14.1Transmission Service Charge (“TSC”)

14.1.1Applicability of the Transmission Service Charge to Wholesale Customers

Each month, each wholesale Transmission Customer shall pay to the appropriate Transmission Owner the applicable Wholesale Transmission Service Charge (“Wholesale TSC”) calculated in accordance with Section 14.1.2.2 of this Attachment for the first two months of LBMP implementation and in accordance with Section 14.1.2.1 of this Attachment thereafter.  The TSC shall apply to Transmission Service:

14.1.1.1from one or more Interconnection Points between the NYCA and another Control Area to one or more Interconnection Points between the NYCA and another Control Area (“Wheels Through”);[1] 

14.1.1.2from the NYCA to one or more Interconnection Points between the NYCA and another Control Area, including transmission to deliver Energy purchased from the LBMP Market and delivered to such a Control Area Interconnection Point (“Exports”);1 or

14.1.1.3to serve Load within the NYCA; except, the Wholesale TSC shall not apply to:

14.1.1.3.1a Transmission Owner’s use of its own system to provide bundled retail service to its Native Load Customers pursuant to a retail service tariff on file with the PSC or, in the case of LIPA, has been approved by the Long Island Power Authority’s Board of Trustees;

14.1.1.3.2Transmission Service pursuant to an Existing Transmission Agreement whereby the otherwise applicable TSC does not apply pursuant to Attachment K; or

14.1.1.3.3retail Transmission Service pursuant to any tariff or rate schedule of a Transmission Owner that explicitly provides for other transmission charges in lieu of the Wholesale TSC, subject to any applicable provisions of the Federal Power Act.

Each Transmission Owner subject to FERC and/or PSC jurisdiction may file with FERC a separate TSC applicable to retail access in accordance with its retail access program filed with the PSC.  To the extent that LIPA’s rates for service are established by the Long Island Power Authority’s Board of Trustees pursuant to Article 5, Title 1-A of the New York Public Authorities Law, Section 1020-f(u) and 1020-s and are not subject to FERC jurisdiction, this requirement will not apply to LIPA.

14.1.2Wholesale TSC Calculation

Sections 14.1.2-14.1.6 do not apply to the development of the NYPA TSC, which is described in Section 14.1.7.

14.1.2.1Wholesale TSC Formula

Beginning with the second month of the Capability Period corresponding to the initial auction for Long Term TCCs through the end of the LBMP Transition Period, each Transmission Owner, except NYPA shall calculate its TSC applicable to Transmission Service to serve Load within or exiting the NYCA at its Transmission District as follows:

WHOLESALE TSC = {(RR:12) + (CCC:12) + (LTPP:12) - SR - ECR - CRR - WR - Reserved}/(BU:12).

Where:

RR=              The Annual Transmission Revenue Requirement, as stated in Table 1 of this Attachment.  Gross Receipts Tax (“GRT”) treatment by each individual company is described in Section 14.1.7.  Revenues from grandfathered agreements listed on Attachment H-1 are treated as a revenue credit in the RR.

CCC=              The annual Scheduling, System Control and Dispatch Costs of the individual Transmission Owner (i.e., the transmission component of control center costs) as stated on Table 1 of this Attachment.

LTPP              =              The Transmission Owner’s annual Net LBMP Transition Period Payment (“LTPP”) (expressed as a positive value) or receipt (expressed as a negative value) as described in Attachment K, Section 17.6 (Note - The LTPP will be established once for the entire LBMP Transition Period after the Initial Auction, as defined in Attachment M, for Long Term TCCs).  Prior to a 205 Filing under the FPA by the Transmission Owners, the LTPP will be set at zero.

SR  =  SR1 + SR2.

SR1 will equal the revenues from the Direct Sale by the Transmission Owner of Original Residual TCCs, TCCs derived from Existing Transmission Capacity for Native Load, and Grandfathered TCCs associated with ETAs, the expenses for which are included in the Transmission Owner’s Revenue Requirements where the Transmission Owner is the Primary Owner of said TCCs.

SR2 will equal the Transmission Owner's revenues from the Centralized TCC Auction allocated pursuant to Attachments N.  SR2 includes revenues from:  (a) TCCs associated with Residual Transmission Capacity that are sold in the Centralized TCC Auction; (b) the sale of Grandfathered TCCs associated with ETAs, if the expenses for those ETAs are included in the Transmission Owner’s Revenue Requirements; and (c) TCCs derived from Existing Transmission Capacity for Native Load that are sold in the Centralized TCC Auction.

Revenue from TCCs associated with Residual Transmission Capacity includes payments for Original Residual TCCs that the Transmission Owners sell through the Centralized TCC Auction and the allocation of revenue for other TCCs sold through the Centralized TCC Auction (per the Facility Flow-Based Methodology described in Attachment N).

SR1 shall be updated prior to the start of each month based on actual data for the calendar month prior to the month in which the adjustment is made (i.e., January actual data will be used in February to calculate the TSC effective in March).  SR1 for a month in which a Direct Sale is applicable shall equal the total nominal revenue that the Transmission Owner will receive under each applicable TCC sold in the Direct Sale divided by the duration of the TCC (in months).  SR2 shall equal the Transmission Owner’s share of Net Auction Revenue for all rounds of a Centralized TCC Auction, as calculated pursuant to Attachment N, divided equally among the months covered by the Centralized TCC Auction.  SR2 shall be adjusted after each Centralized TCC Auction and the revised SR2 shall be effective at the start of each Capability Period;

ECR=              The Transmission Owner's share of Net Congestion Rents in a month, calculated pursuant to Attachment N;

CRR=              The Transmission Owner's Congestion Payments received from Grandfathered TCCs and Imputed Revenues from Grandfathered Rights from ETA's, the expenses for which are included in the Transmission Owner's Revenue Requirement;

WR=              The Transmission Owner's revenues from external sales (Wheels Through and Export Transactions) not associated with Existing Transmission Agreements included in Attachment L, Tables 18.1, 18.2 and 18.3 and wheeling revenue, associated with OATT reservations extending beyond the start-up of the ISO.  (i.e., grandfathered OATT agreements)

14.1.2.1.1              Elements of the WR Component

The WR component will equal the sum of: (1) TSC revenues received from new external transactions (Wheels Through and Export Transactions); (2) transmission revenues received under grandfathered OATT agreements and actual revenues under Schedule 1 to the grandfathered OATT agreements, but not under Schedules 2 through 6 to the grandfathered OATT agreements; and (3) any revenues related to pre-OATT grandfathered arrangements if the transmission owner increased its OATT revenue requirement to derive its RR component to reflect the fact that revenues related to such transactions are at risk due to options available to the customers resulting from the current restructuring, and the customer retains its grandfathered arrangement.

