Document:

RATE DESIGN AND FUNDS DISBURSEMENT AGREEMENT

 Exhibit 10.2.1.4 
  
 ATTACHMENT 5 
  
 REVISED DISBURSEMENT AGREEMENT 

 RATE DESIGN AND FUNDS DISBURSEMENT AGREEMENT 
  
 This Rate Design and Funds Disbursement Agreement (this “Disbursement
Agreement”), effective as of the Operations Date (the “Effective Date”) is made and entered into by and among [The names of the Initial PTOs will be submitted in a compliance filing prior to the Operations Date.]
(herein collectively referred to as the “Initial Participating Transmission Owners”), along with any Additional Participating Transmission Owners or Independent Transmission Companies (as defined in that Transmission Operating
Agreement (“TOA”) between the Initial Participating Transmission Owners and the ISO New England Inc. (“ISO”)). The Initial Participating Transmission Owners, the Additional Participating Transmission Owners, and the
Independent Transmission Companies are collectively referred to herein as the “Transmission Companies” and individually each is referred to as a “Transmission Company”. All capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the TOA. 
  
 RECITALS 
  
 WHEREAS, each
of the Transmission Companies owns and/or operates certain transmission facilities that are interconnected with the transmission facilities of certain other Transmission Companies within the transmission system operated by the ISO, or otherwise
provides transmission service within the New England Transmission System; 
  
 WHEREAS, the ISO is a regional transmission organization (“RTO”) authorized by the Federal Energy Regulatory Commission (“FERC”) to exercise the functions required of RTOs pursuant to
FERC’s Order No. 2000 and FERC’s RTO regulations; 
  
 WHEREAS, each of the PTOs has entered into the TOA with the ISO, and any ITC will enter into an ITC Agreement with the ISO, whereby the ISO will be the regional transmission provider under the ISO Open Access Transmission Tariff
(“ISO OATT”) of transmission services over the Transmission Facilities of the Transmission Companies (“Transmission Service”); 
  

WHEREAS, the ISO shall invoice transmission customers for regional Transmission Services and remit payments for Invoiced Amounts to the Transmission
Companies in accordance with the TOA; 
  
 WHEREAS, the
Transmission Companies wish to establish the procedures for disbursing to each Transmission Company its proper allotment of the Invoiced Amounts; and 
  
 WHEREAS, the Transmission Companies also wish to establish the procedure for reaching agreement on joint Transmission Company filings relating to rate
design and other provisions of the ISO OATT under Section 205 of the Federal Power Act (“Section 205”). 

 NOW, THEREFORE, in consideration of the promises, and the mutual representations, warranties, covenants
and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, each of the Transmission Companies agrees as follows: 

 

	Article I.	JOINT TRANSMISSION COMPANY FILINGS UNDER SECTION 205 

  
 Section 1.01 Application Authority. As more fully set forth in Sections, 2.05(a), 3.03(d) and 3.04(b) of the TOA and as may be set forth in comparable
provisions of one or more ITC Agreements, the Transmission Companies, acting jointly, shall have the authority to submit filings under Section 205 to amend pro forma interconnection agreements, to establish and amend pro forma
Local Service Agreements, and to establish and to revise the design of the rates and charges for service provided by the Transmission Companies collectively pursuant to which the revenue requirements for all facilities of the Transmission Companies
used for the provision of Transmission Service are recovered (“Regional Transmission Service”). The Transmission Companies may also elect, through the joint exercise of the individual filing rights set forth in Section 3.04(a)
of the TOA and as may be set forth in comparable provisions of one or more ITC Agreements to submit joint filings under Section 205 to establish common terms and conditions applicable to Local Service provided by some or all of the Transmission
Companies. Collectively, all of the joint Section 205 filings described in this Section 1.01 shall be referred to hereafter as “Joint Transmission Company Filings”. 
  
 Section 1.02 Agreement to Joint Transmission Company Filings. 
  

	(a)	Those Transmission Companies supporting a proposed Joint Transmission Company Filing will be authorized to make a joint Section 205 filing upon a vote of the Transmission
Companies approving such a filing that satisfies each of the following criteria: 

  

	 	(i)	Transmission Companies shall have cast Individual Votes in favor of such a proposed Section 205 filing in a number equal to or greater than sixty-five (65) percent of the
aggregate Individual Votes of all the Transmission Companies at the time of voting; 

  

	 	(ii)	A number of Non-Affiliated Transmission Companies that have Supporting Votes that are equal to either (x) fifty percent (50%) of all Non-Affiliated Transmission Companies
or (y) four (whichever is less) shall have cast votes in favor of such a proposed Joint Transmission Company Filing; and 

  

	 	(iii)	The negative vote of a single PTO with Individual Votes equal to thirty-five (35) but not more than fifty (50) percent of the aggregate Individual Vote of the Transmission
Companies shall not cause the filing to be disapproved by the Transmission Companies if the combined Individual Votes of the Transmission Companies voting in favor of the filing are equal to or greater than ninety-five (95) percent of the
Individual Votes of all the remaining Transmission Companies. The negative vote of a single PTO with Individual Votes greater than fifty (50) percent of the aggregate Individual Votes of the Transmission Companies voting shall cause the filing
to be disapproved by the Transmission Companies. 

  

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	(b)	“Non-Affiliated Transmission Companies” as used in this Disbursement Agreement shall mean two or more Transmission Companies that are not Affiliates, as defined in
the TOA. 

