10/22/2010 1
Westar Formula Rate and your billWestar Formula Rate and your bill
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What we will be going What we will be going over 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
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OverviewOverview
WestarATRR
TO 2ATRR
TO 2ATRR
TO 17ATRR
SPPTariff
Each Transmission Owner in the SPP reports its authorized Annual Transmission Revenue
Requirement (ATRR)
SPP bills its customers based upon these ATRRs and its
FERC approved Tariff
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Westar Formula Rate 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
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The SPP Tariff - RatesThe 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 TariffTotal Allocated ATRR / Zonal 12 mo Avg. Peak from formula
= Annual Rate.
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SPP Tariff – Cost SPP Tariff – Cost Recovery Recovery
• Zonal chargesTransmission Plant in existence prior to Jan. 1, 2006Reliability Upgrades needed to meet local area criteriaCosts 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
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SPP Tariff – Cost SPP Tariff – Cost Recovery 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 builtZonal Costs may be allocated to other Zones based
upon benefit
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SPP Tariff – Cost Recovery SPP Tariff – Cost Recovery of New Transmission of New Transmission
UpgradesUpgrades
• 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
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Regional Charge
33% of Total
Westar’s Total ATRR
Westar Zone
OGE Zone
All Other SPP Price Zones
OGE’s Total ATRR
BPF
Projects
Westar Zonal ATRR
OGE Zonal ATRR
BPF Zonal
Charges 67%
All Other SPP TO’s Total ATRR
Zonal ATRR
SPP Tariff
BPF ATRR
BPF ATRR
BPF ATRR
Revenue Requirements from Revenue Requirements from Transmission Owners to SPP Transmission Owners to SPP
Pricing ZonesPricing Zones
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$4.80 (20%)
$8.00 (100%)
$1.20 (5%)
BPF Projects
Project 1
33% Regional
67% Zonal Allocation
Project 2
33% Regional
67% Zonal Allocation
Westar PricingZone
LRS=20%
Regional RateRev. Req. AllocatedBy Load Ratio Share
Zonal RateRev. Req. Allocated
By Zonal Benefit(This is Done
by Project)
SPP PricingZone 2
LRS=30%
SPP PricingZone 3
LRS=50%
Zonal RateRev. Req. Allocated
By Zonal Benefit(This is Done
by Project)
BPF ATRR=$12
BPF ATRR=$36
$4
$12
$16
$3.20 (20%)
$4.80 (30%)
$8.00 (50%)
$8
$24$18.00 (75%)
$3.20$8.00$1.20-------
$12.40
Total BPFAllocated Costs
$4.80$4.80-------$9.60
$8.00$18.00
-------$26.00
Total BPF ATRR for all Projects = $48.00 Sum of Allocated BPF ATRR = $48.00
Example of BPF Cost Allocation
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TotalWestarZonalATRR
Customer Bill Make up
Customer 1
WestarRetail = Acct. 566.0011Other Whsle. bus. =
Acct. 565.
SPP Admin Charge (Schedule 1A)
Ancillary 4 - EIS
Ancillary 2 - RV
Ancillaries 3, 5 & 6Supplied on
behalf of SPP by Westar
as necessary
Ancillaries Supplied by SPP
SPPSPP
WestarGenerationAncillaryServices
WestarTransmission
CostRecovery
BPFATRR
AllocatedTo Westar
Zone
Westar’s Share of BPF
Schedule 11
Schedule 9
SPP pays suppliers for
Ancillaries 2 & 4
SPP keeps Admin fees to support
the RTO (Anc. 1A)
Other Transmission
Owners in SPP
Other TO’s Share of BPF
Ancillary 1 - SC
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Looking at 2010 . . .Looking at 2010 . . .