In each subcomponent of the WR component above, the revenues will include the Gross Receipts Tax (“GRT”) when the Transmission Owner has included the GRT in the RR.

14.1.2.1.2              Treatment of Schedule 1 Associated with Grandfathered OATT Service

All customers under grandfathered OATT service agreements must continue to pay the Schedule 1 charge applicable under the individual OATT, absent a settlement to the contrary.  The revenues received from Schedule 1 charges paid by grandfathered OATT customers will be treated as revenue credit in the WR component as part of the wheeling revenue associated with OATT reservations extending beyond the start-up of the ISO.

Reserved =              Reserved1 + Reserved2 + Reserved3 + Reserved4

Reserved1 will equal the Transmission Owner's Congestion payments for a month received pursuant to Section 20.2.3 of Attachment N of this Tariff for the Transmission Owner’s ETCNL TCCs.  Reserved2 will equal the Transmission Owner's Congestion payments for a month received pursuant to Section 20.2.3 of Attachment N of this Tariff for the Transmission Owner’s RCRR TCCs.  Reserved3 will equal the value that a Transmission Owner receives for the sale of its ETCNL TCCs in a month, with the value for each ETCNL TCC sold divided equally over the months remaining until the expiration of that ETCNL TCC.  Reserved4 will equal the value that a Transmission Owner receives for the sale of its RCRR TCCs in a month, with the value for each RCRR TCC sold divided equally over the months remaining until the expiration of that ETCNL TCC.

BU=              The Transmission Owner's Billing Units (annual MWh) for the Transmission District (see Table 1 of this Attachment) The Transmission Owner's BU has been adjusted upward to include subtransmission and distribution losses.

The RR, SR and CRR will not include expenses for the Transmission Owner's purchase of TCCs or revenues from the sale of said TCCs or from the collection of Congestion Rents for said TCCs.  The ECR, CRR, WR, and Reserved shall be updated prior to the start of each month based on actual data for the calendar month prior to the month in which the adjustment is made (e.g., January actual data will be used in February to calculate the TSC effective in March).  The TSC shall not apply to the scheduled quantities physically Curtailed by the ISO.

Each Member System is responsible for calculating: (1) the RR component of its TSC charge; (2) the CCC component of its TSC charge; and (3) the BU component of its TSC charge.

The LTPP component of each Member System's TSC charge is initially set at zero.  Any changes must be made by unanimous consent of the Transmission Owners (See ISO OATT Original Sheet No. 267).  The Member Systems will make a Section 205 filing to propose any change to the LTPP.

The NYISO is responsible for calculating (1) the SR component of each Member System's TSC charge based on information provided by the Member System and information derived from ISO operation; (2) the ECR component of each Member System's TSC charge based on information derived from ISO operation; (3) the CRR component of each Member System's TSC charge based on information derived from ISO operation; (4) the Reserved component of each Member System’s TSC charge based on information provided by the Member System and information derived from ISO operation; and (5) the WR component of each Member System’s TSC charge based on information provided by the Member System and information derived from ISO operation.  Any calculations that the ISO is responsible for are subject to review and comment by all affected parties. 

The RR term will be updated based on Transmission Owner filings to FERC (or a NYISO filing to FERC on behalf of LIPA) under the FPA.  These filings will be made when a Transmission Owner determines that a change to its RR is required under Section 205.

The CCC term will be updated based on Transmission Owner filings to FERC (or a NYISO filing to FERC on behalf of LIPA) under the FPA. These filings will be made when the Transmission Owner determines that a change to the CCC is required.

SR: The revenue from the Direct Sale of TCCs will be determined monthly and will enter the TSC formula through the SR term with a two-month lag (e.g., January actual data will be used in February to calculate the SR term used in the TSC for March).  The revenue that a Transmission Owner receives from a TCC sold in a Centralized Auction will be divided equally among the months for which the TCC is sold.  The revenue from these TCCs will enter the TSC formula month-by-month through the SR term, beginning with the first month of the period covered by the Centralized Auction.  The ISO is responsible for calculating the SR component of each Transmission Owner’s TSC.   The Transmission Owner will not adjust the ISO's calculation.  The ECR revenue will be calculated monthly and will enter the TSC formula with a two-month lag (e.g., January actual data will be used in February to calculate the ECR term used in the TSC for March).  The ISO is responsible for calculating the ECR component of each Transmission Owner’s TSC.   The Transmission Owner will not adjust the ISO's calculation.

The CRR revenue will be calculated monthly and will enter the TSC formula with a two-month lag (e.g., January actual data will be used in February to calculate the CRR term used in the TSC for March). Each Transmission Owner will identify for the ISO each ETA (“Identified ETA”), under which the Transmission Owner is a customer, the expenses for which are included in the Transmission Owner’s RR.  The ISO shall calculate that Transmission Owner’s Congestion Payments received from Grandfathered TCCs and Imputed Revenues from Grandfathered Rights from the Transmission Owner’s Identified ETAs.  If the inclusion of the costs under an Identified ETA in the Transmission Owner’s RR is subject to refund, then the CRR shall be subject to adjustment.  If the costs under one or more of the Identified ETAs are removed from the RR and the Transmission Owner is required to recalculate its TSC with the adjusted RR, then in recalculating the TSC, the Transmission Owner shall reverse the portion of the CRR that was attributed to each such ETA.  The Transmission Owner shall rebill the customers based on the recalculated TSC.  To the extent the Transmission Owner owes a refund to the customer, it shall comply with any applicable refund obligations, including payment of interest to the extent due pursuant to 18 C.F.R. § 35.19a(a)(2)(iii), or its successor.  If the reversal of the CRR results in a higher TSC than was charged, the customer shall pay in the time prescribed for payment of TSCs the Transmission Owner the difference between the TSC payments it made and the rebilled amounts, with interest thereon from the dates payments were made to the date that the rebilled amounts are due.  Said interest will be calculated in the same manner as interest on over-payments as specified in 18 C.F.R. § 35.19a(a)(2)(iii), or its successor. 

The Reserved will be calculated monthly and will enter the TSC formula with a two-month lag (e.g., January actual data will be used in February to calculate the ETCNL TCC term used in the TSC for March).  The ISO shall calculate a Transmission Owner’s Reserved.

WR: The revenue that a Transmission Owner collects for new external sales will be calculated monthly and will enter the WR term in the TSC formula with a two-month lag (i.e., January actual data will be used in February to calculate the WR term used in the TSC for March). The ISO is responsible for calculating new external sales subcomponent of the WR component of each Transmission Owner’s TSC. The Transmission Owner will not adjust the ISO's calculation. The actual revenue that a Transmission Owner collects for grandfathered OATT service that extends beyond ISO start-up, and revenues related to pre-OATT grandfathered arrangements as provided for under numbers (2) and (3) of Original Sheet No. 214A, will also be calculated monthly and will enter the WR term in the TSC formula based upon the prior month's information.  For the first month the credit will be equal to the actual revenues received under those grandfathered agreements to be included in the WR component.

