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1 DOCKET NO APPLICATION OF SOUTHWESTERN PUBLIC SERVICE COMPANY FOR AUTHORITY TO CHANGE RATES PUBLIC UTILITY COMMISSION OF TEXAS DIRECT TESTIMONY of DEBORAH A. BLAIR on behalf of SOUTHWESTERN PUBLIC SERVICE COMPANY (Filename: BlairRRDirect.doc) Table of Contents GLOSSARY OF ACRONYMS AND DEFINED TERMS... 4 LIST OF ATTACHMENTS... 6 I. WITNESS IDENTIFICATION AND QUALIFICATIONS... 7 II. ASSIGNMENT, TESTIMONY SUMMARY AND RECOMMENDATIONS III. SCHEDULES SPONSORED IV. STEPS TO ESTABLISH THE TEXAS RETAIL REVENUE REQUIREMENT A. DEVELOPMENT OF OVERALL REVENUE REQUIREMENT B. JURISDICTIONAL ALLOCATION C. REVENUE REQUIREMENT SUMMARY V. RATE BASE A. ADJUSTMENTS TO RATE BASE POST TEST YEAR ADJUSTMENTS TRANSFORMERS AND METERS TEXAS-SPECIFIC DEPRECIATION RESERVE BALANCE ELIMINATION OF CWIP FUEL INVENTORY ELIMINATION OF PREPAYMENT AMOUNTS ELIMINATION OF REGULATORY ASSETS ADJUSTMENTS TO ADIT BALANCE PENSION ASSETS AND LIABILITIES B. CASH WORKING CAPITAL C. JURISDICTIONAL ALLOCATION OF RATE BASE ITEMS Blair Direct Revenue Requirement Page 1 RR16 - Page 57 of

2 D. TEXAS RETAIL RATE BASE VI. FUEL AND PURCHASED POWER EXPENSE VII. NON-FUEL EXPENSES A. LABOR O&M EXPENSES EMPLOYEE WAGES ANNUAL INCENTIVE COMPENSATION LONG-TERM INCENTIVE COMPENSATION NET LABOR ADJUSTMENTS B. PRODUCTION O&M EXPENSE ACCOUNTING CORRECTIONS FUEL-RELATED O&M EXPENSE ENVIRONMENTAL CONSUMABLES NO X AND SO 2 ALLOWANCE EXPENSES REC COSTS TRADING ORGANIZATION C. TRANSMISSION O&M EXPENSE SPP ADMINISTRATIVE FEES RECLASSIFICATION OF FUEL COSTS WHEELING EXPENSE SHARYLAND O&M EXPENSE D. REGIONAL MARKETS O&M EXPENSE E. DISTRIBUTION O&M EXPENSE F. CUSTOMER OPERATIONS EXPENSE CUSTOMER INTEREST EXPENSE ENERGY EFFICIENCY COSTS WHOLESALE ACCOUNT MANAGER COSTS INSTITUTIONAL AND INFORMATIONAL ADVERTISING G. A&G EXPENSE XCEL ENERGY FOUNDATION CORPORATE AVIATION ACCOUNTING CORRECTIONS SPP LETTER OF CREDIT FEE SELF-INSURED WORKERS COMPENSATION FAS PENSION AND BENEFITS EXPENSE DEFERRED PENSION AND OPEB (K) MATCH EXPENSE TEXAS COMMISSION ASSESSMENT FEES RATE CASE EXPENSE Blair Direct Revenue Requirement Page 2 RR16 - Page 58 of

3 12. ADVERTISING, CONTRIBUTIONS, DONATIONS, AND MEMBERSHIP DUES OTHER ADJUSTMENTS H. DEPRECIATION AND AMORTIZATION EXPENSE I. TAXES OTHER THAN INCOME J. INCOME TAX EXPENSE K. GAIN ON THE SALE OF SO 2 ALLOWANCES, RECS, AND UTILITY PLANT VIII. REVENUE CREDITS IX. CAPITAL STRUCTURE X. JURISDICTIONAL REVENUE DEFICIENCY XI. CONCLUSION AFFIDAVIT Blair Direct Revenue Requirement Page 3 RR16 - Page 59 of

4 GLOSSARY OF ACRONYMS AND DEFINED TERMS Acronym/Defined Term A&G ADIT Commission CRS CWIP EECRF FAS FERC ICO JOA NMPRC NOL NOx OATT O&M OPEB Operating Companies PSCo PURA REC RFP Meaning Administrative and General Accumulated Deferred Income Taxes Public Utility Commission of Texas Customer Resource System Construction Work in Progress Energy Efficiency Cost Recovery Factor Statement of Financial Accounting Standards Federal Energy Regulatory Commission Interruptible Credit Option Joint Operating Agreement New Mexico Public Regulation Commission Net Operating Loss Nitrogen Oxide Open Access Transmission Tariff Operation and Maintenance Other Post-Employment Benefit Northern States Power Company, a Minnesota corporation; Northern States Power Company, a Wisconsin corporation; PSCo; SPS Public Service Company of Colorado Public Utility Regulatory Act Renewable Energy Credit Rate Filing Package Blair Direct Revenue Requirement Page 4 RR16 - Page 60 of

5 Acronym/Defined Term Sharyland SO 2 SPP SPS Meaning Sharyland Distribution and Transmission Services, LLC Sulfur Dioxide Southwest Power Pool, a New Mexico corporation Test Year July 1, 2013 through June 30, 2014 Total Company or total company TUCO WACC Xcel Energy XES Total SPS (before any jurisdictional allocation) TUCO Inc. Weighted Average Cost of Capital Xcel Energy Inc. Xcel Energy Services Inc. Blair Direct Revenue Requirement Page 5 RR16 - Page 61 of

6 LIST OF ATTACHMENTS Attachment DAB-RR-1 DAB-RR-2 DAB-RR-3 DAB-RR-4(CD) DAB-RR-5(CD) Description List of Prior Testimony (Filename: DAB-RR-1.pdf) Cost of Service Study (Filenames: DAB-RR-2.1.xls, DAB-RR-2.2.xls, DAB-RR-2.3.xls, and DAB-RR-2.4.xls) Lead-Lag Study Summary (Filename: DAB-RR-3.doc) Safety, Conservation, and Customer Program Advertising (Filename: DAB-RR-4.pdf) (provided on CD and DVD) Workpapers of Deborah A. Blair (Filename: DAB-RR-5.pdf) (provided on CD) Blair Direct Revenue Requirement Page 6 RR16 - Page 62 of

7 DIRECT TESTIMONY OF DEBORAH A. BLAIR I. WITNESS IDENTIFICATION AND QUALIFICATIONS Q. Please state your name and business address. A. My name is Deborah A. Blair. My business address is 1800 Larimer St., Suite 1400, Denver, Colorado Q. On whose behalf are you testifying in this proceeding? A. I am filing testimony on behalf of, a New Mexico corporation ( SPS ) and wholly-owned electric utility subsidiary of Xcel Energy Inc. ( Xcel Energy ). Xcel Energy is a registered holding company that owns several electric and natural gas utility operating companies. 1 Q. By whom are you employed and in what position? A. I am employed by Xcel Energy Services Inc. ( XES ), the service company subsidiary of Xcel Energy, as Director, Revenue Analysis. Q. Please briefly outline your responsibilities as Director, Revenue Analysis. A. I am responsible for calculating the jurisdictional cost of service studies and revenue requirement determinations filed before the state regulatory authorities that regulate SPS and PSCo. I am also responsible for calculating wholesale production and transmission formula rates currently in place for SPS and PSCo, as approved by FERC. I prepare and file testimony supporting cost of service 1 Xcel Energy is the parent company of four wholly-owned electric utility operating companies: Northern States Power Company, a Minnesota corporation; Northern States Power Company, a Wisconsin corporation; Public Service Company of Colorado, a Colorado corporation ( PSCo ); and SPS (collectively, Operating Companies ). Xcel Energy s natural gas pipeline subsidiary is WestGas InterState, Inc. Xcel Energy also has two transmission-only operating companies, Xcel Energy Southwest Transmission Company, LLC and Xcel Energy Transmission Development Company, LLC, both of which are regulated by the Federal Energy Regulatory Commission ( FERC ). Blair Direct Revenue Requirement Page 7 RR16 - Page 63 of

8 studies and formula rates before regulatory authorities with jurisdiction over these rates. Q. Please describe your educational background. A. I graduated from Colorado State University with a Bachelor of Science degree in Business Administration, with an emphasis in Accounting, in Q. Please describe your professional experience. A. I began my career with Xcel Energy in June 1981 in the PSCo Accounting Division. I held several positions in the Accounting Division. In 1982, I accepted a position as Rate Accountant in the Revenue Requirements department at PSCo. In 1989, I was promoted to Supervisor, Revenue Reporting and in 1994 was promoted to Unit Manager, Revenue Requirements. In May 1997, I was promoted to the position of Director, Regulatory Support Services for New Century Services Inc., a predecessor to XES. In August 2000, I accepted my current position of Director, Revenue Analysis for XES. Q. Have you testified before any regulatory authorities? A. Yes. I have testified before the Colorado Public Utilities Commission, the Wyoming Public Service Commission, and FERC regarding overall revenue 18 requirements. I have submitted written testimony before the Public Utility Commission of Texas ( Commission ) regarding the Transmission Cost Recovery Factor. I also submitted written testimony before this Commission and the New Mexico Public Regulation Commission ( NMPRC ) regarding the merger between New Century Energies, Inc. and Northern States Power Company, which created Xcel Energy. I also testified before the NMPRC in a rate case proceeding Blair Direct Revenue Requirement Page 8 RR16 - Page 64 of

9 1 2 3 supporting the cost of service adjustments and the lead-lag study. A list of proceedings in which I have provided testimony is Attachment DAB-RR-1 to my testimony. Blair Direct Revenue Requirement Page 9 RR16 - Page 65 of

10 1 2 II. ASSIGNMENT, TESTIMONY SUMMARY AND RECOMMENDATIONS Q. What are your assignments in this proceeding? A. I will first address the process SPS uses to calculate its revenue requirement, including the allocation of costs among jurisdictions and the adjustments to total per-book costs. I will then discuss the specific adjustments to the per-book amounts of various components of the revenue requirement, such as rate base, fuel expense, operation and maintenance ( O&M ) expense, administrative and general ( A&G ) expense, depreciation and amortization expense, taxes other than income, income tax expense, revenue credits, and capital structure. Finally, I sponsor or co-sponsor a number of schedules in SPS s Rate Filing Package ( RFP ) and the portions of the Executive Summary that contain information from those schedules. Section III of this testimony. I discuss the schedules that I sponsor in Q. Please summarize the recommendations and conclusions in your testimony. A. I recommend that the Commission approve SPS s request to set rates at a level sufficient to recover an overall revenue requirement for the Texas retail jurisdiction of $577,633,008. That revenue requirement reflects an increase in base rates of $64,746,197, which is necessary for SPS to recover its reasonable and necessary costs of providing service to SPS s Texas retail customers. The portion of the overall revenue requirement attributable to the return on rate base is reasonable because both the rate base and the weighted average cost of capital ( WACC ) that is multiplied by that rate base are reasonable. As I explain in Section IV of this testimony, SPS adjusted the per-book amounts of Blair Direct Revenue Requirement Page 10 RR16 - Page 66 of

11 numerous rate base items to eliminate amounts that should not be in rate base or to reflect known and measurable adjustments to rate base. SPS also included in rate base the plant that will be placed in service between July 1, 2014 and December 31, 2014, and it is reasonable for SPS to earn a return of and on those assets for the reasons discussed by SPS witness Evan D. Evans. And as I explain in Section IX of this testimony, SPS s WACC is reasonable because it is based on the actual capital structure that SPS plans to maintain during the rate year, on SPS s actual embedded cost of debt, and on a reasonable return on equity. The portion of the revenue requirement attributable to expenses is also reasonable and should be approved by the Commission. I explain in Sections V through VII of this testimony that I have made numerous adjustments to the pro forma expense amounts to reflect actual Test Year costs, as adjusted for known 13 and measurable events. 2 I have also correctly recorded and adjusted the revenue credits to ensure that Texas retail customers are given credit for amounts received by SPS for services it performs. Finally, SPS has correctly allocated the expenses and revenues to the proper jurisdictions, which ensures that Texas retail customers pay no more than their fair share of SPS s overall revenue requirement. ( Test Year ). 2 The Test Year in this case is the twelve-month period from July 1, 2013 through June 30, 2014 Blair Direct Revenue Requirement Page 11 RR16 - Page 67 of

12 III. SCHEDULES SPONSORED Q. What RFP schedules do you sponsor? A. I sponsor or co-sponsor the schedules listed in Table DAB-RR-1: Table DAB-RR-1 Schedule A A, 1, 2, 3, 4, and 5 Schedule B 1, 1.1, 1.2, 1.3, 1.4, 2, and 2.1 Schedule C 4.2 Schedule E 1, 1.1, 1.2, 2.1, 4, 5, and 6 Schedule G 5.3, 5.4, 5.5, 7.4d, 7.7, 7.11, 7.13, 10, 11, 12, 13, 14, 14.1, 14.2, and 15 Schedule H 2 Schedule K Q. What information is contained within the A schedules? A. The A Schedule Series contains the following information: Schedule A contains the overall cost of service; Schedule A-1 contains the overall cost of service on a Texas retail basis; Schedule A-2 contains the cost of service detail by account; Schedule A-3 contains the adjustments to the Test Year information, including references to testimony and supporting workpapers; Schedule A-4 provides a detailed Test Year trial balance by FERC account; and Schedule A-5 provides a detailed listing by FERC account of amounts included in unadjusted O&M Q. What information is included in the B schedules that you sponsor? A. The B schedules include the following information: Schedule B-1 contains the original cost of SPS s rate base on a total SPS basis before any jurisdictional allocation ( total company ), the requested adjustments to rate base, and the requested rate of return; Blair Direct Revenue Requirement Page 12 RR16 - Page 68 of

13 Schedule B-1.1 contains the same information as Schedule B-1, except that it is on a Texas retail basis; Schedule B-1.2 requires the utility to provide a schedule showing the original prudent cost if the requested plant in service is less than 100% of original prudent cost. This schedule is not applicable to SPS because it is requesting 100% of original prudent plant placed in service; Schedule B-1.3 provides a schedule with all penalties and fines requested in the plant in service. This schedule is not applicable to SPS, which had no fines or penalties; Schedule B-1.4 provides a schedule of all attendant impacts of any post- Test Year adjustments to rate base; Schedule B-2 lists the monthly balance of each accumulated provision account such as injuries and damages, property insurance, etc. It also includes the amount accrued each month and the amount charged off each month. In addition, it contains the same information on an annual basis for the prior three years, and it contains the nature of major charges to the account; and Schedule B-2.1 details SPS s policies regarding accumulated provision accounts and explains how the accounts benefit customers Q. What information is included in Schedule C-4.2? A. That schedule describes the amount of construction work in progress ( CWIP ) included in rate base for the two most recent rate requests. SPS is not proposing to include any CWIP rate base and has not requested CWIP in rate base in recent rate cases. Q. Please explain what information is included in the E schedules. A. The E schedules contain information regarding short-term assets and inventories: Schedule E-1 is a schedule with each short-term asset requested in rate base, such as materials and supplies, fuel inventories, prepayments, and other types of assets. The schedule includes the monthly book balances and the thirteen-month average; Schedule E-1.1 lists the category types for each short-term asset included in Schedule E-1; Blair Direct Revenue Requirement Page 13 RR16 - Page 69 of

14 Schedule E-1.2 explains all of SPS s obsolete, damaged, or no longer used inventory policies, including discussions of how categories are determined to be obsolete, when items are written off, etc.; Schedule E-1.3 details all changes in policy of accounting for the book balances of items listed in Schedule E-1; Schedule E-2.1 presents SPS s fuel inventory policies in effect during the Test Year; Schedule E-4 presents the working capital allowance included in rate base, along with the lead-lag information; Schedule E-5 presents the amount of prepayments and materials and supplies charged to O&M expense by month for the Test Year; and Schedule E-6 explains SPS s policy for determining when a customer s deposit becomes inactive, and it contains the balance of customer deposits at year end Q. What information is included in the G schedules that you sponsor? A. The G schedules include the following information: Schedule G-5.3 contains a summary of other exclusions related to political organizations. It does not apply to SPS; Schedule G-5.4 contains a summary of exclusions from prior cases. It does not apply to SPS, which has not had any exclusions in prior cases; Schedule G-5.5 also addresses exclusions from prior cases. It does not apply to SPS, which has not had any exclusions in prior cases; Schedule G-7.4d provides detail related to the accumulated deferred income taxes ( ADIT ) associated with rate case expenses; Schedule G-7.7 contains a calculation of adjustments to return for additional depreciation; Schedule G-7.11 lists and explains all effects on federal income tax expense and on ADIT from the requested post-test Year adjustments to plant; Schedule G-7.13 contains a list of all witnesses providing testimony on federal income taxes and ADIT; Schedule G-10 addresses factoring expense. This schedule is not applicable because SPS does not factor expense; Blair Direct Revenue Requirement Page 14 RR16 - Page 70 of

15 Schedule G-11 contains information about deferred expenses from prior dockets; Schedule G-12 contains a detailed analysis of below the line expenses incurred during the Test Year; Schedule G-13 presents an analysis of nonrecurring or extraordinary expenses occurring during the Test Year and included in the cost of service; 8 9 Schedule G-14 contains the expenses charged to FERC Account 928 during the Test Year, along with adjustments to those expenses; Schedule G-14.1 presents information about rate case expenses that SPS seeks to recover in this docket; Schedule G-14.2 presents information on rate case expenses from prior dockets; and Schedule G-15 includes O&M expense by FERC account and by month, including any adjustments to O&M expense Q. What information is included in Schedule H-2? A. That schedule summarizes Production O&M expense data by FERC account. Q. What information is included in Schedule K-1? A. Schedule K-1 contains the WACC that SPS is asking the Commission to approve in this case. It contains the embedded cost of debt, the proposed cost of equity, the proposed capital structure, and the resulting cost of capital. Additionally, Schedule K-1 presents the overall rate of return claimed on the original cost rate base and the resulting total claimed return expressed in dollars. I sponsor the original cost rate base contained in this schedule. Blair Direct Revenue Requirement Page 15 RR16 - Page 71 of

16 1 2 IV. STEPS TO ESTABLISH THE TEXAS RETAIL REVENUE REQUIREMENT Q. What is the general process SPS uses to establish its Texas retail revenue requirement? A. At a very general level, setting utility rates is a three-step process. The first step involves a revenue requirement study, which is sometimes referred to as a cost of service study or pro forma rate of return study. The second step involves the allocation of costs among the jurisdictions that the utility serves. I will discuss each of those steps in more detail in the remainder of this section of my testimony. The third step entails the separation of the costs for the Texas retail jurisdiction into various functions (e.g., production, transmission, distribution). SPS witness Richard M. Luth discusses the functionalization of the Texas retail revenue requirement into the various functions. A. Development of Overall Revenue Requirement Q. What is a revenue requirement study? A. A revenue requirement study is a model that examines all of a company s investments, revenues, and expenses associated with providing electric utility service over a specific 12-month period, with the goal of determining the company s cost of providing service to its customers. The revenue requirement study indicates the overall level of revenues necessary for the company to earn its authorized return, which is used in setting the company s base rates for service. In effect, the revenue requirement establishes a proxy for what the utility s cost of service will be in future periods when the new rates will be in effect, although the Blair Direct Revenue Requirement Page 16 RR16 - Page 72 of

17 use of a historical test year in Texas causes the revenue requirement to understate the utility s true cost of service in a rising-cost environment. Q. What is the starting point for a revenue requirement study? A. The starting point in developing a revenue requirement study is total company per-book accounting information. Adjustments are then made to the per-book data to derive the Test Year costs. There are three types of adjustments that can be made to the per-book data: (1) accounting adjustments; (2) Commissionrequired adjustments; and (3) pro forma adjustments. Q. The first type of adjustment you mentioned is accounting adjustments. What are those? A. Accounting adjustments include both out-of-period adjustments and adjustments to eliminate or add certain accounts or expenses or revenues. Out-of-period adjustments eliminate transactions that were recorded in the Test Year, but that apply to periods outside the Test Year. The intent of these adjustments is to remove the effect of transactions occurring outside of the Test Year from the study. Conversely, transactions that were recorded outside the Test Year but that are applicable to the Test Year are added, and thus reflected in the study. Adjustments also are made to eliminate certain amounts that are included in the per-book accounts, but that should not be included in the base rate calculation. Q. The second type of adjustment you mentioned is a Commission-required adjustment. What is that? A. Commission-required adjustments are made to comply with rate recovery policies and principles established by the Commission in its substantive rules and in orders Blair Direct Revenue Requirement Page 17 RR16 - Page 73 of

18 issued in prior SPS proceedings. For example, promotional and image advertising expenses are costs that the Commission has specifically required to be eliminated from the cost of service, as are costs incurred for political purposes. In isolating the effects on the cost of service for Texas, when these expenses are excluded, so are the tax deductions associated with them. Q. The third type of adjustment is a pro forma adjustment. What is that? A. Pro forma adjustments are made to Test Year per-book results so that the Test Year will be representative of conditions during the rate year. Adjustments are made for known and measurable changes occurring both in the Test Year (in-period adjustments) and outside the Test Year (out-of-period adjustments). Q. Do you discuss these types of adjustments in your testimony? A. Yes. In Sections V through VIII of this testimony, I discuss all of the adjustments that I made to the per-book information. B. Jurisdictional Allocation Q. Please turn to the second step in the ratemaking process - jurisdictional allocation. Why is it necessary to perform a jurisdictional allocation? A. Well-established principles of cost causation require that customers in a particular jurisdiction should pay only the costs associated with providing service to that jurisdiction. Thus, in this case, the revenue requirement ultimately determined for Texas retail customers should include only costs related to the provision of retail utility service in Texas. This process creates a stand-alone financial look at the revenue requirement for the cost of serving SPS s Texas retail jurisdiction, which is then compared to the pro forma present revenues to determine any deficiency or Blair Direct Revenue Requirement Page 18 RR16 - Page 74 of

19 excess. Any excess indicates the need for a rate decrease, whereas a deficiency indicates that SPS is not recovering the cost of providing service to its customers and, thus, a rate increase is warranted. Q. Please explain the allocations that are made to jurisdictionalize the cost of service amounts. A. Each account or line item in the cost of service is assigned or allocated among SPS s Texas retail, New Mexico retail, and wholesale jurisdictions. When a cost is incurred on behalf of only one jurisdiction, it is assigned only to that 9 jurisdiction (i.e., direct assigned). When a cost benefits more than one jurisdiction, SPS uses an allocator based on a cost-causative factor. Q. What jurisdictional allocation factors did SPS use in the cost of service presented in this case? A. The SPS model uses two types of allocators fundamental and derived. The fundamental allocators were developed by Mr. Luth in the Rate Design phase and include the demand, energy, and customer allocation factors. The other allocators are derived within the cost of service model based on the use of the fundamental allocators. For example, transmission plant in service is allocated for the most part using the transmission demand allocator, but there are certain plant accounts that are production-related, and those are allocated using the production demand allocator. The jurisdictional totals for transmission plant in service are then used to derive the plant in service transmission allocator, which is used to allocate other line items such as accumulated reserve for depreciation and amortization - Blair Direct Revenue Requirement Page 19 RR16 - Page 75 of

20 transmission. The jurisdictional allocation factors are shown on pages of Attachment DAB-RR-2. C. Revenue Requirement Summary Q. Please summarize the results of the revenue requirement study after you completed the jurisdictional allocation to Texas retail. A. The study shows a Texas retail revenue requirement of $577,633,008 based on the proposed return on equity of 10.25% as recommended by SPS witness Robert B. Hevert, and a capital structure composed of 53.97% equity and 46.03% debt, as discussed by SPS witness Mary P. Schell. When compared with adjusted Test Year revenue of $512,886,811, as discussed by Mr. Luth in his Rate Design 11 testimony, it results in a base rate revenue deficiency of $64,746,197. The revenue requirement study is provided as Attachment DAB-RR-2 to my direct testimony. In the following sections of my testimony, I discuss the adjustments I made to support the Texas retail revenue requirement. Blair Direct Revenue Requirement Page 20 RR16 - Page 76 of

21 V. RATE BASE Q. What is SPS s per-book rate base before making any adjustments or jurisdictional allocations? A. SPS s per-book rate base before adjustments and before allocation to the Texas retail jurisdiction is $2,926,555,561, as reflected on page 11, line 329 of Attachment DAB-RR-2. Q. What method did you use to measure rate base? A. For the majority of items, I measured rate base using the original cost balances at 9 June 30, 2014, the end of the Test Year. However, I used a different measurement approach for the cash working capital balance and certain items with balances that are more volatile from month to month. Cash working capital is based on cash working capital factors that were derived from a lead-lag study multiplied by the Test Year expenses. I discuss the development of the lead-lag study later in my direct testimony. For those rate base balances that can be more volatile and have large variances from month to month, I used a 13-month average balance. The items that are based upon a 13-month average are: Fuel inventory; Nitrogen oxide ( NOx ) and sulfur dioxide ( SO 2 ) emission allowance inventory; Materials and supplies; Prepayments; Liability associated with Statement of Financial Accounting Standard ( FAS ) 106, Employers Accounting for Post Retirement Benefits Other than Pensions ; and Blair Direct Revenue Requirement Page 21 RR16 - Page 77 of

22 1 2 Liability associated with FAS 112 liability, Employers Accounting for Post Employment Benefits Q. Have you made any adjustments to rate base? A. Yes. I have made several adjustments to rate base, which I will discuss in the following subsections. I will then explain how SPS calculated its cash working capital, and after that I will discuss the jurisdictional allocation of certain rate base items. A. Adjustments to Rate Base 1. Post Test Year Adjustments Q. Did you make any adjustments to rate base to reflect SPS s proposed Post Test Year Adjustments? A. Yes. As discussed by Mr. Evans, SPS included in rate base the plant that will be placed in service between July 1, 2014 and December 31, The adjustment was calculated by comparing the estimated plant in service balance at December 31, 2014 to the actual plant in service balance at June 30, Then adjustments were made for known changes to four capital projects. SPS witnesses Alan J. Davidson, John S. Fulton, Brad E. Baldridge, Danny A. Nygaard, David C. Harkness, and Lisa H. Perkett all provide support for the capital projects that will be in service by the end of December 31, In addition, adjustments were made to several other accounts related to these plant adjustments, including accumulated reserve for depreciation, ADIT, depreciation expense, property taxes, additions and deductions used in the calculation of current income taxes, 23 and deferred income tax expense. The Post Test Year adjustments are Blair Direct Revenue Requirement Page 22 RR16 - Page 78 of

23 summarized on Attachment DAB-RR-2, pages 53 through 60 and pages 66 through Transformers and Meters Q. Did you make any changes to the amounts recorded for transformers and meters? A. Yes. As discussed by Ms. Perkett, some plant balances for line transformers and electric meters were inadvertently recorded as Texas retail jurisdictional assets, when they should have been assigned to the New Mexico retail jurisdiction. In order to correct for those electric meters and line transformers that were not previously assigned to New Mexico, SPS assigned a portion of historical additions to New Mexico based on installed meters in each state. The amounts for transformers and meters mistakenly recorded to the Texas retail jurisdiction were $26,847,560 and $9,358,315, respectively, which appear on page 61, lines 2 14 and 5 of Attachment DAB-RR-2. The accumulated reserve for depreciation associated with these assets has not been adjusted; however, an adjustment was made to eliminate the ADIT and depreciation expense associated with these assets, as shown on page 61, lines 3, 10 and 13 of Attachment DAB-RR Texas-Specific Depreciation Reserve Balance Q. What adjustments did you make to the accumulated reserve for depreciation? A. As discussed in detail by Ms. Perkett, the accumulated reserve for depreciation was adjusted to develop a Texas-specific depreciation reserve based upon the depreciation rates approved for the Texas retail jurisdiction. The book balances Blair Direct Revenue Requirement Page 23 RR16 - Page 79 of

24 1 reflect blended depreciation rates, based on the various depreciation rates 2 approved by the regulatory authorities that regulate SPS. An adjustment is necessary to reflect the effect of the Texas-approved depreciation rates on the accumulated depreciation reserve balance. The adjustment, which decreases the accumulated reserve by approximately $132.3 million (total company), appears on pages 62 through 65 of Attachment DAB-RR Elimination of CWIP Q. Is SPS requesting that CWIP be included in rate base? A. No. SPS is not asserting that it meets the criteria in P.U.C. SUBST. R (c)(2) for including CWIP in rate base in this case. Therefore, I have eliminated all of the $353.5 million (total company) CWIP balance from rate base. That adjustment appears on page 37, lines 107 through 113, of Attachment DAB-RR Fuel Inventory Q. Did you make any adjustments for fuel inventory? A. Yes. As of June 10, 2014, environmental consumable chemicals consumed during the generation process are recoverable through fuel in Texas. The cost of environmental consumable chemicals was previously expensed as it was purchased. Because the Texas rules state that only the amount consumed may be included as fuel costs, SPS has adopted inventory accounting for these chemicals. As the chemicals are purchased, the inventory account is increased, and consumption of the chemicals reduces the inventory account. SPS expenses the 23 amount consumed for recovery in the fuel mechanism. SPS has made an Blair Direct Revenue Requirement Page 24 RR16 - Page 80 of

25 1 adjustment to include the environmental consumable chemical inventory balance 2 in rate base. Accordingly, I took the environmental consumable chemical inventory amounts for June through October 2014 and annualized that average to arrive at a 13-month average. I compared this 13-month average to the Test Year Inventory balance for an adjustment of $70,150 (total company), which appears on page 37, line 119, and page 75 of Attachment DAB-RR Elimination of Prepayment Amounts Q. What adjustments did you make to Prepayments? A. I made adjustments to Prepayments totaling $7,382,038 (total company), which appear on page 38, lines 125 through 133, of Attachment DAB-RR-2. Adjustments made include prepayments related to short-term debt, brand advertising, energy efficiency prepayments, and income taxes. Q. Please discuss the adjustment for short-term debt fees. A. As explained by Ms. Schell, SPS does not include short-term debt in its capital structure. Therefore, I have eliminated from the cost of service all prepayments associated with SPS s line of credit. Q. Why did you eliminate prepayments related to brand advertising? A. The costs that exceed the contributions and donations cap in P.U.C. SUBST. R include brand advertising costs. Accordingly, I eliminated the prepayments associated with SPS s brand advertising. Blair Direct Revenue Requirement Page 25 RR16 - Page 81 of

26 Q. Why did you eliminate the energy efficiency prepayments? A. P.U.C. SUBST. R (f)(4) provides that no energy efficiency costs can be included in base rates. Thus, I removed the prepayments associated with SPS s energy efficiency program. Q. Why did you eliminate the income tax prepayment? A. The income tax prepayment is an accounting entry and does not require any outof-pocket costs for SPS. Therefore, it is not appropriate for SPS to include that amount in rate base and earn a return on it. Q. Did you eliminate any other prepayments? A. Yes. I eliminated two other prepayments that are non-recurring in future periods. I eliminated a prepaid safety award and a transmission prepayment (labeled Other Prepaid TU ). The amount recorded as a transmission prepayment was an accounting error that was reversed in the next month. Adjustments were made to eliminate these two prepayments, which together total $50,367 (total company), as shown on Attachment DAB-RR-2, page 38, lines 127 and Elimination of Regulatory Assets Q. What regulatory assets have you removed from rate base? A. As reflected on page 38, lines 137, 141, and 145 of Attachment DAB-RR-2, I eliminated three types of regulatory assets from rate base: Regulatory assets of approximately $8.5 million (total company) related to energy efficiency and Interruptible Credit Option ( ICO ) costs; Regulatory assets of approximately $19.9 million (total company) related to Renewable Energy Credit ( REC ) costs; and Regulatory assets of approximately $7.5 million (total company) related to deferred pension and Other Post-Employment Benefit ( OPEB ) costs. Blair Direct Revenue Requirement Page 26 RR16 - Page 82 of

27 SPS s request to recover these regulatory assets is based on the parties agreement in SPS s most recent base rate case, Docket No , 3 and on the Commission s orders in SPS s two prior base rate cases, which were Docket Nos and Mr. Evans presents SPS s request for amortization periods for these regulatory assets. Q. If the Commission does not approve the requested amortization periods for those regulatory assets, do you have an alternative request? A. Yes. If the Commission determines that the regulatory assets should be amortized for periods longer than the periods SPS has requested, SPS proposes that the regulatory assets be included in rate base, and that SPS earn a return of and on those assets until they are fully amortized. Q. Have you included any regulatory assets in rate base? A. Yes. I have included in rate base a regulatory asset associated with the cost of meters related to the Texas restructuring rulemaking. SPS incurred those costs in preparation for deregulation and restructuring, but the Legislature subsequently decided that SPS s service area would not be subject to retail competition. The Commission approved SPS s recovery of that regulatory asset in Docket No. 3 As explained in Mr. Evans s testimony, the stipulation in Docket No was non-unanimous. After an evidentiary hearing and briefing on the justness and reasonableness of the settlement, the State Office of Administrative Hearing Administrative Law Judges recommended that the Commission find that the settlement is just, reasonable, and in the public interest. Application of for Authority to Change Rates and to Reconcile Fuel and Purchased Power Costs for the Period July 1, 2012 Through June 30, 2013, Docket No , Proposal for Decision (Oct. 30, 2014). The Commission will consider that recommendation at the December 18, 2014 open meeting, which is after the date on which this base rate case application is being filed. 4 Application of for Authority to Change Rates and to Reconcile Fuel and Purchased Power Costs for the Period January 1, 2010 to June 30, 2012, Docket No (Jun. 19, 2013). 5 Application of for Authority to Change Rates and to Reconcile Fuel and Purchased Power Costs for 2008 and 2009, Docket No , (Mar. 25, 2011). Blair Direct Revenue Requirement Page 27 RR16 - Page 83 of

28 and authorized recovery of the costs over a 20-year period beginning in The Test Year amount is $279,186 (total company), all of which is assigned to the Texas retail jurisdiction, as shown on Attachment DAB-RR-2, page 8, line Adjustments to ADIT Balance Q. How does SPS account for income taxes? A. As discussed in more detail by SPS witness Christopher A. Arend, SPS uses the tax normalization method to account for income taxes. Tax normalization refers to the practice of providing deferred taxes on all book/tax timing differences. Timing differences are transactions that affect book income and taxable income in different periods. This issue arises because taxes are not always required to be paid by a utility at the same time the tax obligation is incurred. In contrast, flowthrough is the accounting method which, for ratemaking purposes, provides for income tax expense currently payable to be included as cost of service income tax expense for the period, and deferred income taxes are not recorded. The classic example of a timing difference is related to depreciation expense, which is recorded on a straight-line basis for financial reporting purposes. For tax purposes, however, depreciation is accelerated, which reduces current taxes by the value of the accelerated depreciation deduction multiplied by the tax rate. The difference between the accelerated deduction used for tax purposes and the straight-line depreciation used for financial reporting is multiplied by the tax rate, which results in recorded ADIT and a deferred tax 6 Application of to Recover Transition to Competition Costs Pursuant to Section of the Public Utility Regulatory Act, Docket No (May 14, 2002). Blair Direct Revenue Requirement Page 28 RR16 - Page 84 of

29 1 2 3 liability. For the purpose of setting rates, the cost of service study includes both the current income tax expense and the ADIT balance, but the ADIT balance is applied as a reduction to rate base, which gives customers credit and a reduction 4 in rates. The reduction in rates reflects SPS s use of taxes that have been collected from customers but that are not due and payable in SPS s current taxes. Q. Has this Commission adopted the use of tax normalization for ratemaking purposes? A. Yes. The Commission requires utilities to use the full tax normalization method 9 for calculating income taxes in the cost of service. 7 In addition, the normalization method of accounting is provided for as comprehensive inter-period income tax allocation in General Instruction 18 of the FERC Uniform System of Accounts, which has been adopted by the Commission for use by utilities such as SPS. 8 Q. What is bonus tax depreciation? A. Bonus tax depreciation is the result of provisions in federal tax laws that allow SPS to deduct either 50% or 100% of qualifying capital investments in the first 16 year an investment is placed in service. In the case of the 50% bonus depreciation, the remaining 50% is depreciated for tax purposes using the existing accelerated depreciation schedules. Both the bonus tax depreciation deductions and the existing accelerated depreciation deductions are normalized for accounting and ratemaking purposes. 7 See P.U.C. SUBST. R (b)(1)(D). 8 See P.U.C. SUBST. R Blair Direct Revenue Requirement Page 29 RR16 - Page 85 of

30 Q. Has SPS s use of bonus depreciation provided benefits to the customers? A. Yes. SPS s use of bonus depreciation has led to substantial reductions in SPS s rate base. Q. Has tax normalization become more complex as a result of bonus tax depreciation? A. Yes. SPS must determine if the bonus tax depreciation results in more tax deductions than SPS can currently use. In other words, SPS must calculate if there are more deductions than net income, which results in a tax Net Operating Loss ( NOL ). If SPS is in an NOL position, a deferred tax asset is created and included in rate base to offset the ADIT balances. SPS made those calculations for the Test Year and concluded it did not have operating losses in the Test Year, and thus it is not in an NOL position for the Test Year. However, SPS did have NOLs in prior years, resulting in a NOL accumulated deferred tax asset balance at the beginning of the Test Year, and SPS did not have enough income in the Test Year to unwind this balance. Therefore, there is a NOL accumulated deferred tax asset balance at the end of the Test Year. In other words, the NOL accumulated deferred tax asset balance declined from the beginning of the Test Year to the end of the Test Year by $14.6 million, resulting in an $8,273,909 balance as of June 30, 2014, as shown on Attachment DAB-RR-2, page 10, lines 253 and 254. Q. Please describe the basis for the ADIT balances included in rate base in this case. A. The ADIT balance included in rate base consists of both plant- and non-plantrelated items booked to FERC Accounts 281, 282, 283, and 190. The plant- Blair Direct Revenue Requirement Page 30 RR16 - Page 86 of

31 related ADIT balance is primarily due to the book-tax timing difference relating to depreciation. The non-plant ADIT balance is primarily due to the book-tax timing differences relating to pensions and benefits and other non-depreciation related items. I have detailed the ADIT balance by each non-plant income tax addition/deduction (also known as Schedule M items ), and I have functionalized the plant-related ADIT items. The details of the non-plant ADIT 7 balances are presented on Attachment DAB-RR-2, page 9 through 11. In addition, I have also presented the corresponding deferred income tax expense and additions and deductions to current income taxes for both plant and non-plant related items consistent with the ADIT balances. Q. Please discuss the adjustments to the ADIT balance included in rate base. A. I made several adjustments to the ADIT balance included in rate base in the cost of service study presented in this case. First, I adjusted the plant-related ADIT balances to reflect the impact that the adjustment to accumulated depreciation reserve for unblending the depreciation had on deferred taxes to reflect the Texas-approved depreciation rates. Second, I eliminated from the ADIT all remaining balances related to the sale of certain transmission assets to Sharyland Distribution and Transmission Services, LLC ( Sharyland ). Third, I adjusted the entire ADIT balances to reflect only the federal income tax rate of 35%, thereby removing any state income tax effects. Fourth, I adjusted the ADIT balances for the post-test Year plant adjustments and the reclassification of electric meters and line transformers, as Blair Direct Revenue Requirement Page 31 RR16 - Page 87 of

32 previously discussed. In addition, I made an incremental adjustment to reflect the ADIT at December 31, 2014 at the federal income tax rate of 35%. As previously discussed, an adjustment was made to adjust the ADIT balances at June 30, 2014 to reflect only the federal income tax rate of 35%. An additional adjustment was required for the ADIT balances at December 31, 2014 to also be included at the federal income tax rate of 35%. Fifth, I eliminated from ADIT all balances that are related to items not included in the cost of service. For example, I eliminated the ADIT balances associated with: unbilled revenue; deferred fuel and purchased energy costs associated with the fuel factor; fuel refunds/surcharges; regulatory liabilities associated with other state or federal jurisdictions; deferred compensation and performance share plans; non-utility plant; federal and state NOL balances; deferred energy efficiency costs associated with the Energy Efficiency Cost Recovery Factor ( EECRF ); ICO costs; deferred RECcosts applicable to the New Mexico retail jurisdiction; and taxes applicable to states other than Texas Because the costs that generated these deferred taxes are not part of the cost of service, the associated deferred tax balances must be excluded as well. Blair Direct Revenue Requirement Page 32 RR16 - Page 88 of

33 Finally, I eliminated ADIT balances associated with FAS No. 109, Accounting for Income Taxes. The deferred taxes created by FAS 109 are recorded as both deferred tax assets (FERC Account 190) and deferred tax liabilities (FERC Account 282). These deferred taxes have equal and offsetting 5 regulatory asset and liability accounts on SPS s balance sheet. Because the regulatory assets and liabilities are not included in rate base, the deferred taxes must also be eliminated. Details of the adjustments to the ADIT balances are shown on pages 38 and 39 of Attachment DAB-RR Pension Assets and Liabilities Q. How have you treated SPS s prepaid pension asset and the liabilities associated with FAS 106 and FAS 112 in the cost of service study? A. As discussed by SPS witness Richard R. Schrubbe, SPS has included the prepaid pension asset in rate base, as shown on page 8, line 182 of Attachment DAB-RR- 2. Similarly, and consistent with the treatment of the prepaid pension asset in rate base, I have included the liabilities associated with FAS 106 and FAS 112 in rate base. The inclusion of the FAS 106 liability in rate base reduces rate base by $17.4 million (total company), and the inclusion of the FAS 112 liability reduces rate base by $2.3 million (total company), as shown on page 11, lines 322 and 323 of Attachment DAB-RR-2. B. Cash Working Capital Q. Please describe cash working capital included in rate base. A. Cash working capital is the amount of investor-supplied capital necessary to finance cost of service expenses between the time the expenditures are required to Blair Direct Revenue Requirement Page 33 RR16 - Page 89 of

34 provide the service to customers and the time cash is received for that service. To determine the allowance of cash working capital, the Commission has traditionally accepted the use of a lead-lag study, per P.U.C. SUBST. R (c)(2)(B)(iii)(IV). Q. Did SPS prepare the lead-lag study that is used to derive the cash working capital amount in rate base in this case? A. Yes. SPS prepared a new lead-lag study for this case based on data from the Test Year. A summary of the lead lag study is attached as Attachment DAB-RR-3. Q. Please describe a lead-lag study. A. A lead-lag study is a method used to measure the amount of working capital required to finance a utility s day-to-day operations. There are two parts in a lead-lag study. First, the utility must calculate the expense lead based on an extensive and detailed study of the payment practices for each cash expense. That is done primarily by determining the service period when goods or services are received by the utility and when the expense is paid. Depending on the number of records, statistical sampling can be used to determine the expense lead. Second, the utility must calculate the revenue lag, which is the time between the mid-point of the service period to the date on which the utility receives payment from the customer. Depending on the number of customers, statistical sampling can be used to determine the revenue lag. The expense lead is then subtracted from the revenue lag to determine the number of days until the utility is compensated for its expense. This net number of days is converted to an annual number by dividing by 365 days, which is referred to as the cash working capital factor. The Blair Direct Revenue Requirement Page 34 RR16 - Page 90 of

35 1 2 cash working capital factor is multiplied by the corresponding Test Year expense items and is an addition to rate base if it is positive or a subtraction from rate base 3 if it is negative. A negative cash working capital factor indicates that SPS receives revenue before it pays expenses. Q. What cash expense items are included in the expense lead calculation you performed? A. The following cash expense items have been included in the expense lead calculation: Coal costs, including freight for steam production; Natural gas for other power generation; Oil for electric generation; Purchased power; Labor regular pay O&M expense; Labor incentive pay O&M expense; Non-labor O&M expense; Property taxes; Payroll taxes; Sales and use taxes; Municipal franchise fees; Texas gross margins (franchise tax) taxes; Texas miscellaneous gross receipts taxes; and Federal income taxes. Blair Direct Revenue Requirement Page 35 RR16 - Page 91 of

36 Q. Please discuss in more detail the procedures used to determine the expense lead. A. The expense lead is the average number of days from the time of service to the date SPS payment for the service to the vendor clears the bank. The expense lead for each invoice is the difference between the number of days it takes for SPS s payment to the vendor to clear the bank and the mid-point date of each invoice s service period. In addition, expense lead days are weighted by the amount of the invoices. SPS used statistical sampling to determine the expense lead for the natural gas for other power generation, purchased power, and nonlabor O&M cash working capital expense categories. SPS followed a statistical sampling method that allowed for confidence intervals of 90% for expense leads. For each sample group, all of the invoice service dates and payment dates were reviewed. SPS reviewed all coal and freight costs for steam production and oil for electric generation invoices to determine the expense lead for these cash 15 working capital expense categories. Service dates and payment dates were gathered for the O&M labor, the incentive compensation O&M labor, and the various tax cash working capital expense categories. A detailed description of the process used to develop the cash working capital expense lead factors is included in Attachment DAB-RR-3. Q. Please discuss in more detail the procedures used to determine the revenue lag. A. The revenue lag is the average number of days from the time of service to the date 23 on which SPS receives payment from the customer. The revenue lag is Blair Direct Revenue Requirement Page 36 RR16 - Page 92 of

37 determined by calculating the collection lag, which is the number of days it takes for the customers to pay their bills from the mid-point date of the service period, and adding an additional half day to account for the posting of the customer receipts to SPS s bank account. An average lag day value for each rate group was calculated and weighted with that group s percent of total revenue. The revenue lag was calculated using data from SPS s customer billing system. SPS used statistical sampling for the customers billed on rate schedules with 1,200 or more customers, and it used 100% sampling for the customers on rate schedules with fewer than 1,200 customers. SPS followed a statistical sampling method that allowed for confidence intervals of 95 % for revenue lag. A revenue lag was calculated for each invoice. A detailed description of the process used to develop the cash working capital revenue lag factors is provided in Attachment DAB-RR-3. Q. What are the resulting lead-lag factors SPS has calculated for use in calculating cash working capital in this case? A. The lead-lag study results are presented in RFP Schedule E-4. The resulting cash working capital amount is ($10,788,103) (Texas retail), as reflected on page 7, line 179, and page 33, line 28 of Attachment DAB-RR-2. C. Jurisdictional Allocation of Rate Base Items Q. After arriving at the rate base balances for the various FERC accounts, did you jurisdictionalize those balances? A. Yes. As I discussed in an earlier section, after the costs are quantified, it is necessary to assign or allocate them among SPS s rate jurisdictions. Some are Blair Direct Revenue Requirement Page 37 RR16 - Page 93 of

38 allocated to all three jurisdictions; some are allocated to just the two retail jurisdictions; and other balances are directly assigned to a single jurisdiction. Q. Please describe the types of rate base items that are assigned to SPS s two retail jurisdictions. A. The rate base items that are assigned to the two retail jurisdictions are the customer resource system ( CRS ) and the call center. Q. Please explain why those are assigned to the retail jurisdictions. A. The CRS is not used to bill any of SPS s wholesale customers, but instead is used solely to bill SPS s retail customers. To bill its wholesale customers, SPS uses an accounts receivable module within the general ledger system, J.D. Edwards, and a portion of that system is already being allocated to the wholesale customers. Likewise, SPS s wholesale customers do not benefit from or use the call centers. Instead, these large customers deal with account representatives, who are not call center employees. Because the wholesale jurisdiction does not benefit from either the CRS or the call center, the costs associated with those are allocated between only the retail jurisdictions served by SPS. Q. Were any rate base items direct-assigned to SPS s retail jurisdictions? A. Yes. I assigned several rate base items directly to SPS s retail jurisdictions. Those items include radial transmission lines, customer deposits, and customer advances for construction. In addition, I directly assigned distribution assets to the Texas or New Mexico retail jurisdiction where possible, and I directly assigned certain regulatory assets. Blair Direct Revenue Requirement Page 38 RR16 - Page 94 of

39 Q. Why were customer deposits and customer advances for construction directly assigned? A. SPS records customer deposits and customer advances for construction balances by location. These costs are specific to the customers in either Texas or New Mexico and therefore were directly assigned. Q. Please discuss the direct assignment of transmission facilities that are included in the cost of service. A. Under the Southwest Power Pool ( SPP ) Regional Open Access Transmission Tariff ( OATT ), each transmission owner is required to determine which of its 10 facilities qualify as Transmission Facilities as defined in Attachment AI. 9 The SPP definition of Transmission Facilities in Attachment AI to the SPP OATT requires SPS to analyze the way it allocates the costs of certain facilities that do not meet the SPP definition of Transmission Facilities. Accordingly, SPS has performed a systematic review of all of its transmission lines and has made a determination as to which facilities should be included in the cost of service as transmission facilities and which facilities should be directly assigned to SPS retail loads or wholesale customers. SPS has directly assigned specific radial transmission lines to the applicable SPS retail jurisdictions and wholesale transmission customers consistent with Attachment AI criteria in the cost of service presented in this case. 9 SPP OATT, Attachment AI IV; see also Southwest Power Pool, Inc., 112 FERC 61,355 at P 62 (2005) (establishing effective date for applicable tariff sheets and the requirement to determine which facilities are Transmission Facilities ), order granting clarif., 114 FERC 61,242 (2006). Blair Direct Revenue Requirement Page 39 RR16 - Page 95 of

40 Q. Is the direct assignment of these items to specific jurisdictions or the allocation to retail jurisdictions consistent with how SPS jurisdictionalized them in its last rate case? A. Yes. The practice of direct assigning these items is consistent with SPS s practice in its 2014, 2012, 2010, 2008, and 2006 base rate cases, which were Docket Nos , 40824, 38147, 35763, 10 and 32766, 11 respectively. Q. Has SPS changed the jurisdictional allocators for any of the items in the cost of service? A. Yes, SPS has made two changes to jurisdictional allocations. First, SPS changed the jurisdictional allocator for the intangible and general plant, along with the related costs (e.g., accumulated reserve for depreciation, ADIT, depreciation expense, etc.,) from Plant in Service Production, Transmission and Distribution (PIS-PTD) to Labor Excluding Administrative and General Expense (LABXAG). This change is consistent with how SPS allocates these same costs in its FERC-approved formula rates. Second, SPS changed the jurisdictional allocator for fuel inventory from the 12 Coincident Peak - Production (12CP-PROD) to Energy because fuel is generally allocated in accordance with sales. 10 Application of for Authority to Change Rates, to Reconcile Fuel and Purchased Power Costs for 2006 and 2007, and to Provide a Credit for Fuel Cost Savings, Docket No (Jun. 1, 2009). 11 Application of for Authority to Change Rates; Reconciliation of its Fuel Costs for 2004 and 2005; Authority to Revise the Semi Annual Formulae Originally Approved in Docket No Used to Adjust its Fuel Factors; and Related Relief, Docket No (Jul. 27, 2007). Blair Direct Revenue Requirement Page 40 RR16 - Page 96 of

41 D. Texas Retail Rate Base Q. What is the Texas retail jurisdictional rate base included in your revenue requirement after all of the adjustments and allocations discussed in this section of your testimony? A. The Texas retail jurisdictional rate base is $1,560,042,382, as reflected on page 11, line 329 of Attachment DAB-RR-2. Blair Direct Revenue Requirement Page 41 RR16 - Page 97 of

42 VI. FUEL AND PURCHASED POWER EXPENSE Q. Did you make any adjustments to fuel and purchased power energy expense? A. Yes. I made several adjustments to fuel and purchased power energy expense. First, I eliminated all fuel and purchased power energy-related expenses, which include steam power fuel costs (gas, oil, and coal), other power fuel costs (gas and oil), purchased power energy costs, and deferred fuel and purchased power energy costs. Those adjustments appear on page 40 of Attachment DAB-RR-2. SPS s base rates do not include any fuel expense or purchased power energy expenses, as these are recovered through the fuel factor mechanism. SPS s base rates do recover certain purchased power capacity and purchased power variable O&M costs, which I will discuss later. Second, I reclassified to O&M certain expenses that are recorded in fuel accounts but that are not recovered through the fuel factor, including: (i) labor expenses that were recorded in FERC Accounts 501, Steam Production Fuel; and (ii) other expenses that were recorded in FERC Account 565, Transmission of Electricity by Others. These expenses are recovered in base rates and have been reclassified to operating expense, as shown on Attachment DAB-RR-2, page 40, line 3 and page 41, line 98. Q. Did you make any adjustments to purchased power capacity and purchased power variable O&M expenses? A. Yes. I made several adjustments to purchased power capacity and purchased power variable O&M for purchased capacity expense. First, I have continued the practice of recovering purchased power variable O&M expense in base rates, consistent with SPS s practice in its prior base rate cases. Blair Direct Revenue Requirement Page 42 RR16 - Page 98 of

43 Second, I adjusted Test Year purchased power capacity and purchased power variable O&M costs discussed by SPS witness Jeffrey C. Klein to reflect: 1. the known, contractual price changes that will occur in 2014 and 2015; 2. the elimination of contracts that expired during the Test Year and that will expire prior to the rate year; and 3. the new contracts that took effect after the end of the Test Year but will be in effect by the rate year. The adjustments are detailed on page 40, lines 24 through 26, of Attachment DAB-RR-2. Q. What is the dollar amount of the Texas retail purchased power capacityrelated and variable O&M costs reflected in the cost of service? A. The Texas retail portion of purchased capacity and variable O&M expenses included in base rates is $66,026,197, as shown on page 13, line 48 of Attachment DAB-RR-2. Blair Direct Revenue Requirement Page 43 RR16 - Page 99 of

44 VII. NON-FUEL EXPENSES A. Labor O&M Expenses Q. What topics do you discuss in this section of your testimony? A. I discuss the adjustments to labor O&M expense, which consist of: the annualization of labor expense and known and measurable adjustments to that expense; the reduction of annual incentive compensation amounts to match targets; and the elimination of the financial-based component of long-term incentive costs. 1. Employee Wages Q. Please describe the adjustments for employee wages. A. I started with total company per book payroll expense for the Test Year and made several adjustments to add or remove expenses associated with items such as: the Xcel Energy Foundation; wholesale managers; business area adjustments; and costs recovered through the EECRF After deriving the adjusted per book labor costs, I made two additional adjustments. First, I annualized the Test Year amount of employee wages by taking the three-month total of employee wages from April through June 2014 and multiplying it by four to arrive at an annual amount of employee wage expense as of the end of the Test Year. Blair Direct Revenue Requirement Page 44 RR16 - Page 100 of

45 Q. Why did you use the three-month period from April through June of 2014? A. I chose that three-month period because it included both the Test Year bargaining employee wage increase, which occurred in November 2013, and the Test Year nonbargaining employee wage increase, which occurred in March Q. What effect did the annualization have on base labor costs? A. It increased labor costs by $5,088,752 (total company). That amount is the sum of the amounts on page 108, line 275, and page 143, line 273 of Attachment DAB-RR-2. Q. What was the second adjustment that you made to employee wages? A. I made an adjustment to incorporate the known and measurable wage increases that SPS and XES employees will receive between the end of the Test Year and the date on which the rates set in this case take effect. Bargaining employees likely will receive a wage increase effective in November 2014 as a result of labor contract negotiations and arbitration, and non-bargaining employees will receive a wage increase in March Q. How did you calculate the known and measurable wage adjustment? A. I first divided employees into two groups XES employees and SPS employees. All XES employees are non-bargaining employees. As discussed by SPS witness Jill H. Reed, SPS has budgeted that the bargaining unit employees will receive a 3.0% wage increase in November 2014, and the non-bargaining employees will receive a 3.0% wage increase on March 15, I applied the same 3.0 percentage increase to all SPS employee payroll costs. Blair Direct Revenue Requirement Page 45 RR16 - Page 101 of

