Staff Report on 

Cost Ranges for the Development and Operation 

of a Day One Regional Transmission Organization 

Docket No. PL04-16-000 

Prepared by the Staff of the 

Federal Energy Regulatory Commission 

October 2004 
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Executive Summary 

This Study is intended to inform the Commission and facilitate discussions with 

the industry and the states regarding Regional Transmission Organization (RTO) 

formation. Specifically, the purpose of this Study is to estimate the cost of developing a 

Day One RTO that provides independent and non-discriminatory transmission service 

and satisfies the minimum requirements of Order No. 2000 to operate as an RTO. 

Further, the Study estimates the annual operating expenses necessary to run such an 

organization. Estimates of the costs of RTO formation vary widely and market 

participants cite the cost of RTO development as a significant barrier to RTO formation. 

The Study did not undertake an analysis of the benefits of RTOs. The benefits of 

RTOs, such as more efficient dispatch and elimination of redundant functions, have been 

evaluated in numerous reports. For example, the Department of Energy (DOE) study, 

completed in April 2003 and summarized in Exhibit 1, found that implementation of the 

Commission’s Standard Market Design through RTOs can provide benefits to the 

ratepayers of the country. 

The analytical base for this Study rests largely on information gleaned from audit 

staff, FERC Form No. 1 data and interviews with and data responses from existing RTOs 

and Independent System Operators (ISOs). This approach of examining actual 

experiences provides valuable insight into the potential cost for an RTO to start-up and 

provide Day One functions. These functions include open access transmission service, 

scheduling authority and available transmission capacity (ATC) determination, redispatch 

for congestion management, ancillary services, planning, parallel path flow mitigation, 

interregional coordination and market monitoring. The Study assumes that a Day One 

RTO does not have bid-based, security-constrained economic dispatch, unit commitment, 

locational prices, financial transmission rights or capacity markets as the Northeast and 

California ISOs have. Such Day Two functions involve further costs which are beyond 

the scope of this study. 

Each organization’s unique circumstances, such as geographic location, market 

type, roll-out expectations, and software development, created comparability problems. 

While the development paths and experiences of existing RTOs and ISOs varied 

significantly and did not provide a basis upon which to make direct comparisons, Staff 

was able to draw upon these experiences. The Study found some patterns that provide an 

indication of expected investment costs and annual operating expenses. The Study 

concludes with an estimated range of expected investment costs and related annual 

expenses. These estimates can help focus future discussions regarding the cost of 

developing an RTO. Unlike other studies that combine investment costs and annual 

operating expenses, this Study separates these two elements so market participants, 

customers and regulators can more readily focus on the potential rate impact. 
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Staff made the following key findings from this Study: 

3⁄4 The direct impact of a new Day One RTO should be less than one-half of 

one percent of a retail customer’s bill. Staff calculations show that the average 

annual operating expense of a new Day One RTO would impact the average retail 

customer by approximately 0.02¢/KWh, or less than 0.3% of the customer’s total 

bill. This represents a charge of $2.31 per year for a typical residential consumer, 

or $0.19 per month. Staff expects these direct costs would be offset by a reduction 

in costs by transmission owners in the region over time. In addition, these costs 

would also likely be offset by efficiencies in grid and market operations; however, 

this study did not evaluate those benefits. Staff anticipates that by employing a 

lessons learned approach, a new organization should be at the lower end of the 

cost range, producing a relatively small impact on customers, which should not be 

an impediment to RTO formation. 

3⁄4 To date, Day One RTOs have required an investment outlay of between 

$38 million and $117 million and an annual revenue requirement of between 

$35 million and $78 million. Staff believes an organization beginning today and 

taking a lessons learned approach from previously formed organizations will 

experience costs at the lower end of the investment cost range, and likely incur 

costs in the range of approximately $50 to $70 million in investment and operating 

costs of $50 to $70 million. This amount of investment should provide the 

independent organization with hardware and fully operational software to 

calculate ATC and schedule transmission through a centralized control center. 

The annual expense would provide for staffing and operations and maintenance 

costs sufficient to run and manage the organization. Further, these expense 

estimates would provide sufficient income to allow the RTO to cover its debt 

service, through depreciation and interest expenses. The organization would 

participate with the local transmission owners in regional planning and would 

maintain NERC reliability requirements. 

3⁄4 Many of the costs are for reliability-related functions. The Day One 

functions listed above—transmission service, scheduling authority and available 

transmission capacity (ATC) determination, redispatch for congestion 

management, ancillary services, planning, parallel path flow mitigation, 

interregional coordination and market monitoring—are, with the exception of 

market monitoring, related to reliability as much as they are to markets. We note 

that performing such functions on a regional basis is likely to bring reliability 

benefits; however, measuring such benefits is beyond the scope of this study. 

3⁄4 Cost overruns can result from changing plans mid-course, poor project 

management and extensive delays. In interviews with RTO managers, several 

expressed that they experienced cost overruns due to incomplete planning of their 
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ultimate software goals, which resulted in continued—and costly—changes to the 

software design. A consultant noted that in today’s market one should be able to 

use off-the-shelf products (with some modification) and the experience of other 

RTOs to reduce the probability and extent of cost overruns. 

3⁄4 Cost data are not accounted for in a standardized way. Each organization 

used Generally Accepted Accounting Principles, but reported investment costs and 

annual expenses differently. That is, while one organization directly assigned 

costs to a particular cost element or operational function, another respondent 

showed no such cost element or operational function. The Uniform System of 

Accounts, designed for the traditional vertically-integrated utility, is not always 

aligned with the functions of an ISO or RTO. Staff recommends review of the 

reporting requirements and possible standardization to facilitate cost oversight by 

the public and the Commission. 

Comments concerning this report may be filed in Docket No. PL04-16-000. 

For information about this report please contact: 

 Robert Petrocelli (202) 502-8447 

 Christopher Thomas (202) 502-8412 

 Katherine Gensler (202) 502-6785 
I. Purpose ................................................................................................................. - 1 -

II. Introduction and Background............................................................................... - 1 -

III. Creating the Day One Regional Transmission Organization ............................... - 2 -

(A) Identification of the Minimum Functions Required for a Day One Regional 

Transmission Organization.................................................................................. - 3 -

Transmission Service Provider................................................................. - 5 -

Reliability Authority................................................................................. - 5 -

Support Functions..................................................................................... - 6 -

Transmission Support.................................................................... - 6 -

Management.................................................................................. - 6 -

(B) Representative Study Group ........................................................................ - 6 -

(C) Development of Investment Costs ............................................................... - 8 -

PJM Interconnection................................................................................. - 8 -

Midwest Independent Transmission System Operator........................... - 10 -

Electric Reliability Council of Texas ..................................................... - 11 -

Southwest Power Pool............................................................................ - 12 -

(D) Development of Annual Operating Expenses............................................ - 13 -

PJM Interconnection............................................................................... - 14 -

Midwest Independent Transmission System Operator........................... - 15 -

Electric Reliability Council of Texas ..................................................... - 17 -

Southwest Power Pool............................................................................ - 18 -

IV. Results ................................................................................................................ - 19 -

V. Start-up Cost Conclusions.................................................................................. - 22 -

Comparisons ........................................................................................... - 22 -

Impact ..................................................................................................... - 24 -

Conclusion.............................................................................................. - 25 -

VI. Study Insights ..................................................................................................... - 26 - 

Exhibits

1 Summary of Benefits Claimed in RTO Studies 

2 NERC Functional Model Chart 

3 Cost Summary and Staff Workpapers 

4 Respondents' Raw Data 

5 RTO Interest Rate Workpapers 

6 Excerpt from RTO-West Cost-Benefit Study 

Summary of Cost-Benefit Studies Performed in Select Regions 
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I. Purpose 

This Study is intended to inform the Commission and facilitate discussions with 

the industry and the states regarding Regional Transmission Organization (RTO) 

formation. Specifically, the purpose of this Study was to estimate the cost of developing 

a Day One RTO that provides independent and non-discriminatory transmission service 

in accordance with Order No. 2000. The purpose was not to detail the particular costs of 

any RTO, nor is this Study a tool for auditing existing RTOs and Independent System 

Operators (ISOs) (collectively, regional transmission providers) from which data were 

collected. Rather, this analysis is a review of the start-up experiences and costs of 

currently operating regional transmission providers, which may be used as a starting 

point for discussions regarding the initial cost of creating an RTO. This Study focuses on 

asset investment costs and annual operating expenses; unless otherwise noted, it does not 

consider expenses borne by utilities to form the RTO (sunk costs). This Study also does 

not consider the benefits of RTO formation; such analysis has been presented in 

numerous reports.1

II. Introduction and Background 

In 1996, the Commission issued Order No. 888, which required, as a remedy for 

undue discrimination, that all public utilities provide open access transmission.2

 In 1999, 

the Commission issued Order No. 2000.3

 The Commission’s objective was “for all 

transmission owning entities in the Nation, including non-public utility entities, to place 

their transmission facilities under the control of appropriate regional transmission 

institutions [RTOs] in a timely manner.” Order No. 888 and Order No. 2000 set the 

foundation upon which to build regional transmission institutions and competitive 

 

1

 See Exhibit 1 for a summary of the benefits claimed in various RTO studies. 

2

 Promoting Wholesale Competition Through Open Access Non-discriminatory 

Transmission Services by Public Utilities; Recovery of Stranded Costs by Public Utilities 

and Transmitting Utilities, Order No. 888, 61 Fed. Reg. 21,540 (May 10, 1996), FERC 

Stats. & Regs. P 31,036 (1996), order on reh'g, Order No. 888-A, 62 Fed. Reg. 12,274 

(March 14, 1977), FERC Stats. & Regs. P 31,048 (1997), order on reh'g, Order No. 888-

B, 81 FERC ¶ 61,248 (1997), order on reh'g, Order No. 888-C, 82 FERC ¶ 61,046 

(1998), aff'd in relevant part sub nom. Transmission Access Policy Study Group, et al. v. 

FERC, 225 F.3d 667 (D.C. Cir. 2000), aff'd sub nom. New York v. FERC, 535 U.S. 1 

(2002). 

3

 Regional Transmission Organizations, Order No. 2000, 65 Fed. Reg. 809 

(January 6, 2000), FERC Stats. & Regs., ¶ 31,089 (1999), order on reh’g, Order No. 

2000-A, 65 Fed. Reg. 12,088 (March 8, 2000), FERC Stats. & Regs. ¶ 31,092 (2000), 

affirmed sub nom. Public Utility District No. 1 of Snohomish County, Washington, et al. 

v. FERC, 272 F.3d 607 (D.C. Cir. 2001). 
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electricity markets. To date, there are several operational RTOs, with additional regions 

expecting RTO operations in the near future. 

While significant progress has been made in developing ISOs and RTOs, certain 

regions of the country remain concerned that the Commission’s RTO policies are too 

prescriptive in substance and in implementation timetable, and do not sufficiently 

accommodate regional differences. In response, the Commission has stated that it would 

consider phased-in implementation and sequencing tailored to each region that allows 

modifications to benefit customers in each region. As a result, several sponsors of 

regional organizations in the formative stage have now adopted strategies to develop 

RTOs with only those characteristics and functions that provide a benefit to their 

respective regions. For example, during a September 24, 2003 Commission-sponsored 

meeting in Phoenix, Arizona, the sponsors of the WestConnect RTO, LLC proposal 

informed the attendees that they intend to institute a phased approach to development of 

WestConnect. The sponsors claimed the cost of starting a fully functional RTO was not 

comparable to the benefits that such an organization would bring to the Southwest. 

Based on the Phoenix meeting, Commission Staff undertook an effort to better 

understand the cost elements associated with independent control of the regional 

transmission grid for the non-discriminatory and transparent provision of transmission 

service, i.e., a Day One Regional Transmission Organization. This report seeks to 

identify the cost of establishing and operating a Day One RTO. 

III. Creating the Day One Regional Transmission Organization 

To establish cost estimates for the development of a Day One RTO, Staff 

undertook the following process: 

(A) Identification of the minimum functions necessary to provide independent, 

non-discriminatory transmission service; 

(B) Identification of a representative group of existing and emerging ISOs and 

RTOs for study to inform the cost estimates for each function; 

(C) Development of the representative investment and annual operating expense 

estimates; and 

(D) Comparisons to the Day One RTO of the costs associated with similar 

functions of existing ISOs and RTOs. 

During this process, Staff collected data through informal discussions with 

representatives from the industry, annual reports, FERC Form No. 1, and the 

Commission’s audit staff. 
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(A) Identification of the Minimum Functions Required for a Day One Regional 

Transmission Organization 

Through several orders, the Commission has concluded that certain limited 

functions provide a suitable beginning that allows a proposed RTO to have a sufficient 

level of market independence and operational authority to qualify for RTO status.4

 The 

Commission’s findings in these orders repeatedly focused on the notion of functional 

authority over the operations of the transmission grid, independent from market 

participants, with oversight responsibilities that are intended to remove any barriers to 

non-discriminatory practices and create robust competition. 

Order No. 2000 specified eight functions for RTOs: tariff administration and 

design, congestion management, parallel path flow, ancillary services, OASIS, market 

monitoring, planning and expansion, and interregional coordination. The difference 

between the minimal requirements to operate an RTO and the more complex functions 

currently performed by, for example, Northeastern ISOs and RTOs is referred to as “Day 

One” versus “Day Two” RTO functionality. 

Figure 1 

Figure 1 shows the 

minimum functions of a Day 

One RTO, as spelled out in 

Order No. 2000. To operate as 

an RTO, the Day One entity 

must meet the minimum 

requirements of Order No. 

2000, but such operation may 

not include market-based 

mechanisms for congestion 

management or the operation of 

energy markets. A fully functional RTO (or Day Two RTO) will carry out all of the 

functions to a greater extent, employing market-based mechanisms, and include 

additional functions.5

 Staff notes that “Pre-Day One” organizations perform only 

regional OASIS functions, without actually controlling the transmission facilities. 

ERCOT, for example, initially operated in this manner. 

 

4 See, e.g., Arizona Public Service Company, et al., 101 FERC ¶ 61,033 (2002); 

Avista Corp., et al., 100 FERC ¶ 61,274 (2002); and Southwest Power Pool, Inc., 106 

FERC ¶ 61,110 (February 10, 2004). 

5

 It should be noted that functions such as operating ancillary services and capacity 

markets are optional programs that some existing RTOs, such ISO-NE, have chosen to 

perform. 

Pre-Day One Day One Day Two

Tariff Administration & Design X X

Congestion Management

Redispatch X

Market-Based X

Parallel Path Flow X X

Ancillary Services X X

OASIS X X X

Market Monitoring X X

Transmission Planning X X

Interregional Coordination X X

Day-Ahead Energy Market X

Same-Day Energy Market X

Ancillary Services Market X

Capacity Market X
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While Order No. 2000 put forth eight minimum functions that an RTO must 

perform, some of these functions are unlikely to be fully performed by a Day One RTO. 

For example, market monitoring takes place on a smaller scale for Day One operations 

than under the Day Two scheme. Similarly, the Day One RTO will initially have a role 

in transmission planning, but only at the Day Two point will the RTO become fully 

responsible for planning. Finally, the extent of congestion management differs between 

Day One and Day Two entities. The Commission has ruled that full market-based 

congestion management does not have to be performed when RTO operations 

commence.6

 The variation in performing these functions has a direct effect on the 

resources devoted to them. This Study attempts to capture only those resources that have 

been classified as Day One functions. This Study does not consider the resources 

associated with retail access programs. State legislated retail access or retail choice 

programs are not a requirement of Order No. 2000. While these programs are created by 

the states, and implemented by the RTO, such programs are considered voluntary, under 

a Day One or a Day Two RTO. 

In order to use information as provided by RTOs and ISOs, Staff organized the 

cost data into consistent functions. For this, Staff found it useful to rely on the North 

American Electric Reliability Council (NERC) functional model.7

 The advent of openaccess transmission service and the evolution of competitive markets and new entrants 

prompted NERC to re-evaluate the functions performed by the traditional control area 

operator. NERC issued a schematic of functions that can be applied across regions and 

across different regulatory and institutional structures. This model defines the core 

functions of control area operators and assigns responsibility for maintaining reliability. 

It also explains the relationship between and among the entities responsible for 

performing the tasks within each function. FERC has encouraged the use of the NERC 

functional model in its RTO policy in order to clarify responsibilities between 

transmission owners and RTOs/ISOs.8

 

Staff determined the following NERC functions necessary to satisfy the 

Commission’s requirements for becoming an operational RTO: Transmission Service 

Provider and Reliability Authority. In addition, a transmission support function and 

organizational management are necessary to develop an adequate framework for the Day 

One RTO. Finally, the Day One RTO should be responsible for the regional oversight of 

transmission planning. While not necessarily performing the planning function, oversight 

 6 See Arizona Public Service Company, supra note 5; Midwest Independent 

Transmission System Operator, Inc., 97 FERC ¶ 61,326 (December 20, 2001). 

7

 See Exhibit 2 for a graphic representation. 

8 See Midwest Independent Transmission System Operator, Inc., 105 FERC ¶ 

61,145 (October 29, 2003) and Southwest Power Pool, Inc., 106 FERC ¶ 61,110 

(February 10, 2004). 
- 5 -

authority and the ability to review expansion is critical for regional reliability. 

Transmission Service Provider 

The Transmission Service Provider administers the transmission tariff and 

provides transmission services to qualified market participants. The tasks involved 

include receiving and processing transmission service requests; maintaining a 

commercial interface for receiving and confirming such requests (i.e., an open access 

same-time information system or OASIS); approving or denying transmission service 

requests; approving interchange transactions; determining and posting available 

transmission capacity (ATC) values; and allocating transmission losses among the users. 

The analysis assumes that the RTO will facilitate provision of ancillary services so 

transmission customers will have a one-stop shop from which to obtain the necessary 

ancillary services from the underlying transmission and generation owners.9

The Transmission Service Provider will perform OASIS and tariff administration 

and design functions in accordance with Order No. 2000. Market monitoring also falls 

under the purview of the Transmission Service Provider. 

Reliability Authority 

The Reliability Authority, as defined in the NERC model, ensures the real-time 

operating reliability of the interconnected bulk electric transmission systems within a 

Reliability Authority Area.10 Activities include, but are not limited to: (1) enforcement 

of operational reliability requirements; (2) monitoring of all reliability-related parameters 

within the Reliability Authority Area, including generation dispatch and transmission 

maintenance; (3) revision authority for transmission and generation maintenance plans; 

(4) development and enforcement of interconnection reliability operating limits to protect 

against instability and cascading outages; (5) approval/denial authority over bilateral 

schedules from a reliability perspective; and (6) direction of emergency procedures and 

system restoration. 

 9

 The NERC Reliability Function Model includes other responsibilities, including 

a Balancing Authority, which has the responsibility to maintain load-interchangegeneration balance within its area of responsibility. Many of the authorities for this 

function are served through the provision of ancillary services under an Open Access 

Transmission Tariff (OATT). 

10 A Reliability Authority Area is the collection of generation, transmission and 

loads within the boundaries of the Reliability Authority. This boundary coincides with 

one or more Balancing Authority Areas, which are the areas in which a controlling 

Organization maintains a load-resource balance. 
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To perform these duties, the Transmission Service Provider needs to communicate 

with market participants, generators, transmission owners and operators and distribution 

owners. This communication often requires hardware and software interconnectivity to 

achieve the real-time monitoring and actions necessary to maintain the reliable operation 

of the grid. These systems are often embodied in energy management (EMS) and 

Supervisory Control and Data Acquisition (SCADA) systems.11

The RTO will perform other reliability-related Day One functions as described in 

Order No. 2000. These functions include congestion management, parallel path flow, 

ancillary services, transmission planning and interregional coordination. 

Support Functions 

While the NERC Model was used to determine the necessary operational functions 

of an RTO, Staff determined that additional cost centers were needed to capture the 

required administrative functions of a Day One RTO. Accordingly, two additional cost 

categories were included in the analysis—Transmission Support and Management. 

Transmission Support

Transmission Support function, as Staff has defined it, includes the systems 

(hardware and software) and other necessary capital assets for the settlements and billing, 

and customer service operations. This list, while not exhaustive, best reflects the support 

services necessary in the provision of transmission service. 

Management

The second support function is the day-to-day management of the transmission 

organization. The services included in this function include human resources, finance, 

administrative support, and building operations. Accordingly, the systems (e.g.,

executive and decision support systems and general web service), furniture, and related 

assets were included in the Day One operations. 

(B) Representative Study Group 

After Staff determined the functions necessary for a Day One RTO, investment 

 11 EMS systems, often characterized as the communication system with the 

generators and their operation, are typically embodied in a SCADA system, which, while 

collecting generator and transmission flow data, also can monitor and collect data on 

discrete facilities (breakers, lines, generator nodes, etc.) for purposes of monitoring the 

grid. 
- 7 -

and expense profiles were developed. Staff reviewed the operations of existing ISOs and 

RTOs to determine a representative group for a Day One RTO. With the exception of the 

PJM Interconnection, LLC (PJM), Staff excluded ISOs and RTOs that developed from a 

tight power pool. As a result, the Midwest Independent Transmission System Operator 

(Midwest ISO), the Electric Reliability Council of Texas (ERCOT), the Southwest Power 

Pool (SPP), and PJM were selected for study.12 This review did not select the Northeast 

entities (ISO-New England and New York ISO) or the California Independent System 

Operator, Inc. (CAISO) as representative examples.13 These entities, among other things, 

began operations with full Day Two market functions. As such, their costs were not 

representative of Day One RTO costs. 

SPP is unique in this analysis, and the results for it should be interpreted 

accordingly. At the time of this Study, SPP had only been granted conditional RTO 

status.14 The costs and expenses reflected in this Study are accurate for the services SPP 

currently provides, but are not necessarily reflective of a fully operational Day One RTO. 

For example, one of the functions of a Day One RTO is market monitoring, but funds for 

an independent market monitor are not included in SPP’s budget. In contrast, SPP has 

been able to draw on the formation and operating experience of other RTOs, reducing the 

outlay required for start-up. 

Information sources utilized in the Study include industry interviews, industry 

submissions, FERC Form No. 1 documents, and data from Commission audit staff. The 

ISO and RTO cost submissions were derived from actual and budgeted costs, and were 

developed in summary format in an effort to respond to the scope of this Study; they do 

not represent actual current revenue requirements. The information, in some instances, 

was purported to be illustrative of what each entity believed it would cost to replicate and 

administer its organization. Some actual data from a specific reporting period, indicated 

as representative of the Day One operations defined in this Study, was also submitted. 

Each entity denoted the specific time frame in its development that is representative of 

Day One RTO functions. For example, the Midwest ISO and ERCOT identified end-ofyear 2002 numbers as the best representation of their Day One costs and expenses. 

 12 While it is recognized that the PJM area operated as an experienced power pool, 

the detailed data provided by PJM staff allowed for analysis, assignment and inclusion of 

PJM costs in the development of a Day One RTO. 

13 A cursory review of the data from the NYISO and ISO-NE indicated that, 

because they evolved out of tight power pools, were not representative of the Day One 

RTO development this Study attempts to capture. Review of the CAISO financial data 

indicated that it would not lend itself to identification of the Day One functionality with 

reasonable results. 

14 Southwest Power Pool, Inc., supra, note 8. See also Southwest Power Pool, 

Inc., 108 FERC ¶ 61,003 (July 2, 2004). 
- 8 -

 Staff organized the supplied cost data and information into the NERC functions 

based upon (1) the entities’ own description of costs, (2) cost element descriptions, (3) 

RTO/ISO allocations to cost categories, and (4) Staff’s analysis and allocation of 

supplied costs.15 This last step was necessary because the existing RTOs and ISOs do not 

maintain standard accounting practices similar to each other and do not have a Uniform 

System of Accounts tailored to their accounting needs and business structure.16

(C) Development of Investment Costs 

The following describes the methodology employed by Staff to develop 

investment cost figures. The essence of the analysis was to take the facilities provided 

within the company’s definitions of accounts and to, where possible, directly align these 

costs with Day One functions and otherwise allocate the facilities using a direct labor 

ratio. 

Staff’s Study does not include previously-incurred sunk costs as a part of the 

RTO’s cost. Those costs are being recovered, at least partially, by the current 

transmission companies. Staff considered only the actual assets to be purchased by the 

RTO, such as hardware, building, etc. These assets of the new organization would likely 

require capital investment by the founding group and such costs would be recovered 

through rates established by the RTO. Other industry studies have used different 

assumptions. For example, in its initial overview of start-up costs, WestConnect’s first 

study combined these investment costs and expenses, and then added substantial cash 

reserve allowances, sunk costs and past consultant fees. 

PJM Interconnection 

The data from PJM was the most comprehensive data received and represents the 

accumulation of facilities placed in service through the year 2000. While PJM represents 

a Day Two RTO, the data utilized in this analysis allowed Staff to closely represent the 

same functionality as a Day One RTO. 

PJM provided summary data itemizing its investment costs, organized by service 

schedules under its tariff.17 PJM allocated the costs of its facilities to the functions 

embodied by the report to its Administrative Cost Recovery service schedule (Schedule 9 

to the PJM Tariff). The PJM Administrative Cost Recovery service schedule is separated 

 15 Staff performed some allocations based upon general ratemaking principles, 

e.g., direct labor ratios. 

16 Currently the Uniform System of Accounts is designed for vertically-integrated 

utilities. 

17 The PJM summary data is included as Exhibit 3 at page 2. 
- 9 -

into six separate schedules: (1) Control Area Services Administration; (2) Fixed 

Transmission Rights Services; (3) Market Support Services; (4) Regulation and 

Frequency Response; (5) Capacity Resource and Obligation Management; and (6) 

Management Services. Staff used PJM’s definitions of cost categories as a basis for 

determining which costs would be necessary for minimum functionality. 

Using these six schedules and PJM’s description for the types of activities (and 

hence costs) included in each schedule, Staff aligned, to the extent possible, these service 

schedules and costs with the relevant Day One categories, i.e., Control Area 

Administration, Market Support Service, and Management Services. For example, PJM 

defines the Control Area Services as comprising all activities associated with preserving 

the reliability of the PJM bulk power system and providing point-to-point and network 

transmission service. Cost items in this service category include OASIS, calculation of 

ATC, real-time transmission monitoring, transmission service requests, EMS and 

reliability reporting. Most of these costs have been allocated to the Transmission Service 

Provider function, but such cost items do have relation to the Reliability Authority 

function. The costs that are clearly identifiable as pertaining to enhancing reliability are 

accounted for entirely in the Reliability Authority function. 

PJM’s Market Support Service encompasses activities which support PJM market 

operations, including scheduling functions, market settlements and billing, and market 

monitoring functions. Many of the functions included in this cost category do not pertain 

to a Day One, minimum functionality approach. However, costs related to EMS, OASIS, 

and generator communications do support minimum functionality. Thus, the costs for 

these discrete facilities are included as the Transmission Support function. 

PJM’s Management Services cost function comprises all administrative and 

management cost elements that support all the services PJM provides. Cost items such as 

the PJM information warehouse, internet network architecture, and enterprise security are 

attributable to this function, and were included as costs of Management of the RTO. 

Finally, in order to present a figure that reflects the cost of PJM’s building to 

house the facilities, Staff used the value, as provided for in the 2002 PJM Annual Report, 

for the cost of the buildings owned by PJM participants and turned over to the PJM for 

use. The 2002 annual report notes that two buildings had an original cost of $2.9 million 

and $4.8 million, respectively. Further, one of the buildings underwent $2.9 million in 

renovations before PJM took residence.18 PJM also identified control center 

infrastructure costs as building upgrades. Therefore, the analysis has estimated the total 

value of these buildings at $11 million.19

 18 PJM 2002 Annual Report, Notes to Consolidated Financial Statements, Note 10. 

19 While the simple purchase cost by PJM participants was used, the present value 
- 10 -

In conclusion, the analysis of PJM facilities resulted in the following estimated 

investment cost for minimum Day One operations: Transmission Service Provider - $35 

million; Transmission Support - $15.5 million; Reliability Authority - $1.3 million; and 

Management - $6.7 million. Combined with the building cost estimate of $11 million, 

total Day One costs estimated from PJM approximate $69.6 million. 

Midwest Independent Transmission System Operator 

The Midwest ISO maintains its accounts in the form prescribed by the 

Commission’s Uniform System of Accounts. Accordingly, the Midwest ISO records its 

physical plant assets by FERC account number. Since the Midwest ISO does not own 

production or distribution facilities, all of its facilities costs are reflected in Transmission 

Plant Accounts as structures and station equipment (Account Nos. 352 and 353) and in 

General Plant (Account Nos. 389, 390, 391, 397 and 398). 

The Midwest ISO asserted that all costs from calendar year 2002 represent an 

accurate description of its Day One functionality; as those costs were incurred from the 

form under which the Midwest ISO commenced operations on February 1, 2002. Each of 

the separate physical asset accounts was reviewed in order to determine the most suitable 

NERC Functional Category to be assigned. For example, Midwest ISO Account No. 

35303 – Computer Software-Transmission, is booked as transmission station equipment. 

Thus, there is no need to allocate any of this software to the management function.20

While certain assets were directly assigned to functions, others were not.21 Staff 

developed an allocator to assign costs across all functions based on selection and 

assignment of 187 of the 227 FTEs for Day One operations. Of the 187, 55% were 

allocated to the Transmission Service Provider, 28% to Transmission Support, 10% to the 

Reliability Authority, and 7% to Management. This allocation allows the accounts that 

contain the general facilities for the use of all employees, including those identified as 

serving the Transmission Service Provider function to be spread over all the functions. 

Conversely, similar to the direct transmission assets, the computer hardware and software 

and communication equipment booked to the General Plant accounts were exclusively 

allocated to the Management function. This was done because the Transmission Plant 

accounts already included specific telecommunication equipment and computer systems. 

These General Plant systems are assumed to incorporate such systems as the finance, 

human resource, and corporate inter- and intranet systems. 

 

of the effective rent to PJM of $1.6 million per year over twenty years, discounted at a 

rate of 10% results in a present value of approximately $13.6 million. 