  

	(c)	During the Moratorium Period established in Section 3.04(h) of the TOA, the Transmission Companies shall not submit a filing under Section 205 of the Federal Power Act to
modify provisions or schedules of the ISO OATT, including Schedules 9, 11, or 12 of the ISO OATT (or any successor schedules thereto), in a manner that would modify: 

  

	 	(i)	the split between PTF and Non-PTF Transmission Facilities in effect prior to the Operations Date for purposes of allocating costs to Transmission Customers;

  

	 	(ii)	the methodology by which the costs of Transmission Upgrades related to generator interconnections are regionally allocated; or 

  

	 	(iii)	the methodology by which the costs of New Transmission Facilities and Transmission Upgrades are regionally allocated under the ISO OATT. 

  

	(d)	The PTO Administrative Committee shall, on the joint behalf of the Transmission Companies, give notice to the ISO of Transmission Company meetings and agendas related to rate design
filings. For purposes of taking actions under this Disbursement Agreement, a Transmission Company that is an ITC shall have the right to participate in the PTO Administrative Committee under the same terms and conditions as a Participating
Transmission Owner. Any meetings of the PTO Administrative Committee or votes taken by the Transmission Companies for purposes of taking actions under this Disbursement Agreement shall be subject to the scheduling, notice, quorum and other
requirements set forth in Schedule 11.04 of the TOA. 

  

	(e)	Each Transmission Company, including each participating ITC, if any, reserves the right to protest or file a complaint concerning any Section 205 filing made pursuant to this
Agreement. 

  

	Article II.	FUNDS DISBURSEMENT 

  
 Section 2.01 Disbursement of Transmission Revenues. The Transmission Companies agree that payments made to the ISO for Invoiced Amounts shall be divided among the Transmission Companies in accordance with
this Section 2.01. For the purposes of this Section 2.01, capitalized terms used herein and not otherwise defined herein or in the TOA shall have the meanings assigned to such terms in the ISO OATT as in effect as of the Effective Date, or
as may be amended from time to time in Section 205 filings submitted by the Transmission Companies pursuant to Section 1.02(a) and approved or accepted by FERC. 
  

	 	(a)	 Regional Network Service. The revenues received by the ISO for Regional Network Service shall be distributed to the Transmission Companies owning or
supporting PTF in 

  

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proportion to their respective Annual Transmission Revenue Requirements for PTF, as determined in accordance with the ISO OATT, provided that with respect to
VELCO, the revenues distributed for Regional Network Service will not only include distribution for VELCO’s PTF in proportion to their respective PTF Annual Transmission Revenue Requirements, but will also include distribution for HTF in
proportion to these respective HTF Annual Transmission Revenue Requirements, to the extent such revenue requirements are included in the RNS rate pursuant to the ISO Tariff, further provided that VELCO shall redistribute such HTF revenues to the
transmission owners of the HTF in accordance with an agreement between VELCO and the transmission owners of the HTF. 

  

	 	(b)	Through or Out Service Revenues. The revenues received by the ISO for Through or Out Service shall be distributed among the Transmission Companies owning PTF and HTF on the
basis of allocated flows for the transaction determined in accordance with the methodology specified in Exhibit A to this Disbursement Agreement, provided that VELCO shall redistribute such Through or Out Service revenues to the transmission owners
of the HTF in accordance with an agreement between VELCO and the transmission owners of the HTF. 

  

	 	(c)	Scheduling, System Control and Dispatch Service Payments. The revenues received by the ISO pursuant to Schedule 1 of the ISO OATT as in effect from time to time or, if
Schedule 1 ceases to exist, the successor to Schedule 1, to cover the expenses incurred by Transmission Companies for providing Scheduling, System Control and Dispatch Service for transmission service over the PTF shall be allocated each month among
the Transmission Companies whose Local Control Center costs or other costs are reflected in the computation of the surcharge for the service in proportion to the costs for each which are reflected in the computation of the surcharge.

  

	 	(d)	 Redirection of Erroneous Payments. To the extent that any Transmission Company receives payments due to another Transmission Company under the terms of this
Section 2.01, such Transmission Company shall redirect such misdirected payments to the appropriate Transmission Company as soon after discovery of the misdirected payments as practicable, together with an amount equal to the interest accruing
on such misdirected payment from the date of receipt of such payment to the date payment is redirected to the proper recipient at a rate equal to the Overnight Funds Rate for the applicable period; provided, however, that if a Transmission Company
fails to redirect any such misdirected payment within thirty (30) days following the date of discovery by such Transmission Company of such misdirected payment, such Transmission Company shall pay to the proper recipient of the payment, in
addition to the amount of such misdirected payment, an amount equal to the interest accruing on such misdirected payment from the date of receipt of such payment at a rate equal to the applicable Prime Rate plus three percent per annum. Such
Transmission Company shall also provide the proper recipient with notification of the erroneous payments within five (5) business days of discovery of the 

  

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mispayment. For purposes of this Section 2.01(d), the “Overnight Funds Rate” shall mean the inter-bank overnight funds rate.

  

	 	(e)	In the event that the Transmission Companies are required by a Governmental Authority to issue a refund or refunds of such rates and charges, each Transmission Company shall remit
it’s respective share of the refunds, as determined in accordance with the ISO Tariff and the order of the Governmental Authority, to the ISO. 

  

	 	(f)	Application of this Section 2.01. Each Transmission Company shall direct any questions or requests for clarification concerning the application or interpretation of this
Section 2.01 to the PTO Administrative Committee (or such subcommittee as the PTO Administrative Committee shall designate for such purpose) and the directions of the PTO Administrative Committee shall be binding on all parties to this
Agreement. The PTO Administrative Committee (or such subcommittee as the PTO Administrative Committee shall designate for such purpose) shall also respond to any ISO questions or requests for clarification concerning the application or
interpretation of this Section 2.01; provided further that the ISO shall be able to rely upon the decision of the PTO Administrative Committee unless and until it receives notification from the PTO Administrative Committee of reversal of such
direction by any Governmental Authority with jurisdiction over this Agreement. 