46 Q. What effect did the second known and measurable adjustment have on base labor costs? A. It increased labor costs by $3,140,852 (total company), as shown on page 164, line 275 of Attachment DAB-RR-2. Q. What is the total of the two wage adjustments on base labor costs? A. The amount is $8,229,604 (total company). 2. Annual Incentive Compensation Q. Please describe the adjustment for annual incentive compensation. A. I first changed the per book expense amounts to reflect the adjustments I described in the previous subsection. The remaining annual incentive compensation associated with the adjusted per book amounts exceeded the targeted amounts. Therefore, I eliminated the portion of the annual incentive compensation that exceeded the target. This adjustment was made by FERC account so that the proper jurisdictional allocation could be made. The total incentive compensation adjustment is a net decrease in O&M expenses of $1,302,415 (total company), as shown on Attachment DAB-RR-2, page 185, line 275. Q. Did you make any other adjustments to annual incentive compensation? A. Yes. I removed all of the incentive compensation that relate to financial goals. That is an adjustment net decrease of $959,219 (total company), as shown on page 192, line 275 of Attachment DAB-RR-2. Q. What is the total of the two incentive pay adjustments on base labor costs? A. The amount is a decrease of $2,261,634 (total company). Blair Direct Revenue Requirement Page 46 RR16 - Page 102 of

47 Long-Term Incentive Compensation Q. Please describe the adjustments that you made to remove long-term incentive compensation. A. For the reasons discussed by SPS witness Ms. Reed, I have eliminated long-term incentive compensation from the cost of service. The adjustment for both SPS and XES employees totals $2,003,694; however, $1,308,488 was eliminated through the business area adjustments that I discuss later in my testimony, resulting in a net adjustment of $695,206 (total company), as shown on Attachment DAB-RR-2, page 231, line 11. The adjustment is made to FERC Account 920, Administrative and General Salaries. 4. Net Labor Adjustments Q. Please summarize the effect of the labor O&M adjustments that you have discussed in this section of your testimony. A. Table DAB-RR-2 summarizes the effects of the labor adjustments: Table DAB-RR-2 Adjustment Amount Wage Adjustment Annualization Wage Adjustment Wage Increases $5,088,752 $3,140,852 Annual Incentive ($2,261,634) Long-Term Incentive ($695,206) Total $5,572,764 Blair Direct Revenue Requirement Page 47 RR16 - Page 103 of

48 B. Production O&M Expense Q. Have you made any adjustments to production O&M expense? A. Yes. In addition to the labor expense adjustments I discussed in the prior section, I have made the following adjustments: Reflected corrections to accounting entries; Increased fuel handling charges to capture contractual increases; Eliminated environmental consumable expenses; Eliminated NO X and SO 2 allowance expenses; Adjusted REC expenses to reflect the methods by which SPS proposes to recover those expenses; and Eliminated expenses associated with trading operations I will address each of these adjustments in the following subsections. 1. Accounting Corrections Q. What adjustments did you make to production O&M expense for accounting corrections? A. I made adjustments to production O&M expense and other functional O&M expenses for accounting corrections in the Test Year. Each of the business area witnesses (the witnesses who support XES charges to SPS) reviewed the costs from his or her business area and identified costs that were charged to SPS in error. I have included adjustments for all of these amounts and identified them as business area reclassifications. These adjustments, which were made by FERC account so that the proper jurisdictional allocation could be made, are shown on pages 193 through 213 of Attachment DAB-RR-2. The total impact of all of these reclassification entries is a net decrease to O&M expense of $2,012,570 (total company), as shown on Attachment DAB-RR-2, page 213, line 275. Blair Direct Revenue Requirement Page 48 RR16 - Page 104 of

49 Fuel-Related O&M Expense Q. Please describe the adjustment to fuel handling expense. A. I made a known and measurable change to the Test Year level of costs charged to SPS by TUCO Inc. ( TUCO ) for supplier margins based on calendar year 2015 contract increases for this item. The amount of the adjustment was $40,117 (total company), as shown on Attachment DAB-RR-2, page 214, line 15. SPS witness H. Craig Romer discusses the change in more detail in his revenue requirement testimony. 3. Environmental Consumables Q. Please describe the adjustment to eliminate the environmental consumable chemicals expense. A. I eliminated the amount of environmental consumable chemicals expensed in the Test Year cost of service because those costs are now recoverable through the fuel recovery mechanism, instead of base rates, as I discussed previously in my testimony. The amount removed from the cost of service was $127,083, which is reflected on page 215, line 3 of Attachment DAB-RR NO X and SO 2 Allowance Expenses Q. Please describe the adjustment to eliminate NO X and SO 2 allowance expense. A. I eliminated the amount of NO x and SO 2 allowance expenses included in the Test Year cost of service because those costs are recoverable through the fuel recovery mechanism, instead of base rates. The amount removed from the cost of service was $1,275, which is reflected on page 41, line 105 of Attachment DAB-RR-2. Blair Direct Revenue Requirement Page 49 RR16 - Page 105 of

50 REC Costs Q. What treatment of RECs did the parties agree to in Docket No ? A. With respect to the treatment of RECs, the parties in Docket No agreed, among other things, that: The price of Texas-generated RECs would decrease from $2.55/MWh to $1.10/MWh effective June 1, 2014; SPS would end the REC tracker approved in Docket No on June 30, 2013, and it would amortize the $9.9 million tracker balance as of that date over 42 months starting on September 1, 2013; and If SPS files for rate relief prior to the end of the 42-month REC amortization period, it may include any unamortized REC expense balance in its request for relief Q. What treatment of RECs is SPS proposing in this case? A. As discussed by SPS witness Ruth M. Sakya, SPS is proposing to continue the amortization of the $9.9 million REC tracker balance over a 42-month period. With the inclusion of interest, that produces an annual REC tracker amortization expense of $2,849,222, as shown on Attachment DAB-RR-2, page 217. The $9.9 million REC tracker balance was based on a projected balance at June 30, 2013 in Docket No As discussed by Ms. Sakya, true-ups and reductions to the REC tracker balance have occurred since, and an adjustment is needed to adjust the REC tracker balance amortization, as shown on Attachment DAB-RR-2, page 218. In addition, SPS is proposing to change the price of bundled RECs from $1.10/MWh to $0.95/MWh, and to continue valuing unbundled RECs at $5.00/MWh per the contract. When those values are multiplied by the expected net annual generation from Texas wind facilities, it produces ongoing REC costs of $3,296,681, as shown on page 216 of Attachment DAB-RR-2. The sum of the Blair Direct Revenue Requirement Page 50 RR16 - Page 106 of

51 REC tracker amortization amount and the ongoing REC costs is $5,800,373, which I have used as the Texas retail amount for REC costs in the cost of service. See page 43, lines 232 through 234, of Attachment DAB-RR Trading Organization Q. Please discuss the adjustment for expenses associated with the trading organization. A. SPS gives its Texas retail customers the benefit of the first $400,000 (Texas retail) in net margins by reducing the Texas retail revenue requirement by that amount. SPS is proposing to maintain this practice. Therefore, I have made an adjustment to remove $400,000 from FERC Account 557, as shown on page 43, line 235 of Attachment DAB-RR-2. The adjustment was directly assigned to the Texas retail jurisdiction. C. Transmission O&M Expense Q. Have you made any adjustments to transmission O&M expense? A. Yes. In addition to the labor adjustments and the accounting correction adjustments discussed in prior sections of my testimony, I have made adjustments to the following elements of transmission O&M expense: SPP administrative fees; reclassification of transmission costs from fuel costs; wheeling expense; and elimination of O&M costs associated with the sale of transmission assets to Sharyland. Blair Direct Revenue Requirement Page 51 RR16 - Page 107 of

52 SPP Administrative Fees Q. Please describe the adjustments for SPP administrative fees. A. I include the adjustments that SPS witness Arthur P. Freitas made to transmission O&M expense related to the SPP administrative fees. Those adjustments include elimination of SPP administrative fees associated with wholesale loads, as there is an offsetting revenue credit for these fees that has also been eliminated from the cost of service. I made that adjustment to FERC Accounts 561.4, Transmission Scheduling, System Control and Dispatch Services; 561.8, Transmission Reliability Planning and Standards Development Services; and 575.7, Regional Market Facilitation, Monitoring and Compliance Services. Second, I included the adjustment for a known and measurable change in the rates charged by SPP for administrative fees. on page 219 of Attachment DAB-RR-2. These adjustments are shown Reclassification of Fuel Costs Q. Please describe the adjustment to reclassify costs that were booked as fuel costs to transmission O&M expense. A. As I previously mentioned, certain expenses were recorded in fuel-related expenses that are not recovered through the fuel factor, and therefore they should be reclassified to O&M expense to be recovered in base rates. I have reclassified $6,039 (total company) of SPP annual membership fees from fuel-related expenses to FERC Account 565, Transmission of Electricity by Others, as shown on page 45, line 356 of Attachment DAB-RR-2. Blair Direct Revenue Requirement Page 52 RR16 - Page 108 of

53 Wheeling Expense Q. Did you also make adjustments for wheeling expense? A. Yes. I made the adjustments discussed by Mr. Freitas for wheeling expense. 4. Sharyland O&M Expense Q. Please describe the adjustments to eliminate O&M expense associated with the sale of transmission assets to Sharyland. A. I have eliminated outside services expenses, transaction costs and vegetation management costs recorded in transmission O&M and administrative and general expenses associated with the sale of transmission assets to Sharyland. I have made adjustments to FERC Accounts 566, Transmission Operations Miscellaneous; 571, Transmission Operations Overhead s; and 921, Administrative and General Office Supplies and Expense. These adjustments are shown on page 224 of Attachment DAB-RR-2. D. Regional Markets O&M Expense Q. Have you made any adjustments to regional markets O&M expense other than the labor-related adjustments, the accounting corrections, and the SPP administrative fee adjustments you discussed earlier? A. No. E. Distribution O&M Expense Q. Have you made any adjustments to distribution O&M expense other than the labor-related adjustments and accounting corrections you discussed earlier? A. No. Blair Direct Revenue Requirement Page 53 RR16 - Page 109 of

54 F. Customer Operations Expense Q. Have you made any adjustments to customer operations expense other than the labor-related costs and the accounting corrections discussed earlier? A. Yes. In addition to the previously discussed adjustments to customer operations expense, I have eliminated the following costs from the cost of service: Interest on customer deposits; Energy efficiency expense; ICO expense; and Expenses associated with wholesale account managers. 1. Customer Interest Expense Q. Please describe the adjustment to customer operations expense for interest on customer deposits. A. As I previously discussed, SPS includes customer deposits as a reduction to rate base, whereas the interest paid on customer deposits is added to Customer Operations expense. The customer deposit interest rate used in this case is 0.09%, 16 which is the Commission-approved rate effective January 1, The adjustment of $7,322 (total company) is shown on page 225, line 5, of Attachment DAB-RR Energy Efficiency Costs Q. How does SPS current recover energy efficiency costs? A. As discussed by SPS witness Shawn M. White, SPS recovers energy efficiency costs in a variety of ways. Since January 1, 2012, it has recovered current-period energy efficiency costs through the EECRF approved by the Commission. Before 2012, however, SPS was not subject to the EECRF statute and rule, and therefore Blair Direct Revenue Requirement Page 54 RR16 - Page 110 of

55 it recovered energy efficiency costs in several ways. Not all of those costs from prior periods have been recovered, and therefore I have included amortized amounts in the cost of service. Saver s Switch costs continue to be recovered through base rates, however, and therefore they are not recovered through the EECRF. Q. Is SPS seeking to recover any of these energy efficiency expenses in future base rates? A. Yes. In Docket No , the parties agreed that SPS could recover energy efficiency expenses incurred as of December 31, 2008 over a ten-year period, with carrying costs to accrue at SPS s then-current cost of debt. And in Docket No , the parties agreed that SPS would be allowed to continue recovering the pre-2008 energy efficiency expenses in accordance with the Docket No stipulation. SPS therefore seeks to recover the remaining portion of the pre-2008 energy efficiency expenses in accordance with the Docket No stipulation and final order. For energy efficiency expenses incurred from January 1, 2010 through February 15, 2011, SPS created a tracker and recorded costs in a regulatory asset, as authorized by the stipulation and final order in Docket No In Docket No , the parties agreed that SPS would be allowed to amortize those costs over 36 months, and that if SPS filed a new base rate case before the end of the amortization period, it would be allowed to include the unamortized amount in its rate request. The balance was $5,200,633 as of the end of the Test Year. Blair Direct Revenue Requirement Page 55 RR16 - Page 111 of

56 Q. Did you make adjustments to the energy efficiency expense in the Test Year? A. Yes, I made several adjustments to the energy efficiency expense in the Test Year. First, I eliminated the Test Year amount of energy efficiency expense of $4,820,722, from the cost of service, as shown on page 49, lines 593 and 594 of Attachment DAB-RR-2. Second, I eliminated $5,577 of prior period EECRF costs from the cost of service recorded in FERC Accounts 908, Customer Assistance expense, 925, Administrative and General Injuries and Damages expense, 926, Administrative and General Pension and Benefits expense, and 931, Administrative and General Rent expense, as shown on page 230, lines 1 through 4 of Attachment DAB-RR-2. In addition, there are payroll taxes associated with the labor portion of these costs that have also been eliminated as I discuss later in my testimony. Finally, I added back the following amounts: 1. $1,155,696 to reflect one year s amortization of the pre-2008 expenses (Attachment DAB-RR-2, page 226, line 3); and 2. $367,685 to reflect carrying costs on the unamortized pre-2008 energy efficiency expense balance (Attachment DAB-RR-2, page 226, line 7). There is no adjustment for the EE tracker balance because the tracker balance is likely to be fully amortized before rates are effective in this case. Because all of these ongoing energy efficiency costs are for Texas programs, these amounts have all been directly assigned to the Texas retail jurisdiction. Q. Did you make any other energy efficiency-related adjustments to the cost of service? A. Yes, I made two additional adjustments associated with the ICO tariff. An adjustment was made to eliminate the historic ICO amortization of $521 (total Blair Direct Revenue Requirement Page 56 RR16 - Page 112 of

57 company) and to include the actual Test Year level of ICO costs in the cost of service of $190,534 (total company). These adjustments were made to FERC Account 908, Customer Assistance expense, and are shown on page 49, lines 597 and 598, and page 227 of Attachment DAB-RR Wholesale Account Manager Costs Q. Why did you exclude costs attributable to wholesale account managers? A. I excluded $9,022 (total company) of costs attributable to wholesale account manager costs because wholesale account manager serve only wholesale customers, not retail customers. Accordingly, it is appropriate for all of the costs to be allocated to the wholesale jurisdiction. This adjustment is the remaining amount to eliminate the wholesale account manager costs after the business area adjustments were made. The adjustment was made to FERC Account 908, Customer Assistance expense; FERC Account 926, Administrative and General Pension and Benefits expense; and FERC Account 931, Administrative and General Rent expense. The adjustment amounts appear on page 229, lines 1 16 through 4 of Attachment DAB-RR-2. Wholesale manager costs that were recorded in FERC Account 427, Other Deductions are not included in the cost of service, and therefore they are not included in the adjustment amounts noted above. Blair Direct Revenue Requirement Page 57 RR16 - Page 113 of

58 Institutional and Informational Advertising Q. Have you included any informational and instructional advertising in the cost of service? A. Yes. The cost of service includes amounts SPS incurred for safety, conservation, 5 and customer program advertising. The advertisements and their costs are included in Attachment DAB-RR-4. The advertising costs are recorded in FERC Account 909, and the amount of these advertisements is $506,941 (total company), as shown on page 18, line 284 of Attachment DAB-RR-2. G. A&G Expense Q. Did you adjust any A&G expense? A. Yes. In addition to the adjustments to labor O&M expense discussed in a prior section, I have made the following adjustments: Eliminated costs associated with the Xcel Energy Foundation; Eliminated corporate aviation costs; Eliminated accounting corrections; Increased costs for the SPP letter of credit fee; Eliminated self-insured workers compensation costs; Eliminated FAS 88, Employers Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits costs; Increased total pension and benefits costs to reflect known and measurable changes; Included the amortization of deferred pension and OPEB costs; Increased costs for the 401(k) match costs; Increased costs for the Texas Commission Assessment fees; Blair Direct Revenue Requirement Page 58 RR16 - Page 114 of

59 Adjusted the rate case expense amounts to include not only the rate case expenses expected to be incurred in this docket, but also the unamortized portion of rate case expenses from Docket Nos and 40824; Eliminated costs for image and promotional advertising; and Adjusted the advertising, contributions, and donations, and membership dues. 1. Xcel Energy Foundation Q. Please describe the adjustments for the costs associated with the Xcel Energy Foundation. A. The Xcel Energy Foundation is a nonprofit corporation that makes contributions to nonprofit and other community organizations within the Xcel Energy service territories. A portion of the labor and other costs of the Foundation is charged to SPS. I have made an adjustment to eliminate the remaining $139,579 (total company) in Foundation costs booked to A&G expense in the Test Year, as a portion of these costs were already eliminated through the business area adjustments. The adjustment is shown on pages 233 through 235, lines 1 through 7 of Attachment DAB-RR-2. In addition, there are payroll taxes associated with the labor portion of these costs that have also been eliminated as I discuss later in my testimony. There are also Foundation costs that were recorded in FERC Account 426, Other Deductions that are not included in the cost of service, and therefore they are not included in the adjustment amounts noted above. 2. Corporate Aviation Q. Please explain the adjustment for corporate aviation expense. A. As discussed by Mr. Nygaard, I have made an adjustment include $60,910 (total 25 company) of corporate aviation costs in the Test Year. The adjustment to Blair Direct Revenue Requirement Page 59 RR16 - Page 115 of

60 eliminate the remaining corporate aviation costs from A&G expense in the Test Year is $598,763 (total company), as shown on Attachment DAB-RR-2, page 232, lines 1 through 7. In addition, there are payroll taxes associated with the labor portion of these costs that have also been eliminated, as I discuss later in my testimony. 3. Accounting Corrections Q. Please explain the adjustment to eliminate accounting corrections to A&G expense. A. SPS recorded two accounting corrections in the Test Year that I have eliminated from FERC Accounts 920, Administrative Salaries, and 925, Injuries and Damages, as shown on Attachment DAB-RR-2, page SPP Letter of Credit Fee Q. Please explain the adjustment to increase the expenses associated with the SPP letter of credit fee. A. As discussed by SPS witness Thomas A. Imbler, I have made an adjustment to the Test Year level of expense for fees related to the letter of credit SPS posts for 17 participation in the SPP s Transmission Congestion Rights auction. An adjustment of $301,243 (total company) has been made to FERC Account 921, A&G Office Supplies and Expense, as shown on Attachment DAB-RR-2, page 237, line 4. Blair Direct Revenue Requirement Page 60 RR16 - Page 116 of

61 Self-Insured Workers Compensation Q. Please explain the adjustment to eliminate the self-insured workers compensation costs. A. As discussed by Mr. Schrubbe, I have made an adjustment to eliminate the negative expense of $271,725 (total company) from the Test Year, as no future claims are anticipated. The adjustment has been made to FERC Account 925, A&G Injuries and Damages, as shown on Attachment DAB-RR-2, page 238, line FAS 88 Q. Please discuss the adjustment to eliminate a one-time expense associated with termination benefits provided to an executive officer that recently retired. A. SPS made an adjustment of $198,918 (total company) to eliminate the expenses booked in compliance with the FAS 88. These expenses are associated with termination benefits provided to a certain executive officer that retired prior to the end of These are one-time expenses that have been eliminated. The adjustment to the Test Year is shown on Attachment DAB-RR-2, page Pension and Benefits Expense Q. Please explain the adjustment for pension and benefit expense. A. The Test Year amount of pension and benefit expense is based on the 2013 actuarial report for the first half of the Test Year (i.e., the last six months of 2013), and on the 2014 actuarial report for the second half of the Test Year (i.e., the first six months of 2014). The Test Year amount of active health care costs is $13,212,986 (total company), as shown on Attachment DAB-RR-2, page 240. As Blair Direct Revenue Requirement Page 61 RR16 - Page 117 of

62 1 discussed by Mr. Schrubbe, two adjustments were made to the Test Year amount 2 of active health and welfare costs. First, an adjustment of $471,336 (total company) was made to include claims incurred but not recorded in the Test Year. Second, an adjustment of $670,602 (total company) was made to adjust the amount of active health and welfare costs to reflect normal ongoing increases. The total adjustment to active health and welfare costs is an increase of $1,141,938 (total company), as shown on Attachment DAB-RR-2, page 240, line 6. Q. How did you calculate the adjustment for ongoing increases in health and welfare costs? A. Based on information provided by Mr. Schrubbe, I adjusted each of the amounts using two components: direct SPS costs and costs allocated to SPS from XES. For the direct costs, I totaled the Test Year amounts and then multiplied them by the percentage that will be expensed. I performed the same calculation for the XES charges, with the additional step of allocating the amounts to SPS. I then summed up the 2014 expense estimates and compared them to the Test Year actual expenses, with the difference being the adjustment to pension and benefits expense. 8. Deferred Pension and OPEB Q. Please describe the background regarding SPS s deferral of pension and OPEB costs. A. The stipulation in Docket No allowed SPS to defer actual pension and OPEB costs above the amounts in base rates, except that the overall annual Blair Direct Revenue Requirement Page 62 RR16 - Page 118 of

63 deferral amount was capped at $2.3 million in 2011 and $4.3 million in 2012 and subsequent years. Because SPS s actual pension and OPEB expenses exceeded the amounts in base rates by more than the caps in 2011 and 2012, SPS had a deferred balance of $6.6 million as of December 31, In the Docket No stipulation, the signatories agreed that recovery of the pension and OPEB amounts deferred through December 31, 2012 of $6,690,007 is included in the base rate increase reflected in Section I of this Stipulation and will be amortized over a three-year period beginning on June 1, The signatories further agreed that if SPS files for rate relief before the end of the three-year amortization period, it may include any unamortized pension and OPEB balances in its request for relief. Finally, the signatories agreed that starting on June 1, 2014 the baseline for the pension and OPEB tracker is set at $9,338,000. Q. How much of the $6,690,007 balance as of December 31, 2012 will have been amortized when the rates set in this docket become effective? A. Based upon the assumption that the rates set in this docket will take effect on July 1, 2015, the unamortized amount of the $6,690,007 will be $4,274,171 (total 18 company). 12 SPS is requesting recovery of that amount in base rates Q. What was the amount of deferred pension expense in 2014? A. SPS deferred a net negative $690,662 of pension expense beginning from June 1, 2014 through December 31, Adding that to the $4,274,171 creates a total 12 The amount is calculated by the following steps: (1) $6,690,007 / 36 months = $185,834 per month; (2) the length of time between June 1, 2014 and June 30, 2015 is 13 months; (3) $185,834 * 13 = $2,415,836; (4) $6,690,007 $2,415,836 = $4,274,171. Blair Direct Revenue Requirement Page 63 RR16 - Page 119 of

64 deferred pension and OPEB expense amount of $3,583,510, as shown on Attachment DAB-RR-2, page 241. Q. Over what period should the deferred pension and OPEB expense be amortized? A. For the reasons explained by Mr. Evans, the deferred pension and OPEB expense should be amortized over one year. Accordingly, I have added $3,583,510 to the cost of service, as shown on page 50, line 654 of Attachment DAB-RR-2. Q. On a going-forward basis, what should the baseline be for the pension and OPEB tracker? A. The baseline pension and OPEB tracker amount should be the amount of pension and OPEB expense set by the Commission in this case. Q. Did you make any other adjustment to the Test Year related to the deferred pension and OPEB tracker? A. Yes. In the Test Year, SPS recorded $1,538,030 of deferred pension and OPEB costs. I have eliminated this amount from the Test Year, as shown on Attachment DAB-RR-2, page 50, line 653, as SPS is requesting a total deferred pension and OPEB expense amount of $3,583,510 as discussed above (k) Match Expense Q. Please explain the adjustment to increase the 401(k) match costs. A. As discussed by Mr. Schrubbe, I have made an adjustment to the FERC Account 926, A&G Pension and Benefits, Test Year amount to increase the 401(k) match costs for the three percent merit increase. The adjustment to the Test Year is shown on Attachment DAB-RR-2, page 242, line 12. Blair Direct Revenue Requirement Page 64 RR16 - Page 120 of

65 Texas Commission Assessment Fees Q. What is the Texas Commission assessment? A. The Texas Commission assessment is a tax imposed under Section of the Public Utility Regulatory Act ( PURA ), 13 which imposes an assessment of onesixth of one percent of a utility s gross receipts from rates charged to end-use consumers in Texas. The amounts collected under PURA are intended to defray the expenses incurred by the Commission to regulate utilities. Q. What amount did SPS incur during the Test Year for the Commission assessment? A. During the Test Year, SPS incurred $1,521,218 for the Commission assessment. Q. Is SPS proposing to include in the cost of service a Commission assessment amount that differs from the amount in the Test Year? A. Yes. I made an adjustment of $91,827 (Texas retail) to gross this amount up to include the tax associated with the net revenue change SPS is proposing in this case. The gross-up calculation results in a total amount of $1,613,044 (Texas retail), as shown on Attachment DAB-RR-2, page Rate Case Expense Q. Did you include any rate case expenses in the cost of service? A. Yes. I included not only the rate case expenses that SPS expects to incur in this proceeding, but also the unamortized rate case expenses from SPS s last two base rate cases, Docket Nos and In Docket No , the signatories agreed SPS could amortize the rate case expenses from Docket Nos and 13 PURA is codified in Title II of the Texas Utilities Code. See TEX. UTILS. CODE ANN (Vernon 2007 and Supp. 2014). Blair Direct Revenue Requirement Page 65 RR16 - Page 121 of

66 over a three-year period beginning June 1, 2014, and that if SPS files for rate relief prior to the three-year amortization period for recovery of rate case expenses, it may include any unamortized rate case expense balances in its request for relief. SPS is proposing to net the remaining Lubbock amortization and the TUCO refund against rate case expenses. Mr. Evans addresses these topics in more detail in his testimony. In addition, in the Test Year, SPS recorded rate case amortizations from Docket No and EECRF case amortizations in FERC Account 928, A&G Regulatory Commission expense that I have eliminated, as shown on Attachment DAB-RR-2, page 244. Q. What amount of rate case expenses has SPS included for preparing and prosecuting this rate case? A. SPS expects that the costs incurred for consultants, law firms, municipal reimbursement, and other expenses in this case will be $4,345,400, as shown on page 245, line 1 of Attachment DAB-RR-2. I have amortized these costs over a 12-month period. Mr. Evans provides the details supporting SPS s rate case expenses and the amortization period. Q. What amount of rate case expenses from Docket Nos and is included in the cost of service? A. The total amount of unamortized rate case expenses included in the cost of service from Docket No will be $784,724 as of June 30, 2015 and the unamortized rate case expenses from Docket No will be $1,737,216 as of June 30, 2015, for a total of $2,521,940. Blair Direct Revenue Requirement Page 66 RR16 - Page 122 of

67 Q. What is the total amount of rate case expenses in the cost of service? A. The total amount of rate case expense in the cost of service is $6,867,340. I have netted this amount with the unamortized balances of the Lubbock gain and the TUCO refund of $(2,310,030). The result is a net amount of rate case expense in the cost of service of $4,557,311, as shown on page 245, line 13 of Attachment DAB-RR Advertising, Contributions, Donations, and Membership Dues Q. Did you eliminate any advertising costs from the cost of service? A. Yes. I removed $1,506,603 (total company) in image and promotional advertising expense, as shown on page 50, line 659 of Attachment DAB-RR-2. Q. Have you included any advertising, contributions, donations and membership dues in the cost of service? A. Yes. I included costs for advertising, contributions, donations and memberships in the cost of service. P.U.C. SUBST. R (b)(1)(E) provides for inclusion of advertising, contributions, and donations up to a cap of 0.3% of the gross receipts of the electric utility for services rendered to the public. SPS s gross receipts in Texas for the Test Year were $967,633,057, which when multiplied by 0.3% results in a cap of $2,902,899 for advertising, contributions, and donations. The sum of the advertising expense, the contributions and donations, and the membership dues is $3,143,092, which is more than the calculated cap. 14 Therefore, SPS has only included the cap amount of $2,902,899 in the cost of service. Of this amount $346,782 is related to customer advertising expenses that 14 The advertising expense is $1,372,964; the contributions and donations expense is $1,242,300; and the membership dues expense is $527,827, for a total of $3,143,092. Blair Direct Revenue Requirement Page 67 RR16 - Page 123 of

68 are already included in the cost of service in FERC Accounts 908, Customer Assistance expense and 909, Customer Advertising expense. Therefore, I made an adjustment to include the net amount of $2,556,117 in the cost of service, as shown on page 246, line 12 of Attachment DAB-RR Other Adjustments Q. Does the cost of service include any expenses for the categories of disallowed expenses that are listed in P.U.C. SUBST. R (b)(2)(A) through (I)? A. No. None of the types of expenses listed in P.U.C. SUBST. R (b)(2)(A) through (I) have been included in the cost of service. H. Depreciation and Amortization Expense Q. What adjustments did you make to the depreciation expense used in the cost of service? A. I made several adjustments to depreciation expense in the cost of service presented in this case, as shown on Attachment DAB-RR-2, page 51, lines through 714. First, as I previously mentioned, SPS unblended the book depreciation expense to reflect the current Texas approved depreciation rates, and I adjusted depreciation expense to reflect that unblending. The effect of this adjustment is a reduction in depreciation expense of $13,901,235 (total company), as shown on Attachment DAB-RR-2, page 247, line 24. Second, I made an adjustment to annualize the depreciation expense at the end of the Test Year to correspond with the year-end plant balances in rate base and the level of depreciation expense SPS will incur prior to the effective date of 15 All numbers listed in this paragraph are Texas retail numbers. Blair Direct Revenue Requirement Page 68 RR16 - Page 124 of

69 rates set in this case. The annualization adjustment is an increase in depreciation expense of $9,425,595 (total company), as shown on Attachment DAB-RR-2, page 248, line 25. Third, SPS witness Dane A. Watson has presented a new depreciation study for production and distribution plant, and Ms. Perkett recommends that the Commission use the revised depreciation rates set out in that study. Thus, I have incorporated the results of those revised depreciation rates into the cost of service. The adjustment is the difference between the depreciation expense that results from the revised Texas depreciation rates and the annualized depreciation expense based on the currently approved depreciation rates, which is shown on page 249, line 25 of Attachment DAB-RR-2. The effect of the revised depreciation rates increases the Test Year depreciation expense by $25,683,708 (total company). Fourth, I made an adjustment to annualize the depreciation expense related to the post-test Year adjustments to the plant in service balances at December 31, The adjustment is the difference between the Test Year depreciation expenses annualized at June 30, 2014, using the new depreciation rates compared to the depreciation expenses annualized at December 31, 2014, using the new depreciation rates, which is shown on page 250, line 25 of Attachment DAB-RR- 2. The effect of the Post Test Year adjustments is an increase to the Test Year depreciation expense of $16,217,089 (total company). Fifth, I made an adjustment to eliminate the depreciation expense related to the electric meters and line transformers that were assigned to the Texas jurisdiction that should be assigned to the New Mexico jurisdiction, which is Blair Direct Revenue Requirement Page 69 RR16 - Page 125 of

70 shown on page 61 of Attachment DAB-RR-2. The effect of this adjustment is a decrease to Test Year depreciation expense of $960,207. Finally, I made an adjustment to eliminate Asset Retirement Obligation regulatory credits booked in FERC Account 407, and the related depreciation, depletion and accretion expense. These adjustments net to zero in the cost of service, as shown on Attachment DAB-RR-2, page 51, lines 682 through 684, 689, 700 through 702, and 710. I. Taxes Other than Income Q. Did you make any adjustments to Taxes Other than Income? A. Yes. I made adjustments to: Reflect 2014 property taxes; Adjust payroll taxes associated with labor adjustments; Normalize and gross-up franchise fees; Reclassify and gross-up the Texas margins tax; and Gross-up Texas gross receipts tax Q. Please describe the adjustments to property taxes. A. I have made two adjustments to property taxes. First, as discussed by Mr. Arend, I have made an adjustment to reflect Test Year property taxes at the 2014 calendar year level. The adjustment is based on actual property taxes through September 2014, plus estimated expenses for October through December based on the 21 September expense level. The adjustment, which totals $7,052,613 (total company) is shown on page 251, line 9 of Attachment DAB-RR-2. In addition, I made an adjustment to reflect Test Year property taxes at the 2014 calendar year level, using the plant in service balances at December 31, Blair Direct Revenue Requirement Page 70 RR16 - Page 126 of

71 The adjustment, which totals $2,559,665 (total company), as shown on page 252, line 9, of Attachment DAB-RR-2. Q. Please describe the adjustment to payroll taxes. A. I adjusted payroll taxes associated with all labor adjustments that I have discussed in previous sections of my testimony. These adjustments include: 1. employee wages; 2. employee incentive compensation; 3. business area labor reclassifications; 4. other labor adjustments; and 5. long-term incentive compensation. The payroll tax adjustments are shown on page 253, line 9 of Attachment DAB- RR-2. Q. Please describe the adjustment to franchise fees. A. SPS s current base rates have a certain level of franchise fees embedded in them. I made two adjustments related to franchise fees. First, I made an adjustment to reflect the embedded franchise fees at the weather-normalized present revenue level. The adjustment increases franchise fee expense by $581,009, as shown on page 254, line 5 of Attachment DAB-RR-2. Second, I adjusted franchise fees for the revenue change SPS is requesting in this case, which leads to an increase in franchise fees of $1,205,855, as shown on Attachment DAB-RR-2, page 255, line 9. The net adjustment to franchise fees is an increase of $1,786,864 (Texas retail), all of which is allocated to the Texas retail jurisdiction. As discussed by Blair Direct Revenue Requirement Page 71 RR16 - Page 127 of

72 Mr. Evans, SPS is not proposing to change how it currently recovers franchise taxes in base rates. 16 Q. What is the margin tax? A. The Texas margin tax, which is also referred to as a franchise tax, is a tax imposed by the State of Texas for the privilege of doing business in Texas. Authorized by chapter 171 of the Texas Tax Code, the margin tax effectively requires SPS to pay 0.7 % of its total revenues to the Texas Comptroller. Q. What was the Test Year amount for the margin tax? A. The Test Year margin tax amount was $3,380,717 (Texas retail) and recorded it in FERC Account 409, State Income Tax. Q. Did you make any adjustment to the Texas margins tax expense? A. Yes. I made an adjustment of $245,009 (Texas retail) to gross this amount up to include the tax associated with the net revenue change SPS is proposing in this case and reclassified this expense from FERC Account 409 to FERC Account 408, Taxes Other than Income, as shown on Attachment DAB-RR-2, page 51, line 724. The gross-up calculation results in a total amount of $3,625,726 (Texas retail), as shown on Attachment DAB-RR-2, page 21, line 381, and page 255, line 7. Q. What is the miscellaneous gross receipts tax? A. The miscellaneous gross receipts tax is a tax imposed under section of the Texas Tax Code. Under that provision, a tax is imposed on each utility 16 As noted in the text, SPS is not proposing to include all franchise fees in base rates. But if the Commission decides to include the entire amount of franchise fees in base rates, which SPS does not recommend for the reasons discussed by Mr. Evans, the amount of franchise fees in base rates would be $19,703,450, an increase of $8,621,638 from the level of franchise fees presented in Attachment DAB-RR-2, page 21, line 378. Blair Direct Revenue Requirement Page 72 RR16 - Page 128 of

73 1 2 located in an incorporated city or town having a population of more than 1,000, according to the most recent federal census. The tax rates are: % of the gross receipts from business done in a city with a population of 1,000 2,499; 1.07% of the gross receipts from business done in a city with a population of 2,500 9,999; and 1.997% of the gross receipts from business done in a city with a population of 10,000 or more Q. What amount of miscellaneous gross receipts taxes did SPS incur during the Test Year? A. During the Test Year, SPS incurred $6,267,967 of gross receipts taxes. The miscellaneous gross receipts taxes are recorded in FERC Account Q. Please describe the adjustment to the Texas Gross Receipts Tax expense. A. Similar to the adjustments I made for franchise fees and the Texas margins tax, I made an adjustment to gross-up the Texas Gross Receipts tax for the revenue change SPS is proposing in this case, including accounting for the weather normalization adjustment on revenues. With an adjustment of $702,435, the grossed up amount of tax is $6,970,402 (Texas retail), as shown on Attachment DAB-RR-2, page 21, line 382 and page 255, line 7. J. Income Tax Expense Q. Did you make any adjustments to income tax expense? A. Yes. I adjusted current federal income tax expense to reflect the result of all adjustments to the cost of service study. The adjustments to deferred income tax expense include out-of-period adjustments, elimination of accounts that are not Blair Direct Revenue Requirement Page 73 RR16 - Page 129 of

74 included in the cost of service study, and the deferred income tax impact of various adjustments made to the per-book data. Q. How is the income tax expense calculated for the cost of service studies presented in this case? A. Taxable income is determined by using Texas retail jurisdictional return on rate base, after which synchronized interest expense is deducted and taxable additions/deductions (these are also known as Schedule M items ) are added to arrive at taxable income. The federal income tax rate is then applied to taxable income to arrive at current income tax expense. As Mr. Arend explains, SPS is in an NOL position, and therefore I have not addressed the Federal Production Tax Deduction. However, that could change during the processing of this case. If SPS is no longer in an NOL position, then the Federal Production Tax Deduction would become applicable and would need to be calculated based on the 14 production taxable income as calculated by Mr. Luth. Deferred income tax expense and the amortization of investment tax credits are added to arrive at total tax expense. The taxable additions/deductions and the deferred income taxes are being presented in this case at the same level of detail, in order to properly allocate to the Texas retail jurisdiction. As a result of these steps, SPS s tax expense for ratemaking purposes is calculated based on the items of income and expense included in SPS s jurisdictional revenue requirement calculation. Blair Direct Revenue Requirement Page 74 RR16 - Page 130 of

75 Q. What adjustments did SPS make to deferred income tax expense? A. SPS adjusted its deferred tax expense to remove deferred income tax expense associated with items excluded from the cost of service and the state deferred income tax expense associated with its operations in states other than Texas. K. Gain on the Sale of SO 2 Allowances, RECs, and Utility Plant Q. Please describe the adjustment to eliminate the gain on the sale of SO 2 allowances and the net gain on the sale of RECs from the cost of service. A. I eliminated $258 of gain on the sale of SO 2 allowances because they are returned to customers through fuel, as shown on page 52, line 773 of Attachment DAB-RR-2. I also eliminated $819,488 of net gain on RECs, which is reflected on page 52, lines 777 and 781, of Attachment DAB-RR-2. Q. What adjustment is included in the cost of service related to the gain on the sale of utility plant? A. I have made an adjustment to the Test Year to eliminate the gain on the sale of utility plant related to the sale of the Lubbock, Texas assets. As approved by the Commission in Docket No , the gain on the sale of assets to Lubbock is currently being amortized over a four-year period beginning February 16, 2011, with an annual amortization amount of $4,898,862. SPS is proposing to net the remaining amortization amount against rate case expenses in this rate case. Therefore, I have removed a revenue credit of $4,898,862 from the cost of service, as shown on page 52, line 785 and page 259 of Attachment DAB-RR-2. Mr. Evans discusses this issue in his testimony. Blair Direct Revenue Requirement Page 75 RR16 - Page 131 of

76 1 VIII. REVENUE CREDITS Q. Did you make any adjustments to other revenues? A. Yes. I made the following adjustments to revenue credits, all of which are shown on pages 52, lines 789 through 809 of Attachment DAB-RR-2: Eliminated rate refunds; Made an adjustment to increase the meter-tampering fee revenue; Eliminated customer discounts; Made a pro forma adjustment to reflect substation lease revenue at current lease payment levels; Made transmission related revenue adjustments as described by Mr. Freitas. Eliminated Joint Operating Agreement ( JOA ) margins; Eliminated out-of-period adjustments; Eliminated energy efficiency incentive revenue and ICO revenue; Eliminated deferred fuel; and Made an adjustment to reflect revenues from wholesale contracts for backup service and planning reserves Q. Please discuss the elimination of rate refunds. A. SPS accrued rate refunds pertaining to its fuel collections during the Test Year. Because these refunds are not associated with base rates, I eliminated them from the cost of service, as shown on page 52, line 789, of Attachment DAB-RR-2. Q. Please discuss the adjustment to meter-tampering fee revenue. A. In Docket No , SPS amended its tariff to increase the charge for metertampering. An annualization adjustment of $19,120 was made to reflect that increased charge for the entire Test Year. Accordingly, I have added that amount Blair Direct Revenue Requirement Page 76 RR16 - Page 132 of

77 to the revenue credits, as shown on page 52, line 790 and page 260 of Attachment DAB-RR-2. Q. What customer discounts did you eliminate from the cost of service? A. I eliminated the customer discounts given to state universities and colleges because PURA prohibits utilities from recovering the amount of the discounts from other customers. Those adjustments appear on page 52, lines of Attachment DAB-RR-2. The present revenue contains the full tariffed rate, and the discount is recorded as a reduction to other revenue. By eliminating the discounts, SPS s present revenue reflects the full base rate revenue for these customers. Q. What adjustment did you make for changes in substation leasing costs? A. I increased the revenue credit for substation leases by $29,026 (total company) to reflect the increase in substation leasing revenue that SPS will receive on a going forward basis. The increase appears on page 52, line 793 and page 261 of Attachment DAB-RR-2. Q. What adjustments did you make for transmission-related revenue? A. I made the adjustments discussed by Mr. Freitas. Q. Please discuss the elimination of the JOA revenues. A. SPS s share of JOA revenues is shared with customers through the calculation of the monthly cumulative fuel cost under-recovery and over-recovery balance. Therefore, $1,715,947 (total company) of revenue credits attributable to the JOA revenues have been eliminated from the cost of service, as shown on page 52, line 800 of Attachment DAB-RR-2. Blair Direct Revenue Requirement Page 77 RR16 - Page 133 of

78 Q. What adjustments did you make to eliminate out-of-period amounts? A. I made adjustments to eliminate out-of-period amounts related to the sale of assets to Lubbock and Sharyland, and the TUCO audit refund, as shown on page 52, lines, 801 through 803 and page 266, of Attachment DAB-RR-2. Q. What adjustment did you make for energy efficiency incentive payments? A. I eliminated $292,951 (total company) of incentive payments because P.U.C. SUBST. R (h)(6) provides that energy efficiency incentive payments are not to be included in the utility s revenues or net income when establishing a utility s rates. That adjustment appears on page 52, line 804, of Attachment DAB-RR-2. Q. Please discuss the elimination of deferred fuel revenues. A. Fuel is not a base rate item, and therefore I eliminated $4,691,070 (total company) of deferred fuel revenues recorded in FERC Account from the cost of service in this case. That amount is reflected on page 52, line 806 of Attachment DAB-RR-2. Q. Please discuss the revenue credits for the wholesale contracts. A. During the Test Year, SPS provided three of its wholesale customers with back-up service, incremental capacity, and planning reserves. The incremental sales will expire before the final rates in this case go into effect. Therefore, I have excluded from the cost of service the revenues with those incremental sales, and I have adjusted the level of revenues that will occur during the rate year from the wholesale contracts for backup service and planning reserves. The net effect of this adjustment is shown on page 52, line 809 and page 268, of Attachment DAB-RR-2. I have included the 2014 expected revenues of $931,127 (total Blair Direct Revenue Requirement Page 78 RR16 - Page 134 of

79 1 2 company) as an offset to the cost of service to give all Texas retail customers a reduction in their production-related costs. Blair Direct Revenue Requirement Page 79 RR16 - Page 135 of

80 IX. CAPITAL STRUCTURE Q. What capital structure is reflected in the cost of service? A. The cost of service uses the capital structure of 53.97% equity and 46.03% debt discussed by Ms. Schell and shown on RFP Schedule K-1. When the 5.98% average cost of debt presented by Ms. Schell and the 10.25% return on equity presented by Mr. Hevert are applied to the capital structure, it results in an 8.28% overall return on rate base. Blair Direct Revenue Requirement Page 80 RR16 - Page 136 of

81 X. JURISDICTIONAL REVENUE DEFICIENCY Q. What is the overall Texas retail revenue requirements for the Test Year? A. The overall Texas retail revenue requirement for the Test Year is $577,633,008. Q. What is the Test Year revenue deficiency? A. The Test Year revenue deficiency is calculated by comparing the net revenue requirements to present base rate revenue. Mr. Luth presents the calculation of present base rate revenue, which is equal to $512,886,811. The result is a Test Year revenue deficiency of $64,746,197, as shown on Attachment DAB-RR-2, page 1. Blair Direct Revenue Requirement Page 81 RR16 - Page 137 of

82 XI. CONCLUSION Q. Were Attachments DAB-RR-1 through DAB-RR-5 prepared by you or under your direct supervision and control? A. Yes. Q. Were the portions of the RFP Schedules you sponsor or co-sponsor prepared by you or under your supervision and control? A. Yes. Q. Do you incorporate the portions of SPS s RFP Schedules sponsored or co-sponsored by you into this testimony? A. Yes. Q. Does this conclude your pre-filed direct testimony? A. Yes. Blair Direct Revenue Requirement Page 82 RR16 - Page 138 of

83 07554

84 Attachment DAB-RR-1 Page 1 of 4 List of Testimony Filed by Deborah A. Blair Year 1993 Regulatory Commission Colorado Public Utilities Commission ("CPUC") Docket/Case Number 93I-199EG 1995 CPUC 95S-041E 1995 CPUC 95A-531EG 1995 Wyoming Public Service Commission ("WPSC") EA GA CPUC 96S-290G 1996 Federal Electric Regulatory Commission ER CPUC 97A-299EG 1997 CPUC 97S-366G 1997 WPSC GR CPUC 98A-262EG 1998 CPUC 98A-511E 1998 CPUC 98S-518G 1998 New Mexico Public Regulation Commission ("NMPRC") CPUC 99A-037E Description of Proceeding In the Matter of the Investigation of Incentive Regulation and Demand Side Management Incentives for Public Service Company of Colorado ("PSCo") The Investigation and Suspension of Tariff Sheets filed by PSCo for Advice Letter No Electric with Regard to the Qualifying Facility Capacity Cost Adjustment Application of PSCo for Commission Authorization (1) to Merge with SPS through the Formation of a Registered Public Utility Holding Company and for Issuance of Securities in Conjunction Therewith and (2) to Implement a Five-Year Regulatory Plan which Includes an Earnings Sharing Mechanism In the Matter of the Application of Cheyenne Light Fuel and Power Company ("CLF&P") for Authority to Engage in a Reorganization Involving the Transfer of a Controlling Interest from PSCo to M-P New Co. as part of a Merger between PSCo and SPS The Investigation and Suspension of Tariff Sheets Filed by PSCo with Advice Letter No Gas Rate Case Implementing Two General Rate Schedule Adjustment Riders Application of PSCo to Change its Rates Applicable to its Wholesale Customers In the Matter of the Application of PSCo for Commission Approval of: (1) Merger Costs; (2) Merger Costs Allocations; and (3) the Ratemaking Treatment of the Holy Cross TIE Agreement The Investigation and Suspension of Tariff Sheets filed by PSCo with Advice Letter No Gas Rate Case In the Matter of the Application of CLF&P for a General Rate Increase of $1,249,949 in its Gas Rates for Sales and Transportation Service In the Matter of the Application of PSCo for an Order to Transfer Certain Assets from PSCo to New Century Energies Communications, Inc. Pursuant to , C.R.S. In the Matter of the Application of PSCo for an Air Quality Improvement Rider to Recover the Costs of Voluntary Emission Reductions in Three Metro Area Power Plants The Investigation and Suspension of Tariff Sheets Filed by PSCo with Advice Letter No Gas Rate Case In the Matter of the Commission's Investigation of the Rates for SPS In the Matter of the Application of PSCo for a Certificate of Public Convenience and Necessity for the Construction of Phase 3 of Fort St. Vrain Repowering Party on Behalf Testimony was Submitted PSCo PSCo PSCo CLF&P PSCo PSCo PSCo PSCo CLF&P PSCo PSCo PSCo SPS PSCo RR16 - Page 140 of

85 Attachment DAB-RR-1 Page 2 of 4 List of Testimony Filed by Deborah A. Blair Year Regulatory Commission Docket/Case Number 1999 CPUC 99A-377EG 1999 CPUC 99A-557E 1999 WPSC 1999 Public Utilities Commission of Texas ("PUCT") EA GA NMPRC CPUC 00A-351E 2000 FERC ER PUCT NMPRC UT 2003 FERC ER FERC ER FERC EL Description of Proceeding In the Matter of the Application of PSCo for Commission Authorization for New Century Energies, Inc. to Merge with Northern States Power Company; for Extension of the Current Regulatory Plan which includes an Earnings Sharing Mechanism; and for such other relief as may be appropriate or necessary In the Matter of the Application of PSCo for an Order Approving its Incentive Cost Adjustment Filing for the Period July 1998 through June 1999 In the Matter of the Application of CLF&P for Authority to Transfer Controlling Interest from New Century Energies, Inc. to Xcel Energy, Inc. Application of SPS Regarding Proposed Merger Between New Century Energies, Inc., and Northern States Power Company Application of SPS for Approvals and Authorizations of the Merger Between New Century Energies, Inc. ("NCE") SPS's Parent/Holding company, into Northern States Power Company/Xcel Energy Inc., Approval of SPS's Second Amended General Diversification Plan that Reflects the Merger and All Other Approvals and Authorizations required to Effectuate and Implement the Merger In the Matter of the Application of PSCo for Commission Authorization to Sell Facilities and Property, and for Request for Declaratory Order or Alternately Request for Exemption under Integrated Resource Planning Rules Application of New Century Services Inc. on behalf of SPS for Revisions to the NCE Open Access Transmission Tariff ("OATT") and Proposed Revisions to SPS's rates for Transmission and Ancillary Services Application of SPS Regarding Transfer of Functional Control of Electric Transmission Facilities to TRANSLink Transmission Company, LLC and for Related Relief In the Matter of SPS's Application for NMPRC Approval of and Authorization for TRANSLink Transmission Company LLC to Operate and Control SPS's New Mexico Certificated Transmission Facilities in Accordance with the Proposed Private Power Operating Agreement Between SPS and TRANSLink Transmission Company LLC Application of PSCo for Changes in Rates Applicable to its Requirements Customers Together with Changes in the Fuel Cost Adjustment Provisions Applicable to each such Customer. Application of Xcel Energy Services Inc. ("XES") on behalf of PSCo and SPS for changes to the Xcel Energy OATT, and to implement a new Attachment O that sets forth a Formula to Annually Update Rates for Transmission Service Complaint filed by Cooperative Customer Group Requesting Investigation and Hearing of Cost-Based Rates and Fuel Adjustment Clause Charges and Establishment of Refund Effective Date Party on Behalf Testimony was Submitted PSCo PSCo CLF&P SPS SPS PSCo SPS SPS SPS PSCo PSCo and SPS SPS RR16 - Page 141 of

86 Attachment DAB-RR-1 Page 3 of 4 List of Testimony Filed by Deborah A. Blair Year Regulatory Commission Docket/Case Number 2006 CPUC 06S-234EG 2006 FERC ER CPUC 07A-469E 2007 FERC ER CPUC 08A-497EG 2008 CPUC 08S-520E 2008 FERC ER FERC ER FERC ER CPUC 09AL-299E 2010 CPUC 10AL-963G 2010 FERC ER FERC ER Description of Proceeding The Investigation and Suspension of Tariff Sheets filed by PSCo for Advice Letter No Electric Rate Case and Advice Letter No Gas Rate Case Application of SPS for Changes in Rates, Terms and Conditions Applicable to its Full and Partial Requirements Customers In the Matter of the Application of PSCo for a Certificate of Public Convenience and Necessity to Construct Two Combustion Turbines at the Fort St. Vrain Generating Station, for an Amendment to its Contingency Plan and for Expedited Treatment Application of XES on behalf of Northern States Power Company, a Minnesota Company ("NSP-MN") and Northern States Power Company, a Wisconsin Company ("NSP-WI") and the Midwest Independent System Operator, Inc. ("Midwest ISO") for revisions to the Midwest ISO Open Access Transmission and Energy Market Tariff to revise Attachment O that sets forth a Formula for Rates for Transmission Service In the Matter of the Application of PSCo for Approval of the Sale of the Technical Services Building Located at th Street, Denver, Colorado The Tariff Sheets Filed by PSCo with Advice Letter No Electric Rate Case Application of XES on behalf of SPS to Revise Tariff Sheets to the Xcel Energy OATT to Implement Transmission Formula Rates for Transmission Services Application of PSCo for Changes in Rates Applicable to its Requirements Customers Together with Changes in the Fuel Cost Adjustment Provisions Applicable to each such Customer Application of SPS for Changes in Rates, Terms and Conditions Applicable to its Full Requirements Customers In the Matter of Advice Letter No by PSCo to Revise its Colorado PUC No. 7 Electric Tariff to Reflect Revised Rates and Rate Schedules to be Effective on June 5, 2009 In the Matter of Advice Letter No. 791 by PSCo to Increase the Rates for all Natural Gas Sales and Transportation Services by Implementing a General Rate Schedule Adjustment in the Company's Colorado PUC No. 6 Gas Tariff to become Effective January 17, 2011 Application of PSCo for Changes in Rates Applicable to its Requirements Customers Together with Changes in the Fuel Cost and Economic Purchased Power Adjustment Clause Applicable to each such Customer. Application of NSP-WI for Changes in Rates, Terms and Conditions Applicable to its Full Requirements Customers and Changes in the Fuel Cost and Economic Purchased Power Adjustment Clause Applicable to each such Customer Party on Behalf Testimony was Submitted PSCo SPS PSCo NSP-MN and NSP-WI PSCo PSCo SPS PSCo SPS PSCo PSCo PSCo NSP-WI RR16 - Page 142 of

87 Attachment DAB-RR-1 Page 4 of 4 List of Testimony Filed by Deborah A. Blair Year Regulatory Commission Docket/Case Number 2011 CPUC 11AL-947E 2011 FERC ER CPUC 12A-782E 2012 CPUC 12AL-1264ST 2012 CPUC 12AL-1268G 2012 CPUC 12AL-1269ST 2012 FERC ER CPUC 14AL-0660E 2014 FERC ER PUCT Description of Proceeding In the Matter of the Advice Letter No Electric filed by PSCo to Revise its Colorado PUC No. 7 - Electric Tariff and to Implement a General Rate Schedule Adjustment and Other Changes Effective December 23, 2011 Application of PSCo for Changes in Rates Applicable to its Requirements Customers Together with Changes in the Fuel Cost and Economic Purchased Power Adjustment Clause Applicable to each such Customer. In the Matter of the Application of PSCo for Approval of the Acquisition of the Brush 1, 3, and 4 Generation Facilities and, in connection therewith, the granting of Certificates of Public Convenience and Necessity if Required and the Approval of Cost Recovery through a General Rate Schedule Adjustment In the Matter of the Application of PSCo for a Certificate of Public Convenience and Necessity to Construct Two Package Boilers for its Steam Utility and for Approval of a Regulatory Plan affecting rates for Natural Gas and Steam Services Effective after the Boilers have been Place in Service In the Matter of Advice Letter No Gas of PSCo, with Accompanying Tariff Sheets Concerning Implementing a General Rate Schedule Adjustment, to become Effective January 1, 2013 In the Matter of Advice Letter No Steam filed by PSCo - Steam Rate Case Application of PSCo for Changes to the Xcel Energy OATT, and to implement a revised Attachment O that sets forth a Formula to Annually Update Rates for Transmission Service In the Matter of Advice Letter No Electric of PSCo to Revise the General Rate Schedule Adjustment Rider Applicable to all Electric Base Rate Schedules and Revise the Transmission Cost Adjustment to Remove Costs that have been Shifted to Base Rates to become Effective July 18, 2014 Application of PSCo for Changes to the Xcel Energy OATT, and to implement a revised Ancillary Service Schedule 3, and to add new Ancillary Service Schedules 3A and 6A to address Wind Integration Application of SPS for Approval of a Transmission Cost Recovery Factor Party on Behalf Testimony was Submitted PSCo PSCo PSCo PSCo PSCo PSCo PSCo PSCo PSCo SPS RR16 - Page 143 of