20 See Exhibit 3, p. 7, Midwest ISO Assets. 

21 For example, Account No. 39100 – Office Furniture and Fixtures-General was 

booked as general plant. 
- 11 -

Finally, the Midwest ISO buildings are booked separately to General Plant 

Account No. 39011 – Buildings-General Leased. The building costs are reflected 

separately from all other allocated costs in this analysis. The building cost to house the 

allocated facilities is $15.8 million.22

The analysis of the Midwest ISO facilities results in the following estimated cost 

for Day One operations: Transmission Service Provider - $55.4 million; Transmission 

Support - $29 million; Reliability Authority - $10 million; and, Management - $7 million. 

Combined with the estimate of the building required to house the necessary facilities of 

$15.8 million, total investment costs from analyzing the Midwest ISO are approximately 

$117 million. 

Electric Reliability Council of Texas 

Unlike the accounting by PJM and the Midwest ISO, ERCOT data did not provide 

a high level of detail in the description of capital assets. As with the Midwest ISO, the 

most reasonable allocation methodology employed for this analysis was a direct labor 

allocation.23

Using data from 2002 as the most representative of Day One operations, Staff 

reviewed, selected and assigned a portion of ERCOT’s full-time employees to the 

Transmission Service Provider, Transmission Support, Reliability Authority, and 

Management functions. Through this review, 188 of ERCOT’s 296 full-time employees 

(or 64%), based upon end-of-year 2002, were selected as necessary for minimum 

functionality. Of the 188, 60% were assigned to the Transmission Service Provider 

function, 18% to the Transmission Support function, 5% to the Reliability Authority 

function, and 17% to the Management function. 

These same labor ratios were used to apportion investment costs for Day One 

functions. Unlike the Midwest ISO, the ERCOT data did not allow for allocation of 

certain identified costs by discrete labor ratios. Rather, because ERCOT only provided 

the overall assets in five general categories,24 the costs in each category were allocated 

across all functions, with the exception of IT equipment and software. Supplementary 

information provided by ERCOT noted $410,000 in computer hardware and software 

related to the management of the RTO.25 Thus, Staff allocated the major IT systems 

 22 The $15.8 million is the present value of the lease. 

23 See Exhibit 3, p. 12, ERCOT 2002 FTEs. 

24 The categories are Computer Equipment and Software, Buildings and 

Leasehold, Furniture and Fixtures, Land and Improvements, and Vehicles. 

25 Staff did not include IT systems that were in development. 
- 12 -

across Transmission Service Provider, Transmission Support and Reliability Authority, 

and directly assigned the $410,000 to the Management function. As a result, the analysis 

of the ERCOT facilities results in the following estimated cost for Day One operations: 

Transmission Service Provider - $59.7 million; Transmission Support - $18 million; 

Reliability Authority - $4.5 million; and Management - $1 million. 

 

Finally, ERCOT data reflects total Buildings and Leasehold assets of $48.9 

million for the year ending 2002. Through application of the fully allocated labor ratio, 

approximately $31 million of the cost of the buildings is representative to house the 

minimum functionality.26 Combined with the estimates of the four functions, total 

investment costs from analyzing ERCOT is estimated at $114 million. 

Southwest Power Pool 

SPP provided an assignment of costs and expenses to the defined functions, which 

allowed Staff to reflect the data in two ways: SPP fully allocated and SPP without an 

imbalance market. 

In 2000, SPP started developing a system for commercial and market operations. 

The market project was put on hold while SPP pursued its merger with the Midwest ISO. 

In March 2003, the merger plans were terminated and SPP resumed plans to implement 

market operations. The 2003 cost data that was used for SPP includes the first phase of 

its market operations implementation: real-time balancing market with market power 

mitigation and market monitoring. Because this project seeks to define the cost of 

minimum Day One functions, Staff included SPP’s costs both with and without the new 

market operations (market operations as defined by SPP include a real time imbalance 

markets). 

SPP data indicates the following necessary costs for minimum functionality: 

$22.3 million for Transmission Service Provider; $3 million for Transmission Support; 

$5.6 million for Reliability Authority; and, $2.3 million for Management. In order to 

account for facilities to house the minimum operations, Staff approximated the lease 

costs for SPP out ten years by increasing its 2003 lease amount by 3% per year; a figure 

to account for inflation. Staff then discounted the lease payments on a net present value 

basis in order to approximate the cost of the SPP building. In doing so, Staff arrived at an 

estimated building cost of $5.1 million. 

Staff developed two estimates of SPP’s costs—one that is near Day One 

functionality and one that is a pre-Day One entity. The Day One version includes SPP’s 

 26 In contrast to the other RTOs, ERCOT’s building was constructed predicated on 

the functions it was required to provide by legislation. 
- 13 -

new market operations systems costs, resulting in a total estimate of $38.3 million. By 

removing SPP’s market operations systems costs of $20.8 million, Staff is better able to 

create a cost estimate of minimum functionality. Excluding the market system costs 

estimates a start-up cost of $17.5 million. However, it was decided that this functionality 

would not be sufficient to represent the needs of a Day One RTO. SPP’s market 

implementation is assumed to include the necessary hardware and software for sufficient 

grid monitoring and generator communication needed to fulfill the Reliability Authority 

function. Thus, it was determined that $17.5 million (which excludes SPP’s market 

system) is more representative of a pre-Day One organization. 

(D) Development of Annual Operating Expenses 

The annual expense for a Day One RTO depicted by this Study is formulated 

much like a cost of service. Included in the annual expenses are debt service, operations 

and maintenance (O&M) and labor costs, taxes other than income taxes, and depreciation 

expense. The following assumptions were made: 

1. Debt-only financing; thus no equity return is included. 

2. Consistent with accounting practice, straight line depreciation rates of three 

years for non-EMS software, five years for non-EMS hardware, seven years 

for EMS systems, and fifteen years for buildings, related chattels and office 

equipment. Lease options were not evaluated. 

3. Income taxes were assumed to be zero because the RTO would likely be a nonprofit entity. Taxes other than income (property and local) were included 

where identified. 

4. Fully loaded labor costs (including pension and benefits, Federal Insurance 

Contributions Act (FICA) taxes and unemployment taxes) were used based 

upon the assumed amount of labor required to staff the organization. 

5. Operation and maintenance expenses were included for the assets selected. 

6. Interest expense was imputed to recover the interest portion of the debt 

services, while the depreciation covered the principal.27

The Study did not include expenses incurred by utilities or the RTO during preoperating stages. While some RTOs financed start-up activities and currently amortize 

such costs, they usually are recovered over a finite period. For example, the Midwest 

ISO secured a debt issuance to fund development activities, including labor and 

consulting expenses, rather than have the participating transmission owners fund those 

activities directly. As a result, Midwest ISO accounts for those expenditures on its 

 27 Staff analyzed the debt costs of the representative group and the utility industry 

and concluded that a range of debt costs from 6.5% to 7.5% was reasonable. (See Exhibit 

5.) 
- 14 -

balance sheet and amortizes the amount over seven years. Since this Study is intended to 

focus on the actual investment necessary for Day One operations, pre-operation start-up 

activities are excluded. 

Using the representative group of ISOs and RTOs in this project to develop an 

estimate of Day One operating expenses required making certain assumptions and 

allocations based upon the quality of the data gathered. The following describes the 

operating expenses utilized to develop a snapshot of operating a Day One RTO. 

PJM Interconnection 

Labor Costs

The fully loaded labor costs (compensation and pension benefits) were provided 

by PJM in its 2004 budget estimates. The same cost center categories were utilized for 

the related expenses as were assigned for investment. Only the FTEs assigned to the cost 

centers selected to the asset assignment are defined to contribute to the total labor force 

of the Day One RTO. Thus, of the 493 budgeted employees for 2004, only 263 FTEs are 

assumed to be required to staff the minimum functionality. In order to determine the 

annual labor expense, Staff divided the total compensation and benefits expense in PJM's 

2004 budget, by the budgeted FTEs (493) to develop a labor expense per FTE. Staff then 

multiplied the labor expense per FTE by the allocated number of FTEs for minimum 

functionality (263) in order to obtain a total annual fully loaded labor cost of $34.9 

million. 

Depreciation

Using generally accepted straight-line depreciation, as described above, nonbuilding assets (computers, software, furniture, etc.), were depreciated over their 

respective useful lives (three or five years). EMS assets were depreciated over seven 

years and a fifteen-year useful life was used for the building.28 As a result, non-building 

and building assets from PJM data reflect annual depreciation expenses of $12.7 million. 

Operations & Maintenance

Since the greatest annual expense for the Day One RTO is labor, O&M was 

estimated based on operating expenses per FTE. Staff divided PJM’s materials and 

 28 It is important to note that these depreciation lives are targeted for purposes of 

cost recovery through rates rather than application of the Internal Revenue Service’s 

Modified Accelerated Cost Recovery System (MACRS). Under MACRS, buildings are 

depreciated over a 39 year period. 
- 15 -

supplies and other expenses, from the selected cost centers, by 2004 budgeted FTEs of 

493. The O&M cost per FTE was then multiplied by the assumed level of staffing (263), 

resulting in an O&M expense estimate of $9.8 million per year. 

Other Expenses

In order to account for some taxation, Staff included property taxes and other 

employee related expenses in this expense development. Employee related expenses, 

calculated as prorated portion of annual budgeted expenses, include lodging, travel, 

meetings, meals, training, telecommunications, buildings maintenance and utilities 

associated with staff allocated to Day One operations. Non-employee expenses include 

annual budget for insurance, board expenses, annual member meeting, audit fees, 

property and school taxes, and bank fees. Non-employee expenses do not vary by staff 

number or customer transaction volumes. As a result, the total other expenses equal $16 

million.29

Debt Service

Finally, to account for the debt service of the RTO, Staff attempted to accurately 

depict the annual cost of funds from each organization in the study group. For most 

RTOs and ISOs, the depreciation expense recovers the principal payback for debt 

issuance. However, a recovery for interest expense is also required. From PJM, Staff 

developed an interest expense by taking an average of unpaid Day One capital investment 

(less depreciation expense), multiplied by an estimated 7.00% interest rate. In doing so, 

Staff calculated the interest expense of debt service for Day One functionality from PJM 

data at $4.4 million. 

Staff’s calculation of expenses necessary for Day One operations approximate $78 

million per year, or $0.22/MWh.30

Midwest Independent Transmission System Operator 

Labor Costs

The Midwest ISO provided staff with the number of employees by department by 

activity. Based on end-of-year 2002 data, the Midwest ISO had total full-time staffing of 

227 employees. Reviewing the data submitted, staff aligned the Midwest ISO activities 

 29 See Exhibit 3, p. 5, Column (B), Lines (6) and (7). 

30 See Exhibit No. 3, page 20 for the calculation of $/MWh. The calculations 

reflect the annual expense divided by net energy on the RTO or ISO system. However, 

certain RTOs, e.g. the Midwest ISO, use peak energy data for rate development. 
- 16 -

to a corresponding Day One function. Staff then selected only the employee head count 

that was necessary to serve each of the transmission, reliability, support, and management 

roles. Of the total 227 full-time employees, 187 were determined to be necessary for Day 

One, independent operations.31 Of the 187, through Staff’s judgment, 55% were 

allocated to the Transmission Service Provider, 28% to Transmission Support, 10% to the 

Reliability Authority, and 7% to Management. To develop the fully loaded labor costs, 

Staff devised an average cost of labor based upon the level of compensation reported for 

2002, including benefits and taxes, related to the amount of staff selected. By developing 

the average annual labor cost, Staff determined a per FTE annual cost of $117,167. The 

annual average compensation was then applied to the allocated FTEs (187) in order to 

determine annual labor expense of $22 million. 

Depreciation

Identical to the process in the PJM analysis, Staff utilized generally accepted 

depreciation rates for non-building assets and a 15-year depreciation rate for building. As 

a result, from the Midwest ISO data, Staff developed an annual depreciation expense of 

$15.4 million. 

Operations & Maintenance

Using the Midwest ISO’s representation of 2002 annual numbers to reflect Day 

One functionality, Staff selected the Midwest ISO’s annualized occupancy expenses and 

actual supplies and other expenses for O&M. In doing so, Staff developed an annual 

O&M expense from the Midwest ISO of $13 million. 

Other Expenses

As with the PJM analysis, to obtain an estimate of the Midwest ISO’s other 

expenses, Staff selected labor related and non-labor related expenses that represent the 

non-direct expenses of operating the RTO, including insurance and property taxes. As a 

result, Staff developed a total other expense of $13 million. 

Debt Service

For the 2002 calendar year, Midwest ISO provided total debt interest expense of 

just under $10 million. In review of Midwest ISO’s 2002 annual report, Staff noted that 

Midwest ISO’s debt carries an interest rate of 8.75%. In order to develop an interest 

expense on the Midwest ISO assets, staff used the average of the unpaid first year Day 

One capital, multiplied by 8.5% to develop a level of interest expense to develop a level 

 31 See Exhibit 3, p. 8, Midwest ISO Headcount. 
- 17 -

of debt service of $9.3 million. 

Staff’s calculation of expenses necessary for Day One operations approximate $73 

million per year or $0.21/MWh. 

Electric Reliability Council of Texas 

Labor Costs

ERCOT provided actual data for its fiscal year 2002 that depicts staffing levels by 

cost center division. In order to delineate the level of staffing to support minimum 

functionality, Staff performed two levels of allocation. First, labor was directly assigned 

to the four functions where applicable. Many departments, however, served multiple 

functions. Those that were determined to perform across all functions were allocated to 

the functions by the ratio of the direct labor assigned to each of the four minimum 

functions. Staff allocated 188 of ERCOT’s 296 FTEs to support the minimum 

functionality. As with the Midwest ISO data, Staff developed an average annual cost of 

compensation and benefits per FTE. The average annual cost was then multiplied by the 

allocated labor of 188 FTEs to obtain an estimated annual labor cost of $17.8 million. 

Depreciation

Again, as in the analyses of the other data providers, Staff utilized generally 

accepted depreciation rates for the non-building assets on a straight-line method and 

depreciated the building over fifteen years. However since Staff was unable to segregate 

EMS systems from the total systems, the depreciation rate for equipment and software 

was set at 5 years. Accordingly, the ERCOT example resulted in a depreciation expense 

of $18.6 million. 

Operations & Maintenance

To develop the O&M expense from the ERCOT data, Staff used only ERCOT’s 

administrative and other expenses and hardware and software maintenance and licensing 

expenses. The administrative and other expenses were divided by ERCOT’s full FTE 

staff of 296 employees for 2002. With that O&M expense per FTE, Staff multiplied the 

expense per FTE by the 188 allocated employees to reflect an estimated O&M expense of 

$3 million. To that Staff added ERCOT’s full hardware and software licensing and 

maintenance expenses of $4.3 million for a total example O&M expense of $7.3 million. 

Other Expenses

The other expense calculation, like O&M, is calculated by taking ERCOT’s 

facility and equipment costs, and consulting and legal services for 2002, in proportion to 
- 18 -

the amount of labor selected for Day One operations. This results in other expenses of 

$13 million. 

Debt Service

As with PJM and Midwest ISO, in order to develop a representation of interest 

expense, Staff multiplied the average of the Day One first year ERCOT assets by seven 

percent. As a result, the data reflects a debt expense of $7.3 million.32

Staff’s calculation of expenses necessary for Day One operations approximate $64 

million per year or $0.22/MWh. 

Southwest Power Pool 

Labor Costs

SPP provided data for the 2003 calendar year. As a result of extensive discussion 

with SPP staff, SPP provided its own allocation, confirmed by Staff review, of labor 

required for minimum functionality.33 However, because of the new market 

implementation that SPP resurrected in 2003, Staff analyzed SPP from two perspectives: 

with the market costs and without the market costs.34 For the analysis with the market 

costs, all 140 SPP FTEs are included in the calculation for a weighted average annual 

cost of labor per FTE of $137,797. Thus with all FTEs counted, annual labor expense is 

$19.3 million. By excluding the imbalance market staffing levels, the total FTE 

allocation is reduced to 109 FTEs. Based upon the average annual labor cost, total 

annual labor cost is approximated at $15.1 million. 

Depreciation

When developing the depreciation expense, the key difference between SPP with 

the market systems and without is the difference in computer hardware and software 

 32 ERCOT carries debt where the principal repayment has been deferred for a 

certain period. Beginning in 2005, recovery of the principal amounts, separate from 

depreciation recovery and interest expense, will be included in ERCOT’s cost recovery 

mechanism. However, for consistency purposes in the illustrative cost examples, 

ERCOT’s principal recovery is not included. 

33 Given its historic operating structure and control and now preliminary guidance 

on performing as an RTO, SPP is much like a minimally functional Organization. 

34 Cost data from SPP includes the first phase of its market operations 

implementation, i.e., real-time balancing market with market power mitigation and 

market monitoring. 
- 19 -

assets. While the asset levels for all other assets would be identical, the “fully loaded 

SPP” has $20.8 million in additional systems to account for. As a result, on a straightline basis, SPP with market systems incurs an annual depreciation expense of $6.99 

million, whereas SPP without the new market systems exhibits a depreciation expense of 

$2.8 million.35

Operations & Maintenance

Staff utilized all of the SPP reported expenses from its administrative and 

maintenance expense accounts. This resulted in a total annual O&M expense of just over 

$5 million. By removing the administrative and maintenance expense accounts related to 

the new market activities, the SPP data approximates an O&M expense of $2.9 million. 

Other Expenses

To ascertain a level of other expense for SPP, Staff used an estimate of laborrelated taxes by applying the statutory IRS rates to the estimates of labor costs. For SPP 

with market systems, labor related taxes are approximately $1.5 million per year. SPP 

data excluding the market systems labor cost reflects labor related tax expense of $1.2 

million. 

Debt Service

Staff applied a 7% interest rate to average SPP assets to develop a representative 

interest expense of $2.4 million. Excluding the market operations assets, Staff developed 

an interest expense of $1.1 million. 

Total approximate expenses, with market operations: $35.3 million per year, or 

$0.16/MWh. Total approximate expenses, less market operations: $23.2 million per 

year, or $0.11/MWh. 

IV. Results 

The experiences reviewed in this Study indicate that, to date, Day One RTOs 

require an investment outlay of between $38 million and $117 million (Figure 2), with 

annual operating expenses between $35 million and $78 million (Figure 3). The 

investment range should provide the Day One RTO with the infrastructure, including 

hardware and fully operating software and other capital assets, necessary to operate the 

 35 There was not a clear separation of general furniture/equipment, non-EMS 

systems and EMS systems to assign depreciation rates. Thus all non-building assets were 

depreciated over 5 years. 
- 20 -

regional transmission system, determine ATC and schedule transmission service through 

centralized control.36

Figure 2 

Investment Cost Ranges 

$0

$50

$100

$150

$200

$250

$300

Pre-Day One Day One Day Two

Millions

The investment range is also sufficient to assure the necessary completion of the 

communication systems that allow the centralized Day One RTO to monitor the regional 

grid and take any necessary action to maintain or enhance reliability. Further, the annual 

expense would provide for staffing, operating expense, debt service, depreciation and 

taxes sufficient to efficiently manage the organization. 

 36 Day Two data reflects the investment costs and annual revenue requirements of 

existing RTOs and ISOs, including those that were not selected for Day One study. 
- 21 -

Figure 3 

Annual Operating Expense Ranges 

$0

$50

$100

$150

$200

$250

$300

Pre-Day One Day One Day Two

Millions

Presentation in terms of ranges is useful because the organizations in the sample 

group vary by location, services, and participation. Similarly, the costs were incurred in 

different years, and Staff did not make an adjustment for inflation. Staff found that no 

particular entity, without some level of system enhancement and operational experience, 

serves as an exact example of a Day One RTO. While the use of existing ISOs and RTOs 

assisted Staff in the identification of the costs necessary to develop a Day One RTO, the 

cost data was not consistently developed or provided to Staff, so that only in a grouping 

was the information relevant for the Study. Accordingly, the results of the analysis 

portray an expected range of investment and expense amounts. The development of an 

RTO from an area in which a tight power pool exists can benefit, in terms of potential 

lower investment costs, from the already developed centralized communication systems. 

Also, entities located in lower cost areas, in terms of labor and real estate costs, would 

likely have lower operating expenditures. Conversely, new development in high cost 

areas can increase building acquisition costs. 

Another reason for the development of the cost ranges is due to the quality of the 

data used in this Study. While some of the respondents to this Study provided detailed 

investment and operating data by cost element, others provided summary data with less 

definition. Also, as described above, much of the data analysis required the use of 

allocation factors. While Staff used allocation factors that are consistent with 

Commission precedent for ratemaking methodologies, the allocation factors are meant to 

create a cost model not a definitive cost amount. It is not the conclusion of either the 

participating organizations or Staff that the cost estimates associated with each 

organization reflect what its actual cost of operating under a Day One scheme would have 

been. 
- 22 -

Notwithstanding, Staff believes that the Study is an accurate reflection of what a 

new Day One RTO could expect for required investment and opening day expense. 

Further, Staff believes the Study’s intrinsic value is that it is based on other RTOs’ actual 

experience. The added value of the range approach is that it allows for a sliding scale of 

costs over time. For example, an entity formed today would face different and likely 

lower hardware and software expenditures, while facing potential increases in building 

costs due to inflation. Further, regional differences play a role in determining how much 

must be spent for both investment and operating expenses. 

In conclusion, Staff believes that ranges displayed in this Study reflect costs likely 

to be incurred by an RTO attempting to perform the Day One functions discussed above. 

V. Start-up Cost Conclusions 

While this Study seeks to identify the costs of starting a Day One RTO, Staff 

sought to: 

A) Compare the results here with (1) the cost-benefit analyses completed for 

various regions which have also been attempting to quantify the costs and 

benefits of RTO formation and (2) what existing large operating companies 

are currently charging for similar services; and 

B) Assess the impact of the added annual charges on customers so market 

participants and regulators can review and discuss their significance. 

Comparisons 

At least six cost-benefit studies have been completed since the issuance of Order 

No. 2000.37 Among the studies that attempted to estimate the cost of developing an RTO, 

only the RTO-West Cost Benefit study, completed in March 2002, contained an 

assessment of RTO start-up costs and operating costs.38

According to the RTO-West study, the estimated cost to develop an RTO is $82 

million. This translates to an annual operating expense or revenue requirement of $50 

million—amounts similar to Staff’s expense and investment estimates. The RTO-West 

 37 These include studies for the Southeastern Association of Regulatory Utility 

Commissioners (SEARUC), RTO-West filing utilities, NY-ISO and NERTO formation 

of a single RTO, and Northeast RTO consisting of PJM, NY-ISO and NERTO. Studies 

were also completed separately by the Commission and the Department of Energy. The 

GridFlorida study is underway. 

38A current study being completed for the GridFlorida RTO proposes to include an 

assessment of the start-up costs under a day-one and day-two approach. 
- 23 -

study used existing data from operating entities much in the same fashion as Staff’s Study 

did. In doing so, however, there was no dissection of the estimated development costs by 

RTO function or through staged implementation. The RTO-West study concluded that, 

on a per unit basis, it would cost between $0.40/MWh and $0.58/MWh.39 In comparison 

to the RTO-West study, Staff used its calculated Day One expenses and load data from 

each of the representative group members to project that a new Day One RTO (in those 

regions) would result in an added charge to customers in the range of $0.16/MWh to 

$0.22/MWh (Figure 4).40 It is important to note that some of the functions of a Day One 

RTO are currently being provided and charged for by transmission owners. For example, 

utilities, including large multi-state holding companies, have explicit charges in their 

tariffs for Scheduling, System Control and Load Dispatch service.41 This function is only 

one of the many functions that an RTO performs and will no longer be performed or 

charged for by the current utilities. 

Figure 4 

Annual Operating Expense Ranges per MWh 

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

$0.90

$1.00

Pre-Day One Day One Day Two

$ per MWh

 39 See Exhibit No. 6 for the relevant portions of the RTO-West Study. 

40 In the cases where the rate development is based on peak energy on the grid 

(e.g., the Midwest ISO), the per unit impact would be lower because of this larger load in 

the denominator. For example, the derived Day One rate for the Midwest ISO, using 

peak energy, would be $0.13/MWh, rather than $0.21/MWh. 

41 This sample includes Arizona Public Service Company ($0.06/MWh), Entergy 

Corporation ($0.10/MWh), Florida Power & Light Company ($0.03/MWh), Florida 

Power Corporation ($0.11/MWh), Public Service Company of Colorado ($0.13/MWh), 

Public Service Company of New Mexico ($0.05/MWh), Southern Electric Generating 

Company ($0.11/MWh), and Tampa Electric Company ($0.05/MWh). 
- 24 -

Staff’s projection demonstrates that the ultimate charge to customers will largely 

depend on the geographic size and electrical load of the new organization, as well as the 

costs. For example, using the PJM Day One illustration, the impact of increasing the 

PJM footprint to expected 2005 levels would result in an approximate rate of 

$0.15/MWh.42 By increasing its geographic footprint, through incremental increases in 

investment, PJM was able to offset the costs by increasing its electrical load. PJM 

indicated that, had its footprint been smaller, investment costs would likely have been 

lower. Thus, size has implication in two contexts: costs differ as a result of both load 

density and geographic footprint. As a result, it is important to recognize that while some 

RTO costs are increasing, the increases are a function of geographic expansion and 

addition of functions, at the request of RTO customers. For example, PJM’s 2005 

operating budget is expected to increase by 46% to accommodate its larger footprint and 

service needs, but the additional scope will actually reduce the per unit charge by 27%. 

Another aspect of this study was to work with the sponsors of WestConnect RTO. 

As a result of Staff’s discussion with WestConnect, an understanding was developed that 

recognizes separate reporting of investment and start-up costs. In addition, Staff’s and 

WestConnect’s estimates of the costs of a Day One RTO are reasonably close.43

Impact 

Finally, in order to provide perspective on the financial impact of a new RTO to 

end-use customers, Staff calculated the percentage of a retail customer’s bill that would 

be associated with the additional expense. Staff used its average annual revenue 

requirement of $62.5 million and Energy Information Agency data on the overall national 

average cost of production, transmission and distribution service to produce this estimate. 

The median expense of developing and operating a Day One RTO would impact retail 

rates by less than 0.3 percent (or two one-hundredths of one cent, $0.0002, per kWh) (see 

Figure 5).44 This represents a charge of $2.31 per year for a typical residential consumer, 

or $0.19 per month. 

 

42 See Exhibit 3, p. 5, Column (C), for detailed information. The forecast costs 

reflect the incremental additions necessary to serve the expanded footprint. 

43 WestConnect developed a study that reflects year one annual revenue 

requirement of about $50 million and necessary investment (as defined above) of 

approximately $65 million. 

44 The average $62.5 million operating cost was divided by the regional average 

load of the United States (Exhibit 3, pages 21 and 22). 
- 25 -

Figure 5 

Average Retail Bill Impact: Nationwide 

(% of Total $/kWh) 

Production

61.11%

Transmission

8.03%

Distribution

Average RTO 30.56%

Expense

0.30%

A second example was calculated using a smaller footprint. Here Staff applied the 

same analysis of new charges for the Desert Southwest footprint and demonstrated that 

an RTO could operate for an added charge of 0.72 percent (or five one-hundredths of one 

cent, $0.0005, per kWh) of a retail customer’s bill (see Figure 6). The observation to be 

drawn from this analysis is that the size of the organization’s footprint will matter; 

however, the impact to customers should be less than one percent. 

Figure 6 

Average Retail Bill Impact: Desert Southwest 

(% of Total $/kWh) 

Production

60.85%

Transmission

7.99%

Distribution

Average RTO 30.43%

Expense

0.72%

Conclusion 

In summary, there is significant investment required to develop an RTO. 

However, the actual revenue requirement of the organization necessary for it to recover 

its operating expenses, return of debt expense, depreciation and taxes (other than income) 

is far less significant and has a relatively small impact on retail customers. For this 
- 26 -

relatively small incremental charge, customers gain all the benefits of independence and 

reliability associated with the new RTO. 

VI. Study Insights 

In the course of developing the Study, Staff interviewed several industry 

consultants and members of current RTO management. In these interviews, respondents 

shared their lessons learned and insights on RTO formation. Despite the variety of 

circumstances under which the current RTOs and ISOs developed, many had common 

experiences. 

While each existing transmission organization had similar operational 

requirements, costs differed in key areas, namely computer hardware and software 

expenditures, management of the transmission organization, outside consulting fees and 

operations center/building. Many respondents noted that there were lessons to be learned 

from their own start-up experience and that a new entity should have a smoother, less 

expensive development stage. Respondents indicated several factors are important to a 

smoother roll-out: (1) have a clear business plan prior to hiring a software contractor; (2) 

attempt to utilize existing modular software; and (3) add functions gradually, rather than 

beginning with full-scale Day Two operations. 

Primarily, respondents noted that delay is expensive. Cost overruns, particularly 

in software design, result from changing plans mid-course. Prolonged delay also 

increases the amount of interest paid on debt before operations commence and the RTO 

has a revenue stream. Conversely, full Day Two operations implementation at the 

organization’s inception on an aggressive timeline is costly both in the amount spent 

hiring outside consultants and in the number of software re-works required after 

operations commence. The entities that developed in stages, moving from Day One to 

Day Two while adding functionality to meet their members’ needs, reported less cost 

overrun and fewer required reconfigurations. Staff finds that, if developing RTOs apply 

the lessons learned by existing RTOs, their formation costs can remain on the low end of 

the cost ranges while moving to a Day Two RTO with only incremental cost additions.45 

Similarly, RTOs that grew out of tight power pools with long-established working 

relationships among members were able to grow from a Day One to a Day Two RTO 

incrementally with greater cost efficiency. Those entities without existing relationships 

spent more on the front end to make their IT and communications systems compatible. 