The BU term will be updated based on Transmission Owner filings to FERC (or a NYISO filing to FERC on behalf of LIPA) under the FPA. These filings will be made when the Transmission Owner determines that a change to its BU is required.

14.1.2.2Implementation of TSC

At the start of LBMP implementation, certain variables of the TSC equation will not be available.  For the first and second month of LBMP implementation, the only terms in the TSC equation that will be known by each Transmission Owner are its Annual Transmission Revenue Requirement (RR), Scheduling, System Control and Dispatch Costs (CCC), Revenues from the Sale of TCCs in the Transitional Auction (SR2), Wheeling Revenues Associated with continuing OATT reservations (WR) and Billing Units (BU), which have been approved by or filed with FERC or, in the case of LIPA, approved by the Long Island Power Authority's Board of Trustees.  (Billing Units for “metered” retail customers are based on manual meter readings).  For these two months each Transmission Owner shall calculate its TSC using the following equation:

WHOLESALE TSC = [(RR12) +(CCC12) - SR-WR]/BU12)

LTPP will not be available until after the Initial Auction as defined in Attachment M for Long Term TCCs.  For the third month of LBMP implementation until the second month of the Capability Period corresponding to the initial auction for Long Term TCCs, each Transmission Owner shall calculate its TSC using the following equation:

WHOLESALE TSC = {(RR12) + (CCC12) - SR - ECR -CRR-WR}/(BU12)

From the second month of the Capability Period corresponding to the initial auction for Long Term TCCs , until the conclusion of the LBMP Transition Period, the TSC shall be calculated using the equation in Section 14.1.2.1.

After the conclusion of the LBMP Transition Period, the LTPP component will no longer be applicable and each Transmission Owner shall calculate its Wholesale TSC using the following equation:

WHOLESALE TSC = {(RR:12) + (CCC:12) -  SR - ECR - CRR - WR - Reserved}/(BU:12)

14.1.3Filing and Posting of Wholesale TSCs

The Transmission Owners shall coordinate with the ISO to update certain components of the Wholesale TSC formula on a monthly basis or Capability Period basis.  Each Transmission Owner may update its Wholesale TSC calculation to change its RR, CCC, or BU component value(s).  Such updates, however, shall be subject to necessary FERC filings under the FPA.  Each Transmission Owner will calculate its monthly Wholesale TSC and provide the ISO with the Wholesale TSC by no later than the fourteenth of each month, for posting on the OASIS to become effective on the first of the next calendar month.  Beginning with the implementation of LBMP, the monthly Wholesale TSCs for each of the Transmission Districts shall be posted on the OASIS by the ISO no later than the fifteenth of each month or as soon thereafter as is reasonably possible but in no event later than the 20th of the month to become effective on the first of the next calendar month.

14.1.4TSC Calculation Information

The Annual Transmission Revenue Requirements (“RR”); Scheduling, System Control and Dispatch Costs (“CCC”), Billing Units (“BU”) and Rates of the Transmission Owners, except NYPA, for the purpose of calculating the respective Transmission District-based Wholesale TSC are shown in Table 1 below.

TABLE 1 - WHOLESALE TSC CALCULATION INFORMATION

1The rate column represents the unit rate prior to crediting; the actual rate will be determined pursuant to the applicable TSC formula rate.

2NYSEG’s RR, BU and unit Rate prior to adjustment pursuant to Attachment H, are subject to retroactive modification pursuant to the provisions of the Settlement Agreement approved by the Commission in its March 26, 2004 order issued in Docket No. EL04-56-000.  For any Transmission Customer that “opts out” of the Settlement Agreement as described in paragraph 1.E thereof, the applicable NYSEG “RR” shall be $100,541,739; the “BU” shall be 13,741,901 MWh; and, the “Rate” prior to adjustment pursuant to Attachment H, shall be $7.4235 effective as of March 1, 2004.

14.1.5 Treatment of Gross Receipts Tax

14.1.5.1Central Hudson Gas & Electric Corporation

Central Hudson’s TSC shall be increased by dividing the following surcharge factors into the total of all applicable rates and charges to reflect the New York State GRT (0.94922 in the MTA regions and 0.95750 in the non-MTA regions), which is not specifically provided for in the transmission rate, to the extent such tax is imposed on Central Hudson as a result of the transmission service provided to such Customer.  Central Hudson shall make an appropriate filing pursuant to Section 205 of the Federal Power Act to implement any change in the specified tax rate prior to altering the tax rate under this provision.

14.1.5.2Consolidated Edison Company of New York, Inc.

The GRT is included in Con Edison's TSC rate.  Con Edison will not charge separately for GRT.

14.1.5.3LIPA

The GRT is included in LIPA's TSC rate.  LIPA will not charge separately for GRT.

14.1.5.4New York State Electric & Gas Corporation

The Transmission Customer shall pay an amount sufficient to reimburse NYSEG for any amounts payable by NYSEG as sales, excise, value-added, gross receipts or other applicable taxes with respect to the total amount payable to NYSEG pursuant to the Tariff.  The total of all rates and charges will be divided by the appropriate tax factor listed below, depending upon the geographic location of the Transmission Customer’s Point(s) of Delivery

Within the Metropolitan Commuter Transportation District:0.984583

Not within the Metropolitan Commuter Transportation District:0.986823

These tax factors incorporate the taxes imposed on the Transmission Provider’s electric revenues pursuant to New York law and represents the Franchise Tax on Gross Earnings, the Gross Income Tax, and where applicable the Metropolitan Commuter Transportation District Surcharge.

This Provision shall be effective upon commencement of services under the ISO OATT.

14.1.5.5Niagara Mohawk Power Corporation

For the settled Niagara Mohawk TSC rate, the GRT is included in the RR and there will be no separate GRT tax assessed; For the filed Niagara Mohawk TSC rate, GRT initially is included in the RR and there will be no separate GRT assessed; however, this issue with regard to GRT is subject to final Commission action in Docket No.  OA96-194-000, including all stipulations executed in connection therewith.

14.1.5.6Orange and Rockland Utilities, Inc.

The Transmission Customer’s rate will be increased to reflect the gross receipts tax (“GRT”) which is not specifically provided for in the transmission rate and ancillary service rates, that a governmental authority may impose on Orange and Rockland as a result of the Transmission Service provided to such Transmission Customer pursuant to Sections 186 and 186-a of the New York Tax Law.  The current effective GRT rate for the Section 186-a tax is 3.25% from October 1, 1998 through October 31, 1999 and 2.5% on and after January 1, 2000. The maximum locality rate allowable under state law for each locality is specified below.   However, if the actual locality rate is less than the maximum locality rate permitted under state law, O&R shall charge the actual tax rate levied by the locality.  The currently effective GRT rate for the Section 186 tax is .75%.