  

	Article III.	MISCELLANEOUS 

  
 Section 3.01 This Disbursement Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, including any Independent Transmission Companies
(“ITCs”) formed by a Participating Transmission Owner to the extent the Participating Transmission Owner elects to assign any of its rights and responsibilities hereunder to such an ITC, and no other Persons shall have any rights
herein. No transferee, successor or assign of any Participating Transmission Owner shall have any rights hereunder until notice and evidence of such transfer, succession or assignment has been provided to the Trustee and to the other Transmission
Companies. 
  
 Section 3.02 This Disbursement Agreement may be executed in
one or more counterparts and each of such counterparts shall, for all purposes, be deemed to be an original, but all counterparts together shall constitute one and the same instrument. Signatures sent to the other parties by: (a) personal
delivery thereof, including by a recognized next-day courier service; (b) certified United States mail, postage prepaid, return receipt requested; or (c) facsimile transmission shall be binding as evidence of acceptance of the terms hereof
by such signatory party. 
  
 Section 3.03 Any notice, statement, or other
communication which is required or permitted hereunder shall be in writing and shall be sufficient in all respects if delivered personally or by certified United States mail, postage prepaid, return receipt requested, or by facsimile or by a
recognized next-day courier service, in each case addressed to each Transmission Company at its 

  

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address set forth in Exhibit B. The address of a Transmission Company may be changed from time to time by giving notice in the manner prescribed in this
paragraph. All such notices or communications will be effective (i) upon mailing or transmission, if mailed or sent by facsimile, (ii) upon receipt, if personally delivered, and (iii) on the first Business Day following the date of
dispatch, if delivered by a nationally recognized next-day courier service. 
  
 Section 3.04 This Disbursement Agreement shall be governed by and construed in accordance with the laws of the District of Columbia, including all matters of construction, validity and performance without regard to the
conflicts-of-laws provisions thereof. 
  
 Section 3.05 If any one or more
provisions in this Disbursement Agreement, for any reason, shall be determined to be invalid, illegal, or unenforceable in any respect, the validity, legality and enforceability of any such provision in any other respect and the remaining provisions
of this Disbursement Agreement shall not be in any way impaired. 
  
 Section 3.06 No failure or delay on the part of any party in the exercise of any power or right hereunder shall operate as a waiver thereof. No single or partial exercise of any right or power hereunder shall operate as a waiver of
such right or power or of any other right or power. The waiver by any party of a breach of any provision of this Disbursement Agreement shall not operate or be construed as a waiver of any other or subsequent breach hereunder. Except as otherwise
expressly provided herein, all rights and remedies existing under this Disbursement Agreement are cumulative with, and not exclusive of, any rights or remedies otherwise available. 
  
 Section 3.07 This Disbursement Agreement shall only be subject to modification or amendment as follows; provided, however, that no
amendment that would or could be expected to affect a Transmission Company in a manner which is more adverse than its effect on other Transmission Companies shall be effective with respect to the more adversely affected PTO without the prior written
consent of such PTO, and further provided that no amendment to Section 2.01 of this Disbursement Agreement that would or could be expected to increase the risk of a PTO’s recovery of its revenue requirements shall be effective with respect
to such PTO without the express consent of such PTO. 
  

	(a)	Agreement to Amendment of Articles II and III of this Disbursement Agreement. The Transmission Companies will be deemed to have agreed to an amendment to Articles II and III
of this Disbursement Agreement upon a vote of the Transmission Companies that satisfies each of the following criteria: 

  

	 	(i)	Transmission Companies shall have cast Individual Votes in favor of such amendment in a number equal to or greater than sixty-five (65) percent of the aggregate Individual
Votes of all the Transmission Companies at the time of voting; 

  

	 	(ii)	A number of Non-Affiliated Transmission Companies that have Supporting Votes that are equal to either (x) fifty percent (50%) of all Non-Affiliated Transmission

  

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Companies or (y) four (whichever is less) shall have cast votes in favor of such an amendment; and 

  

	 	(iii)	The negative vote of a single Transmission Company with Individual Votes equal to thirty-five (35) but not more than fifty (50) percent of the aggregate Individual Vote of
the Transmission Companies shall not cause the amendment to fail if the combined Individual Votes of the Transmission Companies voting in favor of the filing are equal to or greater than ninety-five percent (95) of the Individual Votes of all
the remaining Transmission Companies. The negative vote of a single Transmission Company with Individual Votes greater than fifty (50) percent of the aggregate Individual Votes of the Transmission Companies voting shall cause the amendment to
fail. 

  

	(b)	Agreement to Amendment of Article I of this Disbursement Agreement. The Transmission Companies will be deemed to have agreed to an amendment to Article I of this Disbursement
Agreement upon a vote of the Transmission Companies that satisfies each of the following criteria: 

  

	 	(i)	Transmission Companies shall have cast Individual Votes in favor of such amendment in a number equal to or greater than ninety-five (95) percent of the aggregate Individual
Votes of all the Transmission Companies at the time of voting; and 

  

	 	(ii)	A number of Non-Affiliated Transmission Companies that have Supporting Votes that are equal to either (x) seventy percent (70%) of all Non-Affiliated Transmission
Companies or (y) five (whichever is less) shall have cast votes in favor of such an amendment. 

  
 Section 3.08 This Disbursement Agreement contains the entire agreement among the Transmission Companies with respect to the transactions contemplated hereby and
supersedes all prior arrangements or understandings with respect thereto, written or oral. 
  