Additionally, a gradual approach from Day One operations to a full Day Two 

 45 This can be seen in Figure 2, where the higher end of the investment cost range 

reflects some entities that undertook an immediate full Day Two effort to commence 

operations. 
- 27 -

market may be less expensive due to the advent of modular computer systems. These 

systems can overlay additional functions as required for locational marginal pricing 

(LMP) and market operations on top of the Day One system. This software is becoming 

increasingly standardized and available off-the-shelf. However, it should be recognized 

that software expenditures will continue to be one of the largest portions of an RTO’s 

budget. A consultant to the Commission, Dave Turner of Gestalt LLC cautioned that, 

while commercially available software exists, it is not one-stop shopping. He noted that 

such products will almost always require some customization, perhaps significant. This 

invariably means costs will be higher than the retail price tag, but typically lower than 

entirely customized software. Mr. Turner warned that costs can grow exponentially when 

requirements shift or design changes are introduced in the build, test or deploy stages. 

Similarly, respondents indicated several factors that can lead to cost increases for IT 

systems: (1) lack of clear business plan and project management; (2) over-customization 

of software; (3) incomplete system design; (4) excessive changes during development, 

and (5) implementation delays. 

Staff believes an organization beginning today and taking a lessons learned 

approach from previously formed organizations will experience costs at the lower end of 

the investment cost range, similar to SPP’s recent experience, and likely incur costs in the 

range of approximately $50 to $70 million in investment and operating costs of $50 to 

$70 million. 

This Study also highlights the need for RTO and ISO data to be presented in a 

common format. Much of the imprecision in the results stems from the data submitted by 

the participating organizations, and Staff’s assumptions and allocations of costs. With 

more consistent and precise data, a clearer picture of the up-front investment and ongoing 

expenditures required would emerge. The Uniform System of Accounts, designed for the 

traditional vertically-integrated utility, is not always aligned with the functions of an ISO 

or RTO. Staff recommends review of the reporting requirements and possible 

standardization to facilitate cost oversight by the public and the Commission. 
Exhibit 1 
Exhibit 1 – Benefits Studies Table 

1

Summary Findings from Benefit Studies for RTOs and Competition 

Study (Author) Date Benefit Type Savings Comment 

DOE’s National 

Transmission Grid Study 

(DOE) 

5/2002 Consumer 

benefit of 

competition 

already attained 

$13 bn/year Relieving 

transmission 

constraints 

would 

significantly add 

to customer 

benefits 

SEARUC study of SMD in 

Southeast (Charles River 

Associates) 

11/2002 improved power 

dispatch and 

increased 

reserve sharing 

$1.1 bn in net 

benefits in 

Southeast. 

$1.8 bn in 

Eastern 

Interconnect 

Net benefits 

assume that 

SMD includes 

participant 

funding for new 

transmission 

facilities. 

Finding of net 

benefits differs 

by sub-region 

RTO West (Tabors 

Caramanis and 

Associates) 

3/2002 Elimination of 

pancaked rates 

and loss 

charges, Better 

dispatch across 

a wider region 

and 

Better reserve 

sharing 

Net benefits in 

RTO West 

$305 mm/year 

Net benefits 

for whole 

Western 

Interconnect 

$410 mm 

Benefits to 

electricity buyers 

about $1.3 

bn/year 

Lower net 

revenues to 

generators of 

about $900 mm 

Center for the 

Advancement of Energy 

Markets Competition in 

PJM (Ron Sutherland) 

9/2003 PJM customer 

savings in enduse prices paid 

in 2002 and 

projects future 

savings 

$3.3 bn in 

2002 

$28.5 bn 

present value 

of future 

Wholesale 

market benefits 

primarily from 

centralized 

economic 

dispatch, with 

some reduced 

forced outage 

rates & higher 

availability 

MISO, PJM and SPP on 

Single RTO Market 

(Energy Security Analysis, 

Inc.) 

7/2002 Elimination of 

pancaked 

transmission 

rates and loss 

charges. Better 

dispatch across 

a wider region. 

Better reserve 

sharing 

$7 bn over ten 

years 
Exhibit 1 – Benefits Studies Table 

2

Study (Author) Date Benefit Type Savings Comment 

PJM Study of single 

Northeastern RTO (PJM) 

1/2002 $299 mm/ 

year 

Net generators 

costs of $37 mm 

NYISO and ISO-NE 

combination and single 

Northeastern RTO 

(NYISO and ISO-NE) 

5/2002 Single 

Northeastern 

RTO more 

than $200 

mm/year 

NY and NE 

about 

$120/year 

FERC Environmental 

Impact Statement for 888 

1996 Open 

transmission 

access and 

competition 

through 2010 

$3.76 - $5.37 

bn/ year 

(1995 dollars) 

FERC Economic 

Assessment of RTO 

Policy (ICF) 

2002 3 Scenarios: 

A) Transmission 

Only - reduced 

transmission 

barriers and 

better sharing of 

reserves across 

regions 

B) RTO Policy 

Case, with 

generation 

efficiencies; and 

C) Demand 

Response 

In 2010 (in 

2000 $s) 

A) $0.8 

bn/year 

(0.7%) 

B) $5.2 

bn/year 

(4.8%) 

C) $7.5 

billion/year 

(6.9%) 

Present Value 

2002-2020 from 

$6.2 bn (0.6%) 

to $60 bn (5.6%) 

for three 

scenarios 

Center for Study of 

Competitive Markets 

Operating Efficiencies 

Study (Markiewicz, Rose 

and Wolfram) 

7/2004 Measured 

historical 

improvements in 

operating 

efficiency of 

utility owned 

plants operating 

in competitive 

markets as 

compared with 

owned plants in 

regulated 

markets and with 

Muni- owned 

plants 

Restructured 

IOUs 10% 

more efficient 

in non-fuel 

expenses & 

5% in 

employment, 

vs. 

unrestructured 

IOUs 

13% in nonfuel expenses 

& 10% in 

employment 

vs. Munis. 

Based on 

historical 

experience of 

utilities under 

restructuring 

using annual 

operating data 

on generation 

plants for the 

period 1981 

through 1999 
Exhibit 1 – Benefits Studies Table 

3

Quotes Regarding the Benefits of Competition from Order 888 1

Table of Order 888 Discussion of Benefits and Costs of Markets 

Quantifiable Benefits • $3.8 to $5.4 Billion 

Qualitative Benefits • Better use of existing assets and institutions 

• New Market Mechanisms 

• Technical Innovation 

• Less Rate Distortion 

Quantified Benefits of $3.8 to $5.4 Billion (from Page 3)

The Commission estimates the potential quantitative benefits from the Final Rule will be approximately 

$3.8 to $5.4 billion per year of cost savings, in addition to the non-quantifiable benefits that include better 

use of existing assets and institutions, new market mechanisms, technical innovation, and less rate 

distortion. 

Types of Benefits of Competition (from Section 5.2.6.1. Economic Benefits) 

[O]ther industries that have undergone large shifts in regulation (natural gas, telecommunications, 

railroads, airlines, and trucking) . . . . have gained efficiency in four general ways: 

• Better use of existing assets and institutions. Market forces remove rigidities that are 

associated with highly regulated industries, allowing better allocation of resources and fuller use of 

the transmission network. Competitive pressure encourages companies to make better use of their 

assets. 

• New market mechanisms. As markets take hold, they allow people to trade not only the goods 

and services that were traditionally regulated, but also a wide range of other goods and services. 

For instance, spot markets allow shorter term trading; futures and derivative markets allow more 

sophisticated approaches to managing risk. . . 

• Technical innovation. Companies develop new methods of providing goods and services. In 

some cases, this means developing industry-specific technologies. It also can mean adapting 

existing technologies from other industries. . . . Regulated industries often have a pent-up potential 

for technical innovation that arises because no one has tried to adapt existing technologies from 

other industries. . . 

• Less rate distortion. As the basic commodities or services sold in an industry become more 

competitive, it becomes ever harder to maintain rate structures that prevent efficient use of the 

transportation system. The proposed rule does not directly address transmission rates, but future 

competition arising from non-discriminatory open access is likely to increase pressure on 

inefficiencies in transmission rates. 

 These types of efficiency gain are not mutually exclusive. For instance, improved market structures 

are the mechanism through which resources are better allocated—though better markets also add value in 

ways that were unimagined at the beginning of market-oriented regulation. 

 1 Promoting Wholesale Competition Through Open Access Non-discriminatory Transmission Services by Public Utilities and Recovery of 

Stranded Costs by Public Utilities and Transmitting Utilities, Order No. 888, 61 Fed. Reg. 21,540 (May 10, 1996), FERC Statutes & Regulations, 

Regulations Preambles January 1991-June 1996 ¶ 31,036 (1996), order on reh'g, Order No. 888-A, 62 Fed. Reg. 12,274 (March 14, 1997), FERC 

Statutes & Regulations, Regulations Preambles July 1996-December 2001 ¶ 31,048 (1997), order on reh'g, Order No. 888-B, 81 FERC ¶ 61,248 

(1997), order on reh'g, Order No. 888-C, 82 FERC ¶ 61,046 (1998), aff'd in relevant part sub nom. Transmission Access Policy Study Group, et al. 

v. FERC, 225 F.3d 667 (D.C. Cir. 2002), aff'd sub nom. New York v. FERC, 535 U.S. 1 (2002).
Exhibit 1 – Benefits Studies Table 

4

Quotes Regarding the Benefits of RTOs from Order 2000 2

Table of Order 888 Discussion of Benefits of Markets 

Impediments to 

Competition Benefits 

• Engineering and economic inefficiencies 

• Continuing opportunities for transmission 

owners to unduly discriminate on behalf of 

their affiliates 

Qualitative Benefits • Increased efficiency through elimination of 

regional transmission pricing and rate 

pancaking 

• Improved congestion management 

• More accurate estimates of ATC 

• Effective management of parallel path flows 

• Efficient planning for transmission and 

generation investments 

• Increased coordination among states 

• Reduced transaction costs 

• Facilitation of state deregulation 

• Development of environmentally preferred 

generation 

• Improved grid reliability 

• Less discrimination 

Cost/Benefit Tradeoffs • Organizational flexibility to manage costs 

Impediments to the Achievement of Competitive Benefits (from Page 32)

[T]here remain important transmission-related impediments to a competitive wholesale electric market ... 

[in] two broad categories: (1) the engineering and economic inefficiencies inherent in the current operation 

and expansion of the transmission grid, and (2) continuing opportunities for transmission owners to unduly 

discriminate in the operation of their transmission systems so as to favor their own or their affiliates’ power 

marketing activities. 

Types of Benefits of Competition (from Pages 89-90) 

We conclude that RTO’s will provide the benefits ... includ[ing]: increased efficiency through regional 

transmission pricing and the elimination of rate pancaking; improved congestion management; more 

accurate estimates of ATC; more effective management of parallel path flows; more efficient planning for 

transmission and generation investments; increased coordination among state regulatory agencies; 

reduced transaction costs; facilitation of the success of sate retail access programs; facilitation of the 

development of environmentally preferred generation in sates with retail access programs; improved grid 

reliability; and fewer opportunities for discriminatory transmission practices. 

Cost/Benefit Tradeoffs (from Page 96) 

We also recognize that there are those who worry that the costs of establishing an RTO will outweigh the 

benefits. We believe this concern fails to account for the flexibility we have built into this rule. While many 

look at the high costs involved with respect to establishing some existing ISOs and PXs, this rule does not 

require an RTO to follow any specific approach ... allowing significant flexibility with respect to how and, in 

 

2

 Regional Transmission Organizations, Order No. 2000, 65 Fed. Reg. 809 (Jan. 6, 2000), FERC Statutes & Regulations, Regulations Preambles 

July 1996-December 2000 ¶ 31,089 (1999), order on reh'g, Order No. 2000-A, 65 Fed. Reg. 12,088 (Mar. 8, 2000), FERC Statutes & Regulations, 

Regulations Preambles July 1996-December 2000 ¶ 31,092 (2000), aff'd sub nom. Public Utility District. No. 1 of Snohomish County, Washington 

v. FERC, 272 F.3d 607 (D.C. Cir. 2001). 
Exhibit 1 – Benefits Studies Table 

5

some cases, when the minimum characteristics and functions are satisfied.... T]he flexibility built into the 

Final Rule will allow RTOs to create streamlined organizational structures that are not overly costly. 
Exhibit 2 
Exhibit 2 

NERC Reliability Functional Model 

Functional Model Diagram (Approved 2/10/2004) 

Function Name Responsible Entity 

Operating Reliability Function Reliability Authority 

Planning Reliability Function Planning Authority 

Balancing Function Balancing Authority 

Interchange Function Interchange Authority 

Transmission Service Function Transmission Service Provider 

Transmission Ownership Function Transmission Owner 

Transmission Operations Function Transmission Operator 

Transmission Planning Function Transmission Planner 

Resource Planning Function Resource Planner 

Distribution Function Distribution Provider 

Generator Ownership Function Generator Owner 

Generator Operations Function Generator Operator 

Load-serving Function Load-serving Entity 

Purchasing-Selling Function Purchasing-Selling Entity 

Market Operations Function Market Operator (or Resource Dispatcher) 

Standards Development Function Standards Developer 

Compliance Monitoring Function Compliance Monitor 

* The circled authorities represent Staff’s identification for Day One purposes. 

Balancing (Balancing Authority)

Interchange (Interchange Authority)

Transmission

Service (Transmission Service

Provider)

Generator

Operations

(Generator Operator)

Generator

Ownership

(Generator Owner)

Transmission

Ownership (Transmission Owner)

Load-Serving

(Load-Serving

Entity)

PurchasingSelling (Purchasing-Selling

Entity)

Transmission

Operations (Transmission Operator)

Distribution (Distribution Provider)

Operating

Reliability (Reliability Authority)

Standards

Development

(Standards Developer)

Compliance

Monitoring (Compliance Monitor)

Reliability

Service

Functions

Planning

and

Operating

Functions

Standards

Functions

NERC Functional

Model

Version 2

Planning

Reliability (Planning Authority)

Resource

Planning (Resource Planner)

Transmission

Planning (Transmission Planner)

Market

Operations

(Market Operator or

Resource Dispatcher)
Exhibit 3 
RTO Investment Cost PJM MISO ERCOT SPP S

 Transmission Service Provider 35,198,875 (1) $ 55,385,085 $ 59,740,106 $ 22,307,139 $ 1,466

$ 

 Transmission Support 15,474,219 (2) $ 28,851,278 $ 18,034,749 $ 3,040,533 $ 3,040

$ 

 Reliability 1,269,955 (3) $ 10,142,315 $ 4,508,687 $ 5,670,751 $ 5,670

$ 

 Management 6,684,399 (4) $ 7,029,747 $ 1,011,331 $ 2,256,707 $ 2,256

$ 

 Building 11,046,712 (5) $ 15,776,744 $ 30,655,674 $ 5,059,774 $ 5,059

$ 

(6) Total $ 117,185,169 69,674,160 $ 113,950,547 $ 38,334,905 $ 17,494

$ 

 Number of Employees 263 187 188 140 (7) 

Estimated Annual Operating Expense

(8) Est. Labor Cost(Avg. Ann. Sal.)1/ $ 21,910,268 34,852,639 $ 17,870,915 $ 19,291,633 $ 15,061

$ 

(9) Depreciation 2/ $ 15,461,463 12,722,689 $ 18,671,120 $ 6,992,344 $ 2,824

$ 

(10) O&M 3/ $ 13,039,723 9,768,517 $ 7,378,749 $ 5,037,724 $ 2,943

$ 

(11) Other Expenses 4/ $ 13,141,326 16,025,950 $ 12,954,043 $ 1,536,570 $ 1,199

$ 

(12) Interest Expense 5/ $ 9,303,627 4,431,897 $ 7,323,049 $ 2,438,711 $ 1,125

$ 

 Total (Sum (1) through (5)) 77,801,693 (13) $ 72,856,407 $ 64,197,876 $ 35,296,983 $ 23,153

$ 

1/ Salaries, associated benefits and labor related taxes. MISO salaries exclude

MAPPCOR Contract Expense.

2/ Non-EMS software (3 yrs), Non-EMS Hardware (5 yrs), EMS (7 yrs), Building (15 3/ PJM is Materials and Supplies and Hardware Lease Expense per FTE.

MISO O&M consists of Departmental Occupancy and Supplies Expenses only (2ERCOT O&M includes EOY 2002 Admin costs/FTE plus all Software License ExSPP is directly identifed Admin and L&M Costs.

4/ Includes Labor related expenses (meals, lodging, travel, training, etc.) and Non-

related (e.g., insurance expenses, property tax, bank fees, and SAS 70 II audits)MISO expense excludes amortized component of deferred start-up cost (over 7 ERCOT includes Facility and Equipment expenses, and Consulting and Legal se

5/ Interest Expense Only (PJM/ERCOT/SPP - 7%, MISO - 8.5% of Investment). R

use Depreciation to cover principal retirement. Reflects interest calculated takininto account first year Day One investment paid.

SUMMARY Exhibit 3 
PJM Summary

RTO Investment Cost References

 Transmission Service Provider 35,198,875 (1) $ Page 3 - PJM Day One Capital: Total Column (A) Transmission Support 15,474,219 (2) $ Page 3 - PJM Day One Capital: Total Column (B) Reliability 1,269,955 (3) $ Page 3 - PJM Day One Capital: Total Column (C) Management 6,684,399 (4) $ Page 3 - PJM Day One Capital: Total Column (D) Building 11,046,712 (5) $ Page 3 - PJM Day One Capital: Total Column (E)

(6) Total $ Sum (1) through (5) 69,674,160(7) Number of Employees 263 Page 4 - PJM Day 1 FTEs: Column (B) Total

Estimated Annual Operating Expense

(8) Est. Labor Cost(Avg. Ann. Sal.)1/ $ Page 5 - PJM Day One OpEx: Column (B), Line (3) 34,852,639

(9) Depreciation 2/ $ Page 5 - PJM Day One OpEx: Column (B), Line (1) 12,722,689

(10) O&M 3/ $ Page 5 - PJM Day One OpEx: Column (B), Sum Lines (

9,768,517

(11) Other Expenses 4/ $ Page 5 - PJM Day One OpEx: Column (B), Sum Lines (

16,025,950

(12) Interest Expense 5/ $ Page 5 - PJM Day One OpEx: Column (B), Line (2) 4,431,897

(13) Total $ Sum (8) through (12) 77,801,693

PJM Summary Exhibit 3 
(A) (B) (C) (D) 

Transmission

Service Transmission

Provider Support Reliability Management 

ACES / TMS 106,417 Buildings Business Continuity 5,772,673 Combined OASIS / EES Interfac

e 672,678 

Control Center Infrastructure 

Data Publication Extension 272,509 Energy Management System 25,994,325 11,451,914 Enterprise Securit

y 3,837,498 

Grid Accounting 34,551 

Independent Generator Communications 1,163,538 Internet Network Architecture 377,152 

Network Infrastructure Upgrade 1,155,092 

OASIS 748,027 1,496,050 Operator Training Simulator 128,219 

PJM Information Warehouse 1,882,953 2,219,195 941,477 PJM Manuals 141,144 

PJM Manuals Enhancements 232,037 

Totals 35,198,875 15,474,219 1,269,955 6,684,399 

Portion of System Investment Attributable 

to Each RTO Day 1 Function

Estimated PJM Day 1 Capital Investment

PJM Day One Investment Exhibit 3 
(A) (B) (C) (D) (E)

Directl

y Not

Attributabl

e

Attributabl

e Management /

to Day 1 to Day 1 Support

Functions Functions Functions Total

System Operations 114 114

Transmission Planning 38 38Market Services 52 52Information Technolog

y 129 129

Corporate Services 39 39Finance 87 87Market Monitoring 10 10Office of the President 24 24

Subtotal 114 100 279 493Management Allocation 149 130 (279)

0

Totals 263 230 0 493

Estimated PJM Day 1 Staff

Based on 2004 Annual Budget

PJM Day 1 FTEs Exhibit 3 
(A) (B) 

2004 

Expense Type Footnote Estimate 

 Depreciation (1) 1 12,722,689 

 Interest (2)

2 4,431,897 

 Compensation (3)

3 34,852,639 

 Hardware Lease Expense (4)

4 3,149,064 

 Materials & Supplies (5)

4 6,619,453 

 Other or Outside Services Correlated with Staff Levels (6)

5 8,614,841 

(7) Other or Outside Services NOT Correlated with Staff Levels

6 7,411,109 

 Total (8) 77,801,693 

 Net Energy for Load Forecast (9)

7 349,000,000 

 Day 1 OpEx Rate Per Megawatt Hour 0.2229 (10) $ 

Footnotes

1234567

Estimated PJM Annual Day 1 Revenue Requirement

Calculated as 85% of Day 1 non-building, non-EMS investment depreciated over three-year softlife plus 15% of Day 1 non-building, non-EMS investment depreciated over five-year hardware uDay 1 building investment depreciated overCalculated as average unpaid Day 1 Capital Investment times estimated 7.00% interest rate.Based on PJM's annual budget assumptions and volume forecasts on PJM Finance Committee site.Based on pro ration of PJM's total budgeted 2004 Compensation for PJM's System Operations srated management staff totaling 263 in 2004 and 328 in 2005.Calculated as pro rated portion of 2004 budgeted expense associated with staff allocated to Day O

perations.

Calculated as pro rated portion of annual budgeted expenses for lodging, travel, meetings, meatelecommunications, buildings maintenance and utilities associated with staff allocated to Day Represents annual budget for insurance, board expenses, annual member meeting, audit fees, school taxes, and bank fees that do not vary by staff number or customer transaction volumes.

PJM Day One Expense Exhibit 3 
Midwest ISO Summary

RTO Investment Cost References

 Transmission Service Provider 55,385,085 (1) $ Page 7 - MISO Capital Assets: Total Column (D) Transmission Support 28,851,278 (2) $ Page 7 - MISO Capital Assets: Total Column (E) Reliability 10,142,315 (3) $ Page 7 - MISO Capital Assets: Total Column (F) Management 7,029,747 (4) $ Page 7 - MISO Capital Assets: Total Column (G) Building 15,776,744 (5) $ Page 7 - MISO Capital Assets: Total Column (C), Line (8)

(6) Total $ Sum Lines (1) through (5) 117,185,169

 Number of Employees 187 Page 8 - MISO Headcount: Line (11) (7)

Estimated Annual Operating Expense

(8) Est. Labor Cost(Avg. Ann. Sal.)1/ $ Page 9 - MISO Op Expense, Line (1) divided by 227 times Lin

21,910,268

(9) Depreciation 2/ $ Page 7 - MISO Capital Assets: Column (C), Line (32) 15,461,463

(10) O&M 3/ $ Page 9 - MISO Op Expense: Column (D), Sum Line (3) and Li

13,039,723

(11) Other Expenses 4/ $ Page 9 - MISO Op Expense: Column (D), Sum Line (2), Line (

13,141,326

(12) Interest Expense 5/ $ Line (6) multiplied by 2 less Line (9), divided by 2, multiplied b

9,303,627 

(13) Total $ Sum Lines (8) through (12) 72,856,407

MISO Summary Exhibit 3 
Midwest ISO Assets - 2002 Data

(A) (B) (C) (D) (E) 

Account Description

 Ending Balance 

(through Q3 2003) 

Allocated to 

Day 1 TSP TSP Support Re

 35203 Leasehold Improvements - Transmission 523,325.32 (1) $ 523,325 $ 239,106 $ 126,320 $ 

$ 

 35301 Computer Hardware - Transmission 13,012,919.71 (2) $ 13,012,920 $ 5,945,558 $ 3,141,050 $ 

$ 

 35303 Computer Software - Transmission 61,172,915.29 (3) $ 61,172,915 $ 40,026,722 $ 21,146,193 $ 

 35307 Telecommunications Equipment 8,165,925.41 (4) $ 8,165,925 $ 2,934,481 $ 1,550,292 $ 

$ 

 35311 Computer Hardware - Transmission 4,859,786.79 (5) $ 4,859,787 $ 2,407,184 $ 862,953 $ 

$ 

 38900 Land and Land Rights - General 1,800,000.00 (6) $ 1,800,000 $ 646,842 $ 341,728 $ 

$ 

 39003 Leasehold Improvements - General 6,214,349.05 (7) $ 6,214,349 $ 2,233,169 $ 1,179,787 $ 

$ 

 39011 Buildings - General Leased 15,776,743.50 (8) $ 15,776,744 $  39013 Leasehold Improvements - General - (9) $ - $ - $ - $ 

$ 

 39100 Office Furniture and Fixtures 2,628,986.20 (10) $ 2,628,986 $ 944,744 $ 499,110 $ 

$ 

 39110 Office Furniture and Fixtures 20,255.00 (11) $ 20,255 $ 7,279 $ 3,845 $ 

$ 

 39700 Communication Equipment - General 559,367.57 (12) $ 559,368 $  39710 Communication Equipment - General 520,715.55 (13) $ 520,716 $  39801 Computer Hardware - General 1,504,847.60 (14) $ 1,504,848 $ 

 39803 Computer Software - General 425,031.75 (15) $ 425,032 $ 

(16) Total $ 117,185,169 117,185,168.74 $ 55,385,085 $ 28,851,278 $ 1

$ 

100.00%

Rate (yrs) Allocated Dollars Ann. Depreciation

 5 Leasehold Improvements - Transmission 523,325.32 (17) $ 104,665 $  7 Computer Hardware - Transmission 13,012,919.71 (18) $ 1,858,989 $  7 Computer Software - Transmission 61,172,915.29 (19) $ 8,738,988 $  5 Telecommunications Equipment 8,165,925.41 (20) $ 1,633,185 $  7 Computer Hardware - Transmission 4,859,786.79 (21) $ 694,255 $  0 Land and Land Rights - General 1,800,000.00 (22) $ - $  5 Leasehold Improvements - General 6,214,349.05 (23) $ 1,242,870 $  15 Buildings - General Leased 15,776,743.50 (24) $ - $  5 Leasehold Improvements - General - (25) $ - $  5 Office Furniture and Fixtures 2,628,986.20 (26) $ 525,797 $  5 Office Furniture and Fixtures 20,255.00 (27) $ 4,051 $  5 Communication Equipment - General 559,367.57 (28) $ 111,874 $  5 Communication Equipment - General 520,715.55 (29) $ 104,143 $  5 Computer Hardware - General 1,504,847.60 (30) $ 300,970 $  3 Computer Software - General 425,031.75 (31) $ 141,677 $  117,185,169 (32) $ 15,461,463 $ 

Depreciation Calculation

Midwest ISO Assets 2002 Exhibit 3 
MISO Headcount

December 31, 2002

(1) Admin/Exec 2(2) Finance/Shared Services 27(3) Operations 108(4) Planning 20(5) IT 54(6) Legal/Reg 13(7) Market Ops 3

227

Less:

(8) Market Ops 3(9) Transmission Planning

(10) MAPP FTE's 37(11) Day 1 Headcount 187

Midwest ISO Headcount Exhibit 3 
MISO Annual Operating Expense

(A) (B) (C) (D)

2002

Dec-02 Annualized Form 1 "Day 1" (Basis)

 Salaries/benefits 2,216,413 (1) $ 26,596,956 $ 24,530,838 $ 26,596,956 $ Annualize

 Outside services 977,323 (2) $ 11,727,876 $ 8,910,654 $ 8,910,654 $ Actual

 Occupancy 296,001 (3) $ 3,552,012 $ 3,214,346 $ 3,552,012 $ Annualize

 Insurance 276,336 (4) $ 3,316,032 $ 2,982,254 $ 2,982,254 $ Actual

 Supplies/other 1,054,251 (5) $ 12,651,012 $ 9,487,711 $ 9,487,711 $ Actual

 Taxes (6) $ 64,586 $ 1,248,418 775,032 $ 1,248,418 $ Actual

 Sub-total 4,884,910 (7) $ 58,618,920 $ 50,374,221 $ 52,778,005 $ 

 Depreciation 1,323,916 (8) $ 15,886,992 $ 14,300,334 $ 15,886,992 $ Annualize Amortization 818,252 (9) $ 9,819,024 $ 9,819,026 $ 9,819,026 $ Actual

 Interest Expense (10) $ 7,108,668 592,389 $ 9,399,340 $ 9,399,340 $ Actual

 Sub-total 2,734,557 (11) $ 32,814,684 $ 33,518,700 $ 35,105,358 $ 

 TOTAL 7,619,467 (12) $ 91,433,604 $ 83,892,921 $ 87,883,363 $ 

Less:

 Market Ops 79,777 (13) $ 945,582 $ 945,582 $ 

 Transmission Planning 260,580 (14) $ 3,126,960 $ 3,126,960 $ 

 MAPPCOR Contract Expense 6,054,995 (15) $ 6,054,995 $  Total MISO Day 1 Expenses 77,755,826 (16) $  Load - MWh of peak demand 569,642,179 (17) Cost/MWh of peak demand (18) $ 0.1365

 Load - MWh of energy (19) 343,816,582

 Cost/MWh of energy (20) $ 0.2262

Midwest ISO Op. Expense -12/31/02 Exhibit 3 
ERCOT Summary

RTO Investment Cost References

 Transmission Service Provider 59,740,106 (1) $ Page 11 - ERCOT Assets 2002: Column (C), Line (7) Transmission Support 18,034,749 (2) $ Page 11 - ERCOT Assets 2002: Column (D), Line (7) Reliability 4,508,687 (3) $ Page 11 - ERCOT Assets 2002: Column (E), Line (7) Management 1,011,331 (4) $ Page 11 - ERCOT Assets 2002: Column (F), Line (7) Building 30,655,674 (5) $ Page 11 - ERCOT Assets 2002: Column (G), Line (2)

(6) Total $ Sum Lines (1) through (5) 113,950,547

 Number of Employees 188 Page 12 - ERCOT 2002 FTEs: Column (E), Line (30) (7)

Estimated Annual Operating Expense

(8) Est. Labor Cost(Avg. Ann. Sal.)1/ $ Page 13 - ERCOT Op Expense, Column (D), Line (6) divided by 296

17,870,915

(9) Depreciation 2/ $ Page 11 - ERCOT Assets 2002: Column (H), Line (6) 18,671,120

(10) O&M 3/ $ Page 13 - ERCOT Op Expense, Column (D), Line (10) divided by 29

7,378,749

 plus ERCOT Op Expense, Column (D), Line (11)

(11) Other Expenses 4/ $ Page 13 - ERCOT Op Expense, Column (D), sum of Line (8) and Lin

12,954,043

 times allocated labor ratio (188/296)

(12) Interest Expense 5/ $ Line (6) multiplied by 2 less Line (9), divided by 2, multiplied by 7% 7,323,049 .