Airmont1.0%

Bloomingburg1.0%

Chestnut Ridge1.0%

Goshen1.0%

Grandview on Hudson1.0%

Greenwood Lake1.0%

Harriman1.0%

Haverstraw1.0%

Highland Falls1.0%

Hillburn1.0%

Kaser1.0%

Kiryas Joel1.0%

Middletown1.0%

Monroe1.0%

Montebello1.0%

New Hempstead1.0%

New Square1.0%

Nyack1.0%

Otisville1.0%

Piermont1.0%

Pomona1.0%

Port Jervis1.0%

Sloatsburg1.0%

South Nyack1.0%

Spring Valley1.0%

Suffern1.0%

Unionville1.0%

Upper Nyack1.0%

Warwick1.0%

Washingtonville1.0%

Wesley Hills1.0%

West Haverstraw1.0%

Wurtsboro1.0%

14.1.5.7Rochester Gas & Electric Corporation

The Transmission Customer’s rate will be increased to reflect the gross receipts tax which is not specifically provided for in the transmission rate and ancillary service rates, that a governmental authority may impose on RG&E as a result of the Transmission Service provided to such Transmission Customer pursuant to Sections 186 and 186-a of the New York Tax Law.  The currently effective GRT rate for the Section 186-a tax is 3.5% and each locality rate is specified below.  The currently effective GRT rate for the Section 186 tax is .75%.

City of Rochester3.0%

Leroy1.0%

Manchester1.0%

Perry1.0%

Shortsville1.0%

Warsaw1.0%

Hilton1.0%

Pittsford1.0%

Caledonia1.0%

Wolcott1.0%

Avon1.0%

Leicester1.0%

Nunda1.0%

Genesco1.0%

Mt. Morris1.0%

Sodus Point1.0%

Livonia1.0%

Meridian1.0%

City of Canandaigua1.0%

Fairport1.0%

Brockport1.0%

Scottsville1.0%

East Rochester1.0%

14.1.6TSC For Retail Access Customers (“RTSC”)

Customers who apply for unbundled Transmission Service in accordance with the provisions of a Transmission Owner’s retail access program filed with the PSC or, in the case of LIPA, approved by the Long Island Power Authority’s Board of Trustees, will be responsible for paying a retail transmission service charge as detailed in Section 5 of this Tariff.

14.1.7NYPA Transmission Service Charge

The NYPA TSC for service to its directly connected Loads (Reynolds Metals, GM-Massena, Town of Massena and the City of Plattsburgh) shall, at the Eligible Customer’s option, be (a) $1.30 per kilowatt-month or (b) no more than $3.75 per MWh; not to exceed $60.00 per MW Day applied to peak MWh scheduled any hour each day; not to exceed $300.00 per MW-Week applied to the peak MWh scheduled any hour each week.  The TSC applicable to service over the Vermont intertie[2] and the Ontario-Hydro intertie shall be the same as (b).  The TSC applicable to service over the Hydro-Quebec intertie shall be no more than $4.62 per MWh; not to exceed $73.85 per MW-Day applied to peak MWh scheduled each day; not to exceed $369.23 per MW-Week applied to the peak MWh scheduled any hour each week.  NYPA shall coordinate with the ISO to update its TSC.  Such updates shall be subject to FERC filings.

14.1.8Discounting

Each Transmission Owner may advise the ISO of discounts to its TSC applicable during a specified period to all deliveries to a particular Interconnection between the NYCA and another Control Area.  The ISO shall post the discounts on the OASIS for the specified period.

Three principal requirements apply to discounts for Transmission Service as follows: (1) any offer of a discount made by a Transmission Owner must be announced to all Eligible Customers solely by posting on the OASIS; (2) any customer-initiated requests for discounts (including requests for use by a Transmission Owner's wholesale merchant or an Affiliate's use) must occur solely by posting on the OASIS; and (3) once a discount is negotiated, details must be immediately posted on the OASIS.  For any discount that the Transmission Owner agrees to and advises the ISO of, the same discounted Transmission Service rate will be offered to all Transmission Customers for the same period for all deliveries to a particular Interconnection between the NYCA and another Control Area.  The ISO will post the discounts on the OASIS for the specified period.

TABLE 2

Applicable Wholesale TSC for Exports from

New York State, by Transmission Circuit

All scheduling over the Northport - Norwalk Intertie is conducted by LIPA pursuant to Section 5.7 of this Tariff.

TABLE 3

Applicable Wholesale TSC for Municipal Utilities,

Electric Cooperatives and Loads

Except for those municipal utilities and electric cooperatives that continue to take transmission service under an Existing Transmission Agreement, the following Loads shall be obligated to pay the noted Transmission District - based TSC as applicable in accordance with Section 2.7 of this Tariff.

Notes: (1) - Load is treated as an entity external to the NYCA.

14.1.9Niagara Mohawk Power Corporation Wholesale TSC Formula Components RR, CCC and BU and Sources of Data Inputs

Niagara Mohawk Power Corporation (“NMPC”) will calculate and update each of its RR, CCC, and BU components annually using the formulas for each component contained in Attachment 1 and in accordance with the update procedures set forth in Section 14.1.9.4.  With the exception of forecasted information, the cost data used in the Formula Rate will be cost data from NMPC’s annual FERC Form 1, NMPC’s Annual Report to the New York State Public Service Commission, or NMPC’s official books of record. 

14.1.9.1Definitions

Capitalized terms used in this calculation will have the following definitions:

Allocation Factors

14.1.9.1.1Electric Wages and Salaries Allocation Factor shall be fixed at 0.835. 

14.1.9.1.2Gross Transmission Plant Allocation Factor shall equal the total investment in Transmission Plant in Service, Transmission Related Electric General Plant, Transmission Related Common Plant and Transmission Related Intangible Plant divided by Gross Electric Plant. 

14.1.9.1.3Transmission Wages and Salaries Allocation Factor shall be fixed at 0.13.

14.1.9.1.4Gross Electric Plant Allocation Factor shall equal Gross Electric Plant divided by the sum of Total Gas Plant, Total Electric Plant, and total Common Plant.

Ratebase and Expense Items

14.1.9.1.5Administrative and General Expense shall equal expenses as recorded in FERC Account Nos. 920-935.  FERC Account No. 926 shall be adjusted by reversing the adjustment to the deferred pension costs booked per the NYPSC Statement of Policy for Accounting and Ratemaking Treatment for Pension and Post-Retirement Benefits Other than Pensions.  In addition, Administrative and General Expenses shall exclude the actual Post-Employment Benefits Other than Pensions (“PBOP”) expenses included in FERC Account No. 926, and shall add back the FERC accepted Post Employment Benefit Other than Pensions of $88,644,000 annually or $7,387,000 per month or any other amount subsequently approved by FERC under Section 205 or 206 of the Federal Power Act. 

