2011 Transmission Customer Meeting
October 12, 2011

Agenda
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Minnesota Power and MISO Rates Structure
2010 True Up
2012 Rates
Supporting Documentation
Questions
◦ ALLETE Attachment O to the MISO Tariff
 Develops rates for the AC system
 Schedule 7
 Schedule 8
 Schedule 9
Firm Point to Point Transactions
Non Firm Point to Point Transactions
Network Transmission Service
 Develops rates for the HVDC system
 Schedule 7
 Schedule 8
 Schedule 9
Firm Point to Point Transactions
Non Firm Point to Point Transactions
Network Transmission Service
◦ ALLETE Attachment GG to the MISO Tariff
 Develops rates for the AC system
 Schedule 26 Network Upgrade Charge
 Develops rates for the HVDC system
 Schedule 26 Network Upgrade Charge
◦ Minnesota Power is required to perform a true up of the
2010 forecasted rates to actual cost during 2011.
◦ This true up has been completed based on the 2010
FERC Form 1 .
◦ Any adjustments as a result of the true up will be
included as part of the 2012 forward looking test year.
These adjustments will also include an interest
calculation.
MISO Attachment O True Up Calculation
•Annual Transmission Revenue Requirement True Up
Historic Year Actual RR
Historic Year Projected RR
Historic Year True Up
AC System
$ 29,913,575
$ 32,028,415
$ (2,114,840)
•Divisor True Up (KW Peak)
Historic Year Actual Divisor
Historic Year Projected Divisor
Difference in Divisor
DC System
$ 15,754,008
$ 15,985,088
$ (231,080)
1,488,400
1,445,500
42,900
22.157
500,000
500,000
0
Historic Year Projected Annual Rate ($/kw/yr)
$
$
31.970
Divisor True Up (Rate * Difference)
$ 950,549
Revenue Requirement True Up
Divisor True Up
Total 2010 True Up Before Interest
$ (2,114,840)
$ 950,549
$ (1,164,291)
$ (231,080)
$
0
$ (231,080)
•Interest Calculation
Minnesota Power Average Prime Interest Rate
Interest for 24 Months (Jan-10 to Dec-11)
$ ( 75,679)
$ (15,020)
•Total True Up
$(1,239,970)
•Summary
3.25%
3.25%
$ (246,100)
MISO Attachment GG True Up Calculation
Annual Attachment GG Revenue Requirement True Up
AC System
DC System
Historic Year Actual RR for GG
Historic Year Projected RR for GG
$ 4,770,799
$ 3,801,425
$
$
0
0
Historic Year True Up
$
969,354
$
0
9,965
$
0
Interest Calculation
$
Minnesota Power Short Term Interest Rate
Interest for 24 Months (Jan-10 to Dec-11)
Total True Up
.514%
$
979,319
$
0
Gross Plant in Service (13 month avg.)
CWIP (13 month avg.)
Rate Base
Attachment GG Credits
Net Revenue Requirements
AC System
DC System
$291,453,512
$ 33,078,662
$ 168,002,502
$127,421,467
$ 60,274,065
( $ 16,192.567)
$ 38,753,394
$ 16,329,538
(Before True Up Credits)
True Up Credits
Net Revenue Req.
2012 Projected Peak (MW)
Annual 2012MISO Transmission Rate
( Net RR / Peak = $/MW Yr)
($,1,239,970)
( $ 231,080)
$ 37,513,424
$ 16,098,458
1,520.2
$24,677
500.0
$32,197
Annual Rates
AC System
DC System
$24,677
$32,197
$2,683
Monthly Rates
(Annual rates / 12)
Schedule 7
(Firm)
$2,056
Schedule 8
(Non Firm)
$2,056
$730*
Schedule 9
(Network)
$2,056
N/A
* HVDC Non Firm Transactions are charged $ 1 per MW/Hr
due to non firm losses being incremental
Comparison of Monthly Rates
2011 compared to 2012
2011
2012
AC System
$2,223
$2,056
DC System
$2,482
$2,683
◦ AC Load up from 2011. DC Load steady
◦ AC Plant Balances up due to completion of the
Phase 1 of the Essar Steel Project, the St. Cloud to
Monticello CAPX Line and the Boswell to Bemidji
CAPX Line.
◦ CWIP Balances are up to reflect the continuation of
the St. Cloud to Fargo CAPX project
◦ AC Revenue Requirements have been offset by
$16,192,567 in Attachment GG Credits
Until MISO publishes 2012 allocations from all MISO TO’s a complete rate can
not be projected. The 2012 allocations will be posted by MISO in December
2011.
Minnesota Power will be collecting revenue requirements for the following
projects through Schedule 26 in 2012.
115 KV Badoura Area Upgrades
In Service
$ 5,930,346
(Includes 2010 True Up Amount)
230 kV Boswell to Bemidji CAPX Project
345 kV St Cloud to Monticello CAPX Project
345 kV St Could to Fargo CAPX Project
115 kV 9 Line Upgrade
In Service Sept 2012
$ 2,231,332
In Service Dec 2011
$ 2,770,511
CWIP
In Service Dec 2012
$ 4,503,690
$ 1,736,007
◦ A revised Attachment O and GG were posted to the
MP page of the MISO OASIS earlier this week
◦ A complete set of working papers can also be found
at the same location
◦ https://oasis.midwestiso.org/oasis/MP

Questions
Contacts:
Mike Donahue
Mdonahue@mnpower.com
(218) 355-2617
Jeanne Kallberg
Jkallberg@mnpower.com
(218) 355-2648
Kara Henderson
Khenderson@mnpower.com
(218) 355-2869