(13) Total $ Sum Lines (8) through (12) 64,197,876

ERCOT Summary Exhibit 3 
(A) (B) (C) (D) (E) (F) (G) 

Asset EOY 2002 TSP TSP Support Reliability Management Total (C) - 

(1) Computer Equipment and software 124,576,000 $ 57,560,110 $ 17,376,637 $ 4,344,159 $ 410,000 $ 

(2) Buildings and leasehold 48,170,000 $ 18,543,249 $ 5,597,962 $ 1,399,490 $ 5,114,973 $ 30,655

$ 

(3) Furniture and fixtures 5,286,000 $ 2,034,868 $ 614,300 $ 153,575 $ 561,298 $ 

(4) Land and improvements 248,000 $ 95,469 $ 28,821 $ 7,205 $ 26,334 $ (5) Vehicles 129,000 $ 49,659 $ 14,991 $ 3,748 $ 13,698 $ 

(6) Total 178,409,000 $ 78,283,355 $ 23,632,711 $ 5,908,178 $ 6,126,303 $ $ 113,950

(7) 59,740,106 $ 18,034,749 $ 4,508,687 $ 1,011,331 $ (8) Depreciation and amortization (43,207,000) $ (9) 135,202,000 $ 

(10) CWIP 85,000 $ (11) Systems under development 11,799,000 $ 

$ 147,086,000

ERCOT Capital Assets by Function - 2002

ERCOT Assets 2002 Exhibit 3 
(A) (B) (C) (E) (F)

Corporate Administration System Operations

 101 Executive Organization 7 201 Chief Operating Officer Administration 0 (1)

 110 Finance 10 400 COO Administration 0 (2)

 120 General Counsel 4 401 Technical Operations Administration 1 (3)

 130 Human Resources 3 410 Market Operations Support 12 (4)

 140 NERC Compliance 4 420 Operations Support 59 (5)

 150 Stakeholder Services 3 425 System Operations 0 (6)

 160 Corporate Communications 2 430 System Planning 11 (7)

 170 Market Rules 2 440 Resource Planning 0 (8)

 TOTAL 35 TOTAL 83 (9)

Information Technology Market Operations

 300 CIO Administration 0 500 CMO Administration 0 0 (10)

 301 Technology Services Administra (11) t 2 501 Settlements Administration 4

 310 System Engineering & Administr (12) a 43 15 505 Galvin PM 0

 320 EMS 11 510 Customer Solutions Support 4 * (13)

 321 IT Operations 0 520 Registration 17 4 (14)

 325 Facilities 0 530 Settlement Metering 18 (15)

 330 Network 22 8 540 Load Profiling and Data Aggregation 6 (16)

 340 Commercial Applications 14 550 Settlements and Billing 14 (17)

 345 EMMS Development 0 560 Client Relations 17 (18)

 350 Project Management 2 570 REP/ESI-ID of Record 0 (19)

 353 Market Technology Service 0 580 Renewables and TCR 4 (20)

 354 Data Warehousing 0 605 Gruber PM 0 (21)

 355 Development & Architecture 0 630 Retail Documentation and Reporting 0 * (22)

 356 Transaction Services 0 640 Retail Testing and Quality Control 0 * (23)

 357 Corporate Applications 0 650 Retail Client Services 0 * (24)

 358 Web and Data Services 0 660 Wholesale Client Services 0 * (25)

 359 Settlement and Billing 0 TOTAL 84 (26)

 360 Data Management 0 0 Avg. Ann. Sal. (27)

 370 Cyber Securit (28) y 0 ERCOT TOTAL 296 $ 94,868

 371 Physical Security 0 (29)

 385 IT Deliver (30) y 0 ERCOT Day One 188

 390 IT Operations 2 0 (31)

 395 EMMS Production 0 (32)

 TOTAL 94 (33)

0.64

Direct Day One Labor 101 34% Allocated Day 1 Labor 188 64% 188 

TSP 53 29% 6 54 = 114 38% 60%

TSP Support 16 9% 2 16 = 34 12% 18%

Reliability 4 2% 0 4 = 9 3% 5%

Management 28 15% 3 = 31 11% 17%

Allocated to ALL 22

Allocated TSP/Supp/Rel. portion 75

ERCOT Staffing Summary by Division and Department

FY 2002

(D)

ERCOT 2002 FTEs Exhibit 3 12 of 22
Electric Reliability Council of Texas, Inc.

Statements of Activity

(in 000's)

(B) (C) (D) (E)

12/31/2000 12/31/2001 12/31/2002 12/31/2003

Actual Actual Actual Actual-Unaudited

 Operating Revenues: (1)

 Transaction Fees 42,167 (2) $ 59,958 $ 61,456 $ 93,991 $ 

 Membership Fees and other 1,681 (3) $ 5,507 $ 3,630 $ 3,252 $ 

 Total Operating Revenue 43,848 (4) $ 65,465 $ 65,086 $ 97,243 $ 

 Operating Expenses (5)

 Salaries and Related Benefits 7,702 (6) $ 21,382 $ 28,081 $ 35,920 $ 

 Depreciation and Amortization 289 (7) $ 11,242 $ 31,480 $ 38,091 $ 

 Facility and Equipment Costs 2,005 (8) $ 7,170 $ 6,347 $ 8,175 $ 

 Consulting and Legal Services 4,459 (9) $ 6,886 $ 14,008 $ 12,089 $ 

 Administrative and Other 2,944 (10) $ 7,056 $ 4,811 $ 5,392 $ 

 IT Maintenance and Licensing 1,042 (11) $ 428 $ 4,317 $ 5,383 $ 

 Total Operating Expenses 18,441 (12) $ 54,164 $ 89,044 $ 105,050 $ 

 Income From Operations 25,407 (13) $ 11,301 $ (23,958) $ (7,807) $ 

 Other Income (14)

 Interest Income 331 (15) $ 370 $ 1,208 $ 433 $ 

 Interest Expense - (16) $ (1,471) $ (5,448) $ (8,533) $ 

 Change in unrestricted net assets 25,738 (17) $ 10,200 $ (28,198) $ (15,907) $ 

 Full Time Employees 134 267 296 380 (18)

(A)

ERCOT Op Expense Exhibit 3 13 of 22
SPP Summary

RTO Investment Cost References

 Transmission Service Provider 22,307,139 (1) $ Page 15 - SPP Fixed Assets: sum Col. (C) Line (16), Col. (C) Line (24) and Col.  Transmission Support 3,040,533 (2) $ Page 15 - SPP Fixed Assets: sum Col. (G) Line (16) and Col. (D) Line (24)  Reliability 5,670,751 (3) $ Page 15 - SPP Fixed Assets: sum Col. (D) Line (16), Col. (H) Line (16) and Col.  Management 2,256,707 (4) $ Page 15 - SPP Fixed Assets: sum Col. (B) Line (16) and Col. (E) Line (24) Building 5,059,774 (5) $ Page 16 - SPP Building Costs: Column (E) Line (16)

(6) Total $ Sum Lines (1) through (5) 38,334,905

 Number of Employees 140 (7) Page 19 - SPP Op Budget: Column (H) Line (117)

Estimated Annual Operating Expense

 Est. Labor Cost(Avg. Ann. Sal.) (8) 1/ $ Page 19 - SPP Op Budget: Column (H) Line (116) 19,291,633

 Depreciation (9) 2/ $ Sum Lines (1) through (4), divded by 5 years, plus Line (5) divided by 15 years 6,992,344

 O&M (10) 3/ $ Page 19 - SPP Op Budget: Sum Column (J) Line (116) and Column (K) Line (11

5,037,724

 Other Expenses (11) 4/ $ Line (8) times 7.65%, plus Line (7) times $7,000 times 6.2% 1,536,570

(12) Interest Expense 5/ $ Line (6) multiplied by 2 less Line (9), divided by 2, multiplied by 7%. 2,438,711(13) Total $ Sum Lines (8) through (12) 35,296,983

SPP (non-market) Summary

RTO Investment Cost References

 Transmission Service Provider 1,466,682 (14) $ Page 15 - SPP Fixed Assets: sum Col. (C) Line (24) and Col. (F) Line (16)

 Transmission Support 3,040,533 (15) $ Page 15 - SPP Fixed Assets: sum Col. (G) Line (16) and Col. (D) Line (24) 

 Reliability 5,670,751 (16) $ Page 15 - SPP Fixed Assets: sum Col. (D) Line (16), Col. (H) Line (16) and Col. 

 Management 2,256,707 (17) $ Page 15 - SPP Fixed Assets: sum Col. (B) Line (16) and Col. (E) Line (24)

 Building 5,059,774 (18) $ Page 16 - SPP Building Costs: Column (E) Line (16)

(19) Total $ Sum Lines (1) through (5) 17,494,447

 Number of Employees 109 (20) Page 19 - SPP Op Budget: Column (H) Line (118)

Estimated Annual Operating Expense

 Est. Labor Cost(Avg. Ann. Sal.) (21) 1/ $ Page 19 - SPP Op Budget: Column (H) Line (122) 15,061,253

 Depreciation (22) 2/ $ Sum Lines (14) through (17), divded by 5 years, plus Line (18) divided by 15 yea

2,824,253

 O&M (23) 3/ $ Page 19 - SPP Op Budget: Sum Column (J) Line (119) and Column (K) Line (11

2,943,063

 Other Expenses (24) 4/ $ Line (21) times 7.65%, plus Line (20) times $7,000 times 6.2% 1,199,492 Interest Expense (25) 5/ $ Line (19) multiplied by 2 less Line (22), divided by 2, multiplied by 7.0%. 1,125,762

(26) Total $ Sum Lines (21) through (25) 23,153,824

SPP Summary Exhibit 3 
Southwest Power Pool - 2003

Investment Cost

(A) (B) (C) (D) (E) (F) (G) 

Sum of 12/31/2003 Ending Cost FunctionProject Management Market Reliability Split

Transmission 

Service Provision

Transmission 

Support

 Administration $1,035,567.98 (1) 

 AEP Project (2) $44,095.00 

 Business Continuity $259,690.27 (3) 

 Business Systems $168,171.56 (4) 

 Computer Room Expansion $1,246,447.20 

(5)

 Control Room Infrastructure $26,200.00 $631,476.35 $42,666.00 

(6)

 EMS Enhancements $1,621,434.78 $444,803.38 

(7)

 EMS Implementation $2,692,652.00 $36,500.00 

(8)

 Enhance Energy Scheduling (9) $2,727,441.62  Enterprise Security $39,841.00 $273,106.12 $55,031.00 

(10)

 IT Architecture (11) $196,139.06  Market Systems $20,814,257.75 (12)  OASIS (13) $637,794.32  Operating Reserve Sharing $85,402.00 (14)  Transmission Planning $166,950.00 (15)  Total $1,243,580.54 $20,840,457.75 $4,826,129.05 $2,828,472.11 $736,920.32 $2,770,107.62 

(16)

Split Items TSP Support Management Reliability 

 Computer Room Expansion $1,246,447.20 321,590 (17) $ 119,171 $ 446,463 $ 359,223 $ 

 Control Room Infrastructure $631,476.35 162,924 (18) $ 60,374 $ 226,188 $ 181,990 $ 

 EMS Enhancements $444,803.38 114,762 (19) $ 42,527 $ 159,323 $ 128,191 $ 

 EMS Implementation $36,500.00 9,417 (20) $ 3,490 $ 13,074 $ 10,519 $ 

(21) $ - - $ - $ - $ 

 Enterprise Security $273,106.12 70,463 (22) $ 26,111 $ 97,823 $ 78,709 $ 

 IT Architecture $196,139.06 50,605 (23) $ 18,753 $ 70,255 $ 56,527 $ 

(24) TOTAL $2,828,472.11 729,761 $ 270,426 $ 1,013,126 $ 815,159 $ 

SPP Fixed Assets Exhibit 3 
SPP Lease Data

(A) (B) (C) (D) (E) (F)

Period

Prior Rent per 

Month

Scheduled Rate 

Increase

Current Rent 

Rate 

Total Rent for 

the Period

Annual Cost per 

Sq. Ft.

 Jan - Sept. 2003 47,625 (1) $ - 428,629 $ 15.13 $ 

 Oct. 2003 - Oct. 2004 47,625 (2) $ 3% 49,054 $ 588,651 $ 15.58 $ 

 Oct. 2004 - Oct. 2005 49,054 (3) $ 3% 50,526 $ 606,311 $ 16.05 $ 

 Oct. 2005 - Oct. 2006 50,526 (4) $ 3% 52,042 $ 624,500 $ 16.53 $ 

 Oct. 2006 - Oct. 2007 52,042 (5) $ 3% 53,603 $ 643,235 $ 17.03 $ 

 Oct. 2007 - Oct. 2008 53,603 (6) $ 3% 55,211 $ 662,532 $ 17.54 $ 

 Oct. 2008 - Oct. 2009 55,211 (7) $ 3% 56,867 $ 682,408 $ 18.07 $ 

 Oct. 2009 - Oct. 2010 56,867 (8) $ 3% 58,573 $ 702,880 $ 18.61 $ 

 Oct. 2010 - Oct. 2011 58,573 (9) $ 3% 60,331 $ 723,967 $ 19.17 $ 

 2012 60,331 (10) $ 3% 62,140 $ 745,686 $ 19.74 $ 

 2013 62,140 (11) $ 3% 64,005 $ 768,056 $ 20.33 $ 

 2014 64,005 (12) $ 3% 65,925 $ 791,098 $ 20.94 $ 

 2015 65,925 (13) $ 3% 67,903 $ 814,831 $ 21.57 $ 

 2016 67,903 (14) $ 3% 69,940 $ 839,276 $ 22.22 $ 

 2017 69,940 (15) $ 3% 72,038 $ 864,454 $ 22.89 $ 

(16) Net Present Value = $421,647.86 $5,059,774.27 1

(17) (A) Total Rent for the REMAINING Life of the Lease $ Sum of Rents from 

6,408,798

(18) (B) Average MONTHLY Rent for the REMAINING Life of $ (A) divided by 105 m

61,036

(19) (C) Square Footage Occupied $ 37,773

(20) (D) Average ANNUAL Cost per Square Foot $ ((B)*12)/(C) 19.39

SPP Building Cost Exhibit 3 
1

23456789

10111213141516171819202122232425262728293031323334353637383940414243444546

474849505152

A BCDEF

Sum of FTEs

Corporate Function

Departmental Function Management Markets

Regional 

Reliability Reliability

Transmission 

Service Provider

Trans

Su

ADMINISTRATIVE 7.85 BUSINESS APPLICATIONS 0.2 1 BUSINESS ARCHITECTURE & STRATEGY 1.1 BUSINESS INFRASTRUCTURE 6.1 BUSINESS PROJECT MANAGEMENT 0.2 CHANGE MANAGEMENT 1.5 COMPLIANCE 1 CORPORATE AFFAIRS 0.25 CUSTOMER RELATIONS 0.7 EMS APPLICATIONS 4 0.5 ENGINEERING MANAGEMENT 1.75 0.5 FINANCE & ACCOUNTING 4.55 FINANCIAL ANALYSIS & PROCESS IMPROVEMENT 1 GOVERNMENT RELATIONS 0.5 HUMAN RESOURCES 2 INTERCONNECTION ENGINEERING 2 IT MANAGEMENT 2.2 LEGAL 1.5 MARKET ANALYSIS 4 

MARKET MANAGEMENT 2.25 MARKET OPERATIONS 7.75 MARKET SUPPORT 13.2 MEMBER RELATIONS 0.3 NETWORK MODELS 2.5 0.5 OFFICE & FACILITIES 2.5 OPERATIONS ENGINEERING 0.25 2.95 2 OPERATIONS MANAGEMENT 0.35 REGIONAL SUPPORT & SCHEDULING 0.5 

RELIABILITY AUTHORITY 0.25 8.05 RELIABILITY ENGINEERING 2 

SCHEDULING 1 SETTLEMENTS 3 2.85 TARIFF ADMINISTRATION 2 0.25 11.85 TECH SUPPORT 1.75 0.5 TRAINING 0.5 0.5 TRANSMISSION ENGINEERING 4 TRANSMISSION PLANNING 6.5 TRANSMISSION POLICY 2 3 TREASURY 0.1 Grand Total 39.15 30.7 5.25 26.25 28.2 

Mgmt FTEs TSP FTEs Reliability FTEs Transmission Support FTEs Total Non-market FTEs Markets FTEs 

SPP FTE Allocation Exhibit 3 
1

23456789

101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960

A B C D E F G H I J K 

SPP Budget

Salary, Travel, 

Meetings, Comm NERC

 Admin 1,270,347 

 L&M 3,767,368 

 S7

Personnel Corporate Function Departmental Function Op Budget FTEs 800,000 19,291,638 492,647 1,148,389

Accounting Management ADMINISTRATIVE 149,519 1 0.71% 137,797 3,519 8,203

Carl Monroe Management ADMINISTRATIVE 37,380 0.25 0.18% 34,449 880 2,051

Cheryl Robertson Management ADMINISTRATIVE 149,519 1 0.71% 137,797 3,519 8,203

Customer Service Management ADMINISTRATIVE 14,952 0.1 0.07% 13,780 352 820

HR Management ADMINISTRATIVE 528,137 3 2.14% 413,392 10,557 24,608 

Karen Thomas Management ADMINISTRATIVE 112,139 0.75 0.54% 103,348 2,639 6,152

Keith Dover Management ADMINISTRATIVE 74,759 0.5 0.36% 68,899 1,759 4,101

Nick Brown Management ADMINISTRATIVE 989,839 0.75 0.54% 103,348 780,339 6,152 

Stacy Duckett Management ADMINISTRATIVE 37,380 0.25 0.18% 34,449 880 2,051

Tom Dunn Management ADMINISTRATIVE 37,380 0.25 0.18% 34,449 880 2,051

Accounting Transmission Service Provider BUSINESS APPLICATIONS 149,519 1 0.71% 137,797 3,519 8,203

Kevin Perry Management BUSINESS APPLICATIONS 29,904 0.2 0.14% 27,559 704 1,641

Kevin Perry Management BUSINESS ARCHITECTURE & S 0.3 0.21% 41,339 44,856 1,056 2,461

Security Management BUSINESS ARCHITECTURE & S 0.8 0.57% 110,238 119,615 2,815 6,562

Infrastructure Management BUSINESS INFRASTRUCTURE 619,702 4 2.86% 551,190 14,076 32,811 

Kevin Perry Management BUSINESS INFRASTRUCTURE 14,952 0.1 0.07% 13,780 352 820

Security Management BUSINESS INFRASTRUCTURE 304,039 2 1.43% 275,595 7,038 16,406 

Kevin Perry Management BUSINESS PROJECT MANAGEM 0.2 0.14% 27,559 29,904 704 1,641

Keith Dover Management CHANGE MANAGEMENT 74,759 0.5 0.36% 68,899 1,759 4,101

Tech DevelopmenManagement CHANGE MANAGEMENT 149,519 1 0.71% 137,797 3,519 8,203

Ron Ciesiel Regional Reliability COMPLIANCE 359,519 1 0.71% 137,797 3,519 8,203 

Stacy Duckett Management CORPORATE AFFAIRS 59,380 0.25 0.18% 34,449 880 2,051 

RJ Robertson Management CUSTOMER RELATIONS 104,663 0.7 0.50% 96,458 2,463 5,742

Applications Reliability EMS APPLICATIONS 448,557 3 2.14% 413,392 10,557 24,608

Applications Transmission Service Provider EMS APPLICATIONS 608,248 0.5 0.36% 68,899 1,759 537,590

Ops Engineering Reliability EMS APPLICATIONS 149,519 1 0.71% 137,797 3,519 8,203

Bruce Rew Management ENGINEERING MANAGEMENT 74,759 0.5 0.36% 68,899 1,759 4,101

Les Dillahunty Management ENGINEERING MANAGEMENT 37,380 0.25 0.18% 34,449 880 2,051

Planning Reliability ENGINEERING MANAGEMENT 74,759 0.5 0.36% 68,899 1,759 4,101

Sherry Jensen Management ENGINEERING MANAGEMENT 149,519 1 0.71% 137,797 3,519 8,203

Accounting Management FINANCE & ACCOUNTING 598,077 4 2.86% 551,190 14,076 32,811

Tom Dunn Management FINANCE & ACCOUNTING 82,236 0.55 0.39% 75,789 1,935 4,512

Accounting Management FINANCIAL ANALYSIS & PROCE 1 0.71% 137,797 149,519 3,519 8,203

Les Dillahunty Management GOVERNMENT RELATIONS 37,380 0.25 0.18% 34,449 880 2,051

Nick Brown Management GOVERNMENT RELATIONS 37,380 0.25 0.18% 34,449 880 2,051

HR Management HUMAN RESOURCES 323,039 2 1.43% 275,595 7,038 16,406 

Tariff Studies Transmission Service Provider INTERCONNECTION ENGINEER 2 1.43% 275,595 299,039 7,038 16,406

Applications Management IT MANAGEMENT 149,519 1 0.71% 137,797 3,519 8,203

Carl Monroe Management IT MANAGEMENT 37,380 0.25 0.18% 34,449 880 2,051

Infrastructure Management IT MANAGEMENT 96,384 0.5 0.36% 68,899 1,759 4,101 

Kevin Perry Management IT MANAGEMENT 29,904 0.2 0.14% 27,559 704 1,641

Tech DevelopmenManagement IT MANAGEMENT 37,380 0.25 0.18% 34,449 880 2,051

Laurie Guinn Management LEGAL 149,519 1 0.71% 137,797 3,519 8,203

Stacy Duckett Management LEGAL 134,759 0.5 0.36% 68,899 1,759 4,101 

Market Dev and A Markets MARKET ANALYSIS 898,077 4 2.86% 551,190 14,076 32,811 

Market Dev and A Markets MARKET MANAGEMENT 74,759 0.5 0.36% 68,899 1,759 4,101Richard Dillon Markets MARKET MANAGEMENT 149,519 1 0.71% 137,797 3,519 8,203

Tech DevelopmenMarkets MARKET MANAGEMENT 112,139 0.75 0.54% 103,348 2,639 6,152

Carl Monroe Markets MARKET OPERATIONS 37,380 0.25 0.18% 34,449 880 2,051

Market Dev and A Markets MARKET OPERATIONS 6,420,591 0.5 0.36% 68,899 1,759 1,779,933 

Market OperationsMarkets MARKET OPERATIONS 1,046,633 7 5.00% 964,582 24,632 57,419Applications Markets MARKET SUPPORT 373,798 2.5 1.79% 344,494 8,797 20,507

Customer Service Markets MARKET SUPPORT 254,183 1.7 1.21% 234,256 5,982 13,945

Infrastructure Markets MARKET SUPPORT 208,524 1.25 0.89% 172,247 4,399 10,253 

Karen Thomas Markets MARKET SUPPORT 37,380 0.25 0.18% 34,449 880 2,051

Market Dev and A Markets MARKET SUPPORT 149,519 1 0.71% 137,797 3,519 8,203

Tech DevelopmenMarkets MARKET SUPPORT 747,596 5 3.57% 688,987 17,595 41,014Training Markets MARKET SUPPORT 224,278 1.5 1.07% 206,696 5,278 12,304

SPP Op Budget Exhibit 3 
61

6263646566676869707172737475767778798081828384858687888990919293949596979899

100101102103104105106107108109110111112113114115116117118119120 121

122

A B C D E F G H I J K 

RJ Robertson Management MEMBER RELATIONS 44,856 0.3 0.21% 41,339 1,056 2,461

Applications Reliability NETWORK MODELS 734,759 0.5 0.36% 68,899 1,759 4,101 

Applications Transmission Service Provider NETWORK MODELS 74,759 0.5 0.36% 68,899 1,759 4,101

Ops Engineering Reliability NETWORK MODELS 299,039 2 1.43% 275,595 7,038 16,406

Security Management OFFICE & FACILITIES 154,519 1 0.71% 137,797 3,519 8,203 

Telecomm Management OFFICE & FACILITIES 224,278 1.5 1.07% 206,696 5,278 12,304

Lanny Nickell Reliability OPERATIONS ENGINEERING 29,904 0.2 0.14% 27,559 704 1,641

Ops Engineering Regional Reliability OPERATIONS ENGINEERING 37,380 0.25 0.18% 34,449 880 2,051

Ops Engineering Reliability OPERATIONS ENGINEERING 411,178 2.75 1.96% 378,943 9,677 22,558

Ops Engineering Transmission Service Provider OPERATIONS ENGINEERING 299,039 2 1.43% 275,595 7,038 16,406

Carl Monroe Management OPERATIONS MANAGEMENT 37,380 0.25 0.18% 34,449 880 2,051

Lanny Nickell Management OPERATIONS MANAGEMENT 14,952 0.1 0.07% 13,780 352 820

Lanny Nickell Regional Reliability REGIONAL SUPPORT & SCHED 44,856 0.3 0.21% 41,339 1,056 2,461

Security Regional Reliability REGIONAL SUPPORT & SCHED 29,904 0.2 0.14% 27,559 704 1,641

Customer Service Reliability RELIABILITY AUTHORITY 14,952 0.1 0.07% 13,780 352 820

Lanny Nickell Reliability RELIABILITY AUTHORITY 829,904 0.2 0.14% 27,559 800,000 704 1,641

Reliability Coor Regional Reliability RELIABILITY AUTHORITY 37,380 0.25 0.18% 34,449 880 2,051

Reliability Coor Reliability RELIABILITY AUTHORITY 1,009,255 6.75 4.82% 930,133 23,753 55,369

Training Reliability RELIABILITY AUTHORITY 149,519 1 0.71% 137,797 3,519 8,203

Planning Regional Reliability RELIABILITY ENGINEERING 299,039 2 1.43% 275,595 7,038 16,406

Applications TSP Support SCHEDULING 299,039 2 1.43% 275,595 7,038 16,406

Customer Service TSP Support SCHEDULING 14,952 0.1 0.07% 13,780 352 820

Lanny Nickell TSP Support SCHEDULING 14,952 0.1 0.07% 13,780 352 820

Scheduling Regional Reliability SCHEDULING 149,519 1 0.71% 137,797 3,519 8,203

Scheduling TSP Support SCHEDULING 1,426,633 7 5.00% 964,582 24,632 57,419 

Training TSP Support SCHEDULING 37,380 0.25 0.18% 34,449 880 2,051

Accounting Markets SETTLEMENTS 550,557 3 2.14% 413,392 10,557 126,608

Accounting Transmission Service Provider SETTLEMENTS 299,039 2 1.43% 275,595 7,038 16,406

Applications Transmission Service Provider SETTLEMENTS 74,759 0.5 0.36% 68,899 1,759 4,101

Infrastructure Transmission Service Provider SETTLEMENTS 59,005 0.25 0.18% 34,449 880 2,051 

Tom Dunn Transmission Service Provider SETTLEMENTS 14,952 0.1 0.07% 13,780 352 820

AEP Project Management TARIFF ADMINISTRATION 299,039 2 1.43% 275,595 7,038 16,406

Applications Transmission Service Provider TARIFF ADMINISTRATION 373,798 2.5 1.79% 344,494 8,797 20,507

Customer Service Transmission Service Provider TARIFF ADMINISTRATION 299,039 2 1.43% 275,595 7,038 16,406

Infrastructure Transmission Service Provider TARIFF ADMINISTRATION 59,005 0.25 0.18% 34,449 880 2,051 

Lanny Nickell Transmission Service Provider TARIFF ADMINISTRATION 14,952 0.1 0.07% 13,780 352 820

Tariff AdministratioRegional Reliability TARIFF ADMINISTRATION 50,080 0.25 0.18% 34,449 880 2,051 

Tariff AdministratioTransmission Service Provider TARIFF ADMINISTRATION 1,009,255 6.75 4.82% 930,133 23,753 55,369Training Transmission Service Provider TARIFF ADMINISTRATION 37,380 0.25 0.18% 34,449 880 2,051

Infrastructure Reliability TECH SUPPORT 208,524 1.25 0.89% 172,247 4,399 10,253 

Infrastructure TSP Support TECH SUPPORT 96,409 0.5 0.36% 68,899 1,759 4,101 

Telecomm Reliability TECH SUPPORT 74,759 0.5 0.36% 68,899 1,759 4,101

Telecomm Transmission Service Provider TECH SUPPORT 74,759 0.5 0.36% 68,899 1,759 4,101

Telecomm TSP Support TECH SUPPORT 74,759 0.5 0.36% 68,899 1,759 4,101

Katie Duncan Management TRAINING 74,759 0.5 0.36% 68,899 1,759 4,101

Katie Duncan Markets TRAINING 74,759 0.5 0.36% 68,899 1,759 4,101

Tariff Studies Transmission Service Provider TRANSMISSION ENGINEERING 598,077 4 2.86% 551,190 14,076 32,811

Planning Reliability TRANSMISSION PLANNING 1,179,532 6.5 4.64% 895,683 22,873 260,976

Bruce Rew Management TRANSMISSION POLICY 518,759 0.5 0.36% 68,899 1,759 4,101 

Jeff Price Transmission Service Provider TRANSMISSION POLICY 699,519 1 0.71% 137,797 3,519 8,203 

Les Dillahunty Management TRANSMISSION POLICY 74,759 0.5 0.36% 68,899 1,759 4,101

Pat Bourne Management TRANSMISSION POLICY 149,519 1 0.71% 137,797 3,519 8,203

Roy Sundman Transmission Service Provider TRANSMISSION POLICY 149,519 1 0.71% 137,797 3,519 8,203

Tariff Studies Transmission Service Provider TRANSMISSION POLICY 149,519 1 0.71% 137,797 3,519 8,203

Tom Dunn Management TREASURY 14,952 0.1 0.07% 13,780 352 820

 140 100.00% 19,291,633 32,703,037 800,000 1,270,351 3,767,373 

SPP Heavy Staff 140

SPP lite Staff 109.3 95,714 1,998,947 

 1,768,426 1,174,637 

$ 137,797

Lite Staffing $'s 15,061,253

SPP Op Budget Exhibit 3 
(A) (B) (C) (D)=Avg. (A),(B),(C) Net Energy

2001 2002 2003 3 year Avg. ** Load in kWhs Ann. Expen

CAISO 38,975 42,352 42,581 41,303 (E) (F) 

PJM 54,014 63,762 61,499 59,758 PJM 349,000,000,000 77,80

$ 

MISO * 71,600 71,600 MISO 343,816,582,000 72,85

$ 

SPP 36,563 36,249 38,321 37,044 SPP-H 1/ 35,29

217,420,601,200 $ 

ERCOT 55,719 56,246 59,993 57,319 SPP-L 1/ 23,15

217,420,601,200 $ 

High 71,600 ERCOT 2/ 64,19

286,206,895,200 $ 

Low 37,044 1/ SPP Calculated at 67% load factor

2/ Estimate ERCOT 2003 Energy per 20

* Load data has not been obtained for MISO for the 3 year period.