14.1.9.1.6Amortization of Investment Tax Credits shall equal credits as recorded in FERC Account No. 420, per 18 C.F.R. Parts 101 (Electric) and 201 (Gas).

14.1.9.1.7Amortization of Debt Discount Expense shall equal expenses as recorded in FERC Account No. 428.

14.1.9.1.8Amortization of Loss on Reacquired Debt shall equal expenses as recorded in FERC Account No. 428.1.

14.1.9.1.9Amortization of Premium on Debt –Credit shall equal the expenses as recorded in FERC Account 429.

14.1.9.1.10Amortization of Gain on Reacquired Debt--Credit shall equal the expenses as recorded in FERC Account No. 429.1.

14.1.9.1.11Common Plant shall equal the balance of plant recorded in FERC Account Nos. 389-399.  Common Plant shall be defined as the plant common to NMPC’s gas and electric functions per 18 C.F.R. Parts 101 (Electric) and 201 (Gas).

14.1.9.1.12Common Plant Depreciation Expense shall equal the common plant depreciation expenses as recorded in FERC Account No. 403, 404 and 405 associated with Common Plant per 18 C.F.R. Parts 101 (Electric) and 201 (Gas).

14.1.9.1.13Common Plant Depreciation Reserve shall equal the common plant depreciation reserve balance as recorded in FERC Account No. 108 associated with Common Plant per 18 C.F.R. Parts 101 (Electric) and 201 (Gas).

14.1.9.1.14Depreciation Expense for Transmission Plant in Service shall equal depreciation expenses as recorded in FERC Account No. 403, 404 and 405 calculated using the depreciation rates set forth in the following table:

Depreciation Rates

FERC Account/NMPC Internal Account No.     Annual Rate

350Land –Rights of Way and Easements1.32

352Structures and Improvements2.08

353Station Equipment2.44

353.55Station Equipment – EMS3.40

354Towers and Fixtures1.71

355Poles and Fixtures2.00

356Overhead Conductors and Devices1.60

357Underground Conduit1.33

358Underground Conductors and Devices1.48

359Roads and Trails1.33

370Meters

Meters5.05

Installation5.05

14.1.9.1.15Distribution Plant shall equal the plant balance as recorded in FERC Account Nos. 360 – 374.

14.1.9.1.16Equity AFUDC Component of Depreciation Expense shall equal the activity recorded in FERC Account No. 419.1.

14.1.9.1.17Electric Environmental Remediation Expense shall be the environmental remediation expense as recorded in NMPC’s internal FERC Account 930.200.

14.1.9.1.18Electric General Plant shall equal the plant balance recorded in FERC Account Nos. 389-399.  Electric General Plant shall be defined as the general plant associated with NMPC’s electric function.

14.1.9.1.19Electric General Plant Depreciation Expense shall equal general plant depreciation expenses as recorded in FERC Account No. 403, 404 and 405 associated with Electric General Plant.

14.1.9.1.20Electric General Plant Depreciation Reserve shall equal the general plant depreciation reserve balance as recorded in FERC Account No. 108 associated with Electric General Plant.

14.1.9.1.21Electric Property Insurance shall equal property insurance recorded in FERC Account No. 924.

14.1.9.1.22Electric Research and Development Expense shall equal research and development expenses as recorded in NMPC internal FERC Account No. 930.210.

14.1.9.1.23Gain on Reacquired Debt shall equal the balance as recorded in FERC Account No. 257.

14.1.9.1.24Gross Electric Plant shall equal Total Electric Plant plus an allocation of Common Plant determined by multiplying Common Plant by the Electric Wages and Salaries Allocation Factor.

14.1.9.1.25Gross Plant (Gas & Electric) shall equal Total Gas Plant plus Total Electric Plant plus Total Common Plant. 

14.1.9.1.26Gross Transmission Investment shall equal the total of Transmission Plant in Service, Transmission Related Electric General Plant, Transmission Related Common Plant and Transmission Related Intangible Plant.

14.1.9.1.27Intangible Electric Plant shall equal the balance of plant recorded in FERC Account Nos. 301-303.  Intangible Electric Plant shall be defined as the intangible plant associated with NMPC’s electric functions.

14.1.9.1.28Intangible Electric Plant Depreciation Expense shall equal the intangible electric plant depreciation expenses as recorded in FERC Account No. 403, 404 and 4053 associated with Intangible Electric Plant.

14.1.9.1.29Intangible Electric Plant Depreciation Reserve shall equal the intangible plant depreciation reserve balance as recorded in FERC Account No. 108 associated with Intangible Electric Plant.

14.1.9.1.30Loss on Reacquired Debt shall equal the loss on reacquired debt as recorded in FERC Account No. 189.

14.1.9.1.31Materials and Supplies shall equal materials and supplies balance as recorded in FERC Account No. 154 per 18 C.F.R. Parts 101 (Electric) and 201 (Gas).

14.1.9.1.32Payroll Taxes shall equal the electric payroll tax expenses related to FICA and federal and state unemployment as recorded in FERC Account 408.1.NMPC’s internal Account Nos. 408.100, 408.110 and 408.130.

14.1.9.1.33Plant Held for Future Use shall equal the balance as recorded in FERC Account No. 105 for transmission uses within 5 years.

14.1.9.1.34Prepayments shall equal prepayment balance as recorded in FERC Account No. 165 per 18 C.F.R. Parts 101 (Electric) and 201 (Gas) less prepaid state and Federal income taxes.

14.1.9.1.35Real Estate Tax Expenses shall equal electric real estate tax expense as recorded in FERC Account 408.1.NMPC’s internal Account No. 408.140 and 408.180.

14.1.9.1.36Regulatory Assets and Liabilities shall equal state and federal regulatory asset balances in FERC Account Nos. 182.3 and 254, assets and liabilities solely related to FAS109, and excess AFUDC.

14.1.9.1.37Total Accumulated Deferred Income Taxes shall equal the sum of deferred tax balances recorded in FERC Account Nos. 281 - 283 plus accumulated deferred investment tax credits as reflected in FERC Account No. 255, minus the deferred tax balance in FERC Account No. 190.  Total Accumulated Deferred Income Taxes shall exclude the specifically identified generation-related stranded cost deferred taxes.

14.1.9.1.38Total Electric Plant shall equal the sum of Transmission Plant, Distribution Plant, Electric General Plant and Intangible Electric Plant.