 Section 3.09 The rights of the parties under this Disbursement Agreement are unique and each party hereto acknowledges that the failure of a party to perform its obligations hereunder would irreparably harm the
other parties hereto. Accordingly, the parties shall, in addition to such other remedies as may be available at law or in equity, have the right to enforce their rights hereunder by actions for specific performance to the extent permitted by law.

  
 Section 3.10 No Transmission Company shall be liable to another
Transmission Company for any incidental, indirect, special, exemplary, punitive or consequential damages, including lost revenues or profits, arising from an alleged breach of this Agreement, even if such damages are foreseeable or the damaged
Transmission Company has advised such Transmission Company of the possibility of such damages and regardless of whether any such damages are deemed to result from the failure or inadequacy of any exclusive or other remedy. 
  

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 Section 3.11 This Disbursement Agreement is not intended to confer any rights or remedies upon any Person other than
the parties hereto and their successors or permitted assigns. 
  
 Section 3.12 Neither this Disbursement Agreement nor any part hereof shall be assigned by any Transmission Company hereto except: (i) to an affiliated corporation of such Transmission Company, provided that such affiliated
corporation shall assume the liabilities of such Transmission Company hereunder and that such transfer shall not operate to relieve such Transmission Company of its liabilities hereunder; (ii) to any Person to whom any or all of such
Transmission Company’s interest in Transmission Facilities or right to operate such Transmission Facilities is transferred, including an ITC, provided that such transferee shall assume the liabilities of the Transmission Company hereunder;
(iii) to any corporation which succeeds to substantially all of the assets of the Transmission Company by acquisition, merger or consolidation and which assumes all of the Transmission Company’s obligations and liabilities hereunder; or
(iv) to any other Transmission Company, provided that such transferee Transmission Company shall assume the liabilities of the transferor Transmission Company hereunder. The Transmission Company’s successors and assigns shall agree to be
bound by the terms of this Disbursement Agreement except that a Transmission Company’s successors and assigns shall not be required to be bound by any obligations hereunder to the extent that the Transmission Company has agreed to retain such
obligations.  
  
 Section 3.13 Each of the parties hereto agrees to
cooperate with the other parties hereto in effectuating this Disbursement Agreement and to execute and deliver such further documents or instruments and to take such further actions as shall be reasonably requested in connection therewith.

  
 Section 3.14 Additional Participating Transmission Owners and any ITC
that is a successor to the rights and responsibilities of a Transmission Company with respect to some or all of such Transmission Company’s Transmission Facilities may become parties to this Disbursement Agreement without any amendment to this
Disbursement Agreement pursuant to Section 3.07 or any consent or approval of the other Transmission Companies. 
  
 Section 3.15 To the extent that this Disbursement Agreement imposes additional obligations or requirements on any Transmission Company relating to subject matters
set forth in the TOA, the Transmission Companies agree to be bound by this Disbursement Agreement. 
  
 Section 3.16 In the event of any dispute among the Transmission Companies concerning the interpretation of this Disbursement Agreement, the Transmission Companies agree to engage in good faith negotiations to
resolve such disputes; provided that nothing in this Disbursement Agreement shall limit the right of any Transmission Company to submit questions of interpretation of this Disbursement Agreement to FERC or a court or agency with jurisdiction over
this Disbursement Agreement upon the conclusion of such negotiations. 
  

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 Section 3.17 If a Transmission Company withdraws from or terminates the TOA, then such Transmission Company shall be
deemed to have withdrawn from or terminated this Agreement at such time as its withdrawal from or termination of the TOA becomes effective. 
  
 Section 3.18 It is not the intention of this Agreement or of the Transmission Companies thereto to confer a third party beneficiary status or rights of action upon
any Person or entity whatsoever other than the Transmission Companies and nothing contained herein, either express or implied, shall be construed to confer upon any Person or entity other than Transmission Companies any rights of actions or remedies
either under this Agreement or in any manner whatsoever. 
  
 Section 3.19 The
Transmission Companies do not intend by this Agreement to create, nor does this Agreement constitute, a joint venture, association, partnership, corporation or an entity taxable as a corporation or otherwise. No express or implied term, provision or
condition of this Agreement shall be deemed to constitute the Transmission Companies as partners or joint venturers. 
  
 Section 3.20 Absent the agreement of the Transmission Companies to any amendment of this Disbursement Agreement pursuant to Section 3.07 hereof, the standard of
review for changes to this Disbursement Agreement proposed by a Transmission Company, a non-party or the Federal Energy Regulatory Commission acting sua sponte shall be the “public interest” standard of review set forth in
United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956) 
  

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 IN WITNESS WHEREOF, the parties hereto have caused their respective hands and seals to be set hereto with
the intention of being bound effective in all respects as of the date and year first herein above written. 
  
 [The names of the Initial PTOs will be submitted in a compliance filing prior to the Operations Date.] 
  

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 EXHIBIT A 
  
 Methodology for Determination of Transmission Flows 
  
 All capitalized terms used in this Exhibit A and not otherwise defined in this Exhibit A shall have the meanings assigned to
such terms in the TOA or, to the extent not defined in the TOA, the ISO OATT. 
  
 The methodology for determining parallel path transmission flows to be used in determining the distribution of revenues received for Through or Out Service is as follows, and shall be determined on the basis of the
flows for the particular transaction (“Transaction Flows”) for the purpose of allocating revenues from the furnishing of Through or Out Service: 
  

	A.	Responsibility for Calculations. The calculation of mega watt mile allocations in accordance with this methodology shall be performed under the direction of the PTO
Administrative Committee (or such subcommittee as the PTO Administrative Committee shall designate for such purpose). 

  

	B.	Periodic Review. Calculations of MW-Mile allocations shall be performed whenever significant changes to the transmission system load flows, as determined by the PTO
Administrative Committee (or such subcommittee as the PTO Administrative Committee shall designate for such purpose), occur. 