While MISO began RTO operation in 2001, it did not fully recordthrough public information the RTO load as compared to individualloads of the participating utilities.

** A three year average of the peak RTO loads was used in order

to smooth any anomalous years.

(Ann. Peak in MW)

Load Data and Unit Cost Exhibit 3 
Retail Costs and RTO Impact

(in cents per kWh) Average

Production 4.20 62% 4.10 62% 3.90 60% 61%

Transmission 0.50 7% 0.50 8% 0.60 9% 8%

Distribution 2.10 31% 2.00 30% 2.00 31% 31%

Avg. End-use Prices 6.80 100% 6.60 100% 6.50 100% 100%

Source: EIA/Annual Energy Outlook 2003, page 131 - Prices by Service Category

Avg. RTO Exp.

EOY 2002 $ 62,538,240

Region GWh's Avg. RTE Exp. Total Production TransmissionDistribution Total ProductionTransmissionDistribution

 State (A) (B) 1/ (C) (D)=(C)*61% (E)=(C)*8% (F)=(C)*31% (G)=(A)/(C) (H)=(A)/(D) (I)=(A)/(E) (J)=(A)/(F)

New England 116,614 0.0005 $ 11,845 $ 7,260 $ 954 $ 3,631 $ 0.1016 $ 0.0623 $ 0.0082 $ 0.0311 $ 

 Connecticut 30,906 $ 3,007 0.0020 1,843 $ 242 $ 922 $ 0.0973 $ 0.0596 $ 0.0078 $ 0.0298 $ 

 Maine 9,636 $ 1,095 0.0065 671 $ 88 $ 336 $ 0.1136 $ 0.0696 $ 0.0091 $ 0.0348 $ 

 Massachussetts 52,410 $ 5,338 0.0012 3,272 $ 430 $ 1,636 $ 0.1018 $ 0.0624 $ 0.0082 $ 0.0312 $ 

 New Hampshire 10,490 $ 1,100 0.0060 674 $ 89 $ 337 $ 0.1049 $ 0.0643 $ 0.0084 $ 0.0321 $ 

 Rhode Island 7,544 $ 693 0.0083 425 $ 56 $ 213 $ 0.0919 $ 0.0563 $ 0.0074 $ 0.0282 $ 

 Vermont 5,629 $ 612 0.0111 375 $ 49 $ 188 $ 0.1087 $ 0.0666 $ 0.0088 $ 0.0333 $ 

Middle Atlantic 358,811 0.0002 $ 34,414 $ 21,094 $ 2,771 $ 10,548 $ 0.0959 $ 0.0588 $ 0.0077 $ 0.0294 $ 

 New Jersey 74,460 $ 6,930 0.0008 4,248 $ 558 $ 2,124 $ 0.0931 $ 0.0571 $ 0.0075 $ 0.0285 $ 

 New York 143,564 $ 16,208 0.0004 9,935 $ 1,305 $ 4,968 $ 0.1129 $ 0.0692 $ 0.0091 $ 0.0346 $ 

 Pennsylvania 140,787 $ 11,276 0.0004 6,912 $ 908 $ 3,456 $ 0.0801 $ 0.0491 $ 0.0065 $ 0.0245 $ 

East North Central 569,403 0.0001 $ 37,032 $ 22,699 $ 2,982 $ 11,351 $ 0.0650 $ 0.0399 $ 0.0052 $ 0.0199 $ 

 Illinois 137,666 $ 9,597 0.0005 5,883 $ 773 $ 2,942 $ 0.0697 $ 0.0427 $ 0.0056 $ 0.0214 $ 

 Indiana 101,429 $ 5,420 0.0006 3,322 $ 436 $ 1,661 $ 0.0534 $ 0.0328 $ 0.0043 $ 0.0164 $ 

 Michigan 107,311 $ 7,423 0.0006 4,550 $ 598 $ 2,275 $ 0.0692 $ 0.0424 $ 0.0056 $ 0.0212 $ 

 Ohio 155,999 $ 10,383 0.0004 6,364 $ 836 $ 3,182 $ 0.0666 $ 0.0408 $ 0.0054 $ 0.0204 $ 

 Wisconsin 66,999 $ 4,209 0.0009 2,580 $ 339 $ 1,290 $ 0.0628 $ 0.0385 $ 0.0051 $ 0.0193 $ 

West North Central 259,591 0.0002 $ 15,509 $ 9,506 $ 1,249 $ 4,754 $ 0.0597 $ 0.0366 $ 0.0048 $ 0.0183 $ 

 Iowa 40,898 $ 2,458 0.0015 1,507 $ 198 $ 754 $ 0.0601 $ 0.0368 $ 0.0048 $ 0.0184 $ 

 Kansas 36,714 $ 2,315 0.0017 1,419 $ 186 $ 710 $ 0.0631 $ 0.0387 $ 0.0051 $ 0.0193 $ 

 Minnesota 62,162 $ 3,630 0.0010 2,225 $ 292 $ 1,113 $ 0.0584 $ 0.0358 $ 0.0047 $ 0.0179 $ 

 Missouri 75,001 $ 4,565 0.0008 2,798 $ 368 $ 1,399 $ 0.0609 $ 0.0373 $ 0.0049 $ 0.0187 $ 

 Nebraska 25,661 $ 1,424 0.0024 873 $ 115 $ 436 $ 0.0555 $ 0.0340 $ 0.0045 $ 0.0170 $ 

 North Dakota 10,219 $ 557 0.0061 341 $ 45 $ 171 $ 0.0545 $ 0.0334 $ 0.0044 $ 0.0167 $ 

 South Dakota 8,937 $ 560 0.0070 343 $ 45 $ 172 $ 0.0626 $ 0.0384 $ 0.0050 $ 0.0192 $ 

South Atlantic 753,324 0.0001 $ 49,424 $ 30,294 $ 3,980 $ 15,149 $ 0.0656 $ 0.0402 $ 0.0053 $ 0.0201 $ 

 Delaware 11,557 $ 815 0.0054 499 $ 66 $ 250 $ 0.0705 $ 0.0432 $ 0.0057 $ 0.0216 $ 

 D.C. 11,066 $ 815 0.0057 500 $ 66 $ 250 $ 0.0737 $ 0.0452 $ 0.0059 $ 0.0226 $ 

 Florida 210,474 $ 15,394 0.0003 9,436 $ 1,240 $ 4,718 $ 0.0731 $ 0.0448 $ 0.0059 $ 0.0224 $ 

 Georgia 123,789 $ 7,726 0.0005 4,735 $ 622 $ 2,368 $ 0.0624 $ 0.0383 $ 0.0050 $ 0.0191 $ 

 Maryland 66,928 $ 4,158 0.0009 2,548 $ 335 $ 1,274 $ 0.0621 $ 0.0381 $ 0.0050 $ 0.0190 $ 

 North Carolina 122,686 $ 8,263 0.0005 5,065 $ 665 $ 2,533 $ 0.0674 $ 0.0413 $ 0.0054 $ 0.0206 $ 

 South Carolina 77,819 $ 4,537 0.0008 2,781 $ 365 $ 1,391 $ 0.0583 $ 0.0357 $ 0.0047 $ 0.0179 $ 

 Virginia 100,541 $ 6,262 0.0006 3,838 $ 504 $ 1,919 $ 0.0623 $ 0.0382 $ 0.0050 $ 0.0191 $ 

 West Virginia 28,463 $ 1,455 0.0022 892 $ 117 $ 446 $ 0.0511 $ 0.0313 $ 0.0041 $ 0.0157 $ 

East South Central 314,019 0.0002 $ 16,917 $ 10,369 $ 1,362 $ 5,185 $ 0.0539 $ 0.0330 $ 0.0043 $ 0.0165 $ 

 Alabama 83,067 $ 4,745 0.0008 2,908 $ 382 $ 1,454 $ 0.0571 $ 0.0350 $ 0.0046 $ 0.0175 $ 

 Kentucky 87,267 $ 3,721 0.0007 2,281 $ 300 $ 1,141 $ 0.0426 $ 0.0261 $ 0.0034 $ 0.0131 $ 

 Mississippi 45,452 $ 2,835 0.0014 1,738 $ 228 $ 869 $ 0.0624 $ 0.0382 $ 0.0050 $ 0.0191 $ 

 Tennessee 98,233 $ 5,616 0.0006 3,442 $ 452 $ 1,721 $ 0.0572 $ 0.0350 $ 0.0046 $ 0.0175 $ 

West South Central 492,042 0.0001 $ 31,142 $ 19,088 $ 2,508 $ 9,545 $ 0.0633 $ 0.0388 $ 0.0051 $ 0.0194 $ 

 Arkansas 42,450 $ 2,380 0.0015 1,459 $ 192 $ 729 $ 0.0561 $ 0.0344 $ 0.0045 $ 0.0172 $ 

 Louisiana 79,261 $ 4,746 0.0008 2,909 $ 382 $ 1,455 $ 0.0599 $ 0.0367 $ 0.0048 $ 0.0184 $ 

 Oklahoma 49,485 $ 2,765 0.0013 1,695 $ 223 $ 847 $ 0.0559 $ 0.0342 $ 0.0045 $ 0.0171 $ 

 Texas 320,846 $ 21,251 0.0002 13,026 $ 1,711 $ 6,514 $ 0.0662 $ 0.0406 $ 0.0053 $ 0.0203 $ 

Mountain 226,364 0.0003 $ 14,760 $ 9,047 $ 1,189 $ 4,524 $ 0.0652 $ 0.0400 $ 0.0053 $ 0.0200 $ 

 Arizona 62,601 $ 4,514 0.0010 2,767 $ 364 $ 1,384 $ 0.0721 $ 0.0442 $ 0.0058 $ 0.0221 $ 

 Colorado 45,937 $ 2,758 0.0014 1,691 $ 222 $ 845 $ 0.0600 $ 0.0368 $ 0.0048 $ 0.0184 $ 

 Idaho 20,700 $ 1,156 0.0030 708 $ 93 $ 354 $ 0.0558 $ 0.0342 $ 0.0045 $ 0.0171 $ 

 Montana 12,575 $ 724 0.0050 444 $ 58 $ 222 $ 0.0575 $ 0.0353 $ 0.0046 $ 0.0176 $ 

 Nevada 29,204 $ 2,460 0.0021 1,508 $ 198 $ 754 $ 0.0842 $ 0.0516 $ 0.0068 $ 0.0258 $ 

 New Mexico 19,207 $ 1,292 0.0033 792 $ 104 $ 396 $ 0.0673 $ 0.0412 $ 0.0054 $ 0.0206 $ 

 Utah 23,267 $ 1,255 0.0027 769 $ 101 $ 385 $ 0.0539 $ 0.0330 $ 0.0043 $ 0.0165 $ 

 Wyoming 12,874 $ 602 0.0049 369 $ 49 $ 185 $ 0.0468 $ 0.0287 $ 0.0038 $ 0.0143 $ 

Pacific Contiguous 356,996 0.0002 $ 36,690 $ 22,489 $ 2,955 $ 11,246 $ 0.1028 $ 0.0630 $ 0.0083 $ 0.0315 $ 

 California 235,249 $ 29,398 0.0003 18,019 $ 2,367 $ 9,011 $ 0.1250 $ 0.0766 $ 0.0101 $ 0.0383 $ 

 Oregon 45,255 $ 2,859 0.0014 1,753 $ 230 $ 876 $ 0.0632 $ 0.0387 $ 0.0051 $ 0.0194 $ 

 Washington 76,492 $ 4,433 0.0008 2,717 $ 357 $ 1,359 $ 0.0580 $ 0.0355 $ 0.0047 $ 0.0178 $ 

Avg. Contiguous 48 0.000214 383,018 $ 27,526 16,872 $ 2,217 $ 8,437 $ 0.0719 $ $ 0.0058 0.0441 $ 0.0220 $ 

1/ Average RTO Expense ($62.5 million) divided by GWh Load (Column (A)).

(Million Dollars)

Avg Revenue from Retail

Cents/kWh

2000 2001 2005 (Fcst)

Retail Sales of Electricity Avg Revenue from Retail

Retail Costs Exhibit 3 21 of 22
Retail Costs and RTO Impact Summary

(A) (B) (C) (D) (E) 

(in cents per kWh) 

Production 4.20 62% 4.10 62% 3.90 Transmission 0.50 7% 0.50 8% 0.60 Distribution 2.10 31% 2.00 30% 2.00 

Avg. End-use Prices 6.80 100% 6.60 100% 6.50 1

Nationwide $/kWh % of Retail Bill

Production 0.0441 $ 61.12%Transmission 0.0058 $ 8.03%Distribution 0.0220 $ 30.57%

Average RTO 0.0002 $ 0.29%

Total 0.0721 $ 100.00% Totals from Page 22 - Average Contiguous 48 States

GWh

Total Revenue 

(millions)

Arizona 62,601 4,514 $ Colorado 45,937 2,758 $ New Mexico 19,207 1,292 $ 

Desert Southwest 127,744 8,564 $ 

Desert Southwest $/kWh % of Retail Bill

= $8564 * (G) = TR / total GWh

Production 5,249 $ 0.0411 $ 60.85%

Transmission 690 $ 0.0054 $ 7.99%

Distribution 2,625 $ 0.0205 $ 30.43%

Average RTO = (Avg RTO/1,000,000) / Total GWh 0.0005 $ 0.72%

$ 100% 0.0675

Total Revenue by Function

2000 2001 2005 (Fcst)

Retail Impact Summary Exhibit 3 
Exhibit 4 
PJM Interconnection, LLC
2004 20

Footnote Expense Type Estimate Estim

1 Depreciation 15,400,709 15,402 Interest 4,936,447 4,933 Compensation 34,852,639 49,994 Hardware Lease Expense 3,149,064 4,844 Materials & Supplies 6,619,453 10,995 Other or Outside Services Correlated with Staff Levels 8,614,841 12,05

6 Other or Outside Services NOT Correlated with Staff Levels 7,411,109 9,06

Total 80,984,262 107,28

7 Net Energy for Load Forecast 349,000,000 700,00

Day 1 OpEx Rate Per Megawatt Hour 0.2320 $ 0

$ 

1234567

Estimated PJM Annual Day 1 Revenue Requirement

Calculated as 85% of Day 1 non-building, non-EMS investment depreciated over three-year software useful liplus 15% of Day 1 non-building, non-EMS investment depreciated over five-year hardware useful life plus Dabuilding investment depreciated over fifteen-year building useful life plus Day 1 EMS investment depreciated seven-year EMS useful life.Calculated as average unpaid Day 1 Capital Investment times estimated 7.00% interest rate.Based on pro ration of PJM's total budgeted 2004 Compensation for PJM's System Operations staff plus pro management staff totaling 263 in 2004 and 328 in 2005.Calculated as pro rated portion of 2004 budgeted expense associated with staff allocated to Day 1 OperationCalculated as pro rated portion of annual budgeted expenses for lodging, travel, meetings, meals, training, telecommunications, buildings maintenance and utilities associated with staff allocated to Day 1 OperationsRepresents annual budget for insurance, board expenses, annual member meeting, audit fees, property and school taxes, and bank fees that do not vary by staff number or customer transaction volumes.Based on PJM's annual budget assumptions and volume forecasts on PJM Finance Committee page of web 

PJM Day One Op Ex Exhibit 4 
Directly Not

Attributable Attributable Management /

to Day 1 to Day 1 Support

Functions Functions Functions Total

System Operations 114 114

Transmission Planning 38 38

Market Services 52 52

Information Technology 129 129

Corporate Services 39 39

Finance 87 87

Market Monitoring 10 10

Office of the President 24 24

Subtotal 114 100 279 493

Management Allocation 149 130 (279) 0

Totals 263 230 0 493

Directly Not

Attributable Attributable Management /

to Day 1 to Day 1 Support

Functions Functions Functions Total

System Operations 148 148

Transmission Planning 56 56

Market Services 72 72

Information Technology 169 169

Corporate Services 100 100

Finance 25 25

Market Monitoring 17 17

Office of the President 63 63

Subtotal 148 145 357 650

Management Allocation 180 177 (357) 0

Totals 328 322 0 650

Estimated PJM Day 1 Staff

Based on 2004 Annual Budget

Based on Proposed 2005 Annual Budget

PJM Day One Headcount Exhibit 4 Page 3 of 44
Transmission

Service Transmission

Provider Support Reliability Management B

ACES / TMS 106,417 

Buildings 1Business Continuity 5,772,673 

Combined OASIS / EES Interface 672,678 

Control Center Infrastructure Data Publication Extension 272,509 

Energy Management System 25,994,325 11,451,914 

Enterprise Security 3,837,498 

Grid Accounting 34,551 Independent Generator Communications 1,163,538 

Internet Network Architecture 377,152 

Network Infrastructure Upgrade 1,155,092 

OASIS 748,027 1,496,050 

Operator Training Simulator 128,219 PJM Information Warehouse 1,882,953 2,219,195 941,477 

PJM Manuals 141,144 PJM Manuals Enhancements 232,037 Retail Choice 8,546,871 

Totals 35,198,875 24,021,090 1,269,955 6,684,399 11

Estimated PJM Day 1 Capital Investment

Portion of System Investment Attributable 

to Each RTO Day 1 Function

PJM Day One Capital Exhibit 4 
Proposed

2004 2005

Budget (1) Budget (2)

 82,345,000 53,895,755

 16,636,000 11,529,375

 11,864,000 6,144,991

 46,871,000 34,962,613

 9,903,000 4,211,700 

 9,591,000 8,180,650 

 82,107,000 53,030,193

 7,758,000 9,674,818 

 9,925,000 8,369,905 

190,000,000 277,000,000 46%

349,000,000 700,000,000

Day 1 OpEx Rate Per Megawatt Hour 0.5444 $ 0.3957 $ -27%

1

2

Estimated PJM Annual Day 2 Revenue Requirement

Expense Type

Compensation

Pension and postretirement benefits

Software licenses and fees

Outside services

Computer maintenance and office supplies

Lease expenses

Net Energy for Load Forecast

Based on PJM's original 2004 budget assumptions and volume forecasts on PJM 

Finance Committee page of web site.

Based on PJM's proposed 2005 budget assumptions and volume forecasts 

recommended by PJM Finance Committee for Board of Managers consideration 

during September 2004. Includes ComEd, AEP, Dayton, Dominion and Duquesne.

Depreciation and amortization

Other expenses

Interest expense

Total

PJM Day Two Op Ex Exhibit 4 5 of 44
Non-Market Integration Capital Investment:

1 0

1 3,954,318

1 1,532,000

1 112,440,000

1 31,459,000

1 58,268,000

1 35,020,000

2 47,000,000

289,673,318

Day 1 Capital Investment (78,221,031)

Day 2 Capital Investment 211,452,287

1

2

Estimated PJM Day 2 Capital Investment

1997

1998

1999

2004

Per PJM's respective year's audited financial statements.

Based on PJM's approved 2004 capital budget.

2000

2001

2002

2003

PJM Day Two Capital Exhibit 4 6 of 44
Electric Reliability Council of Texas (ERCOT)
Corporate Administration System Operations

101 Executive Organization 4,233,555 $ 201 Chief Operating Officer Administration 

110 Finance 47,640,233 $ 400 COO Administration 

120 General Counsel 4,708,316 $ 401 Technical Operations Administration 

130 Human Resources 814,284 $ 410 Market Operations Support 

140 NERC Compliance 702,443 $ 420 Operations Support 

150 Stakeholder Services 480,815 $ 425 System Operations 

160 Corporate Communications 869,410 $ 430 System Planning 

170 Market Rules 3,426,011 $ 440 Resource Planning 

TOTAL 62,875,067 $ TOTAL 

Information Technology Market Operations

300 CIO Administration 1,624,526 $ 500 CMO Administration 

301 Technology Services Administration 8,187,242 $ 501 Settlements Administration 

310 System Engineering & Administration 2,703,300 $ 505 Galvin PM 

320 EMS - $ 510 Customer Solutions Support 

321 IT Operations 784,389 $ 520 Registration 

325 Facilities 4,160,094 $ 530 Settlement Metering 

330 Network 5,933,457 $ 540 Load Profiling and Data Aggregation 

340 Commercial Applications - $ 550 Settlements and Billing 

345 EMMS Development 954,041 $ 560 Client Relations 

350 Project Management 746,998 $ 570 REP/ESI-ID of Record 

353 Market Technology Service 267,135 $ 580 Renewables and TCR 

354 Data Warehousing 866,369 $ 605 Gruber PM 

355 Development & Architecture 585,973 $ 630 Retail Documentation and Reporting 

356 Transaction Services 1,249,670 $ 640 Retail Testing and Quality Control 

357 Corporate Applications 763,674 $ 650 Retail Client Services 

358 Web and Data Services 939,561 $ 660 Wholesale Client Services 

359 Settlement and Billing 620,921 $ TOTAL 

360 Data Management 1,107,703 $ 370 Cyber Security 1,518,464 $ ERCOT TOTAL 

371 Physical Security 1,201,707 $ 385 IT Delivery 805,899 $ 390 IT Operations 2 2,784,433 $ 395 EMMS Production 1,196,170 $ 

TOTAL 39,001,726 $ 

FY 2004 Budget

ERCOT Operating Expense Summary by Division and Department

ERCOT 2004 Operating Budget Exhibit 4 
Corporate Administration System Operations

101 Executive Organization 9 201 Chief Operating Officer Administration 110 Finance 17 400 COO Administration 120 General Counsel 11 401 Technical Operations Administration 130 Human Resources 5 410 Market Operations Support 140 NERC Compliance 5 420 Operations Support 150 Stakeholder Services 4 425 System Operations 160 Corporate Communications 4 430 System Planning 170 Market Rules 8 440 Resource Planning 

TOTAL 63 TOTAL 

Information Technology Market Operations

300 CIO Administration 7 500 CMO Administration 301 Technology Services Administration 0 501 Settlements Administration 310 System Engineering & Administration 27 505 Galvin PM 320 EMS 0 510 Customer Solutions Support 321 IT Operations 10 520 Registration 325 Facilities 6 530 Settlement Metering 330 Network 17 540 Load Profiling and Data Aggregation 340 Commercial Applications 0 550 Settlements and Billing 345 EMMS Development 8 560 Client Relations 350 Project Management 7 570 REP/ESI-ID of Record 353 Market Technology Service 4 580 Renewables and TCR 354 Data Warehousing 6 605 Gruber PM 355 Development & Architecture 2 630 Retail Documentation and Reporting 356 Transaction Services 12 640 Retail Testing and Quality Control 357 Corporate Applications 6 650 Retail Client Services 358 Web and Data Services 6 660 Wholesale Client Services 359 Settlement and Billing 7 TOTAL 360 Data Management 10370 Cyber Securit

y

9 ERCOT TOTA

L 

371 Physical Security 4385 IT Delivery 7390 IT Operations 2 20395 EMMS Production 9

TOTAL 184

ERCOT Staffing Summary by Division and Department

FY 2004 Budget

ERCOT 2004 FTEs by Department Exhibit 4 
Asset EOY 2003

Computer equipment and software 157,215,000 $ Buildings and leasehold 48,890,000 $ Furniture and fixtures 5,912,000 $ Land and improvements 248,000 $ Vehicles 129,000 $ Total 212,394,000 $ Depreciation and amortization (79,800,000) $ 

$ 132,594,000

Construction work in progress - $ Systems under development 35,047,000 $ 

$ 167,641,000

ERCOT Capital Assets

ERCOT Capital Assets Exhibit 4 
(A) (B)

Asset EOY 2002

Computer Equipment and software 124,576,000 $ Buildings and leasehold 48,170,000 $ Furniture and fixtures 5,286,000 $ Land and improvements 248,000 $ Vehicles 129,000 $ Total 178,409,000 $ Depreciation and amortization (43,207,000) $ 

$ 135,202,000

CWIP 85,000 $ Systems under development 11,799,000 $ 

$ 147,086,000

ERCOT Capital Assets by Function - 2002

ERCOT Assets 2002 Exhibit 4 
(A) (B) (E)

Corporate Administration System Operations

 101 Executive Organization 7 201 Chief Operating Officer Administration 0 (1)

 110 Finance 10 400 COO Administration 0 (2)

 120 General Counsel 4 401 Technical Operations Administration 1 (3)

 130 Human Resources 3 410 Market Operations Support 12 (4)

 140 NERC Compliance 4 420 Operations Support 59 (5)

 150 Stakeholder Services 3 425 System Operations 0 (6)

 160 Corporate Communications 2 430 System Planning 11 (7)

 170 Market Rules 2 440 Resource Planning 0 (8)

 TOTAL 35 TOTAL 83 (9)

Information Technology Market Operations

 300 CIO Administration 0 500 CMO Administration 0 (10)

 301 Technology Services Administra (11) t 2 501 Settlements Administration 4

 310 System Engineering & Administr (12) a 43 505 Galvin PM 0

 320 EMS 11 510 Customer Solutions Support 4 (13)

 321 IT Operations 0 520 Registration 17 (14)

 325 Facilities 0 530 Settlement Metering 18 (15)

 330 Network 22 540 Load Profiling and Data Aggregation 6 (16)

 340 Commercial Applications 14 550 Settlements and Billing 14 (17)

 345 EMMS Development 0 560 Client Relations 17 (18)

 350 Project Management 2 570 REP/ESI-ID of Record 0 (19)

 353 Market Technology Service 0 580 Renewables and TCR 4 (20)

 354 Data Warehousing 0 605 Gruber PM 0 (21)

 355 Development & Architecture 0 630 Retail Documentation and Reporting 0 (22)

 356 Transaction Services 0 640 Retail Testing and Quality Control 0 (23)

 357 Corporate Applications 0 650 Retail Client Services 0 (24)

 358 Web and Data Services 0 660 Wholesale Client Services 0 (25)

 359 Settlement and Billing 0 TOTAL 84 (26)

 360 Data Management 0 (27)

 370 Cyber Securit (28) y 0 ERCOT TOTAL 296

 371 Physical Security 0 (29)

 385 IT Delivery 0 (30)

 390 IT Operations 2 0 (31)

 395 EMMS Production 0 (32)

 TOTAL 94 (33)

ERCOT Staffing Summary by Division and Department

FY 2002

(D)

ERCOT 2002 FTEs Exhibit 4 12 of 44
Electric Reliability Council of Texas, Inc.

Statements of Activity

(in 000's)

(B) (C) (D) (E)

12/31/2000 12/31/2001 12/31/2002 12/31/2003

Actual Actual Actual Actual-Unaudited

 Operating Revenues: (1)

 Transaction Fees 42,167 (2) $ 59,958 $ 61,456 $ 93,991 $ 

 Membership Fees and other 1,681 (3) $ 5,507 $ 3,630 $ 3,252 $ 

 Total Operating Revenue 43,848 (4) $ 65,465 $ 65,086 $ 97,243 $ 

 Operating Expenses (5)

 Salaries and Related Benefits 7,702 (6) $ 21,382 $ 28,081 $ 35,920 $ 

 Depreciation and Amortization 289 (7) $ 11,242 $ 31,480 $ 38,091 $ 

 Facility and Equipment Costs 2,005 (8) $ 7,170 $ 6,347 $ 8,175 $ 

 Consulting and Legal Services 4,459 (9) $ 6,886 $ 14,008 $ 12,089 $ 

 Administrative and Other 2,944 (10) $ 7,056 $ 4,811 $ 5,392 $ 

 IT Maintenance and Licensing 1,042 (11) $ 428 $ 4,317 $ 5,383 $ 

 Total Operating Expenses 18,441 (12) $ 54,164 $ 89,044 $ 105,050 $ 

 Income From Operations 25,407 (13) $ 11,301 $ (23,958) $ (7,807) $ 

 Other Income (14)

 Interest Income 331 (15) $ 370 $ 1,208 $ 433 $ 

 Interest Expense - (16) $ (1,471) $ (5,448) $ (8,533) $ 

 Change in unrestricted net assets 25,738 (17) $ 10,200 $ (28,198) $ (15,907) $ 

 Full Time Employees 134 267 296 380 (18)

(A)

ERCOT Op Expense Exhibit 4 13 of 44
1995/96 Budget

1995/96 

Estimated 

Expenditures

1996/97 ERCOT 

Office Budget 

(12 Mos.)