14.1.9.1.39Total Gas Plant shall equal the plant balance recorded in 18 C.F.R. Part 201, FERC Account Nos. 301-399.  Total Gas Plant shall exclude Common Plant.

14.1.9.1.40Transmission Depreciation Reserve shall equal electric transmission plant related depreciation reserve balance as recorded in FERC Account No. 108, plus Transmission Related General Plant Accumulated Depreciation, Transmission Related Amortization of Other Utility Plant, and Common Plant Accumulated Depreciation associated with Gross Electric Plant.

14.1.9.1.41Transmission Operation and Maintenance Expense shall equal the sum of electric expenses as recorded in FERC Account Nos. 560 and, 562-574 which shall include Transmission Support Payments, but shall exclude expenses incurred pursuant to agreements entered into with generators or other similar resources for the purpose of supporting transmission reliability that do not qualify as Transmission Support Payments .

14.1.9.1.42Transmission Plant shall equal the gross plant balance as recorded in FERC Account Nos. 350-359.

14.1.9.1.43Transmission Related Bad Debt Expense shall equal Bad Debt Expense as reported in FERC Account 904 related to NMPC’s wholesale transmission billing.

14.1.9.1.44Unamortized Discount on Long-Term Debt shall equal the balance in FERC Account No. 226.

14.1.9.1.45Wholesale Metering Investment shall equal the gross plant investment associated with any Revenue or Remote Terminal Unit (“RTU”) meters and associated equipment connected to an internal or external tie at voltages equal to or greater than 23 kV.  The gross plant investment shall be determined by multiplying the number of such existing wholesale meters recorded in FERC Account No. 370.3 and in blanket metering accounts by the average cost of the meters plus the average costs of installation.  To the extent future gross plant investment for Wholesale Metering can be specifically identified, actual gross meter costs will be used.

Forecast and True-up Related Terms

14.1.9.1.46Forecast Period shall mean the calendar year immediately following the calendar year for which the most recent FERC Form 1 data is available, as of the beginning of the Update Year.

14.1.9.1.47Forecasted Transmission Plant Additions (“FTPA”) shall mean the sum of:

14.1.9.1.47.1NMPC’s actual Transmission Plant additions during the first quarter (January 1 through March 31) of the Forecast Period; and

14.1.9.1.47.2NMPC’s forecasted transmission investment for the Forecast Period less the amount (i), divided by 2.

14.1.9.1.48Interest on refunds, surcharges, or adjustments, as applicable, shall mean interest calculated in accordance with the methodology specified in the Commission’s regulations at 18 C.F.R. § 35.19a (a) (2) (iii) (or as such provision may be renumbered in the future).

14.1.9.1.49Actual Transmission Revenue Requirement shall mean the current Historical Transmission Revenue Requirement (as defined in Attachment 1).

14.1.9.1.50Actual Scheduling, System Control and Dispatch cost shall mean the most recently established CCC (as defined in Attachment 1).

14.1.9.1.51Actual Billing Units shall mean the most recently established BU (as defined in Attachment 1).

14.1.9.1.52Prior Year Transmission Revenue Requirement shall equal RR less Annual True-Up (“ATU”), as defined in Attachment 1, for the most recently ended calendar year as of the beginning of the Update Year. 

14.1.9.1.53Prior Year Scheduling, System Control and Dispatch shall equal the CCC, as defined in Attachment 1, for the prior calendar year.

14.1.9.1.54Prior Year Billing Units shall equal the BU, as defined in Attachment 1, for the prior calendar year.

14.1.9.1.55Prior Year Unit Rate shall equal the sum of RR, as defined in Attachment 1, for the most recently ended Prior Year Revenue Requirement and the Prior Year Scheduling, System Control and Dispatch divided by the Prior Year Billing Units.

14.1.9.1.56Annual Update shall mean the calculation of the RR, CCC, and BU components with Data Inputs for an Update Year in accordance with Section 14.1.9.4.

14.1.9.1.57Data Input shall mean any data required for the calculation of RR, CCC and BU, in accordance with the Formula Rate.

14.1.9.1.58Formal Challenge shall mean a challenge presented in accordance with Section 14.1.9.4.3.2.

14.1.9.1.59Informational Filing shall mean the filing that NMPC makes in accordance with Section 14.1.9.4 to establish the Annual Update for an Update Year.

14.1.9.1.60Interested Party shall mean a person that is (i) a party to FERC Docket No. ER08-552, (ii) the New York State Public Service Commission; (iii) a transmission customer under this Tariff that pays charges based on the Formula Rate during the calendar year prior to the submission of the Informational Filing; or (iv) a state regulatory authority having jurisdiction over the retail electric rates of such a transmission customer, provided that such regulatory authority or such customer notifies NMPC of that fact no later than 30 days prior to the Publication Date.  An Interested Person includes employees of or consultants to such person.

14.1.9.1.61Material Accounting Change shall mean an accounting policy or practice, including, but not limited to, a policy or practice affecting the allocation of costs or revenues, employed by NMPC during an Update Year that differs from the corresponding policy or practice in effect during any of the three previous calendar years which change affects any Data Input for the Update Year by $1.0 million or more, as compared to the previous calendar year. 

14.1.9.1.62Preliminary Challenge shall mean a challenge presented by an Interested Party in accordance with Section 14.1.9.4.2.1.

14.1.9.1.63Publication Date shall be the date of an Informational Filing for an Update Year.

14.1.9.1.64Review Period shall be the period ending one-hundred and fifty (150) days after the Publication Date, unless extended in accordance with Section 14.1.9.4.2.1.

14.1.9.1.65Formula Rate shall be the formulas set forth in Attachment 1.  

14.1.9.1.66Update Year shall be the period from July 1 of a given calendar year through June 30 of the subsequent calendar year for a particular Annual Update.

14.1.9.1.67Transmission Support Payments shall be expenses accepted by FERC for inclusion in the Historical Transmission Revenue Requirement pursuant to agreements entered into with generators or other similar resources for the purpose of supporting transmission reliability that have been submitted to FERC for review. 

All references to FERC accounts in the above definitions are references to 18 C.F.R. Part 101, unless specifically noted otherwise.  In the event that the above-referenced FERC accounts are renumbered, renamed, or otherwise modified, the above sections shall be deemed amended to incorporate such renumbered, renamed, modified or additional accounts.

14.1.9.2Calculation of RR

The RR component shall equal the (a) Historical Transmission Revenue Requirement, plus (b) the Forecasted Transmission Revenue Requirement which shall exclude the impact of any Transmission Support Payments, plus (c) the Annual True-Up, determined in accordance with the Formula Rate.