88 Calculation of Revenue Deficiency / Excess Attachment DAB-RR-2 Page 1 of 270 No. Description Texas Retail 1 Net Jurisdictional Rate Base 1,560,042, Allowed Return on Rate Base 8.28% 4 5 Required Earnings 129,171, Net Jurisdictional Operating Expenses 498,586, Total Revenue Requirements 627,757, Less: Revenue Credits 50,124, Net Revenue Requirements 577,633, Total Rate Revenue 512,886, Revenue Deficiency 64,746,197 RR16 - Page 144 of

89 Allowed Cost of Capital - Texas At June 30, 2014 Attachment DAB-RR-2 Page 2 of 270 Pro Forma Adjusted No. Description Per Books Adjustments Capital 1 Long Term Debt 1,350,000,000 (16,262,577) 1,333,737, Preferred Stock 4 5 Common Equity 1,469,071,104 94,651,896 1,563,723, Total 2,819,071,104 78,389,319 2,897,460, Composite 12 Ratio Cost Cost Long Term Debt 46.03% 5.98% 2.75% Preferred Stock 0.00% 0.00% 0.00% Common Equity 53.97% 10.25% 5.53% Total % 8.28% RR16 - Page 145 of

90 Page 3 of 270 Electric Rate Base At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail 1 PLANT IN SERVICE 2 3 Intangible: 4 Organization 301 LABXAG 0 5 Franchises and Consents 302 LABXAG 0 6 Misc. Intangible Plant ,269,482 16,779,053 89,048,535 LABXAG 52,133,374 7 Misc. Intangible Plant - CRS 303CRS 16,335, ,335,494 CUST-RET 11,115,465 8 Total Intangible 88,604,977 16,779, ,384,030 63,248, Steam Production: 11 Land and Land Rights ,200,043 6,297,433 17,497,476 12CP-PROD 9,170, Structures & Improvements ,513,533 9,527, ,041,496 12CP-PROD 119,511, Boiler Plant Equipment ,295,419 7,647, ,942,972 12CP-PROD 491,031, Turbo-Generator Units ,499,864 6,231, ,731,553 12CP-PROD 239,363, Accessory Electric Equipment ,296, ,780 75,226,968 12CP-PROD 39,424, Misc. Power Plant Equipment ,389, ,197 31,982,910 12CP-PROD 16,761, Total Steam Production 1,715,194,761 31,228,615 1,746,423, ,262, Other Production Combustion Equipment: 20 Land and Land Rights , ,722 12CP-PROD 60, Structures & Improvements ,530,520 82,231 14,612,751 12CP-PROD 7,658, Fuel Holders, Prod & Acc 342 5,644, ,500 5,980,652 12CP-PROD 3,134, Other Production Engine ,604,861 2,492,228 67,097,089 12CP-PROD 35,164, Generators ,016, , ,640,233 12CP-PROD 88,380, Accessory Electric Equipment ,709,028 1,026,582 32,735,610 12CP-PROD 17,156, Misc. Power Plant Equipment 346 4,799, ,112 4,995,266 12CP-PROD 2,617, Total Other Production Combustion Equipment 289,419,878 4,757, ,177, ,171, RR16 - Page 146 of

91 Page 4 of 270 Electric Rate Base At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail 29 Transmission Plant: 30 Land Owned in Fee ,263, ,195 6,394,523 12CP-TRAN 2,966, Land Owned in Fee - Total ,263, ,195 6,394,523 12CP-TRAN 2,966, Land Rights - Radial Texas 350.2R 3,693, ,693,695 TX 3,693, Land Rights - Radial New Mexico 350.2R 2,179, ,179,643 NM 0 34 Land Rights - Radial Wholesale 350.2R 573, ,376 WHLS 0 35 Land Rights - Other 350.2O 68,014,529 13,151,527 81,166,056 12CP-TRAN 37,653, Land Rights - Total ,461,243 13,151,527 87,612,770 41,347, Structures & Improvements ,300,952 10,576,705 56,877,656 12CP-TRAN 26,385, Station Equipment ,702,558 84,827, ,529,886 12CP-TRAN 316,629, Station Equipment - Interconnection 353I 30,078,585 (1,384,562) 28,694,023 12CP-PROD 15,037, Station Equipment - Total ,781,143 83,442, ,223, ,667, Towers and Fixtures - Radial Texas 354R 408, ,932 TX 408, Towers and Fixtures - Radial New Mexico 354R 241, ,310 NM 0 43 Towers and Fixtures - Radial Wholesale 354R 63, ,479 WHLS 0 44 Towers and Fixtures - Other 354O 7,529,950 3,287,653 10,817,603 12CP-TRAN 5,018, Towers and Fixtures - Total 354 8,243,671 3,287,653 11,531,324 5,427, Poles and Fixtures - Radial Texas 355R 29,399, ,399,599 TX 29,399, Poles and Fixtures - Radial New Mexico 355R 17,348, ,348,654 NM 0 48 Poles and Fixtures - Radial Wholesale 355R 4,563, ,563,727 WHLS 0 49 Poles and Fixtures - Other 355O 541,354, ,493, ,848,021 12CP-TRAN 319,560, Poles and Fixtures - Total ,666, ,493, ,160, ,959, Overhead Conductor - Radial Texas 356R 12,268, ,268,818 TX 12,268, Overhead Conductor - Radial New Mexico 356R 7,239, ,239,809 NM 0 53 Overhead Conductor - Radial Wholesale 356R 1,904, ,904,500 WHLS 0 54 Overhead Conductor - Other 356O 225,914,118 84,201, ,115,957 12CP-TRAN 143,864, Overhead Conductor - Total ,327,245 84,201, ,529, ,133, Underground Conduit , , ,799 12CP-TRAN 165, Underground Conductor , , ,020 12CP-TRAN 317, Total Transmission Plant 1,603,789, ,581,868 1,946,371, ,369, RR16 - Page 147 of

92 Page 5 of 270 Electric Rate Base At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail 60 Distribution Plant: 61 Land and Land Rights 360 6,059, ,663 6,605,419 DA 3,107, Structures & Improvements 361 8,146, ,128 8,790,440 DA 6,140, Station Equipment ,538,251 7,564, ,102,642 DA 113,594, Towers and Fixtures ,928,886 7,920, ,849,237 DA 154,875, Overhead Conductor - Primary 365P 180,011,768 7,031, ,043,381 DA 130,541, Overhead Conductor - Secondary 365S 21,869, ,258 22,723,553 DA 15,859, Overhead Conductor ,881,063 7,885, ,766, ,400, Underground Conduit ,194,224 1,327,995 23,522,220 DA 17,772, Underground Conductor - Primary 367P 29,621, ,286 30,244,184 DA 23,238, Underground Conductor - Secondary 367S 3,372,005 70,838 3,442,843 DA 2,645, Underground Conductor ,993, ,124 33,687,027 25,883, Transformers ,957,907 (30,947,387) 145,010,520 DA 117,733, Services ,567,682 (986,514) 73,581,168 DA 50,131, Meters ,559,453 (11,596,687) 52,962,766 DA 36,576, Inst. on Customer Premises ,083,382 (103,347) 12,980,036 DA 8,015, Street Light / Signal Systems ,456, ,790 22,985,828 DA 13,396, Total Distribution Plant 1,005,366,860 (16,522,624) 988,844, ,628, General Plant: 80 Land and Land Rights 389 1,100, ,100,782 LABXAG 644, Structures & Improvements - Call Center 390 9,076, ,076,308 CUST-RET 6,175, Structures & Improvements - Other ,762, ,596 62,443,767 LABXAG 36,557, Structures & Improvements - Total ,838, ,596 71,520,075 42,733, Office Furniture & Equipment - Call Center , ,727 CUST-RET 557, Office Furniture & Equipment - Other ,763,415 8,397,152 39,160,567 LABXAG 22,926, Office Furniture & Equipment - Total ,583,142 8,397,152 39,980,294 23,484, Transportation Equipment ,030,432 1,250,556 75,280,987 LABXAG 44,073, Stores Equipment ,265 32, ,736 LABXAG 288, Tools, Shop & Garage Equip. - Call Center , ,558 CUST-RET 16, Tools, Shop & Garage Equip. - Other ,776, ,100 23,060,259 LABXAG 13,500, Tools, Shop & Garage Equip. - Total ,799, ,100 23,083,817 13,516, Laboratory Equipment - Call Center CUST-RET Laboratory Equipment - Other ,918, ,576 11,594,364 LABXAG 6,787, Laboratory Equipment - Total ,919, ,576 11,594,638 6,788, Power Operated Equipment ,831, ,323 10,967,442 LABXAG 6,420, Communication Equipment - Call Center , ,943 CUST-RET 515, Communication Equipment - Other ,142,309 6,537,076 66,679,385 LABXAG 39,037, Communication Equipment - Total ,900,253 6,537,076 67,437,329 39,553, Miscellaneous Equipment - Call Center , ,915 CUST-RET 14, Miscellaneous Equipment - Other 398 2,845, ,284 3,047,622 LABXAG 1,784, Miscellaneous Equipment - Total 398 2,867, ,284 3,069,537 1,799, Total General Plant 286,330,502 18,197, ,527, ,301, Total Electric Plant in Service 4,988,706, ,021,491 5,385,727,689 2,918,983, RR16 - Page 148 of

93 Page 6 of 270 Electric Rate Base At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail 106 Depreciation & Amortization Reserve: 107 Steam Production (1,022,392,197) 116,975,064 (905,417,133) PIS-PROD (474,509,370) 108 Other Production (64,902,115) (1,612,793) (66,514,908) PIS-PROD (34,859,013) 109 Total Production (1,087,294,312) 115,362,271 (971,932,041) (509,368,383) 110 Transmission (314,855,533) (33,287,131) (348,142,664) PIS-TRAN (163,372,260) 111 Distribution (316,483,879) (3,002,223) (319,486,102) DA (224,512,887) 112 General - CRS/Call Center (21,429,443) 678,877 (20,750,566) CUST-RET (14,119,695) 113 General & Intangible (154,844,352) (6,003,331) (160,847,683) PIS-GEN (94,704,998) 114 Total Depreciation & Amortization Reserve (1,894,907,519) 73,748,463 (1,821,159,056) (1,006,078,223) Net Steam Production Plant 692,802, ,203, ,006, ,753, Net Other Production Plant 224,517,763 3,144, ,662, ,312, Total Net Production Plant 917,320, ,348,331 1,068,668, ,065, Net Transmission Plant 1,288,933, ,294,736 1,598,228, ,997, Net Distribution Plant 688,882,981 (19,524,847) 669,358, ,115, Net General & Intangible Plant 198,661,683 29,651, ,313, ,726, Total Net Plant in Service 3,093,798, ,769,954 3,564,568,632 1,912,905, Plant Held for Future Use: 125 Steam Production 12CP-PROD Other Production 12CP-PROD Total Production Transmission 12CP-TRAN Distribution DA General LABXAG Total Plant Held for Future Use Construction Work in Progress: 134 Steam Production 5,736,592 (5,736,592) 0 12CP-PROD Other Production 298,583 (298,583) 0 12CP-PROD Total Production 6,035,175 (6,035,175) Transmission 282,643,725 (282,643,725) 0 12CP-TRAN Distribution 12,837,894 (12,837,894) 0 DA Intangible & General 51,964,792 (51,964,792) 0 LABXAG Total Construction Work in Progress 353,481,585 (353,481,585) Total Plant 3,447,280, ,288,369 3,564,568,632 1,912,905, RR16 - Page 149 of

94 Page 7 of 270 Electric Rate Base At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail 144 Fuel Inventory 12,255, ,255,296 ENERGY 6,728, NOx Inventory 12CP-PROD Utility Materials & Supplies: 147 Production 11,725,233 70,150 11,795,383 12CP-PROD 6,181, Transmission 5,220, ,220,949 12CP-TRAN 2,422, Distribution 3,272, ,272,855 PIS-DIST 2,295, Total Utility Materials & Supplies 20,219,036 70,150 20,289,186 10,899, % 152 Cash Working Capital: 153 Fuel & Non-Fuel Energy Costs 888,783, ,783, ,936, Demand Related Energy Costs 103,931, ,931,599 54,468, Total Energy Costs 992,714, ,714, ,404, Factor ( ) ( ) Total Energy Costs CWC Amount (25,406) (25,406) 155, Total O&M Expense 439,955,487 3,428, ,383, ,760, Factor Total O&M Expense CWC Amount 1,508,645 1,520, , Total TOTI 41,606,755 14,190,205 55,796,960 35,326, Factor ( ) ( ) ( ) 165 Total TOTI CWC Amount (11,420,423) (15,315,419) (11,607,146) Total Franchise Fees 4,331,623 4,331, Factor ( ) ( ) 169 Total Franchise Fees CWC Amount (188,335) (188,335) Total Federal Income Tax Expense (14,479,100) (38,887,359) (25,825,894) 172 Factor ( ) ( ) ( ) 173 Total Federal Income Tax Expense CWC Amount 54, , , Total State Income Tax Expense 3,594,833 (853,097) Factor ( ) ( ) Total State Income Tax Expense CWC Amount (11,718) 1, Total Cash Working Capital (10,082,532) (3,813,780) (13,896,312) (10,788,103) RR16 - Page 150 of

95 Page 8 of 270 Electric Rate Base At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail 180 Prepayments: 181 Insurance 2,847, ,847,487 PIS-NET 1,528, Pensions 168,638, ,638,622 LABOR 100,354, Transmission (NERC Fees) 172, ,814 RETAIL-TRAN 126, Fuel LABOR Capacity 12CP-PROD Short-term Debt Fees 1,176,611 (1,176,611) 0 PIS-NET Auto Licensing 56, ,568 PIS-NET 30, I/T Related 119, ,081 PIS-NET 63, Other Prepaid PIS-NET Other Prepaid - Brand Adv 164,488 (164,488) 0 N/A Other Prepaid-TU 47,284 (47,284) 0 N/A Other Prepaid - Safety Award 3,083 (3,083) 0 N/A Other Prepaid - Pollution Emissions 422, ,956 12CP-PROD 221, Other Prepaid - Benefits 9, ,881 LABOR 5, Other Prepaid - EE 87,366 (87,366) 0 N/A Taxes: 198 Federal 4,882,813 (4,882,813) 0 N/A State: 200 Texas 482,151 (482,151) 0 N/A Other State 538,242 (538,242) 0 N/A Total State 1,020,394 (1,020,394) Total Taxes 5,903,207 (5,903,207) Total Prepayments 179,649,447 (7,382,038) 172,267, ,331, Regulatory Asset - EE & ICO Related 8,541,014 (8,541,014) 0 12CP-PROD Regulatory Asset - REC Related 19,866,234 (19,866,234) 0 N/A Regulatory Asset - Texas Restructuring Meters 279, ,186 TX 279, Regulatory Asset - Deferred Pension and OPEB Costs 7,521,266 (7,521,266) 0 TX RR16 - Page 151 of

96 Page 9 of 270 Electric Rate Base At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail 210 Accumulated Deferred Income Taxes: 211 Account 190: 212 Bad Debts 1,990,556 (52,909) 1,937,647 CUST-RET 1,318, Contribution Carryover 1,289,287 (1,289,287) 0 N/A Deferred Compensation Plan Reserve 420,698 (420,698) 0 LABOR Renewable Energy Standard 84,101 (84,101) 0 N/A Deferred Fuel Costs N/A Demand Side Management 1,533,821 (1,533,821) 0 N/A Electric Vehicle Credit - Fed DIT Only 7, ,500 LABOR 4, Employee Incentive Plans 604,055 (16,055) 588,000 LABOR 349, Environmental Remediation 56,443 (1,500) 54,943 PIS-PROD 28, Federal NOL Benefit 51,186,654 (51,186,654) 0 N/A Fuel Tax Credit - Inc Addback 1,171 (31) 1,140 LABOR Interest Inc/Exp on Disputed Tax - DTA N/A Inventory Reserve 138,171 (3,673) 134,498 PIS-NET 72, ITC Grant - Fed DIT Only N/A KS State Only NOL 10,425 (10,425) 0 N/A Litigation Reserve PIS-NET New Hire Retention Credit 11, ,000 LABOR 6, NM State Only NOL 923,949 (923,949) 0 N/A Non-qualified Pension Plans 633,163 (16,829) 616,334 LABOR 366, OCI Treasury 603,830 (603,830) 0 N/A OK Bonus Depreciation N/A OK State Only NOL 12,021 (12,021) 0 N/A Performance Share Plan 3,187 (3,187) 0 N/A Post Employment Benefits - FAS106 6,204,792 (164,923) 6,039,869 LABOR 3,594, Post Employment Benefits - FAS106 Medicare LABOR Post Employment Benefits - FAS ,716 (17,163) 628,553 LABOR 374, R&E Credit - Fed DIT Only 1,684, ,684,966 PIS-NET 904, Rate Refund 18,943,904 (18,943,904) 0 N/A Reg Liab - Transmission Attach O 1,376,145 (1,376,145) 0 N/A Reg Liab - Refund Obligation 2,698,597 (2,698,597) 0 N/A Severance Accrual LABOR State Tax Deduct Cash vs Acc - DTA 1,177,503 (1,177,503) 0 N/A State Tax Deduction Cash vs. Accrual (FIN48) - Perm 434 (434) 0 N/A State Tax Deduction Cash vs. Accrual (FIN48) - Temp - (Non-Utility) 653 (653) 0 N/A Texas Margin Tax 404,321 (404,321) 0 N/A Unrecovered REC Inventory N/A 0 RR16 - Page 152 of

97 Page 10 of 270 Electric Rate Base At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail 248 TUCO Refund 229,714 (229,714) 0 N/A Unbilled Revenue 15,706,203 (15,706,203) 0 N/A Vacation Accrual 1,730,803 (46,004) 1,684,799 LABOR 1,002, FAS Rate Change (3,283,280) 3,283,280 0 N/A FAS Unamortized ITC N/A Texas NOL Carryforward - Beginning Balance 0 22,906,633 22,906,633 TX 22,906, Texas NOL Carryforward 0 (14,632,724) (14,632,724) TX (14,632,724) 255 Plant Timing Differences - Production 7,540,252 (63,636) 7,476,616 PIS-PROD 3,918, Plant Timing Differences - Transmission 25,861,934 1,248,573 27,110,507 PIS-TRAN 12,722, Plant Timing Differences - Distribution 30,632,671 (384,736) 30,247,935 PIS-DIST 21,217, Plant Timing Differences - General 819,220 23, ,565 LABXAG 493, Plant Timing Differences - Non Utility (952,514) 952,514 0 N/A Total Account ,932,067 (83,591,286) 87,340,781 54,648, Account 281: 263 Plant (1,262,777) (286,788) (1,549,565) PIS-PROD (812,093) Account 282: 266 Plant Timing Differences - Production (234,225,353) 0 (234,225,353) PIS-PROD (122,752,399) 267 Plant Timing Differences - Transmission (311,325,984) 1,522,777 (309,803,207) PIS-TRAN (145,380,775) 268 Plant Timing Differences - Distribution (189,828,131) 0 (189,828,131) PIS-DIST (133,155,713) 269 Plant Timing Differences - General (43,676,701) 0 (43,676,701) LABXAG (25,570,480) 270 Plant Timing Differences - CRS / General Call Center (930,931) 0 (930,931) CUST-RET (633,451) 271 Plant Timing Differences - South Georgia 109, ,019 NM Plant Timing Differences - Future Use PIS-NET Plant Timing Differences - Non Utility 3,900 (3,900) 0 N/A Plant Timing Differences - Unblend Adj Production 0 (51,250,571) (51,250,571) PIS-PROD (26,859,306) 275 Plant Timing Differences - Unblend Adj Transmission 0 7,398,504 7,398,504 PIS-TRAN 3,471, Plant Timing Differences - Unblend Adj Distribution PIS-DIST Plant Timing Differences - Unblend Adj General 0 (2,375,115) (2,375,115) PIS-GEN (1,398,436) 278 Plant Timing Differences - Unblend Adj CRS/Call Center 0 (295,454) (295,454) CUST-RET (201,041) 279 Plant Timing Differences - Post TY Adj Production 0 (1,704,776) (1,704,776) PIS-PROD (893,436) 280 Plant Timing Differences - Post TY Adj Transmission 0 (31,634,234) (31,634,234) PIS-TRAN (14,844,938) 281 Plant Timing Differences - Post TY Adj Distribution 0 (3,634,622) (3,634,622) PIS-DIST (2,549,520) 282 Plant Timing Differences - Post TY Adj General 0 106, ,062 PIS-GEN 62, Plant Timing Differences - Post TY Adj CRS/Call Center 0 139, ,535 CUST-RET 94, Plant Timing Differences - State Tax Portion Exclusion (Texas Retail) Production 0 6,721,831 6,721,831 TX 6,721, Plant Timing Differences - State Tax Portion Exclusion (Texas Retail) Transmission 0 3,074,799 3,074,799 TX 3,074, Plant Timing Differences - State Tax Portion Exclusion (Texas Retail) Distribution 0 2,528,373 2,528,373 TX 2,528, Plant Timing Differences - State Tax Portion Exclusion (Texas Retail) General 0 948, ,991 TX 948, Plant Timing Differences - State Tax Portion Exclusion (Other Jurisdictions) Production 0 53,487,918 53,487,918 WHLS Plant Timing Differences - State Tax Portion Exclusion (Other Jurisdictions) Transmissi 0 (3,623,184) (3,623,184) WHLS Plant Timing Differences - State Tax Portion Exclusion (Other Jurisdictions) Distributio 0 2,184,764 2,184,764 WHLS Plant Timing Differences - State Tax Portion Exclusion (Other Jurisdictions) General 0 3,283,211 3,283,211 WHLS FAS 109 Related (34,085,491) 34,085,491 0 N/A Total Account (813,959,673) 20,960,401 (792,999,272) (457,336,225) 294 RR16 - Page 153 of

98 Page 11 of 270 Electric Rate Base At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail 295 Account 283: 296 Book Unamortized Cost of Reacquired Debt (1,551,360) 41,235 (1,510,125) PIS-NET (810,400) 297 Deferred Fuel Costs (5,833,102) 5,833,102 0 N/A Demand Side Management Advertising (31,968) 31,968 0 N/A Interest Expense - Deferred Fuel Revenue (179,563) 179,563 0 N/A Interruptible Service Option Credit N/A Mark to Market Adjustment (1,132,479) 1,132,479 0 N/A Pension Expense (61,213,603) 1,627,054 (59,586,549) LABOR (35,459,271) 303 Prepaid Advertising (91,634) 91,634 0 N/A Reg Asset - New Mexico NOx Expense (5,299) 5,299 0 N/A Rate Case Expenses (2,568,238) 2,568,238 0 N/A Restructuring Costs - Recoverable Meters 375,458 (9,979) 365,479 TX 365, Interest Inc/Exp on Disputed Tax (23,863) 23,863 0 N/A Renewable Energy Standard N/A State Tax Deduction Cash vs Accrual 877 (877) 0 N/A Texas Margin Tax N/A Unrecovered REC Inventory (7,549,079) 7,549,079 0 N/A Accelerated Amortization & Basis Differences - Software (4,832,227) 290,097 (4,542,130) LABXAG (2,659,185) 313 Accelerated Amortization & Basis Differences - State Tax Unblend 0 (365,923) (365,923) TX (365,923) 314 Total Account (84,636,079) 18,996,832 (65,639,247) (38,929,300) Total Accumulated Deferred Income Taxes (728,926,462) (43,920,841) (772,847,303) (442,429,518) Customer Deposits 319 Customer Deposits - Texas 235TX (8,136,028) 0 (8,136,028) TX (8,136,028) 320 Customer Deposits - New Mexico 235NM (2,168,851) 0 (2,168,851) NM Total Customer Deposits (10,304,879) 0 (10,304,879) (8,136,028) 322 FAS 106 Liability (17,391,011) 0 (17,391,011) LABOR (10,349,191) 323 FAS 112 Liability (2,341,289) 0 (2,341,289) LABOR (1,393,274) 324 Customer Advances for Construction 325 Customer Advances for Construction - Texas 252 (4,860) 0 (4,860) NCP-DIST (4,857) 326 Customer Advances for Construction - New Mexico 252 (5,147) 0 (5,147) NM Total Customer Advances for Construction (10,007) 0 (10,007) (4,857) Net Rate Base 2,926,555,561 26,313,347 2,952,868,908 1,560,042,382 RR16 - Page 154 of

99 Page 12 of 270 Electric Net Operating Earnings At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail 1 Cost of Sales: 2 Steam Production Fuel: 3 Steam Generation Fuel ,980 (10,980) 0 ENERGY 0 4 Steam Power Fuel - Gas ,575,224 (232,575,224) 0 ENERGY 0 5 Steam Power Fuel - Oil ,488 (480,488) 0 ENERGY 0 6 Steam Power Fuel - Coal ,469,407 (230,469,407) 0 ENERGY 0 7 Steam Power Fuel - Coal Non-Native Load ,137,626 (3,137,626) 0 ENERGY 0 8 Steam - Other Sources ENERGY 0 9 Total Steam Production Fuel 466,673,725 (466,673,725) Other Production Turbine Fuel: 12 Other Operating Fuel ENERGY 0 13 Other Production Fuel - Gas / Nitrogen (4,040,459) 4,040,459 0 ENERGY 0 14 Other Production Fuel - Engine Oil ENERGY 0 15 Other Production Fuel - Gas Non-Native Load ,421,367 (12,421,367) 0 ENERGY 0 16 Total Other Production Fuel 8,380,908 (8,380,908) Deferred Electric Generation Costs (7,198,888) 7,198,888 0 N/A Purchased Power: 21 Energy: 22 Purchased Power - Real Time Energy ,491,327 (72,491,327) 0 ENERGY 0 23 Purchased Power - Energy ,411,723 (198,411,723) 0 ENERGY 0 24 Purchased Power - Non-Firm Energy ,907 (703,907) 0 ENERGY 0 25 Purchased Power - Wind ,854,094 (108,854,094) 0 ENERGY 0 26 Purchased Power - Variable O&M ,893, ,425 15,201,733 ENERGY 8,345, Purchased Power - Firm Energy ,096,267 (5,096,267) 0 ENERGY 0 28 Purchased Power - Solar ,483,442 (12,483,442) 0 ENERGY 0 29 Purchased Power - Gen Trading ,794,889 (3,794,889) 0 ENERGY 0 30 Purchased Power - Prop Trading ENERGY 0 31 Purchased Power - SPP Real Power Losses ,409 (6,409) 0 ENERGY 0 32 Purchased Power - MISO ENERGY 0 33 Purchased Power - MISO Prop ENERGY 0 34 Purchased Power - ICO ENERGY 0 35 Purchased Power - Non-Native Load Tolling (1,681,409) 1,681,409 0 ENERGY 0 36 Purchased Power - Non-Native Load LT (865,347) 865,347 0 ENERGY 0 37 Purchased Power - Non-Native Load ST (455,094) 455,094 0 ENERGY 0 38 Wheeling - by Others ,039 (6,039) 0 12CP-PROD 0 39 Wheeling - Resale CP-PROD 0 40 Total Energy 413,739,555 (398,537,822) 15,201,733 8,345, RR16 - Page 155 of

100 Page 13 of 270 Electric Net Operating Earnings At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail 42 Demand: 43 Purchased Power - Capacity ,931,599 6,129, ,060,937 12CP-PROD 57,680, Total Demand 103,931,599 6,129, ,060,937 57,680, Deferred Purchased Power ,338,242 (8,338,242) 0 N/A Total Purchased Power 526,009,396 (400,746,726) 125,262,670 66,026, Total Cost of Sales 993,865,141 (868,602,471) 125,262,670 66,026, Operating & Maintenance Expenses: Steam Production Operation: 55 Supervision & Engineering ,697,214 (16,937) 2,680,277 12CP-PROD 1,404, Fuel (Transportation & Handling) 0501F # 37,524,247 63,834 37,588,081 ENERGY 20,635, Steam Expense ,797,913 (532,765) 9,265,147 12CP-PROD 4,855, Electric Expense ,924,509 (239,950) 10,684,560 12CP-PROD 5,599, Miscellaneous ,370, ,248 14,102,447 12CP-PROD 7,390, Rent ,930, ,930,804 12CP-PROD 2,060, Supplies and Expenses CP-PROD 0 62 Allowances ,275 (1,275) 0 12CP-PROD 0 63 Total Steam Production Operation 78,246,161 5,155 78,251,316 41,946, Steam Production Maintenance: 66 Supervision & Engineering ,286, ,949 2,418,136 12CP-PROD 1,267, Structures ,248,824 82,926 4,331,750 12CP-PROD 2,270, Boilers ,495, ,757 20,410,729 ENERGY 11,205, Electric Plant ,134, ,512 15,386,090 ENERGY 8,446, Miscellaneous Plant ,561, ,405 13,485,335 12CP-PROD 7,067, Steam Production (Nonmajor) CP-PROD 0 72 Total Steam Production Maintenance 53,727,492 2,304,548 56,032,040 30,257, Total Steam Production O&M 131,973,653 2,309, ,283,356 72,203, RR16 - Page 156 of

101 Page 14 of 270 Electric Net Operating Earnings At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail 76 Other Production Operation: 77 Supervision & Engineering ,719 (2,285) 5,434 12CP-PROD 2, Fuel Handling 0547 ENERGY 0 79 Generation Expense ,838 91, ,784 12CP-PROD 217, Miscellaneous ,791 (47,105) 536,685 12CP-PROD 281, Rents , ,659 12CP-PROD 209, Total Other Production Operation 1,316,007 42,556 1,358, , Other Production Maintenance: 85 Supervision & Engineering (144) CP-PROD Structures ,349 (1,188) 168,161 12CP-PROD 88, Electric Plant ,514, ,231 1,692,600 12CP-PROD 887, Miscellaneous Plant , ,791 12CP-PROD 5, Total Other Production Maintenance 1,694, ,898 1,871, , Total Other Production O&M 3,010, ,454 3,230,389 1,692, System Control and Dispatch: 94 System Load Control ,073,100 28,921 1,102,021 12CP-PROD 577, Other Expenditures ,167,067 44,386 1,211,454 12CP-PROD 634, Other Expenditures - New Mexico 0557NM (329,666) 0 (329,666) NM 0 97 Other Expenditures - Texas 0557TX 6,494,034 (693,661) 5,800,373 TX 5,800, Total System Control and Dispatch 8,404,536 (620,354) 7,784,181 7,012, Total Non-Fuel Production O&M 143,389,123 1,908, ,297,927 80,909, Transmission Operations: 103 Supervision & Engineering ,239,154 (95,971) 7,143,183 PIS-TRAN 3,352, Load Dispatch CP-TRAN Load Dispatch - Reliability ,412 14,159 77,572 12CP-TRAN 35, Load Dispatch - Monitor/Operate ,127,814 56,842 3,184,656 12CP-TRAN 1,477, Load Dispatch - Transmission Serv/Sch CP-TRAN Load Dispatch - Sch/Con/Disp Serv ,806,674 (773,115) 3,033,559 RETAIL-TRAN 2,216, Rel/Plan/Standards Dev Serv ,929 (191,212) 130,717 12CP-TRAN 60, Trans Service Studies (51,414) (45,396) (96,810) 12CP-TRAN (44,911) 111 Generation Interconnection Studies (416,085) 4,404 (411,682) 12CP-TRAN (190,981) 112 Rel/Plan/Standards Dev Serv ,026,406 (410,717) 2,615,689 RETAIL-TRAN 1,911, Station Equipment ,276,075 57,663 1,333,738 PIS-TRAN 625, Overhead s ,291 (48,949) 900,341 PIS-TRAN 422, Underground s 0564 PIS-TRAN Miscellaneous ,617, ,137 3,268,229 PIS-TRAN 1,533, Rents ,226, ,226,164 PIS-TRAN 575, Total Transmission Operations 23,186,512 (781,156) 22,405,356 11,975, RR16 - Page 157 of

102 Page 15 of 270 Electric Net Operating Earnings At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail 120 Transmission Maintenance: 121 Supervision & Engineering ,238 25,345 98,583 PIS-TRAN 46, Structures 0569 PIS-TRAN Station Equipment ,524, ,289 2,668,308 PIS-TRAN 1,252, Overhead s ,051,352 11,272 1,062,624 PIS-TRAN 498, Underground s PIS-TRAN Miscellaneous ,137 (105) 25,032 PIS-TRAN 11, Total Transmission Maintenance 3,673, ,801 3,854,635 1,808, Wheeling: 130 Wheeling - Lamar HVDC Tie 0565P 8,475, ,182 8,865,360 12CP-PROD 4,646, Wheeling - PNM Reliability Purchase 0565P 3,292,873 (3,292,873) 0 12CP-PROD Wheeling - Ancillary Services - Schedules 1, 2, & Facilities Charges 0565R 1,396,707 (1,153,757) 242,950 RETAIL-TRAN 177, Wheeling - Ancillary Services - Schedules 3, 5 & R 1,653,421 (1,653,421) 0 RETAIL-TRAN Wheeling - Schedules 7 & 8 - Point to Point 0565R 43, ,004 RETAIL-TRAN 31, Wheeling - Schedule 9 Network Integration 0565T 24,828,360 (24,440,418) 387,943 12CP-TRAN 179, Wheeling - Schedule T 54,595,476 29,369,550 83,965,026 12CP-TRAN 38,951, Wheeling - Schedule 12 - FERC Assessment 0565R 1,757,837 6,575 1,764,412 RETAIL-TRAN 1,289, Wheeling - Other 0565T 7,352 6,039 13,391 12CP-TRAN 6, Total Wheeling 96,050,207 (768,122) 95,282,086 45,282, Total Transmission O&M 122,910,554 (1,368,477) 121,542,077 59,066, Regional Market Expenses: 146 Operation Supervision ,385 (23,368) 170,017 ENERGY 93, Day Ahead & Real Time Mkt Admin ,592 (6,199) 35,393 ENERGY 19, Trans Rights Mkt Admin ENERGY Cap Mkt Admin ENERGY Ancillary Serv Mkt Admin ,301 (3,328) 5,974 ENERGY 3, Market Monitoring/Compliance ,120 (8,684) 53,437 ENERGY 29, Mkt Fac/Mon/Comp Serv ,066,886 (1,232,152) 4,834,734 RETAIL-TRAN 3,532, Regional Market Rents , ,353 ENERGY 14, Total Regional Market Expenses 6,399,638 (1,273,730) 5,125,909 3,692, Distribution Operations: 157 Supervision - H/S 0580 # 45, ,713 CUST-H/S 8, Supervision - Texas 0580 # 2,599, ,599,678 TX 2,599, Supervision - New Mexico 0580 # 513, ,150 NM Supervision ,984,403 (44,628) 1,939,775 PIS-DIST 1,360, Total Supervision ,142,944 (44,628) 5,098,316 3,968, Load Dispatch - H/S 0581 # CUST-H/S Load Dispatch - Texas 0581 # 464, ,557 TX 464, Load Dispatch - New Mexico 0581 # NM Load Dispatch , , ,089 PIS-DIST 532, Total Load Dispatch , ,947 1,223, ,023 RR16 - Page 158 of

103 Page 16 of 270 Electric Net Operating Earnings At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail 167 Station Equipment - H/S 0582 # CUST-H/S Station Equipment - Texas 0582 # 466, ,933 TX 466, Station Equipment - New Mexico 0582 # NM Station Equipment ,556 44, ,003 PIS-DIST 372, Total Station Equipment ,045 44, , , Overhead s - H/S 0583 # CUST-H/S Overhead s - Texas 0583 # 1,678, ,678,776 TX 1,678, Overhead s - New Mexico 0583 # 641, ,615 NM Overhead s 0583 (1,842,805) 44,511 (1,798,294) PIS-DIST (1,261,420) 176 Total Overhead s ,587 44, , , Underground s - H/S 0584 # CUST-H/S Underground s - Texas 0584 # 364, ,465 TX 364, Underground s - New Mexico 0584 # 263, ,584 NM Underground s 0584 (272,801) 51,484 (221,317) PIS-DIST (155,244) 181 Total Underground s ,248 51, , , Street Lighting - H/S 0585 # CUST-H/S Street Lighting - Texas 0585 # 127, ,327 TX 127, Street Lighting - New Mexico 0585 # 43, ,990 NM Street Lighting ,469 (113,631) 634,838 PIS-DIST 445, Total Street Lighting ,785 (113,631) 806, , Metering - H/S 0586 # CUST-H/S Metering - Texas 0586 # 2,680, ,680,607 TX 2,680, Metering - New Mexico 0586 # 1,408, ,408,300 NM Metering ,531 16, ,773 PIS-DIST 640, Total Metering ,985,438 16,242 5,001,680 3,320, Customer Installations - H/S 0587 # CUST-H/S Customer Installations - Texas 0587 # 693, ,595 TX 693, Customer Installations - New Mexico 0587 # 6, ,579 NM Customer Installations ,373 (82,251) 549,123 PIS-DIST 385, Total Customer Installations ,331,547 (82,251) 1,249,297 1,078, Miscellaneous - H/S 0588 # 84, ,712 CUST-H/S 15, Miscellaneous - Texas 0588 # 3,433, ,433,050 TX 3,433, Miscellaneous - New Mexico 0588 # 2,156, ,156,607 NM Miscellaneous ,749, ,435 2,158,311 PIS-DIST 1,513, Total Miscellaneous ,424, ,435 7,832,680 4,962, Rents - H/S 0589 # 10, ,039 CUST-H/S 1, Rents - Texas 0589 # 896, ,857 TX 896, Rents - New Mexico 0589 # 295, ,755 NM Rents ,125, ,125,909 PIS-DIST 789, Total Rents ,328, ,328,560 1,688, Total Distribution Operations 24,686, ,557 25,467,654 18,055, RR16 - Page 159 of

104 Page 17 of 270 Electric Net Operating Earnings At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail 210 Distribution Maintenance: 211 Supervision So - H/S 0590 # CUST-H/S Supervision - TX 0590 # 80, ,262 TX 80, Supervision - NM 0590 # 31, ,249 NM Supervision ,572 44, ,500 PIS-DIST 162, Total Supervision ,083 44, , , Structures So - H/S 0591 # CUST-H/S Structures - TX 0591 # TX Structures - NM 0591 # NM Structures 0591 PIS-DIST Total Structures Station Equipment So - H/S 0592 # CUST-H/S Station Equipment - TX 0592 # 1,160, ,160,521 TX 1,160, Station Equipment - NM 0593 # 15, ,441 NM Station Equipment , ,927 1,050,530 PIS-DIST 736, Total Station Equipment ,021, ,927 2,226,492 1,897, Overhead s So - H/S 0593 # 1, ,526 CUST-H/S Overhead s - TX 0593 # 4,512, ,512,487 TX 4,512, Overhead s - NM 0593 # 1,810, ,810,416 NM Overhead s ,786,869 1,115,369 3,902,239 PIS-DIST 2,737, Total Overhead s ,111,298 1,115,369 10,226,668 7,250, Underground s So - H/S 0594 # CUST-H/S Underground s - TX 0594 # 201, ,888 TX 201, Underground s - NM 0594 # 115, ,021 NM Underground s 0594 (52,437) (11,140) (63,576) PIS-DIST (44,596) 235 Total Underground s ,472 (11,140) 253, , Transformers So - H/S 0595 # CUST-H/S Transformers - TX 0595 # 24, ,362 TX 24, Transformers - NM 0595 # 71, ,793 NM Transformers ,564 4,564 PIS-DIST 3, Total Transformers ,155 4, ,719 27, Street Lighting So - H/S 0596 # CUST-H/S Street Lighting - TX 0596 # 16, ,808 TX 16, Street Lighting - NM 0596 # 14, ,776 NM Street Lighting ,234 (6,615) 30,619 PIS-DIST 21, Total Street Lighting ,818 (6,615) 62,202 38, Metering So - H/S 0597 # CUST-H/S Metering - TX 0597 # 8, ,691 TX 8, Metering - NM 0597 # 1, ,124 NM Metering ,940 (2,145) 13,795 PIS-DIST 9, Total Metering ,756 (2,145) 23,610 18,367 RR16 - Page 160 of

105 Page 18 of 270 Electric Net Operating Earnings At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail 251 Miscellaneous So - H/S 0598 # CUST-H/S Miscellaneous - TX 0598 # TX Miscellaneous - NM 0598 # NM Miscellaneous ,611 (129) 8,482 PIS-DIST 5, Total Miscellaneous ,812 (129) 8,683 5, Total Distribution Maintenance 11,894,958 1,349,760 13,244,718 9,637, Total Distribution O&M 36,581,055 2,131,317 38,712,373 27,693, Customer Accounting Expense: 262 Supervision , ,239 CUST-AVG 29, Meter Reading ,017, ,780 5,238,907 CUST-AVG 3,564, Billing & Cashiering ,761,856 18,914 6,780,769 CUST-AVG 4,613, Uncollectible Accounts 0904 DA Uncollectible Accounts 0904 # 3,910, ,910,703 CUST-RET 2,661, Total Uncollectible Accounts ,910, ,910,703 2,661, Customer Deposit Interest - Texas 0 7,322 7,322 TX 7, Miscellaneous 0905 CUST-AVG Total Miscellaneous ,322 7,322 7, Total Customer Accounting Expense 15,732, ,856 15,980,940 10,876, Customer Service Expense: 276 Supervision 0907 CUST-AVG Customer Assistance - Historic EE Amortization - Texas 0908HDSMTX 1,673,346 (149,965) 1,523,381 TX 1,523, Customer Assistance - EE Tracker Amortization - Texas 0908DSMTX 3,147,376 (3,147,376) 0 TX Customer Assistance - EE - New Mexico 0908DSMNM 6,045, ,045,416 NM Customer Assistance - ICO Credits 0908ICO , ,534 TX 190, Customer Assistance - Saver Switch & EE Labor 0908SVR 1,082,553 (624) 1,081,929 TX 1,081, Customer Assistance - Other ,610,071 (54,686) 2,555,385 CUST-AVG 1,738, Customer Assistance - Total ,559,283 (3,162,638) 11,396,645 CUST-AVG 4,534, Advertisement , ,941 CUST-RET 344, Miscellaneous CUST-AVG Total Customer Service Expense 15,066,224 (3,162,638) 11,903,586 4,879, RR16 - Page 161 of

106 Page 19 of 270 Electric Net Operating Earnings At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail 289 Sales Expense: 290 Sales Expense - Supv CUST-AVG Demonstrations & Selling ,858 (11,129) 177,729 CUST-AVG 120, Advertising Expense - Sales 0913 CUST-RET Miscellaneous Sales Expense 0916 CUST-AVG Total Sales Expense 188,858 (11,129) 177, , Total Customer Service & Sales Expense 15,255,082 (3,173,767) 12,081,315 5,000, Total Customer Operations Expense 30,987,166 (2,924,911) 28,062,255 15,876, Administrative & General Expense: 302 Administrative Salaries ,263,197 (1,999,497) 20,263,701 LABXAG 11,863, Office Supplies & Expense ,119,259 (357,781) 15,761,477 LABXAG 9,227, A&G Expense Transferred 0922 (6,408,374) 0 (6,408,374) LABXAG (3,751,776) 305 Outside Services - Legal ,014,213 (252,197) 6,762,016 LABXAG 3,958, Property Insurance ,695,725 (5,016) 3,690,710 PIS-NET 1,980, Injuries and Damages ,394, ,325 4,844,659 LABXAG 2,836, Pensions & Benefits ,621, ,099 35,551,742 LABXAG 20,813, Deferred Pensions & Benefits ,538,030 2,045,479 3,583,510 TX 3,583, Regulatory Commission Expense - Texas ,113,949 3,246,621 6,360,570 TX 6,360, Regulatory Commission Expense - New Mexico ,976, ,045 2,699,549 NM Regulatory Commission Expense - Wholesale ,061,102 (723,045) 338,057 WHLS Regulatory Commission Expense - ENERGY , ,959 ENERGY 60, Regulatory Commission Expense - Transmission , ,903 12CP-TRAN 106, Regulatory Commission Expense - NERC Fees 0928 RETAIL-TRAN Regulatory Commission Expense - Misc , ,982 RETAIL-ENERGY 16, Total Regulatory Commission Expense ,514,399 3,246,621 9,761,019 6,544, Duplicate Charges - Electric 0929 (1,199,955) 0 (1,199,955) PIS-PTD (645,442) 319 Miscellaneous ,606,807 (1,517,157) 1,089,650 PIS-PTD 586, Rents - Retail Allocated ,468,489 (13,065) 2,455,423 PISRET-PTD 1,772, Rents - Other 931O 5,791,385 (7,565) 5,783,821 PIS-PTD 3,111, Rents ,259,874 (20,630) 8,239,244 4,883, Maintenance of Structures 0932 PIS-GEN Maintenance of General Plant ,798 (120,990) 147,808 PIS-GEN 87, Contributions &, Dues 0 2,556,117 2,556,117 TX 2,556, Total Administrative & General Expense 99,687,950 4,955, ,643,324 64,523, Total O&M Expense 439,955,487 3,428, ,383, ,760, RR16 - Page 162 of

107 Page 20 of 270 Electric Net Operating Earnings At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail 330 Depreciation and Amortization Expense: 2,975, Intangible: 333 Misc. Intangible PIS-GEN PIS-GEN Total Intangible Production: 338 Amortization of Regulatory Assets - DG, NM Fuel Audit NM Depreciation Expense ,133,456 5,011,837 49,145,293 PIS-PROD 25,755, Depreciation & Depletion Expense (1,047,071) 1,047,071 0 N/A Amortization - ARO Regulatory Credits ,394 (217,394) 0 N/A Accretion Expense # 829,676 (829,676) 0 N/A Total Production 44,133,456 5,011,837 49,145,293 25,755, Transmission: 346 Depreciation Expense ,564,218 16,625,744 49,189,962 PIS-TRAN 23,083, Depreciation & Depletion Expense # 456 (456) 0 N/A Total Transmission 32,564,675 16,625,287 49,189,962 23,083, Distribution: 351 Depreciation Expense - Texas 0403TX 17,329,277 1,230,612 18,559,889 NCP-DIST 18,548, Depreciation Expense - New Mexico 0403NM 8,632,874 (487,368) 8,145,506 NM Depreciation & Depletion Expense # 200,895 (200,895) 0 N/A Amortization - Distribution Regulatory Credits TX (53,949) 0 (53,949) NCP-DIST (53,917) 355 Amortization - ARO Regulatory Credits # (426,091) 426,091 0 N/A Accretion Expense # 222,135 (222,135) 0 N/A Total Distribution 25,905, ,305 26,651,446 18,495, General: Amortization of Software - CRS CRS 1,585, ,585,372 CUST-RET 1,078, Amortization of Intangible ,309,892 6,903,077 15,212,969 PIS-GEN 8,957, Depreciation Expense ,898,558 7,091,628 14,990,186 PIS-GEN 8,826, Depreciation Expense - Call Center ,468 89, ,888 CUST-RET 215, Depreciation & Depletion Expense # 2,605 (2,605) 0 N/A Amortization - Office Remodel PIS-GEN Amortization - Regulatory Debits - Texas TX 34, ,898 TX 34, Amortization - Regulatory Debits - New Mexico NM 3,400, ,400,406 NM Total General 21,459,198 14,081,520 35,540,718 19,112, Total Depreciation and Amortization Expense 124,062,470 36,464, ,527,419 86,446, RR16 - Page 163 of

108 Page 21 of 270 Electric Net Operating Earnings At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail 373 Taxes Other Than Income: 374 Property ,506,086 9,612,279 37,118,364 PIS-NET 19,919, Payroll # 7,860, ,765 8,110,374 LABOR 4,826, Sales and Use Tax (27,907) (27,907) PIS-NET (14,976) 377 Other: 378 Franchise Fees - Texas 40833TX 9,294,948 1,786,864 11,081,812 TX 11,081, Franchise Fees - New Mexico 40833NM 0 0 NM Franchise Fees - Other 40833OTH 0 0 N/A Texas Franchise Tax ,625,726 3,625,726 TX 3,625, Texas Gross Receipts Tax ,267, ,435 6,970,402 TX 6,970, Other , ,548 PIS-NET 4, Total Other 15,571,464 6,115,025 21,686,489 21,682, Total Taxes Other Than Income 50,910,251 15,977,069 66,887,320 46,413, Income Tax Expense: Net Original Cost Rate Base 2,952,868,914 1,560,042, Return on Rate Base 8.28% 392 Earnings 244,497, ,171, Net Original Cost Rate Base 2,952,868,914 1,560,042, Composite Cost of Debt 2.75% 395 Synchronized Interest 81,203,896 42,901, Schedule M Items: Temp/Perm 398 Plant Differences: 399 Plant Deferred Tax - Production T 5,670,619 (36,709,727) (31,039,108) PIS-PROD (16,266,919) 400 Plant Deferred Tax - Transmission T (92,478,987) (85,851,847) (178,330,833) PIS-TRAN (83,684,978) 401 Plant Deferred Tax - Distribution T (35,068,284) (2,889,161) (37,957,445) PIS-DIST (26,625,403) 402 Plant Deferred Tax - General T 6,490,763 15,337,834 21,828,597 PIS-GEN 12,852, Plant Related - General Call Center / CRS T (1,136,722) (295,455) (1,432,177) PISRET-PTD (1,033,668) 404 Plant Deferred Tax - Other T 873,360 (873,360) 0 N/A Plant Deferred Tax - Production P 1,354,855 1,206,827 2,561,682 PIS-PROD 1,342, Plant Deferred Tax - Transmission P (6,937,654) 8,804,039 1,866,385 PIS-TRAN 875, Plant Deferred Tax - Distribution P (854,110) 1,394, ,203 PIS-DIST 378, Plant Deferred Tax - General P (823,122) 1,692, ,733 PIS-GEN 512, Plant Deferred Tax - Other P 6,267 (6,267) 0 N/A RR16 - Page 164 of

109 Page 22 of 270 Electric Net Operating Earnings At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail 411 Non-Plant differences - Permanent: 412 Additional Charitable Contribution P N/A Club Dues P 28,361 (28,361) 0 N/A Deferred Revenue (ITC Grant Accounting) P (12,027) 12,027 0 N/A Depletion on Royalty Income P (832) N/A Lobbying Expenses P 468,509 (468,509) 0 N/A Meals & Entertainment P 307, ,625 LABOR 183, Penalties P 319,803 (319,803) 0 N/A Non-Plant differences - Temporary 421 Bad Debts T 1,035, ,035,747 CUST-RET 704, Book Unamort Cost of Reacquired Debt T 1,224, ,224,570 PIS-NET 657, Contributions Carryover T 757,640 (757,640) 0 N/A Deferred Compensation Plan Reserve T 317,332 (317,332) 0 LABOR REC Amortization T 0 2,836,570 2,836,570 TX 2,836, Historic EE Amortization T 0 1,155,696 1,155,696 TX 1,155, Unamortized Rate Case Expense Amortization T 0 784, ,724 TX 784, Unamortized Pension/OPEB Reg Asset Amortization T 0 3,583,510 3,583,510 TX 3,583, Deferred Fuel Costs T (8,538,701) 8,538,701 0 N/A Demand Side Management T (297,206) 297,206 0 N/A Demand Side Management - Advertising T 81,408 (81,408) 0 N/A Employee Incentive Plans T 216, ,541 LABOR 128, Environmental Remediation T 104, ,906 PIS-PROD 54, FAS 106 Medicare Reimbursements T LABOR Fed NOL Benefit - DIT NR (Non regulated) T (295) N/A Fed NOL Benefit - DIT OPER T (93,907,893) 93,907,893 0 N/A Interest Expense - Deferred Fuel Revenue T (22,487) 22,487 0 N/A Interest inc/exp on Disputed Tax T (370,467) 370,467 0 N/A Interruptible Service Option Credit T N/A Inventory Reserve T 33, ,889 PIS-NET 18, Litigation Reserve T PIS-NET Mark to Market Adjustment T 765,456 (765,456) 0 N/A Non-Qualified Pension Plan T (45,831) 0 (45,831) LABOR (27,274) 444 Pension Expense T 16,139, ,139,486 LABOR 9,604, Performance Share Plan T 1,137 (1,137) 0 N/A Post Employment Benefit - FAS 106 T (210,039) 0 (210,039) LABOR (124,992) 447 Post Employment Benefit - FAS 112 T (720,060) 0 (720,060) LABOR (428,499) 448 Prepaid Advertising T 34,772 (34,772) 0 N/A Rate Case Expenses T (3,548,184) 3,548,184 0 N/A Restructuring Costs - Recoverable Meters T 34, ,898 TX 34, Rate Refund T 42,628,134 (42,628,134) 0 N/A 0 RR16 - Page 165 of

110 Page 23 of 270 Electric Net Operating Earnings At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail 452 Regulatory Liability - Refund Obligation T (3,191,349) 3,191,349 0 N/A Reg Asset - NM NOX Expense T 1,275 (1,275) 0 N/A Reg Liability - Transmission Attachment O T 1,253,675 (1,253,675) 0 N/A Renewable Energy Standard T (780,321) 780,321 0 N/A Severance Accrual T LABOR State Tax Deduction Cash vs. Accrual T 874,926 (874,926) 0 N/A TUCO Refund T 541,185 (541,185) 0 N/A Unbilled Revenue T 5,838,583 (5,838,583) 0 N/A Unrecovered REC Inventory T (2,104,328) 2,104,328 0 N/A Vacation Accrual T 97, ,793 LABOR 58, VEBA T (697,981) 697,981 0 LABOR State Only NOL T N/A Texas Gross Margin Tax T N/A OK Bonus Depreciation T N/A Fuel Tax Credit - Inc. Addback T N/A R&E Credit - Fed FIT only T N/A NOL Carryforward 0 (41,807,783) (41,807,783) TX (41,807,783) 469 (164,243,364) (72,077,358) (236,320,722) (134,232,718) State Taxable Income (73,027,072) (47,962,375) 472 State Income Tax Rate 0.00% 473 State Income Tax Expense SIT 3,594,833 (4,402,525) (807,692) Federal Taxable Income (72,219,380) (47,962,375) 476 Federal Tax Rate % 477 Federal Income Tax Expense (14,479,100) (10,797,683) (25,276,783) (16,786,831) 478 Impact of Production Tax Deduction TX Total Current Federal Income Tax Expense (14,479,100) (10,797,683) (25,276,783) (16,786,831) RR16 - Page 166 of