NERC Dues 217190 217264 233967

Engineering Studies 271000 281000 300000

Equipment Rent & Maintenance 3655 4466 5085

Furniture & Equipment Purchases 12900 21741 15000

Meetings & Seminars 8000 6000 8000

Other Expenses 7877 8549 11591

Salaries 311632 305934 326557

Payroll Taxes 18669 18303 19376

Benefits 78538 90312 97123

Postage/Shipping 8000 8400 8400

Printing/Media 5500 4220 8500

Rent/Insurance/Property Taxes 32676 32581 60000

Supplies 6300 5000 5500

Telephone 7500 8050 9000

Travel 29500 29500 29500

TOTAL FOR ERCOT OFFICE 1,018,937 $ 1,041,320 $ 1,137,599 $ 

ISO FACILITY 3,442,000 $ 

TOTAL $ 4,579,599

1996/97 ERCOT BUDGET

ERCOT 1996-97 Budget Exhibit 4 14 of 44
Midwest Independent Transmission System Operator

(Midwest ISO)
MwH Peak Demand MwH Peak Demand FERC 582 Est System

Demand Demand Annualized* Energy Load Factor

2002 552,761,642 569,642,179 343,816,582 62.20%

2003 644,301,697 740,389,562 427,998,509 66.43%

2004 811,950,762 833,165,948 

*METC joined 5/1/02

*FE/NIPSCO joined 10/1/03

*Ameren joined 5/1/04

Midwest ISO Load Exhibit 4 16 of 44
Annual Operating Expense

2002

Dec-02 Annualized Form 1 "Day 1" (Basis)

Salaries/benefits 2,216,413 $ 26,596,956 $ 24,530,838 $ 26,596,956 $ AnnualizedOutside services 977,323 $ 11,727,876 $ 8,910,654 $ 8,910,654 $ ActualOccupancy 296,001 $ 3,552,012 $ 3,214,346 $ 3,552,012 $ AnnualizedInsurance 276,336 $ 3,316,032 $ 2,982,254 $ 2,982,254 $ ActualSupplies/other 1,054,251 $ 12,651,012 $ 9,487,711 $ 9,487,711 $ ActualTaxes 64,586 $ $ 1,248,418 775,032 $ 1,248,418 $ Actual

$ 58,618,920 4,884,910 $ 50,374,221 $ 52,778,005 $ 

Depreciation 1,323,916 $ 15,886,992 $ 14,300,334 $ 15,886,992 $ AnnualizedAmortization 818,252 $ 9,819,024 $ 9,819,026 $ 9,819,026 $ ActualInterest Expense 592,389 $ 7,108,668 $ 9,399,340 $ 9,399,340 $ Actual

$ 32,814,684 2,734,557 $ 33,518,700 $ 35,105,358 $ 

TOTAL 7,619,467 $ 91,433,604 $ 83,892,921 $ 87,883,363 $ Less:Market Ops 79,777 $ 945,582 $ 945,582 $ 

Transmission Planning 260,580 $ 3,126,960 $ 3,126,960 $ 

MAPPCOR Contract Expense 6,054,995 $ 6,054,995 $ Total MISO Day 1 Expenses 77,755,826 $ Load - MWh of peak demand 569,642,179Cost/MWh of peak demand $ 0.1365Load - MWh of energy 343,816,582Cost/MWh of energy $ 0.2262

Midwest ISO Op Expense Exhibit 4 
Headcount

December 31, 2002

Admin/Exec 2

Finance/Shared Services 27

Operations 108

Planning 20

IT 54

Legal/Reg 13

Market Ops 3

227

Less:

Market Ops 3

Transmission Planning 20

MAPP FTE's 37

Day 1 Headcount 167

Midwest ISO Headcount Exhibit 4 18 of 44
Operational Estimate

Fixed Assets January 2002

Operational Date for Day 1 was February 1, 2002

Balance as of

January 31, 2002

 Land 1,952,457 $ 

 Buildings and Improvements 22,050,603

 Furniture and Fixtures 2,281,957

 Computer Hardware 12,220,990

 Computer Software 43,546,144

 Telecommunications Equipment 5,794,169

Total Assets 87,846,320

 Deferred Regulatory Asset 58,914,154

Total Start-up Costs $ 146,760,474

Midwest ISO Capital Exhibit 4 19 of 44
FINAL 12/31/02 MISO TRIAL BALANCE

D:\Documents and Settings\catmt13\My Documents\MyFiles\Outreach Prog\ISO Startup Costs\[Exhibit 4(v2).xls]WESTCONNECT RAW DATA

Form 1 Form 1

Account Description 12/31/2001 Activity 12/31/2002 Page Line

10700 Construction in Process-Tranm 57,251,795.54 (37,731,631.92) 19,520,163.62 110 310850 Accumulated provision for dep - (11,838,294.75) (11,838,294.75) 110 510860 Accumulated provision for dep - (134,994.08) (134,994.08) 110 510870 Accumulated provision for dep (1,652,842.26) (818,018.43) (2,470,860.69) 110 510880 Accumulated provision for dep - (1,509,026.42) (1,509,026.42) 110 512410 One Group Investment 33,670,072.42 (13,102,777.24) 20,567,295.18 110 2712420 SERP Investment - 224,038.87 224,038.87 110 2112421 Plan 457 Investment - 57,279.14 57,279.14 110 2113110 Petty Cash 529.11 148.08 677.19 110 2413120 Bank One Checking 2,223,250.55 (3,936,511.24) (1,713,260.69) 110 2413125 Cash Deposits for Engineering - 3,008,887.02 3,008,887.02 110 2413150 Flex Account (1,242.98) (3,370.82) (4,613.80) 110 2413170 Restricted Cash (Credit Depos 17,017,476.66 (7,575,456.44) 9,442,020.22 110 2513400 Deposits 705.54 310,322.75 39,028.29 110 2514200 Customer accounts receivable 3,310,388.48 1,236,614.62 1,575,003.10 110 2914310 Employee receivable 457,787.30 (451,540.79) 6,246.51 110 3014320 Sales tax receivable 5,362.07 948,169.23 953,531.30 110 3014330 Other accounts receivable - 443,505.64 443,505.64 110 3016510 Prepaid Insurance 2,454,063.53 (1,404,526.93) 1,049,536.60 110 4616520 Other Prepayments 663,862.43 505,770.91 1,169,633.34 110 4617300 Accrued utility revenue - 5,722,524.00 5,722,524.00 110 5018100 Unamortized debt expense - 20 585,937.50 (56,250.00) 529,687.50 111 5618230 Deferred regulatory asset - C 58,914,154.28 (57,579,257.50) 1,334,896.78 111 5918235 Deferred regulatory asset - P - 58,296,781.90 58,296,781.90 111 5918236 Deferred regulatory asset - A - (9,819,025.68) (9,819,025.68) 111 5922100 Bonds - 2012 (100,000,000.00) - (100,000,000.00) 112 17 LATER MOVED TO 

22400 Other long-term debt (261,495.26) 261,495.26 - 112 2022410 IDFA Note - long term (944,443.74) 80,074.54 (864,369.20) 112 2022600 Unamortized discount on long- 412,319.00 (39,588.00) 372,731.00 112 2222700 Obligations under capital lea (15,292,331.14) (6,666,507.51) (21,958,838.65) 112 2522800 Deferred revenue (61,161,829.33) 493,723.80 (60,668,105.53)

10A Settlement (60,000,000.00) 197,641.47 (59,802,358.53) 113 54Other (1,161,829.33) 296,082.33 (865,747.00) 113 53

23110 IDFA Note - short term (32,959.93) (35,745.87) (68,705.80) 112 3323120 NCSC - short term (500,895.84) 239,400.58 (261,495.26) 112 3323200 Accounts Payable (20,631,030.93) (4,452,678.02) (6,516,508.95) 112 3423510 Customer deposits - generatio - (1,893,495.84) (1,893,495.84) 112 3723520 Customer deposits - facility - (1,115,391.18) (1,115,391.18) 112 3723610 Property tax accrual - (286,608.00) (286,608.00) 112 38

Midwest ISO Accounts Exhibit 4 
23650 Accrued State Sales Tax (897.57) (19,885.90) (20,783.47) 112 38

23655 Accrued Local Sales Tax (69.05) (1,632.85) (1,701.90) 112 3823700 Interest accrued (746,649.66) (103,022.19) (849,671.85) 112 3924220 Accrued Payroll (3,684.04) 3,684.04 - 112 4424225 Accrued Bonus (1,817,756.60) (1,039,016.52) (2,656,773.12) 112 4424230 Accrued Vacation and Holiday (530,455.03) (13,348.61) (543,803.64) 112 4424250 Other Current and Accrued Lia (3,206,860.24) 15,621,035.38 (1,644,024.86) 112 4424260 Withholdings - taxes (0.02) - (0.02) 112 4424265 Flex account withholdings (16,676.12) (13,464.90) (30,141.02) 112 4424270 Accrued liabilities-benefits (93,123.00) 19,278.37 (73,844.63) 112 4424275 SERP Liability (143,664.04) (80,374.85) (224,038.89) 112 2824276 Plan 457 Liability - (57,279.14) (57,279.14) 112 2824280 401k withholdings 302.55 (511.65) (209.10) 112 4424290 401k match 0.04 (0.05) (0.01) 112 4424295 Garnishments (288.00) 288.00 - 112 4424300 Obligations under capital lea (3,371,037.12) (2,505,704.36) (2,843,541.48) 112 4525305 Customer deposits - long term (23,811.00) - (23,811.00) 112 3725310 Customer deposits - credit as (17,000,000.00) 7,678,484.64 (9,321,515.36) 112 3725320 Deferred rent (4,678.22) (56,162.64) (60,840.86) 113 5325330 Deferred compensation - direc - (79,401.00) (79,401.00) 113 5325340 Reserve for disputed amounts - (1,942,570.07) (1,942,570.07) 113 5435203 Leasehold Improvements-Transm - 523,235.32 523,235.32 110 235301 Computer Hardware-Transmissio 2,745,218.87 10,267,700.84 13,012,919.71 110 235303 Computer Software-Transmissio 1,499,438.48 59,673,476.81 61,172,915.29 110 235307 Telecommunications Equipment- - 8,165,925.41 8,165,925.41 110 235311 Computer Hardware-Transmissio - 4,859,786.79 4,859,786.79 110 2

Midwest ISO Accounts Exhibit 4 
35399 MAPP Deferred Credit - Pensio (419,906.50) 419,906.50 - 110 2

38900 Land and Land Rights - Genera 1,952,457.48 (152,457.48) 1,800,000.00 110 239003 Leasehold Improvements-Genera 4,293,721.17 1,920,627.88 6,214,349.05 110 239011 Buildings-General Leased 15,822,128.50 (45,385.00) 15,776,743.50 110 239013 Leasehold Improvements-Genera 1,682,463.60 (1,682,463.60) - 110 239100 Office Furniture and Fixtures 2,226,756.18 401,230.02 2,627,986.20 110 239110 Office Furniture and Fixtures 20,255.00 - 20,255.00 110 239700 Communciation Equipment - Gen 77,044.32 482,323.25 559,367.57 110 239710 Communication Equipment - Gen - 520,715.55 520,715.55 110 239801 Computer Hardware-General 1,138,594.34 366,253.26 1,504,847.60 110 239803 Computer Software-General 2,103,427.13 141,604.62 425,031.75 110 239815 Network Equipment-General Lea 520,715.55 (520,715.55) - 110 240350 Depreciation Expense - Transm - 11,973,288.83 11,973,288.83 114 640370 Depreciation Expense - Genera - 2,327,044.85 2,327,044.85 114 640730 Regulatory debits - 9,819,025.68 9,819,025.68 114 1140740 Regulatory credits - (1,334,896.78) (1,334,896.78) 114 1240810 Taxes - property - 385,961.70 385,961.70 114 1340820 Taxes - FICA, Unemployment - 861,455.72 861,455.72 114 1340855 Taxes - MN State Sales Tax - 879.62 879.62 114 1340856 Taxes - ST PL Local Sales Tax - 120.96 120.96 114 1341910 Interest Income - Checking - (44,276.41) (44,276.41) 117 3541920 Interest Income - Sweep - (2,613.41) (2,613.41) 117 3541930 Interest Income - One Investm - (568,320.01) (568,320.01) 117 3541940 Interest Income - Tax Refund - (63,855.89) (63,855.89) 117 3542110 Gain on disposition of proper - (3,300.00) (3,300.00) 117 3842710 Interest on long-term debt - - 8,109,615.90 8,109,615.90 117 56

42720 Interest on long-term debt - - 40,573.97 40,573.97 117 5642800 Amortization of debt discount - 95,838.00 95,838.00 117 5743120 Interest expense - Capital Le - 1,347,269.35 1,347,269.35 117 6243130 Interest expense - other - 488,408.36 488,408.36 117 6245110 MAPP Reliability - DBMR - (933,912.00) (933,912.00) 114 245120 MAPP Reliability - Admin - (65,868.00) (65,868.00) 114 245130 MAPP Reliability - Sublease - (410,736.00) (410,736.00) 114 2 = sh45610 Membership - (180,000.00) (180,000.00) 114 2 a/c 45620 Dues - (54,000.00) (54,000.00) 114 245630 Schedule 10 - (73,783,270.85) (73,783,270.85) 114 245635 Scheduel 10A - (197,641.46) (197,641.46) 114 245640 Miscellaneous Income - (18,266.67) (18,266.67) 114 245645 Engineering Studies Income - (435,040.98) (435,040.98) 114 245650 Training Income - (125,711.64) (125,711.64) 114 245670 MAPP Transmission - AL (alloc - (3,244,716.00) (3,244,716.00) 114 245680 MAPP Transmission - Sched F - (2,184,024.00) (2,184,024.00) 114 2 45685 MAPP MCN Income - (924,835.99) (924,835.99) 114 2 OP a/c Dollars Diff 

EXPENSE

Midwest ISO Accounts Exhibit 4 
90810 Member Training - 155,685.72 155,685.72 114 4 

 

91000 Miscellaneous Customer Servic - 5,109.17 5,109.17 114 4 

 

92010 Salaries and Wages - 16,705,871.56 16,705,871.56 114 4 1

 

92020 Annual Bonus - 3,172,161.79 3,172,161.79 114 4 

 

92022 Other Bonuses - 55,099.75 55,099.75 114 4 

 

92025 Signing Bonus - 129,950.00 129,950.00 114 4 

 

92030 Relocation Expense - Taxable - 890,169.33 890,169.33 114 4 

 

92040 Relocation Expense - Non Taxa - 167,418.70 167,418.70 114 4 

 

92060 Severance - (10,627.23) (10,627.23) 114 4 

 

92110 Office Supplies - 249,558.73 249,558.73 114 4 

 

92111 Postage - (2,363.17) (2,363.17) 114 4 

 

92112 - - - 

 

92113 - - - 

 

93030 Bank Charges - 248,723.87 248,723.87 114 4 

 

92120 Telephone - 280,206.19 280,206.19 114 4 

 

92121 Long Distance - 46,215.39 46,215.39 114 4 

 

92130 Subscriptions/Literature - 76,832.84 76,832.84 114 4 

 

92140 Meals & Entertainment-Travel - 117,262.34 117,262.34 114 4 

 

92142 Meals & Entertainment-Busines - 165,651.46 165,651.46 114 4 

 

92144 Meals & Entertainment-Recruit - 163.94 163.94 114 4 

 

92146 Mileage-IDOC Limit - 4.75 4.75 114 4 

 

92149 Mileage - 557.90 557.90 114 4 

 

92150 Travel-Air, Lodging, Auto - 1,179,745.85 1,179,745.85 114 4 

 

92154 Lodging - 1,473.14 1,473.14 114 4 

 

92156 Taxi, Car Rental, Parking, To - 751.89 751.89 114 4 

 

92157 Travel-IDOC Per Diem Meals-Fu - 156.35 156.35 114 4 

 

92168 Small Tools & Equipment - 13,661.53 13,661.53 114 4 

 

92170 Memberships/Dues - 40,094.99 40,094.99 114 4 

 

92179 NERC - 41,476.42 41,476.42 114 4 

 

92180 Printing - 16,399.90 16,399.90 114 4 

 

92187 Voice Circuits (AT&T) - 12,210.14 12,210.14 114 4 

 

92190 Computer Maintenance - 1,064,750.27 1,064,750.27 114 4 

 

92191 Telecommunications - ICCS - 4,402,692.10 4,402,692.10 114 4 

 

92192 MCN - 624,363.55 624,363.55 114 4 

 

92193 VPN - 33,469.45 33,469.45 114 4 

 

92195 Telcom Maintenance - 1,895.93 1,895.93 114 4 

 

92196 Internet - 47,094.96 47,094.96 114 4 

 

92197 Cable/Satellite - 9,202.97 9,202.97 114 4 

 

92198 Telecommunications - On Call - 903.10 903.10 114 4 

 

92310 Outside Services - 2,698,416.55 2,698,416.55 114 4 

 

92320 Legal Fees - 2,024,829.46 2,024,829.46 114 4 

 

92340 Executive Search - 68,692.00 68,692.00 114 4 

 

92345 Hiring/Retention Costs - 148,832.11 148,832.11 114 4 

 

Midwest ISO Accounts Exhibit 4 
92360 Management Consultants - 2,659,006.41 2,659,006.41 114 4 

 

92365 Management Consultants Exp - - 13,760.85 13,760.85 114 4 

 

92375 Temporary Help - 737,228.59 737,228.59 114 4 

 

92380 Security - 208,705.23 208,705.23 114 4 

 

92385 Payroll Service - 20,793.70 20,793.70 114 4 

 

92395 Contractor - 330,388.95 330,388.95 114 4 

 

92405 Property Insurance - 141,425.25 141,425.25 114 4 

 

92410 General Liability/Reps and Wa - 1,878,888.29 1,878,888.29 114 4 

 

92440 Automotive - 553.36 553.36 114 4 

 

92450 Directors & Officers Liabilit - 165,810.00 165,810.00 114 4 

 

92460 Workman's Compensation - 41,504.90 41,504.90 114 4 

 

92470 Excess Liability - 740,807.85 740,807.85 114 4 

 

92480 IN Surplus Lines Tax - 9,733.72 9,733.72 114 4 

 

92490 Insurance - Crime Coverage - 3,048.28 3,048.28 114 4 

 

92500 Injuries and Damages - 482.52 482.52 114 4 

 

92610 Employee Benefits - 1,403,254.95 1,403,254.95 114 4 

 

92615 Employee Benefits - SERP - 166,488.25 166,488.25 114 4 

 

92620 401k - 1,607,919.92 1,607,919.92 114 4 

 

92630 Officer Flex Spending - 35,357.99 35,357.99 114 4 

 

92640 Education Assistance/Outside - 190,212.61 190,212.61 114 4 

 

92650 Materials/Books - 1,247.48 1,247.48 114 4 

 

93016 Conventions and seminars - 16,312.75 16,312.75 114 4 

 

91300 Marketing, PR Expense - 84,251.58 84,251.58 114 4 

 

93015 General Advertising Expenses - 470.25 470.25 114 4 

 

91300 Marketing, PR Expense - 15,359.00 15,359.00 114 4 

 

93035 Directors Fees - 450,062.50 450,062.50 114 4 

 

92145 Meals & Entertainment-Directo - 1,579.88 1,579.88 114 4 

 

92159 Travel-Directors - 81,903.73 81,903.73 114 4 

 

93025 Miscellaneous General Expense - 3,420.30 3,420.30 114 4 

 

92170 Memberships/Dues - 16,712.00 16,712.00 114 4 

 

93110 Operating Lease-Building - 1,863,772.33 1,863,772.33 114 4 

 

93130 Operating Lease-Furniture - 2,626.18 2,626.18 114 4 

 

93140 Operating Lease-Computers - 46,516.84 46,516.84 114 4 

 

93150 Operating Lease-Copier - 136,793.86 136,793.86 114 4 

 

93510 Services for building - 118,499.61 118,499.61 114 5 

 

93520 Utilities - 444,018.73 444,018.73 114 5 

 

93530 General Maintenance - 602,118.82 602,118.82 114 5 

 

Midwest ISO Accounts Exhibit 4 
Southwest Power Pool (SPP)
Southwest Power Pool, Inc.

Date Acquired

ID 

Number C/F/S Location Description Life (Yrs)

12/31/2003 

Ending Cost Function 

31-Dec-01 S Computer Room Market Settlement Software 5 15,932,379 Market 28-Dec-00 S Computer Room Software - Market Settlemnt 3 3,040,800 Market 

01-Oct-97 10052 S Computer Room EMS Software 3 1,983,505 Reliability 

29-Jun-01 S Scheduling agent Hardware/Software 3 1,715,754 TSP Support 

13-Dec-01 S Scheduling agent MOS Project 3 1,251,550 Market 22-Aug-01 S Computer Room ESCA - EMP Project 3 596,130 Reliability 17-Dec-01 C Scheduling agent Hardware 3 586,400 TSP Support 

01-Jan-01 F Security Center New Chillers 5 480,876 Split 01-Jan-01 F Security Center renovate security center 5 338,842 Split 

31-Dec-03 MS Market Settlement Software 5 298,000 Market 17-Dec-01 S Computer Room ESCA - EMP Project 3 221,641 Reliability 21-Nov-00 S Computer Room OATI 3 200,000 TSP Support 

04-Mar-98 S C. Monroe ESCA Software 3 177,599 Reliability 

24-Aug-98 S C. Monroe TrakR Software 3 166,250 Reliability 

01-Oct-96 10526 C Computer Room OASIS 3 164,041 Transmission Se

01-Mar-98 10446 C Security Center Video Display Hardware 3 162,371 Reliability 

22-Aug-01 S Computer Room ESCA - Compaq Project 3 154,208 Reliability 17-Dec-01 C Scheduling agent Hardware 3 146,600 TSP Support 

23-May-01 11086 S Computer Room Microsoft Licenses 3 134,322 Management 

31-Dec-02 11385 C Backup Site- AREC Redundant Network Router 3 122,314 Reliability 18-Sep-03 11892 C Telecomm Room Core Switch 3 117,130 Split 

24-Apr-01 11079 F 7th Floor Modular Furniture for Offices 5 108,425 Management 

25-Feb-02 11808 S EMS Project Cutover Project 3 105,400 Reliability 

18-Apr-02 n/a F Computer Room 2 chillers, handlers and data mates 5 103,315 Split 

01-Jan-92 10231 S J. Chamberlin PTI Software 3 100,000 Reliability 

15-Aug-02 n/a S Computer Room 5 Sequel Server Licenses 2000 Editio 3 92,022 Split 

25-Jun-98 S C. Monroe TrakR Software 3 85,241 Reliability 

5-Mar-02 F New Cubicles on 9 Deposit on Cubicles 5 83,630 Management 

27-May-98 S C. Monroe Tagging software 3 82,686 Reliability 

01-Sep-99 S Computer Room Oasis Automation 3 78,063 Transmission Se

10-Apr-99 S B. Gibson JTAG Software 3 77,150 Reliability 

10-Aug-01 21202 F 9th Floor Modular Furniture 5 68,798 Management 

01-Jan-97 10095 C Computer Room Lan Server (SPPALPHA) 3 63,962 Management 

01-May-99 S Computer Room Oasis Automation 3 61,843 Transmission Se

24-Oct-01 S Software Firewall Software 3 60,358 Split 

30-Dec-02 1376-1138 C Computer Room Firewall Servers (4) 11376-11380 3 57,287 Split 

01-Dec-00 S Computer Room GENESYS Subsystem 3 55,743 Reliability 

01-Oct-96 10528 C Computer Room OASIS Firewall 3 55,031 Transmission Se

26-Apr-99 S Computer Room Oasis Automation 3 51,451 Transmission Se

01-Mar-01 11020 C Scheduling Agent UPS 3 50,372 Split 28-Mar-02 11259 C Operations OASIS replacement server/peripheral 3 47,703 Transmission Se

Fixed Assets and Depreciation as of 12/31/2003

Asset_BV>4,000 Exhibit 4 
Southwest Power Pool, Inc.

Date Acquired

ID 

Number C/F/S Location Description Life (Yrs)

12/31/2003 

Ending Cost Function 

Fixed Assets and Depreciation as of 12/31/2003

04-Jun-98 S C. Monroe TrakR Software 3 45,920 Reliability 

20-Nov-03 11932 C ESCA Office PowerEdge 6650 2.5 G Server 3 44,809 Reliability 20-Nov-03 11933 C ESCA Office PowerEdge 6650 2.5 G Server 3 44,808 Reliability 20-Nov-03 11951 C ESCA Office PowerEdge 6650 2.5 G Server 3 44,808 Reliability 

31-May-02 n/a F 8th Floor Furniture Balance on cubes for 8th floor 5 43,333 Management 

19-Jun-03 11869 C 6th Floor - Training Audio System 5 41,265 Management 

18-Sep-01 11204 C Door Control System HID Door Reader System 3 41,097 Management 

24-Mar-97 C Security Center A/C Units in Comp. Room 3 41,051 Split 

01-Jan-97 10192 C Computer Room Telephone System 3 40,841 Split 

31-Jul-97 10388 F Security Center Consoles for Sec. Center 5 40,836 Split 

09-Jul-01 11128 C Computer Room Digital Voice Recorder 3 40,155 Split 

8-May-03 11762 C Back-Up Site-AREC Nokie Firewall for Backup Site 3 39,714 Reliability 

18-Apr-02 n/a F 8th Floor Furniture deposit on 8th floor cubicles 5 39,270 Management 

01-Jun-00 S Computer Room Sequel Server Software 3 37,995 Split 

30-Oct-97 10325 C Computer Room UPS 3 36,500 Split 

19-Aug-02 11316 C Telecom Room Back Up Site Route at AREC & Maint 3 35,417 Reliability 

30-Mar-98 S C. Monroe ESCA Software 3 35,000 Reliability 

2/14/2003 11397 C IT Dell PowerVault 220S Server 3 34,039 Management 

06-Aug-98 S C. Monroe Free Flow Software 3 33,550 Reliability 20-Nov-03 11931 C ESCA Office Dell EMC DAE2 Disk array Encl. 3 32,524 Market 20-Nov-03 11930 C ESCA Office Dell EMC DAE2 Disk array Encl. 3 32,524 Market 

23-Apr-01 11051 C Telecom Room SPPNET Replacement Router 3 32,301 Split 

01-May-00 S 9th Floor Forecasting Program-Engineering 3 31,000 Reliability 

23-Apr-01 11052 C Telecom Room INET Routers 3 30,138 Reliability 23-Apr-01 11053 C BackUp Site - AREC INET router 3 30,138 Reliability 

14-Oct-98 S C. Monroe Tagging Software 3 29,889 Reliability 

27-Feb-96 10358 C A. Rodriquez HP Network Analyzer-Advisor 3 29,765 Split 15-Mar-02 C RTTOSS system Compaq-runs setup/integra. 3 29,000 TSP Support 

22-Oct-03 11917 C Computer Room Drive Array 3 28,790 Split 

29-Nov-99 10786 F 9th Floor Office Panels 5 27,488 Management 01-Sep-01 11177 C COSMOS Project Compaq Testing System CPU 3 27,374 Market 

11-Apr-01 F Security Center raised floor/carpeting for comp room 5 26,987 Split 

29-Jun-99 S Computer Room Oasis Automation 3 26,831 Transmission Se

25-Sep-02 n/a F Security Center 2 consoles - Market Ops 5 26,200 Market 

01-Apr-00 10876 C Ohio Office Stancil Voice Logger 3 26,107 Transmission Se

20-Nov-03 11945 C ESCA Office Dell EMC SAN Array 3 25,366 Market 20-Nov-03 11944 C ESCA Office Dell EMC SAN Array 3 25,366 Market 

01-Oct-98 10190 C Computer Room Corporate Server 3 24,985 Management 

01-Feb-97 10033 C Computer Room A/C Units in Comp. Room 3 24,917 Split 

24-Apr-01 11075 F 7th Floor Fire Detection System 5 24,495 Split 

01-Dec-00 10974 F Scheduling Agent Consoles 5 23,965 TSP Support 

Asset_BV>4,000 Exhibit 4 
Southwest Power Pool, Inc.

Date Acquired

ID 

Number C/F/S Location Description Life (Yrs)

12/31/2003 

Ending Cost Function 

Fixed Assets and Depreciation as of 12/31/2003

3-Jun-02 11282-86 C Computer Room 5 PowerEdge 1650 Srvrs (11282-286) 3 22,775 Split 

1/16/2003 11382 C Computer Room New Tape Backup System & Tapes 3 22,350 Split 

20-Nov-03 11948 S ESCA Office Software/Accessories 3 22,327 Market 

07-Apr-99 10369 C Computer Room Operating Reserve Servers 3 22,248 Reliability 07-Apr-99 10370 C Computer Room Operating Reserve Servers 3 22,248 Reliability 

20-Jul-01 11141 C EMS Upgrade Computer ES40 3 22,093 Reliability 24-Jul-01 S Software MUST Licenses 3 21,400 Reliability 

24-Oct-01 S Software OASIS Enhancements 3 21,063 Transmission Se

01-Jun-99 S Computer Room Nostradamus Software 3 21,000 Reliability 

26-Apr-02 n/a F Computer Room Balance on chillers, handlers, etc. 5 20,938 Split 

22-May-02 1272-1127 C Computer Room 2-Cisco Pix Firewalls(11272& 11273) 3 20,881 Split 

22-Oct-03 11918 C Computer Room Tape Backup System 3 20,858 Split 

01-Mar-99 S Computer Room OASIS Software 3 20,610 Transmission Se

9-Apr-02 n/a S Operations 150 user license ACE server software 3 20,596 Reliability 

01-Feb-96 10620 C R. Wheeler SUN Workstation 3 20,453 Reliability 01-Feb-96 10621 C Computer Room SUN Workstation 3 20,453 Reliability 

31-Dec-02 11383 C Computer Room Dial Up Router (repl. MCI RLN) 3 20,210 Split 

01-Jul-97 10374 C Computer Room Control Center Phone System 3 20,206 Split 

10-Apr-02 11261-65 F Telecom Equip. SPP video conference phone equip. 5 19,228 Management 10-Apr-99 10355 C B. Gibson JTAG Workstation 3 18,888 TSP Support 

14-Feb-02 F Sch. Agent Comfort Systems 5 18,701 TSP Support 

22-Apr-02 11266-68 C Computer Room 3 servers (11266;11267;11268) 3 17,885 Split 

27-Dec-02 n/a F 12th Floor Office Door Access Control System 5 17,726 Split 

01-Jul-01 11140 F Scheduling Agent Raised Flooring 5 17,718 Split 

1-Oct-03 11895 C Computer Room PowerEdge 2650 Server - Acctng. 3 16,925 Management 1-Oct-03 11896 C Computer Room PowerEdge 2650 Server - FTP 3 16,925 Management 

01-Dec-00 10973 F Scheduling Agent Raised Floor 5 16,916 Split 18-Dec-02 n/a F 12th Floor Office Bal. On 12th floor furnishings (8 sets) 5 16,738 Management 

20-Mar-01 11039 F 6th Floor Cubical Offices 5 16,527 Management 

01-Jun-91 10092 C Security Center harris rf/ssb radio 3 16,154 Split 

15-Nov-02 n/a F 12th Floor Office Dep. On 8 sets of furniture 5 15,148 Management 01-Sep-99 S Computer Room MUST Licenses - Engineer 3 15,000 Transmission Se

31-Dec-02 S Computer Room Cold Fusion Software & Licenses 3 14,643 Split 

1/9/2003 S Computer Room Cold Fusion Server & licenses 3 14,643 Split 

07-Aug-01 11172 C Computer Room Data Base Server 3 14,429 Split 07-Aug-01 11173 C Computer Room Data Base Server 3 14,429 Split 

01-Feb-97 10076 F Computer Room Fire Suppression System 5 14,418 Split 

22-May-02 n/a S R. Turner LAN Mgmt. Sys. - CiscoWorks 3 14,273 Split 

09-Nov-01 F 9th Floor Conference Room Chairs 5 14,166 Management 31-Dec-99 10783 C Computer Room JTAG Redundant Server 3 14,056 TSP Support 

01-Jan-93 10525 C Xerox Room Router 3 14,000 Management 

Asset_BV>4,000 Exhibit 4 
Southwest Power Pool, Inc.