  

	C.	Facilities Included in the Analysis 

  

	 	1.	Transmission Lines. A calculation of MW-miles shall be determined for all PTF and HTF lines. 

  

	 	2.	Generators. The analysis shall include all generators with a Winter Capability equal to or greater than 10.0 MW. Multiple generators connected to a single bus with a total Winter
Capability equal to or greater than 10.0 MW shall also be included. 

  

	 	3.	Transformers. All transformers connecting PTF and HTF transmission lines shall be included in the analysis. 

  

	D.	Determination of Rate Distribution 

  

	 	1.	General. Modeling of the transmission system shall be performed using a system simulation program and associated cases as approved by the PTO Administrative Committee (or such
subcommittee as the PTO Administrative Committee shall designate for such purpose). 

  

	 	2.	 Determination of Regional Flows. The change in real power flow (MW) over each transmission line and transformer shall be determined for each generator (or 

  

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group of generators on a single bus) by determining the absolute value of the difference between the flows on each facility with the generator(s) modeled off
and while operating at its net Winter Capability. In addition, a generator shall be simulated at each transmission line tie to the New England Control Area and changes in flow determined for this generator off or while generating at a level of 100
MW. Loads throughout the New England Control Area shall be proportionally scaled to account for differences in generator output and electrical losses. The changes in flow shall be multiplied by the length of each respective line. Changes in flow
through transformers shall be multiplied by a factor of five. Changes in flow through phase-shifting transformers shall be multiplied by a factor of ten. The resulting values represent the MW-miles associated with each facility.

  

	 	3.	Determination of Transaction Flows 

  

	 	a.	Definition of Supply and Receipt Areas. For the purposes of these calculations, areas of supply and receipt shall be determined by the PTO Administrative Committee (or such
subcommittee as the PTO Administrative Committee shall designate for such purpose). These areas shall be based on the system boundaries of each Local Network. 

  

	 	b.	Calculation of MW-Miles. The change in real power flow (MW) over each transmission line and transformer shall be determined for each combination of supply and receipt areas by
determining the absolute value of the difference between the flows on each facility following a scaled increase of the supplying areas generation by 100 MW. Loads in the area of receipt shall be scaled to account for changes in generation and
electrical losses. In instances where the areas of supply and/or receipt are outside the New England Control Area, the changes in real power flow will be determined only for facilities within the New England Control Area. The changes in flow shall
then be multiplied by the length of each respective line. Changes in flow through transformers shall be multiplied by a factor of five. Changes in flow through phase-shifting transformers shall be multiplied by a factor of ten. The resulting values
represent the MW-miles associated with each facility. 

  

	 	4.	Assignment of MW-Miles to Transmission Companies. Each Transmission Company shall have assigned to it the MW- miles associated with each PTF and HTF facility for which it has full
ownership and for which there are no arrangements in effect by which other Transmission Companies support the facility. For facilities that are jointly owned and/or supported, each Transmission Company shall be assigned MW-miles in proportion to the
percentage of its ownership of jointly-owned facilities and/or the percentage of its support for facilities that are jointly supported to the extent such support payments are included in the determination of Annual Transmission Revenue Requirements.

  

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 EXHIBIT B 
  
 Notice AddressesLufkin Industries, Inc. Supplemental Retirement Plan

 Exhibit 10.1 
  
 LUFKIN INDUSTRIES, INC. 
 SUPPLEMENTAL RETIREMENT PLAN 
  
 LUFKIN
INDUSTRIES, INC. (the “Company”) hereby establishes the Lufkin Industries, Inc. Supplemental Retirement Plan (the “Plan”) effective as of January 1, 1995. The terms, provisions and conditions of the Plan are as follows:

  
 SECTION I 
 Purpose of Plan 
  
 Section 1.1 Purpose - The purpose of the Plan is to enhance the Company’s ability to attract and to retain those key executives who are essential to the
Company’s success by providing them with nonqualified retirement benefits that are in addition to the retirement benefits provided by the Company’s qualified defined benefit pension plan (the “Qualified Plan”). 
  
 SECTION II 
 Eligibility and Participation 
  
 Section 2.1 Eligibility - Only those key executives of the Company who are (i) “highly compensated employees” or “members of a select group of management”, within the meaning of
those terms as set forth in Section 201(2) of the Employee Retirement Income Security Act of 1974, as amended, and (ii) formally designated as participants by the Compensation Committee of the Board of Directors of the Company (the
“Compensation Committee”) shall be participants in this Plan. 
  
 SECTION III 
 Benefits 
  
 Section 3.1 Benefits - Subject to farther provisions of this Plan, a participant (or, in the event of his death, his Beneficiary) shall be entitled to receive
from the Company a supplemental monthly retirement benefit hereunder that is equal to the excess of: 
  
 (a) the monthly retirement benefit that would be payable to such participant (or Beneficiary) under the Qualified Plan if (i) the participant were credited with an additional .5 year of credited service
thereunder for each year of credited service actually credited to the participant under the Qualified Plan, (ii) the participant’s compensation were determined as provided under the Qualified Plan but without limitation pursuant to
Section 401(a)(17) of the Internal Revenue Code, and (iii) the participant’s benefits thereunder were not limited by Section 415 of the Internal Revenue Code, 
  
 (b) the monthly retirement benefit that is actually paid to the participant (or Beneficiary) under the Qualified Plan. 
  