111 Page 24 of 270 Electric Net Operating Earnings At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail 482 Deferred Income Tax Expense: 483 Plant Related 484 Plant Deferred Tax - Production (2,384,044) 13,247,732 10,863,688 PIS-PROD 5,693, Plant Deferred Tax - Transmission 33,586,124 28,829,667 62,415,792 PIS-TRAN 29,289, Plant Deferred Tax - Distribution 13,177, ,413 13,285,106 PIS-DIST 9,318, Plant Deferred Tax - General (1,534,782) (6,105,227) (7,640,009) PIS-GEN (4,498,337) 488 Plant Deferred Tax - General - CRS/Call Center (394,353) 895, ,262 PISRET-PTD 361, Non-Plant Related: 492 Additional Charitable Contribution # N/A Club Dues N/A Deferred Revenue (ITC Grant - Fed Only) N/A Depletion on Royalty Income N/A Lobbying Expenses N/A Meals & Entertainment LABOR Penalties N/A Bad Debts (371,100) 8,589 (362,511) CUST-RET (246,670) 500 Book Unamort Cost of Reacquired Debt (441,914) 13,315 (428,600) PIS-NET (230,005) 501 Contributions Carryover 2,060,240 (2,060,240) 0 N/A Deferred Compensation Plan Reserve (113,851) 113,851 0 LABOR Deferred Fuel Costs 3,067,914 (3,067,914) 0 N/A Demand Side Management 108,190 (108,190) 0 N/A Demand Side Management - Advertising (29,321) 29,321 0 N/A Employee Incentive Plans (77,433) 1,644 (75,789) LABOR (45,101) 507 Environmental Remediation (37,705) 988 (36,717) PIS-PROD (19,243) 508 FAS 106 Medicare Reimbursements LABOR Fed NOL Benefit - DIT NR (Non regulated) (2,278,360) 2,278,360 0 N/A Fed NOL Benefit - DIT OPER 37,216,599 (37,216,599) 0 N/A Interest Expense - Deferred Fuel Revenue 7,947 (7,947) 0 N/A Interest inc/exp on Disputed Tax 133,293 (133,293) 0 N/A Interruptible Service Option Credit N/A Inventory Reserve (12,083) 222 (11,861) PIS-NET (6,365) 515 Litigation Reserve PIS-NET Mark to Market Adjustment (276,364) 276,364 0 N/A Non-Qualified Pension Plan 17,005 (964) 16,041 LABOR 9, Pension Expense (5,857,304) 208,484 (5,648,820) LABOR (3,361,548) 519 Performance Share Plan (407) N/A Post Employment Benefit - FAS ,604 (7,090) 73,514 LABOR 43, Post Employment Benefit - FAS ,635 (7,614) 252,021 LABOR 149, Prepaid Advertising (12,587) 12,587 0 N/A Rate Case Expenses 1,274,729 (1,274,729) 0 N/A Restructuring Costs - Recoverable Meters (12,254) 40 (12,214) TX (12,214) RR16 - Page 167 of

112 Page 25 of 270 Electric Net Operating Earnings At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail 525 Rate Refund (15,324,316) 15,324,316 0 N/A Regulatory Liability - Refund Obligation 1,150,585 (1,150,585) 0 N/A Reg Asset - NM NOX Expense (463) N/A Reg Liability - Transmission Attachment O (450,019) 450,019 0 N/A Renewable Energy Standard (726,025) 726,025 0 N/A Severance Accrual LABOR State Tax Deduction Cash vs. Accrual (310,467) 310,467 0 N/A TUCO Refund (194,559) 194,559 0 N/A Unbilled Revenue (2,088,291) 2,088,291 0 N/A Unrecovered REC Inventory 1,758,019 (1,758,019) 0 N/A Vacation Accrual (33,790) (438) (34,228) LABOR (20,368) 536 VEBA LABOR REC Amortization 0 (992,799) (992,799) TX (992,799) 538 Historic EE Amortization 0 (404,494) (404,494) TX (404,494) 539 Unamortized Rate Case Expense Amortization 0 (274,654) (274,654) TX (274,654) 540 Unamortized Pension/OPEB Reg Asset Amortization 0 (1,254,228) (1,254,228) TX (1,254,228) 541 State Only NOL 572,579 (572,579) 0 N/A Texas Gross Margin Tax (173,982) 173,982 0 TX Electric Vehicle Credit - Fed DIT Only LABOR State Tax Deduction Cash vs Accrual (FIN 48) - Perm LT - Elec (15) 15 0 N/A State Tax Deduction Cash vs Accrual (FIN 48) - Perm LT - NonReg 316 (316) 0 N/A ITC Grant - Fed DIT Only 313,352 (313,352) 0 N/A OCI - Treasury 96,981 (96,981) 0 N/A OK Bonus Depreciation 563 (563) 0 N/A Fuel Tax Credit - Inc. Addback (388) LABOR R&E Credit - Fed FIT only (330,371) 330,371 0 PIS-NET New Hire Retention Credit LABOR NOL Carryforward 0 14,632,724 14,632,724 TX 14,632, Total Deferred Income Tax Expense 61,415,819 23,447,403 84,863,222 48,133, ITC - Generated N/A ITC - Amortized (347,479) 0 (347,479) PIS-NET (186,473) Total 50,184,073 8,247,195 58,431,268 31,160, Tax Gross-up Factor Total Income Tax Expense 50,184,073 41,178,603 91,362,676 47,939, Gain on Sale of Disposition of Allowances (258) N/A Gain on Sale of Disposition of RECs (813,102) 813,102 0 N/A Loss on Sale of Disposition of RECs (6,386) 6,386 0 N/A Gain on Sale of Utility Plant (5,067,357) 4,898,862 (168,495) NM Total Operating Deductions 1,653,090,319 (765,834,864) 887,255, ,586, Total Revenue Requirements 1,131,753, ,757,977 RR16 - Page 168 of

113 Page 26 of 270 Electric Net Operating Earnings At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail Revenue Credits: 574 Provision for Rate Refunds ,073,217 (45,073,217) 0 N/A Late Payment Revenue - Texas 450 # (1,655,673) 0 (1,655,673) TX (1,655,673) 576 Late Payment Revenue - New Mexico 450 # (580,960) 0 (580,960) NM Late Payment Revenue - Total 450 (2,236,633) 0 (2,236,633) (1,655,673) 578 Misc Service Revenue - Cust Connection - Texas # (665,311) 0 (665,311) TX (665,311) 579 Misc Service Revenue - Cust Connection - New Mexico # (152,560) 0 (152,560) NM Misc Service Revenue - Cust Connection - Other # N/A Misc Service Revenue - Cust Connection - Total (817,871) 0 (817,871) (665,311) 582 Misc Service Revenue - Return Check Charge - Texas # (122,870) 0 (122,870) TX (122,870) 583 Misc Service Revenue - Return Check Charge - New Mexico # (45,770) 0 (45,770) NM Misc Service Revenue - Return Check Charge - Other # N/A Misc Service Revenue - Return Check Charge - Total (168,640) 0 (168,640) (122,870) 586 Misc Service Revenue - Other (330,586) 0 (330,586) PIS-DIST (231,891) 587 Misc Service Revenue - Other Texas (19,120) (19,120) TX (19,120) 588 Misc Service Revenue - NonRecoverable Discounts (491) 0 N/A Misc Service Revenue - Recoverable Discounts (4,556) 4,556 0 N/A Rent from Electric Property - Texas 454TX # (2,947,443) (29,026) (2,976,469) TX (2,976,469) 591 Rent from Electric Property - New Mexico 454NM # (2,572,802) 0 (2,572,802) NM Rent from Electric Property - Other 454 # (1,419,154) 0 (1,419,154) PIS-DIST (995,471) 593 Total Rent from Electric Property 454 (6,939,399) (29,026) (6,968,425) (3,971,940) 594 Other Electric Revenue: 595 Other Electric Revenues - EEI Mutual (99,156) 0 (99,156) PIS-DIST (69,554) 596 RTO PTP Firm Revenues (4,086,694) (327,563) (4,414,257) 12CP-TRAN (2,047,796) 597 Tariff-Base Non-Firm PTP (782,943) (130,287) (913,230) 12CP-TRAN (423,652) 598 Network Transmission Revenue (40,574,055) 40,574,055 0 N/A Contracts Transmission Revenue (986,452) 0 (986,452) WHLS Sch 1 Sys Ctrl Disp Serv Revenue (2,029,014) 748,415 (1,280,599) PIS-TRAN (600,944) 601 Sch 2 Ret Supp Voltage Ctr Revenue (377,148) 0 (377,148) 12CP-PROD (197,655) 602 Sch 3 Reg 7 Freq Rspon Rv (709,893) 0 (709,893) WHLS Sch 4 Energy Imbalance Revenue ENERGY Sch 5 Oper Rsv Spinning Revenue (971,600) 0 (971,600) WHLS Sch 6 Oper Rsv Sup Rev (380,436) 0 (380,436) WHLS 0 RR16 - Page 169 of

114 Page 27 of 270 Electric Net Operating Earnings At June 30, 2014 No. Description Account Per Book Adjustments Adjusted State Allocator Texas Retail 606 Losses Revenue ENERGY Offsystem Transmission Wheeling ,506 (286,506) 0 WHLS Misc Transmission Adj - Gen Step-Up WHLS JOA - Other Elec Rev fr PSCO (1,715,947) 1,715,947 0 N/A Other - Texas 45642TX (4,657,438) 4,583,454 (73,984) TX (73,984) 611 Other - New Mexico 45642NM 2, ,665 NM Other - Wholesale 45642WH (211,382) 0 (211,382) WHLS Other (519,319) 0 (519,319) PIS-NET (278,690) 614 Total Other (5,385,474) 4,583,454 (802,020) (352,674) 615 CIP - Incentive Revenue (292,951) 292,951 0 N/A Service Quality Adj Revenue N/A Unbilled Transmission Revenue N/A Interruptible Revenue N/A Deferred Fuel Revenue (4,691,070) 4,691,070 0 N/A Schedule 11 Base Plan Revenues - PTP (8,430,758) 0 (8,430,758) 12CP-TRAN (3,911,072) 621 Distribution Interconnection Revenue CP-TRAN Schedule 1 Network Sys Cntrl Dispatch Srvc Revenue (7,011) 0 (7,011) 12CP-TRAN (3,253) 623 Schedule 11 Network Base Plan Revenues (52,405,377) (23,824,817) (76,230,194) 12CP-TRAN (35,363,581) 624 NM Deferred for Building Donation (2,277) 0 (2,277) NM NM Deferred for Building Donation , ,520 NM Wholesale Incremental Capacity Contracts 447 (931,127) (931,127) 12CP-PROD (487,983) 627 Total Revenue Credits (89,055,206) (18,011,707) (107,066,912) (50,124,969) Total Revenue Requirements 1,024,686, ,633,008 RR16 - Page 170 of

115 Labor - Total Company Attachment DAB-RR-2 Page 28 of 270 No. Description Allocator Texas All Others 1 Operating & Maintenance Labor Expenses: 2 3 Steam Production Operation: 4 Supervision & Engineering 12CP-PROD 1,086, ,389 5 Fuel (Transportation & Handling) ENERGY 272, ,226 6 Steam Expense 12CP-PROD 3,220,234 2,924,334 7 Electric Expense 12CP-PROD 3,155,408 2,865,465 8 Miscellaneous 12CP-PROD 3,714,788 3,373,445 9 Rent 12CP-PROD Total Steam Production Operation 11,449,570 10,373, Steam Production Maintenance: 13 Supervision & Engineering 12CP-PROD 919, , Structures 12CP-PROD 830, , Boilers ENERGY 3,743,967 3,075, Electric Plant ENERGY 2,634,087 2,163, Miscellaneous Plant 12CP-PROD 4,420,167 4,014, Total Steam Production Maintenance 12,548,018 10,842, Total Steam Production O&M 23,997,588 21,216, Other Production Operation: 23 Supervision & Engineering 12CP-PROD 1,308 1, Fuel Handling ENERGY Generation Expense 12CP-PROD 217, , Miscellaneous 12CP-PROD 115, , Rents 12CP-PROD Total Other Production Operation 333, , Other Production Maintenance: 31 Supervision & Engineering 12CP-PROD Structures 12CP-PROD 32,235 29, Electric Plant 12CP-PROD 421, , Miscellaneous Plant 12CP-PROD Total Other Production Maintenance 453, , Total Other Production O&M 787, , Load Dispatch: 40 System Load Control 12CP-PROD 482, , Other Expenditures 12CP-PROD 1,181,700 1,073, Total Load Dispatch 1,664,688 1,511, Total Non-Fuel Production O&M 26,449,451 23,443, RR16 - Page 171 of

116 Labor - Total Company Attachment DAB-RR-2 Page 29 of 270 No. Description Allocator Texas All Others 46 Transmission Operations: 47 Supervision & Engineering PIS-TRAN 2,222,026 2,513, Load Dispatch 12CP-TRAN Load Dispatch - Reliability 12CP-TRAN 9,071 10, Load Dispatch - Monitor/Operate 12CP-TRAN 1,074,614 1,241, Load Dispatch - Transmission Serv/Sch 12CP-TRAN Load Dispatch - Sch/Con/Disp Serv RETAIL-TRAN Rel/Plan/Standards Dev Serv 12CP-TRAN 40,811 47, Trans Service Studies 12CP-TRAN 2,124 2, Generation Interconnection Studies 12CP-TRAN 2,706 3, Rel/Plan/Standards Dev Serv RETAIL-TRAN Station Equipment PIS-TRAN 393, , Overhead s PIS-TRAN 110, , Underground s PIS-TRAN Miscellaneous PIS-TRAN 1,135,071 1,283, Rents PIS-TRAN Total Transmission Operations 4,989,982 5,671, Transmission Maintenance: 65 Supervision & Engineering PIS-TRAN 45,026 50, Structures PIS-TRAN Station Equipment PIS-TRAN 690, , Overhead s PIS-TRAN 64,792 73, Underground s PIS-TRAN Miscellaneous PIS-TRAN Total Transmission Maintenance 800, , Wheeling: 74 Wheeling - Wholesale WHLS Wheeling - Long Term Purchases 12CP-PROD Wheeling - Reliability Purchases 12CP-PROD Wheeling - Schedule 9 - SPP Zone 11 Network 12CP-TRAN Wheeling - Schedule 11 - LT Purchases 12CP-PROD Wheeling - Schedule 11 - Retail RETAIL-TRAN Wheeling - Schedule 11 - Wholesale WHLS Wheeling - Schedule 11 - Known & Measurable 12CP-TRAN Wheeling - Schedule 12 - Retail RETAIL-TRAN Wheeling - Schedule 12 - Wholesale WHLS Wheeling - Other 12CP-TRAN Total Wheeling Total Transmission O&M 5,790,217 6,576, Regional Market Expenses: 90 Operation Supervision ENERGY 73,277 60, DA & RT Mkt Admin ENERGY 19,431 15, Trans Rights Mkt Admin ENERGY Cap Mkt Admin ENERGY Ancillary Serv Mkt Admin ENERGY 3,280 2, Market Monitoring/Compliance ENERGY 29,336 24, Mkt Fac/Mon/Comp Serv RETAIL-ENERGY Regional Market Rents ENERGY Total Regional Market Expenses 125, , RR16 - Page 172 of

117 Labor - Total Company Attachment DAB-RR-2 Page 30 of 270 No. Description Allocator Texas All Others 100 Distribution Operations: 101 Supervision - H/S CUST-H/S Supervision - Texas TX 1,882, Supervision - New Mexico NM 0 439, Supervision PIS-DIST 1,131, , Total Supervision 3,013, , Load Dispatch - H/S CUST-H/S Load Dispatch - Texas TX 804, Load Dispatch - New Mexico NM Load Dispatch PIS-DIST 100,562 42, Total Load Dispatch 905,194 42, Station Equipment - H/S CUST-H/S Station Equipment - Texas TX 352, Station Equipment - New Mexico NM 0 1, Station Equipment PIS-DIST 229,090 97, Total Station Equipment 581,561 98, Overhead s - H/S CUST-H/S Overhead s - Texas TX 1,089, Overhead s - New Mexico NM 0 384, Overhead s PIS-DIST 37,514 15, Total Overhead s 1,126, , Underground s - H/S CUST-H/S Underground s - Texas TX 134, Underground s - New Mexico NM 0 20, Underground s PIS-DIST Total Underground s 134,867 20, Street Lighting - H/S CUST-H/S Street Lighting - Texas TX Street Lighting - New Mexico NM 0 2, Street Lighting PIS-DIST 306, , Total Street Lighting 306, , Metering - H/S CUST-H/S Metering - Texas TX 1,779, Metering - New Mexico NM 0 1,024, Metering PIS-DIST 816, , Total Metering 2,595,736 1,372, Customer Installations - H/S CUST-H/S Customer Installations - Texas TX 260, Customer Installations - New Mexico NM 0 2, Customer Installations PIS-DIST 468, , Total Customer Installations 729, , Miscellaneous - H/S CUST-H/S 478 2, Miscellaneous - Texas TX 1,464, Miscellaneous - New Mexico NM 0 861, Miscellaneous PIS-DIST 751, , Total Miscellaneous 2,217,014 1,183, Rents CUST-H/S Rents - H/S TX Rents - Texas NM Rents - New Mexico PIS-DIST Total Rents Total Distribution Operations 11,610,795 4,374, RR16 - Page 173 of

118 Labor - Total Company Attachment DAB-RR-2 Page 31 of 270 No. Description Allocator Texas All Others 154 Distribution Maintenance: 155 Supervision So - H/S CUST-H/S Supervision - TX TX 67, Supervision - NM NM 0 30, Supervision PIS-DIST 156,309 66, Total Supervision 223,374 96, Structures So - H/S CUST-H/S Structures - TX TX Structures - NM NM Structures PIS-DIST Total Structures Station Equipment So - H/S CUST-H/S Station Equipment - TX TX 733, Station Equipment - NM NM 0 22, Station Equipment PIS-DIST 356, , Total Station Equipment 1,089, , Overhead s So - H/S CUST-H/S Overhead s - TX TX 3,404, Overhead s - NM NM 0 1,089, Overhead s PIS-DIST 87,171 37, Total Overhead s 3,491,900 1,126, Underground s So - H/S CUST-H/S Underground s - TX TX 89, Underground s - NM NM 0 59, Underground s PIS-DIST Total Underground s 90,106 59, Transformers So - H/S CUST-H/S Transformers - TX TX 17, Transformers - NM NM 0 67, Transformers PIS-DIST Total Transformers 17,072 67, Street Lighting So - H/S CUST-H/S Street Lighting - TX TX 6, Street Lighting - NM NM Street Lighting PIS-DIST 17,394 7, Total Street Lighting 23,428 8, Metering So - H/S CUST-H/S Metering - TX TX 2, Metering - NM NM Metering PIS-DIST 9,212 3, Total Metering 12,140 3, Miscellaneous So - H/S CUST-H/S Miscellaneous - TX TX Miscellaneous - NM NM Miscellaneous PIS-DIST Total Miscellaneous Total Distribution Maintenance 4,947,858 1,537, Total Distribution O&M 16,558,653 5,911, RR16 - Page 174 of

119 Labor - Total Company Attachment DAB-RR-2 Page 32 of 270 No. Description Allocator Texas All Others 205 Customer Accounting Expense: 206 Supervision CUST-AVG 19,504 9, Meter Reading CUST-AVG 2,094, , Billing & Cashiering CUST-AVG 2,028, , Uncollectible Accounts DA Uncollectible Accounts CUST-AVG Total Uncollectible Accounts Miscellaneous DA Miscellaneous CUST-RET Total Miscellaneous Total Customer Accounting Expense 4,142,252 1,945, Customer Service Expense: 220 Supervision CUST-AVG Customer Assistance CUST-AVG 1,494, , Customer Assistance TX 27, Advertisement CUST-RET Miscellaneous CUST-AVG Total Customer Service Expense 1,521, , Sales Expense: 229 Sales Expense - Supv. CUST-AVG Demonstrations & Selling CUST-AVG 119,169 55, Advertising Expense - Sales CUST-AVG Miscellaneous Sales Expense CUST-AVG Total Sales Expense 119,169 55, Total Customer Service & Sales Expense 1,640, , Total Customer Operations Expense 5,783,202 2,703, Administrative & General Expense: 241 Administrative Salaries LABXAG 11,863,363 8,400, Office Supplies & Expense LABXAG A&G Expense Transferred LABXAG Outside Services - Legal LABXAG Property Insurance PIS-NET Injuries and Damages LABXAG 741, , Pensions & Benefits LABXAG 20,813,731 14,738, Deferred Pensions & Benefits TX 3,583, Regulatory Commission Expense - Wholesale DA Regulatory Commission Expense - Retail REV-RET Total Regulatory Commission Expense Duplicate Charges - Electric PIS-PTD Miscellaneous PIS-PTD Rents PIS-PTD Maintenance of General Plant PIS-GEN Total Administrative & General Expense 37,002,131 23,663, Total O&M Labor Expense 91,708,978 62,400,830 RR16 - Page 175 of

120 Cash Working Capital Calculation - Texas Retail At June 30, 2014 Attachment DAB-RR-2 Page 33 of 270 Texas Jurisdictional No. Description Amount Factor CWC 1 Texas Retail Energy Costs: 2 Gas For Generation 132,283,488 ( ) (1,384,479) 3 Coal Fossil Fuel & Freight 128,248, ,651,461 4 Fuel Oil 263,785 ( ) (2,855) 5 Purchased Power - Energy 227,140,563 ( ) (87,222) 6 Purchased Power - Capacity 54,468,284 ( ) (20,916) 7 Total Texas Retail Energy Costs 542,404, , Texas Retail O&M Expense: 10 Labor O&M - Regular 88,666, ,910, Labor O&M - Incentive 3,042,773 ( ) (1,813,660) 12 Other O&M 160,051,968 ( ) (3,345,726) 13 Total Texas Retail O&M Expense 251,760, , Texas Retail Taxes Other Than Income Texas: 16 Property Taxes 19,919,360 ( ) (8,134,190) 17 Payroll 4,826, , Sales & Use Tax (14,976) ( ) Texas Franchise Tax 3,625,726 ( ) (2,884,388) 20 Texas Gross Receipts Tax 6,970,402 ( ) (765,406) 21 Total Texas Retail Taxes Other Than Income Texas 35,326,903 (11,607,146) Franchise Fees Paid 4,331,623 ( ) (188,335) 25 Federal Income Taxes (25,825,894) ( ) 100, State Income Taxes Total Texas Retail Electric CWC 807,998,574 (10,788,103) RR16 - Page 176 of

121 Cash Working Capital Calculation - Total Company Adjusted At June 30, 2014 Attachment DAB-RR-2 Page 34 of 270 CWC Total Weighted Company No. Description Amount Factor CWC 1 Total Adjusted Energy Costs 992,714,805 ( ) (25,406) 2 3 Total Adjusted O&M Expense 443,383, ,520, Total Adjusted Forma Taxes Other Than Income 55,796,960 ( ) (15,315,419) 6 7 Franchise Fees Paid 4,331,623 ( ) (188,335) 8 Federal Income Taxes (29,312,214) ( ) 110,747 9 State Income Taxes (521,531) ( ) 1, Total Company Adjusted 1,466,393,516 (13,896,312) RR16 - Page 177 of

122 Cash Working Capital Calculation - Per Book At June 30, 2014 Attachment DAB-RR-2 Page 35 of 270 CWC Total Weighted Company No. Description Amount Factor CWC 1 Total Per Book Energy Costs 992,714,806 ( ) (25,406) 2 3 Total Per Book O&M Expense 439,955, ,508, Total Per Book Taxes Other Than Income 41,606,755 ( ) (11,420,423) 6 7 Franchise Fees Paid 4,331,623 ( ) (188,335) 8 Per Book Federal Income Taxes (14,479,100) ( ) 54,705 9 Per Book State Income Taxes 3,594,833 ( ) (11,718) Total 1,467,724,404 (10,082,532) RR16 - Page 178 of

123 Details of Adjustments Attachment DAB-RR-2 Page 36 of 270 No. Description Account Labor Non-Labor Total 1 Gross Plant: 2 Intangible Plant 3 Post Test Year Adjustment - Organization Post Test Year Adjustment - Franchises and Consents Post Test Year Adjustment - Misc. Intangible Plant ,779,053 16,779,053 6 Total Intangible Plant 0 16,779,053 16,779, Steam Production: 9 Post Test Year Adjustment - Land and Land Rights 310 6,297,433 6,297, Post Test Year Adjustment - Structures & Improvements 311 9,527,963 9,527, Post Test Year Adjustment - Boiler Plant Equipment 312 7,647,553 7,647, Post Test Year Adjustment - Turbo-Generator Units 314 6,231,689 6,231, Post Test Year Adjustment - Accessory Electric Equipment , , Post Test Year Adjustment - Misc. Power Plant Equipment , , Total Steam Production 0 31,228,615 31,228, Internal Combustion Equipment: 18 Post Test Year Adjustment - Land and Land Rights Post Test Year Adjustment - Structures & Improvements ,231 82, Post Test Year Adjustment - Fuel Holders, Prod & Acc , , Post Test Year Adjustment - Internal Combustion Engine 343 2,492,228 2,492, Post Test Year Adjustment - Generators , , Post Test Year Adjustment - Accessory Electric Equipment 345 1,026,582 1,026, Post Test Year Adjustment - Misc. Power Plant Equipment , , Total Internal Combustion Equipment 0 4,757,445 4,757, Transmission Plant: 28 Post Test Year Adjustment - Land Owned in Fee , , Post Test Year Adjustment - Land Rights ,151,527 13,151, Post Test Year Adjustment - Structures & Improvements ,576,705 10,576, Post Test Year Adjustment - Station Equipment ,827,328 84,827, Post Test Year Adjustment - Station Equipment - Production (1,384,562) (1,384,562) 33 Post Test Year Adjustment - Towers and Fixtures 354 3,287,653 3,287, Post Test Year Adjustment - Poles and Fixtures ,493, ,493, Post Test Year Adjustment - Overhead Conductor ,201,839 84,201, Post Test Year Adjustment - Underground Conduit , , Post Test Year Adjustment - Underground Conductor , , Total Transmission Plant 0 342,581, ,581, Texas Distribution Plant: 41 Post Test Year Adjustment - Land and Land Rights , , Post Test Year Adjustment - Structures & Improvements , , Post Test Year Adjustment - Station Equipment 362 7,564,390 7,564, Post Test Year Adjustment - Towers and Fixtures 364 7,920,351 7,920, Post Test Year Adjustment - Overhead Conductor 365 7,885,871 7,885, Post Test Year Adjustment - Underground Conduit 366 1,327,995 1,327, Post Test Year Adjustment - Underground Conductor , , Post Test Year Adjustment - Transformers 368 (4,099,826) (4,099,826) 49 Reclass Transformers to New Mexico 368 (26,847,560) (26,847,560) 50 Post Test Year Adjustment - Services 369 (986,514) (986,514) 51 Post Test Year Adjustment - Meters 370 (2,238,373) (2,238,373) 52 Reclass Meters to New Mexico 370 (9,358,315) (9,358,315) 53 Post Test Year Adjustment - Inst. on Customer Premises 371 (103,347) (103,347) 54 Post Test Year Adjustment - Street Light / Signal Systems , , Total Texas Distribution Plant 0 (16,522,624) (16,522,624) 56 RR16 - Page 179 of

124 Details of Adjustments Attachment DAB-RR-2 Page 37 of 270 No. Description Account Labor Non-Labor Total 57 General Plant: 58 Post Test Year Adjustment - Land and Land Rights Post Test Year Adjustment - Structures & Improvements , , Post Test Year Adjustment - Office Furniture & Equipment 391 8,397,152 8,397, Post Test Year Adjustment - Transportation Equipment 392 1,250,556 1,250, Post Test Year Adjustment - Stores Equipment ,472 32, Post Test Year Adjustment - Tools, Shop & Garage Equip , , Post Test Year Adjustment - Laboratory Equipment , , Post Test Year Adjustment - Power Operated Equipment , , Post Test Year Adjustment - Communication Equipment 397 6,537,076 6,537, Post Test Year Adjustment - Miscellaneous Equipment , , Total General Plant 0 18,197,135 18,197, Total Electric Plant in Service 0 397,021, ,021, Accumulated Reserve for Depreciation & Amortization: 73 Steam Production: 74 Unblend Depreciation 141,868, ,868, Post Test Year Adjustment (24,893,147) (24,893,147) 76 Total Steam Production 0 116,975, ,975, Other Production: 79 Unblend Depreciation 5,166,130 5,166, Post Test Year Adjustment (6,778,924) (6,778,924) 81 Total Other Production 0 (1,612,793) (1,612,793) Transmission: 84 Unblend Depreciation (20,600,683) (20,600,683) 85 Post Test Year Adjustment (12,686,448) (12,686,448) 86 Total Transmission 0 (33,287,131) (33,287,131) Distribution: 89 Unblend Depreciation Post Test Year Adjustment (3,002,223) (3,002,223) 91 Total Distribution 0 (3,002,223) (3,002,223) General: 94 Unblend Depreciation 5,016,410 5,016, Unblend Call Center/CRS Depreciation 819, , Post Test Year Adjustment (11,019,741) (11,019,741) 97 Call Center/CRS Post Test Year Adjustment (141,079) (141,079) 98 Total General 0 (5,324,454) (5,324,454) Total Accumulated Reserve for Depreciation & Amortization 0 73,748,463 73,748, Plant Held for Future Use Total Plant Held for Future Use Construction Work in Progress 107 Eliminate Steam Production (5,736,592) (5,736,592) 108 Eliminate Other Production (298,583) (298,583) 109 Total Production (6,035,175) (6,035,175) 110 Eliminate Transmission (282,643,725) (282,643,725) 111 Eliminate Distribution - Texas (9,072,843) (9,072,843) 112 Eliminate Distribution - New Mexico (3,765,051) (3,765,051) 113 Eliminate Intangible & General (51,964,792) (51,964,792) 114 Total Construction Work in Progress (353,481,585) (353,481,585) Total Plant 0 117,288, ,288, Materials and Supplies 119 Include Inventory of Environmental Chemicals 70,150 70, Total Materials and Supplies 0 70,150 70,150 RR16 - Page 180 of

125 Details of Adjustments Attachment DAB-RR-2 Page 38 of 270 No. Description Account Labor Non-Labor Total Cash Working Capital (3,813,780) (3,813,780) Prepayments: 125 Eliminate Prepaid Capacity Eliminate Prepaid Short-Term Debt Fees (1,176,611) (1,176,611) 127 Eliminate Other Prepaid - TU (47,284) (47,284) 128 Eliminate Other Prepaid - Safety Award (3,083) (3,083) 129 Eliminate Prepaid Brand Advertising (164,488) (164,488) 130 Eliminate Prepaid - EE (87,366) (87,366) 131 Eliminate Prepaid Taxes - Federal (4,882,813) (4,882,813) 132 Eliminate Prepaid Taxes - Texas (482,151) (482,151) 133 Eliminate Prepaid Taxes - Other State (538,242) (538,242) 134 Total Prepayments 0 (7,382,038) (7,382,038) Regulatory Asset - EE & ICO Related: 137 Eliminate Regulatory Asset - EE & ICO Related (8,541,014) (8,541,014) 138 Total Regulatory Asset - EE & ICO 0 (8,541,014) (8,541,014) Regulatory Asset - REC Related: 141 Eliminate Regulatory Asset - REC Related (19,866,234) (19,866,234) 142 Total Regulatory Asset - REC Related 0 (19,866,234) (19,866,234) Regulatory Asset - Pension and OPEB Costs 145 Eliminate Regulatory Asset - Pension and OPEB Costs (7,521,266) (7,521,266) 146 Total Regulatory Asset - Pension and OPEB Costs 0 (7,521,266) (7,521,266) Accumulated Deferred Income Taxes: 149 Account 190: 150 Exclude State Tax Portion - Bad Debts (52,909) (52,909) 151 Eliminate Contribution Carryover (1,289,287) (1,289,287) 152 Eliminate Deferred Compensation Plan Reserve (420,698) (420,698) 153 Eliminate Renewable Energy Standard (84,101) (84,101) 154 Eliminate Deferred Fuel Costs Eliminate Demand Side Management (1,533,821) (1,533,821) 156 Exclude State Tax Portion - Employee Incentive Plans (16,055) (16,055) 157 Exclude State Tax Portion - Environmental Remediation (1,500) (1,500) 158 Eliminate Federal NOL Benefit (51,186,654) (51,186,654) 159 Exclude State Tax Portion - Fuel Tax Credit - Inc Addback (31) (31) 160 Eliminate Interest Inc/Exp on Disputed Tax - DTA Exclude State Tax Portion - Inventory Reserve (3,673) (3,673) 162 Eliminate ITC Grant - Fed DIT Only Eliminate KS State Only NOL (10,425) (10,425) 164 Exclude State Tax Portion - Litigation Reserve Eliminate NM State Only NOL (923,949) (923,949) 166 Exclude State Tax Portion - Non-qualified Pension Plans (16,829) (16,829) 167 Eliminate OCI Treasury (603,830) (603,830) 168 Eliminate OK Bonus Depreciation Eliminate OK State Only NOL (12,021) (12,021) 170 Eliminate Performance Share Plan (3,187) (3,187) 171 Exclude State Tax Portion - Post Employment Benefits - FAS106 (164,923) (164,923) 172 Exclude State Tax Portion - Post Employment Benefits - FAS106 Medicare Exclude State Tax Portion - Post Employment Benefits - FAS112 (17,163) (17,163) 174 Eliminate Rate Refund (18,943,904) (18,943,904) 175 Eliminate Reg Liab - Transmission Attach O (1,376,145) (1,376,145) 176 Eliminate Reg Liab - Refund Obligation (2,698,597) (2,698,597) 177 Eliminate State Tax Deduct Cash vs Acc - DTA (1,177,503) (1,177,503) 178 Eliminate State Tax Deduction Cash vs. Accrual (FIN48) - Perm -LT (434) (434) 179 Eliminate State Tax Deduction Cash vs. Accrual (FIN48) - Temp -LT (Non-Utility) (653) (653) 180 Eliminate Texas Margin Tax (404,321) (404,321) 181 Eliminate Unrecovered REC Inventory Eliminate TUCO Refund (229,714) (229,714) 183 Eliminate Unbilled Revenue (15,706,203) (15,706,203) 184 Exclude State Tax Portion - Vacation Accrual (46,004) (46,004) 185 Eliminate FAS Rate Change 3,283,280 3,283, Texas NOL Carryforward - Beginning Balance 22,906,633 22,906, Texas NOL Carryforward (14,632,724) (14,632,724) 188 Eliminate Plant Timing Differences for Non-Utility 952, , Plant Timing Differences - Post Test Year Adjustment - Production (63,636) (63,636) 190 Plant Timing Differences - Post Test Year Adjustment - Transmission 1,248,573 1,248, Plant Timing Differences - Post Test Year Adjustment - Distribution (384,736) (384,736) 192 Plant Timing Differences - Post Test Year Adjustment - General 23,345 23, Total Account (83,591,286) (83,591,286) 194 RR16 - Page 181 of

126 Details of Adjustments Attachment DAB-RR-2 Page 39 of 270 No. Description Account Labor Non-Labor Total 195 Account 281: 196 Plant Timing Differences - Post Test Year Adjustment - Production (286,788) (286,788) 197 Total Account (286,788) (286,788) Account 282: 201 Eliminate Plant Timing Differences - Non Utility (3,900) (3,900) 202 Eliminate Sharyl;and ADIT 1,522,777 1,522, Adjust ADIT for Reclass of Transformers 107, , Plant Timing Differences - Unblend Depreciation - Production (51,250,571) (51,250,571) 205 Plant Timing Differences - Unblend Depreciation - Transmission 7,291,144 7,291, Plant Timing Differences - Unblend Depreciation - Distribution Plant Timing Differences - Unblend Depreciation - General (2,375,115) (2,375,115) 208 Plant Timing Differences - Unblend Depreciation - Call Center/CRS (295,454) (295,454) 209 Plant Timing Differences - Post Test Year Adjustment - Production (1,704,776) (1,704,776) 210 Plant Timing Differences - Post Test Year Adjustment - Transmission (31,634,234) (31,634,234) 211 Plant Timing Differences - Post Test Year Adjustment - Distribution (3,634,622) (3,634,622) 212 Plant Timing Differences - Post Test Year Adjustment - General 106, , Plant Timing Differences - Post Test Year Adjustment - Call Center/CRS 139, , Plant Timing Differences Production - Exclude State Tax Portion (Texas Retail) 6,683,973 6,683, Plant Timing Differences Transmission - Exclude State Tax Portion (Texas Retail) 1,377,120 1,377, Plant Timing Differences Distribution - Exclude State Tax Portion (Texas Retail) 2,668,533 2,668, Plant Timing Differences General - Exclude State Tax Portion (Texas Retail) 1,272,702 1,272, Plant Timing Differences Production - Exclude State Tax Portion (Texas Retail) - Post Test Yr Adj 37,858 37, Plant Timing Differences Transmission - Exclude State Tax Portion (Texas Retail) - Post Test Yr Adj 1,697,679 1,697, Plant Timing Differences Distribution - Exclude State Tax Portion (Texas Retail) - Post Test Yr Adj (140,159) (140,159) 221 Plant Timing Differences General - Exclude State Tax Portion (Texas Retail) - Post Test Yr Adj (323,711) (323,711) 222 Plant Timing Differences Production - Exclude State Tax Portion (Other Jurisdictions) 53,487,918 53,487, Plant Timing Differences Transmission - Exclude State Tax Portion (Other Jurisdictions) (3,623,184) (3,623,184) 224 Plant Timing Differences Distribution - Exclude State Tax Portion (Other Jurisdictions) 2,184,764 2,184, Plant Timing Differences General - Exclude State Tax Portion (Other Jurisdictions) 3,283,211 3,283, Eliminate FAS 109 Related 34,085,491 34,085, Total Account ,960,401 20,960, Account 283: 230 Exclude State Tax Portion - Book Unamortized Cost of Reacquired Debt 41,235 41, Eliminate Deferred Fuel Costs 5,833,102 5,833, Eliminate Demand Side Management Advertising 31,968 31, Eliminate Interest Expense - Deferred Fuel Revenue 179, , Eliminate Interruptible Service Option Credit Eliminate Mark to Market Adjustment 1,132,479 1,132, Exclude State Tax Portion - Pension Expense 1,627,054 1,627, Eliminate Prepaid Advertising 91,634 91, Eliminate Reg Asset - New Mexico NOx Expense 5,299 5, Eliminate Non-Texas Related Portion - Rate Case/Restructuring Costs 2,568,238 2,568, Exclude State Tax Portion - Rate Case/Restructuring Costs - Recoverable Meters (9,979) (9,979) 241 Eliminate Reg Asset - Transmission Attachment O 23,863 23, Eliminate Renewable Energy Standard Eliminate State Tax Deduction Cash vs Accrual (877) (877) 244 Eliminate Texas Margin Tax Plant Timing Differences - Post Test Year Adjustment - Intangible 290, , Plant Timing Differences Intangible - Exclude State Tax Portion (Texas Retail) (314,970) (314,970) 247 Plant Timing Differences Intangible - Exclude State Tax Portion (Texas Retail) - Post Test Yr Adj (50,953) (50,953) 248 Eliminate Unrecovered REC Inventory 7,549,079 7,549, Total Account ,996,832 18,996, Total Accumulated Deferred Income Taxes 0 (43,920,841) (43,920,841) Total Rate Base 0 26,313,347 26,313,347 RR16 - Page 182 of

127 Details of Adjustments Attachment DAB-RR-2 Page 40 of 270 No. Description Account Labor Non-Labor Total 1 Cost of Sales 2 Steam Production Fuel: 3 Reclassify Steam Generation Fuel Costs as Misc. Expenses (10,980) (10,980) 4 Eliminate Steam Power Fuel - Gas (232,575,224) (232,575,224) 5 Eliminate Steam Power Fuel - Oil (480,488) (480,488) 6 Eliminate Steam Power Fuel - Coal (230,469,407) (230,469,407) 7 Eliminate Steam Power Fuel - Non-Native Load (3,137,626) (3,137,626) 8 Eliminate Steam - Other Sources Total Steam Production Fuel (10,980) (466,662,745) (466,673,725) Other Production Fuel: 12 Reclassify Other Operating Fuel Costs as Misc. Expenses Eliminate Other Production Fuel - Gas / Nitrogen ,040,459 4,040, Eliminate Other Production Fuel - Engine Oil Eliminate Other Production Fuel - Non-Native Load (12,421,367) (12,421,367) 16 Total Other Production Turbine Fuel 0 (8,380,908) (8,380,908) Deferred Electric Generation Costs: 19 Eliminate Deferred Fuel Costs ,198,888 7,198, Total Deferred Electric Generation Costs 0 7,198,888 7,198, Purchased Power: 23 Capacity: 24 Adjustment for changes in contract demand rates (4,590,551) (4,590,551) 25 Adjustment for new contracts ,984,200 17,984, Adjustment for expiring contracts (7,264,311) (7,264,311) 27 Total Capacity 0 6,129,338 6,129, Energy: 30 Eliminate Purchased Power - Real Time Energy Recovered through Fuel Adjustment Clauses (72,491,327) (72,491,327) 31 Eliminate Purchased Power - Energy Recovered through Fuel Adjustment Clauses (198,411,723) (198,411,723) 32 Eliminate Purchased Power - Non-Firm Energy Recovered through Fuel Adjustment Clauses (703,907) (703,907) 33 Eliminate Purchased Power - Wind Recovered through Fuel Adjustment Clauses (108,854,094) (108,854,094) 34 Adjustment for changes in contract Variable O&M rates (1,257,486) (1,257,486) 35 Adjustment for new contracts ,660,395 1,660, Adjustment for expiring contracts (94,484) (94,484) 37 Eliminate Purchased Power - Firm Energy Recovered through Fuel Adjustment Clauses (5,096,267) (5,096,267) 38 Eliminate Purchased Power - Solar Recovered through Fuel Adjustment Clauses (12,483,442) (12,483,442) 39 Eliminate Gen Book Trading (3,794,889) (3,794,889) 40 Eliminate Prop Book Trading Eliminate Purchased Power - SPP Transmission Loss Purchases (6,409) (6,409) 42 Eliminate Wheeling - Resale Short Term Eliminate Wheeling - Retail Purchases Eliminate Purchased Power - ICO Eliminate Gen Book Trading ,681,409 1,681, Eliminate Prop Book Trading , , Eliminate Purchased Power - Non-Native Load ST , , Reclassify SPP Annual Membership Fee (6,039) (6,039) 49 Total Energy 0 (398,537,822) (398,537,822) Deferred Purchased Power: 52 Eliminate Deferred Purchased Power Costs (8,338,242) (8,338,242) 53 Total Deferred Purchased Power 0 (8,338,242) (8,338,242) Total Purchased Power 0 (400,746,726) (400,746,726) Total Cost of Sales (10,980) (868,591,491) (868,602,471) 58 RR16 - Page 183 of

128 Details of Adjustments Attachment DAB-RR-2 Page 41 of 270 No. Description Account Labor Non-Labor Total 59 Operating & Maintenance Expenses: 60 Steam Production Operation: 61 Wage Adjustment ,930 57, Wage Adjustment ,174 13, Wage Adjustment , , Wage Adjustment , , Wage Adjustment , , Adjust SPS Annual Incentive to Target Level 500 (13,274) (13,274) 67 Adjust SPS Annual Incentive to Target Level Adjust SPS Annual Incentive to Target Level 502 (46,040) (46,040) 69 Adjust SPS Annual Incentive to Target Level 505 (44,530) (44,530) 70 Adjust SPS Annual Incentive to Target Level 506 (21,201) (21,201) 71 Adjust XES Annual Incentive to Target Level 500 (7,849) (7,849) 72 Adjust XES Annual Incentive to Target Level 501 (11,049) (11,049) 73 Adjust XES Annual Incentive to Target Level 502 (2,164) (2,164) 74 Adjust XES Annual Incentive to Target Level Adjust XES Annual Incentive to Target Level 506 (77,578) (77,578) 76 Remove SPS Financial Based Annual Incentive 500 (6,533) (6,533) 77 Remove SPS Financial Based Annual Incentive Remove SPS Financial Based Annual Incentive 502 (22,661) (22,661) 79 Remove SPS Financial Based Annual Incentive 505 (21,918) (21,918) 80 Remove SPS Financial Based Annual Incentive 506 (10,435) (10,435) 81 Remove XES Financial Based Annual Incentive 500 (6,947) (6,947) 82 Remove XES Financial Based Annual Incentive 501 (9,780) (9,780) 83 Remove XES Financial Based Annual Incentive 502 (1,916) (1,916) 84 Remove XES Financial Based Annual Incentive Remove XES Financial Based Annual Incentive 506 (68,665) (68,665) 86 Annualize SPS Wages 500 (22,017) (22,017) 87 Annualize SPS Wages Annualize SPS Wages 502 (479,721) (479,721) 89 Annualize SPS Wages 505 (343,806) (343,806) 90 Annualize SPS Wages , , Annualize XES Wages 500 (17,980) (17,980) 92 Annualize XES Wages ,992 17, Annualize XES Wages 502 (26,642) (26,642) 94 Annualize XES Wages Annualize XES Wages , , Business Area Adjustment (267) (267) 97 Increase in TUCO Margin Costs ,117 40, Reclassify Steam Generation Fuel Costs as Misc. Expenses ,980 10, Business Area Adjustment ,389 2, Business Area Adjustment (16) (16) 101 Eliminate Environmental Chemical Costs Recovered through Fuel Adjustment Clauses (127,083) (127,083) 102 Business Area Adjustment Business Area Adjustment ,508 10, Business Area Adjustment Eliminate NOX And SO2 Allowance Costs Recovered through Fuel Adjustment Clauses 509 (1,275) (1,275) 106 Total Steam Production Operation 80,783 (75,628) 5, Steam Production Maintenance: 109 Wage Adjustment ,197 49, Wage Adjustment ,908 44, Wage Adjustment , , Wage Adjustment , , Wage Adjustment , , Adjust SPS Annual Incentive to Target Level 510 (9,822) (9,822) 115 Adjust SPS Annual Incentive to Target Level 511 (10,969) (10,969) 116 Adjust SPS Annual Incentive to Target Level 512 (31,099) (31,099) 117 Adjust SPS Annual Incentive to Target Level 513 (23,619) (23,619) 118 Adjust SPS Annual Incentive to Target Level 514 (37,126) (37,126) 119 Adjust XES Annual Incentive to Target Level 510 (5,996) (5,996) 120 Adjust XES Annual Incentive to Target Level Adjust XES Annual Incentive to Target Level 512 (2,222) (2,222) 122 Adjust XES Annual Incentive to Target Level 513 (6,050) (6,050) 123 Adjust XES Annual Incentive to Target Level 514 (52,475) (52,475) 124 Remove SPS Financial Based Annual Incentive 510 (4,834) (4,834) 125 Remove SPS Financial Based Annual Incentive 511 (5,399) (5,399) 126 Remove SPS Financial Based Annual Incentive 512 (15,307) (15,307) 127 Remove SPS Financial Based Annual Incentive 513 (11,626) (11,626) 128 Remove SPS Financial Based Annual Incentive 514 (18,274) (18,274) 129 Remove XES Financial Based Annual Incentive 510 (5,307) (5,307) 130 Remove XES Financial Based Annual Incentive Remove XES Financial Based Annual Incentive 512 (1,967) (1,967) 132 Remove XES Financial Based Annual Incentive 513 (5,355) (5,355) 133 Remove XES Financial Based Annual Incentive 514 (46,446) (46,446) 134 Annualize SPS Wages ,546 87, Annualize SPS Wages ,320 46,320 RR16 - Page 184 of

129 Details of Adjustments Attachment DAB-RR-2 Page 42 of 270 No. Description Account Labor Non-Labor Total 136 Annualize SPS Wages , , Annualize SPS Wages , , Annualize SPS Wages , , Annualize XES Wages ,166 21, Annualize XES Wages 511 8,018 8, Annualize XES Wages 512 (5,381) (5,381) 142 Annualize XES Wages 513 (56,335) (56,335) 143 Annualize XES Wages , , Business Area Adjustment Business Area Adjustment Business Area Adjustment 512 (47,093) (30) (47,124) 147 Business Area Adjustment ,093 (15) 47, Business Area Adjustment (226) (226) 149 Total Steam Production Maintenance 2,304,820 (271) 2,304, Other Production Operation: 152 Wage Adjustment Wage Adjustment ,750 11, Wage Adjustment 549 5,817 5, Adjust SPS Annual Incentive to Target Level 546 (5) (5) 156 Adjust SPS Annual Incentive to Target Level 548 (2,250) (2,250) 157 Adjust SPS Annual Incentive to Target Level 549 (356) (356) 158 Adjust XES Annual Incentive to Target Level 546 (94) (94) 159 Adjust XES Annual Incentive to Target Level 548 (55) (55) 160 Adjust XES Annual Incentive to Target Level 549 (4,653) (4,653) 161 Remove SPS Financial Based Annual Incentive 546 (2) (2) 162 Remove SPS Financial Based Annual Incentive 548 (1,107) (1,107) 163 Remove SPS Financial Based Annual Incentive 549 (175) (175) 164 Remove XES Financial Based Annual Incentive 546 (83) (83) 165 Remove XES Financial Based Annual Incentive 548 (49) (49) 166 Remove XES Financial Based Annual Incentive 549 (4,118) (4,118) 167 Annualize SPS Wages 546 (793) (793) 168 Annualize SPS Wages ,904 75, Annualize SPS Wages 549 (36,861) (36,861) 170 Annualize XES Wages 546 (1,365) (1,365) 171 Annualize XES Wages 548 7,753 7, Annualize XES Wages 549 (6,752) (6,752) 173 Business Area Adjustment (3) (3) 174 Business Area Adjustment Reclassify Other Operating Fuel Costs as Misc. Expenses Business Area Adjustment (7) (7) 177 Total Other Production Operation 42,565 (9) 42, RR16 - Page 185 of

130 Details of Adjustments Attachment DAB-RR-2 Page 43 of 270 No. Description Account Labor Non-Labor Total 179 Other Production Maintenance: 180 Wage Adjustment Wage Adjustment 552 1,741 1, Wage Adjustment ,710 22, Wage Adjustment Adjust SPS Annual Incentive to Target Level 551 (1) (1) 185 Adjust SPS Annual Incentive to Target Level 552 (370) (370) 186 Adjust SPS Annual Incentive to Target Level 553 (3,807) (3,807) 187 Adjust SPS Annual Incentive to Target Level Adjust XES Annual Incentive to Target Level 551 (5) (5) 189 Adjust XES Annual Incentive to Target Level 552 (75) (75) 190 Adjust XES Annual Incentive to Target Level 553 (2,170) (2,170) 191 Adjust XES Annual Incentive to Target Level Remove SPS Financial Based Annual Incentive 551 (0) (0) 193 Remove SPS Financial Based Annual Incentive 552 (182) (182) 194 Remove SPS Financial Based Annual Incentive 553 (1,874) (1,874) 195 Remove SPS Financial Based Annual Incentive Remove XES Financial Based Annual Incentive 551 (4) (4) 197 Remove XES Financial Based Annual Incentive 552 (67) (67) 198 Remove XES Financial Based Annual Incentive 553 (1,921) (1,921) 199 Remove XES Financial Based Annual Incentive Annualize SPS Wages 551 (164) (164) 201 Annualize SPS Wages 552 1,577 1, Annualize SPS Wages , , Annualize SPS Wages Annualize XES Wages Annualize XES Wages 552 (3,812) (3,812) 206 Annualize XES Wages 553 (3,672) (3,672) 207 Annualize XES Wages Business Area Adjustment Business Area Adjustment Business Area Adjustment Business Area Adjustment Total Other Production Maintenance 176, , System Control and Dispatch: 215 Wage Adjustment ,709 24, Wage Adjustment ,319 49, Adjust SPS Annual Incentive to Target Level 556 (6,791) (6,791) 218 Adjust SPS Annual Incentive to Target Level 557 (7) (7) 219 Adjust XES Annual Incentive to Target Level 556 (11,266) (11,266) 220 Adjust XES Annual Incentive to Target Level 557 (42,563) (42,563) 221 Remove SPS Financial Based Annual Incentive 556 (3,343) (3,343) 222 Remove SPS Financial Based Annual Incentive 557 (4) (4) 223 Remove XES Financial Based Annual Incentive 556 (9,972) (9,972) 224 Remove XES Financial Based Annual Incentive 557 (37,673) (37,673) 225 Annualize SPS Wages 556 (141,200) (141,200) 226 Annualize SPS Wages 557 (991) (991) 227 Annualize XES Wages , , Annualize XES Wages ,358 62, Business Area Adjustment 556 (1,084) (1,364) (2,448) 230 Business Area Adjustment ,438 (3,490) 13, Eliminate Annual REC Costs 0557TX (6,094,034) (6,094,034) 232 REC Costs - Ongoing Obligation 0557TX 3,296,681 3,296, REC Tracker Costs - Annual Amortization 0557TX 2,849,222 # 2,849, REC Tracker Costs - Annual Amortization Impact of True Up Adjustments 0557TX (345,530) (345,530) 235 Trading A&G Adjustment 0557TX (400,000) (400,000) 236 Total System Control and Dispatch 78,161 (698,515) (620,354) 237 RR16 - Page 186 of

131 Details of Adjustments Attachment DAB-RR-2 Page 44 of 270 No. Description Account Labor Non-Labor Total 238 Transmission Operations 239 Wage Adjustment , , Wage Adjustment Wage Adjustment ,450 64, Wage Adjustment ,310 2, Wage Adjustment Wage Adjustment Wage Adjustment ,753 23, Wage Adjustment 563 6,445 6, Wage Adjustment ,789 65, Adjust SPS Annual Incentive to Target Level 560 (20,355) (20,355) 249 Adjust SPS Annual Incentive to Target Level Adjust SPS Annual Incentive to Target Level (12,132) (12,132) 251 Adjust SPS Annual Incentive to Target Level (1,633) (1,633) 252 Adjust SPS Annual Incentive to Target Level (64) (64) 253 Adjust SPS Annual Incentive to Target Level (3) (3) 254 Adjust SPS Annual Incentive to Target Level 562 (4,715) (4,715) 255 Adjust SPS Annual Incentive to Target Level 563 (1,395) (1,395) 256 Adjust SPS Annual Incentive to Target Level 566 (5,987) (5,987) 257 Adjust XES Annual Incentive to Target Level 560 (53,137) (53,137) 258 Adjust XES Annual Incentive to Target Level (98) (98) 259 Adjust XES Annual Incentive to Target Level (9,194) (9,194) 260 Adjust XES Annual Incentive to Target Level (567) (567) 261 Adjust XES Annual Incentive to Target Level Adjust XES Annual Incentive to Target Level Adjust XES Annual Incentive to Target Level 562 (1,015) (1,015) 264 Adjust XES Annual Incentive to Target Level 563 (1,179) (1,179) 265 Adjust XES Annual Incentive to Target Level 566 (18,697) (18,697) 266 Remove SPS Financial Based Annual Incentive 560 (10,019) (10,019) 267 Remove SPS Financial Based Annual Incentive Remove SPS Financial Based Annual Incentive Remove SPS Financial Based Annual Incentive (5,972) (5,972) 270 Remove SPS Financial Based Annual Incentive (804) (804) 271 Remove SPS Financial Based Annual Incentive (31) (31) 272 Remove SPS Financial Based Annual Incentive (1) (1) 273 Remove SPS Financial Based Annual Incentive 562 (2,321) (2,321) 274 Remove SPS Financial Based Annual Incentive 563 (687) (687) 275 Remove SPS Financial Based Annual Incentive 566 (2,947) (2,947) 276 Remove XES Financial Based Annual Incentive 560 (47,032) (47,032) 277 Remove XES Financial Based Annual Incentive Remove XES Financial Based Annual Incentive (87) (87) 279 Remove XES Financial Based Annual Incentive (8,137) (8,137) 280 Remove XES Financial Based Annual Incentive (502) (502) 281 Remove XES Financial Based Annual Incentive Remove XES Financial Based Annual Incentive Remove XES Financial Based Annual Incentive 562 (898) (898) 284 Remove XES Financial Based Annual Incentive 563 (1,044) (1,044) 285 Remove XES Financial Based Annual Incentive 566 (16,549) (16,549) 286 Annualize SPS Wages , , Annualize SPS Wages Annualize SPS Wages Annualize SPS Wages (182,065) (182,065) 290 Annualize SPS Wages (45,427) (45,427) 291 Annualize SPS Wages ,238 4, Annualize SPS Wages ,994 36, Annualize SPS Wages 563 (45,431) (45,431) 294 Annualize SPS Wages , , Annualize XES Wages 560 (433,618) (433,618) 296 Annualize XES Wages ,787 13, Annualize XES Wages ,095 27, Annualize XES Wages (7,945) (7,945) 299 Annualize XES Wages Annualize XES Wages Annualize XES Wages 562 5,866 5, Annualize XES Wages 563 (5,611) (5,611) 303 Annualize XES Wages , , Business Area Adjustment (2,674) (2,534) 305 Business Area Adjustment Business Area Adjustment (191) (191) 307 Eliminate SPP Admin Fees - Wholesale (1,054,121) (1,054,121) 308 SPP Admin Fees - Adjust for impact of change in Schedule 1a Rate , , Business Area Adjustment (4) (4) 310 Business Area Adjustment Eliminate SPP Admin Fees - Wholesale (560,002) (560,002) 312 SPP Admin Fees - Adjust for impact of change in Schedule 1a Rate , , Business Area Adjustment 562 RR16 - Page 187 of