14.1.9.3Fixed Formula Inputs

Formula Rate inputs for (i) the authorized return on common equity (“ROE”), (ii) any cap on the common equity component of the capital structure, (iii) amount and amortization period of extraordinary property losses, (iv) depreciation and/or amortization rates, (v)  PBOP expenses, and (vi) the electric wages and salaries allocation factor and transmission wages and salaries allocation factor shall be stated values until changed by the FERC pursuant to Section 205 or Section 206 of the Federal Power Act.  An application under Section 205 or 206 or a proceeding initiated by FERC sua sponte under Section 206 to modify any of these stated values under the Formula Rate other than the ROE, the cap on the common equity component of the capital structure or the allocation factors in (vi) shall not be deemed to open for review other components of the Formula Rate.

14.1.9.4Annual Update Process

14.1.9.4.1               Annual Updates

14.1.9.4.1.1On or before June 14th of each year, NMPC shall recalculate its RR, CCC, and BU components, applying the Data Inputs called for in the Formula Rate to produce the Annual Update for the upcoming Update Year, and:

14.1.9.4.1.1.1shall post such Annual Update and a “workable” excel file containing that year’s Annual Update on the NYISO’s Internet website;

14.1.9.4.1.1.2shall file such Annual Update with the FERC as the Informational Filing.  The submission of such Informational Filing with FERC shall not require any action by the agency; and

14.1.9.4.1.1.3shall serve the Annual Update electronically on all Interested Parties.

14.1.9.4.1.2If the date for making the Informational Filing should fall on a weekend or a holiday recognized by the FERC, then the posting/filing shall coincide with the NYISO posting requirement for July rates.

14.1.9.4.1.3The Annual Update for the Update Year:

14.1.9.4.1.3.1shall use the Data Inputs specified in NMPC’s Formula Rate, and therefore, to the extent specified in NMPC’s Formula Rate, be based upon NMPC’s FERC Form No. 1 data for the most recent calendar year; to the extent specified in NMPC’s Formula Rate, be based upon the books and records of NMPC consistent with FERC accounting policies, and, to the extent specified in NMPC’s Formula Rate, be based on projections for the upcoming calendar year;

14.1.9.4.1.3.2shall provide supporting documentation for Data Inputs in the form of the data provided in Attachment C to the Offer of Settlement dated April 6, 2009, in Docket No. ER08-552;  and, with respect to Billing Units, shall include monthly documents in PDF format with redacted names and revised reference numbers for each entity to protect confidentiality, showing the Billing Units for each month of the most recently completed calendar billing year (the six-month updated BUs), including NMPC’s Transmission Owner Load (“TOL”), consisting of metered loads for the December through November timeframe showing the calendar billing year BUs reported to the NYISO by NMPC.  The total MWh of generation (including load modifiers) and net interchange for each NMPC transmission zone will be displayed. National Grid will also provide a document as a “workable” Excel file summarizing the TOL for disputed station service, High Load Factor Fitzpatrick and any other entity excluded from the Billing Units calculation in Attachment 1, Schedule 6.12, of the Formula Rate.  The summary will be labeled to show the reason for exclusion, consistent with the definition of Billing Units and will reconcile to the totals shown on Attachment 1, Schedule 6.12.

14.1.9.4.1.3.3shall provide notice of and describe all Material Accounting Changes, which description shall include an explanation of the purpose for and the circumstances giving rise to the Material Accounting Change, including references to any relevant orders, policies or notices of the Securities and Exchange Commission, the FERC or a retail regulator, which explanation may incorporate by reference any applicable disclosure statements filed with any such agency;

14.1.9.4.1.3.4shall provide notice of the date and location of the meeting to be held in accordance with Section 14.1.9.4.2.2;

14.1.9.4.1.3.5shall be subject to challenge and review only in accordance with the procedures set forth in this Section 14.1.9.4, provided that such procedures shall not preclude investigation of the Annual Update by FERC, including through hearing procedures;

14.1.9.4.1.3.6shall not seek to modify NMPC’s Formula Rate and shall not be subject to challenge by an Interested Party seeking to modify NMPC’s Formula Rate (i.e., all such modifications to the Formula Rate will require, as applicable, a Federal Power Act Section 205 or Section 206 proceeding), provided that an Interested Party may propose for consideration a change to the Formula Rate, as provided in Section 14.1.9.4.3.5;

14.1.9.4.1.3.7shall include a list of the email addresses of Interested Parties upon which the Annual Update was served; and

14.1.9.4.1.3.8shall provide a description of, and workpapers for, any correction of an error discovered by NMPC that affects the calculation of any charges under the Formula Rate during a prior year within the period applicable under Section 14.1.9.4.4.

14.1.9.4.1.4The fixed Formula Rate inputs set forth in Section 14.1.9.3 shall not be subject to adjustment in an Annual Update.

14.1.9.4.2 Annual Review Procedures

Each Annual Update shall be subject to the following review procedures:

14.1.9.4.2.1Any Interested Party shall have up to one hundred fifty (150) days after the Publication Date (unless such period is extended with the written consent of NMPC) to review the calculations and to notify NMPC in writing of any specific challenges to the accuracy of any Data Input in the Annual Update or the conformance of any such Data Input with the requirements of the Formula Rate (“Preliminary Challenge”); provided, however, that each Interested Party shall make a good faith effort to submit Preliminary Challenges at the earliest practicable date so that they may be resolved as soon as possible, and provide NMPC with a non-binding list of potential Preliminary Challenges it may present, based on its review of the Annual Update and on responses to information requests provided to that point, within ninety (90) days of the Publication Date.  Any Preliminary Challenge shall be posted on the NYISO’s internet website and served by electronic service on all Interested Parties by the next business day following the date it is provided to NMPC.

14.1.9.4.2.2Within thirty (30) days of the Publication Date, NMPC shall hold a meeting open to all Interested Parties, at which meeting: (a) NMPC shall present and explain the Annual Update; (b) NMPC shall respond to questions from Interested Parties, to the extent such questions can be answered immediately; and (c) Interested Parties shall identify any areas of potential Preliminary Challenges, to the extent they have identified them at the time of the meeting. 

14.1.9.4.2.3Interested Parties shall have up to one hundred thirty (130) days after each annual Publication Date (unless such period is extended with the written consent of NMPC) to serve reasonable information requests on NMPC; provided, however, that the Interested Parties shall make a good faith effort to submit consolidated sets of information requests that limit the number and overlap of questions to the extent practicable.  Such information requests may be directed to matters relevant to the accuracy of the Data Inputs included in the Annual Update and the conformance of those Data Inputs with the requirements of the corresponding provisions of the Formula Rate, including:  (a) the reasons for any change in a Data Input from the corresponding Data Input in an earlier Annual Update; (b) the reasons for any change in a Data Input based on actual costs from the corresponding Data Input based on a cost projection in an earlier Annual Update; (c) any reports or other materials provided to fulfill the requirements of a state or federal regulatory agency that explain the basis for projected or actual costs reflected in a Data Input; and (d) the impact of any Material Accounting Change identified in the Annual Update on the charges produced by the Formula Rate.