 Section 3.2 Automatic Form of Benefit Payments - Subject to the further
provisions of this Plan, the monthly retirement benefit payable to a participant (or Beneficiary) under this Plan shall commence at the same time, shall be paid in the same form, and shall be subject to the same restrictions and actuarial
adjustments and other terms, as the benefit actually paid to such person under the Qualified Plan; provided, however, the Compensation Committee, in its sole discretion, may direct at any time on or after the participant’s retirement or
death that the Actuarial Equivalent present value of such benefit (or remaining benefit if already in pay status) be paid to such person in a lump sum (by check). 
  
 Section 3.3 Vesting of Benefits - Subject to the further provisions of the Plan, each participant shall possess a vested
interest in (a nonforfeitable right to) his accrued supplemental retirement benefit hereunder to the same extent that such participant is vested in his accrued retirement benefit under the Qualified Plan; provided, however, if (1) the
participant voluntarily terminates his employment with the Company prior to attaining the age of 62 years or (2) the Company terminates the participant’s employment for Cause, no benefits shall be payable to or on behalf of such
participant under the Plan; provided further, however, a participant who is an employee of the Company on the date of a Change in Control shall always be 100% vested under the Plan on and after that date. 

 Section 3.4 Automatic Lump Sum Benefit - Notwithstanding anything in Section 3.1, 3.2 or 3.3 to the
contrary, if a participant’s employment with the Company is terminated for any reason other than death on or following a Change in Control or a participant’s employment is terminated by the Company at any time other than for Cause, the
Actuarial Equivalent of such participant’s accrued supplemental retirement benefit shall be paid to him in a single lump sum as soon as is reasonably practicable following the date of his termination of employment. 
  
 Section 3.5 Definitions 
  
 (a) A “Change in Control” shall occur on the date of the earliest of the following
events: 
  
 (i) any “person,” as such term is used in
Section 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) (other than the Company, any trustee or other fiduciary holding securities under an executive benefit plan of the Company, or any company owned,
directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company) together with its “Affiliates” and “Associates”, as such term is defined in Rule 12b-2
of the Exchange Act, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the Company’s common stock or of the
combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors; 
  
 (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company (the “Board”),
and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (i), (iii) or (iv) of this definition) whose election by the Board or
nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority thereof; 
  
 (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other company other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 80% of the combined voting power of the voting securities of the Company (or such surviving
entity) outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no “person” (as hereinabove defined)
acquires more than 25% of the combined voting power of the Company’s then outstanding securities; or 
  
 (iv) the shareholders of the Company adopt a plan of complete liquidation of the Company or approve an agreement for the sale, exchange or disposition by the Company of “all or a significant portion of the
Company’s assets,” which for this purpose shall mean a sale or other disposition transaction or series of related transactions involving assets of the Company or any subsidiary (including the stock of any subsidiary) in which the value of
the assets or stock being sold or otherwise disposed of (as measured by the purchase price being paid therefor or by such other method as the Board determines is appropriate in a case where there is no readily ascertainable purchase price)
constitutes more than 25% of the fair market value of the Company (as hereinafter defined). For purposes of the preceding sentence, the “fair market value of the Company” shall be the aggregate market value of the outstanding shares of
common stock of the Company (on a fully diluted basis) plus the aggregate market value of the Company’s other outstanding equity securities. The aggregate market value of the shares of common stock of the Company shall be determined by
multiplying the number of shares of the Company’s common stock (on a fully diluted basis) outstanding on the date of the execution and delivery of a definitive agreement with respect to the transaction or series of related transactions (the
“Transaction Date”) by the market value per share immediately preceding the Transaction Date or by such other method as the Board shall reasonably determine is appropriate. The aggregate market value of any other equity securities of the
Company shall be determined in a manner similar to that prescribed in the immediately preceding sentence for determining the aggregate market value of the shares of common stock of the Company or by such other method as the Board shall reasonably
determine is appropriate. 

 (b) The term “Cause” shall mean: 
  
 (i) an act or acts of personal dishonesty taken by the participant and intended to result in substantial personal enrichment of the
participant at the expense of the Company; 
  
 (ii) repeated violations by the
participant of his duties which are demonstrably willful and deliberate on the participant’s part and which are not remedied in a reasonable period of time after receipt of written notice from the Company; or 
  
 (iii) the conviction of the participant of, or plea of nolo contendere by the participant to,
a felony. 
  
 A participant must be notified in writing of any termination of his
employment for Cause, which writing shall set forth in reasonable detail the facts and circumstances relied upon therefor. A participant will then have the right, within ten days of receipt of such notice, to file a written request for review. In
such case, the participant will be given the opportunity to be heard, personally or by counsel, by the members of the Board who are not then executives of the Company (the “Independent Directors”) and a majority of the Independent
Directors must thereafter confirm that such termination is for Cause. If the Independent Directors do not provide such confirmation, the termination shall be treated as a termination by the Company without Cause. 
  
 (c) The term “Actuarial Equivalent” shall have the same meaning as such term in the
Qualified Plan. 
  
 (d) The term “Beneficiary” shall mean the
participant’s surviving spouse entitled to any survivor benefits under the Qualified Plan or, if the participant is either not married or his surviving spouse is not his beneficiary under the Qualified Plan, the person(s) including, if
applicable, estate, that is the participant’s beneficiary receiving the comparable survivor’s benefit under the Qualified Plan. 
  
 SECTION IV 
 Administration

  
 Section 4.1 Administrator - The Compensation Committee shall
be the Administrator of the Plan and shall have the complete discretion and authority to interpret and construe the Plan, to determine a person’s eligibility for and the amount of his benefit under the Plan and to decide all questions or
disputes arising under the Plan. All decisions and actions by the Compensation Committee with respect to the Plan shall be final and binding on all persons. 
  