132 Details of Adjustments Attachment DAB-RR-2 Page 45 of 270 No. Description Account Labor Non-Labor Total 314 Business Area Adjustment (48) (48) 315 Business Area Adjustment (1,017) (1,017) 316 Eliminate Transaction costs related to Transmission Assets sold to Sharyland 566 (1,062) (1,062) Total Transmission Operations 407,672 (1,188,828) (781,156) Transmission Maintenance 321 Wage Adjustment 568 2,750 2, Wage Adjustment ,908 41, Wage Adjustment 571 3,899 3, Adjust SPS Annual Incentive to Target Level 568 (391) (391) 325 Adjust SPS Annual Incentive to Target Level 570 (8,304) (8,304) 326 Adjust SPS Annual Incentive to Target Level 571 (851) (851) 327 Adjust XES Annual Incentive to Target Level Adjust XES Annual Incentive to Target Level Adjust XES Annual Incentive to Target Level 571 (216) (216) 330 Remove SPS Financial Based Annual Incentive 568 (193) (193) 331 Remove SPS Financial Based Annual Incentive 570 (4,087) (4,087) 332 Remove SPS Financial Based Annual Incentive 571 (419) (419) 333 Remove XES Financial Based Annual Incentive Remove XES Financial Based Annual Incentive Remove XES Financial Based Annual Incentive 571 (191) (191) 336 Annualize SPS Wages ,179 23, Annualize SPS Wages , , Annualize SPS Wages 571 1,679 1, Annualize XES Wages Annualize XES Wages Annualize XES Wages Business Area Adjustment Business Area Adjustment Business Area Adjustment 571 (22) 13,459 13, Eliminate O&M on Assets Sold to Sharyland 571 (6,664) (6,664) 346 Business Area Adjustment (105) (105) 347 Total Transmission Maintenance 174,112 6, , Wheeling: 350 Eliminate Schedule 9 Charges 0565T (24,828,360) (24,828,360) 351 Eliminate PNM Charges 0565R (3,292,873) (3,292,873) 352 Eliminate Wholesale Ancillary Charges - Sch 1, Sch 2, facilities 0565W (1,153,757) (1,153,757) 353 Eliminate Wholesale Ancillary Charges - Sch 3, 5 & W (1,653,421) (1,653,421) 354 Eliminate Per Book Schedule T (54,595,476) (54,595,476) 355 Eliminate Wholesale Schedule 12 FERC Assessment 0565W 6,575 6, Reclassify SPP Annual Membership Fee 0565T 6,039 6, Include Schedule 9 Charges for Lea County Formula Rate 0565T 387, , Include Schedule 11 Charges 0565T 83,965,026 83,965, Adjust Lamar DC Tie Charges for 2015 Rates 0565P 390, , Total Wheeling 0 (768,122) (768,122) 361 RR16 - Page 188 of

133 Details of Adjustments Attachment DAB-RR-2 Page 46 of 270 No. Description Account Labor Non-Labor Total 362 Regional Markets Expense: 363 Wage Adjustment ,437 3, Wage Adjustment Wage Adjustment Wage Adjustment Wage Adjustment ,352 1, Adjust SPS Annual Incentive to Target Level Adjust SPS Annual Incentive to Target Level (6) (6) 370 Adjust SPS Annual Incentive to Target Level Adjust SPS Annual Incentive to Target Level (6) (6) 372 Adjust SPS Annual Incentive to Target Level Adjust XES Annual Incentive to Target Level (3,814) (3,814) 374 Adjust XES Annual Incentive to Target Level (1,154) (1,154) 375 Adjust XES Annual Incentive to Target Level Adjust XES Annual Incentive to Target Level (178) (178) 377 Adjust XES Annual Incentive to Target Level (1,729) (1,729) 378 Remove SPS Financial Based Annual Incentive Remove SPS Financial Based Annual Incentive (3) (3) 380 Remove SPS Financial Based Annual Incentive Remove SPS Financial Based Annual Incentive (3) (3) 382 Remove SPS Financial Based Annual Incentive Remove XES Financial Based Annual Incentive (3,376) (3,376) 384 Remove XES Financial Based Annual Incentive (1,022) (1,022) 385 Remove XES Financial Based Annual Incentive Remove XES Financial Based Annual Incentive (158) (158) 387 Remove XES Financial Based Annual Incentive (1,531) (1,531) 388 Annualize SPS Wages Annualize SPS Wages (824) (824) 390 Annualize SPS Wages Annualize SPS Wages (824) (824) 392 Annualize SPS Wages Annualize XES Wages (17,507) (17,507) 394 Annualize XES Wages (5,583) (5,583) 395 Annualize XES Wages Annualize XES Wages (2,310) (2,310) 397 Annualize XES Wages (6,775) (6,775) 398 Business Area Adjustment (2,107) (2,107) 399 Business Area Adjustment , , Business Area Adjustment Business Area Adjustment Eliminate SPP Admin Fees - Wholesale (1,680,005) (1,680,005) 403 SPP Admin Fees - Adjust for impact of change in Schedule 1a Rate , , Total Regional Markets Expense (39,471) (1,234,259) (1,273,730) Distribution Operations 407 Wage Adjustment , , Wage Adjustment ,022 27, Wage Adjustment ,322 19, Wage Adjustment ,192 43, Wage Adjustment 584 4,396 4, Wage Adjustment ,362 12, Wage Adjustment , , Wage Adjustment ,275 26, Wage Adjustment ,767 95, Wage Adjustment Adjust SPS Annual Incentive to Target Level 580 (24,139) (24,139) 418 Adjust SPS Annual Incentive to Target Level 581 (1,837) (1,837) 419 Adjust SPS Annual Incentive to Target Level 582 (4,349) (4,349) 420 Adjust SPS Annual Incentive to Target Level 583 (7,520) (7,520) 421 Adjust SPS Annual Incentive to Target Level 584 (505) (505) 422 Adjust SPS Annual Incentive to Target Level 585 (4,107) (4,107) 423 Adjust SPS Annual Incentive to Target Level 586 (28,135) (28,135) 424 Adjust SPS Annual Incentive to Target Level 587 (7,538) (7,538) 425 Adjust SPS Annual Incentive to Target Level 588 (21,004) (21,004) 426 Adjust XES Annual Incentive to Target Level 580 (17,556) (17,556) 427 Adjust XES Annual Incentive to Target Level 581 (3,224) (3,224) 428 Adjust XES Annual Incentive to Target Level Adjust XES Annual Incentive to Target Level 583 (927) (927) 430 Adjust XES Annual Incentive to Target Level Adjust XES Annual Incentive to Target Level Adjust XES Annual Incentive to Target Level 586 (5,804) (5,804) 433 Adjust XES Annual Incentive to Target Level Adjust XES Annual Incentive to Target Level 588 (1,020) (1,020) 435 Remove SPS Financial Based Annual Incentive 580 (11,881) (11,881) 436 Remove SPS Financial Based Annual Incentive 581 (904) (904) 437 Remove SPS Financial Based Annual Incentive 582 (2,141) (2,141) RR16 - Page 189 of

134 Details of Adjustments Attachment DAB-RR-2 Page 47 of 270 No. Description Account Labor Non-Labor Total 438 Remove SPS Financial Based Annual Incentive 583 (3,702) (3,702) 439 Remove SPS Financial Based Annual Incentive 584 (248) (248) 440 Remove SPS Financial Based Annual Incentive 585 (2,022) (2,022) 441 Remove SPS Financial Based Annual Incentive 586 (13,848) (13,848) 442 Remove SPS Financial Based Annual Incentive 587 (3,710) (3,710) 443 Remove SPS Financial Based Annual Incentive 588 (10,338) (10,338) 444 Remove XES Financial Based Annual Incentive 580 (15,539) (15,539) 445 Remove XES Financial Based Annual Incentive 581 (2,853) (2,853) 446 Remove XES Financial Based Annual Incentive Remove XES Financial Based Annual Incentive 583 (820) (820) 448 Remove XES Financial Based Annual Incentive Remove XES Financial Based Annual Incentive Remove XES Financial Based Annual Incentive 586 (5,137) (5,137) 451 Remove XES Financial Based Annual Incentive Remove XES Financial Based Annual Incentive 588 (903) (903) 453 Annualize SPS Wages 580 (126,580) (126,580) 454 Annualize SPS Wages , , Annualize SPS Wages ,616 31, Annualize SPS Wages 583 9,230 9, Annualize SPS Wages ,841 47, Annualize SPS Wages 585 (119,864) (119,864) 459 Annualize SPS Wages 586 (65,162) (65,162) 460 Annualize SPS Wages 587 (97,276) (97,276) 461 Annualize SPS Wages , , Annualize XES Wages ,079 40, Annualize XES Wages 581 7,520 7, Annualize XES Wages Annualize XES Wages 583 5,058 5, Annualize XES Wages Annualize XES Wages Annualize XES Wages ,932 22, Annualize XES Wages Annualize XES Wages 588 8,153 8, Business Area Adjustment 580 (68) 1,267 1, Business Area Adjustment (3) (3) 473 Business Area Adjustment (2) (2) 474 Business Area Adjustment Business Area Adjustment Business Area Adjustment Business Area Adjustment 586 (287) - (287) 478 Business Area Adjustment Business Area Adjustment 588 1,079 10,440 11, Total Distribution Operations 769,855 11, , RR16 - Page 190 of

135 Details of Adjustments Attachment DAB-RR-2 Page 48 of 270 No. Description Account Labor Non-Labor Total 482 Distribution Maintenance 483 Wage Adjustment 590 9,071 9, Wage Adjustment ,989 35, Wage Adjustment , , Wage Adjustment 594 4,262 4, Wage Adjustment 595 2,400 2, Wage Adjustment Wage Adjustment Wage Adjustment Adjust SPS Annual Incentive to Target Level 590 (1,798) (1,798) 492 Adjust SPS Annual Incentive to Target Level 592 (7,414) (7,414) 493 Adjust SPS Annual Incentive to Target Level 593 (15,227) (15,227) 494 Adjust SPS Annual Incentive to Target Level 594 (899) (899) 495 Adjust SPS Annual Incentive to Target Level 595 (582) (582) 496 Adjust SPS Annual Incentive to Target Level 596 (222) (222) 497 Adjust SPS Annual Incentive to Target Level 597 (128) (128) 498 Adjust SPS Annual Incentive to Target Level 598 (1) (1) 499 Adjust XES Annual Incentive to Target Level 590 (390) (390) 500 Adjust XES Annual Incentive to Target Level Adjust XES Annual Incentive to Target Level 593 (768) (768) 502 Adjust XES Annual Incentive to Target Level Adjust XES Annual Incentive to Target Level Adjust XES Annual Incentive to Target Level Adjust XES Annual Incentive to Target Level Adjust XES Annual Incentive to Target Level Remove SPS Financial Based Annual Incentive 590 (885) (885) 508 Remove SPS Financial Based Annual Incentive 592 (3,649) (3,649) 509 Remove SPS Financial Based Annual Incentive 593 (7,495) (7,495) 510 Remove SPS Financial Based Annual Incentive 594 (443) (443) 511 Remove SPS Financial Based Annual Incentive 595 (287) (287) 512 Remove SPS Financial Based Annual Incentive 596 (109) (109) 513 Remove SPS Financial Based Annual Incentive 597 (63) (63) 514 Remove SPS Financial Based Annual Incentive 598 (0) (0) 515 Remove XES Financial Based Annual Incentive 590 (345) (345) 516 Remove XES Financial Based Annual Incentive Remove XES Financial Based Annual Incentive 593 (680) (680) 518 Remove XES Financial Based Annual Incentive Remove XES Financial Based Annual Incentive Remove XES Financial Based Annual Incentive Remove XES Financial Based Annual Incentive Remove XES Financial Based Annual Incentive Annualize SPS Wages ,693 25, Annualize SPS Wages , , Annualize SPS Wages 593 1,004,862 1,004, Annualize SPS Wages 594 (14,060) (14,060) 527 Annualize SPS Wages 595 3,034 3, Annualize SPS Wages 596 (7,184) (7,184) 529 Annualize SPS Wages 597 (2,408) (2,408) 530 Annualize SPS Wages 598 (128) (128) 531 Annualize XES Wages ,583 13, Annualize XES Wages Annualize XES Wages 593 2,303 2, Annualize XES Wages Annualize XES Wages Annualize XES Wages Annualize XES Wages Annualize XES Wages RR16 - Page 191 of

136 Details of Adjustments Attachment DAB-RR-2 Page 49 of 270 No. Description Account Labor Non-Labor Total 539 Business Area Adjustment Business Area Adjustment Business Area Adjustment (317) (317) 542 Business Area Adjustment Business Area Adjustment Business Area Adjustment Business Area Adjustment Business Area Adjustment Total Distribution Maintenance 1,350,077 (317) 1,349, Customer Accounting Expense: 550 Wage Adjustment Wage Adjustment ,296 87, Wage Adjustment ,081 79, Adjust SPS Annual Incentive to Target Level 901 (0) (0) 554 Adjust SPS Annual Incentive to Target Level 902 (19,768) (19,768) 555 Adjust SPS Annual Incentive to Target Level Adjust XES Annual Incentive to Target Level 901 (604) (604) 557 Adjust XES Annual Incentive to Target Level 902 (826) (826) 558 Adjust XES Annual Incentive to Target Level 903 (65,565) (65,565) 559 Remove SPS Financial Based Annual Incentive 901 (0) (0) 560 Remove SPS Financial Based Annual Incentive 902 (9,730) (9,730) 561 Remove SPS Financial Based Annual Incentive Remove XES Financial Based Annual Incentive 901 (534) (534) 563 Remove XES Financial Based Annual Incentive 902 (731) (731) 564 Remove XES Financial Based Annual Incentive 903 (58,033) (58,033) 565 Annualize SPS Wages 901 (25) (25) 566 Annualize SPS Wages , , Annualize SPS Wages Annualize XES Wages 901 1,350 1, Annualize XES Wages 902 1,059 1, Annualize XES Wages ,668 51, Business Area Adjustment (118) (109) 572 Business Area Adjustment ,037 6, Business Area Adjustment 903 (337) 12,100 11, Business Area Adjustment Business Area Adjustment Interest Expense on Customer Deposits - Texas 7,322 7, Total Customer Accounting Expense 223,516 25, , Customer Service Expense: 580 Wage Adjustment ,323 61, Wage Adjustment 0908SVR Adjust SPS Annual Incentive to Target Level 908 (13,096) (13,096) 583 Adjust SPS Annual Incentive to Target Level 0908SVR Adjust XES Annual Incentive to Target Level 908 (10,618) (10,618) 585 Adjust XES Annual Incentive to Target Level 0908SVR (602) (602) 586 Remove SPS Financial Based Annual Incentive 908 (6,446) (6,446) 587 Remove SPS Financial Based Annual Incentive 0908SVR Remove XES Financial Based Annual Incentive 908 (9,398) (9,398) 589 Remove XES Financial Based Annual Incentive 0908SVR (533) (533) 590 Annualize SPS Wages , , Annualize SPS Wages 0908SVR Annualize XES Wages 908 (147,643) (147,643) 593 Eliminate Texas Per Book EE Costs - EE Tracker 0908DSMTX (3,147,376) (3,147,376) 594 Eliminate Texas Per Book EE Costs - Historic EE 0908HDSMT (1,673,346) (1,673,346) 595 Include One year Amortization of Existing EE (10 year Amortization) 0908HDSMT 1,155,696 1,155, Include Carrying Costs of Existing EE 0908HDSMT 367, , Eliminate Historic ICO Amortization 0908ICO (521) (521) 598 Include ICO Credits to Expected Rate Year Amount 0908ICO 190, , Business Area Adjustment 908 (60,119) 1,358 (58,762) 600 Eliminate Wholesale Account Manager Costs (918) (918) 601 Eliminate Prior Period EECRF Costs 908 3,468 (400) 3, Total Customer Service Expense (55,350) (3,107,289) (3,162,638) 603 RR16 - Page 192 of

137 Details of Adjustments Attachment DAB-RR-2 Page 50 of 270 No. Description Account Labor Non-Labor Total 604 Sales Expense: 605 Wage Adjustment 912 4,853 4, Adjust SPS Annual Incentive to Target Level 912 (1,184) (1,184) 607 Adjust XES Annual Incentive to Target Level 912 (960) (960) 608 Remove SPS Financial Based Annual Incentive 912 (583) (583) 609 Remove XES Financial Based Annual Incentive 912 (850) (850) 610 Annualize SPS Wages ,541 12, Annualize XES Wages 912 (24,948) (24,948) 612 Business Area Adjustment Total Sales Expense (11,129) 0 (11,129) Administrative & General Expense: 616 Wage Adjustment , , Adjust SPS Annual Incentive to Target Level 920 (26,074) (26,074) 618 Adjust XES Annual Incentive to Target Level 920 (383,693) (383,693) 619 Remove SPS Financial Based Annual Incentive 920 (12,834) (12,834) 620 Remove XES Financial Based Annual Incentive 920 (339,610) (339,610) 621 Annualize SPS Wages ,509 46, Annualize XES Wages , , Eliminate Long-term Incentive 920 (695,206) 0 (695,206) 624 Business Area Adjustment 920 (1,645,555) 0 (1,645,555) 625 Eliminate Labor Costs Associated with Xcel Foundation 920 (51,552) 0 (51,552) 626 Aviation Adjustment 920 (105,162) (105,162) 627 Eliminate Other Compensation Accounting Correction ,802 59, Include cost for SPP Letter of Credit , , Eliminate Costs Associated with Xcel Foundation (50,138) (50,138) 630 Business Area Adjustment (105,611) (105,611) 631 Aviation Adjustment 921 (330,806) (330,806) 632 Eliminate Transaction costs related to Transmission Assets sold to Sharyland 921 (172,469) (172,469) 633 Business Area Adjustment (226,802) (226,802) 634 Eliminate Costs Associated with Xcel Foundation (17,986) (17,986) 635 Aviation Adjustment 923 (7,409) (7,409) 636 Business Area Adjustment Aviation Adjustment 924 (5,016) (5,016) 638 Eliminate Wholesale Account Manager Injuries & Damages Costs Business Area Adjustment 925 (517) 59,802 59, Eliminate Self-Insured Workers Compensation , , Eliminate Costs Associated with Xcel Foundation 925 (92) 0 (92) 642 Eliminate Prior Period EECRF Costs Aviation Adjustment 925 (204) (204) 644 Eliminate Injuries and Damages Accounting Correction , , Eliminate Wholesale Account Manager Pension & Benefits Costs 926 (539) 0 (539) 646 Eliminate Prior Period EECRF Costs 926 1, , Eliminate FAS 88 Costs 926 (198,918) 0 (198,918) 648 Pension & Benefits Adjustment 926 1,141,938 1,141, Business Area Adjustment 926 (78,260) 0 (78,260) 650 Eliminate Costs Associated with Xcel Foundation 926 (13,328) 0 (13,328) 651 Aviation Adjustment 926 (30,040) (30,040) 652 Adjust 401k Matching Expense for Base Labor Adjustment , , Eliminate Deferral of Pension Costs (1,538,030) (1,538,030) 654 Include Amortization of Deferred Pension Costs ,583,510 3,583, Adjust PUCT Fees to Present Rates ,827 91, Eliminate Test Year Rate Case Expense Amortization 928 (1,370,858) (1,370,858) 657 Eliminate EECRF Case Expense Amortization Recovered in EECRF 928 (31,658) (31,658) 658 Include Amortization of Rate Case Expenses 928 4,557,311 4,557, Eliminate Brand & General Advertising (1,506,603) (1,506,603) 660 Business Area Adjustment (10,554) (10,554) 661 Business Area Adjustment (8,037) (8,037) 662 Eliminate Costs Associated with Xcel Foundation (6,451) (6,451) 663 Eliminate Prior Period EECRF Costs ,422 1, Eliminate Wholesale Account Manager Rents 931O 0 (7,565) (7,565) 665 Business Area Adjustment (832) (832) 666 Eliminate Costs Associated with Xcel Foundation (31) (31) 667 Aviation Adjustment 935 (120,127) (120,127) 668 Contributions/Donations/Organization Memberships/Dues 2,556,117 2,556, Total Administrative & General Expense 1,366,605 3,588,770 4,955, Total O&M 6,869,114 (3,440,736) 3,428,378 RR16 - Page 193 of

138 Details of Adjustments Attachment DAB-RR-2 Page 51 of 270 No. Description Account Labor Non-Labor Total Depreciation & Amortization Expense: 674 Steam Production - Unblend Depreciation Expense 403 (14,393,306) (14,393,306) 675 Other Production - Unblend Depreciation Expense 403 (1,857,015) (1,857,015) 676 Steam Production - Annualize Unblended Depreciation Expense , , Other Production - Annualize Unblended Depreciation Expense ,193 97, Steam Production - New Depreciation/Amortization Rates ,089,860 19,089, Other Production - New Depreciation/Amortization Rates 403 1,189,706 1,189, Steam Production - Post Test Year Adjustment , , Other Production - Post Test Year Adjustment , , Eliminate Depreciation & Depletion Expense - Production ,047,071 1,047, Eliminate Amortization of Reg Credits - Production (217,394) (217,394) 684 Eliminate Accretion Expense - Production (829,676) (829,676) 685 Transmission - Unblend Depreciation Expense 403 2,403,172 2,403, Transmission - Annualize Unblended Depreciation Expense 403 4,053,066 4,053, Transmission - New Depreciation/Amortization Rates 403 1,167,345 1,167, Transmission - Post Test Year Adjustment 403 9,002,160 9,002, Eliminate Depreciation & Depletion Expense - Transmission (456) (456) 690 Texas Distribution - Unblend Depreciation Expense 0403TX New Mexico Distribution - Unblend Depreciation Expense 0403NM Texas Distribution - Annualize Unblended Depreciation Expense 0403TX 459, , New Mexico Distribution - Annualize Unblended Depreciation Expense 0403NM (1,279,333) (1,279,333) 694 Texas Distribution - New Depreciation/Amortization Rates 0403TX 1,225,742 1,225, New Mexico Distribution - New Depreciation/Amortization Rates 0403NM 403, , Texas Distribution - Adjust Depreciation Expense for Transformer Reclass 0403TX (703,960) (703,960) 697 Texas Distribution - Adjust Depreciation Expense for Meter Reclass 0403TX (256,247) (256,247) 698 Texas Distribution - Post Test Year Adjustment 0403TX 505, , New Mexico Distribution - Post Test Year Adjustment 0403NM 388, , Eliminate Depreciation & Depletion Expense - Distribution (200,895) (200,895) 701 Eliminate Amortization of Reg Credits - Distribution , , Eliminate Accretion Expense - Distribution (222,135) (222,135) 703 General - Unblend Depreciation Expense 403 (210,899) (210,899) 704 General - Call Center - Unblend Depreciation Expense 403 (40,735) (40,735) 705 General - Annualize Unblended Depreciation Expense 403 2,553,629 2,553, General - Call Center - Annualize Unblended Depreciation Expense 403 4,439 4, General - New Depreciation/Amortization Rates 403 2,450,048 2,450, General - Post Test Year Adjustment 403 2,298,850 2,298, General - Call Center - New Depreciation/Amortization Rates , , Eliminate Depreciation & Depletion Expense - General (2,605) (2,605) 711 Intangible - Unblend Depreciation Expense , , Intangible - Annualize Unblended Depreciation Expense ,317,647 3,317, Intangible - New Depreciation/Amortization Rates ,072 32, Intangible - Post Test Year Adjustment ,355,811 3,355, Total Depreciation & Amortization Expense 0 36,464,950 36,464, Taxes Other Than Income: 718 Adjust Property Tax Expense to June 2014 Plant Levels ,052,613 7,052, Adjust Property Tax Expense for Post Test Year Plant ,559,665 2,559, Adjust Payroll Tax Expense Associated with Labor Adjustments , , Adjust Franchise Fees to Present Revenues 40833TX 581, , Adjust Franchise Fees to Proposed Revenues 40833TX 1,205,855 1,205, Reclassify Texas Franchise Tax 408 3,380,717 3,380, Adjust Texas Franchise Tax to Proposed Revenues , , Adjust Texas Gross Receipts to Proposed Revenues , , Total Taxes Other Than Income 0 15,977,069 15,977, State Income Tax Expense: 729 Reclassify Texas Margin Tax (3,380,717) (3,380,717) 730 Adjust State Income Tax (1,021,808) (1,021,808) 731 Total State Income Tax Expense 0 (4,402,525) (4,402,525) Federal Income Tax Expense: 734 Federal Income Tax Expense (10,797,683) (10,797,683) 735 Production Tax Deduction Total Federal Income Tax Expense 0 (10,797,683) (10,797,683) 737 RR16 - Page 194 of

139 Details of Adjustments Attachment DAB-RR-2 Page 52 of 270 No. Description Account Labor Non-Labor Total 738 Schedule M 739 Plant Schedule M - Production T (36,709,727) (36,709,727) 740 Plant Schedule M - Transmission T (85,851,847) (85,851,847) 741 Plant Schedule M - Texas Distribution T (2,047,712) (2,047,712) 742 Plant Schedule M - New Mexico Distribution T (841,449) (841,449) 743 Plant Schedule M - Intangible T 7,734,596 7,734, Plant Schedule M - General Call Center T (295,455) (295,455) 745 Plant Schedule M - General T 7,603,238 7,603, Plant Schedule M - Production P 1,206,827 1,206, Plant Schedule M - Transmission P 8,804,039 8,804, Plant Schedule M - Texas Distribution P 988, , Plant Schedule M - New Mexico Distribution P 406, , Plant Schedule M - Intangible P 1,506,926 1,506, Plant Schedule M - General P 185, , REC Amortization (excl tracker interest) T 2,836,570 2,836, Historic EE Amortization (excl interest) T 1,155,696 1,155, Unamortized Rate Case Expense Amortization T 784, , Unamortized Pension/OPEB Reg Asset Amortization T 3,583,510 3,583, Eliminate amounts related to sale of Sharyland assets Total Schedule M 0 8,360,500 8,360, Deferred Income Tax Expense 760 Plant Non-Plant 762 State Only NOL (572,579) (572,579) 763 Texas Gross Margin Tax 173, , State Tax Deduction Cash vs Accrual (FIN 48) - Perm LT - Elec State Tax Deduction Cash vs Accrual (FIN 48) - Perm LT - NonReg (316) (316) 766 ITC Grant - Fed DIT Only (313,352) (313,352) 767 OCI - Treasury (96,981) (96,981) 768 OK Bonus Depreciation (563) (563) 769 New Hire Retention Credit Total Deferred Income Tax Expense 0 (809,795) (809,795) Gain on Disposition of Allowances 773 Eliminate Gain Returned through Fuel Adjustments Total Gain on Disp. of Allowances Gain on Disposition of RECs 777 Eliminate Gain on Disposition of RECs , , Total Gain on Disposition of RECs 0 813, , Loss on Disposition of RECs 781 Eliminate Loss on Disposition of RECs ,386 6, Total Loss on Disposition of RECs 0 6,386 6, Gain on Sale of Utility Plant 785 Eliminate Lubbock Sale Gain ,898,862 4,898, Total Gain on Sale of Utility Plant 0 4,898,862 4,898, Revenue Credits: 789 Eliminate Provision for Rate Refunds 449 (45,073,217) (45,073,217) 790 Increase in Meter Tampering Fee (19,120) (19,120) 791 Eliminate Customer Discounts (491) (491) 792 Eliminate New Mexico Customer Discounts ,556 4, Adjust Rent from Electric Property - Texas for Known & Measurable Lease Changes 454TX (29,026) (29,026) 794 Adjust RTO PTP Firm Revenues for 2015 Rate Increase (642,812) (642,812) 795 Exclude Out of Period PTP Resettlement , , Adjust RTO PTP Non-Firm Revenues for 2015 Rate Increase (130,287) (130,287) 797 Eliminate Network Transmission Revenue ,574,055 40,574, Exclude Out of Period Schedule 1 Resettlement , , Eliminate Offsystem Wheeling (286,506) (286,506) 800 Elminate JOA Revenues Shared in Fuel ,715,947 1,715, Eliminate Out-of-Period Amount 45642TX (527) (527) 802 Eliminate Sharyland Gain Refund 45642TX 5,222,262 5,222, EliminateTUCO Savage Refund Amount returned to Texas Rate Payers 45642TX (638,281) (638,281) 804 Eliminate CIP Inentive Revenue , , Eliminate ICO Revenue Eliminate Deferred Fuel Revenue ,691,070 4,691, Eliminate Test Period Schedule 11 Network Base Plan Revenues ,405,377 52,405, Include Base Plan Upgrade Revenue at 2013 Rates with Test Year Plant-in-Service (76,230,194) (76,230,194) 809 Include Demand Revenues from New Wholesale Contracts 447 (931,127) (931,127) 810 Total Revenue Credits 0 (18,011,707) (18,011,707) Total Operating Deductions Adjustments, Excluding Income Taxes 6,858,134 (829,881,604) (823,023,470) RR16 - Page 195 of

140 Page 53 of 270 Post Test Year Adjustments - Gross Plant Remove Texas Rules Texas Rules Jun-14 Dec-14 Adjustment Install Higg East Sub No. Description Account Plant Plant Plant Plant 1 Intangible: 2 Organization Franchises and Consents Misc. Intangible Plant ,604, ,384,030 16,779,053 5 Total Intangible 88,604, ,384,030 16,779, Steam Production: 8 Land and Land Rights ,200,043 11,257,571 57,528 9 Structures & Improvements ,513, ,041,496 9,527, Boiler Plant Equipment ,295, ,942,972 7,647, Turbo-Generator Units ,499, ,731,553 6,231, Accessory Electric Equipment ,296,189 75,226, , Misc. Power Plant Equipment ,389,713 31,982, , Total Steam Production 1,715,194,761 1,740,183,471 24,988, Internal Combustion Equipment: 17 Land and Land Rights , , Structures & Improvements ,530,520 14,612,751 82, Fuel Holders, Prod & Acc 342 5,644,152 5,980, , Internal Combustion Engine ,604,861 67,097,089 2,492, Generators ,016, ,640, , Accessory Electric Equipment ,709,028 32,735,610 1,026, Misc. Power Plant Equipment 346 4,799,154 4,995, , Total Internal Combustion Equipment 289,419, ,177,323 4,757, RR16 - Page 196 of

141 Page 54 of 270 Post Test Year Adjustments - Gross Plant Remove Texas Rules Texas Rules Jun-14 Dec-14 Adjustment Install Higg East Sub No. Description Account Plant Plant Plant Plant 26 Transmission Plant: 27 Land Owned in Fee ,263,328 6,394, , Land Rights ,461,243 87,612,770 13,151, Structures & Improvements ,300,952 56,877,656 10,576, Station Equipment ,702, ,529,886 84,827, Station Equipment - Production ,078,585 28,694,023 (1,384,562) 32 Towers and Fixtures 354 8,243,671 11,531,324 3,287, Poles and Fixtures ,666, ,160, ,493, Overhead Conductor ,327, ,529,084 84,201, Underground Conduit , , , Underground Conductor , , , Total Transmission Plant 1,603,789,219 1,946,371, ,581, Texas Distribution Plant: 40 Land and Land Rights 360 2,562,906 3,108, , Structures & Improvements 361 5,499,828 6,161, ,949 (17,821) 42 Station Equipment ,093, ,596,754 8,503,665 (939,275) 43 Towers and Fixtures ,042, ,149,585 8,107, Overhead Conductor ,596, ,482,489 7,885, Underground Conduit ,454,055 17,782,050 1,327, Underground Conductor ,205,366 25,898, , Transformers ,680, ,580,983 (4,099,826) 48 Services ,117,920 50,131,405 (986,514) 49 Meters ,894,664 47,656,292 (2,238,373) 50 Inst. on Customer Premises 371 8,118,606 8,015,259 (103,347) 51 Street Light / Signal Systems ,867,177 13,396, , Total Texas Distribution Plant 712,133, ,960,620 20,827,450 (957,096) 53 RR16 - Page 197 of

142 Page 55 of 270 Post Test Year Adjustments - Gross Plant Remove Texas Rules Texas Rules Jun-14 Dec-14 Adjustment Install Higg East Sub No. Description Account Plant Plant Plant Plant 54 New Mexico Distribution Plant: 55 Land and Land Rights 360 3,496,850 3,681, , Structures & Improvements 361 2,646,485 2,920, , Station Equipment ,445,162 72,669,001 4,223, Towers and Fixtures ,886,756 67,204,073 5,317, Overhead Conductor ,284,445 67,620,516 4,336, Underground Conduit 366 5,740,169 6,389, , Underground Conductor 367 7,788,537 8,498, , Transformers ,277,098 27,653, , Services ,449,762 22,952,720 (497,042) 64 Meters ,664,789 13,794,651 (870,138) 65 Inst. on Customer Premises 371 4,964,777 4,903,700 (61,076) 66 Street Light / Signal Systems 373 9,588,862 10,141, , Total New Mexico Distribution Plant 293,233, ,430,256 15,196, Distribution Plant: 70 Land and Land Rights 360 6,059,756 6,790, , Structures & Improvements 361 8,146,312 9,082, ,985 (17,821) 72 Station Equipment ,538, ,265,755 12,727,503 (939,275) 73 Towers and Fixtures ,928, ,353,658 13,424, Overhead Conductor ,881, ,103,005 12,221, Underground Conduit ,194,224 24,171,175 1,976, Underground Conductor ,993,904 34,397,229 1,403, Transformers ,957, ,234,912 (3,722,995) 0 78 Services ,567,682 73,084,126 (1,483,556) 0 79 Meters ,559,453 61,450,942 (3,108,511) 0 80 Inst. on Customer Premises ,083,382 12,918,959 (164,423) 0 81 Street Light / Signal Systems ,456,038 23,538,792 1,082, Total Distribution Plant 1,005,366,861 1,041,390,875 36,024,014 (957,096) 83 RR16 - Page 198 of

143 Page 56 of 270 Post Test Year Adjustments - Gross Plant Remove Texas Rules Texas Rules Jun-14 Dec-14 Adjustment Install Higg East Sub No. Description Account Plant Plant Plant Plant 84 General Plant: 85 Land and Land Rights 389 1,100,782 1,100, Structures & Improvements ,838,479 71,520, , Office Furniture & Equipment ,583,142 39,980,294 8,397, Transportation Equipment ,030,432 75,280,987 1,250, Stores Equipment , ,736 32, Tools, Shop & Garage Equip ,799,717 23,083, , Laboratory Equipment ,919,061 11,594, , Power Operated Equipment ,831,119 10,967, , Communication Equipment ,900,253 67,437,329 6,537, Miscellaneous Equipment 398 2,867,253 3,069, , Total General Plant 286,330, ,527,637 18,197, Total Electric Plant in Service 4,988,706,198 5,432,034, ,328,225 (957,096) RR16 - Page 199 of

144 Page 57 of 270 Post Test Year Adjustments - Gross Plant No. Description Account 1 Intangible: 2 Organization Franchises and Consents Misc. Intangible Plant Total Intangible 6 7 Steam Production: 8 Land and Land Rights Structures & Improvements Boiler Plant Equipment Turbo-Generator Units Accessory Electric Equipment Misc. Power Plant Equipment Total Steam Production Internal Combustion Equipment: 17 Land and Land Rights Structures & Improvements Fuel Holders, Prod & Acc Internal Combustion Engine Generators Accessory Electric Equipment Misc. Power Plant Equipment Total Internal Combustion Equipment 25 Remove Add Add Total Dec Adj Install Higg East Feeders Pur Oliver Rose Water Rights Develop Barrett H2O Rights Texas Rules Plant Plant Plant Plant ,779,053 16,779,053 5,286, ,982 6,297,433 9,527,963 7,647,553 6,231, , , ,286, ,982 31,228, , ,500 2,492, ,791 1,026, ,112 4,757,445 RR16 - Page 200 of

145 Page 58 of 270 Post Test Year Adjustments - Gross Plant No. Description Account 26 Transmission Plant: 27 Land Owned in Fee Land Rights Structures & Improvements Station Equipment Station Equipment - Production Towers and Fixtures Poles and Fixtures Overhead Conductor Underground Conduit Underground Conductor Total Transmission Plant Texas Distribution Plant: 40 Land and Land Rights Structures & Improvements Station Equipment Towers and Fixtures Overhead Conductor Underground Conduit Underground Conductor Transformers Services Meters Inst. on Customer Premises Street Light / Signal Systems Total Texas Distribution Plant 53 Remove Add Add Total Dec Adj Install Higg East Feeders Pur Oliver Rose Water Rights Develop Barrett H2O Rights Texas Rules Plant Plant Plant Plant 131,195 13,151,527 10,576,705 84,827,328 (1,384,562) 3,287, ,493,153 84,201, , , ,581, , ,128 7,564,390 (187,104) 7,920,351 7,885,871 1,327, ,124 (4,099,826) (986,514) (2,238,373) (103,347) 529,790 (187,104) ,683,251 RR16 - Page 201 of

146 Page 59 of 270 Post Test Year Adjustments - Gross Plant No. Description Account 54 New Mexico Distribution Plant: 55 Land and Land Rights Structures & Improvements Station Equipment Towers and Fixtures Overhead Conductor Underground Conduit Underground Conductor Transformers Services Meters Inst. on Customer Premises Street Light / Signal Systems Total New Mexico Distribution Plant Distribution Plant: 70 Land and Land Rights Structures & Improvements Station Equipment Towers and Fixtures Overhead Conductor Underground Conduit Underground Conductor Transformers Services Meters Inst. on Customer Premises Street Light / Signal Systems Total Distribution Plant 83 Remove Add Add Total Dec Adj Install Higg East Feeders Pur Oliver Rose Water Rights Develop Barrett H2O Rights Texas Rules Plant Plant Plant Plant 184, ,036 4,223,839 5,317,317 4,336, , , ,832 (497,042) (870,138) (61,076) 552,963 15,196, , ,164 11,788,229 (187,104) ,237,668 12,221,942 1,976,951 1,403,325 (3,722,995) (1,483,556) (3,108,511) (164,423) 1,082,753 (187,104) ,879,815 RR16 - Page 202 of

147 Page 60 of 270 Post Test Year Adjustments - Gross Plant No. Description Account 84 General Plant: 85 Land and Land Rights Structures & Improvements Office Furniture & Equipment Transportation Equipment Stores Equipment Tools, Shop & Garage Equip Laboratory Equipment Power Operated Equipment Communication Equipment Miscellaneous Equipment Total General Plant Total Electric Plant in Service Remove Add Add Total Dec Adj Install Higg East Feeders Pur Oliver Rose Water Rights Develop Barrett H2O Rights Texas Rules Plant Plant Plant Plant 0 681,596 8,397,152 1,250,556 32, , , ,323 6,537, ,284 18,197,135 (187,104) 5,286, , ,423,930 RR16 - Page 203 of

148 Meters and Transformers Adjustment Attachment DAB-RR-2 Page 61 of 270 No. Description Account Amount 1 2 Adjustment to Transformers - Gross Plant 368 (26,847,560) 3 Adjustment to Transformers - ADIT , Adjustment to Meters - Gross Plant 370 (9,358,315) 6 7 Adjustment to Depreciation Expense 8 9 Proposed Depreciation Rate - Transformers % 10 Adjustment to Proposed Depreciation Expense 403 (703,960) Proposed Depreciation Rate - Meters % 13 Adjustment to Proposed Depreciation Expense 403 (256,247) RR16 - Page 204 of

149 Page 62 of 270 Accumulated Depreciation - Financial Rules to Texas Rules Adjustment Financial Rules Texas Rules Adjustment Accumulated Accumulated Accumulated Reserve for Reserve for Reserve for No. Description Account DAR RWIP Depreciation DAR RWIP Depreciation Depreciation 1 Intangible: 2 Organization Franchises and Consents Misc. Intangible Plant 303 (63,803,704) 739 (63,802,965) (63,803,704) 739 (63,802,965) 0 5 Total Intangible (63,803,704) 739 (63,802,965) (63,803,704) 739 (63,802,965) Steam Production: 8 Land and Land Rights 310 (2,388,158) 0 (2,388,158) (2,303,555) 0 (2,303,555) 84,603 9 Structures & Improvements 311 (113,928,855) 348,241 (113,580,614) (115,440,002) 348,241 (115,091,761) (1,511,147) 10 Boiler Plant Equipment 312 (543,236,301) 1,661,526 (541,574,774) (470,394,362) 1,661,526 (468,732,836) 72,841, Turbo-Generator Units 314 (301,510,994) 1,009,540 (300,501,454) (237,514,015) 1,009,540 (236,504,476) 63,996, Accessory Electric Equipment 315 (43,303,764) 8,432 (43,295,332) (39,895,957) 8,432 (39,887,525) 3,407, Misc. Power Plant Equipment 316 (21,028,226) (23,638) (21,051,864) (17,980,194) (23,638) (18,003,832) 3,048, Total Steam Production (1,025,396,298) 3,004,101 (1,022,392,197) (883,528,086) 3,004,101 (880,523,985) 141,868, Internal Combustion Equipment: 17 Land and Land Rights 340 (568) 0 (568) (677) 0 (677) (109) 18 Structures & Improvements 341 (851,091) 0 (851,091) (522,690) 0 (522,690) 328, Fuel Holders, Prod & Acc 342 (3,367,761) 4,561 (3,363,200) (3,038,837) 4,561 (3,034,276) 328, Internal Combustion Engine 343 (26,667,051) 5,411 (26,661,640) (24,993,867) 5,411 (24,988,456) 1,673, Generators 344 (27,620,764) 36,110 (27,584,654) (25,512,750) 36,110 (25,476,640) 2,108, Accessory Electric Equipment 345 (5,730,696) 20,610 (5,710,086) (5,092,059) 20,610 (5,071,449) 638, Misc. Power Plant Equipment 346 (730,875) 0 (730,875) (641,797) 0 (641,797) 89, Total Internal Combustion Equipment (64,968,808) 66,692 (64,902,115) (59,802,677) 66,692 (59,735,985) 5,166, Transmission Plant: 27 Land Owned in Fee (28) 28 Land Rights 350 (14,982,850) 10,909 (14,971,941) (14,796,219) 10,909 (14,785,310) 186, Structures & Improvements 352 (15,791,599) (75,429) (15,867,029) (15,491,987) (75,429) (15,567,416) 299, Station Equipment 353 (107,388,187) 1,916,189 (105,471,998) (116,424,784) 1,916,189 (114,508,595) (9,036,597) 31 Station Equipment - Production 353 (14,429,760) 9,046 (14,420,715) (11,366,156) 9,046 (11,357,110) 3,063, Towers and Fixtures 354 (2,356,740) 0 (2,356,740) (2,998,729) 0 (2,998,729) (641,989) 33 Poles and Fixtures 355 (109,706,123) 13,174,489 (96,531,634) (125,779,344) 13,174,489 (112,604,856) (16,073,222) 34 Overhead Conductor 356 (66,019,920) 1,181,955 (64,837,965) (64,674,574) 1,181,955 (63,492,619) 1,345, Underground Conduit 357 (162,590) 0 (162,590) (85,203) 0 (85,203) 77, Underground Conductor 358 (235,029) 0 (235,029) (56,458) 0 (56,458) 178, Total Transmission Plant (331,072,691) 16,217,158 (314,855,533) (351,673,375) 16,217,158 (335,456,217) (20,600,683) 38 RR16 - Page 205 of

150 Page 63 of 270 Accumulated Depreciation - Financial Rules to Texas Rules Adjustment Financial Rules Texas Rules Adjustment Accumulated Accumulated Accumulated Reserve for Reserve for Reserve for No. Description Account DAR RWIP Depreciation DAR RWIP Depreciation Depreciation 39 Texas Distribution Plant: 40 Land and Land Rights 360 (784,942) 0 (784,942) (784,942) 0 (784,942) 0 41 Structures & Improvements 361 (1,893,952) 4,286 (1,889,666) (1,893,952) 4,286 (1,889,666) 0 42 Station Equipment 362 (31,786,648) 495,724 (31,290,924) (31,786,648) 495,724 (31,290,924) 0 43 Towers and Fixtures 364 (54,496,173) (113,688) (54,609,861) (54,496,173) (113,688) (54,609,861) 0 44 Overhead Conductor 365 (40,735,749) (239,198) (40,974,947) (40,735,749) (239,198) (40,974,947) 0 45 Underground Conduit 366 (6,762,659) 1,946 (6,760,712) (6,762,659) 1,946 (6,760,712) 0 46 Underground Conductor 367 (6,452,463) (85,290) (6,537,753) (6,452,463) (85,290) (6,537,753) 0 47 Transformers 368 (36,595,301) 515,462 (36,079,839) (36,595,301) 515,462 (36,079,839) 0 48 Services 369 (22,700,630) 198,000 (22,502,630) (22,700,630) 198,000 (22,502,630) 0 49 Meters 370 (12,083,345) 0 (12,083,345) (12,083,345) 0 (12,083,345) 0 50 Inst. on Customer Premises 371 (8,687,712) 1,946 (8,685,765) (8,687,712) 1,946 (8,685,765) 0 51 Street Light / Signal Systems 373 (2,413,371) (31,632) (2,445,003) (2,413,371) (31,632) (2,445,003) 0 52 Total Texas Distribution Plant (225,392,943) 747,556 (224,645,388) (225,392,943) 747,556 (224,645,388) New Mexico Distribution Plant: 55 Land and Land Rights 360 (520,757) 0 (520,757) (520,757) 0 (520,757) 0 56 Structures & Improvements 361 (678,817) 0 (678,817) (678,817) 0 (678,817) 0 57 Station Equipment 362 (15,051,803) 286,772 (14,765,031) (15,051,803) 286,772 (14,765,031) 0 58 Towers and Fixtures 364 (20,458,964) 228,282 (20,230,682) (20,458,964) 228,282 (20,230,682) 0 59 Overhead Conductor 365 (13,587,926) 320,029 (13,267,898) (13,587,926) 320,029 (13,267,898) 0 60 Underground Conduit 366 (2,257,543) 383 (2,257,160) (2,257,543) 383 (2,257,160) 0 61 Underground Conductor 367 (2,481,029) 8,950 (2,472,079) (2,481,029) 8,950 (2,472,079) 0 62 Transformers 368 (8,176,260) 2,493 (8,173,767) (8,176,260) 2,493 (8,173,767) 0 63 Services 369 (14,089,914) 42,088 (14,047,826) (14,089,914) 42,088 (14,047,826) 0 64 Meters 370 (6,801,893) 0 (6,801,893) (6,801,893) 0 (6,801,893) 0 65 Inst. on Customer Premises 371 (5,243,649) 60 (5,243,589) (5,243,649) 60 (5,243,589) 0 66 Street Light / Signal Systems 373 (3,417,044) 38,051 (3,378,993) (3,417,044) 38,051 (3,378,993) 0 67 Total New Mexico Distribution Plant (92,765,599) 927,107 (91,838,491) (92,765,599) 927,107 (91,838,491) 0 68 RR16 - Page 206 of

151 Page 64 of 270 Accumulated Depreciation - Financial Rules to Texas Rules Adjustment Financial Rules Texas Rules Adjustment Accumulated Accumulated Accumulated Reserve for Reserve for Reserve for No. Description Account DAR RWIP Depreciation DAR RWIP Depreciation Depreciation 69 Total Distribution Plant: 70 Land and Land Rights 360 (1,305,699) 0 (1,305,699) (1,305,699) 0 (1,305,699) 0 71 Structures & Improvements 361 (2,572,769) 4,286 (2,568,483) (2,572,769) 4,286 (2,568,483) 0 72 Station Equipment 362 (46,838,451) 782,495 (46,055,955) (46,838,451) 782,495 (46,055,955) 0 73 Towers and Fixtures 364 (74,955,137) 114,594 (74,840,544) (74,955,137) 114,594 (74,840,544) 0 74 Overhead Conductor 365 (54,323,676) 80,831 (54,242,845) (54,323,676) 80,831 (54,242,845) 0 75 Underground Conduit 366 (9,020,201) 2,330 (9,017,872) (9,020,201) 2,330 (9,017,872) 0 76 Underground Conductor 367 (8,933,492) (76,340) (9,009,832) (8,933,492) (76,340) (9,009,832) 0 77 Transformers 368 (44,771,560) 517,955 (44,253,606) (44,771,560) 517,955 (44,253,606) 0 78 Services 369 (36,790,543) 240,087 (36,550,456) (36,790,543) 240,087 (36,550,456) 0 79 Meters 370 (18,885,238) 0 (18,885,238) (18,885,238) 0 (18,885,238) 0 80 Inst. on Customer Premises 371 (13,931,361) 2,006 (13,929,355) (13,931,361) 2,006 (13,929,355) 0 81 Street Light / Signal Systems 373 (5,830,415) 6,419 (5,823,996) (5,830,415) 6,419 (5,823,996) 0 82 Total Distribution Plant (318,158,542) 1,674,663 (316,483,879) (318,158,542) 1,674,663 (316,483,879) General Plant: 85 Land and Land Rights 389 (25,792) 0 (25,792) (28,081) 0 (28,081) (2,288) 86 Structures & Improvements 390 (28,948,342) 444,769 (28,503,573) (25,815,007) 444,769 (25,370,238) 3,133, Office Furniture & Equipment 391 (13,333,859) 213 (13,333,646) (12,905,784) 213 (12,905,571) 428, Transportation Equipment 392 (29,127,707) 0 (29,127,707) (27,897,653) 0 (27,897,653) 1,230, Stores Equipment 393 (229,966) 0 (229,966) (201,656) 0 (201,656) 28, Tools, Shop & Garage Equip. 394 (4,726,830) (625) (4,727,455) (5,996,675) (625) (5,997,300) (1,269,845) 91 Laboratory Equipment 395 (5,949,094) 0 (5,949,094) (4,021,959) 0 (4,021,959) 1,927, Power Operated Equipment 396 (2,954,761) 0 (2,954,761) (3,160,274) 0 (3,160,274) (205,513) 93 Communication Equipment 397 (26,446,942) 47,860 (26,399,081) (25,679,795) 0 (25,679,795) 719, Miscellaneous Equipment 398 (1,219,755) 0 (1,219,755) (1,371,938) 0 (1,371,938) (152,183) 95 Total General Plant (112,963,048) 492,217 (112,470,830) (107,078,820) 444,357 (106,634,463) 5,836, Total Electric Plant in Service (1,916,363,091) 21,455,571 (1,894,907,519) (1,784,045,205) 21,407,711 (1,762,637,494) 132,270,025 RR16 - Page 207 of

152 Page 65 of 270 Accumulated Depreciation - Financial Rules to Texas Rules Adjustment No. Description Financial Rules Texas Rules Adjustment 1 Call Center Accumulated Depreciation (5,462,148) (4,642,191) 819, CRS Accumulated Depreciation (15,967,295) (15,967,295) Total (21,429,443) (20,609,486) 819,957 RR16 - Page 208 of

153 Page 66 of 270 Post Test Year Adjustments - Accumulated Depreciation Remove Remove Texas Rules December Adjustment Install Higg East Sub Install Higg East Feeders Accumulated Accumulated Accumulated Reserve for Reserve for Reserve for No. Description Account DAR RWIP Depreciation Depreciation Depreciation 1 Intangible: 2 Organization Franchises and Consents Misc. Intangible Plant 303 (4,812,090) (649) (4,812,739) 5 Total Intangible (4,812,090) (649) (4,812,739) Steam Production: 8 Land and Land Rights 310 (89,442) 0 (89,442) 9 Structures & Improvements 311 (1,658,850) (348,241) (2,007,091) 10 Boiler Plant Equipment 312 (12,270,497) (1,325,316) (13,595,813) 11 Turbo-Generator Units 314 (6,167,264) (544,733) (6,711,998) 12 Accessory Electric Equipment 315 (703,017) (8,432) (711,449) 13 Misc. Power Plant Equipment 316 (1,772,015) 23,638 (1,748,377) 14 Total Steam Production (22,661,086) (2,203,084) (24,864,169) Internal Combustion Equipment: 17 Land and Land Rights Structures & Improvements 341 (107,564) 0 (107,564) 19 Fuel Holders, Prod & Acc 342 (91,828) (4,561) (96,390) 20 Internal Combustion Engine 343 (4,665,771) (5,411) (4,671,182) 21 Generators 344 (1,498,859) (36,110) (1,534,969) 22 Accessory Electric Equipment 345 (307,014) (20,610) (327,625) 23 Misc. Power Plant Equipment 346 (41,196) 0 (41,196) 24 Total Internal Combustion Equipment (6,712,231) (66,692) (6,778,924) RR16 - Page 209 of