Date Acquired

ID 

Number C/F/S Location Description Life (Yrs)

12/31/2003 

Ending Cost Function 

Fixed Assets and Depreciation as of 12/31/2003

01-Jul-00 S Computer Room Cold Fusion Software 3 13,663 Split 

09-Mar-01 11041 C AREC Redundancy Proj. Server & Peripherals 3 13,625 Reliability 

5-Jun-02 1274-1127 C Computer Room 5 Cisco Switches(11274-11278) 3 13,594 Split 

01-Feb-97 10546 C S. Venable - home Workstation 3 13,594 Management 01-Feb-97 10616 C K. Bates Workstation 3 13,594 Transmission Se

01-Feb-97 10618 C A. Rodriquez Workstation 3 13,594 Split 

22-Oct-03 11915 C Computer Room Seq. Database Cluster Server 3 13,515 Split 22-Oct-03 11916 C Computer Room Seq. Database Cluster Server 3 13,515 Split 

17-Aug-01 11203 C COSMOS Project Oracle Server (20 seat) 3 13,499 Market 

5-Mar-02 F Security Camera Equip. 5 13,096 Split 

30-Mar-98 S C. Monroe ESCA Software 3 13,066 Split 

24-Jun-03 11861 C HR-Server PowerEdge 2650 Server 3 12,974 Management 24-Jun-03 11863 C Computer Room Dell PowerEdge 2650 Server-Hope 3 12,820 Split 24-Jun-03 11864 C Computer Room Dell PowerEdge 1650 Server-Hope 3 12,820 Split 

24-Apr-03 S Computer Room Software for Load Balancers 3 12,634 Market 

06-Nov-01 F BackUp Site - AREC Raised Flooring 5 12,054 Reliability 

9-Oct-03 11907 C OATI-Plymouth, MN Redundant Router for OATI system 3 11,968 TSP Support 

09-Nov-01 F 7th Floor Office Panels 5 11,758 Management 

1-Jan-02 S Software Veritas Net Backup Sys. 3 11,520 Split 

31-Dec-02 C Computer Room Tape Backup Sys. & Tapes 3 11,175 Split 

01-Apr-97 10617 C T. Mallinger Workstation 3 11,142 Split 

01-Feb-97 10544 C K. McArthur Workstation 3 11,142 Management 

01-Apr-97 10215 C Backup Site - AREC Workstation 3 11,131 Reliability 

01-Jun-98 10111 C Computer Room 4.3 GB UW Drive 3 11,000 Split 

18-Sep-02 11320&21 C Computer Room Two SPP Routers 3 10,993 Split 06-Nov-01 S Software Mailsweeper 3 10,974 Management 

01-Jun-01 11087 S Computer Room Firewall - Gateway 3 10,888 Split 

14-Nov-02 n/a F 6th Floor Balance on 28 Tables & Carts 5 10,704 Management 01-Aug-01 S Software Verisign OnSite Certs & Seats (322) 3 10,660 Split 

24-Jun-03 11865 C Computer Room Dell Power Vault 220S Server-Hope 3 10,609 Split 

1/22/2003 S Computer Room Software for New BackUp System 3 10,603 Split 

22-Dec-03 11961 C Computer Room Dell PowerEdge 1750 Server 3 10,305 Market 22-Dec-03 11962 C Computer Room Dell PowerEdge 1750 Server 3 10,304 Market 

3-Jun-02 n/a S Software 3 Roguewave Soft. Licenses 3 10,260 Split 

11-Apr-01 F Computer Room Raised Floor 5 10,000 Split 

14-Mar-01 S Computer Room VSAT Software 3 10,000 Reliability 

09-Oct-01 11206 C Computer Room Dell PowerVault 20XS 3 9,962 Split 

18-Sep-02 n/a S Computer Room DreamWeaver & Cold Fusion SW & L 3 9,809 Split 

01-Apr-00 10875 C Ohio Office Voice Gate Voice Mail System 3 9,739 Transmission Se

18-Sep-02 n/a C Computer Room Two SPP Spare Router 3 9,718 Split 18-Sep-02 n/a F 6th Floor Deposit on 28 tables & 2 carts 5 9,675 Management 

Asset_BV>4,000 Exhibit 4 
Southwest Power Pool, Inc.

Date Acquired

ID 

Number C/F/S Location Description Life (Yrs)

12/31/2003 

Ending Cost Function 

Fixed Assets and Depreciation as of 12/31/2003

14-Nov-02 n/a F 6th Floor Balance on Chairs (60) 5 9,621 Management 

25-Jul-02 n/a S Software 25 Visio Pro 2002 copies 3 9,357 Management 

30-Dec-02 C A/C & TelCom Room on 7 RCM 8 Monitor for Sec. Ctr. & TelCom 3 9,298 Split 

20-Jun-02 11281 C Computer Room 1 PowerEdge 2250 Srvr (Intrusion De 3 9,276 Split 

9-Oct-03 11897 C Computer Room SPPList Server Replacement 3 9,255 Management 

20-Mar-01 C Computer Room Voice System Upgrade 3 9,228 Management 

22-Dec-97 10418 C S. Skipper Color Scanner 3 8,923 Management 

15-May-03 11820 C Computer Room Dell Power Edge 2650 Server 3 8,919 Split 

31-Oct-97 10435 C R. Turner Workstation 3 8,792 Split 

16-Sep-02 n/a F 6th Floor Deposit on 60 chairs for training ctr. 5 8,693 Management 

01-Jan-97 10229 C B. Phillips Laptop 3 8,640 Management 

01-Dec-00 S Computer Room EMS Upgrade Support Software 3 8,421 Reliability 

1-Apr-03 11748 F Security Center True Time Device 5 8,295 Split 

01-Jul-97 10196 C Computer Room Laptop - Workstation HP 3 8,257 Split 

01-May-00 10913 F Ohio Office Ricoh 350 Copier 5 8,249 Transmission Se

25-Jun-01 S Software HR Software - Employees Self Service 3 8,248 Management 

15-Aug-01 F Security Center Raised floor in computer room 5 8,148 Split 

31-Jul-97 10385 C Security Center Workstation 3 8,100 Split 11-Jul-01 11130 C Telecom Room Vendor Net Router 3 7,955 Split 

25-Jan-01 10981 C J. Chamberlin Workstation 3 7,952 Transmission Se

25-Jan-01 10983 C K. Tynes Workstation 3 7,952 Transmission Se25-Jan-01 10985 C C. Jamieson Workstation 3 7,952 Transmission Se25-Jan-01 10987 C J. Boshears Workstation 3 7,952 Transmission Se

16-Mar-99 10289 F 9th Floor Office Panels 5 7,919 Management 

3-Apr-03 F 9th Floor Bal. On Cubes & Chairs 5 7,912 Management 

14-Aug-01 S Software Norton AntiVirus Software 3 7,710 Management 

17-Apr-03 C IT Infrastructure CSI Essential SoftWare for Nokia 3 7,692 Split 

01-Jul-97 10375 C Security Center Closed Circuit TV System 3 7,674 Split 

26-Nov-97 10419 C 9th Floor Color printer 3 7,608 Management 

01-Apr-99 10277 C Telecom Room Laptop 3 7,546 Split 

27-Mar-02 S Software VM Workstation 3.0 3 7,541 Transmission Se

01-Apr-00 10842 C R. Ciesiel Workstation 3 7,456 Regional Reliabi

27-Nov-02 11361 C 8th Floor Reception ScanXtender Scanner 3 7,395 Management 

15-Apr-97 F Security Center Carpet in Security Room 5 7,387 Split 

01-Sep-00 10923 C Computer Room ICCP Machine-Redundant 3 7,366 Reliability 01-Sep-00 10924 C Computer Room ICCP Machine-Redundant 3 7,366 Reliability 01-Sep-00 10925 C Computer Room ICCP Machine-Development 3 7,366 Reliability 

23-Feb-01 11005 C Computer Room Hi-Speed Backup Sytem (Veritas SW 3 7,356 Split 

02-Dec-99 S Corporate Services - 4th Floor Imaging Software 3 7,349 Management 

20-Jul-01 11129 C Computer Room Cisco Router & Smartnet 3 7,286 Split 11-Jul-02 11292-94 C 8th Floor Printers 2-Laser Jet 8150; 1-Laser Jet 1200N 3 7,285 Management 

Asset_BV>4,000 Exhibit 4 
Southwest Power Pool, Inc.

Date Acquired

ID 

Number C/F/S Location Description Life (Yrs)

12/31/2003 

Ending Cost Function 

Fixed Assets and Depreciation as of 12/31/2003

29-Aug-01 11198 C Computer Room 73 Gigabyte Hard Drives 3 7,229 Split 

01-Feb-97 10077 F Computer Room Raised Floor 5 7,225 Split 

29-Dec-97 10420 C Security Center Frequency Recorder 3 7,200 Split 

17-Feb-99 S K. Perry DEC Server Licenses 3 7,179 Split 

2/14/2003 F 9th Floor Additional Cubes Setup 5 7,143 Management 

01-Jun-00 10895 C Computer Room Workstation 3 7,129 Split 01-Jun-00 10898 C A. Blacklaw Workstation 3 7,129 Transmission Se

01-Jun-00 10917 C J. Smith Workstation 3 7,129 Transmission Se

01-Apr-00 10893 C C. Ordaz Workstation 3 7,129 Transmission Se

01-Jan-00 10818 C R. Rhodes Laptop 3 7,071 Split 

01-Mar-00 10840 C R. Ciesiel Laptop 3 7,008 Regional Reliabi01-Feb-96 10342 C 6th Floor Laser 5SI-REC 3 6,850 Management 

20-Dec-99 10807 C T. Mallinger Laptop computer 3 6,815 Split 01-Nov-00 10971 C Engineering Plotter-36" DesignJet 750C Plus 3 6,728 Transmission Se

19-Jun-01 S Software WordPerfect Office; Corel; Acrobat 3 6,676 Management 

01-Dec-00 S Computer Room MMS EASE & Exceed & DCE 3 6,613 Split 

01-Jan-97 C Computer Room Network 3 6,598 Split 

01-Feb-00 10800 C 4th Floor Server 3 6,536 Management 15-Feb-96 10541 C C. Monroe Laptop 3 6,521 Management 15-Feb-96 10542 C M. Sidor Laptop 3 6,521 Management 

1-Dec-03 S Telecomm Room Software to upgrade Sec. Ctr. Phone 3 6,474 Split 

31-Oct-97 10430 F Computer Room LanScape 3000 Rack System 5 6,473 Split 

01-Jan-00 10781 C Computer Room Web Server 3 6,458 Split 01-Jan-00 10782 C Computer Room Web Server 3 6,458 Split 

9-Oct-03 11902 C Computer Room EMS Redundant Server 3 6,448 Reliability 9-Oct-03 11901 C Computer Room EMS Redundant Server 3 6,447 Reliability 

01-Jun-00 10909 C D. Martin Workstation 3 6,441 Split 

22-May-02 n/a S Computer Room 36GB Ultra SCSI 10 K RPM Disk Driv 3 6,434 Split 

20-Jul-01 11134 C Firewall BorderGuard 3000 3 6,387 Split 20-Jul-01 11135 C Firewall BorderGuard 3000 3 6,387 Split 

24-Apr-03 S IT & EMS group 15 copies of Visual Sourcesafe 3 6,360 Split 01-Apr-00 10843 C M. Crosby Laptop 3 6,303 Split 

14-Nov-02 n/a F 8th Floor Extra Cubicles 5 6,301 Management 20-Nov-03 11956 C Computer Room PowerEdge 650 2.4GH Server 3 6,298 Market 20-Nov-03 11957 C Computer Room PowerEdge 650 2.4GH Server 3 6,298 Market 20-Nov-03 11955 C Computer Room PowerEdge 650 2.4GH Server 3 6,298 Market 

02-Jul-01 S Software VeriSign OnSite Global Server Admin 3 6,255 Split 

2/6/2003 11393 C A. Kloster Dell Latitude C840 workstation 3 6,160 Split 

18-Dec-97 10424 C 8 - IT Lab Infocus LP420 Video Projector 3 6,141 Management 

01-Jan-97 10078 C Library Laser Printer - 5SI - ENG 3 6,119 Management 01-Jan-97 10622 C 9th Floor Laser Printer - 5SI -OPS 3 6,119 Management 

Asset_BV>4,000 Exhibit 4 
Southwest Power Pool, Inc.

Date Acquired

ID 

Number C/F/S Location Description Life (Yrs)

12/31/2003 

Ending Cost Function 

Fixed Assets and Depreciation as of 12/31/2003

29-Sep-03 11894 C Security Center HP LaserJet 5100 DTN Printer 3 6,109 Split 

23-Oct-02 n/a S Software Authorware & VLO Corp Studio Mix 3 6,082 Split 

1-Apr-02 11254 C Computer Room Server 3 6,064 Split 1-Apr-02 11255 C Computer Room Server 3 6,064 Split 

25-Mar-99 10351 C Computer Room Docking Station 3 6,052 Split 

3-Jun-02 n/a C Computer Room Cisco Routers (Spares) 3 5,988 Split 

13-Nov-01 F 4th Floor Security System for 465 5 5,984 Split 

01-Jul-98 10172 C Computer Room Workstation 3 5,974 Split 

13-Nov-03 11949 C ESCA Office PIX Firewall - 515E 3 5,957 Split 01-Sep-00 10964 C J. Wilson Workstation 3 5,937 Transmission Se

18-Dec-03 11958 C J. Keaton Latitude D800 Laptop & Docking 3 5,911 Split 01-Dec-98 10327 C Computer Room Workstation 3 5,897 Split 

01-Feb-97 10545 C Backup Site - AREC Laptop 3 5,896 Reliability 

01-Dec-00 10979 C J. Marschewski Laptop 3 5,869 Management 

2/6/2003 11388 C Security Center HP LaserJet 5100 DTN Printer 3 5,846 Split 

01-Aug-99 10533 S 8-IT Lab Portable Projector 3 5,791 Management 

01-Jul-00 10922 C B. Gibson Workstation 3 5,789 Split 

6-Nov-03 11931 C ESCA Office Dell PowerEdge 4210 Cabinet 3 5,780 Market 6-Nov-03 11930 C ESCA Office Dell PowerEdge 4210 Cabinet 3 5,779 Market 

18-Dec-02 n/a F 12th Floor Office Bal. On 12th floor conf. Table & chairs 5 5,712 Management 

16-Feb-95 10278 C 8th Floor Laserjet 4Si - ENG 3 5,695 Management 

01-Sep-00 S Computer Room McAfee License Scans 3 5,661 Management 

27-Feb-95 10248 C Security Center Dell 575/XL w/ 17" monitor 3 5,655 Split 

01-Jan-97 10228 C R. Ciesiel Laptop 3 5,636 Regional Reliabi

20-Aug-01 11194 C J. Woods Dell Precision 330 Workstation 3 5,633 Transmission Se

10-Sep-03 11889 C T. Thompson Dell C400 Latitude Laptop 3 5,589 Split 02-Dec-99 10794 F Corporate Services - 4th Floor Scanner 5 5,539 Management 

26-Jun-01 11119 C S. Pilgrim Dell P4 Precision Workstation 3 5,522 Split 01-Jun-01 11089 C J. Holland Dell P4 Precision Wkstn 3 5,522 Transmission Se

01-Jun-01 11103 C B. Walkup Dell P4 Precision Workstation 3 5,522 Transmission Se

31-Mar-03 F 9th Floor Bal. On Cubes & Chairs 5 5,509 Management 

02-Jul-01 S Software PGP Personal Security Software 3 5,504 Management 

5-Mar-02 F Office Chairs Deposit on chairs 5 5,468 Management 

23-Apr-01 11080 F 7th Floor Generator Switch 5 5,464 Reliability 

22-Nov-99 10602 C A. Rodriquez laptop computer 3 5,428 Split 01-Sep-01 11178 C H. Ho Dell Precision 330 MiniTower 3 5,418 Split 01-Dec-98 10201 C 7-Telecom Room DELL Laptop - Network Analyzer 3 5,395 Split 01-Dec-98 10268 C C. Monroe DELL Laptop 3 5,395 Split 01-Aug-99 10434 C C. Mamandur Laptop 3 5,379 Transmission Se

20-Nov-03 11935 C ESCA Office Fiber Switch 3 5,328 Market 20-Nov-03 11934 C ESCA Office Fiber Switch 3 5,328 Market 

Asset_BV>4,000 Exhibit 4 
Southwest Power Pool, Inc.

Date Acquired

ID 

Number C/F/S Location Description Life (Yrs)

12/31/2003 

Ending Cost Function 

Fixed Assets and Depreciation as of 12/31/2003

15-May-03 11799 C B. Sugg Dell Latitude C840 laptop 3 5,306 Split 15-May-03 11802 C J. Holland Dell Latitude C840 laptop 3 5,306 Transmission Se

20-Jul-01 11131 S Computer Room PowerEdge 1550-Web Server 3 5,278 Split 20-Jul-01 11132 S Computer Room PowerEdge 1550-Web Server 3 5,278 Split 20-Jul-01 11133 S Computer Room PowerEdge 1550-Web Server 3 5,278 Split 

27-Feb-95 10247 C R. Wheeler - Home Workstation 3 5,255 Split 27-Feb-95 10252 C B. Rew - Home Workstation 3 5,255 Transmission Se

01-Sep-98 10174 C J. Keaton Laptop 3 5,239 Split 20-Nov-03 11939 C ESCA Office Fiber Switch 3 5,195 Market 20-Nov-03 11940 C ESCA Office Fiber Switch 3 5,194 Market 15-Nov-02 n/a F 12th Floor Office dep. On Conf. Table w/chairs 5 5,181 Management 13-Nov-01 S Software TOAD (7 copies) 3 5,174 Market 12-Sep-02 n/a F 8th Floor Furn. For reception, MTS, interview ro 5 5,153 Management 

31-Dec-99 10784 C Compter Room Web Redundant Server 3 5,148 Split 31-Dec-99 10785 C Computer Room Web Redundant Server 3 5,148 Split 

28-Mar-01 11044 C 6th Floor Projector for Training Room 3 5,142 Management 16-Feb-01 11001 C S. Austin Workstation 3 5,116 Split 01-Feb-97 10202 C B. Rew Laptop 3 5,096 Transmission Se

31-Aug-01 11199 C Computer Room Mail Sweeper Server 3 5,087 Management 

2/27/2003 11398 C R. Ciesiel Dell Latitude C640 Laptop 3 5,056 Regional Reliabi10-Apr-03 11753 C RJ Robertson Dell Latitude C640 Laptop 3 5,029 Management 10-Apr-03 11756 C E. Davis Dell Latitude C640 Laptop 3 5,029 Market 

21-Feb-02 11240 C Computer Room Fluke Network Analyzer 3 5,014 Split 

09-Jul-01 11106 C BackUp Site - AREC Remote Backup Site Equipment 3 5,000 Reliability 01-Jul-01 11144 C AREC Redundancy Proj. Cisco Router 3 4,985 Reliability 01-Jul-01 11145 C Telecom Room Cisco Router 3 4,985 Split 

01-Jun-99 10389 C A. Sabb Work Station 3 4,967 Split 

2/20/2003 F 9th Floor Galli & RJ Furn; 10 Chairs;Cubes 5 4,963 Management 

9-May-02 11271 C Telecom Room Security Badge Printer System 3 4,905 Management 

03-Mar-00 10822 C 6-Training Ctr. Redundant Compaq Machine 3 4,884 Management 03-Mar-00 10824 C 6-Training Ctr. Redundant Compaq Machine 3 4,884 Management 03-Mar-00 10826 C 6-Training Ctr. Redundant Compaq Machine 3 4,884 Management 03-Mar-00 10828 C 6-Training Ctr. Redundant Compaq Machine 3 4,884 Management 

9-Oct-03 11898 C T. Avery Dell Latitude C840 laptop 3 4,860 Split 9-Oct-03 11903 C J. Kelly Dell Latitude C840 laptop 3 4,860 Split 

21-Aug-03 11886 C J. Wilson Dell Latitude C840 laptop 3 4,860 Transmission Se

19-Aug-02 n/a S Computer Room Exch. Serv. Licenses (2yr)E-Mail Syst 3 4,847 Split 

29-Aug-01 11169 C Computer Room PowerEdge 2550, Pentium III 3 4,814 Split 29-Aug-01 11170 C Computer Room PowerEdge 2550, Pentium III 3 4,814 Split 29-Aug-01 11171 C Computer Room PowerEdge 2550, Pentium III 3 4,814 Split 

01-Jul-00 10912 C 12th Floor Color Printer 3 4,806 Management 

Asset_BV>4,000 Exhibit 4 
Southwest Power Pool, Inc.

Date Acquired

ID 

Number C/F/S Location Description Life (Yrs)

12/31/2003 

Ending Cost Function 

Fixed Assets and Depreciation as of 12/31/2003

24-Jun-03 11867 C K. Tynes Dell Latitude C840 laptop 3 4,802 Transmission Se

07-Mar-01 11019 C Scheduling Agent CISCO Switch-OATI (off site) 3 4,776 TSP Support 

01-Dec-00 10972 C 8-IT Lab Laptop 3 4,738 Split 

01-Mar-97 10282 C K. Moran Laptop -Dell Latitude 166 3 4,664 Split 24-Mar-97 F Computer Room Carpet 5 4,627 Split 

01-May-01 11077 C Training Center Projector 3 4,622 Management 

28-Aug-03 11890 C Computer Room PowerEdge 2650 Server 3 4,617 Market 28-Aug-03 11891 C Computer Room PowerEdge 2650 Server 3 4,616 Market 15-Dec-00 S Engineering U. S. AutoCad 3 4,550 Reliability 

16-May-01 S Remote Site Firewall Software 3 4,514 Split 

01-Jun-98 10164 C 7-Telecom Room Telephone System Upgrade 3 4,512 Management 

31-Aug-01 11195 C Computer Room Firewall Servers 3 4,452 Split 31-Aug-01 11196 C Computer Room Firewall Servers 3 4,452 Split 31-Aug-01 11197 C Computer Room Firewall Servers 3 4,452 Split 

25-Jan-01 10975 C R. Dillon Workstation 3 4,358 Market 25-Jan-01 10977 C A. Ralls Workstation 3 4,358 Split 

01-Sep-00 10966 C N. Brown Laptop 3 4,334 Management 01-Aug-99 10561 C Computer Room ARS Test Machine 3 4,307 Regional Reliabi

01-Apr-98 10152 C Computer Room Tape Drive 3 4,305 Split 

01-Feb-91 10079 C Training Center proxima versacolor 3 4,305 Management 

22-Oct-03 11909 C J. Rooker Dell 2.4GB MiniTower 3 4,297 Transmission Se

22-Oct-03 11912 C B. Lux Dell 2.4GB MiniTower 3 4,297 Transmission Se

23-May-01 F Computer Room Hardware boards 5 4,280 Split 

2/6/2003 11395 C J. Mills Dell Precision 350 Workstation 3 4,208 Transmission Se

03-Sep-97 10378 C Security Center Raised Flooring for Sec. Ctr. Lease #3 3 4,160 Split 

01-Aug-01 11146 C Computer Room Cabinet - 4100 M Series 3 4,145 Split 

14-Jan-94 10142 C J. Keaton Dell 450/lbase 3 4,100 Split 

08-Dec-99 10603 C 9th Floor HP Printer 3 4,096 Management 

23-Jul-03 11870 F Outside Generator Steps & Platform to Gen. Door 5 4,090 Reliability 

27-Feb-95 10251 C R. Turner Dell 575/XL w/ 17" monitor 3 4,080 Split 

16-Jan-01 F Computer Room Raised Floor 5 4,066 Split 30-Jan-02 11241 C Kevin Goolsby PC 3 4,017 Transmission Se

6-Nov-03 11950 C Training Room Dell 3200 MP Projector 3 4,016 Market 

Assets < 4,000 1,261,768

33,275,131

Asset_BV>4,000 Exhibit 4 
Sum of 12/31/2003 Ending Cost Function

Project Management Market Reliability Split Transmission Service Provision TSP Support Re

Re

Administration $1,035,567.98 $AEP Project $44,095.00 Business Continuity $259,690.27 Business Systems $168,171.56 Computer Room Expansion $1,246,447.20 Control Room Infrastructure $26,200.00 $631,476.35 $42,666.00 EMS Enhancements $1,621,434.78 $444,803.38 EMS Implementation $2,692,652.00 $36,500.00 Enhance Energy Scheduling $2,727,441.62 Enterprise Security $39,841.00 $273,106.12 $55,031.00 IT Architecture $196,139.06 Market Systems $20,814,257.75 OASIS $637,794.32 Operating Reserve Sharing $85,402.00 Transmission Planning $166,950.00 Grand Total $1,243,580.54 $20,840,457.75 $4,826,129.05 $2,828,472.11 $736,920.32 $2,770,107.62 $

SPP Fixed Assets by Function Exhibit 4 
Sum of 2004 Budget Function

Project2 Management Market Reliability Split Transmission Service Provision TSP Support Re

Re

Administration $1,297,438.00 Business Continuity $804,125.00 Computer Room Expansion $308,040.00 EMS Enhancements $218,000.00 Enhance Energy Scheduling $7,500.00 Enterprise Security $49,085.00 $71,976.00 Market Systems $12,859,320.00 OASIS $211,775.00 Transmission Planning $53,000.00 Grand Total $1,346,523.00 $12,859,320.00 $1,075,125.00 $380,016.00 $211,775.00 $7,500.00 

SPP 2004 Capital Budget Exhibit 4 
Period

Prior Rent per 

Month

Scheduled 

Rate Increase Current Rent Rate 

Total Rent 

for the 

Period

Annual 

Cost per 

Sq. Ft.