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Comparison of Transmission Formula Rate Results
2009(Proj) 2010(Proj)Change from 2009 to 2010
Rate Base 516,089,141$ 640,910,500$ 24.19%
O&M 35,776,626$ 36,577,947$ 2.24%Dep. Expense 25,511,853$ 25,969,421$ 1.79%Taxes Other than Inc. 13,463,304$ 12,959,043$ -3.75%Income Taxes 18,574,132$ 22,551,336$ 21.41%Return 42,355,852$ 52,428,290$ 23.78%Incentive Return 488,817$ 531,471$ 8.73%Gross Rev. Req. 136,170,584$ 151,017,508$ 10.90%
Rev. Credits 15,227,764$ 17,939,732$ 17.81%True-up Adj(3) (3,034,975)$ (1,120,609)$ -63.08%Net Rev. Req. 117,907,845$ 131,957,167$ 11.92%
BPF Rev. Req. 10,932,138$ 19,256,992$ 76.15%BPF True up (122,136)$ (2,803,356)$ 2195.27%Zonal Rev. Req. 107,097,843$ 115,503,531$ 7.85%
Notes:(1) Current collected ATRR from TFR posted Feb. 17, 2009(2) 2010 ATRR posted October 15, 2009.(3) Total True up value is : Adjustment Interest Total True-up
Zonal 1,594,109$ 88,638$ 1,682,747$ BPF (2,550,745)$ (252,611)$ (2,803,356)$ Total (956,636)$ (163,973)$ (1,120,609)$
Total True up value is only for the months of June 2008 through December 2008.
Comparison between Comparison between 2010 and 20092010 and 2009
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BPF Transmission BPF Transmission ProjectsProjects
• 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
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Zonal Total $115,503,530BPF Total $19,256,992
Regional Westar Zonal Westar Zone33% * Total LRS % Allocation
Westar $6,354,807 12% $762,577All Others 5,875,701 12% $705,084Total Regional $1,467,661
AllocatedZonal BPF Cost to WR
67% * TotalWestar $12,902,185 $11,611,967All Others $296,630
$11,908,597
Estimated Westar Zonal Estimated Westar Zonal Costs for 2010Costs for 2010
2009 Zonal ATRR
$115,050,240
2010 Zonal ATRR
$128,879,788
Estimated 12% Increase
Wholesale CustomerEstimate of Transmission Service Costs based on SPP OATT
Peak LoadLine Description Calculation (MW)
1 City Peak Load (Note 6) 13.3332 Average Peak Load (est) (12 mo loss comp. avg with trans pk) 10.0003 Annual Energy (MWH) (Note 5) 66288
4 Average Network Transmission Peak Demand (MW) 3751.6675 Load Ratio Share (line 2 / line 4 ) 0.002665482
Transmission charges - SPP OATT CalculationRevenue
Requirements6 Schedule 9 SPP OATT-Attachment H 115,503,530$ 7 Schedule 11-Zonal SPP OATT-Schedule 11 11,908,597$
7A Schedule 11 - Regional SPP OATT-Schedule 11 1,467,661$ 8 Total Rev. Req. 128,879,788$
Estimated Annual Transmission Charges Calculation Rates Percentage Annual Costs9 Transmission Charge (Sched. 9 & 11) (line 8 * line 5) See Rev Reqm 100.00% 343,526.76$ 10 Schedule 1 - Westar Scheduling [Note 1] (line 2 * rate/yr) 752.09$ 100.00% 7,520.90$ 11 Schedule 1A - SPP Scheduling (line 2 * 730 hrs * rate/MW*12 mos) 0.195$ 100.00% 17,082.00$ 12 Schedule 2 - Reactive (SPP Billing-est only) (Note 2) 122.63$ 100.00% 1,226.30$ 13 Schedule 3 - Regulation [Note 1] (line 2 * rate * 1.35%) 53,358.74$ 1.35% 7,203.43$ 14 Schedule 4 - Imbalance (Based on Market) (varies)(Note 3)15 Schedule 5 - Spinning Reserves [Note 1] (line 2 * rate * 1.67%) 53,358.74$ 1.67% 8,910.91$ 16 Schedule 6 - Supplemental Reserves [Note 5] (line 2 * rate * 1.65%) 39,134.61$ 1.65% 6,457.21$ 17 Schedule 10 - Distribution Facilities Charge (Note 4) (rate per month) 1,000.00$ 100.00% 12,000.00$ 18 Schedule 12 - FERC Fees (line 3 * rate/MWH) 0.054908392$ 100.00% 3,639.77$ 19 Total of all Annual Charges (sum lines 9 to 18) 407,567.28$
Note 1: Pricing comes from the Westar Open Access Transmission Tariff (OATT)Note 2: Price fluctuates. Cost was estimated by taking about 10% of Westar's OATT price.Note 3: Charge varies depending on the market and if the supplier takes on the charge from SPP.Note 4: Distribution facilities charge is based upon the pro-rated costs of any distribution facitlies used by the city to obtain power.Note 5: Source WEN Form 1 Page 311 Column G (this is only energy sold by WRGS to City, doesn't include any other resources)Note 6: Peak Load based at Westar Transmission Peak. Loss Compensated based on SPP Transmission Service.
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