 Section 4.2 Appeal of Decisions - A person who initially has been denied a benefit hereunder either in whole or in part may
appeal that decision to the Compensation Committee. The appeals procedures under the Plan shall be the same as the appeals procedures under the Qualified Plan, except that the appeal shall be to the Compensation Committee. 
  
 SECTION V 
 Amendment and Termination 
  
 Section 5.1 Amendment and Termination - The Board may amend, “freeze” and/or terminate the Plan at any time for whatever reasons it may deem appropriate. However, no such action shall reduce or void any
participant’s right to the benefit he has accrued under the Plan as of the date of such action. If the Plan is terminated, the Company shall pay each participant (and beneficiary then in pay status) the Actuarial Equivalent of his then accrued
supplemental benefit (or, if in pay status, his remaining benefit) in a lump sum as soon as is reasonably practicable following such termination of the Plan. 
  
 Section 5.2 Successor - The Company shall require any successor, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all of the business or assets of the Company, expressly to assume and agree to pay the benefits accrued under this Plan as of the date of such succession in the same manner and to the same extent as the Company would have been required
if no such succession had taken place. If a successor fails to assume such obligations, such failure shall be deemed a termination of the Plan as of the date of such succession. 

 SECTION VI 
 Miscellaneous 
  
 Section 6.1 No
Employment Rights - Nothing contained in the Plan shall be construed as a contract of employment between the Company and any employee, or as creating a right in any employee to continue in the employment of the Company, or as a limitation of the
right of the Company to discharge any employee, with or without Cause. 
  
 Section 6.2 Assignment - The benefits payable under the Plan may not be assigned, alienated, pledged, transferred, attached, garnished or hypothecated in any manner (whether voluntary or involuntary) by a participant (or
beneficiary). 
  
 Section 6.3 Taxes - The Company shall withhold (or
cause to be withheld) from all payments made under the Plan, all taxes required by law to be withheld from such payments. 
  
 Section 6.4 Benefits Unfunded - The benefits to be paid pursuant to the Plan are unfunded obligations of the Company and, until actual payment, shall
constitute general obligations of the Company. The Company is not required to segregate any monies from its general funds, or to create any grantor trusts, or to make any special deposits or other funding arrangements with respect to these
obligations, although it may do so in its sole discretion. Title to and the beneficial ownership of any investments, including grantor trust investments, which the Company may make with respect to its obligations hereunder shall at all times remain
solely in the Company. Any investments and the creation or maintenance of any trust or other funding accounts by the Company shall not create or constitute a trust or a fiduciary relationship between the Company and a participant, or otherwise
create any vested or beneficial interest in any participant or his creditors in any assets of the Company or in any such trust whatsoever. The participants shall be only general unsecured creditors of the Company with respect to the payment of any
benefits due under the Plan. 
  
 Section 6.5 Applicable law - This
Plan shall be governed by the laws of the State of Texas, except to the extent preempted by applicable Federal law. 
  
 IN WITNESS WHEREOF, the Company has caused its duly authorized officer to affix its name hereto this October 6, 1995, effective for all purposes as provided
above. 
  
 LUFKIN INDUSTRIES, INC. 
  

			
	By:	 	 /s/ C. J. Haley, Jr.

	Title:	 	Secretary – Treasurer

 AMENDMENT ONE TO 
  
 LUFKIN INDUSTRIES, INC. 
  
 SUPPLEMENTAL RETIREMENT PLAN 
  
 WHEREAS, effective as of January 1, 1995, Lufkin Industries, Inc. (the “Company”) established the Lufkin Industries, Inc. Supplemental Retirement Plan (the
“Plan”) for the benefit of certain of its key employees; 
  
 WHEREAS, by
the terms of Section 5.1 of the Plan, the Plan may be amended by the Board of Directors of the Company; 
  
 WHEREAS, the Company has determined that the Plan shall be amended to correct a drafting error which omitted a reduction in the benefits under the Plan for benefits paid from the Company’s retirement plan
restoration plan, and to reduce the age for vesting in Plan benefits from age 62 to age 60; and 
  
 WHEREAS, the Board of Directors of the Company has approved and adopted such amendments as set forth herein; 
  
 NOW, THEREFORE, the Plan is hereby amended, effective as of January 1, 1998, as follows: 
  
 1. Section 1.1 of the Plan is amended to read in its entirety as follows: 
  
 “Section 1.1 Purpose - The purpose of the Plan is to enhance the Company’s
ability to attract and to retain those key executives who are essential to the Company’s success by providing them with nonqualified retirement benefits that are in addition to the retirement benefits provided by the Company’s qualified
defined benefit pension plan (the “Qualified Plan”) and the Company’s nonqualified retirement plan restoration plan (the “Restoration Plan”).” 
  
 2. Section 3.l(b) of the Plan is amended to read in its entirety as follows: 
  
 “(b) the sum of the monthly retirement benefits that are actually paid to the
participant (or Beneficiary) under the Qualified Plan and the Restoration Plan.” 
  
 3. Section 3.3 of the Plan is amended to read in its entirety as follows: 
  
 “Section 3.3 Vesting of Benefits - Subject to the further provisions of the Plan, each participant shall possess a vested interest in (a nonforfeitable right to) his accrued supplemental retirement benefit
hereunder to the same extent that such participant is vested in his accrued retirement benefit under the Qualified Plan; provided, however, if (l) the participant voluntarily terminates his employment with the Company prior to attaining the age of
60 years or (2) the Company terminates the participant’s employment for Cause, no benefits shall be payable to or on behalf of such participant under the Plan; provided further, a participant who is an employee of the Company on the date
of a Change in Control shall always be 100% vested under the Plan on and after that date.” 
  
 IN WITNESS WHEREOF, LUFKIN INDUSTRIES, INC. has caused this instrument to be executed by its duly authorized officers on this 4th day of August, 1998, to be effective as stated above. 
  