154 Page 67 of 270 Post Test Year Adjustments - Accumulated Depreciation Remove Remove Texas Rules December Adjustment Install Higg East Sub Install Higg East Feeders Accumulated Accumulated Accumulated Reserve for Reserve for Reserve for No. Description Account DAR RWIP Depreciation Depreciation Depreciation 26 Transmission Plant: 27 Land Owned in Fee Land Rights (508,030) (10,909) (518,939) 29 Structures & Improvements 352 (481,678) 94,479 (387,199) 30 Station Equipment (3,168,087) 6,089,440 2,921, Station Equipment - Production (151,279) (9,046) (160,325) 32 Towers and Fixtures 354 (63,710) 0 (63,710) 33 Poles and Fixtures 355 (2,046,792) (10,804,897) (12,851,689) 34 Overhead Conductor 356 (1,535,063) (88,762) (1,623,826) 35 Underground Conduit 357 (1,970) 0 (1,970) 36 Underground Conductor 358 (142) 0 (142) 37 Total Transmission Plant (7,956,752) (4,729,696) (12,686,448) Texas Distribution Plant: 40 Land and Land Rights 360 (12,970) 0 (12,970) 41 Structures & Improvements 361 (7,720) (1,148) (8,869) 42 Station Equipment 362 (160,787) (393,948) (554,735) (8,907) 43 Towers and Fixtures 364 (806,270) 413,960 (392,309) (12,528) 44 Overhead Conductor 365 (800,603) 286,593 (514,010) 45 Underground Conduit 366 (18,109) (1,773) (19,882) 46 Underground Conductor 367 (27,847) 92,972 65, Transformers ,882 (507,052) (432,170) 48 Services 369 (128,177) (196,990) (325,166) 49 Meters , , Inst. on Customer Premises 371 (84,660) (211) (84,871) 51 Street Light / Signal Systems ,147 40, , Total Texas Distribution Plant (1,590,810) (266,917) (1,857,728) (8,907) (12,528) 53 RR16 - Page 210 of

155 Page 68 of 270 Post Test Year Adjustments - Accumulated Depreciation Remove Remove Texas Rules December Adjustment Install Higg East Sub Install Higg East Feeders Accumulated Accumulated Accumulated Reserve for Reserve for Reserve for No. Description Account DAR RWIP Depreciation Depreciation Depreciation 54 New Mexico Distribution Plant: 55 Land and Land Rights 360 (89,025) 0 (89,025) 56 Structures & Improvements 361 (21,169) 0 (21,169) 57 Station Equipment 362 (1,488,508) (227,619) (1,716,127) 58 Towers and Fixtures 364 (98,581) (116,656) (215,237) 59 Overhead Conductor ,903 (302,192) (176,289) 60 Underground Conduit ,235 (194) 328, Underground Conductor ,636 (6,150) 124, Transformers 368 (4,431,864) 227 (4,431,636) 63 Services 369 2,751,016 (41,627) 2,709, Meters , , Inst. on Customer Premises 371 (29,520) 146 (29,374) 66 Street Light / Signal Systems 373 2,132,882 (30,961) 2,101, Total New Mexico Distribution Plant (398,034) (725,027) (1,123,061) Distribution Plant: 70 Land and Land Rights 360 (101,994) 0 (101,994) Structures & Improvements 361 (28,889) (1,148) (30,038) Station Equipment 362 (1,649,295) (621,567) (2,270,862) (8,907) 0 73 Towers and Fixtures 364 (904,850) 297,304 (607,546) 0 (12,528) 74 Overhead Conductor 365 (674,700) (15,599) (690,299) Underground Conduit ,126 (1,967) 308, Underground Conductor ,788 86, ,61 77 Transformers 368 (4,356,981) (506,825) (4,863,806) Services 369 2,622,839 (238,617) 2,384, Meters , , Inst. on Customer Premises 371 (114,180) (65) (114,245) Street Light / Signal Systems 373 2,372,030 9,546 2,381, Total Distribution Plant (1,988,845) (991,944) (2,980,789) (8,907) (12,528) 83 RR16 - Page 211 of

156 Page 69 of 270 Post Test Year Adjustments - Accumulated Depreciation Remove Remove Texas Rules December Adjustment Install Higg East Sub Install Higg East Feeders Accumulated Accumulated Accumulated Reserve for Reserve for Reserve for No. Description Account DAR RWIP Depreciation Depreciation Depreciation 84 General Plant: 85 Land and Land Rights 389 (359) 0 (359) 86 Structures & Improvements ,689 (261,449) 48, Office Furniture & Equipment 391 (2,672,166) (213) (2,672,379) 88 Transportation Equipment 392 (1,974,778) 0 (1,974,778) 89 Stores Equipment 393 (14,006) 0 (14,006) 90 Tools, Shop & Garage Equip. 394 (370,009) 625 (369,384) 91 Laboratory Equipment 395 (112,547) 0 (112,547) 92 Power Operated Equipment 396 (148,740) 0 (148,740) 93 Communication Equipment 397 (1,003,678) (13,507) (1,017,185) 94 Miscellaneous Equipment 398 (86,943) 0 (86,943) 95 Total General Plant (6,073,537) (274,544) (6,348,082) Total Electric Plant in Service (50,204,540) (8,266,610) (58,471,150) (8,907) (12,528) RR16 - Page 212 of

157 Page 70 of 270 Post Test Year Adjustments - Accumulated Depreciation No. Description Account 1 Intangible: 2 Organization Franchises and Consents Misc. Intangible Plant Total Intangible 6 7 Steam Production: 8 Land and Land Rights Structures & Improvements Boiler Plant Equipment Turbo-Generator Units Accessory Electric Equipment Misc. Power Plant Equipment Total Steam Production Internal Combustion Equipment: 17 Land and Land Rights Structures & Improvements Fuel Holders, Prod & Acc Internal Combustion Engine Generators Accessory Electric Equipment Misc. Power Plant Equipment Total Internal Combustion Equipment 25 Add Add Pur Oliver Rose Water Rights Develop Barrett H2O Rights Total Accumulated Accumulated Accumulated Reserve for Reserve for Reserve for Depreciation Depreciation Depreciation 0 0 (4,812,739) 0 0 (4,812,739) (28,584) (394) (118,420) (2,007,091) (13,595,813) (6,711,998) (711,449) (1,748,377) (28,584) (394) (24,893,147) 1 (107,564) (96,390) (4,671,182) (1,534,969) (327,625) (41,196) 0 0 (6,778,924) RR16 - Page 213 of

158 Page 71 of 270 Post Test Year Adjustments - Accumulated Depreciation No. Description Account 26 Transmission Plant: 27 Land Owned in Fee Land Rights Structures & Improvements Station Equipment Station Equipment - Production Towers and Fixtures Poles and Fixtures Overhead Conductor Underground Conduit Underground Conductor Total Transmission Plant Texas Distribution Plant: 40 Land and Land Rights Structures & Improvements Station Equipment Towers and Fixtures Overhead Conductor Underground Conduit Underground Conductor Transformers Services Meters Inst. on Customer Premises Street Light / Signal Systems Total Texas Distribution Plant 53 Add Add Pur Oliver Rose Water Rights Develop Barrett H2O Rights Total Accumulated Accumulated Accumulated Reserve for Reserve for Reserve for Depreciation Depreciation Depreciation 0 (518,939) (387,199) 2,921,352 (160,325) (63,710) (12,851,689) (1,623,826) (1,970) (142) 0 0 (12,686,448) (12,970) (8,869) (563,642) (404,837) (514,010) (19,882) 65,125 (432,170) (325,166) 142,475 (84,871) 279, (1,879,162) RR16 - Page 214 of

159 Page 72 of 270 Post Test Year Adjustments - Accumulated Depreciation No. Description Account 54 New Mexico Distribution Plant: 55 Land and Land Rights Structures & Improvements Station Equipment Towers and Fixtures Overhead Conductor Underground Conduit Underground Conductor Transformers Services Meters Inst. on Customer Premises Street Light / Signal Systems Total New Mexico Distribution Plant Distribution Plant: 70 Land and Land Rights Structures & Improvements Station Equipment Towers and Fixtures Overhead Conductor Underground Conduit Underground Conductor Transformers Services Meters Inst. on Customer Premises Street Light / Signal Systems Total Distribution Plant 83 Add Add Pur Oliver Rose Water Rights Develop Barrett H2O Rights Total Accumulated Accumulated Accumulated Reserve for Reserve for Reserve for Depreciation Depreciation Depreciation (89,025) (21,169) (1,716,127) (215,237) (176,289) 328, ,485 (4,431,636) 2,709, ,959 (29,374) 2,101, (1,123,061) (101,994) (30,038) (2,279,769) (620,074) (690,299) 308, ,610 (4,863,806) 2,384, ,434 (114,245) 2,381, (3,002,223) RR16 - Page 215 of

160 Page 73 of 270 Post Test Year Adjustments - Accumulated Depreciation No. Description Account 84 General Plant: 85 Land and Land Rights Structures & Improvements Office Furniture & Equipment Transportation Equipment Stores Equipment Tools, Shop & Garage Equip Laboratory Equipment Power Operated Equipment Communication Equipment Miscellaneous Equipment Total General Plant Total Electric Plant in Service Add Add Pur Oliver Rose Water Rights Develop Barrett H2O Rights Total Accumulated Accumulated Accumulated Reserve for Reserve for Reserve for Depreciation Depreciation Depreciation (359) 48,240 (2,672,379) (1,974,778) (14,006) (369,384) (112,547) (148,740) (1,017,185) (86,943) 0 0 (6,348,082) (28,584) (394) (58,521,562) RR16 - Page 216 of

161 Call Center and CRS Post Test Year Adjustment Attachment DAB-RR-2 Page 74 of 270 June 2014 December 2014 No. Description Balance Balance Adjustment 1 Accumulated Depreciation - Texas Rules 2 Call Center (4,642,191) (4,737,362) (95,170) 3 CRS (15,967,295) (16,013,204) (45,909) 4 5 ADIT - Texas Rules 6 Call Center (1,005,894) (992,950) 12,944 7 CRS (220,490) (93,900) 126, Schedule M - Texas Rules 10 Call Center 75,746 71,861 (3,885) 11 CRS 1,020, ,591 (291,570) RR16 - Page 217 of

162 Environmental Chemical Inventory Attachment DAB-RR-2 Page 75 of 270 No. Description Account Amount 1 Adjusted Chemical Inventory , Test Year Chemical Inventory 154 6, Adjustment to Chemical Inventory 70,150 RR16 - Page 218 of

163 Page 76 of 270 Plant Related Accumulated Deferred Income Taxes Financial Rules to Texas Rules Adjustment Financial Rules No. Description Account Intangible: 2 Organization Franchises and Consents Misc. Intangible Plant ,539 0 (414,750) (4,822,802) 5 Total Intangible 68,539 0 (414,750) (4,822,802) 6 7 Steam Production: 8 Land and Land Rights , , Structures & Improvements ,857 (1,262,777) (22,814,277) 0 10 Boiler Plant Equipment 312 2,357,002 0 (95,707,829) 0 11 Turbo-Generator Units 314 1,159,270 0 (45,144,225) 0 12 Accessory Electric Equipment ,080 0 (7,560,096) 0 13 Misc. Power Plant Equipment ,950 0 (3,085,602) 0 14 Total Steam Production 4,572,970 (1,262,777) (174,282,673) Internal Combustion Equipment: 17 Land and Land Rights (55) 0 18 Structures & Improvements ,153 0 (2,553,041) 0 19 Fuel Holders, Prod & Acc ,517 0 (922,790) 0 20 Internal Combustion Engine 343 1,015,001 0 (12,443,379) 0 21 Generators 344 1,372,016 0 (35,535,994) 0 22 Accessory Electric Equipment ,414 0 (7,079,945) 0 23 Misc. Power Plant Equipment ,180 0 (1,407,474) 0 24 Total Internal Combustion Equipment 2,967,282 0 (59,942,679) Transmission Plant: 27 Land Owned in Fee 350 1,653 0 (763) 0 28 Land Rights ,845 0 (5,664,844) 0 29 Structures & Improvements ,652 0 (8,991,064) 0 30 Station Equipment ,172,449 0 (116,988,238) 0 31 Station Equipment - Production ,824 0 (4,878,529) 0 32 Towers and Fixtures ,895 0 (1,530,865) 0 33 Poles and Fixtures 355 8,402,983 0 (121,986,175) 0 34 Overhead Conductor 356 3,493,973 0 (50,722,029) 0 35 Underground Conduit 357 3,772 0 (54,753) 0 36 Underground Conductor 358 1,466,889 0 (508,726) 0 37 Total Transmission Plant 25,861,934 0 (311,325,984) 0 38 RR16 - Page 219 of

164 Page 77 of 270 Plant Related Accumulated Deferred Income Taxes Financial Rules to Texas Rules Adjustment Financial Rules No. Description Account Distribution Plant: 40 Land and Land Rights 360 3,939 0 (368,920) 0 41 Structures & Improvements ,056 0 (3,190,462) 0 42 Station Equipment 362 3,989,128 0 (35,031,330) 0 43 Towers and Fixtures 364 7,895,435 0 (48,425,306) 0 44 Overhead Conductor 365 8,343,577 0 (35,876,967) 0 45 Underground Conduit ,395 0 (2,778,556) 0 46 Underground Conductor 367 1,682,140 0 (11,955,956) 0 47 Transformers 368 4,274,201 0 (28,821,496) 0 48 Services 369 1,660,229 0 (8,056,742) 0 49 Meters 370 1,319,591 0 (8,014,228) 0 50 Inst. on Customer Premises ,680 0 (1,294,941) 0 51 Street Light / Signal Systems ,300 0 (5,904,208) 0 52 Total Distribution Plant 30,632,671 0 (189,719,113) General Plant: 55 Land and Land Rights 389 (45) 0 (6,156) 0 56 Structures & Improvements ,950 0 (3,737,184) 0 57 Office Furniture & Equipment ,761 0 (5,128,959) (9,267) 58 Transportation Equipment 392 2,919 0 (13,725,654) 0 59 Stores Equipment 393 1,326 0 (92,466) (1) 60 Tools, Shop & Garage Equip ,246 0 (4,694,703) (38) 61 Laboratory Equipment ,208 0 (2,315,902) (19) 62 Power Operated Equipment (2,016,525) 0 63 Communication Equipment ,096 0 (11,862,226) (95) 64 Miscellaneous Equipment 398 8,792 0 (613,109) (5) 65 Total General Plant 750,681 0 (44,192,883) (9,425) Total 64,854,077 (1,262,777) (779,878,081) (4,832,227) RR16 - Page 220 of

165 Page 78 of 270 Plant Related Accumulated Deferred Income Taxes Financial Rules to Texas Rules Adjustment No. Description Account 1 Intangible: 2 Organization Franchises and Consents Misc. Intangible Plant Total Intangible Texas Rules Adjustment ,539 0 (414,750) (4,822,802) 0 0 (0) 0 68,539 0 (414,750) (4,822,802) 0 0 (0) 0 57, ,498 11, ,857 (1,262,777) (28,394,719) (5,580,442) 0 2,357,002 0 (123,252,373) (27,544,543) 0 1,159,270 0 (58,302,698) (13,158,473) 0 211,080 0 (9,651,462) (2,091,367) 0 83,950 0 (4,094,254) (1,008,651) 0 4,572,970 (1,262,777) (223,655,008) (49,372,334) (4) ,153 0 (2,711,164) (158,123) 0 59,517 0 (1,025,790) (103,000) 0 1,015,001 0 (12,913,897) (470,517) 0 1,372,016 0 (36,349,703) (813,709) 0 330,414 0 (7,310,234) (230,289) 0 77,180 0 (1,510,125) (102,651) 0 2,967,282 0 (61,820,916) (1,878,236) 0 1,653 0 (753) ,845 0 (6,106,158) (441,314) 0 858,652 0 (8,782,710) 208, ,172,449 0 (114,277,214) 2,711, ,824 0 (5,950,578) (1,072,048) 0 121,895 0 (1,471,233) 59, ,402,983 0 (117,875,359) 4,110, ,493,973 0 (49,012,746) 1,709, ,772 0 (52,908) 1, ,466,889 0 (505,183) 3, ,861,934 0 (304,034,840) 7,291, Steam Production: 8 Land and Land Rights Structures & Improvements Boiler Plant Equipment Turbo-Generator Units Accessory Electric Equipment Misc. Power Plant Equipment Total Steam Production Internal Combustion Equipment: 17 Land and Land Rights Structures & Improvements Fuel Holders, Prod & Acc Internal Combustion Engine Generators Accessory Electric Equipment Misc. Power Plant Equipment Total Internal Combustion Equipment Transmission Plant: 27 Land Owned in Fee Land Rights Structures & Improvements Station Equipment Station Equipment - Production Towers and Fixtures Poles and Fixtures Overhead Conductor Underground Conduit Underground Conductor Total Transmission Plant 38 RR16 - Page 221 of

166 Page 79 of 270 Plant Related Accumulated Deferred Income Taxes Financial Rules to Texas Rules Adjustment Texas Rules Adjustment ,939 0 (368,920) ,056 0 (3,190,462) 0 0 3,989,128 0 (35,031,330) 0 0 7,895,435 0 (48,425,306) 0 0 8,343,577 0 (35,876,967) ,395 0 (2,778,556) 0 0 1,682,140 0 (11,955,956) 0 0 4,274,201 0 (28,821,496) 0 0 1,660,229 0 (8,056,742) 0 0 1,319,591 0 (8,014,228) ,680 0 (1,294,941) ,300 0 (5,904,208) ,632,671 0 (189,719,113) 0 0 (45) 0 (6,424) (268) 0 415,950 0 (5,792,799) (2,055,615) 0 31,761 0 (5,390,836) (9,267) 0 0 (261,877) 0 2,919 0 (14,110,161) (384,507) 0 1,326 0 (90,664) (1) 0 0 1, ,246 0 (4,601,076) (38) , ,208 0 (2,270,782) (19) , (2,072,974) (56,449) 0 170,096 0 (11,631,118) (95) , ,792 0 (601,164) (5) , ,681 0 (46,567,998) (9,425) 0 0 (2,375,115) 0 64,854,077 (1,262,777) (826,212,624) (4,832,227) 0 0 (46,334,542) 0 No. Description Account 39 Distribution Plant: 40 Land and Land Rights Structures & Improvements Station Equipment Towers and Fixtures Overhead Conductor Underground Conduit Underground Conductor Transformers Services Meters Inst. on Customer Premises Street Light / Signal Systems Total Distribution Plant General Plant: 55 Land and Land Rights Structures & Improvements Office Furniture & Equipment Transportation Equipment Stores Equipment Tools, Shop & Garage Equip Laboratory Equipment Power Operated Equipment Communication Equipment Miscellaneous Equipment Total General Plant Total RR16 - Page 222 of

167 Accumulated Depreciation - Financial Rules to Texas Rules Adjustment Attachment DAB-RR-2 Page 80 of 270 No. Description Financial Rules Texas Rules Adjustment 1 Call Center Accumulated Depreciation (710,440) (1,005,894) (295,454) 2 3 CRS Accumulated Depreciation (220,490) (220,490) Total (930,931) (1,226,384) (295,454) RR16 - Page 223 of

168 Page 81 of 270 XES Labor Annualization XES XES XES XES XES Total Bus Area Adj BL BL BL Apr-Jun Apr-Jun No. Description Account April-13 May-13 June-13 Base Labor Base Labor 1 Operating & Maintenance Expenses: 2 3 Steam Production Operation: 4 Supervision & Engineering ,569 25,215 21,235 69, Fuel (Transportation & Handling) 0501F 37,029 35,379 34, , Steam Expense 502 3,470 3,292 3,398 10, Electric Expense Miscellaneous , , , , Rent Supplies and Expenses Allowances Total Steam Production Operation 302, , , , Steam Production Maintenance: 15 Supervision & Engineering ,360 23,758 15,059 60, Structures ,286 1, Boilers 512 7,934 19, , Electric Plant ,358 4,023 7,277 40, Miscellaneous Plant , , , , Steam Production (Nonmajor) Total Steam Production Maintenance 195, , , , Total Steam Production O&M 497, , ,870 1,684, Combustion Turbine Production Operation: 26 Supervision & Engineering Fuel Handling Generation Expense ,057 1,527 2, Miscellaneous ,542 10,999 12,581 41, Rents Total Combustion Turbine Production Operation 17,709 12,239 14,267 44, Combustion Turbine Production Maintenance: 34 Supervision & Engineering Structures Electric Plant 553 3,708 6,982 10,079 20, Miscellaneous Plant Total Combustion Turbine Production Maintenance 3,729 6,998 10,096 20, Total Combustion Turbine Production O&M 21,439 19,237 24,362 65, RR16 - Page 224 of

169 Page 82 of 270 XES Labor Annualization XES XES XES XES XES Total Bus Area Adj BL BL BL Apr-Jun Apr-Jun No. Description Account April-13 May-13 June-13 Base Labor Base Labor 42 System Control and Dispatch: 43 System Load Control ,464 36,583 66, , Other Expenditures , , , ,313 (321) 45 Other Expenditures - New Mexico 557NM 46 Other Expenditures - Texas 557TX 47 Total System Control and Dispatch 181, , , ,929 (109) Total Non-Fuel Production O&M 700, , ,380 2,301,542 (98) Transmission Operations: 52 Supervision & Engineering , , , ,125 (82) 53 Load Dispatch Load Dispatch - Reliability ,649 4, Load Dispatch - Monitor/Operate ,547 30,181 32,261 91, Load Dispatch - Transmission Serv/Sch Load Dispatch - Sch/Con/Disp Serv Rel/Plan/Standards Dev Serv ,994 1,660 1,743 5, Trans Service Studies Generation Interconnection Studies Rel/Plan/Standards Dev Serv Station Equipment 562 3,346 2,716 3,653 9, Overhead s 563 5, ,002 7, Underground s Miscellaneous , ,708 89, , Rents Total Transmission Operations 242, , , ,108 (82) Transmission Maintenance: 70 Supervision & Engineering Structures Station Equipment Overhead s , Underground s Miscellaneous Total Transmission Maintenance , RR16 - Page 225 of

170 Page 83 of 270 XES Labor Annualization XES XES XES XES XES Total Bus Area Adj BL BL BL Apr-Jun Apr-Jun No. Description Account April-13 May-13 June-13 Base Labor Base Labor 78 Wheeling: 79 Wheeling - Lamar HVDC Tie 0565P Wheeling - PNM Reliability Purchase 0565P Wheeling - Ancillary Services - Schedules 1, 2, & Facilities Charg 0565R Wheeling - Ancillary Services - Schedules 3, 5 & R Wheeling - Schedules 7 & 8 - Point to Point 0565R Wheeling - Schedule 9 Network Integration 0565T Wheeling - Schedule T Wheeling - Schedule 12 - FERC Assessment 0565R Wheeling - Other 0565T Total Wheeling Total Transmission O&M 243, , , ,853 (82) Regional Market Expenses: 95 Operation Supervision ,726 8,611 8,302 28, DA & RT Mkt Admin ,312 2, , Trans Rights Mkt Admin Cap Mkt Admin Ancillary Serv Mkt Admin , Market Monitoring/Compliance ,697 4,180 2,389 11, Mkt Fac/Mon/Comp Serv Regional Market Rents Total Regional Market Expenses 21,096 16,318 11,207 48, Distribution Operations: 106 Supervision - H/S Supervision - Texas Supervision - New Mexico Supervision ,925 57,600 56, ,386 (88) 110 Total Supervision ,925 57,600 56, ,386 (88) 111 Load Dispatch - H/S Load Dispatch - Texas Load Dispatch - New Mexico Load Dispatch ,697 10,927 9,996 31, Total Load Dispatch ,697 10,927 9,996 31, Station Equipment - H/S Station Equipment - Texas Station Equipment - New Mexico Station Equipment RR16 - Page 226 of

171 Page 84 of 270 XES Labor Annualization XES XES XES XES XES Total Bus Area Adj BL BL BL Apr-Jun Apr-Jun No. Description Account April-13 May-13 June-13 Base Labor Base Labor 120 Total Station Equipment Overhead s - H/S Overhead s - Texas Overhead s - New Mexico Overhead s 583 4,076 4,035 2,864 10, Total Overhead s 583 4,076 4,035 2,864 10, Underground s - H/S Underground s - Texas Underground s - New Mexico Underground s Total Underground s Street Lighting - H/S Street Lighting - Texas Street Lighting - New Mexico Street Lighting Total Street Lighting Metering - H/S Metering - Texas Metering - New Mexico Metering ,096 23,032 23,319 63, Total Metering ,096 23,032 23,319 63, Customer Installations - H/S Customer Installations - Texas Customer Installations - New Mexico Customer Installations Total Customer Installations Miscellaneous - H/S Miscellaneous - Texas Miscellaneous - New Mexico Miscellaneous 588 3,376 3,908 4,354 11, Total Miscellaneous 588 3,376 3,908 4,354 11, Rents Rents - H/S Rents - Texas Rents - New Mexico Total Rents Total Distribution Operations 94,170 99,502 97, ,067 (88) 158 RR16 - Page 227 of

172 Page 85 of 270 XES Labor Annualization XES XES XES XES XES Total Bus Area Adj BL BL BL Apr-Jun Apr-Jun No. Description Account April-13 May-13 June-13 Base Labor Base Labor 159 Distribution Maintenance: 160 Supervision So - H/S Supervision - TX Supervision - NM Supervision 590 2,753 2,100 2,449 7, Total Supervision 590 2,753 2,100 2,449 7, Structures So - H/S Structures - TX Structures - NM Structures Total Structures Station Equipment So - H/S Station Equipment - TX Station Equipment - NM Station Equipment Total Station Equipment Overhead s So - H/S Overhead s - TX Overhead s - NM Overhead s 593 2,271 2,198 2,253 6, Total Overhead s 593 2,271 2,198 2,253 6, Underground s So - H/S Underground s - TX Underground s - NM Underground s Total Underground s Transformers So - H/S Transformers - TX Transformers - NM Transformers Total Transformers Street Lighting So - H/S Street Lighting - TX Street Lighting - NM Street Lighting Total Street Lighting Metering So - H/S Metering - TX Metering - NM Metering Total Metering Miscellaneous So - H/S RR16 - Page 228 of

173 Page 86 of 270 XES Labor Annualization XES XES XES XES XES Total Bus Area Adj BL BL BL Apr-Jun Apr-Jun No. Description Account April-13 May-13 June-13 Base Labor Base Labor 201 Miscellaneous - TX Miscellaneous - NM Miscellaneous Total Miscellaneous Total Distribution Maintenance 5,025 4,298 4,702 14, Total Distribution O&M 99, , , ,091 (88) Customer Accounting Expense: 211 Supervision 901 2,137 2,214 2,012 6, Meter Reading 902 2,281 3,445 1,813 7, Billing & Cashiering , , , , Uncollectible Accounts Uncollectible Accounts Total Uncollectible Accounts Customer Deposit Interest - Texas 218 Miscellaneous Total Miscellaneous Total Customer Accounting Expense 227, , , , Customer Service Expense: 225 Supervision Customer Assistance - Historic EE Amortization - Texas 0908HDSMTX 227 Customer Assistance - EE Tracker Amortization - Texas 0908DSMTX 228 Customer Assistance - EE - New Mexico 0908DSMNM 229 Customer Assistance - ICO Credits 0908ICO 230 Customer Assistance - Saver Switch & EE Labor 0908SVR 1, ,120 4, Customer Assistance - Other ,010 17,558 23,001 59,569 (5,404) 232 Customer Assistance - Total ,210 18,493 25,121 63,824 (5,404) 233 Advertisement Miscellaneous Total Customer Service Expense 20,210 18,493 25,121 63,824 (5,404) 237 RR16 - Page 229 of

174 Page 87 of 270 XES Labor Annualization XES XES XES XES XES Total Bus Area Adj BL BL BL Apr-Jun Apr-Jun No. Description Account April-13 May-13 June-13 Base Labor Base Labor 238 Sales Expense: 239 Sales Expense - Supv Demonstrations & Selling Advertising Expense - Sales Miscellaneous Sales Expense Total Sales Expense Total Customer Service & Sales Expense 20,210 18,493 25,121 63,824 (5,404) Total Customer Operations Expense 248, , , ,735 (5,404) Administrative & General Expense: 251 Administrative Salaries 920 1,247,146 1,256,580 1,225,684 3,729,410 (50,755) 252 Office Supplies & Expense A&G Expense Transferred Outside Services - Legal Property Insurance Injuries and Damages Pensions & Benefits Deferred Pensions & Benefits Regulatory Commission Expense - Texas Regulatory Commission Expense - New Mexico Regulatory Commission Expense - Wholesale Regulatory Commission Expense - NERC Fees Regulatory Commission Expense - Misc Total Regulatory Commission Expense Duplicate Charges - Electric Miscellaneous 930M Rents - Retail Allocated Rents - Other 931O Rents Maintenance of Structures Maintenance of General Plant Contributions &, Dues 273 Total Administrative & General Expense 1,247,146 1,256,580 1,225,684 3,729,410 (50,755) Total O&M Expense 2,559,056 2,714,723 2,627,471 7,901,250 (56,428) RR16 - Page 230 of

175 Page 88 of 270 XES Labor Annualization No. Description Account 1 Operating & Maintenance Expenses: 2 3 Steam Production Operation: 4 Supervision & Engineering Fuel (Transportation & Handling) 0501F 6 Steam Expense Electric Expense Miscellaneous Rent Supplies and Expenses Allowances Total Steam Production Operation Steam Production Maintenance: 15 Supervision & Engineering Structures Boilers Electric Plant Miscellaneous Plant Steam Production (Nonmajor) Total Steam Production Maintenance Total Steam Production O&M Combustion Turbine Production Operation: 26 Supervision & Engineering Fuel Handling Generation Expense Miscellaneous Rents Total Combustion Turbine Production Operation Combustion Turbine Production Maintenance: 34 Supervision & Engineering Structures Electric Plant Miscellaneous Plant Total Combustion Turbine Production Maintenance Total Combustion Turbine Production O&M 41 XES XES XES XES XES Foundation EE to EECRF Whls Acct Mgr Adjusted Average Monthly Apr-Jun Apr-Jun Apr-Jun Apr-Jun Labor Expense Base Labor Base Labor Base Labor Base Labor Base Labor ,019 23, ,040 35, ,160 3, , , , , ,177 20, , ,942 9, ,657 13, , , , ,161 1,684, , , ,122 13, ,215 14, ,769 6, ,823 6,941 65,038 21,679 RR16 - Page 231 of

176 Page 89 of 270 XES Labor Annualization No. Description Account 42 System Control and Dispatch: 43 System Load Control Other Expenditures Other Expenditures - New Mexico 557NM 46 Other Expenditures - Texas 557TX 47 Total System Control and Dispatch Total Non-Fuel Production O&M Transmission Operations: 52 Supervision & Engineering Load Dispatch Load Dispatch - Reliability Load Dispatch - Monitor/Operate Load Dispatch - Transmission Serv/Sch Load Dispatch - Sch/Con/Disp Serv Rel/Plan/Standards Dev Serv Trans Service Studies Generation Interconnection Studies Rel/Plan/Standards Dev Serv Station Equipment Overhead s Underground s Miscellaneous Rents Total Transmission Operations Transmission Maintenance: 70 Supervision & Engineering Structures Station Equipment Overhead s Underground s Miscellaneous Total Transmission Maintenance 77 XES XES XES XES XES Foundation EE to EECRF Whls Acct Mgr Adjusted Average Monthly Apr-Jun Apr-Jun Apr-Jun Apr-Jun Labor Expense Base Labor Base Labor Base Labor Base Labor Base Labor ,828 46, , , , ,940 2,301, , , , ,649 1, ,989 30, ,397 1, ,715 3, ,162 2, , , , , , , RR16 - Page 232 of

177 Page 90 of 270 XES Labor Annualization No. Description Account 78 Wheeling: 79 Wheeling - Lamar HVDC Tie 0565P 80 Wheeling - PNM Reliability Purchase 0565P 81 Wheeling - Ancillary Services - Schedules 1, 2, & Facilities Charg 0565R 82 Wheeling - Ancillary Services - Schedules 3, 5 & R 83 Wheeling - Schedules 7 & 8 - Point to Point 0565R 84 Wheeling - Schedule 9 Network Integration 0565T 85 Wheeling - Schedule T 86 Wheeling - Schedule 12 - FERC Assessment 0565R 87 Wheeling - Other 0565T Total Wheeling Total Transmission O&M Regional Market Expenses: 95 Operation Supervision DA & RT Mkt Admin Trans Rights Mkt Admin Cap Mkt Admin Ancillary Serv Mkt Admin Market Monitoring/Compliance Mkt Fac/Mon/Comp Serv Regional Market Rents Total Regional Market Expenses Distribution Operations: 106 Supervision - H/S Supervision - Texas Supervision - New Mexico Supervision Total Supervision Load Dispatch - H/S Load Dispatch - Texas Load Dispatch - New Mexico Load Dispatch Total Load Dispatch Station Equipment - H/S Station Equipment - Texas Station Equipment - New Mexico Station Equipment 582 XES XES XES XES XES Foundation EE to EECRF Whls Acct Mgr Adjusted Average Monthly Apr-Jun Apr-Jun Apr-Jun Apr-Jun Labor Expense Base Labor Base Labor Base Labor Base Labor Base Labor , , ,639 9, ,447 2, , ,266 3, ,620 16, ,298 57, ,298 57, ,620 10,540 31,620 10, RR16 - Page 233 of

178 Page 91 of 270 XES Labor Annualization No. Description Account 120 Total Station Equipment Overhead s - H/S Overhead s - Texas Overhead s - New Mexico Overhead s Total Overhead s Underground s - H/S Underground s - Texas Underground s - New Mexico Underground s Total Underground s Street Lighting - H/S Street Lighting - Texas Street Lighting - New Mexico Street Lighting Total Street Lighting Metering - H/S Metering - Texas Metering - New Mexico Metering Total Metering Customer Installations - H/S Customer Installations - Texas Customer Installations - New Mexico Customer Installations Total Customer Installations Miscellaneous - H/S Miscellaneous - Texas Miscellaneous - New Mexico Miscellaneous Total Miscellaneous Rents Rents - H/S Rents - Texas Rents - New Mexico Total Rents Total Distribution Operations 158 XES XES XES XES XES Foundation EE to EECRF Whls Acct Mgr Adjusted Average Monthly Apr-Jun Apr-Jun Apr-Jun Apr-Jun Labor Expense Base Labor Base Labor Base Labor Base Labor Base Labor ,975 3,658 10,975 3, ,447 21,149 63,447 21, ,638 3,879 11,638 3, ,979 96,993 RR16 - Page 234 of

179 Page 92 of 270 XES Labor Annualization No. Description Account 159 Distribution Maintenance: 160 Supervision So - H/S Supervision - TX Supervision - NM Supervision Total Supervision Structures So - H/S Structures - TX Structures - NM Structures Total Structures Station Equipment So - H/S Station Equipment - TX Station Equipment - NM Station Equipment Total Station Equipment Overhead s So - H/S Overhead s - TX Overhead s - NM Overhead s Total Overhead s Underground s So - H/S Underground s - TX Underground s - NM Underground s Total Underground s Transformers So - H/S Transformers - TX Transformers - NM Transformers Total Transformers Street Lighting So - H/S Street Lighting - TX Street Lighting - NM Street Lighting Total Street Lighting Metering So - H/S Metering - TX Metering - NM Metering Total Metering Miscellaneous So - H/S XES XES XES XES XES Foundation EE to EECRF Whls Acct Mgr Adjusted Average Monthly Apr-Jun Apr-Jun Apr-Jun Apr-Jun Labor Expense Base Labor Base Labor Base Labor Base Labor Base Labor ,302 2,434 7,302 2, ,722 2,241 6,722 2, RR16 - Page 235 of

180 Page 93 of 270 XES Labor Annualization No. Description Account 201 Miscellaneous - TX Miscellaneous - NM Miscellaneous Total Miscellaneous Total Distribution Maintenance Total Distribution O&M Customer Accounting Expense: 211 Supervision Meter Reading Billing & Cashiering Uncollectible Accounts Uncollectible Accounts Total Uncollectible Accounts Customer Deposit Interest - Texas 218 Miscellaneous Total Miscellaneous Total Customer Accounting Expense Customer Service Expense: 225 Supervision Customer Assistance - Historic EE Amortization - Texas 0908HDSMTX 227 Customer Assistance - EE Tracker Amortization - Texas 0908DSMTX 228 Customer Assistance - EE - New Mexico 0908DSMNM 229 Customer Assistance - ICO Credits 0908ICO 230 Customer Assistance - Saver Switch & EE Labor 0908SVR 231 Customer Assistance - Other Customer Assistance - Total Advertisement Miscellaneous Total Customer Service Expense 237 XES XES XES XES XES Foundation EE to EECRF Whls Acct Mgr Adjusted Average Monthly Apr-Jun Apr-Jun Apr-Jun Apr-Jun Labor Expense Base Labor Base Labor Base Labor Base Labor Base Labor ,024 4, , , ,362 2, ,539 2, , , , , ,255 1,418 54,165 18,055 58,420 19,473 58,420 19,473 RR16 - Page 236 of

181 Page 94 of 270 XES Labor Annualization No. Description Account 238 Sales Expense: 239 Sales Expense - Supv Demonstrations & Selling Advertising Expense - Sales Miscellaneous Sales Expense Total Sales Expense Total Customer Service & Sales Expense Total Customer Operations Expense Administrative & General Expense: 251 Administrative Salaries Office Supplies & Expense A&G Expense Transferred Outside Services - Legal Property Insurance Injuries and Damages Pensions & Benefits Deferred Pensions & Benefits Regulatory Commission Expense - Texas Regulatory Commission Expense - New Mexico Regulatory Commission Expense - Wholesale Regulatory Commission Expense - NERC Fees Regulatory Commission Expense - Misc Total Regulatory Commission Expense Duplicate Charges - Electric Miscellaneous 930M 267 Rents - Retail Allocated Rents - Other 931O 269 Rents Maintenance of Structures Maintenance of General Plant Contributions &, Dues 273 Total Administrative & General Expense Total O&M Expense XES XES XES XES XES Foundation EE to EECRF Whls Acct Mgr Adjusted Average Monthly Apr-Jun Apr-Jun Apr-Jun Apr-Jun Labor Expense Base Labor Base Labor Base Labor Base Labor Base Labor ,420 19, , ,777 (12,865) 0 3,665,790 1,221, (12,865) 0 0 3,665,790 1,221,930 (12,865) 0 0 7,831,957 2,610,652 RR16 - Page 237 of

182 Page 95 of 270 XES Labor Annualization No. Description Account 1 Operating & Maintenance Expenses: 2 3 Steam Production Operation: 4 Supervision & Engineering Fuel (Transportation & Handling) 0501F 6 Steam Expense Electric Expense Miscellaneous Rent Supplies and Expenses Allowances Total Steam Production Operation Steam Production Maintenance: 15 Supervision & Engineering Structures Boilers Electric Plant Miscellaneous Plant Steam Production (Nonmajor) Total Steam Production Maintenance Total Steam Production O&M Combustion Turbine Production Operation: 26 Supervision & Engineering Fuel Handling Generation Expense Miscellaneous Rents Total Combustion Turbine Production Operation Combustion Turbine Production Maintenance: 34 Supervision & Engineering Structures Electric Plant Miscellaneous Plant Total Combustion Turbine Production Maintenance Total Combustion Turbine Production O&M 41 XES XES XES XES Annualized 50 Bus Area Adj Foundation Labor Expense BL Test Yr Test Yr Base Labor Test Yr Base Labor Base Labor Base Labor 276, , , , ,638 67, ,111,535 2,873, ,856,408 3,645, , , ,130 (888) , ,782 (37,632) 0 162, ,332 37, ,359,695 1,927, ,881,932 2,481, ,738,340 6,127, ,034 3, ,338 2, , , , , , ,077 86, ,293 90, , , RR16 - Page 238 of

183 Page 96 of 270 XES Labor Annualization No. Description Account 42 System Control and Dispatch: 43 System Load Control Other Expenditures Other Expenditures - New Mexico 557NM 46 Other Expenditures - Texas 557TX 47 Total System Control and Dispatch Total Non-Fuel Production O&M Transmission Operations: 52 Supervision & Engineering Load Dispatch Load Dispatch - Reliability Load Dispatch - Monitor/Operate Load Dispatch - Transmission Serv/Sch Load Dispatch - Sch/Con/Disp Serv Rel/Plan/Standards Dev Serv Trans Service Studies Generation Interconnection Studies Rel/Plan/Standards Dev Serv Station Equipment Overhead s Underground s Miscellaneous Rents Total Transmission Operations Transmission Maintenance: 70 Supervision & Engineering Structures Station Equipment Overhead s Underground s Miscellaneous Total Transmission Maintenance 77 XES XES XES XES Annualized 50 Bus Area Adj Foundation Labor Expense BL Test Yr Test Yr Base Labor Test Yr Base Labor Base Labor Base Labor 563, , ,643,968 1,584,262 (2,652) 0 2,207,280 1,967,926 (2,236) 0 9,205,774 8,362,925 (2,220) 0 1,432,169 1,865, ,596 4, , , ,589 29, ,860 32, ,648 34, ,204, , ,112,104 3,026, ,977 6, ,977 6, RR16 - Page 239 of

184 Page 97 of 270 XES Labor Annualization No. Description Account 78 Wheeling: 79 Wheeling - Lamar HVDC Tie 0565P 80 Wheeling - PNM Reliability Purchase 0565P 81 Wheeling - Ancillary Services - Schedules 1, 2, & Facilities Charg 0565R 82 Wheeling - Ancillary Services - Schedules 3, 5 & R 83 Wheeling - Schedules 7 & 8 - Point to Point 0565R 84 Wheeling - Schedule 9 Network Integration 0565T 85 Wheeling - Schedule T 86 Wheeling - Schedule 12 - FERC Assessment 0565R 87 Wheeling - Other 0565T Total Wheeling Total Transmission O&M Regional Market Expenses: 95 Operation Supervision DA & RT Mkt Admin Trans Rights Mkt Admin Cap Mkt Admin Ancillary Serv Mkt Admin Market Monitoring/Compliance Mkt Fac/Mon/Comp Serv Regional Market Rents Total Regional Market Expenses Distribution Operations: 106 Supervision - H/S Supervision - Texas Supervision - New Mexico Supervision Total Supervision Load Dispatch - H/S Load Dispatch - Texas Load Dispatch - New Mexico Load Dispatch Total Load Dispatch Station Equipment - H/S Station Equipment - Texas Station Equipment - New Mexico Station Equipment 582 XES XES XES XES Annualized 50 Bus Area Adj Foundation Labor Expense BL Test Yr Test Yr Base Labor Test Yr Base Labor Base Labor Base Labor ,119,081 3,033, , , ,789 35, ,074 7, ,064 51, , , , ,182 (68) 0 693, ,182 (68) , , , , RR16 - Page 240 of

185 Page 98 of 270 XES Labor Annualization No. Description Account 120 Total Station Equipment Overhead s - H/S Overhead s - Texas Overhead s - New Mexico Overhead s Total Overhead s Underground s - H/S Underground s - Texas Underground s - New Mexico Underground s Total Underground s Street Lighting - H/S Street Lighting - Texas Street Lighting - New Mexico Street Lighting Total Street Lighting Metering - H/S Metering - Texas Metering - New Mexico Metering Total Metering Customer Installations - H/S Customer Installations - Texas Customer Installations - New Mexico Customer Installations Total Customer Installations Miscellaneous - H/S Miscellaneous - Texas Miscellaneous - New Mexico Miscellaneous Total Miscellaneous Rents Rents - H/S Rents - Texas Rents - New Mexico Total Rents Total Distribution Operations 158 XES XES XES XES Annualized 50 Bus Area Adj Foundation Labor Expense BL Test Yr Test Yr Base Labor Test Yr Base Labor Base Labor Base Labor ,899 38, ,899 38, , ,115 (258) 0 253, ,115 (258) ,554 37,322 1, ,554 37,322 1, ,163,915 1,079, RR16 - Page 241 of

186 Page 99 of 270 XES Labor Annualization No. Description Account 159 Distribution Maintenance: 160 Supervision So - H/S Supervision - TX Supervision - NM Supervision Total Supervision Structures So - H/S Structures - TX Structures - NM Structures Total Structures Station Equipment So - H/S Station Equipment - TX Station Equipment - NM Station Equipment Total Station Equipment Overhead s So - H/S Overhead s - TX Overhead s - NM Overhead s Total Overhead s Underground s So - H/S Underground s - TX Underground s - NM Underground s Total Underground s Transformers So - H/S Transformers - TX Transformers - NM Transformers Total Transformers Street Lighting So - H/S Street Lighting - TX Street Lighting - NM Street Lighting Total Street Lighting Metering So - H/S Metering - TX Metering - NM Metering Total Metering Miscellaneous So - H/S XES XES XES XES Annualized 50 Bus Area Adj Foundation Labor Expense BL Test Yr Test Yr Base Labor Test Yr Base Labor Base Labor Base Labor ,207 15, ,207 15, ,889 24, ,889 24, RR16 - Page 242 of

187 Page 100 of 270 XES Labor Annualization No. Description Account 201 Miscellaneous - TX Miscellaneous - NM Miscellaneous Total Miscellaneous Total Distribution Maintenance Total Distribution O&M Customer Accounting Expense: 211 Supervision Meter Reading Billing & Cashiering Uncollectible Accounts Uncollectible Accounts Total Uncollectible Accounts Customer Deposit Interest - Texas 218 Miscellaneous Total Miscellaneous Total Customer Accounting Expense Customer Service Expense: 225 Supervision Customer Assistance - Historic EE Amortization - Texas 0908HDSMTX 227 Customer Assistance - EE Tracker Amortization - Texas 0908DSMTX 228 Customer Assistance - EE - New Mexico 0908DSMNM 229 Customer Assistance - ICO Credits 0908ICO 230 Customer Assistance - Saver Switch & EE Labor 0908SVR 231 Customer Assistance - Other Customer Assistance - Total Advertisement Miscellaneous Total Customer Service Expense 237 XES XES XES XES Annualized 50 Bus Area Adj Foundation Labor Expense BL Test Yr Test Yr Base Labor Test Yr Base Labor Base Labor Base Labor ,095 40, ,220,011 1,119, ,449 24, ,157 29, ,636,038 2,584,784 (414) ,691,643 2,637,968 (401) ,019 21, , ,429 (48,654) 0 233, ,875 (48,654) , ,875 (48,654) 0 RR16 - Page 243 of

188 Page 101 of 270 XES Labor Annualization No. Description Account 238 Sales Expense: 239 Sales Expense - Supv Demonstrations & Selling Advertising Expense - Sales Miscellaneous Sales Expense Total Sales Expense Total Customer Service & Sales Expense Total Customer Operations Expense Administrative & General Expense: 251 Administrative Salaries Office Supplies & Expense A&G Expense Transferred Outside Services - Legal Property Insurance Injuries and Damages Pensions & Benefits Deferred Pensions & Benefits Regulatory Commission Expense - Texas Regulatory Commission Expense - New Mexico Regulatory Commission Expense - Wholesale Regulatory Commission Expense - NERC Fees Regulatory Commission Expense - Misc Total Regulatory Commission Expense Duplicate Charges - Electric Miscellaneous 930M 267 Rents - Retail Allocated Rents - Other 931O 269 Rents Maintenance of Structures Maintenance of General Plant Contributions &, Dues 273 Total Administrative & General Expense Total O&M Expense XES XES XES XES Annualized 50 Bus Area Adj Foundation Labor Expense BL Test Yr Test Yr Base Labor Test Yr Base Labor Base Labor Base Labor , , , ,823 (48,654) 0 2,925,322 3,089,790 (49,055) 0 14,663,159 14,276,410 (187,847) (40,898) ,663,159 14,276,410 (187,847) (40,898) 31,327,828 30,108,721 (238,229) (40,898) RR16 - Page 244 of

189 Page 102 of 270 XES Labor Annualization No. Description Account 1 Operating & Maintenance Expenses: 2 3 Steam Production Operation: 4 Supervision & Engineering Fuel (Transportation & Handling) 0501F 6 Steam Expense Electric Expense Miscellaneous Rent Supplies and Expenses Allowances Total Steam Production Operation Steam Production Maintenance: 15 Supervision & Engineering Structures Boilers Electric Plant Miscellaneous Plant Steam Production (Nonmajor) Total Steam Production Maintenance Total Steam Production O&M Combustion Turbine Production Operation: 26 Supervision & Engineering Fuel Handling Generation Expense Miscellaneous Rents Total Combustion Turbine Production Operation Combustion Turbine Production Maintenance: 34 Supervision & Engineering Structures Electric Plant Miscellaneous Plant Total Combustion Turbine Production Maintenance Total Combustion Turbine Production O&M 41 XES XES XES EE to EECRF Whls Acct Mgr Adjusted Test Yr Test Yr Test Yr Base Labor Base Labor Base Labor Adjustment ,057 (17,980) ,167 17, ,281 (26,642) ,873, , ,645, , ,543 21, (888) 8, ,150 (5,381) ,964 (56,335) 0 0 1,927, , ,481, , ,127, , ,400 (1,365) ,584 7, ,241 (6,752) ,225 (364) ,812 (3,812) ,749 (3,672) ,753 (7,460) ,978 (7,824) RR16 - Page 245 of

190 Page 103 of 270 XES Labor Annualization No. Description Account 42 System Control and Dispatch: 43 System Load Control Other Expenditures Other Expenditures - New Mexico 557NM 46 Other Expenditures - Texas 557TX 47 Total System Control and Dispatch Total Non-Fuel Production O&M Transmission Operations: 52 Supervision & Engineering Load Dispatch Load Dispatch - Reliability Load Dispatch - Monitor/Operate Load Dispatch - Transmission Serv/Sch Load Dispatch - Sch/Con/Disp Serv Rel/Plan/Standards Dev Serv Trans Service Studies Generation Interconnection Studies Rel/Plan/Standards Dev Serv Station Equipment Overhead s Underground s Miscellaneous Rents Total Transmission Operations Transmission Maintenance: 70 Supervision & Engineering Structures Station Equipment Overhead s Underground s Miscellaneous Total Transmission Maintenance 77 XES XES XES EE to EECRF Whls Acct Mgr Adjusted Test Yr Test Yr Test Yr Base Labor Base Labor Base Labor Adjustment , , ,581,610 62, ,965, , ,360, , ,865,786 (433,618) ,809 13, ,860 27, ,534 (7,945) ,995 5, ,259 (5,611) , , ,027,068 85, , , RR16 - Page 246 of

191 Page 104 of 270 XES Labor Annualization No. Description Account 78 Wheeling: 79 Wheeling - Lamar HVDC Tie 0565P 80 Wheeling - PNM Reliability Purchase 0565P 81 Wheeling - Ancillary Services - Schedules 1, 2, & Facilities Charg 0565R 82 Wheeling - Ancillary Services - Schedules 3, 5 & R 83 Wheeling - Schedules 7 & 8 - Point to Point 0565R 84 Wheeling - Schedule 9 Network Integration 0565T 85 Wheeling - Schedule T 86 Wheeling - Schedule 12 - FERC Assessment 0565R 87 Wheeling - Other 0565T Total Wheeling Total Transmission O&M Regional Market Expenses: 95 Operation Supervision DA & RT Mkt Admin Trans Rights Mkt Admin Cap Mkt Admin Ancillary Serv Mkt Admin Market Monitoring/Compliance Mkt Fac/Mon/Comp Serv Regional Market Rents Total Regional Market Expenses Distribution Operations: 106 Supervision - H/S Supervision - Texas Supervision - New Mexico Supervision Total Supervision Load Dispatch - H/S Load Dispatch - Texas Load Dispatch - New Mexico Load Dispatch Total Load Dispatch Station Equipment - H/S Station Equipment - Texas Station Equipment - New Mexico Station Equipment 582 XES XES XES EE to EECRF Whls Acct Mgr Adjusted Test Yr Test Yr Test Yr Base Labor Base Labor Base Labor Adjustment ,033,448 85, ,062 (17,507) ,372 (5,583) ,384 (2,310) ,839 (6,775) ,658 (32,176) ,114 40, ,114 40, ,962 7, ,962 7, RR16 - Page 247 of

192 Page 105 of 270 XES Labor Annualization No. Description Account 120 Total Station Equipment Overhead s - H/S Overhead s - Texas Overhead s - New Mexico Overhead s Total Overhead s Underground s - H/S Underground s - Texas Underground s - New Mexico Underground s Total Underground s Street Lighting - H/S Street Lighting - Texas Street Lighting - New Mexico Street Lighting Total Street Lighting Metering - H/S Metering - Texas Metering - New Mexico Metering Total Metering Customer Installations - H/S Customer Installations - Texas Customer Installations - New Mexico Customer Installations Total Customer Installations Miscellaneous - H/S Miscellaneous - Texas Miscellaneous - New Mexico Miscellaneous Total Miscellaneous Rents Rents - H/S Rents - Texas Rents - New Mexico Total Rents Total Distribution Operations 158 XES XES XES EE to EECRF Whls Acct Mgr Adjusted Test Yr Test Yr Test Yr Base Labor Base Labor Base Labor Adjustment ,841 5, ,841 5, ,857 22, ,857 22, ,400 8, ,400 8, ,080,174 83,741 RR16 - Page 248 of

193 Page 106 of 270 XES Labor Annualization No. Description Account 159 Distribution Maintenance: 160 Supervision So - H/S Supervision - TX Supervision - NM Supervision Total Supervision Structures So - H/S Structures - TX Structures - NM Structures Total Structures Station Equipment So - H/S Station Equipment - TX Station Equipment - NM Station Equipment Total Station Equipment Overhead s So - H/S Overhead s - TX Overhead s - NM Overhead s Total Overhead s Underground s So - H/S Underground s - TX Underground s - NM Underground s Total Underground s Transformers So - H/S Transformers - TX Transformers - NM Transformers Total Transformers Street Lighting So - H/S Street Lighting - TX Street Lighting - NM Street Lighting Total Street Lighting Metering So - H/S Metering - TX Metering - NM Metering Total Metering Miscellaneous So - H/S XES XES XES EE to EECRF Whls Acct Mgr Adjusted Test Yr Test Yr Test Yr Base Labor Base Labor Base Labor Adjustment ,624 13, ,624 13, ,585 2, ,585 2, RR16 - Page 249 of

194 Page 107 of 270 XES Labor Annualization No. Description Account 201 Miscellaneous - TX Miscellaneous - NM Miscellaneous Total Miscellaneous Total Distribution Maintenance Total Distribution O&M Customer Accounting Expense: 211 Supervision Meter Reading Billing & Cashiering Uncollectible Accounts Uncollectible Accounts Total Uncollectible Accounts Customer Deposit Interest - Texas 218 Miscellaneous Total Miscellaneous Total Customer Accounting Expense Customer Service Expense: 225 Supervision Customer Assistance - Historic EE Amortization - Texas 0908HDSMTX 227 Customer Assistance - EE Tracker Amortization - Texas 0908DSMTX 228 Customer Assistance - EE - New Mexico 0908DSMNM 229 Customer Assistance - ICO Credits 0908ICO 230 Customer Assistance - Saver Switch & EE Labor 0908SVR 231 Customer Assistance - Other Customer Assistance - Total Advertisement Miscellaneous Total Customer Service Expense 237 XES XES XES EE to EECRF Whls Acct Mgr Adjusted Test Yr Test Yr Test Yr Base Labor Base Labor Base Labor Adjustment ,209 15, ,120,383 99, ,099 1, ,097 1, ,584,370 51, ,637,567 54, ,446 (4,427) 3, ,875 (143,216) 3, ,321 (147,643) 3, ,321 (147,643) RR16 - Page 250 of

195 Page 108 of 270 XES Labor Annualization No. Description Account 238 Sales Expense: 239 Sales Expense - Supv Demonstrations & Selling Advertising Expense - Sales Miscellaneous Sales Expense Total Sales Expense Total Customer Service & Sales Expense Total Customer Operations Expense Administrative & General Expense: 251 Administrative Salaries Office Supplies & Expense A&G Expense Transferred Outside Services - Legal Property Insurance Injuries and Damages Pensions & Benefits Deferred Pensions & Benefits Regulatory Commission Expense - Texas Regulatory Commission Expense - New Mexico Regulatory Commission Expense - Wholesale Regulatory Commission Expense - NERC Fees Regulatory Commission Expense - Misc Total Regulatory Commission Expense Duplicate Charges - Electric Miscellaneous 930M 267 Rents - Retail Allocated Rents - Other 931O 269 Rents Maintenance of Structures Maintenance of General Plant Contributions &, Dues 273 Total Administrative & General Expense Total O&M Expense XES XES XES EE to EECRF Whls Acct Mgr Adjusted Test Yr Test Yr Test Yr Base Labor Base Labor Base Labor Adjustment ,948 (24,948) ,948 (24,948) 3, ,269 (172,590) 3, ,043,836 (118,514) ,047, , ,047, ,494 3, ,832,694 1,495,134 RR16 - Page 251 of

