2016 Attachment O Customer Meeting

1. 2016 Attachment OCustomer Meeting October 30, 2015

2. Agenda • Meeting Purpose • Otter Tail Power Company Profile • Attachment O Calculation • Capital Projects • Budget Risks • Pending Updates to the Formula Template • Question/Answer

3. Legal Disclosure All numeric data provided in this presentation is preliminary and subject to change. All information will be finalized by 12/31/15.

4. Meeting Purpose • To provide an informational forum regarding Otter Tail’s forecasted Attachment O for 2016. • The forecasted Attachment O for 2016 is calculated using the FERC Form 1 Attachment O template under the MISO Tariff with a projected net revenue requirement and projected load. • Rates become effective on January 1, 2016 for the joint pricing zone comprised of Otter Tail, Great River Energy, and Missouri River Energy Services, Benson Municipal Utilities, Detroit Lakes Public Utilities, and Alexandria Light & Power.

5. 70,000 Square miles • 130,200 Customers • 422 Communities • Avg. population about 400 • 785 Employees • 495 Minnesota • 200 North Dakota • 90 South Dakota • About 800 MW owned generation • About 245 MW wind generation • About 5,400 miles of transmission lines Service area LANGDON WIND ENERGY CENTER Rugby Devils Lake Crookston SOLWAY COMBUSTIONTURBINE Garrison Bemidji COYOTESTATION LUVERNE WIND FARM ASHTABULA WIND ENERGY CENTER Jamestown ASHTABULA III JAMESTOWNCOMBUSTIONTURBINE Fergus Falls NORTH DAKOTA Wahpeton HOOT LAKE PLANT Oakes SOUTH DAKOTA Morris BIG STONE PLANT Milbank LAKE PRESTONCOMBUSTION TURBINE

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

7. Forward Rate Requirements • By June 1 of each year, Otter Tail will post on OASIS all information regarding any Attachment O True-up Adjustments for the prior year. • By September 1 each year, Otter Tail will post on OASIS its projected Net Revenue Requirement including the True-Up Adjustment and load for the following year, and associated work papers. • Otter Tail will hold a customer meeting by October 31 each year to explain its formula rate input projections and cost detail.

8. RATE BASE Note: The above numbers are Transmission only

9. OPERATING EXPENSES Note: The above numbers are Transmission only

10. REVENUE REQUIREMENT AND RATE

11. Rate Summary $0.25 or 8.4% increase

12. TOTAL TRANSMISSION REVENUE REQUIREMENT BREAKDOWN

13. 2016 Transmission Projects

14. ATTACHMENT O CAPITAL PROJECTS: TRANSMISSION LINE PROJECTS > $200K

15. ATTACHMENT O CAPITAL PROJECTS: TRANSMISSION LINE PROJECTS > $200K

16. ATTACHMENT O CAPITAL PROJECTS: TRANSMISSION LINE PROJECTS > $200K

17. ATTACHMENTS GG AND MM CAPITAL PROJECTS: TRANSMISSION LINE PROJECTS > $200K

18. Budget Risks

19. Pending updates to formula template • Otter Tail anticipates making a change to its Attachment O rate template concerning the treatment of accumulated deferred income taxes (“ADIT”) based on recent IRA Private Letter Rulings. • The revisions modify the method used to calculate average ADIT balances. • Otter Tail is working with other MISO Transmission Owners to file an updated formula template with FERC and will request this update become effective January 1, 2016. • Otter Tail is still working through the calculations and does not have a final impact at this time. • Otter Tail will post the updated 2016 revenue requirements for Attachment O, GG and MM on OASIS once the calculation is completed and the template change request filing has been filed with FERC. • The information in this presentation is based on the currently effective rate template.

20. Questions? If you have any additional questions after the meeting, please submit via e-mailto: Stacie Hebert shebert@otpco.com • Questions and answers will be posted on Otter Tail’s OASIS website (http://www.oasis.oati.com/OTP/index.html) within two weeks from the date of inquiry.