					
	ATTEST:	 	COMPANY
		
	 	 	LUFKIN INDUSTRIES, INC.
			
	 /s/ R. E. Myers

	 	By:	 	 /s/ C. J. Haley, Jr.

	Assistant Secretary	 	Title:	 	Secretary – Treasurer

 AMENDMENT TWO 
  
 LUFKIN INDUSTRIES, INC. 
  
 SUPPLEMENTAL RETIREMENT PLAN 
  
 WHEREAS, effective as of January 1, 1995, Lufkin Industries, Inc. (the “Company”) established the Lufkin Industries, Inc.
Supplemental Retirement Plan (the “Plan”) for the benefit of certain of its key employees; 
  
 WHEREAS, by the terms of Section 5.1 of the Plan, the Plan may be amended by the Board of Directors of the Company; 
  
 WHEREAS, the Company has determined that the Plan shall be amended to
comply with the requirements of section 409A of the Internal Revenue Code as amended and to clarify the intent of the Plan; 
  
 NOW, THEREFORE, the Plan is hereby amended, effective as of January 1, 2005 as follows: 
  

	 	1.	Section 3.1 of the Plan shall be amended to read as follows: 

  
 “(a) the monthly retirement benefit that would be payable to such participant (or Beneficiary) under the Qualified Plan if (i) the participant
were credited with an additional .5 year of credited service thereunder for each year of credited service actually credited to the participant under the qualified Plan, (ii) the participant’s compensation were determined as provided under
the Qualified Plan but without limitations pursuant to Section 401(A)(17) of the Internal Revenue Code of 1986 as amended (the “Code”) and as if the participant’s compensation under the Basic Plan had not been reduced by any
deferrals of his compensation which he elected to make under a deferred compensation agreement with an employer pursuant to a nonqualified defined contribution plan restoration plan maintained by the employer; and (iii) the participant’s
benefits thereunder were not limited by Section 415 of the Code, 
  
 (b) the sum of the monthly retirement benefits that are actually paid to the participant (or Beneficiary) under the Qualified Plan and the Restoration Plan.” 
  

	2.	Section 3.2 of the Plan shall be amended to read as follows: 

  
 “Section 3.2 Automatic Form of Benefit Payments – Subject to the further provision of this Plan, the benefit payable to a participant (or
Beneficiary) under this Plan shall be paid or commence as soon as administratively feasible following the participant’s Benefit Distribution Date (as defined below). The Participant shall be entitled to make the following elections as to the
form and timing of the payment: 
  
 (a) At any time prior to the
date the Participant first becomes eligible to participate in the Plan and subject to such requirements as may be imposed by the Committee, Participant may elect to receive the Actuarial Equivalent of his benefits under the Plan in a lump sum or in
any form of benefit offered under the Qualified Plan commencing on his or her Benefit Distribution Date; 
  
 (b) At any time prior to January 1, 2006, subject to such requirements as may be imposed by the Committee, a Participant may elect to receive
benefits under the Plan in a lump sum or in any form of benefit offered under the Qualified Plan commencing on his or her Benefit Distribution Date; 
  
 (c) At any time prior to Participant’s Benefit Distribution Date, Participant may elect to change his form of benefit to a lump sum or any of the
forms of distribution permitted under the Qualified Plan, provided that such change complies with each of the following requirements: 
  

	 	    i.	Such payment change must be submitted to and accepted by the Committee in its sole discretion at least twelve (12) months prior to the Participant’s previously designated
scheduled Benefit Distribution Date; and 

	 	 ii.	The new scheduled Benefit Distribution Date selected by the Participant must be at least five years after the previously designated Benefit Distribution Date; and

  

	 	iii.	The election of the new scheduled Benefit Distribution Date shall have no effect until at least twelve (12) months after the date on which the election is made.”

  

	3.	Section 3.4 of the Plan shall be amended to read as follows: 

  
 “Section 3.4 Automatic Lump Sum Benefit – Notwithstanding anything in Section 3.1, 3.2 or 3.3 to the contrary, if a
participant’s employment with the Company is terminated for any reason other than death on or following a Change in Control or a participant’s employment is terminated by the Company at any time other than for Cause, the Actuarial
Equivalent of such participant’s accrued supplemental retirement benefit shall be paid to him in a single lump sum as soon as reasonably practicable following his Benefit Distribution Date.” 
  

	4.	Section 3.5 of the Plan shall be amended to add subsection 3.5 (e) to read as follows: 

  
 “(e) “Benefit Distribution Date” shall mean the date that is as soon as administratively feasible following a
participant’s separation from service (within the meaning of section 409A of the Code) with the Company and each member of its controlled group; provided, however, that in the event that a participant is determined by the Committee to be a
“key employee” (as defined in section 416(i) of the Code without regard to paragraph (5) thereof) as of the last day of the calendar year prior to the Participant’s separation from service, such participant’s Benefit
Distribution Date shall be the date that is the earlier of (i) participant’s date of death or (ii) six (6) months following such separation from service. If a participant would have received payments during such six-month period
but for the fact that participant is a “key employee”, participant’s installment payments shall be accumulated during such six-month period and paid as soon as administratively feasible after such six-month period.” 

 

	4.	Except as hereinabove amended, the provision of the Plan as previously amended shall remain in full force and effect. 

  
 IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its duly authorized officer on this 2nd day of November, 2005. 
  

					
	ATTEST:	 	COMPANY
		
	 	 	LUFKIN INDUSTRIES, INC.
			
	 /s/ P. G. Perez.

	 	By:	 	 /s/ R. D. Leslie

	Secretary	 	Title:	 	Vice President/Treasurer/Chief Financial Officer

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