196 Page 109 of 270 SPS Labor Annualization BL BL BL Total No. Description Account April-13 May-13 June-13 Base Labor 1 Operating & Maintenance Expenses: 2 3 Steam Production Operation: 4 Supervision & Engineering , , , ,729 5 Fuel (Transportation & Handling) 0501F 0 6 Steam Expense , , ,077 1,435,498 7 Electric Expense , , ,922 1,419,198 8 Miscellaneous , , , ,820 9 Rent Supplies and Expenses Allowances Total Steam Production Operation 1,404,790 1,467,257 1,237,200 4,109, Steam Production Maintenance: 15 Supervision & Engineering , , , , Structures , , , , Boilers , , ,307 1,595, Electric Plant , , ,133 1,095, Miscellaneous Plant , , ,760 1,370, Steam Production (Nonmajor) Total Steam Production Maintenance 1,671,359 1,715,185 1,397,289 4,783, Total Steam Production O&M 3,076,149 3,182,442 2,634,489 8,893, Combustion Turbine Production Operation: 26 Supervision & Engineering Fuel Handling Generation Expense ,646 31,566 30,117 95, Miscellaneous 549 4,969 1, , Rents Total Combustion Turbine Production Operation 38,615 32,952 31, , Combustion Turbine Production Maintenance: 34 Supervision & Engineering Structures 552 5,510 5,928 3,067 14, Electric Plant ,720 65,519 59, , Miscellaneous Plant Total Combustion Turbine Production Maintenance 49,230 71,447 62, , Total Combustion Turbine Production O&M 87, ,399 93, , RR16 - Page 252 of

197 Page 110 of 270 SPS Labor Annualization BL BL BL Total No. Description Account April-13 May-13 June-13 Base Labor 42 System Control and Dispatch: 43 System Load Control ,753 35,061 (730) 65, Other Expenditures Other Expenditures - New Mexico 557NM 46 Other Expenditures - Texas 557TX 47 Total System Control and Dispatch 30,753 35,061 (730) 65, Total Non-Fuel Production O&M 3,194,747 3,321,901 2,727,180 9,243, Transmission Operations: 52 Supervision & Engineering , , , , Load Dispatch Load Dispatch - Reliability Load Dispatch - Monitor/Operate , , , , Load Dispatch - Transmission Serv/Sch Load Dispatch - Sch/Con/Disp Serv Rel/Plan/Standards Dev Serv ,243 4,647 3,959 13, Trans Service Studies , Generation Interconnection Studies , , Rel/Plan/Standards Dev Serv Station Equipment ,935 46,053 80, , Overhead s ,342 (21,511) 14,717 46, Underground s Miscellaneous , ,447 46, , Rents Total Transmission Operations 647, , ,393 1,662, Transmission Maintenance: 70 Supervision & Engineering ,131 6,760 6,027 22, Structures Station Equipment , , , , Overhead s 571 8,217 6,819 15,714 30, Underground s Miscellaneous Total Transmission Maintenance 113, , , , RR16 - Page 253 of

198 Page 111 of 270 SPS Labor Annualization BL BL BL Total No. Description Account April-13 May-13 June-13 Base Labor 78 Wheeling: 79 Wheeling - Lamar HVDC Tie 0565P 0 80 Wheeling - PNM Reliability Purchase 0565P 0 81 Wheeling - Ancillary Services - Schedules 1, 2, & Facilities Charg 0565R 0 Wheeling - Ancillary Services - Schedules 3, 5 & R 0 82 Wheeling - Schedules 7 & 8 - Point to Point 0565R 0 83 Wheeling - Schedule 9 Network Integration 0565T 0 84 Wheeling - Schedule T 0 Wheeling - Schedule 12 - FERC Assessment 0565R 0 85 Wheeling - Other 0565T Total Wheeling Total Transmission O&M 760, , ,569 2,065, Regional Market Expenses: 93 Operation Supervision DA & RT Mkt Admin Trans Rights Mkt Admin Cap Mkt Admin Ancillary Serv Mkt Admin Market Monitoring/Compliance Mkt Fac/Mon/Comp Serv Regional Market Rents Total Regional Market Expenses Distribution Operations: 104 Supervision - H/S Supervision - Texas , , , , Supervision - New Mexico ,684 30,668 32, , Supervision ,881 62,824 61, , Total Supervision , , , , Load Dispatch - H/S Load Dispatch - Texas ,403 77,634 70, , Load Dispatch - New Mexico Load Dispatch Total Load Dispatch ,403 77,634 70, , Station Equipment - H/S Station Equipment - Texas ,115 24,512 34,843 83, Station Equipment - New Mexico Station Equipment ,418 29,171 26,645 77,234 RR16 - Page 254 of

199 Page 112 of 270 SPS Labor Annualization BL BL BL Total No. Description Account April-13 May-13 June-13 Base Labor 118 Total Station Equipment ,845 53,683 61, , Overhead s - H/S Overhead s - Texas ,379 92,767 92, , Overhead s - New Mexico ,081 27,005 39,035 89, Overhead s Total Overhead s , , , , Underground s - H/S Underground s - Texas ,587 13,522 9,215 32, Underground s - New Mexico , ,157 4, Underground s Total Underground s ,055 14,206 11,371 36, Street Lighting - H/S Street Lighting - Texas Street Lighting - New Mexico Street Lighting ,710 32,122 32, , Total Street Lighting ,925 32,382 32, , Metering - H/S Metering - Texas , , , , Metering - New Mexico ,666 83,111 66, , Metering ,407 75,082 57, , Total Metering , , , , Customer Installations - H/S Customer Installations - Texas ,015 20,866 18,757 61, Customer Installations - New Mexico Customer Installations ,830 49,073 54, , Total Customer Installations ,136 70,175 73, , Miscellaneous - H/S Miscellaneous - Texas , ,975 28, , Miscellaneous - New Mexico ,228 83,319 61, , Miscellaneous ,759 79,206 59, , Total Miscellaneous , , , , Rents Rents - H/S Rents - Texas Rents - New Mexico Total Rents Total Distribution Operations 1,218,764 1,209,899 1,028,757 3,457, RR16 - Page 255 of

200 Page 113 of 270 SPS Labor Annualization BL BL BL Total No. Description Account April-13 May-13 June-13 Base Labor 157 Distribution Maintenance: 158 Supervision So - H/S Supervision - TX ,287 5,469 5,069 15, Supervision - NM ,310 2,463 2,347 7, Supervision ,376 14,249 12,718 45, Total Supervision ,973 22,180 20,134 68, Structures So - H/S Structures - TX Structures - NM Structures Total Structures Station Equipment So - H/S Station Equipment - TX ,466 60,583 54, , Station Equipment - NM ,208 1,707 2,528 5, Station Equipment ,704 36,638 44, , Total Station Equipment ,378 98, , , Overhead s So - H/S Overhead s - TX , , , , Overhead s - NM , ,008 84, , Overhead s 593 6,647 7,430 8,192 22, Total Overhead s , , ,972 1,099, Underground s So - H/S Underground s - TX ,144 3,011 9,105 21, Underground s - NM ,631 4,937 4,575 14, Underground s Total Underground s ,839 7,973 13,702 35, Transformers So - H/S Transformers - TX ,272 1,776 3, Transformers - NM ,188 6,252 4,567 16, Transformers Total Transformers 595 6,131 7,524 6,343 19, Street Lighting So - H/S Street Lighting - TX ,059 1, Street Lighting - NM Street Lighting 596 1,252 2,458 2,134 5, Total Street Lighting 596 1,658 2,588 3,261 7, Metering So - H/S Metering - TX Metering - NM Metering , , Total Metering , , Miscellaneous So - H/S RR16 - Page 256 of

201 Page 114 of 270 SPS Labor Annualization BL BL BL Total No. Description Account April-13 May-13 June-13 Base Labor 199 Miscellaneous - TX Miscellaneous - NM Miscellaneous Total Miscellaneous Total Distribution Maintenance 428, , ,355 1,534, Total Distribution O&M 1,647,565 1,734,779 1,609,113 4,991, Customer Accounting Expense: 209 Supervision Meter Reading , , , , Billing & Cashiering Uncollectible Accounts Uncollectible Accounts Total Uncollectible Accounts Customer Deposit Interest - Texas 216 Miscellaneous Total Miscellaneous Total Customer Accounting Expense 247, , , , Customer Service Expense: 223 Supervision Customer Assistance - Historic EE Amortization - Texas 0908HDSMTX 225 Customer Assistance - EE Tracker Amortization - Texas 0908DSMTX 226 Customer Assistance - EE - New Mexico 0908DSMNM 227 Customer Assistance - ICO Credits 0908ICO 228 Customer Assistance - Saver Switch & EE Labor 0908SVR Customer Assistance - Other , , , , Customer Assistance - Total , , , , Advertisement Miscellaneous Total Customer Service Expense 148, , , , RR16 - Page 257 of

202 Page 115 of 270 SPS Labor Annualization BL BL BL Total No. Description Account April-13 May-13 June-13 Base Labor 236 Sales Expense: 237 Sales Expense - Supv Demonstrations & Selling ,589 14,765 10,088 40, Advertising Expense - Sales Miscellaneous Sales Expense Total Sales Expense 15,589 14,765 10,088 40, Total Customer Service & Sales Expense 164, , , , Total Customer Operations Expense 411, , ,782 1,217, Administrative & General Expense: 249 Administrative Salaries , , , , Office Supplies & Expense A&G Expense Transferred Outside Services - Legal Property Insurance Injuries and Damages Pensions & Benefits Deferred Pensions & Benefits Regulatory Commission Expense - Texas Regulatory Commission Expense - New Mexico Regulatory Commission Expense - Wholesale Regulatory Commission Expense - NERC Fees Regulatory Commission Expense - Misc Total Regulatory Commission Expense Duplicate Charges - Electric Miscellaneous 930M Rents - Retail Allocated Rents - Other 931O Rents Maintenance of Structures Maintenance of General Plant Contributions &, Dues 271 Total Administrative & General Expense 290, , , , Total O&M Expense 6,305,014 6,405,147 5,651,535 18,361,697 RR16 - Page 258 of

203 Page 116 of 270 SPS Labor Annualization No. Description Account 1 Operating & Maintenance Expenses: 2 3 Steam Production Operation: 4 Supervision & Engineering Fuel (Transportation & Handling) 0501F 6 Steam Expense Electric Expense Miscellaneous Rent Supplies and Expenses Allowances Total Steam Production Operation Steam Production Maintenance: 15 Supervision & Engineering Structures Boilers Electric Plant Miscellaneous Plant Steam Production (Nonmajor) Total Steam Production Maintenance Total Steam Production O&M Combustion Turbine Production Operation: 26 Supervision & Engineering Fuel Handling Generation Expense Miscellaneous Rents Total Combustion Turbine Production Operation Combustion Turbine Production Maintenance: 34 Supervision & Engineering Structures Electric Plant Miscellaneous Plant Total Combustion Turbine Production Maintenance Total Combustion Turbine Production O&M 41 Reclass Bus Area Adj Foundation Fuel Handling Whls Acct Mgr Adjusted Base Labor Base Labor Base Labor Base Labor Base Labor 413,729 2,745 2,745 1,435,498 1,419, , , ,111, , ,450 1,595,674 1,095,578 1,370, ,783, , ,895, ,329 7, , , , , ,664 RR16 - Page 259 of

204 Page 117 of 270 SPS Labor Annualization No. Description Account 42 System Control and Dispatch: 43 System Load Control Other Expenditures Other Expenditures - New Mexico 557NM 46 Other Expenditures - Texas 557TX 47 Total System Control and Dispatch Total Non-Fuel Production O&M Transmission Operations: 52 Supervision & Engineering Load Dispatch Load Dispatch - Reliability Load Dispatch - Monitor/Operate Load Dispatch - Transmission Serv/Sch Load Dispatch - Sch/Con/Disp Serv Rel/Plan/Standards Dev Serv Trans Service Studies Generation Interconnection Studies Rel/Plan/Standards Dev Serv Station Equipment Overhead s Underground s Miscellaneous Rents Total Transmission Operations Transmission Maintenance: 70 Supervision & Engineering Structures Station Equipment Overhead s Underground s Miscellaneous Total Transmission Maintenance 77 Reclass Bus Area Adj Foundation Fuel Handling Whls Acct Mgr Adjusted Base Labor Base Labor Base Labor Base Labor Base Labor 65, , , ,246, , , ,849 1,051 1, ,230 46, , ,662,892 22, ,237 30, ,904 0 RR16 - Page 260 of

205 Page 118 of 270 SPS Labor Annualization No. Description Account 78 Wheeling: 79 Wheeling - Lamar HVDC Tie 0565P 80 Wheeling - PNM Reliability Purchase 0565P 81 Wheeling - Ancillary Services - Schedules 1, 2, & Facilities Charg 0565R Wheeling - Ancillary Services - Schedules 3, 5 & R 82 Wheeling - Schedules 7 & 8 - Point to Point 0565R 83 Wheeling - Schedule 9 Network Integration 0565T 84 Wheeling - Schedule T Wheeling - Schedule 12 - FERC Assessment 0565R 85 Wheeling - Other 0565T Total Wheeling Total Transmission O&M Regional Market Expenses: 93 Operation Supervision DA & RT Mkt Admin Trans Rights Mkt Admin Cap Mkt Admin Ancillary Serv Mkt Admin Market Monitoring/Compliance Mkt Fac/Mon/Comp Serv Regional Market Rents Total Regional Market Expenses Distribution Operations: 104 Supervision - H/S Supervision - Texas Supervision - New Mexico Supervision Total Supervision Load Dispatch - H/S Load Dispatch - Texas Load Dispatch - New Mexico Load Dispatch Total Load Dispatch Station Equipment - H/S Station Equipment - Texas Station Equipment - New Mexico Station Equipment 582 Reclass Bus Area Adj Foundation Fuel Handling Whls Acct Mgr Adjusted Base Labor Base Labor Base Labor Base Labor Base Labor ,065, , , , , , , , ,234 RR16 - Page 261 of

206 Page 119 of 270 SPS Labor Annualization No. Description Account 118 Total Station Equipment Overhead s - H/S Overhead s - Texas Overhead s - New Mexico Overhead s Total Overhead s Underground s - H/S Underground s - Texas Underground s - New Mexico Underground s Total Underground s Street Lighting - H/S Street Lighting - Texas Street Lighting - New Mexico Street Lighting Total Street Lighting Metering - H/S Metering - Texas Metering - New Mexico Metering Total Metering Customer Installations - H/S Customer Installations - Texas Customer Installations - New Mexico Customer Installations Total Customer Installations Miscellaneous - H/S Miscellaneous - Texas Miscellaneous - New Mexico Miscellaneous Total Miscellaneous Rents Rents - H/S Rents - Texas Rents - New Mexico Total Rents Total Distribution Operations 156 Reclass Bus Area Adj Foundation Fuel Handling Whls Acct Mgr Adjusted Base Labor Base Labor Base Labor Base Labor Base Labor 0 161, ,060 89, , ,324 4, , , , , , , , , , , , , , , ,457,421 RR16 - Page 262 of

207 Page 120 of 270 SPS Labor Annualization No. Description Account 157 Distribution Maintenance: 158 Supervision So - H/S Supervision - TX Supervision - NM Supervision Total Supervision Structures So - H/S Structures - TX Structures - NM Structures Total Structures Station Equipment So - H/S Station Equipment - TX Station Equipment - NM Station Equipment Total Station Equipment Overhead s So - H/S Overhead s - TX Overhead s - NM Overhead s Total Overhead s Underground s So - H/S Underground s - TX Underground s - NM Underground s Total Underground s Transformers So - H/S Transformers - TX Transformers - NM Transformers Total Transformers Street Lighting So - H/S Street Lighting - TX Street Lighting - NM Street Lighting Total Street Lighting Metering So - H/S Metering - TX Metering - NM Metering Total Metering Miscellaneous So - H/S Reclass Bus Area Adj Foundation Fuel Handling Whls Acct Mgr Adjusted Base Labor Base Labor Base Labor Base Labor Base Labor 0 15,825 7,120 45, , ,592 5, , , , ,103 22, ,099, ,259 14, , ,990 16, , , , , , , RR16 - Page 263 of

208 Page 121 of 270 SPS Labor Annualization No. Description Account 199 Miscellaneous - TX Miscellaneous - NM Miscellaneous Total Miscellaneous Total Distribution Maintenance Total Distribution O&M Customer Accounting Expense: 209 Supervision Meter Reading Billing & Cashiering Uncollectible Accounts Uncollectible Accounts Total Uncollectible Accounts Customer Deposit Interest - Texas 216 Miscellaneous Total Miscellaneous Total Customer Accounting Expense Customer Service Expense: 223 Supervision Customer Assistance - Historic EE Amortization - Texas 0908HDSMTX 225 Customer Assistance - EE Tracker Amortization - Texas 0908DSMTX 226 Customer Assistance - EE - New Mexico 0908DSMNM 227 Customer Assistance - ICO Credits 0908ICO 228 Customer Assistance - Saver Switch & EE Labor 0908SVR 229 Customer Assistance - Other Customer Assistance - Total Advertisement Miscellaneous Total Customer Service Expense 235 Reclass Bus Area Adj Foundation Fuel Handling Whls Acct Mgr Adjusted Base Labor Base Labor Base Labor Base Labor Base Labor ,534, ,991, , , , , ,860 RR16 - Page 264 of

209 Page 122 of 270 SPS Labor Annualization No. Description Account 236 Sales Expense: 237 Sales Expense - Supv Demonstrations & Selling Advertising Expense - Sales Miscellaneous Sales Expense Total Sales Expense Total Customer Service & Sales Expense Total Customer Operations Expense Administrative & General Expense: 249 Administrative Salaries Office Supplies & Expense A&G Expense Transferred Outside Services - Legal Property Insurance Injuries and Damages Pensions & Benefits Deferred Pensions & Benefits Regulatory Commission Expense - Texas Regulatory Commission Expense - New Mexico Regulatory Commission Expense - Wholesale Regulatory Commission Expense - NERC Fees Regulatory Commission Expense - Misc Total Regulatory Commission Expense Duplicate Charges - Electric Miscellaneous 930M 265 Rents - Retail Allocated Rents - Other 931O 267 Rents Maintenance of Structures Maintenance of General Plant Contributions &, Dues 271 Total Administrative & General Expense Total O&M Expense Reclass Bus Area Adj Foundation Fuel Handling Whls Acct Mgr Adjusted Base Labor Base Labor Base Labor Base Labor Base Labor 0 40, , , ,217, , , , ,364,442 RR16 - Page 265 of

210 Page 123 of 270 SPS Labor Annualization No. Description Account 1 Operating & Maintenance Expenses: 2 3 Steam Production Operation: 4 Supervision & Engineering Fuel (Transportation & Handling) 0501F 6 Steam Expense Electric Expense Miscellaneous Rent Supplies and Expenses Allowances Total Steam Production Operation Steam Production Maintenance: 15 Supervision & Engineering Structures Boilers Electric Plant Miscellaneous Plant Steam Production (Nonmajor) Total Steam Production Maintenance Total Steam Production O&M Combustion Turbine Production Operation: 26 Supervision & Engineering Fuel Handling Generation Expense Miscellaneous Rents Total Combustion Turbine Production Operation Combustion Turbine Production Maintenance: 34 Supervision & Engineering Structures Electric Plant Miscellaneous Plant Total Combustion Turbine Production Maintenance Total Combustion Turbine Production O&M 41 Average Monthly Annualized Test Year Labor Expense Labor Expense Base Labor 137,910 1,654,917 1,676, , ,499 5,741,994 6,221, ,066 5,676,793 6,020, ,273 3,363,282 2,895,879 1,370,664 16,447,966 16,815, ,599 1,399,188 1,311, ,150 1,489,800 1,443, ,891 6,382,698 5,559, ,193 4,382,313 4,211, ,778 5,481,335 5,071,114 1,594,611 19,135,334 17,597,154 2,965,275 35,583,299 34,412, , , ,413 2,451 29,407 66,268 34, , , ,835 58,017 56,440 56, , ,950 60, , ,554 95,221 1,142, ,028 RR16 - Page 266 of

211 Page 124 of 270 SPS Labor Annualization No. Description Account 42 System Control and Dispatch: 43 System Load Control Other Expenditures Other Expenditures - New Mexico 557NM 46 Other Expenditures - Texas 557TX 47 Total System Control and Dispatch Total Non-Fuel Production O&M Transmission Operations: 52 Supervision & Engineering Load Dispatch Load Dispatch - Reliability Load Dispatch - Monitor/Operate Load Dispatch - Transmission Serv/Sch Load Dispatch - Sch/Con/Disp Serv Rel/Plan/Standards Dev Serv Trans Service Studies Generation Interconnection Studies Rel/Plan/Standards Dev Serv Station Equipment Overhead s Underground s Miscellaneous Rents Total Transmission Operations Transmission Maintenance: 70 Supervision & Engineering Structures Station Equipment Overhead s Underground s Miscellaneous Total Transmission Maintenance 77 Average Monthly Annualized Test Year Labor Expense Labor Expense Base Labor 21, , , , , ,528 3,082,191 36,986,293 35,748, ,847 2,878,162 2,536, ,365 1,780,378 1,779,455 4,616 55, , ,204 49, ,651 1,413 62, , ,927 15, , ,622 82, , , ,297 6,651,570 6,394,779 7,639 91,672 68, ,412 1,396,947 1,282,175 10, , , ,301 1,611,617 1,471,986 RR16 - Page 267 of

212 Page 125 of 270 SPS Labor Annualization No. Description Account 78 Wheeling: 79 Wheeling - Lamar HVDC Tie 0565P 80 Wheeling - PNM Reliability Purchase 0565P 81 Wheeling - Ancillary Services - Schedules 1, 2, & Facilities Charg 0565R Wheeling - Ancillary Services - Schedules 3, 5 & R 82 Wheeling - Schedules 7 & 8 - Point to Point 0565R 83 Wheeling - Schedule 9 Network Integration 0565T 84 Wheeling - Schedule T Wheeling - Schedule 12 - FERC Assessment 0565R 85 Wheeling - Other 0565T Total Wheeling Total Transmission O&M Regional Market Expenses: 93 Operation Supervision DA & RT Mkt Admin Trans Rights Mkt Admin Cap Mkt Admin Ancillary Serv Mkt Admin Market Monitoring/Compliance Mkt Fac/Mon/Comp Serv Regional Market Rents Total Regional Market Expenses Distribution Operations: 104 Supervision - H/S Supervision - Texas Supervision - New Mexico Supervision Total Supervision Load Dispatch - H/S Load Dispatch - Texas Load Dispatch - New Mexico Load Dispatch Total Load Dispatch Station Equipment - H/S Station Equipment - Texas Station Equipment - New Mexico Station Equipment 582 Average Monthly Annualized Test Year Labor Expense Labor Expense Base Labor 688,599 8,263,187 7,866, , , ,153 1,765,831 2,065,016 34, , ,033 65, , , ,204 2,966,443 3,093,023 64, , ,009 64, , ,009 27, , , , , , ,642 RR16 - Page 268 of

213 Page 126 of 270 SPS Labor Annualization No. Description Account 118 Total Station Equipment Overhead s - H/S Overhead s - Texas Overhead s - New Mexico Overhead s Total Overhead s Underground s - H/S Underground s - Texas Underground s - New Mexico Underground s Total Underground s Street Lighting - H/S Street Lighting - Texas Street Lighting - New Mexico Street Lighting Total Street Lighting Metering - H/S Metering - Texas Metering - New Mexico Metering Total Metering Customer Installations - H/S Customer Installations - Texas Customer Installations - New Mexico Customer Installations Total Customer Installations Miscellaneous - H/S Miscellaneous - Texas Miscellaneous - New Mexico Miscellaneous Total Miscellaneous Rents Rents - H/S Rents - Texas Rents - New Mexico Total Rents Total Distribution Operations 156 Average Monthly Annualized Test Year Labor Expense Labor Expense Base Labor 53, , ,448 86,353 1,036, ,490 29, , , ,121 2, ,320 1,395,845 1,386,615 10, ,295 83,293 1,435 17,214 15, , ,527 98, ,753 4,953 34, , ,222 34, , , ,588 1,675,050 1,694,870 80, , ,974 69, , , ,083 3,468,999 3,534,161 20, , , ,281 4,802 52, , ,666 72, , , , ,405 1,384,861 1,257,531 68, , ,368 78, , , ,139 3,145,667 2,819,407 1,152,474 13,829,684 13,392,392 RR16 - Page 269 of

214 Page 127 of 270 SPS Labor Annualization No. Description Account 157 Distribution Maintenance: 158 Supervision So - H/S Supervision - TX Supervision - NM Supervision Total Supervision Structures So - H/S Structures - TX Structures - NM Structures Total Structures Station Equipment So - H/S Station Equipment - TX Station Equipment - NM Station Equipment Total Station Equipment Overhead s So - H/S Overhead s - TX Overhead s - NM Overhead s Total Overhead s Underground s So - H/S Underground s - TX Underground s - NM Underground s Total Underground s Transformers So - H/S Transformers - TX Transformers - NM Transformers Total Transformers Street Lighting So - H/S Street Lighting - TX Street Lighting - NM Street Lighting Total Street Lighting Metering So - H/S Metering - TX Metering - NM Metering Total Metering Miscellaneous So - H/S Average Monthly Annualized Test Year Labor Expense Labor Expense Base Labor 5,275 63,298 59,373 2,373 28,478 26,721 15, , ,364 22, , ,458 58, , ,139 1,814 21,771 12,981 39, , ,509 99,969 1,199,631 1,019, ,889 3,262,666 2,423,476 87,034 1,044, ,179 7,423 89,077 71, ,346 4,396,156 3,391,294 7,086 85,037 87,322 4,714 56,572 63, ,878 11, , ,119 1,330 15,958 22,724 5,336 64,032 54, (0) 6,666 79,991 76, ,777 6, ,405 1,948 23,376 26,975 2,502 30,025 37, ,713 3, ,035 12,415 12,987 1,261 15,128 17,536 RR16 - Page 270 of

215 Page 128 of 270 SPS Labor Annualization No. Description Account 199 Miscellaneous - TX Miscellaneous - NM Miscellaneous Total Miscellaneous Total Distribution Maintenance Total Distribution O&M Customer Accounting Expense: 209 Supervision Meter Reading Billing & Cashiering Uncollectible Accounts Uncollectible Accounts Total Uncollectible Accounts Customer Deposit Interest - Texas 216 Miscellaneous Total Miscellaneous Total Customer Accounting Expense Customer Service Expense: 223 Supervision Customer Assistance - Historic EE Amortization - Texas 0908HDSMTX 225 Customer Assistance - EE Tracker Amortization - Texas 0908DSMTX 226 Customer Assistance - EE - New Mexico 0908DSMNM 227 Customer Assistance - ICO Credits 0908ICO 228 Customer Assistance - Saver Switch & EE Labor 0908SVR 229 Customer Assistance - Other Customer Assistance - Total Advertisement Miscellaneous Total Customer Service Expense 235 Average Monthly Annualized Test Year Labor Expense Labor Expense Base Labor ,345 6,136,142 4,946,331 1,663,819 19,965,826 18,338, ,976 2,879,712 2,721, ,976 2,879,712 2,721, ,287 1,827,441 1,699, ,287 1,827,441 1,699, ,287 1,827,441 1,699,638 RR16 - Page 271 of

216 Page 129 of 270 SPS Labor Annualization No. Description Account 236 Sales Expense: 237 Sales Expense - Supv Demonstrations & Selling Advertising Expense - Sales Miscellaneous Sales Expense Total Sales Expense Total Customer Service & Sales Expense Total Customer Operations Expense Administrative & General Expense: 249 Administrative Salaries Office Supplies & Expense A&G Expense Transferred Outside Services - Legal Property Insurance Injuries and Damages Pensions & Benefits Deferred Pensions & Benefits Regulatory Commission Expense - Texas Regulatory Commission Expense - New Mexico Regulatory Commission Expense - Wholesale Regulatory Commission Expense - NERC Fees Regulatory Commission Expense - Misc Total Regulatory Commission Expense Duplicate Charges - Electric Miscellaneous 930M 265 Rents - Retail Allocated Rents - Other 931O 267 Rents Maintenance of Structures Maintenance of General Plant Contributions &, Dues 271 Total Administrative & General Expense Total O&M Expense Average Monthly Annualized Test Year Labor Expense Labor Expense Base Labor 13, , ,226 13, , , ,767 1,989,208 1,848, ,743 4,868,920 4,570, ,129 3,373,545 3,327, ,129 3,373,545 3,327,036 6,121,481 73,457,769 69,853,172 RR16 - Page 272 of

217 Page 130 of 270 SPS Labor Annualization No. Description Account 1 Operating & Maintenance Expenses: 2 3 Steam Production Operation: 4 Supervision & Engineering Fuel (Transportation & Handling) 0501F 6 Steam Expense Electric Expense Miscellaneous Rent Supplies and Expenses Allowances Total Steam Production Operation Steam Production Maintenance: 15 Supervision & Engineering Structures Boilers Electric Plant Miscellaneous Plant Steam Production (Nonmajor) Total Steam Production Maintenance Total Steam Production O&M Combustion Turbine Production Operation: 26 Supervision & Engineering Fuel Handling Generation Expense Miscellaneous Rents Total Combustion Turbine Production Operation Combustion Turbine Production Maintenance: 34 Supervision & Engineering Structures Electric Plant Miscellaneous Plant Total Combustion Turbine Production Maintenance Total Combustion Turbine Production O&M 41 Bus Area Adj Foundation Reclass Test Yr Test Yr Fuel Handling Base Labor Base Labor Base Labor 10, , ,980 RR16 - Page 273 of

218 Page 131 of 270 SPS Labor Annualization No. Description Account 42 System Control and Dispatch: 43 System Load Control Other Expenditures Other Expenditures - New Mexico 557NM 46 Other Expenditures - Texas 557TX 47 Total System Control and Dispatch Total Non-Fuel Production O&M Transmission Operations: 52 Supervision & Engineering Load Dispatch Load Dispatch - Reliability Load Dispatch - Monitor/Operate Load Dispatch - Transmission Serv/Sch Load Dispatch - Sch/Con/Disp Serv Rel/Plan/Standards Dev Serv Trans Service Studies Generation Interconnection Studies Rel/Plan/Standards Dev Serv Station Equipment Overhead s Underground s Miscellaneous Rents Total Transmission Operations Transmission Maintenance: 70 Supervision & Engineering Structures Station Equipment Overhead s Underground s Miscellaneous Total Transmission Maintenance 77 Bus Area Adj Foundation Reclass Test Yr Test Yr Fuel Handling Base Labor Base Labor Base Labor ,980 RR16 - Page 274 of

219 Page 132 of 270 SPS Labor Annualization No. Description Account 78 Wheeling: 79 Wheeling - Lamar HVDC Tie 0565P 80 Wheeling - PNM Reliability Purchase 0565P 81 Wheeling - Ancillary Services - Schedules 1, 2, & Facilities Charg 0565R Wheeling - Ancillary Services - Schedules 3, 5 & R 82 Wheeling - Schedules 7 & 8 - Point to Point 0565R 83 Wheeling - Schedule 9 Network Integration 0565T 84 Wheeling - Schedule T Wheeling - Schedule 12 - FERC Assessment 0565R 85 Wheeling - Other 0565T Total Wheeling Total Transmission O&M Regional Market Expenses: 93 Operation Supervision DA & RT Mkt Admin Trans Rights Mkt Admin Cap Mkt Admin Ancillary Serv Mkt Admin Market Monitoring/Compliance Mkt Fac/Mon/Comp Serv Regional Market Rents Total Regional Market Expenses Distribution Operations: 104 Supervision - H/S Supervision - Texas Supervision - New Mexico Supervision Total Supervision Load Dispatch - H/S Load Dispatch - Texas Load Dispatch - New Mexico Load Dispatch Total Load Dispatch Station Equipment - H/S Station Equipment - Texas Station Equipment - New Mexico Station Equipment 582 Bus Area Adj Foundation Reclass Test Yr Test Yr Fuel Handling Base Labor Base Labor Base Labor RR16 - Page 275 of

220 Page 133 of 270 SPS Labor Annualization No. Description Account 118 Total Station Equipment Overhead s - H/S Overhead s - Texas Overhead s - New Mexico Overhead s Total Overhead s Underground s - H/S Underground s - Texas Underground s - New Mexico Underground s Total Underground s Street Lighting - H/S Street Lighting - Texas Street Lighting - New Mexico Street Lighting Total Street Lighting Metering - H/S Metering - Texas Metering - New Mexico Metering Total Metering Customer Installations - H/S Customer Installations - Texas Customer Installations - New Mexico Customer Installations Total Customer Installations Miscellaneous - H/S Miscellaneous - Texas Miscellaneous - New Mexico Miscellaneous Total Miscellaneous Rents Rents - H/S Rents - Texas Rents - New Mexico Total Rents Total Distribution Operations 156 Bus Area Adj Foundation Reclass Test Yr Test Yr Fuel Handling Base Labor Base Labor Base Labor RR16 - Page 276 of

221 Page 134 of 270 SPS Labor Annualization No. Description Account 157 Distribution Maintenance: 158 Supervision So - H/S Supervision - TX Supervision - NM Supervision Total Supervision Structures So - H/S Structures - TX Structures - NM Structures Total Structures Station Equipment So - H/S Station Equipment - TX Station Equipment - NM Station Equipment Total Station Equipment Overhead s So - H/S Overhead s - TX Overhead s - NM Overhead s Total Overhead s Underground s So - H/S Underground s - TX Underground s - NM Underground s Total Underground s Transformers So - H/S Transformers - TX Transformers - NM Transformers Total Transformers Street Lighting So - H/S Street Lighting - TX Street Lighting - NM Street Lighting Total Street Lighting Metering So - H/S Metering - TX Metering - NM Metering Total Metering Miscellaneous So - H/S Bus Area Adj Foundation Reclass Test Yr Test Yr Fuel Handling Base Labor Base Labor Base Labor RR16 - Page 277 of

222 Page 135 of 270 SPS Labor Annualization No. Description Account 199 Miscellaneous - TX Miscellaneous - NM Miscellaneous Total Miscellaneous Total Distribution Maintenance Total Distribution O&M Customer Accounting Expense: 209 Supervision Meter Reading Billing & Cashiering Uncollectible Accounts Uncollectible Accounts Total Uncollectible Accounts Customer Deposit Interest - Texas 216 Miscellaneous Total Miscellaneous Total Customer Accounting Expense Customer Service Expense: 223 Supervision Customer Assistance - Historic EE Amortization - Texas 0908HDSMTX 225 Customer Assistance - EE Tracker Amortization - Texas 0908DSMTX 226 Customer Assistance - EE - New Mexico 0908DSMNM 227 Customer Assistance - ICO Credits 0908ICO 228 Customer Assistance - Saver Switch & EE Labor 0908SVR 229 Customer Assistance - Other Customer Assistance - Total Advertisement Miscellaneous Total Customer Service Expense 235 Bus Area Adj Foundation Reclass Test Yr Test Yr Fuel Handling Base Labor Base Labor Base Labor RR16 - Page 278 of

223 Page 136 of 270 SPS Labor Annualization No. Description Account 236 Sales Expense: 237 Sales Expense - Supv Demonstrations & Selling Advertising Expense - Sales Miscellaneous Sales Expense Total Sales Expense Total Customer Service & Sales Expense Total Customer Operations Expense Administrative & General Expense: 249 Administrative Salaries Office Supplies & Expense A&G Expense Transferred Outside Services - Legal Property Insurance Injuries and Damages Pensions & Benefits Deferred Pensions & Benefits Regulatory Commission Expense - Texas Regulatory Commission Expense - New Mexico Regulatory Commission Expense - Wholesale Regulatory Commission Expense - NERC Fees Regulatory Commission Expense - Misc Total Regulatory Commission Expense Duplicate Charges - Electric Miscellaneous 930M 265 Rents - Retail Allocated Rents - Other 931O 267 Rents Maintenance of Structures Maintenance of General Plant Contributions &, Dues 271 Total Administrative & General Expense Total O&M Expense Bus Area Adj Foundation Reclass Test Yr Test Yr Fuel Handling Base Labor Base Labor Base Labor ,980 RR16 - Page 279 of

224 Page 137 of 270 SPS Labor Annualization No. Description Account 1 Operating & Maintenance Expenses: 2 3 Steam Production Operation: 4 Supervision & Engineering Fuel (Transportation & Handling) 0501F 6 Steam Expense Electric Expense Miscellaneous Rent Supplies and Expenses Allowances Total Steam Production Operation Steam Production Maintenance: 15 Supervision & Engineering Structures Boilers Electric Plant Miscellaneous Plant Steam Production (Nonmajor) Total Steam Production Maintenance Total Steam Production O&M Combustion Turbine Production Operation: 26 Supervision & Engineering Fuel Handling Generation Expense Miscellaneous Rents Total Combustion Turbine Production Operation Combustion Turbine Production Maintenance: 34 Supervision & Engineering Structures Electric Plant Miscellaneous Plant Total Combustion Turbine Production Maintenance Total Combustion Turbine Production O&M 41 Whls Acct Mgr Adjusted Test Yr Test Yr Base Labor Base Labor Adjustment 1,676,934 (22,017) 10, ,221,715 (479,721) 6,020,599 (343,806) 2,895, , ,826,107 (378,142) 1,311,642 87,546 1,443,479 46,320 5,559, ,022 4,211, ,070 5,071, , ,597,154 1,538, ,423,262 1,160, (793) ,413 75,904 66,268 (36,861) ,474 38, (164) 56,440 1, , , , , , ,629 RR16 - Page 280 of

225 Page 138 of 270 SPS Labor Annualization No. Description Account 42 System Control and Dispatch: 43 System Load Control Other Expenditures Other Expenditures - New Mexico 557NM 46 Other Expenditures - Texas 557TX 47 Total System Control and Dispatch Total Non-Fuel Production O&M Transmission Operations: 52 Supervision & Engineering Load Dispatch Load Dispatch - Reliability Load Dispatch - Monitor/Operate Load Dispatch - Transmission Serv/Sch Load Dispatch - Sch/Con/Disp Serv Rel/Plan/Standards Dev Serv Trans Service Studies Generation Interconnection Studies Rel/Plan/Standards Dev Serv Station Equipment Overhead s Underground s Miscellaneous Rents Total Transmission Operations Transmission Maintenance: 70 Supervision & Engineering Structures Station Equipment Overhead s Underground s Miscellaneous Total Transmission Maintenance 77 Whls Acct Mgr Adjusted Test Yr Test Yr Base Labor Base Labor Adjustment 401,537 (141,200) 991 (991) 0 402,528 (142,191) 0 35,759,818 1,226,474 2,536, , ,779, ,461 (182,065) 49,632 (45,427) 1,413 4, ,927 36, ,622 (45,431) , , ,394, ,791 68,493 23, ,282, , ,318 1, ,471, ,631 RR16 - Page 281 of

226 Page 139 of 270 SPS Labor Annualization No. Description Account 78 Wheeling: 79 Wheeling - Lamar HVDC Tie 0565P 80 Wheeling - PNM Reliability Purchase 0565P 81 Wheeling - Ancillary Services - Schedules 1, 2, & Facilities Charg 0565R Wheeling - Ancillary Services - Schedules 3, 5 & R 82 Wheeling - Schedules 7 & 8 - Point to Point 0565R 83 Wheeling - Schedule 9 Network Integration 0565T 84 Wheeling - Schedule T Wheeling - Schedule 12 - FERC Assessment 0565R 85 Wheeling - Other 0565T Total Wheeling Total Transmission O&M Regional Market Expenses: 93 Operation Supervision DA & RT Mkt Admin Trans Rights Mkt Admin Cap Mkt Admin Ancillary Serv Mkt Admin Market Monitoring/Compliance Mkt Fac/Mon/Comp Serv Regional Market Rents Total Regional Market Expenses Distribution Operations: 104 Supervision - H/S Supervision - Texas Supervision - New Mexico Supervision Total Supervision Load Dispatch - H/S Load Dispatch - Texas Load Dispatch - New Mexico Load Dispatch Total Load Dispatch Station Equipment - H/S Station Equipment - Texas Station Equipment - New Mexico Station Equipment 582 Whls Acct Mgr Adjusted Test Yr Test Yr Base Labor Base Labor Adjustment 0 7,866, , (824) (824) ,648 (1,648) 24,013 (24,013) 2,065,016 (299,186) 366,033 49, , , ,093,023 (126,580) , , , , ,376 28, ,642 2,296 RR16 - Page 282 of

227 Page 140 of 270 SPS Labor Annualization No. Description Account 118 Total Station Equipment Overhead s - H/S Overhead s - Texas Overhead s - New Mexico Overhead s Total Overhead s Underground s - H/S Underground s - Texas Underground s - New Mexico Underground s Total Underground s Street Lighting - H/S Street Lighting - Texas Street Lighting - New Mexico Street Lighting Total Street Lighting Metering - H/S Metering - Texas Metering - New Mexico Metering Total Metering Customer Installations - H/S Customer Installations - Texas Customer Installations - New Mexico Customer Installations Total Customer Installations Miscellaneous - H/S Miscellaneous - Texas Miscellaneous - New Mexico Miscellaneous Total Miscellaneous Rents Rents - H/S Rents - Texas Rents - New Mexico Total Rents Total Distribution Operations 156 Whls Acct Mgr Adjusted Test Yr Test Yr Base Labor Base Labor Adjustment 0 612,448 31, ,490 48, ,422 (39,940) 2, ,386,615 9, ,293 46,002 15,348 1, (27) 0 98,686 47, (767) 4,953 (2,200) 526,222 (116,897) 0 531,942 (119,864) 0 0 1,694,870 (19,819) 959,974 5, ,317 (50,653) 0 3,534,161 (65,162) ,633 8,918 4,802 (2,521) 730,666 (103,674) 0 973,101 (97,276) 65,917 (65,917) 1,257, , , , , , ,819, , ,392, ,292 RR16 - Page 283 of

228 Page 141 of 270 SPS Labor Annualization No. Description Account 157 Distribution Maintenance: 158 Supervision So - H/S Supervision - TX Supervision - NM Supervision Total Supervision Structures So - H/S Structures - TX Structures - NM Structures Total Structures Station Equipment So - H/S Station Equipment - TX Station Equipment - NM Station Equipment Total Station Equipment Overhead s So - H/S Overhead s - TX Overhead s - NM Overhead s Total Overhead s Underground s So - H/S Underground s - TX Underground s - NM Underground s Total Underground s Transformers So - H/S Transformers - TX Transformers - NM Transformers Total Transformers Street Lighting So - H/S Street Lighting - TX Street Lighting - NM Street Lighting Total Street Lighting Metering So - H/S Metering - TX Metering - NM Metering Total Metering Miscellaneous So - H/S Whls Acct Mgr Adjusted Test Yr Test Yr Base Labor Base Labor Adjustment ,373 3,926 26,721 1, ,364 20, ,458 25, , ,228 12,981 8, ,509 16, ,019, , ,423, , , ,234 71,639 17, ,391,294 1,004, ,322 (2,285) 63,920 (7,348) 4,878 (4,427) 0 156,119 (14,060) ,724 (6,765) 54,234 9,799 (0) ,957 3, ,829 (1,053) 3,405 (2,533) 26,975 (3,598) 0 37,210 (7,184) 0 0 3,694 (981) 855 (855) 12,987 (572) 0 17,536 (2,408) 0 0 RR16 - Page 284 of

229 Page 142 of 270 SPS Labor Annualization No. Description Account 199 Miscellaneous - TX Miscellaneous - NM Miscellaneous Total Miscellaneous Total Distribution Maintenance Total Distribution O&M Customer Accounting Expense: 209 Supervision Meter Reading Billing & Cashiering Uncollectible Accounts Uncollectible Accounts Total Uncollectible Accounts Customer Deposit Interest - Texas 216 Miscellaneous Total Miscellaneous Total Customer Accounting Expense Customer Service Expense: 223 Supervision Customer Assistance - Historic EE Amortization - Texas 0908HDSMTX 225 Customer Assistance - EE Tracker Amortization - Texas 0908DSMTX 226 Customer Assistance - EE - New Mexico 0908DSMNM 227 Customer Assistance - ICO Credits 0908ICO 228 Customer Assistance - Saver Switch & EE Labor 0908SVR 229 Customer Assistance - Other Customer Assistance - Total Advertisement Miscellaneous Total Customer Service Expense 235 Whls Acct Mgr Adjusted Test Yr Test Yr Base Labor Base Labor Adjustment (128) (128) 0 4,946,331 1,189, ,338,723 1,627, (25) 2,721, , ,721, , ,699, , ,699, , ,699, ,803 RR16 - Page 285 of

230 Page 143 of 270 SPS Labor Annualization No. Description Account 236 Sales Expense: 237 Sales Expense - Supv Demonstrations & Selling Advertising Expense - Sales Miscellaneous Sales Expense Total Sales Expense Total Customer Service & Sales Expense Total Customer Operations Expense Administrative & General Expense: 249 Administrative Salaries Office Supplies & Expense A&G Expense Transferred Outside Services - Legal Property Insurance Injuries and Damages Pensions & Benefits Deferred Pensions & Benefits Regulatory Commission Expense - Texas Regulatory Commission Expense - New Mexico Regulatory Commission Expense - Wholesale Regulatory Commission Expense - NERC Fees Regulatory Commission Expense - Misc Total Regulatory Commission Expense Duplicate Charges - Electric Miscellaneous 930M 265 Rents - Retail Allocated Rents - Other 931O 267 Rents Maintenance of Structures Maintenance of General Plant Contributions &, Dues 271 Total Administrative & General Expense Total O&M Expense Whls Acct Mgr Adjusted Test Yr Test Yr Base Labor Base Labor Adjustment ,226 12, ,226 12, ,848, , ,570, ,758 3,327,036 46, ,327,036 46, ,864,152 3,593,617 RR16 - Page 286 of

231 Page 144 of 270 Wage Adjustment Per Book Total XES SPS 50 BL BL BL No. Description Account Base Labor Base Labor Base Labor 1 Operating & Maintenance Expenses: 2 3 Steam Production Operation: 4 Supervision & Engineering 500 1,970, ,057 1,676,934 5 Fuel (Transportation & Handling) 0501F 410, , Steam Expense 502 6,288,995 67,281 6,221,715 7 Electric Expense 505 6,020, ,020,599 8 Miscellaneous 506 5,769,443 2,873,564 2,895,879 9 Rent Supplies and Expenses Allowances Total Steam Production Operation 20,460,185 3,645,058 16,815, Steam Production Maintenance: 15 Supervision & Engineering 510 1,531, ,543 1,311, Structures 511 1,442,591 (888) 1,443, Boilers 512 5,714, ,782 5,559, Electric Plant 513 4,392, ,332 4,211, Miscellaneous Plant 514 6,998,308 1,927,194 5,071, Steam Production (Nonmajor) Total Steam Production Maintenance 20,079,117 2,481,963 17,597, Total Steam Production O&M 40,539,303 6,127,021 34,412, Combustion Turbine Production Operation: 26 Supervision & Engineering 546 4,193 3, Fuel Handling Generation Expense ,998 2, , Miscellaneous , ,241 66, Rents Total Combustion Turbine Production Operation 549, , , Combustion Turbine Production Maintenance: 34 Supervision & Engineering Structures ,252 3,812 56, Electric Plant ,699 86, , Miscellaneous Plant Total Combustion Turbine Production Maintenance 652,307 90, , Total Combustion Turbine Production O&M 1,202, , , RR16 - Page 287 of

232 Page 145 of 270 Wage Adjustment Per Book Total XES SPS 50 BL BL BL No. Description Account Base Labor Base Labor Base Labor 42 System Control and Dispatch: 43 System Load Control , , , Other Expenditures 557 1,585,253 1,584, Other Expenditures - New Mexico 557NM 46 Other Expenditures - Texas 557TX 47 Total System Control and Dispatch 2,370,454 1,967, , Total Non-Fuel Production O&M 44,111,763 8,362,925 35,748, Transmission Operations: 52 Supervision & Engineering 560 4,402,396 1,865,647 2,536, Load Dispatch Load Dispatch - Reliability ,809 4, Load Dispatch - Monitor/Operate ,120, ,860 1,779, Load Dispatch - Transmission Serv/Sch Load Dispatch - Sch/Con/Disp Serv Rel/Plan/Standards Dev Serv ,995 29, , Trans Service Studies , , Generation Interconnection Studies , , Rel/Plan/Standards Dev Serv Station Equipment ,921 32, , Overhead s ,882 34, , Underground s Miscellaneous 566 1,561, , , Rents Total Transmission Operations 9,421,708 3,026,929 6,394, Transmission Maintenance: 70 Supervision & Engineering , , Structures Station Equipment 570 1,282, ,282, Overhead s ,697 6, , Underground s Miscellaneous Total Transmission Maintenance 1,478,365 6,379 1,471, RR16 - Page 288 of

233 Page 146 of 270 Wage Adjustment Per Book Total XES SPS 50 BL BL BL No. Description Account Base Labor Base Labor Base Labor 78 Wheeling: 79 Wheeling - Lamar HVDC Tie 0565P 80 Wheeling - PNM Reliability Purchase 0565P 81 Wheeling - Ancillary Services - Schedules 1, 2, & Facilities Charg 0565R 82 Wheeling - Ancillary Services - Schedules 3, 5 & R 83 Wheeling - Schedules 7 & 8 - Point to Point 0565R 84 Wheeling - Schedule 9 Network Integration 0565T 85 Wheeling - Schedule T 86 Wheeling - Schedule 12 - FERC Assessment 0565R 87 Wheeling - Other 0565T Total Wheeling Total Transmission O&M 10,900,073 3,033,308 7,866, Regional Market Expenses: 95 Operation Supervision , , DA & RT Mkt Admin ,196 35, Trans Rights Mkt Admin Cap Mkt Admin Ancillary Serv Mkt Admin ,208 7, Market Monitoring/Compliance ,839 51, Mkt Fac/Mon/Comp Serv Regional Market Rents Total Regional Market Expenses 228, ,658 1, Distribution Operations: 106 Supervision - H/S , , Supervision - Texas ,065, ,065, Supervision - New Mexico , , Supervision 580 1,291, , , Total Supervision 580 3,746, ,182 3,093, Load Dispatch - H/S Load Dispatch - Texas , , Load Dispatch - New Mexico Load Dispatch , , Total Load Dispatch , , , Station Equipment - H/S Station Equipment - Texas , , Station Equipment - New Mexico Station Equipment , ,642 RR16 - Page 289 of

234 Page 147 of 270 Wage Adjustment Per Book Total XES SPS 50 BL BL BL No. Description Account Base Labor Base Labor Base Labor 120 Total Station Equipment , , Overhead s - H/S Overhead s - Texas , , Overhead s - New Mexico , , Overhead s ,545 38,841 2, Total Overhead s 583 1,425,456 38,841 1,386, Underground s - H/S Underground s - Texas , , Underground s - New Mexico , , Underground s Total Underground s , , Street Lighting - H/S Street Lighting - Texas Street Lighting - New Mexico , , Street Lighting , , Total Street Lighting , , Metering - H/S Metering - Texas ,694, ,694, Metering - New Mexico , , Metering 586 1,110, , , Total Metering 586 3,765, ,115 3,534, Customer Installations - H/S Customer Installations - Texas , , Customer Installations - New Mexico , , Customer Installations , , Total Customer Installations , , Miscellaneous - H/S , , Miscellaneous - Texas ,257, ,257, Miscellaneous - New Mexico , , Miscellaneous ,912 37, , Total Miscellaneous 588 2,856,728 37,322 2,819, Rents Rents - H/S Rents - Texas Rents - New Mexico Total Rents Total Distribution Operations 14,471,813 1,079,421 13,392, RR16 - Page 290 of

235 Page 148 of 270 Wage Adjustment Per Book Total XES SPS 50 BL BL BL No. Description Account Base Labor Base Labor Base Labor 159 Distribution Maintenance: 160 Supervision So - H/S Supervision - TX , , Supervision - NM , , Supervision ,988 15, , Total Supervision ,082 15, , Structures So - H/S Structures - TX Structures - NM Structures Total Structures Station Equipment So - H/S Station Equipment - TX , , Station Equipment - NM , , Station Equipment , , Total Station Equipment 592 1,019, ,019, Overhead s So - H/S Overhead s - TX ,423, ,423, Overhead s - NM , , Overhead s ,224 24,585 71, Total Overhead s 593 3,415,879 24,585 3,391, Underground s So - H/S Underground s - TX , , Underground s - NM , , Underground s 594 4, , Total Underground s , , Transformers So - H/S Transformers - TX , , Transformers - NM , , Transformers 595 (0) 0 (0) 189 Total Transformers , , Street Lighting So - H/S Street Lighting - TX , , Street Lighting - NM , , Street Lighting , , Total Street Lighting , , Metering So - H/S Metering - TX , , Metering - NM Metering , , Total Metering , , Miscellaneous So - H/S RR16 - Page 291 of

236 Page 149 of 270 Wage Adjustment Per Book Total XES SPS 50 BL BL BL No. Description Account Base Labor Base Labor Base Labor 201 Miscellaneous - TX Miscellaneous - NM Miscellaneous Total Miscellaneous Total Distribution Maintenance 4,986,540 40,209 4,946, Total Distribution O&M 19,458,353 1,119,630 18,338, Customer Accounting Expense: 211 Supervision ,115 24, Meter Reading 902 2,750,367 29,094 2,721, Billing & Cashiering 903 2,584,784 2,584, Uncollectible Accounts Uncollectible Accounts Total Uncollectible Accounts Customer Deposit Interest - Texas 218 Miscellaneous Total Miscellaneous Total Customer Accounting Expense 5,359,266 2,637,968 2,721, Customer Service Expense: 225 Supervision Customer Assistance - Historic EE Amortization - Texas 0908HDSMTX 227 Customer Assistance - EE Tracker Amortization - Texas 0908DSMTX 228 Customer Assistance - EE - New Mexico 0908DSMNM 229 Customer Assistance - ICO Credits 0908ICO 230 Customer Assistance - Saver Switch & EE Labor 0908SVR 21,446 21, Customer Assistance - Other 908 2,105, ,429 1,699, Customer Assistance - Total 908 2,126, ,875 1,699, Advertisement Miscellaneous Total Customer Service Expense 2,126, ,875 1,699, RR16 - Page 292 of

