Rochester Public Utilities Presentation on True-up of Attachment O & GG Transmission Revenue

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Rochester Public Utilities (RPU) uses a FERC-approved formula rate with True-up to develop its Annual Transmission Revenue Requirements for MISO. This presentation covers the purpose of the True-up meeting, regulatory background, calculation of True-up adjustments, and more. Discover how RPU prepares its Forward-Looking and True-up ATRRs based on financial results and inputs.

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Rochester Public Utilities Presentation on True-up of Attachment O & GG Transmission Revenue Requirements for Calendar 2019 August 20, 2020

RPU 2019 ATRR True-up Meeting Purpose Rochester Public Utilities ( RPU ) uses a FERC-approved Forward-looking Attachment O & GG formula rate with True-up to develop RPU s Annual Transmission Revenue Requirements for all RPU transmission dedicated to MISO (the RPU ATRR ) RPU protocols require that RPU hold Annual Meetings to provide information on RPU inputs for both the forward-looking and the True-up ATRRs, providing an opportunity for Interested Parties to ask questions about those inputs This meeting will present information and answer questions on the calculation of the True-up of RPU s 2019 ATRR The meeting will also discuss the calculation of the True-up Adjustment that will be included in the 2021 Forward-Looking Rate - 2 - All dollar amounts in this presentation are preliminary pending MISO review

RPU 2019 True-up Regulatory Background RPU s Forward-looking formula rate with True-up was filed and approved by FERC under Docket Nos. ER14-2154 and ER15- 277 (consolidated), subject to the outcome of further proceedings, and subject to refund. A partial settlement was reached, but the proceedings were on-going. On March 27, 2020, FERC issued an Order denying requests for rehearing in these dockets - 3 -

RPU 2019 ATRR True-up RPU prepared a Forward-Looking 2019 ATRR in late 2018 The main inputs to that ATRR were RPU s calendar 2017 financial results, with certain adjustments The principal adjustment was for new generation asset that was placed in-service in 2018. No expected change in transmission investment was projected. The forward-looking ATRR allocates between MISO s Zone 20 and 16 for inclusion in zonal rates for 2019, with the allocation based on the Gross Book value of RPU Transmission facilities located in each zone Following completion of RPU s Calendar 2019 financial statements, RPU prepared the 2019 True-up ATRRs using actual 2019 financial results and loads RPU s 2019 True-up Adjustment will be combined with RPU s Forward-Looking 2021 ATRR for the 2021 Rate Year - 4 -

RPU 2019 ATRR True-up Calculation of True- up Adjustment for inclusion in 2021 Per Commission approved formula, the True-up Adjustment is comprised of several parts: The ATRR Variance the difference between the Forward-Looking and True-up ATRRs for Attachment O in 2019 An adjustment for Load Variance on Attachment O in 2019 The ATRR Variance between the Actual Attach GG revenue requirements and Attach GG receipts during 2019 Interest calculated on the Attachment O ATRR, Load Variance, and Attach GG true-ups. - 5 -

RPU 2019 ATRR True-up Comparing Forward-Looking to True-up ATRRs RPU s Forward-Looking (Attach O) 2019 ATRR was $5,029,997* RPU s Trued-up 2019 Net ATRR was $5,312,365* Main factors in the difference between the Forward-Looking and True-up amounts were: A reduction in Account 456.1 (Other Electric Revenue credits) A reduction of allocated Total O&M Expense An increase in return driven by an increase in Transmission rate base A reduction in 2019 Attachment GG ATRR Adjustment allocated away from 2019 Attachment O ATRR - 6 - * Net ATRR excluding any true-ups.

RPU 2019 ATRR True-up Calculation of Attachment O True-up Adjustment for 2021 Divisor Load Variance (Divisor) factor Forward-Looking 2019 RPU Load forecast 210,417 kW True-up (actual) 2019 RPU load Forward-Looking 2019 RPU Attachment O ATRR - $5,029,997 Look-Ahead Rate = $23.905/kW Divisor true-up = Variance from Forward-Looking Load x Look-Ahead Rate Load Variance factor = 15,568 kW x $23.905/kW RPU 2019 Divisor true-up = $372,145 194,849 kW - 7 -

RPU 2019 ATRR True-up Calculation of True- up Adjustment for 2021 Attach GG Attachment GG Actual ATRR for 2019 = $4,331,418 Attachment GG Receipts in 2019 = $4,528,713 Attachment GG True-Up for 2019 = $(197,295) - 8 -

RPU 2019 ATRR True-up Calculation of True- up Adjustment for 2021 Schedule 1 Schedule 1 Actual ATRR for 2019 = $268,268 Schedule 1 Projected for 2019 = $251,100 Schedule 1 True-Up for 2019 = $17,168 Schedule 1 Load Variance Adj = $ 18,578 Schedule 1 Net True-up 2019 = $35,746* *Before Interest - 9 -

RPU 2019 ATRR True-up Calculation of True- up Adjustment for 2021 - Summary The 2019 True-up Adjustment is the sum of the Att O True-Up, the Load Variance Factor, Att GG, and accrued interest: The Attach O true-up for 2019 is $282,368 The Load Variance true-up for 2019 is $372,145 The total Attach O True-up for 2019 is $282,368 + $372,145 = $654,513* The Attachment GG True-up for 2019 is $(197,295)* * Before Interest - 10 -

RPU 2019 ATRR True-up Application of True- up Adjustment in 2021 The 2019 True-up Adjustment will be combined with RPU s Forward-Looking 2021 Attachment O ATRR when the Forward-Looking ATRR is calculated later this year The combined 2019 True-up Adjustment for the Attachment O and the Forward-Looking 2021 Attachment O ATRR will be allocated between Zones 16 and 20 based upon the ratio of RPU s Attachment O Gross Transmission Plant located in each zone to RPU s total Attachment O Gross Transmission Plant - 11 -

RPU 2019 Formula ATRR Source Material RPU has posted source materials for the calculation of the RPU 2019 Attachment O/GG True-up Material is posted on under the 2021 tab on MISO s web site at: https://www.misoenergy.org/markets-and-operations/settlements/to- rate-data/city-of-rochester---a-minnesota-municipal- corp/#nt=/rateyear:2021 or at http://www.oasis.oati.com/RPU/index.html The posted materials includes: A copy of this presentation Live spreadsheets: 2021_RPU_YE123119_AttGG_TU 2021_RPU_YE123119_AttO_GGWkpr 2021_RPU_YE123119_AttO_TU - 12 -

Follow-up Questions? Questions and Comments can be provided in writing to: Tina Livingston Rochester Public Utilities 4000 East River Road NE, Rochester, MN 55906-2813 Or by e-mail to: tlivingston@rpu.org Questions or comments should specifically identify the issue or input, including the page/tab and line reference in the applicable spreadsheet - 13 -