (ZATRR) • Network Customers pay a Load Ratio share of the allocated ATRR • The Load Ratio shares are calculated in January each year based on the previous Calendar year period • (Customer 12 mo. Avg.. Peak / Zonal 12 mo Avg. Peak) • PTP rates are shown in Attachment T of the SPP Tariff • Total Allocated ATRR / Zonal 12 mo Avg. Peak from formula = Annual Rate.

6. SPP Tariff – Cost Recovery • Zonal charges • Transmission Plant in existence prior to Jan. 1, 2006 • Reliability Upgrades needed to meet local area criteria • Costs of new transmission projects assigned to the Zone by SPP • Regional charges • ATRR of each project is allocated to all Zones on a load ratio share basis • 12 mo. Zonal Avg. Load / (Σ 12 mo. Zonal Avg. Load for all zones) • Based on previous calendar year load values • Direct Assigned Costs • Costs assigned to specific transmission customers or Transmission Project Sponsors

7. SPP Tariff – Cost Recovery • Certain Transmission Projects can also qualify for Base Plan Funding (BPF) • Costs of BPF projects are recovered: 33% Regionally; 67% Zonally • Zonal costs are primarily allocated to the zone where the upgrade is built • Zonal Costs may be allocated to other Zones based upon benefit

8. SPP Tariff – Cost Recovery of New Transmission Upgrades • Reliability Projects • Normally BPF • If needed to meet local area reliability criteria that are more strict that SPP criteria, then its costs are assigned to the specific Zone • Upgrades related to requests for Transmission Service • Costs may qualify for Base Plan Funding • Otherwise, costs direct assigned to Customer • Economic Balanced Portfolio Upgrades • Regional • Sponsored Upgrades • Costs direct assigned to Sponsor • Generation Interconnection Service • Upgrades assigned to Generator, with credits from Attachment Z

9. Revenue Requirements from Transmission Owners to SPP Pricing Zones Westar’s Total ATRR BPF Projects SPP Tariff Westar Zonal ATRR Westar Zone Regional Charge 33% of Total BPF ATRR BPF Zonal Charges 67% OGE’s Total ATRR OGE Zone BPF ATRR OGE Zonal ATRR All Other SPP Price Zones All Other SPP TO’s Total ATRR BPF ATRR Zonal ATRR

10. BPF Projects Example of BPF Cost Allocation Total BPF Allocated Costs Regional Rate Rev. Req. Allocated By Load Ratio Share Westar Pricing Zone LRS=20% $3.20 $8.00 $1.20 ------- $12.40 $3.20 (20%) $8.00 (100%) $16 $1.20 (5%) BPF ATRR=$12 $4 Project 1 33% Regional 67% Zonal Allocation $4.80 (30%) SPP Pricing Zone 2 LRS=30% $4.80 $4.80 ------- $9.60 Zonal Rate Rev. Req. Allocated By Zonal Benefit (This is Done by Project) $8 $4.80 (20%) BPF ATRR=$36 $12 Project 2 33% Regional 67% Zonal Allocation $8.00 (50%) SPP Pricing Zone 3 LRS=50% $8.00 $18.00 ------- $26.00 $24 Zonal Rate Rev. Req. Allocated By Zonal Benefit (This is Done by Project) $18.00 (75%) Total BPF ATRR for all Projects = $48.00 Sum of Allocated BPF ATRR = $48.00

11. Customer Bill Make up SPP keeps Admin fees to support the RTO (Anc. 1A) SPP pays suppliers for Ancillaries 2 & 4 Ancillaries Supplied by SPP SPP Admin Charge (Schedule 1A) SPP Ancillary 2 - RV Ancillary 4 - EIS Customer 1 Ancillaries 3, 5 & 6 Supplied on behalf of SPP by Westar as necessary Westar’s Share of BPF Westar Generation Ancillary Services Ancillary 1 - SC BPF ATRR Allocated To Westar Zone Westar Retail = Acct. 566.0011 Other Whsle. bus. = Acct. 565. Schedule 11 Westar Transmission Cost Recovery Total Westar Zonal ATRR Schedule 9 Other Transmission Owners in SPP Other TO’s Share of BPF

12. Looking at 2010 . . .

13. Comparison between 2010 and 2009

14. BPF Transmission Projects • Westar • 41 BPF Projects totaling over $19.3 million (Rev. Req.) $126 million E&C. • Second phase of Wichita-Reno-Summit 345 kV line $101.4 million • AEP • 17 BPF Projects, Total=$12.6 million • Westar’s direct Zonal share, $0 • OGE • 10 BPF Projects, Total = $3.3 million • Westar’s direct Zonal Share, $296,630 • SPS, NPPD • 6 BPF Projects, Total = $2.0 million • Westar’s direct Zonal Share, $0

15. Estimated Westar Zonal Costs for 2010 2009 Zonal ATRR $115,050,240 2010 Zonal ATRR $128,879,788 Estimated 12% Increase

17. Questions?