Jan-Sept. 2003 47,625 - 428,629 15.13 $ 

Oct 2003-Oct. 2004 47,625 3% 49,054 588,651 15.58 $ 

Oct 2004-Oct. 2005 49,054 3% 50,526 606,311 16.05 $ 

Oct. 2005 - Oct. 2006 50,526 3% 52,042 624,500 16.53 $ 

Oct. 2006-Oct. 2007 52,042 3% 53,603 643,235 17.03 $ 

Oct. 2007-Oct. 2008 53,603 3% 55,211 662,532 17.54 $ 

Oct. 2008 - Oct. 2009 55,211 3% 56,867 682,408 18.07 $ 

Oct. 2009 - Oct 2010 56,867 3% 58,573 702,880 18.61 $ 

Oct 2010 - Oct. 2011 58,573 3% 60,331 723,967 19.17 $ 

Total Rent for the REMAINING Life of the Lease 5,663,113

Average MONTHLY Rent for the REMAINING Life of the Lease 53,934

Square Footage Occupied 37,773

Average ANNUAL Cost per Square Foot $ 17.13

SPP Lease Info Exhibit 4 37 of 44
Sum of Op Budget Corporate Function 

Departmental Function Management Markets Regional Reliability Reliability Transmission Service Provider T

ADMINISTRATIVE 2,131,004 BUSINESS APPLICATIONS 29,904 149,519 BUSINESS ARCHITECTURE & STRATEGY 164,471 BUSINESS INFRASTRUCTURE 938,693 BUSINESS PROJECT MANAGEMENT 29,904 

CHANGE MANAGEMENT 224,278 COMPLIANCE 359,519 CORPORATE AFFAIRS 59,380 

CUSTOMER RELATIONS 104,663 EMS APPLICATIONS 608,248 598,076 ENGINEERING MANAGEMENT 261,658 74,759 FINANCE & ACCOUNTING 680,313 FINANCIAL ANALYSIS & PROCESS IMPROVEMENT 149,519 GOVERNMENT RELATIONS 74,760 

HUMAN RESOURCES 323,039 INTERCONNECTION ENGINEERING 

299,039

IT MANAGEMENT 350,567 LEGAL 284,278 MARKET ANALYSIS 898,077 MARKET MANAGEMENT 336,417 MARKET OPERATIONS 7,504,604 MARKET SUPPORT 1,995,278 MEMBER RELATIONS 44,856 

NETWORK MODELS 74,759 1,033,798 OFFICE & FACILITIES 378,797 OPERATIONS ENGINEERING 441,082 37,380 299,039 

OPERATIONS MANAGEMENT 52,332 

REGIONAL SUPPORT & SCHEDULING 74,760 

RELIABILITY AUTHORITY 2,003,630 37,380 

RELIABILITY ENGINEERING 299,039 SCHEDULING 

149,519 

SETTLEMENTS 550,557 447,755 TARIFF ADMINISTRATION 299,039 50,080 1,793,429 TECH SUPPORT 74,759 283,283 

 

TRAINING 74,759 74,759 TRANSMISSION ENGINEERING 

598,077

TRANSMISSION PLANNING 

1,179,532

TRANSMISSION POLICY 743,037 

998,557

TREASURY 14,952 

Grand Total 7,414,203 11,359,692 1,007,677 5,614,160 5,343,181 

 

SPP 2004 Operating Budget Table Exhibit 4 
SPP Raw Operating Budget Data

Salary, Travel, 

Meetings, Comm NERC

 

Personnel Corporate Function Departmental Function Op Budget FTEs 800,000 19,291,638 

Accounting Management ADMINISTRATIVE 149,519 1 0.71% 

137,797 

Accounting Management FINANCE & ACCOUNTING 598,077 4 2.86% 

551,190 

Accounting Management FINANCIAL ANALYSIS & PROCESS IMPROVEMENT 149,519 1 0.71% 

137,797 

Accounting Markets SETTLEMENTS 550,557 3 2.14% 

413,392 

Accounting Transmission Service Provider BUSINESS APPLICATIONS 149,519 1 0.71% 

137,797 

Accounting Transmission Service Provider SETTLEMENTS 299,039 2 1.43% 

275,595 

AEP Project Management TARIFF ADMINISTRATION 299,039 2 1.43% 

275,595 

Applications Management IT MANAGEMENT 149,519 1 0.71% 

137,797 

Applications Markets MARKET SUPPORT 373,798 2.5 1.79% 

344,494 

Applications Reliability EMS APPLICATIONS 448,557 3 2.14% 

413,392 

Applications Reliability NETWORK MODELS 734,759 0.5 0.36% 

68,899 

Applications Transmission Service Provider EMS APPLICATIONS 608,248 0.5 0.36% 

68,899 

Applications Transmission Service Provider NETWORK MODELS 74,759 0.5 0.36% 

68,899 

Applications Transmission Service Provider SETTLEMENTS 74,759 0.5 0.36% 

68,899 

Applications Transmission Service Provider TARIFF ADMINISTRATION 373,798 2.5 1.79% 

344,494 

Applications TSP Support SCHEDULING 299,039 2 1.43% 

275,595 

Bruce Rew Management ENGINEERING MANAGEMENT 74,759 0.5 0.36% 

68,899 

Bruce Rew Management TRANSMISSION POLICY 518,759 0.5 0.36% 

68,899 

Carl Monroe Management ADMINISTRATIVE 37,380 0.25 0.18% 

34,449 

Carl Monroe Management IT MANAGEMENT 37,380 0.25 0.18% 

34,449 

Carl Monroe Management OPERATIONS MANAGEMENT 37,380 0.25 0.18% 

34,449 

Carl Monroe Markets MARKET OPERATIONS 37,380 0.25 0.18% 

34,449 

Cheryl Robertson Management ADMINISTRATIVE 149,519 1 0.71% 

137,797 

Customer Service Management ADMINISTRATIVE 14,952 0.1 0.07% 

13,780 

Customer Service Markets MARKET SUPPORT 254,183 1.7 1.21% 

234,256 

Customer Service Reliability RELIABILITY AUTHORITY 14,952 0.1 0.07% 

13,780 

Customer Service Transmission Service Provider TARIFF ADMINISTRATION 299,039 2 1.43% 

275,595 

Customer Service TSP Support SCHEDULING 14,952 0.1 0.07% 

13,780 

HR Management ADMINISTRATIVE 528,137 3 2.14% 

413,392 

HR Management HUMAN RESOURCES 323,039 2 1.43% 

275,595 

Infrastructure Management BUSINESS INFRASTRUCTURE 619,702 4 2.86% 

551,190 

Infrastructure Management IT MANAGEMENT 96,384 0.5 0.36% 

68,899 

Infrastructure Markets MARKET SUPPORT 208,524 1.25 0.89% 

172,247 

Infrastructure Reliability TECH SUPPORT 208,524 1.25 0.89% 

172,247 

Infrastructure Transmission Service Provider SETTLEMENTS 59,005 0.25 0.18% 

34,449 

Infrastructure Transmission Service Provider TARIFF ADMINISTRATION 59,005 0.25 0.18% 

34,449 

Infrastructure TSP Support TECH SUPPORT 96,409 0.5 0.36% 

68,899 

Jeff Price Transmission Service Provider TRANSMISSION POLICY 699,519 1 0.71% 

137,797 

Karen Thomas Management ADMINISTRATIVE 112,139 0.75 0.54% 

103,348 

Karen Thomas Markets MARKET SUPPORT 37,380 0.25 0.18% 

34,449 

Katie Duncan Management TRAINING 74,759 0.5 0.36% 

68,899 

Katie Duncan Markets TRAINING 74,759 0.5 0.36% 

68,899 

Keith Dover Management ADMINISTRATIVE 74,759 0.5 0.36% 

68,899 

Keith Dover Management CHANGE MANAGEMENT 74,759 0.5 0.36% 

68,899 

Kevin Perry Management BUSINESS APPLICATIONS 29,904 0.2 0.14% 

27,559 

Kevin Perry Management BUSINESS ARCHITECTURE & STRATEGY 44,856 0.3 0.21% 

41,339 

Kevin Perry Management BUSINESS INFRASTRUCTURE 14,952 0.1 0.07% 

13,780 

Kevin Perry Management BUSINESS PROJECT MANAGEMENT 29,904 0.2 0.14% 

27,559 

Kevin Perry Management IT MANAGEMENT 29,904 0.2 0.14% 

27,559 

Lanny Nickell Management OPERATIONS MANAGEMENT 14,952 0.1 0.07% 

13,780 

Lanny Nickell Regional Reliability REGIONAL SUPPORT & SCHEDULING 44,856 0.3 0.21% 

41,339 

Lanny Nickell Reliability OPERATIONS ENGINEERING 29,904 0.2 0.14% 

27,559 

Lanny Nickell Reliability RELIABILITY AUTHORITY 829,904 0.2 0.14% 800,000 27,559 

Lanny Nickell Transmission Service Provider TARIFF ADMINISTRATION 14,952 0.1 0.07% 

13,780 

Lanny Nickell TSP Support SCHEDULING 14,952 0.1 0.07% 

13,780 

Laurie Guinn Management LEGAL 149,519 1 0.71% 

137,797 

SPP Raw Operating Budget Data Exhibit 4 
SPP Raw Operating Budget Data

Salary, Travel, 

Meetings, Comm NERC

 

Personnel Corporate Function Departmental Function Op Budget FTEs 800,000 19,291,638 

Les Dillahunty Management ENGINEERING MANAGEMENT 37,380 0.25 0.18% 

34,449 

Les Dillahunty Management GOVERNMENT RELATIONS 37,380 0.25 0.18% 

34,449 

Les Dillahunty Management TRANSMISSION POLICY 74,759 0.5 0.36% 

68,899 

Market Dev and Analysis Markets MARKET ANALYSIS 898,077 4 2.86% 

551,190 

Market Dev and Analysis Markets MARKET MANAGEMENT 74,759 0.5 0.36% 

68,899 

Market Dev and Analysis Markets MARKET OPERATIONS 6,420,591 0.5 0.36% 

68,899 

Market Dev and Analysis Markets MARKET SUPPORT 149,519 1 0.71% 

137,797 

Market Operations Markets MARKET OPERATIONS 1,046,633 7 5.00% 

964,582 

Nick Brown Management ADMINISTRATIVE 989,839 0.75 0.54% 

103,348 

Nick Brown Management GOVERNMENT RELATIONS 37,380 0.25 0.18% 

34,449 

Ops Engineering Regional Reliability OPERATIONS ENGINEERING 37,380 0.25 0.18% 

34,449 

Ops Engineering Reliability OPERATIONS ENGINEERING 411,178 2.75 1.96% 

378,943 

Ops Engineering Transmission Service Provider OPERATIONS ENGINEERING 299,039 2 1.43% 

275,595 

Ops Engineering Reliability EMS APPLICATIONS 149,519 1 0.71% 

137,797 

Ops Engineering Reliability NETWORK MODELS 299,039 2 1.43% 

275,595 

Pat Bourne Management TRANSMISSION POLICY 149,519 1 0.71% 

137,797 

Planning Regional Reliability RELIABILITY ENGINEERING 299,039 2 1.43% 

275,595 

Planning Reliability ENGINEERING MANAGEMENT 74,759 0.5 0.36% 

68,899 

Planning Reliability TRANSMISSION PLANNING 1,179,532 6.5 4.64% 

895,683 

Reliability Coor Regional Reliability RELIABILITY AUTHORITY 37,380 0.25 0.18% 

34,449 

Reliability Coor Reliability RELIABILITY AUTHORITY 1,009,255 6.75 4.82% 

930,133 

Richard Dillon Markets MARKET MANAGEMENT 149,519 1 0.71% 

137,797 

RJ Robertson Management CUSTOMER RELATIONS 104,663 0.7 0.50% 

96,458 

RJ Robertson Management MEMBER RELATIONS 44,856 0.3 0.21% 

41,339 

Ron Ciesiel Regional Reliability COMPLIANCE 359,519 1 0.71% 

137,797 

Roy Sundman Transmission Service Provider TRANSMISSION POLICY 149,519 1 0.71% 

137,797 

Scheduling Regional Reliability SCHEDULING 149,519 1 0.71% 

137,797 

Scheduling TSP Support SCHEDULING 1,426,633 7 5.00% 

964,582 

Security Management BUSINESS ARCHITECTURE & STRATEGY 119,615 0.8 0.57% 

110,238 

Security Management BUSINESS INFRASTRUCTURE 304,039 2 1.43% 

275,595 

Security Management OFFICE & FACILITIES 154,519 1 0.71% 

137,797 

Security Regional Reliability REGIONAL SUPPORT & SCHEDULING 29,904 0.2 0.14% 

27,559 

Sherry Jensen Management ENGINEERING MANAGEMENT 149,519 1 0.71% 

137,797 

Stacy Duckett Management ADMINISTRATIVE 37,380 0.25 0.18% 

34,449 

Stacy Duckett Management CORPORATE AFFAIRS 59,380 0.25 0.18% 

34,449 

Stacy Duckett Management LEGAL 134,759 0.5 0.36% 

68,899 

Tariff Administration Regional Reliability TARIFF ADMINISTRATION 50,080 0.25 0.18% 

34,449 

Tariff Administration Transmission Service Provider TARIFF ADMINISTRATION 1,009,255 6.75 4.82% 

930,133 

Tariff Studies Transmission Service Provider INTERCONNECTION ENGINEERING 299,039 2 1.43% 

275,595 

Tariff Studies Transmission Service Provider TRANSMISSION ENGINEERING 598,077 4 2.86% 

551,190 

Tariff Studies Transmission Service Provider TRANSMISSION POLICY 149,519 1 0.71% 

137,797 

Tech Development Management CHANGE MANAGEMENT 149,519 1 0.71% 

137,797 

Tech Development Management IT MANAGEMENT 37,380 0.25 0.18% 

34,449 

Tech Development Markets MARKET MANAGEMENT 112,139 0.75 0.54% 

103,348 

Tech Development Markets MARKET SUPPORT 747,596 5 3.57% 

688,987 

Telecomm Management OFFICE & FACILITIES 224,278 1.5 1.07% 

206,696 

Telecomm Reliability TECH SUPPORT 74,759 0.5 0.36% 

68,899 

Telecomm Transmission Service Provider TECH SUPPORT 74,759 0.5 0.36% 

68,899 

Telecomm TSP Support TECH SUPPORT 74,759 0.5 0.36% 

68,899 

Tom Dunn Management ADMINISTRATIVE 37,380 0.25 0.18% 

34,449 

Tom Dunn Management FINANCE & ACCOUNTING 82,236 0.55 0.39% 

75,789 

Tom Dunn Management TREASURY 14,952 0.1 0.07% 

13,780 

Tom Dunn Transmission Service Provider SETTLEMENTS 14,952 0.1 0.07% 

13,780 

Training Markets MARKET SUPPORT 224,278 1.5 1.07% 

206,696 

Training Reliability RELIABILITY AUTHORITY 149,519 1 0.71% 

137,797 

Training Transmission Service Provider TARIFF ADMINISTRATION 37,380 0.25 0.18% 

34,449 

SPP Raw Operating Budget Data Exhibit 4 
SPP Raw Operating Budget Data

Salary, Travel, 

Meetings, Comm NERC

 

Personnel Corporate Function Departmental Function Op Budget FTEs 800,000 19,291,638 

Training TSP Support SCHEDULING 37,380 0.25 0.18% 

34,449 

SPP Raw Operating Budget Data Exhibit 4 
Sum of FTEs Corporate Function

Departmental Function Management Markets Regional Reliability Reliability Transmission Service Provider T

ADMINISTRATIVE 7.85 BUSINESS APPLICATIONS 0.2 1 BUSINESS ARCHITECTURE & STRATEGY 1.1 BUSINESS INFRASTRUCTURE 6.1 BUSINESS PROJECT MANAGEMENT 0.2 CHANGE MANAGEMENT 1.5 COMPLIANCE 1 CORPORATE AFFAIRS 0.25 CUSTOMER RELATIONS 0.7 EMS APPLICATIONS 4 0.5 ENGINEERING MANAGEMENT 1.75 0.5 FINANCE & ACCOUNTING 4.55 FINANCIAL ANALYSIS & PROCESS IMPROVEMENT 1 GOVERNMENT RELATIONS 0.5 HUMAN RESOURCES 2 INTERCONNECTION ENGINEERING 2 IT MANAGEMENT 2.2 LEGAL 1.5 MARKET ANALYSIS 4 

MARKET MANAGEMENT 2.25 MARKET OPERATIONS 7.75 MARKET SUPPORT 13.2 MEMBER RELATIONS 0.3 NETWORK MODELS 2.5 0.5 OFFICE & FACILITIES 2.5 OPERATIONS ENGINEERING 0.25 2.95 2 OPERATIONS MANAGEMENT 0.35 REGIONAL SUPPORT & SCHEDULING 0.5 RELIABILITY AUTHORITY 0.25 8.05 RELIABILITY ENGINEERING 2 SCHEDULING 1 SETTLEMENTS 3 2.85 TARIFF ADMINISTRATION 2 0.25 11.85 TECH SUPPORT 1.75 0.5 TRAINING 0.5 0.5 TRANSMISSION ENGINEERING 4 TRANSMISSION PLANNING 6.5 TRANSMISSION POLICY 2 3 TREASURY 0.1 Grand Total 39.15 30.7 5.25 26.25 28.2 

SPP FTEs per Department Exhibit 4 
WestConnect
2003 Total 2004 Total 2005 Total 2006 Total 2007 Total 2008 Total 2009 Total 2010 Total 2011 Total 

Interim Committee Expenses Board Search Expenses $0 $0 $0 $0 $450,000 $0 $0 $0 $0 

 CEO/Executive Search Expenses $18,000 $0 $0 $0 $700,000 $0 $0 $0 $0  Office Space approx. 1000 sq. ft. $0 $36,000 $36,000 $36,000 $21,000 $0 $0 $0 $0  Administrative $12,000 $24,000 $24,000 $24,000 $9,000 $0 $0 $0 $0 Total Interim Committee Expenses $30,000 $60,000 $60,000 $60,000 $1,180,000 $0 $0 $0 $0 WestConnect Board Expenses

Retention Fees $0 $0 $0 $0 $175,000 $175,000 $175,000 $175,000 $0 

Meeting Fees $0 $0 $0 $0 $24,000 $32,000 $32,000 $32,000 $8,000 Meeting and Travel Expenses $0 $0 $0 $0 $39,000 $52,000 $52,000 $52,000 $13,000 D & O Insurance $0 $0 $0 $0 $225,000 $300,000 $300,000 $300,000 $75,000 

Total Board Expenses $0 $0 $0 $0 $463,000 $559,000 $559,000 $559,000 $96,000 Tariff Filing Consultanting $100,000 $280,000 $100,000 $100,000 $90,000 $0 $0 $0 $0 

Systems $0 $60,000 $60,000 $100,000 $0 $0 $0 $0 

 RFP Process & Contract $0 $0 $0 $0 $240,000 $0 $0 $0 $0  SSG-WI Expemses $180,000 $120,000 $40,000 $40,000 $270,000 $0 $0 $0 $0  Website $4,800 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 Total Outside Consultant Expenses $284,800 $404,000 $204,000 $204,000 $704,000 $4,000 $4,000 $4,000 $4,000 WestConnect Building

Lease (07 temp. facilities) $0 $0 $0 $0 $180,000 $1,500,000 $1,500,000 $1,500,000 $1,500,000 

 Prepare Facilities (Renovate/, I/C & UP $0 $0 $0 $0 $0 $13,500,000 $456,000 $456,000 $114,000 

On going Operating Expense $0 $0 $0 $0 $0 $456,000 $0 $0 $0 Furniture $0 $0 $0 $0 $60,000 $0 $0 $0 $0 

Total Facility Expenses $0 $0 $0 $0 $240,000 $15,456,000 $1,956,000 $1,956,000 $1,614,000 WestConnect Operations

Operations Software/Hardware $0 $0 $0 $0 $0 $16,000,000 $12,000,000 $16,000,000 $0 

 Communications between W/C and PT $0 $0 $0 $0 $0 $1,650,000 $2,200,000 $550,000 $150,000 

Total Operations Systems Expenses $0 $0 $0 $0 $0 $17,650,000 $14,200,000 $16,550,000 $150,000 Staff Expenses Project Manager Expenses $336,000 $336,000 $336,000 $336,000 $84,000 $0 $0 $0 $0  Staffing $1,204,000 $3,408,000 $3,929,000 $17,545,000 $7,194,000  Procurement Project Manager (1) $0 $0 $0 $0 $0 $0 $0 $0  Relocation $0 $0 $0 $0 $340,000 $0 $700,000 $1,200,000 $0 

$0 $0

Total Staff Expenses $336,000 $336,000 $336,000 $336,000 $1,628,000 $3,408,000 $4,629,000 $18,745,000 $7,194,000 

$0 $0

Miscellaneous ExpensesLegal $0 $0 $0 $0 $3,600,000 $3,600,000 $3,600,000 $3,600,000 $900,000 Corporation Financial Reserve $0 $0 $0 $0 $8,000,000 $0 $0 $0 $0 Project Contingency $0 $0 $0 $0 $10,000,000 $0 $0 $0 $0 Dues, licensing, insurance $0 $0 $0 $0 $4,000,000 $4,000,000 $4,000,000 $4,000,000 $0 Total Misc. Expenses $0 $0 $0 $0 $25,600,000 $7,600,000 $7,600,000 $7,600,000 $900,000 Total Expenses $650,800 $800,000 $600,000 $600,000 $29,815,000 $44,677,000 $28,948,000 $45,414,000 $9,958,000 

WestConnect Projections Exhibit 4 
Exhibit 5 
Moody's

Five Year Seven Year Long-term

Prime Treasury Treasury Aaa

Rate Notes Notes Bond Rate

1989 10.87 8.50 8.52 9.26

1990 10.01 8.37 8.52 9.32

1991 8.46 7.37 7.68 8.77

1992 6.25 6.19 6.63 8.14

1993 6.00 5.14 5.54 7.22

1994 7.15 6.69 6.91 7.97

1995 8.83 6.38 6.50 7.59

1996 8.27 6.18 6.34 7.37

1997 8.44 6.22 6.33 7.27

1998 8.35 5.15 5.28 6.53

1999 8.00 5.55 5.79 7.05

2000 9.23 6.16 6.20 7.62

2001 6.91 4.56 4.88 7.08

2002 4.67 3.82 4.30 6.49

2003 4.12 2.97 3.52 5.66

15 Year Avg 7.70 5.95 6.20 7.56

Basis spread 0.00 1.75 (1) 1.75 (1) 0.00

Total 7.70 7.70 7.95 7.56

(1) In Docket No. ES02-53-000, Midwest Independent Transmission System Operator, Inc., 

application to issue securities the pricing of the interest rate was based on the market rate of 

comparable term U.S. Treasury on the date of pricing, plus a spread that of 150 to 200 basis points. 

Consequently, for the above calculation we picked the mid-range of 175 basis points.

Source: Federal Reserve Board

Debt Interest Rates 

15 Year Average

15 Year Avg Exhibit 5 1 of 4
Moody's

Five Year Seven Year Long-term

Prime Treasury Treasury Aaa

Rate Notes Notes Bond Rate

1994 7.15 6.69 6.91 7.97

1995 8.83 6.38 6.50 7.59

1996 8.27 6.18 6.34 7.37

1997 8.44 6.22 6.33 7.27

1998 8.35 5.15 5.28 6.53

1999 8.00 5.55 5.79 7.05

2000 9.23 6.16 6.20 7.62

2001 6.91 4.56 4.88 7.08

2002 4.67 3.82 4.30 6.49

2003 4.12 2.97 3.52 5.66

10 Year Avg 7.40 5.37 5.61 7.06

Basis spread 0.00 1.75 (1) 1.75 (1) 0.00

Total 7.40 7.12 7.36 7.06

(1) In Docket No. ES02-53-000, Midwest Independent Transmission System Operator, Inc., 

application to issue securities the pricing of the interest rate was based on the market rate of 

comparable term U.S. Treasury on the date of pricing, plus a spread that of 150 to 200 basis points. 

Consequently, for the above calculation we picked the mid-range of 175 basis points.

Source: Federal Reserve Board

Debt Interest Rates 

10 Year Average

10 Year Avg Exhibit 5 2 of 4
Moody's

Five Year Seven Year Long-term

Prime Treasury Treasury Aaa

Rate Notes Notes Bond Rate

1999 8.00 5.55 5.79 7.05

2000 9.23 6.16 6.20 7.62

2001 6.91 4.56 4.88 7.08

2002 4.67 3.82 4.30 6.49

2003 4.12 2.97 3.52 5.66

5 Year Avg 6.59 4.61 4.94 6.78

Basis spread 0.00 1.75 (1) 1.75 (1) 0.00

Total 6.59 6.36 6.69 6.78

(1) In Docket No. ES02-53-000, Midwest Independent Transmission System Operator, Inc., 

application to issue securities the pricing of the interest rate was based on the market rate of 

comparable term U.S. Treasury on the date of pricing, plus a spread that of 150 to 200 basis points. 

Consequently, for the above calculation we picked the mid-range of 175 basis points.

Source: Federal Reserve Board

Debt Interest Rates 

5 Year Average

5 Year Average Exhibit 5 3 of 4
Weighted 

Outstanding Average

12/31/2003 Ratio Rate Rate

Short-term Debt 0 0.000 0 0

Long-Term Debt:

Senior Notes $66,521,000 0.466 7.163 3.34 

Project Development Facility - Variable Rate 76,129,000 0.534 3.200 (1) 1.71 

$142,650,000 1.000 5.05 

Weighted 

Outstanding Average

12/31/2003 Ratio Rate Rate

Short-term Debt $5,000,000 0.024 1.670 0.04 

Long-Term Debt:

8.75 % Series Senior Notes $99,667,000 0.485 8.750 4.24 

4.69 % Series Senior Notes 100,000,000 0.486 4.690 2.28 

National Cooperative Services Corp. Variable Rate 887,498 0.004 3.000 (1) 0.01 

$200,554,498 6.52 

Total Debt

$205,554,498 1.000 6.56 

(1) Variable rate debt - used rate on December 31, 2003 in the above calculations.

RTO Debt Outstanding

As of December 31, 2003

PJM

Midwest Independent Transmission System Operator, Inc.

PJM - MISO Debt Exhibit 5 4 of 4
Exhibit 6 




 Exhibit 6 

General Comment: With the exception of the SEARUC study, which looks at several benchmarks that c

actual costs, the studies summarized below do not break start-up RTO costs into their component costs. studies do provide useful upper and lower bounds of costs projected and experienced by other RTOs and 

indication of the range within which WestConnect’s costs are likely to be discussed. Northeast RTO Costs and Benefits Assessment, ISO New England and New York ISO, May 14, 2002. 

Summary of Implementation Costs by Action Table ES-5, p.9 NERTO Actions Cost (Millions $) Explanation 

Costs of RTO formation and Organizational Integration 

35 - 60 

Standardize Markets/Eliminate Seams 

NA Costs already committed 

independently of NERTO (SMD 1.0 in NE and SMD 2.0 in NYISO) 

Eliminate Export Fees (Own: Not a startup cost) 

NA Estimated Transmission 

owner revenue losses of $36 million in NY and $14 million must be recovered elsewhere 

Single Dispatch 85-100 Cost of single dispatch 

solution 
 Exhibit 6 

The Benefits and Costs of Regional Transmission Organizations and Standard Market Design in the Sou

the Southeastern Association of Regulatory Utility Commissioners, Prepared by Charles River AssociateSystems Energy Consulting), November 6, 2002. Section II. B. Pgs. 22- 24. Costs are based on estimates supplied by the RTOs. 

• “Day 1” RTO start-up costs are implementation costs short of SMD implementation. 

• “Day 2” Costs are those of implementing SMD 

The cost breakdown for GridSouth and GridFlorida were based on more detailed costs provided by Grid

assumes similar costs for GridSouth (which did not provide detailed costs) as for GridFlorida. Takes mid

potential costs provided by SeTrans (range for Day 1 costs of $145 -170 million and Day 2 costs of $55-The studies assume no offsetting savings in transmission costs at the utilities as certain utilities estimate

from elimination of functions and others small incremental costs associated with additional interaction w

The analysis also considered whether there would be different costs should one Combined RTO be estab

region. “Conservatively” it was assumed that start-up costs would be the same as if three separate RTOs though O&M expenses would be lower for the combined RTO. 
 Exhibit 6 

Table 1 RTO Start-up and Operating Costs (in $mm of dollars, except as otherwise noted)

 GridSouth GridFlorida SeTrans Total of 3 

RTOs 

1 Combined 

RTO 

Without SMD 1 Time Start-Up Costs 

186 186 158 530 530 

Annual O&M 46 46 58 150 95 2005 Revenue Required 

89 89 95 274 217 

$/MWh of Load 0.43 0.45 0.22 0.32 0.26 With SMD 1 Time Start-Up Costs 

244 244 215 703 703 

Annual O&M 60 60 75 195 123 2005 Revenue Required 

118 118 127 362 289 

$/MWh of Load 0.55 0.58 0.28 0.42 0.33 
 Exhibit 6 

RTO West Benefit/Cost Study: Final Report Presented to RTO West Filing Utilities, by Tabors Caramis 

March 11, 2002, Section 4.1. p. 36. The October 2000 “RTO West Potential Benefits and Costs” report estimated the RTO West expected smillion and the annual operating costs at $50 million. They also collected data on actual expenses of 

US and Canada and that data is the table below: 1

1 All Values in $, 

Direct comparisons across regions must be undertaken with care. Some shared regional functions 

responsibilities are handled outside of ISO cost structure. 

Some of startup costs are not reflected or associated with previous tight pool structure and cost re

Cost values actual or projected for 2000 and 2001, except where noted New England annual depreciation and interest costs are accounted for outside of the NE-ISO tarifOntario, PJM, New England and NY values from Ontario IMO Business Plan 2001-2003, No. 20NY ISO transition costs were obtained from the NY ISO Annual Report, 2000 ERCOT values taken from PUC of Texas Docket 23320 filings Alberta values from Transmission Administrator and Power Pool of Alberta Annual Review/Rep

2000, and Cox Report and as provided by EAL professionals 

Ontario startup costs based on 1999 – 2001 capital expenditures from the IMO Business Plan 20ERCOT start-up costs based on 2000 - 2001 capital expenditures from “Year 2001 ERCOT Fund 

Docket 23320 filings 

California data from 2001 and from “Participant Charges at Electricity Exchanges. Pools and ISO

Power Pool of Alberta by Paul Cox (12/29/00) and revised (5/9/01)/ 

PJM represented in several configurations in table each of which used in weighted averages. 
 Exhibit 6 

 Annual 

O&M Costs ($ mm) 

Annual Amortized Depreciation & Interest Costs ($ mms) 

Total Annual Revenue Requirement with Debt & Interest ($ mm) 

Annual Energy (TWh) 

Unit O&M Costs ($/MWh) 

Unit Revenue Requirements ($/MWh) 

Peak Demand 2000 

Trans. Miles 

# FTE Employee

PJM (2000) 70.2 31.6 101.8 256 0.27 0.40 49,417 8,000 384 PJM without PJM West (2002) 

 128.9 256 0.50 8,000 

PJM with PJM West (2002) 

 137.3 314 0.44 13,100 

New York 53.7 6.9 60.6 149 0.36 0.41 30,311 10,800 222 New England 

55.7 55.7 122 0.46 0.46 23,300 7,000 323 

Calif ISO 228.0 270 .084 45,990 25,526 544 ERCOT 44.6 77.4 122.1 281 0.16 0.44 57,606 37,000 250 Alberta TA and SC 

6.3 21.4 54 0.40 7,785 10,540 76 

Ontario 57.6 28.4 86.0 150 0.39 0.58 23.728 18,000 417 Weighted average $/MWh RTO Carrying Cost 0.51 Weighted average $/MWh RTO Carrying Cost without CA ISA 0.45 

• The RTO West study notes that judgment needed to apply resulting benchmarks to RTO West be

o Different base year data was used for each region o Certain attributes of different regions not noted, including that ISO costs may include upgr

have occurred with or without RTO formation, such as regional upgrades, SCADA upgrad

upgrades. 

• The study assumes no parallel savings at any of the TOs or CAOs in the RTO. 

• Costs do not include associated stakeholder participation costs. 

• The study notes that CA is high in startup costs and that without CA that costs are relatively tight

range. 
 Exhibit 6 

While the study also looks at operations of secondary exchanges and schedule coordinate functions but t

not address these costs as it assumes they are not considered Day 1 functions. Report to Congress: Impacts of the FERC’s Proposal for Standard Market Design (and Appendices). DO

Costs to implement SMD, including establishment and operation of RTOs (p.17) are exhibited on a cons

DOE report and shown on an annual basis as an annual revenue requirement. 

• While data is presented for each region of the country it is not broken out between start-up and on

estimates are drawn from other studies. 

Summary table for RTO/SMD costs for 2005 in 2002 dollars Table 3.2 

Region RTO Annual Revenue Requirement 

($MM) 

Annual Generation (TWhs) 

ISO New England 63 130 NY ISO 135 163 PJM 287 702 MISO 155 784 SPP 33 80 RTO West 116 284 WestConnect RTO 34 82 California RTO 234 278 Rocky Mountain 22 54 SeTrans 117 463 GridSouth 109 219 GridFlorida 109 208 TVA 45 177 Total 1,457 3,623 Other Benchmarks: Ontario IMO 85.3 154 ERCOT 121.9 292 Notes to table provided in study, page 18.