14.1.9.4.2.4NMPC shall make a good faith effort to respond to information requests pertaining to the Annual Update within ten (10) business days of receipt of such requests. NMPC may give reasonable priority to responding to requests that satisfy the practicable coordination and consolidation provision of Section 14.1.9.4.2.3, above.  NMPC’s responses to information requests shall not be entitled to protection as privileged settlement communications; provided, however, that: (a) any communications between NMPC and any Interested Party in connection with efforts to negotiate a resolution of a Preliminary Challenge or Formal Challenge shall be entitled to such protection; (b) if NMPC’s response to an information request contains proprietary or trade secret information or critical energy infrastructure information, NMPC and the Interested Party or Parties receiving such information shall enter into a confidentiality agreement materially similar to the model protective order used by the FERC to protect the confidentiality of such information; and (c) nothing herein shall require NMPC to provide information that is protected by the attorney-client privilege, the attorney work product doctrine, or any other legally recognized privilege.

14.1.9.4.3Resolution of Challenges

14.1.9.4.3.1NMPC and the Interested Parties shall negotiate in good faith throughout the Review Period to attempt to resolve any Preliminary Challenges. 

14.1.9.4.3.2If NMPC and any Interested Party or Parties have not resolved any Preliminary Challenge to the Annual Update within the Review Period, an Interested Party shall have an additional twenty-one (21) days (unless such period is extended with the written consent of NMPC to continue efforts to resolve a Preliminary Challenge) to present the subject matter of the Preliminary Challenge to the FERC as a Formal Challenge, which shall be served on NMPC and all other Interested Parties by electronic service on the date of such filing and posted on the NYISO’s internet website, however, there shall be no need to make a Formal Challenge or to await conclusion of the time periods in Section 14.1.9.4.2 if the FERC already has initiated a proceeding to investigate the Annual Update.  By no later than five (5) business days after the end of the Review Period, NMPC shall apprise Interested Parties of the resolution of all Preliminary Challenges that have been resolved and of the impact of the resolution of all such Preliminary Challenges on the Annual Update.  Within an additional fifteen (15) business days, NMPC shall submit a supplement to its Informational Filing to the FERC, with electronic service upon the Interested Parties, reflecting the impact of all successfully resolved Preliminary Challenges.

14.1.9.4.3.3Any response by NMPC to a Formal Challenge must be submitted to the FERC within twenty-one (21) days of the date of the filing of the Formal Challenge, and shall be posted on the NYISO’s Internet website and served on all Interested Parties by electronic service on the date of such filing.

14.1.9.4.3.4In any proceeding initiated by the FERC concerning the Annual Update or in response to a Formal Challenge, NMPC shall bear the burden of proving that the Data Inputs in that year’s Annual Update are correct and conform to the terms of the Formula Rate and refunds or adjustments may be made, in either case with interest, to charges collected under the Formula Rate if the FERC concludes that the Data Inputs are incorrect or do not conform to the terms of the Formula Rate.  In all other respects, any such proceeding shall be governed by the rules and requirements applicable to proceedings under Section 206 of the Federal Power Act.

14.1.9.4.3.5An Interested Party may propose that resolution of a Preliminary Challenge or Formal Challenge concerning a Material Accounting Change necessitates changes to the Formula Rate to ensure that the resulting charges, including the effect of the Material Accounting Change, are just and reasonable.  If NMPC agrees to such a proposed change to the Formula Rate to resolve a Preliminary Challenge, NMPC shall file the change to the Formula Rate with the FERC for approval pursuant to Section 205 of the Federal Power Act.  If NMPC does not agree to such a proposed change, the Interested Party may file the proposed change with the FERC for approval pursuant to Section 206 of the Federal Power Act concurrent with its submission of a Formal Challenge; provided that if FERC approves the proposed change, the change to the Formula Rate shall take effect as of the beginning of the Update Year during which the Section 206 filing is made, and refunds or surcharges shall be made, in either case with interest, to charges under the Formula Rate after the beginning of such Update Year to reflect the proposed change.

14.1.9.4.3.6Nothing herein shall be deemed to limit in any way the right of NMPC to file unilaterally, pursuant to Section 205 of the Federal Power Act and the regulations thereunder, changes to NMPC’s Formula Rate (including changes in connection with any incentive mechanism) or any of its Data Inputs (including, but not limited to, any fixed Data Inputs) or the right of any other party to file for such changes pursuant to Section 206 of the Federal Power Act and the regulations thereunder.  All parties reserve all rights to challenge, or take any position in response to, any such filing by any other party.

14.1.9.4.4 Changes to Data Inputs

14.1.9.4.4.1Any changes to the Data Inputs for an Annual Update, including but not limited to revisions resulting from any FERC proceeding to consider the Annual Update, or as a result of the procedures set forth herein, shall take effect as of the beginning of the Update Year and the impact of such changes shall be incorporated into the charges produced by the Formula Rate (with interest determined in accordance with 18 C.F.R. § 35.19(a)) in the Annual Update for the next effective Update Year.  This mechanism shall apply in lieu of mid-Update Year adjustments and any refunds or surcharges, except that, if an error in a Data Input is discovered and agreed upon within the Review Period, the impact of such change shall be incorporated prospectively into the charges produced by the Formula Rate during the remainder of the year preceding the next effective Update Year, in which case the impact reflected in subsequent charges shall be reduced accordingly. 

14.1.9.4.4.2The impact of an error affecting a Data Input on charges collected during the Formula Rate during the five (5) years prior to the Update Year in which the error was first discovered shall be corrected by incorporating the impact of the error on the charges produced by the Formula Rate during the five-year period into the charges produced by the Formula Rate (with interest determined in accordance with 18 C.F.R. § 35.19(a)) in the Annual Update for the next effective Update Year.  Charges collected before the five-year period shall not be subject to correction.

14.2Attachment 1 to Attachment H

14.2.1Schedules

Table of Contents

Historical Transmission Revenue RequirementSchedule 1

Forecasted Transmission Revenue RequirementSchedule 2

Annual True-up with Interest CalculationSchedule 3

Year to Year ComparisonSchedule 4

Allocators Schedule 5

Transmission Investment Base (Part 1 of 2)Schedule 6 Page 1 of 2

Transmission Investment Base (Part 1 of 2)Schedule 6 Page 2 of 2

Transmission Investment Base (Part 2 of 2)Schedule 7

Capital StructureSchedule 8

ExpensesSchedule 9

OtherSchedule 10

System Dispatch Expense - Component CCCSchedule 11

Billing Units - Component BUSchedule 12