237 Page 150 of 270 Wage Adjustment Per Book Total XES SPS 50 BL BL BL No. Description Account Base Labor Base Labor Base Labor 238 Sales Expense: 239 Sales Expense - Supv Demonstrations & Selling ,173 24, , Advertising Expense - Sales Miscellaneous Sales Expense Total Sales Expense 174,173 24, , Total Customer Service & Sales Expense 2,300, ,823 1,848, Total Customer Operations Expense 7,659,952 3,089,790 4,570, Administrative & General Expense: 251 Administrative Salaries ,603,446 14,276,410 3,327, Office Supplies & Expense A&G Expense Transferred Outside Services - Legal Property Insurance Injuries and Damages Pensions & Benefits Deferred Pensions & Benefits Regulatory Commission Expense - Texas Regulatory Commission Expense - New Mexico Regulatory Commission Expense - Wholesale Regulatory Commission Expense - NERC Fees Regulatory Commission Expense - Misc Total Regulatory Commission Expense Duplicate Charges - Electric Miscellaneous 930M 267 Rents - Retail Allocated Rents - Other 931O 269 Rents Maintenance of Structures Maintenance of General Plant Contributions &, Dues 273 Total Administrative & General Expense 17,603,446 14,276,410 3,327, Total O&M Expense 99,961,893 30,108,721 69,853,172 RR16 - Page 293 of

238 Page 151 of 270 Wage Adjustment No. Description Account 1 Operating & Maintenance Expenses: 2 3 Steam Production Operation: 4 Supervision & Engineering Fuel (Transportation & Handling) 0501F 6 Steam Expense Electric Expense Miscellaneous Rent Supplies and Expenses Allowances Total Steam Production Operation Steam Production Maintenance: 15 Supervision & Engineering Structures Boilers Electric Plant Miscellaneous Plant Steam Production (Nonmajor) Total Steam Production Maintenance Total Steam Production O&M Combustion Turbine Production Operation: 26 Supervision & Engineering Fuel Handling Generation Expense Miscellaneous Rents Total Combustion Turbine Production Operation Combustion Turbine Production Maintenance: 34 Supervision & Engineering Structures Electric Plant Miscellaneous Plant Total Combustion Turbine Production Maintenance Total Combustion Turbine Production O&M 41 Adjustments to Per Book Base Labor Adjusted Base Labor XES SPS XES SPS Base Labor Base Labor Base Labor Base Labor (17,980) (22,017) 276,077 1,654,917 18,002 10, ,159 10,980 (26,642) (479,721) 40,638 5,741,994 0 (343,806) 0 5,676, , ,402 3,111,535 3,363, ,350 (367,162) 3,856,408 16,447,966 21,166 87, ,709 1,399,188 8,018 46,320 7,130 1,489,800 (43,013) 823, ,769 6,382,698 (18,703) 171, ,629 4,382, , ,221 2,359,695 5,481, ,969 1,538,179 2,881,932 19,135, ,319 1,171,017 6,738,340 35,583,299 (1,365) (793) 2, ,753 75,904 10, ,318 (6,752) (36,861) 164,489 29,407 0 (364) 38, , , (164) (3,812) 1, ,017 (3,672) 168,965 83, ,915 0 (7,460) 170,378 83, ,932 (7,824) 208, ,154 1,142,657 RR16 - Page 294 of

239 Page 152 of 270 Wage Adjustment No. Description Account 42 System Control and Dispatch: 43 System Load Control Other Expenditures Other Expenditures - New Mexico 557NM 46 Other Expenditures - Texas 557TX 47 Total System Control and Dispatch Total Non-Fuel Production O&M Transmission Operations: 52 Supervision & Engineering Load Dispatch Load Dispatch - Reliability Load Dispatch - Monitor/Operate Load Dispatch - Transmission Serv/Sch Load Dispatch - Sch/Con/Disp Serv Rel/Plan/Standards Dev Serv Trans Service Studies Generation Interconnection Studies Rel/Plan/Standards Dev Serv Station Equipment Overhead s Underground s Miscellaneous Rents Total Transmission Operations Transmission Maintenance: 70 Supervision & Engineering Structures Station Equipment Overhead s Underground s Miscellaneous Total Transmission Maintenance 77 Adjustments to Per Book Base Labor Adjusted Base Labor XES SPS XES SPS Base Labor Base Labor Base Labor Base Labor 179,647 (141,200) 563, ,337 59,706 (991) 1,643, ,354 (142,191) 2,207, , ,849 1,237,455 9,205,774 36,986,293 (433,478) 341,413 1,432,169 2,878, , , , ,955 1,780, (7,945) (182,065) 21,589 55,396 0 (45,427) 0 4, , , ,866 36,994 38, ,920 (5,611) (45,431) 28, , , ,145 1,204, , , ,791 3,112,104 6,651, , , , ,396, ,679 6, , ,631 6,977 1,611,617 RR16 - Page 295 of

240 Page 153 of 270 Wage Adjustment No. Description Account 78 Wheeling: 79 Wheeling - Lamar HVDC Tie 0565P 80 Wheeling - PNM Reliability Purchase 0565P 81 Wheeling - Ancillary Services - Schedules 1, 2, & Facilities Charg 0565R 82 Wheeling - Ancillary Services - Schedules 3, 5 & R 83 Wheeling - Schedules 7 & 8 - Point to Point 0565R 84 Wheeling - Schedule 9 Network Integration 0565T 85 Wheeling - Schedule T 86 Wheeling - Schedule 12 - FERC Assessment 0565R 87 Wheeling - Other 0565T Total Wheeling Total Transmission O&M Regional Market Expenses: 95 Operation Supervision DA & RT Mkt Admin Trans Rights Mkt Admin Cap Mkt Admin Ancillary Serv Mkt Admin Market Monitoring/Compliance Mkt Fac/Mon/Comp Serv Regional Market Rents Total Regional Market Expenses Distribution Operations: 106 Supervision - H/S Supervision - Texas Supervision - New Mexico Supervision Total Supervision Load Dispatch - H/S Load Dispatch - Texas Load Dispatch - New Mexico Load Dispatch Total Load Dispatch Station Equipment - H/S Station Equipment - Texas Station Equipment - New Mexico Station Equipment 582 Adjustments to Per Book Base Labor Adjusted Base Labor XES SPS XES SPS Base Labor Base Labor Base Labor Base Labor , ,422 3,119,081 8,263,187 (17,507) 0 114,555 0 (5,583) (824) 29, (2,310) (824) 5,074 0 (6,775) 0 45, (32,176) (1,648) 194, (24,013) (299,186) 0 1,765, , ,788 40, , , ,825 40,011 (126,580) 693,193 2,966, , , , , , , , , , , , , ,938 RR16 - Page 296 of

241 Page 154 of 270 Wage Adjustment No. Description Account 120 Total Station Equipment Overhead s - H/S Overhead s - Texas Overhead s - New Mexico Overhead s Total Overhead s Underground s - H/S Underground s - Texas Underground s - New Mexico Underground s Total Underground s Street Lighting - H/S Street Lighting - Texas Street Lighting - New Mexico Street Lighting Total Street Lighting Metering - H/S Metering - Texas Metering - New Mexico Metering Total Metering Customer Installations - H/S Customer Installations - Texas Customer Installations - New Mexico Customer Installations Total Customer Installations Miscellaneous - H/S Miscellaneous - Texas Miscellaneous - New Mexico Miscellaneous Total Miscellaneous Rents Rents - H/S Rents - Texas Rents - New Mexico Total Rents Total Distribution Operations 158 Adjustments to Per Book Base Labor Adjusted Base Labor XES SPS XES SPS Base Labor Base Labor Base Labor Base Labor 0 31, , , ,036,242 0 (39,940) 0 356,482 5, ,899 3,121 5,058 9,230 43,899 1,395, , , , ,214 0 (27) , , (767) (2,200) 0 2,753 0 (116,897) 0 409,325 0 (119,864) 0 412, (19,819) 0 1,675, , ,284 22,674 (50,653) 253, ,664 22,674 (65,162) 253,789 3,468, , ,551 0 (2,521) 0 2,281 0 (103,674) 0 626,993 0 (97,276) 0 875,824 0 (65,917) , ,384, , ,747 9, ,468 46, ,058 9, ,260 46,554 3,145, , ,292 1,163,915 13,829,684 RR16 - Page 297 of

242 Page 155 of 270 Wage Adjustment No. Description Account 159 Distribution Maintenance: 160 Supervision So - H/S Supervision - TX Supervision - NM Supervision Total Supervision Structures So - H/S Structures - TX Structures - NM Structures Total Structures Station Equipment So - H/S Station Equipment - TX Station Equipment - NM Station Equipment Total Station Equipment Overhead s So - H/S Overhead s - TX Overhead s - NM Overhead s Total Overhead s Underground s So - H/S Underground s - TX Underground s - NM Underground s Total Underground s Transformers So - H/S Transformers - TX Transformers - NM Transformers Total Transformers Street Lighting So - H/S Street Lighting - TX Street Lighting - NM Street Lighting Total Street Lighting Metering So - H/S Metering - TX Metering - NM Metering Total Metering Miscellaneous So - H/S Adjustments to Per Book Base Labor Adjusted Base Labor XES SPS XES SPS Base Labor Base Labor Base Labor Base Labor 0 0 3, , , ,478 13,583 20,010 29, ,375 13,583 25,693 29, , , , , , , , , ,199, , ,262, , ,044,413 2,303 17,438 26,889 89,077 2,303 1,004,862 26,889 4,396, (2,285) 0 85,037 0 (7,348) 0 56,572 0 (4,427) (14,060) 0 142, (6,765) 0 15, , , , , (1,053) 0 5,777 0 (2,533) (3,598) 0 23,376 0 (7,184) 0 30, (981) 0 2,713 0 (855) (572) 0 12,415 0 (2,408) 0 15,128 0 RR16 - Page 298 of

243 Page 156 of 270 Wage Adjustment No. Description Account 201 Miscellaneous - TX Miscellaneous - NM Miscellaneous Total Miscellaneous Total Distribution Maintenance Total Distribution O&M Customer Accounting Expense: 211 Supervision Meter Reading Billing & Cashiering Uncollectible Accounts Uncollectible Accounts Total Uncollectible Accounts Customer Deposit Interest - Texas 218 Miscellaneous Total Miscellaneous Total Customer Accounting Expense Customer Service Expense: 225 Supervision Customer Assistance - Historic EE Amortization - Texas 0908HDSMTX 227 Customer Assistance - EE Tracker Amortization - Texas 0908DSMTX 228 Customer Assistance - EE - New Mexico 0908DSMNM 229 Customer Assistance - ICO Credits 0908ICO 230 Customer Assistance - Saver Switch & EE Labor 0908SVR 231 Customer Assistance - Other Customer Assistance - Total Advertisement Miscellaneous Total Customer Service Expense 237 Adjustments to Per Book Base Labor Adjusted Base Labor XES SPS XES SPS Base Labor Base Labor Base Labor Base Labor 0 0 (128) (128) ,886 1,189,810 56,095 6,136, ,381 1,627,102 1,220,011 19,965,826 1,359 (25) 25, , ,439 30,157 2,879,712 51, ,636, , ,413 2,691,643 2,879,712 0 (4,427) 0 17,019 0 (188,770) 127, ,659 1,827,441 (193,196) 127, ,679 1,827, (193,196) 127, ,679 1,827,441 RR16 - Page 299 of

244 Page 157 of 270 Wage Adjustment No. Description Account 238 Sales Expense: 239 Sales Expense - Supv Demonstrations & Selling Advertising Expense - Sales Miscellaneous Sales Expense Total Sales Expense Total Customer Service & Sales Expense Total Customer Operations Expense Administrative & General Expense: 251 Administrative Salaries Office Supplies & Expense A&G Expense Transferred Outside Services - Legal Property Insurance Injuries and Damages Pensions & Benefits Deferred Pensions & Benefits Regulatory Commission Expense - Texas Regulatory Commission Expense - New Mexico Regulatory Commission Expense - Wholesale Regulatory Commission Expense - NERC Fees Regulatory Commission Expense - Misc Total Regulatory Commission Expense Duplicate Charges - Electric Miscellaneous 930M 267 Rents - Retail Allocated Rents - Other 931O 269 Rents Maintenance of Structures Maintenance of General Plant Contributions &, Dues 273 Total Administrative & General Expense Total O&M Expense Adjustments to Per Book Base Labor Adjusted Base Labor XES SPS XES SPS Base Labor Base Labor Base Labor Base Labor 0 (24,948) 12, , (24,948) 12, ,767 (218,144) 140, ,679 1,989,208 (164,468) 298,758 2,925,322 4,868, ,219 46,509 14,572,629 3,373, ,219 46,509 14,572,629 3,373,545 1,128,577 3,604,597 31,237,298 73,457,769 RR16 - Page 300 of

245 Page 158 of 270 Wage Adjustment No. Description Account 1 Operating & Maintenance Expenses: 2 3 Steam Production Operation: 4 Supervision & Engineering Fuel (Transportation & Handling) 0501F 6 Steam Expense Electric Expense Miscellaneous Rent Supplies and Expenses Allowances Total Steam Production Operation Steam Production Maintenance: 15 Supervision & Engineering Structures Boilers Electric Plant Miscellaneous Plant Steam Production (Nonmajor) Total Steam Production Maintenance Total Steam Production O&M Combustion Turbine Production Operation: 26 Supervision & Engineering Fuel Handling Generation Expense Miscellaneous Rents Total Combustion Turbine Production Operation Combustion Turbine Production Maintenance: 34 Supervision & Engineering Structures Electric Plant Miscellaneous Plant Total Combustion Turbine Production Maintenance Total Combustion Turbine Production O&M 41 Wage Increase XES SPS Total 3.00% 3.00% XES+SPS Base Labor Base Labor Base Labor 8,282 49,648 57,930 12, ,174 1, , , , ,304 93, , , , , ,131 7,221 41,976 49, ,694 44,908 3, , ,834 4, , ,348 70, , ,231 86, , , ,150 1,067,499 1,269, ,440 11,750 4, ,817 5,306 12,322 17, ,741 1,741 2,492 20,217 22,710 2,499 21,958 24,457 7,805 34,280 42,084 RR16 - Page 301 of

246 Page 159 of 270 Wage Adjustment No. Description Account 42 System Control and Dispatch: 43 System Load Control Other Expenditures Other Expenditures - New Mexico 557NM 46 Other Expenditures - Texas 557TX 47 Total System Control and Dispatch Total Non-Fuel Production O&M Transmission Operations: 52 Supervision & Engineering Load Dispatch Load Dispatch - Reliability Load Dispatch - Monitor/Operate Load Dispatch - Transmission Serv/Sch Load Dispatch - Sch/Con/Disp Serv Rel/Plan/Standards Dev Serv Trans Service Studies Generation Interconnection Studies Rel/Plan/Standards Dev Serv Station Equipment Overhead s Underground s Miscellaneous Rents Total Transmission Operations Transmission Maintenance: 70 Supervision & Engineering Structures Station Equipment Overhead s Underground s Miscellaneous Total Transmission Maintenance 77 Wage Increase XES SPS Total 3.00% 3.00% XES+SPS Base Labor Base Labor Base Labor 16,899 7,810 24,709 49, ,319 66,218 7,810 74, ,173 1,109,589 1,385,762 42,965 86, , ,039 53,411 64, ,662 2, ,166 22,588 23, ,586 6,445 36,129 29,660 65,789 93, , , ,750 2, ,908 41, ,690 3, ,349 48,558 RR16 - Page 302 of

247 Page 160 of 270 Wage Adjustment No. Description Account 78 Wheeling: 79 Wheeling - Lamar HVDC Tie 0565P 80 Wheeling - PNM Reliability Purchase 0565P 81 Wheeling - Ancillary Services - Schedules 1, 2, & Facilities Charg 0565R 82 Wheeling - Ancillary Services - Schedules 3, 5 & R 83 Wheeling - Schedules 7 & 8 - Point to Point 0565R 84 Wheeling - Schedule 9 Network Integration 0565T 85 Wheeling - Schedule T 86 Wheeling - Schedule 12 - FERC Assessment 0565R 87 Wheeling - Other 0565T Total Wheeling Total Transmission O&M Regional Market Expenses: 95 Operation Supervision DA & RT Mkt Admin Trans Rights Mkt Admin Cap Mkt Admin Ancillary Serv Mkt Admin Market Monitoring/Compliance Mkt Fac/Mon/Comp Serv Regional Market Rents Total Regional Market Expenses Distribution Operations: 106 Supervision - H/S Supervision - Texas Supervision - New Mexico Supervision Total Supervision Load Dispatch - H/S Load Dispatch - Texas Load Dispatch - New Mexico Load Dispatch Total Load Dispatch Station Equipment - H/S Station Equipment - Texas Station Equipment - New Mexico Station Equipment 582 Wage Increase XES SPS Total 3.00% 3.00% XES+SPS Base Labor Base Labor Base Labor 93, , ,468 3, , , ,352 5, , ,975 52, ,474 12,474 20,796 23,545 44,341 20,796 88, , ,227 23,227 3, ,794 3,794 23,227 27, ,016 10, ,268 9,268 RR16 - Page 303 of

248 Page 161 of 270 Wage Adjustment No. Description Account 120 Total Station Equipment Overhead s - H/S Overhead s - Texas Overhead s - New Mexico Overhead s Total Overhead s Underground s - H/S Underground s - Texas Underground s - New Mexico Underground s Total Underground s Street Lighting - H/S Street Lighting - Texas Street Lighting - New Mexico Street Lighting Total Street Lighting Metering - H/S Metering - Texas Metering - New Mexico Metering Total Metering Customer Installations - H/S Customer Installations - Texas Customer Installations - New Mexico Customer Installations Total Customer Installations Miscellaneous - H/S Miscellaneous - Texas Miscellaneous - New Mexico Miscellaneous Total Miscellaneous Rents Rents - H/S Rents - Texas Rents - New Mexico Total Rents Total Distribution Operations 158 Wage Increase XES SPS Total 3.00% 3.00% XES+SPS Base Labor Base Labor Base Labor 0 19,322 19, ,087 31, ,694 10,694 1, ,411 1,317 41,875 43, ,879 3, ,396 4, ,280 12, ,362 12, ,252 50, ,959 28,959 7,614 24,860 32,474 7, , , ,397 7, ,810 18, ,275 26, ,546 41, ,562 24,562 1,397 28,262 29,658 1,397 94,370 95,767 34, , ,808 RR16 - Page 304 of

249 Page 162 of 270 Wage Adjustment No. Description Account 159 Distribution Maintenance: 160 Supervision So - H/S Supervision - TX Supervision - NM Supervision Total Supervision Structures So - H/S Structures - TX Structures - NM Structures Total Structures Station Equipment So - H/S Station Equipment - TX Station Equipment - NM Station Equipment Total Station Equipment Overhead s So - H/S Overhead s - TX Overhead s - NM Overhead s Total Overhead s Underground s So - H/S Underground s - TX Underground s - NM Underground s Total Underground s Transformers So - H/S Transformers - TX Transformers - NM Transformers Total Transformers Street Lighting So - H/S Street Lighting - TX Street Lighting - NM Street Lighting Total Street Lighting Metering So - H/S Metering - TX Metering - NM Metering Total Metering Miscellaneous So - H/S Wage Increase XES SPS Total 3.00% 3.00% XES+SPS Base Labor Base Labor Base Labor 0 1,899 1, ,441 6, ,195 9, ,951 20, ,385 14, ,989 35, ,880 97, ,332 31, ,672 3, , , ,551 2, ,697 1, ,262 4, ,921 1, ,400 2, RR16 - Page 305 of

250 Page 163 of 270 Wage Adjustment No. Description Account 201 Miscellaneous - TX Miscellaneous - NM Miscellaneous Total Miscellaneous Total Distribution Maintenance Total Distribution O&M Customer Accounting Expense: 211 Supervision Meter Reading Billing & Cashiering Uncollectible Accounts Uncollectible Accounts Total Uncollectible Accounts Customer Deposit Interest - Texas 218 Miscellaneous Total Miscellaneous Total Customer Accounting Expense Customer Service Expense: 225 Supervision Customer Assistance - Historic EE Amortization - Texas 0908HDSMTX 227 Customer Assistance - EE Tracker Amortization - Texas 0908DSMTX 228 Customer Assistance - EE - New Mexico 0908DSMNM 229 Customer Assistance - ICO Credits 0908ICO 230 Customer Assistance - Saver Switch & EE Labor 0908SVR 231 Customer Assistance - Other Customer Assistance - Total Advertisement Miscellaneous Total Customer Service Expense 237 Wage Increase XES SPS Total 3.00% 3.00% XES+SPS Base Labor Base Labor Base Labor 1, , ,767 36, , , ,391 87,296 79, ,081 80,749 86, , ,500 54,823 61,323 7,010 54,823 61,834 7,010 54,823 61,834 RR16 - Page 306 of

251 Page 164 of 270 Wage Adjustment No. Description Account 238 Sales Expense: 239 Sales Expense - Supv Demonstrations & Selling Advertising Expense - Sales Miscellaneous Sales Expense Total Sales Expense Total Customer Service & Sales Expense Total Customer Operations Expense Administrative & General Expense: 251 Administrative Salaries Office Supplies & Expense A&G Expense Transferred Outside Services - Legal Property Insurance Injuries and Damages Pensions & Benefits Deferred Pensions & Benefits Regulatory Commission Expense - Texas Regulatory Commission Expense - New Mexico Regulatory Commission Expense - Wholesale Regulatory Commission Expense - NERC Fees Regulatory Commission Expense - Misc Total Regulatory Commission Expense Duplicate Charges - Electric Miscellaneous 930M 267 Rents - Retail Allocated Rents - Other 931O 269 Rents Maintenance of Structures Maintenance of General Plant Contributions &, Dues 273 Total Administrative & General Expense Total O&M Expense Wage Increase XES SPS Total 3.00% 3.00% XES+SPS Base Labor Base Labor Base Labor 0 4,853 4, ,853 4,853 7,010 59,676 66,687 87, , , , , , , , , ,119 2,203,733 3,140,852 RR16 - Page 307 of

252 Page 165 of 270 Adjustments to Incentive Per Book Total XES SPS 50 INC INC INC No. Description Account Incentive Incentive Incentive 1 Operating & Maintenance Expenses: 2 3 Steam Production Operation: 4 Supervision & Engineering ,266 46,659 71,607 5 Fuel (Transportation & Handling) 0501F 65,684 65, Steam Expense ,239 12, ,372 7 Electric Expense , ,223 8 Miscellaneous , , ,371 9 Rent Supplies and Expenses Allowances Total Steam Production Operation 1,260, , , Steam Production Maintenance: 15 Supervision & Engineering ,633 35,647 52, Structures ,025 (149) 59, Boilers ,440 22, , Electric Plant ,921 26, , Miscellaneous Plant , , , Steam Production (Nonmajor) Total Steam Production Maintenance 1,004, , , Total Steam Production O&M 2,265, ,012 1,282, Combustion Turbine Production Operation: 26 Supervision & Engineering Fuel Handling Generation Expense , , Miscellaneous ,582 27,660 1, Rents Total Combustion Turbine Production Operation 42,633 28,548 14, Combustion Turbine Production Maintenance: 34 Supervision & Engineering Structures 552 2, , Electric Plant ,438 12,899 20, Miscellaneous Plant Total Combustion Turbine Production Maintenance 35,917 13,374 22, Total Combustion Turbine Production O&M 78,550 41,922 36, RR16 - Page 308 of

253 Page 166 of 270 Adjustments to Incentive Per Book Total XES SPS 50 INC INC INC No. Description Account Incentive Incentive Incentive 42 System Control and Dispatch: 43 System Load Control ,110 68,473 36, Other Expenditures , , Other Expenditures - New Mexico 557NM 46 Other Expenditures - Texas 557TX 47 Total System Control and Dispatch 358, ,829 36, Total Non-Fuel Production O&M 2,702,272 1,346,763 1,355, Transmission Operations: 52 Supervision & Engineering , , , Load Dispatch Load Dispatch - Reliability Load Dispatch - Monitor/Operate ,104 54,653 65, Load Dispatch - Transmission Serv/Sch Load Dispatch - Sch/Con/Disp Serv Rel/Plan/Standards Dev Serv ,184 3,373 8, Trans Service Studies Generation Interconnection Studies Rel/Plan/Standards Dev Serv Station Equipment ,471 6,034 25, Overhead s ,536 7,010 7, Underground s Miscellaneous , ,151 32, Rents Total Transmission Operations 748, , , Transmission Maintenance: 70 Supervision & Engineering 568 2, , Structures Station Equipment , , Overhead s 571 5,896 1,305 4, Underground s Miscellaneous Total Transmission Maintenance 52,805 1,305 51, RR16 - Page 309 of

254 Page 167 of 270 Adjustments to Incentive Per Book Total XES SPS 50 INC INC INC No. Description Account Incentive Incentive Incentive 78 Wheeling: 79 Wheeling - Lamar HVDC Tie 0565P 80 Wheeling - PNM Reliability Purchase 0565P 81 Wheeling - Ancillary Services - Schedules 1, 2, & Facilities Charg 0565R 82 Wheeling - Ancillary Services - Schedules 3, 5 & R 83 Wheeling - Schedules 7 & 8 - Point to Point 0565R 84 Wheeling - Schedule 9 Network Integration 0565T 85 Wheeling - Schedule T 86 Wheeling - Schedule 12 - FERC Assessment 0565R 87 Wheeling - Other 0565T Total Wheeling Total Transmission O&M 801, , , Regional Market Expenses: 95 Operation Supervision ,674 22, DA & RT Mkt Admin ,396 5, Trans Rights Mkt Admin Cap Mkt Admin Ancillary Serv Mkt Admin ,093 1, Market Monitoring/Compliance ,281 10, Mkt Fac/Mon/Comp Serv Regional Market Rents Total Regional Market Expenses 39,444 39, Distribution Operations: 106 Supervision - H/S , , Supervision - Texas , , Supervision - New Mexico , , Supervision , ,364 26, Total Supervision , , , Load Dispatch - H/S Load Dispatch - Texas , , Load Dispatch - New Mexico Load Dispatch ,164 19, Total Load Dispatch ,074 19,164 9, Station Equipment - H/S Station Equipment - Texas , , Station Equipment - New Mexico Station Equipment , ,594 RR16 - Page 310 of

255 Page 168 of 270 Adjustments to Incentive Per Book Total XES SPS 50 INC INC INC No. Description Account Incentive Incentive Incentive 120 Total Station Equipment , , Overhead s - H/S Overhead s - Texas , , Overhead s - New Mexico , , Overhead s 583 5,562 5, Total Overhead s ,078 5,508 40, Underground s - H/S Underground s - Texas , , Underground s - New Mexico Underground s Total Underground s 584 2, , Street Lighting - H/S Street Lighting - Texas Street Lighting - New Mexico Street Lighting , , Total Street Lighting , , Metering - H/S Metering - Texas , , Metering - New Mexico , , Metering ,095 34,532 35, Total Metering ,314 34, , Customer Installations - H/S Customer Installations - Texas , , Customer Installations - New Mexico Customer Installations , , Total Customer Installations , , Miscellaneous - H/S , , Miscellaneous - Texas , , Miscellaneous - New Mexico , , Miscellaneous ,398 6,061 31, Total Miscellaneous ,370 6, , Rents Rents - H/S Rents - Texas Rents - New Mexico Total Rents Total Distribution Operations 704, , , RR16 - Page 311 of

256 Page 169 of 270 Adjustments to Incentive Per Book Total XES SPS 50 INC INC INC No. Description Account Incentive Incentive Incentive 159 Distribution Maintenance: 160 Supervision So - H/S Supervision - TX , , Supervision - NM , , Supervision 590 8,337 2,319 6, Total Supervision ,020 2,319 9, Structures So - H/S Structures - TX Structures - NM Structures Total Structures Station Equipment So - H/S Station Equipment - TX , , Station Equipment - NM Station Equipment , , Total Station Equipment , , Overhead s So - H/S Overhead s - TX , , Overhead s - NM , , Overhead s 593 6,930 4,568 2, Total Overhead s ,715 4,568 82, Underground s So - H/S Underground s - TX , , Underground s - NM , , Underground s Total Underground s 594 4, , Transformers So - H/S Transformers - TX Transformers - NM , , Transformers 595 (0) 0 (0) 189 Total Transformers 595 3, , Street Lighting So - H/S Street Lighting - TX Street Lighting - NM Street Lighting Total Street Lighting 596 1, , Metering So - H/S Metering - TX Metering - NM Metering Total Metering Miscellaneous So - H/S RR16 - Page 312 of

257 Page 170 of 270 Adjustments to Incentive Per Book Total XES SPS 50 INC INC INC No. Description Account Incentive Incentive Incentive 201 Miscellaneous - TX Miscellaneous - NM Miscellaneous Total Miscellaneous Total Distribution Maintenance 148,618 6, , Total Distribution O&M 853, , , Customer Accounting Expense: 211 Supervision 901 3,590 3, Meter Reading ,552 4, , Billing & Cashiering , , Uncollectible Accounts Uncollectible Accounts Total Uncollectible Accounts Customer Deposit Interest - Texas 218 Miscellaneous Total Miscellaneous Total Customer Accounting Expense 504, , , Customer Service Expense: 225 Supervision Customer Assistance - Historic EE Amortization - Texas 0908HDSMTX 227 Customer Assistance - EE Tracker Amortization - Texas 0908DSMTX 228 Customer Assistance - EE - New Mexico 0908DSMNM 229 Customer Assistance - ICO Credits 0908ICO 230 Customer Assistance - Saver Switch & EE Labor 0908SVR 3,578 3, Customer Assistance - Other ,865 74,217 70, Customer Assistance - Total ,443 77,795 70, Advertisement Miscellaneous Total Customer Service Expense 148,443 77,795 70, RR16 - Page 313 of

258 Page 171 of 270 Adjustments to Incentive Per Book Total XES SPS 50 INC INC INC No. Description Account Incentive Incentive Incentive 238 Sales Expense: 239 Sales Expense - Supv Demonstrations & Selling ,092 5,706 6, Advertising Expense - Sales Miscellaneous Sales Expense Total Sales Expense 12,092 5,706 6, Total Customer Service & Sales Expense 160,535 83,501 77, Total Customer Operations Expense 665, , , Administrative & General Expense: 251 Administrative Salaries 920 2,472,222 2,331, , Office Supplies & Expense A&G Expense Transferred Outside Services - Legal Property Insurance Injuries and Damages Pensions & Benefits Deferred Pensions & Benefits Regulatory Commission Expense - Texas Regulatory Commission Expense - New Mexico Regulatory Commission Expense - Wholesale Regulatory Commission Expense - NERC Fees Regulatory Commission Expense - Misc Total Regulatory Commission Expense Duplicate Charges - Electric Miscellaneous 930M 267 Rents - Retail Allocated Rents - Other 931O 269 Rents Maintenance of Structures Maintenance of General Plant Contributions &, Dues 273 Total Administrative & General Expense 2,472,222 2,331, , Total O&M Expense 7,533,663 4,876,031 2,657,633 RR16 - Page 314 of

259 Page 172 of 270 Adjustments to Incentive No. Description Account 1 Operating & Maintenance Expenses: 2 3 Steam Production Operation: 4 Supervision & Engineering Fuel (Transportation & Handling) 0501F 6 Steam Expense Electric Expense Miscellaneous Rent Supplies and Expenses Allowances Total Steam Production Operation Steam Production Maintenance: 15 Supervision & Engineering Structures Boilers Electric Plant Miscellaneous Plant Steam Production (Nonmajor) Total Steam Production Maintenance Total Steam Production O&M Combustion Turbine Production Operation: 26 Supervision & Engineering Fuel Handling Generation Expense Miscellaneous Rents Total Combustion Turbine Production Operation Combustion Turbine Production Maintenance: 34 Supervision & Engineering Structures Electric Plant Miscellaneous Plant Total Combustion Turbine Production Maintenance Total Combustion Turbine Production O&M 41 Adjustments to Per Book Incentive Adjusted Incentive XES SPS XES SPS Incentive Incentive Incentive Incentive ,659 71, , , , , , , , , ,647 52, (149) 59,174 (9,461) 0 13, ,767 9, , , , , , , ,013 1,282, , ,660 1, ,548 14, , ,899 20, ,374 22, ,922 36,628 RR16 - Page 315 of

260 Page 173 of 270 Adjustments to Incentive No. Description Account 42 System Control and Dispatch: 43 System Load Control Other Expenditures Other Expenditures - New Mexico 557NM 46 Other Expenditures - Texas 557TX 47 Total System Control and Dispatch Total Non-Fuel Production O&M Transmission Operations: 52 Supervision & Engineering Load Dispatch Load Dispatch - Reliability Load Dispatch - Monitor/Operate Load Dispatch - Transmission Serv/Sch Load Dispatch - Sch/Con/Disp Serv Rel/Plan/Standards Dev Serv Trans Service Studies Generation Interconnection Studies Rel/Plan/Standards Dev Serv Station Equipment Overhead s Underground s Miscellaneous Rents Total Transmission Operations Transmission Maintenance: 70 Supervision & Engineering Structures Station Equipment Overhead s Underground s Miscellaneous Total Transmission Maintenance 77 Adjustments to Per Book Incentive Adjusted Incentive XES SPS XES SPS Incentive Incentive Incentive Incentive (1,500) 0 66,973 36,637 (328) 0 253, (1,828) 0 320,002 36,676 (1,827) 0 1,344,936 1,355, , , ,653 65, ,373 8, ,034 25, ,010 7, ,151 32, , ,691 2, ,798 (22) 0 1,283 4, (22) 0 1,283 51,500 RR16 - Page 316 of

261 Page 174 of 270 Adjustments to Incentive No. Description Account 78 Wheeling: 79 Wheeling - Lamar HVDC Tie 0565P 80 Wheeling - PNM Reliability Purchase 0565P 81 Wheeling - Ancillary Services - Schedules 1, 2, & Facilities Charg 0565R 82 Wheeling - Ancillary Services - Schedules 3, 5 & R 83 Wheeling - Schedules 7 & 8 - Point to Point 0565R 84 Wheeling - Schedule 9 Network Integration 0565T 85 Wheeling - Schedule T 86 Wheeling - Schedule 12 - FERC Assessment 0565R 87 Wheeling - Other 0565T Total Wheeling Total Transmission O&M Regional Market Expenses: 95 Operation Supervision DA & RT Mkt Admin Trans Rights Mkt Admin Cap Mkt Admin Ancillary Serv Mkt Admin Market Monitoring/Compliance Mkt Fac/Mon/Comp Serv Regional Market Rents Total Regional Market Expenses Distribution Operations: 106 Supervision - H/S Supervision - Texas Supervision - New Mexico Supervision Total Supervision Load Dispatch - H/S Load Dispatch - Texas Load Dispatch - New Mexico Load Dispatch Total Load Dispatch Station Equipment - H/S Station Equipment - Texas Station Equipment - New Mexico Station Equipment 582 Adjustments to Per Book Incentive Adjusted Incentive XES SPS XES SPS Incentive Incentive Incentive Incentive (22) 0 499, , , , , , , , , ,119 87,521 15, ,364 26, , , , , ,164 9, , ,594 RR16 - Page 317 of

262 Page 175 of 270 Adjustments to Incentive No. Description Account 120 Total Station Equipment Overhead s - H/S Overhead s - Texas Overhead s - New Mexico Overhead s Total Overhead s Underground s - H/S Underground s - Texas Underground s - New Mexico Underground s Total Underground s Street Lighting - H/S Street Lighting - Texas Street Lighting - New Mexico Street Lighting Total Street Lighting Metering - H/S Metering - Texas Metering - New Mexico Metering Total Metering Customer Installations - H/S Customer Installations - Texas Customer Installations - New Mexico Customer Installations Total Customer Installations Miscellaneous - H/S Miscellaneous - Texas Miscellaneous - New Mexico Miscellaneous Total Miscellaneous Rents Rents - H/S Rents - Texas Rents - New Mexico Total Rents Total Distribution Operations 158 Adjustments to Per Book Incentive Adjusted Incentive XES SPS XES SPS Incentive Incentive Incentive Incentive 23, ,981 10, , ,508 40, , , ,932 22, ,359 41,860 (29) 0 34,503 35,563 (29) 0 34, , , ,890 40,668 3,510 53,175 25, ,062 31, , , (29) 0 169, ,800 RR16 - Page 318 of

263 Page 176 of 270 Adjustments to Incentive No. Description Account 159 Distribution Maintenance: 160 Supervision So - H/S Supervision - TX Supervision - NM Supervision Total Supervision Structures So - H/S Structures - TX Structures - NM Structures Total Structures Station Equipment So - H/S Station Equipment - TX Station Equipment - NM Station Equipment Total Station Equipment Overhead s So - H/S Overhead s - TX Overhead s - NM Overhead s Total Overhead s Underground s So - H/S Underground s - TX Underground s - NM Underground s Total Underground s Transformers So - H/S Transformers - TX Transformers - NM Transformers Total Transformers Street Lighting So - H/S Street Lighting - TX Street Lighting - NM Street Lighting Total Street Lighting Metering So - H/S Metering - TX Metering - NM Metering Total Metering Miscellaneous So - H/S Adjustments to Per Book Incentive Adjusted Incentive XES SPS XES SPS Incentive Incentive Incentive Incentive 0 2,582 1, ,319 6, ,319 9, , ,308 39, ,076 18, ,568 2, ,568 82, ,922 1, , ,263 (0) 3, , RR16 - Page 319 of

264 Page 177 of 270 Adjustments to Incentive No. Description Account 201 Miscellaneous - TX Miscellaneous - NM Miscellaneous Total Miscellaneous Total Distribution Maintenance Total Distribution O&M Customer Accounting Expense: 211 Supervision Meter Reading Billing & Cashiering Uncollectible Accounts Uncollectible Accounts Total Uncollectible Accounts Customer Deposit Interest - Texas 218 Miscellaneous Total Miscellaneous Total Customer Accounting Expense Customer Service Expense: 225 Supervision Customer Assistance - Historic EE Amortization - Texas 0908HDSMTX 227 Customer Assistance - EE Tracker Amortization - Texas 0908DSMTX 228 Customer Assistance - EE - New Mexico 0908DSMNM 229 Customer Assistance - ICO Credits 0908ICO 230 Customer Assistance - Saver Switch & EE Labor 0908SVR 231 Customer Assistance - Other Customer Assistance - Total Advertisement Miscellaneous Total Customer Service Expense 237 Adjustments to Per Book Incentive Adjusted Incentive XES SPS XES SPS Incentive Incentive Incentive Incentive , ,731 (29) 0 176, , , , ,641 (40) 0 389, (40) 0 398, , ,578 0 (11,098) 0 63,119 70,648 (11,098) 0 66,697 70, (11,098) 0 66,697 70,648 RR16 - Page 320 of

265 Page 178 of 270 Adjustments to Incentive No. Description Account 238 Sales Expense: 239 Sales Expense - Supv Demonstrations & Selling Advertising Expense - Sales Miscellaneous Sales Expense Total Sales Expense Total Customer Service & Sales Expense Total Customer Operations Expense Administrative & General Expense: 251 Administrative Salaries Office Supplies & Expense A&G Expense Transferred Outside Services - Legal Property Insurance Injuries and Damages Pensions & Benefits Deferred Pensions & Benefits Regulatory Commission Expense - Texas Regulatory Commission Expense - New Mexico Regulatory Commission Expense - Wholesale Regulatory Commission Expense - NERC Fees Regulatory Commission Expense - Misc Total Regulatory Commission Expense Duplicate Charges - Electric Miscellaneous 930M 267 Rents - Retail Allocated Rents - Other 931O 269 Rents Maintenance of Structures Maintenance of General Plant Contributions &, Dues 273 Total Administrative & General Expense Total O&M Expense Adjustments to Per Book Incentive Adjusted Incentive XES SPS XES SPS Incentive Incentive Incentive Incentive ,706 6, ,706 6,386 (11,098) 0 72,403 77,034 (11,138) 0 470, ,675 (50,606) 0 2,280, , (50,606) 0 2,280, ,661 (62,122) 0 4,813,909 2,657,633 RR16 - Page 321 of

266 Page 179 of 270 Adjustments to Incentive No. Description Account 1 Operating & Maintenance Expenses: 2 3 Steam Production Operation: 4 Supervision & Engineering Fuel (Transportation & Handling) 0501F 6 Steam Expense Electric Expense Miscellaneous Rent Supplies and Expenses Allowances Total Steam Production Operation Steam Production Maintenance: 15 Supervision & Engineering Structures Boilers Electric Plant Miscellaneous Plant Steam Production (Nonmajor) Total Steam Production Maintenance Total Steam Production O&M Combustion Turbine Production Operation: 26 Supervision & Engineering Fuel Handling Generation Expense Miscellaneous Rents Total Combustion Turbine Production Operation Combustion Turbine Production Maintenance: 34 Supervision & Engineering Structures Electric Plant Miscellaneous Plant Total Combustion Turbine Production Maintenance Total Combustion Turbine Production O&M 41 Adjust to Target XES SPS Total % % XES+SPS Incentive Incentive Incentive (7,849) (13,274) (21,122) (11,049) 0 (11,049) (2,164) (46,040) (48,204) 0 (44,530) (44,530) (77,578) (21,201) (98,778) (98,640) (125,044) (223,684) (5,996) (9,822) (15,818) 25 (10,969) (10,944) (2,222) (31,099) (33,321) (6,050) (23,619) (29,669) (52,475) (37,126) (89,602) (66,719) (112,635) (179,354) (165,359) (237,679) (403,037) (94) (5) (99) (55) (2,250) (2,305) (4,653) (356) (5,009) (4,802) (2,611) (7,413) (5) (1) (6) (75) (370) (446) (2,170) (3,807) (5,977) (2,250) (4,179) (6,428) (7,052) (6,790) (13,842) RR16 - Page 322 of

267 Page 180 of 270 Adjustments to Incentive No. Description Account 42 System Control and Dispatch: 43 System Load Control Other Expenditures Other Expenditures - New Mexico 557NM 46 Other Expenditures - Texas 557TX 47 Total System Control and Dispatch Total Non-Fuel Production O&M Transmission Operations: 52 Supervision & Engineering Load Dispatch Load Dispatch - Reliability Load Dispatch - Monitor/Operate Load Dispatch - Transmission Serv/Sch Load Dispatch - Sch/Con/Disp Serv Rel/Plan/Standards Dev Serv Trans Service Studies Generation Interconnection Studies Rel/Plan/Standards Dev Serv Station Equipment Overhead s Underground s Miscellaneous Rents Total Transmission Operations Transmission Maintenance: 70 Supervision & Engineering Structures Station Equipment Overhead s Underground s Miscellaneous Total Transmission Maintenance 77 Adjust to Target XES SPS Total % % XES+SPS Incentive Incentive Incentive (11,266) (6,791) (18,057) (42,563) (7) (42,571) (53,829) (6,799) (60,628) (226,240) (251,267) (477,507) (53,137) (20,355) (73,492) (98) 0 (98) (9,194) (12,132) (21,326) (567) (1,633) (2,201) 0 (64) (64) 0 (3) (3) (1,015) (4,715) (5,730) (1,179) (1,395) (2,574) (18,697) (5,987) (24,685) (83,888) (46,284) (130,173) 0 (391) (391) 0 (8,304) (8,304) (216) (851) (1,067) (216) (9,546) (9,762) RR16 - Page 323 of

268 Page 181 of 270 Adjustments to Incentive No. Description Account 78 Wheeling: 79 Wheeling - Lamar HVDC Tie 0565P 80 Wheeling - PNM Reliability Purchase 0565P 81 Wheeling - Ancillary Services - Schedules 1, 2, & Facilities Charg 0565R 82 Wheeling - Ancillary Services - Schedules 3, 5 & R 83 Wheeling - Schedules 7 & 8 - Point to Point 0565R 84 Wheeling - Schedule 9 Network Integration 0565T 85 Wheeling - Schedule T 86 Wheeling - Schedule 12 - FERC Assessment 0565R 87 Wheeling - Other 0565T Total Wheeling Total Transmission O&M Regional Market Expenses: 95 Operation Supervision DA & RT Mkt Admin Trans Rights Mkt Admin Cap Mkt Admin Ancillary Serv Mkt Admin Market Monitoring/Compliance Mkt Fac/Mon/Comp Serv Regional Market Rents Total Regional Market Expenses Distribution Operations: 106 Supervision - H/S Supervision - Texas Supervision - New Mexico Supervision Total Supervision Load Dispatch - H/S Load Dispatch - Texas Load Dispatch - New Mexico Load Dispatch Total Load Dispatch Station Equipment - H/S Station Equipment - Texas Station Equipment - New Mexico Station Equipment 582 Adjust to Target XES SPS Total % % XES+SPS Incentive Incentive Incentive (84,104) (55,831) (139,935) (3,814) 0 (3,814) (1,154) (6) (1,161) (178) (6) (184) (1,729) 0 (1,729) (6,876) (12) (6,889) 0 (207) (207) 0 (16,224) (16,224) 0 (2,832) (2,832) (17,556) (4,876) (22,432) (17,556) (24,139) (41,695) 0 (1,837) (1,837) (3,224) 0 (3,224) (3,224) (1,837) (5,061) 0 (2,197) (2,197) 0 (3) (3) 0 (2,149) (2,149) RR16 - Page 324 of

269 Page 182 of 270 Adjustments to Incentive No. Description Account 120 Total Station Equipment Overhead s - H/S Overhead s - Texas Overhead s - New Mexico Overhead s Total Overhead s Underground s - H/S Underground s - Texas Underground s - New Mexico Underground s Total Underground s Street Lighting - H/S Street Lighting - Texas Street Lighting - New Mexico Street Lighting Total Street Lighting Metering - H/S Metering - Texas Metering - New Mexico Metering Total Metering Customer Installations - H/S Customer Installations - Texas Customer Installations - New Mexico Customer Installations Total Customer Installations Miscellaneous - H/S Miscellaneous - Texas Miscellaneous - New Mexico Miscellaneous Total Miscellaneous Rents Rents - H/S Rents - Texas Rents - New Mexico Total Rents Total Distribution Operations 158 Adjust to Target XES SPS Total % % XES+SPS Incentive Incentive Incentive 0 (4,349) (4,349) 0 (5,558) (5,558) 0 (1,953) (1,953) (927) (10) (936) (927) (7,520) (8,447) 0 (430) (430) 0 (74) (74) 0 (0) (0) 0 (505) (505) 0 (4) (4) 0 (37) (37) 0 (4,065) (4,065) 0 (4,107) (4,107) 0 (13,784) (13,784) 0 (7,759) (7,759) (5,804) (6,592) (12,396) (5,804) (28,135) (33,939) 0 (1,772) (1,772) 0 (41) (41) 0 (5,726) (5,726) 0 (7,538) (7,538) 0 (651) (651) 0 (9,857) (9,857) 0 (4,688) (4,688) (1,020) (5,809) (6,828) (1,020) (21,004) (22,023) (28,530) (99,134) (127,664) RR16 - Page 325 of

270 Page 183 of 270 Adjustments to Incentive No. Description Account 159 Distribution Maintenance: 160 Supervision So - H/S Supervision - TX Supervision - NM Supervision Total Supervision Structures So - H/S Structures - TX Structures - NM Structures Total Structures Station Equipment So - H/S Station Equipment - TX Station Equipment - NM Station Equipment Total Station Equipment Overhead s So - H/S Overhead s - TX Overhead s - NM Overhead s Total Overhead s Underground s So - H/S Underground s - TX Underground s - NM Underground s Total Underground s Transformers So - H/S Transformers - TX Transformers - NM Transformers Total Transformers Street Lighting So - H/S Street Lighting - TX Street Lighting - NM Street Lighting Total Street Lighting Metering So - H/S Metering - TX Metering - NM Metering Total Metering Miscellaneous So - H/S Adjust to Target XES SPS Total % % XES+SPS Incentive Incentive Incentive 0 (479) (479) 0 (204) (204) (390) (1,115) (1,506) (390) (1,798) (2,188) 0 (3,532) (3,532) 0 (118) (118) 0 (3,764) (3,764) 0 (7,414) (7,414) 0 (11,322) (11,322) 0 (3,468) (3,468) (768) (438) (1,206) (768) (15,227) (15,996) 0 (542) (542) 0 (329) (329) 0 (29) (29) 0 (899) (899) 0 (163) (163) 0 (420) (420) 0 (582) (582) 0 (21) (21) 0 (16) (16) 0 (184) (184) 0 (222) (222) 0 (34) (34) 0 (5) (5) 0 (88) (88) 0 (128) (128) RR16 - Page 326 of

271 Page 184 of 270 Adjustments to Incentive No. Description Account 201 Miscellaneous - TX Miscellaneous - NM Miscellaneous Total Miscellaneous Total Distribution Maintenance Total Distribution O&M Customer Accounting Expense: 211 Supervision Meter Reading Billing & Cashiering Uncollectible Accounts Uncollectible Accounts Total Uncollectible Accounts Customer Deposit Interest - Texas 218 Miscellaneous Total Miscellaneous Total Customer Accounting Expense Customer Service Expense: 225 Supervision Customer Assistance - Historic EE Amortization - Texas 0908HDSMTX 227 Customer Assistance - EE Tracker Amortization - Texas 0908DSMTX 228 Customer Assistance - EE - New Mexico 0908DSMNM 229 Customer Assistance - ICO Credits 0908ICO 230 Customer Assistance - Saver Switch & EE Labor 0908SVR 231 Customer Assistance - Other Customer Assistance - Total Advertisement Miscellaneous Total Customer Service Expense 237 Adjust to Target XES SPS Total % % XES+SPS Incentive Incentive Incentive 0 (1) (1) 0 (1) (1) (1,159) (26,272) (27,431) (29,688) (125,407) (155,095) (604) (0) (604) (826) (19,768) (20,594) (65,565) 0 (65,565) (66,996) (19,768) (86,763) (602) 0 (602) (10,618) (13,096) (23,713) (11,220) (13,096) (24,315) (11,220) (13,096) (24,315) RR16 - Page 327 of

272 Page 185 of 270 Adjustments to Incentive No. Description Account 238 Sales Expense: 239 Sales Expense - Supv Demonstrations & Selling Advertising Expense - Sales Miscellaneous Sales Expense Total Sales Expense Total Customer Service & Sales Expense Total Customer Operations Expense Administrative & General Expense: 251 Administrative Salaries Office Supplies & Expense A&G Expense Transferred Outside Services - Legal Property Insurance Injuries and Damages Pensions & Benefits Deferred Pensions & Benefits Regulatory Commission Expense - Texas Regulatory Commission Expense - New Mexico Regulatory Commission Expense - Wholesale Regulatory Commission Expense - NERC Fees Regulatory Commission Expense - Misc Total Regulatory Commission Expense Duplicate Charges - Electric Miscellaneous 930M 267 Rents - Retail Allocated Rents - Other 931O 269 Rents Maintenance of Structures Maintenance of General Plant Contributions &, Dues 273 Total Administrative & General Expense Total O&M Expense Adjust to Target XES SPS Total % % XES+SPS Incentive Incentive Incentive (960) (1,184) (2,144) (960) (1,184) (2,144) (12,179) (14,280) (26,459) (79,175) (34,047) (113,222) (383,693) (26,074) (409,767) (383,693) (26,074) (409,767) (809,777) (492,638) (1,302,415) RR16 - Page 328 of

273 Page 186 of 270 Adjustments to Incentive No. Description Account 1 Operating & Maintenance Expenses: 2 3 Steam Production Operation: 4 Supervision & Engineering Fuel (Transportation & Handling) 0501F 6 Steam Expense Electric Expense Miscellaneous Rent Supplies and Expenses Allowances Total Steam Production Operation Steam Production Maintenance: 15 Supervision & Engineering Structures Boilers Electric Plant Miscellaneous Plant Steam Production (Nonmajor) Total Steam Production Maintenance Total Steam Production O&M Combustion Turbine Production Operation: 26 Supervision & Engineering Fuel Handling Generation Expense Miscellaneous Rents Total Combustion Turbine Production Operation Combustion Turbine Production Maintenance: 34 Supervision & Engineering Structures Electric Plant Miscellaneous Plant Total Combustion Turbine Production Maintenance Total Combustion Turbine Production O&M 41 Remove Financial Based Goals XES SPS Total 17.90% 11.20% Incentive Incentive Incentive (6,947) (6,533) (13,480) (9,780) 0 (9,780) (1,916) (22,661) (24,577) 0 (21,918) (21,918) (68,665) (10,435) (79,100) (87,307) (61,547) (148,854) (5,307) (4,834) (10,142) 22 (5,399) (5,377) (1,967) (15,307) (17,274) (5,355) (11,626) (16,980) (46,446) (18,274) (64,720) (59,053) (55,440) (114,493) (146,360) (116,987) (263,347) (83) (2) (86) (49) (1,107) (1,156) (4,118) (175) (4,294) (4,250) (1,285) (5,536) (4) (0) (5) (67) (182) (249) (1,921) (1,874) (3,794) (1,991) (2,057) (4,048) (6,242) (3,342) (9,584) RR16 - Page 329 of

274 Page 187 of 270 Adjustments to Incentive No. Description Account 42 System Control and Dispatch: 43 System Load Control Other Expenditures Other Expenditures - New Mexico 557NM 46 Other Expenditures - Texas 557TX 47 Total System Control and Dispatch Total Non-Fuel Production O&M Transmission Operations: 52 Supervision & Engineering Load Dispatch Load Dispatch - Reliability Load Dispatch - Monitor/Operate Load Dispatch - Transmission Serv/Sch Load Dispatch - Sch/Con/Disp Serv Rel/Plan/Standards Dev Serv Trans Service Studies Generation Interconnection Studies Rel/Plan/Standards Dev Serv Station Equipment Overhead s Underground s Miscellaneous Rents Total Transmission Operations Transmission Maintenance: 70 Supervision & Engineering Structures Station Equipment Overhead s Underground s Miscellaneous Total Transmission Maintenance 77 Remove Financial Based Goals XES SPS Total 17.90% 11.20% Incentive Incentive Incentive (9,972) (3,343) (13,314) (37,673) (4) (37,677) (47,645) (3,346) (50,991) (200,247) (123,675) (323,922) (47,032) (10,019) (57,051) (87) 0 (87) (8,137) (5,972) (14,109) (502) (804) (1,306) 0 (31) (31) 0 (1) (1) (898) (2,321) (3,219) (1,044) (687) (1,730) (16,549) (2,947) (19,496) (74,250) (22,782) (97,032) 0 (193) (193) 0 (4,087) (4,087) (191) (419) (610) (191) (4,699) (4,890) RR16 - Page 330 of

275 Page 188 of 270 Adjustments to Incentive No. Description Account 78 Wheeling: 79 Wheeling - Lamar HVDC Tie 0565P 80 Wheeling - PNM Reliability Purchase 0565P 81 Wheeling - Ancillary Services - Schedules 1, 2, & Facilities Charg 0565R 82 Wheeling - Ancillary Services - Schedules 3, 5 & R 83 Wheeling - Schedules 7 & 8 - Point to Point 0565R 84 Wheeling - Schedule 9 Network Integration 0565T 85 Wheeling - Schedule T 86 Wheeling - Schedule 12 - FERC Assessment 0565R 87 Wheeling - Other 0565T Total Wheeling Total Transmission O&M Regional Market Expenses: 95 Operation Supervision DA & RT Mkt Admin Trans Rights Mkt Admin Cap Mkt Admin Ancillary Serv Mkt Admin Market Monitoring/Compliance Mkt Fac/Mon/Comp Serv Regional Market Rents Total Regional Market Expenses Distribution Operations: 106 Supervision - H/S Supervision - Texas Supervision - New Mexico Supervision Total Supervision Load Dispatch - H/S Load Dispatch - Texas Load Dispatch - New Mexico Load Dispatch Total Load Dispatch Station Equipment - H/S Station Equipment - Texas Station Equipment - New Mexico Station Equipment 582 Remove Financial Based Goals XES SPS Total 17.90% 11.20% Incentive Incentive Incentive (74,441) (27,480) (101,922) (3,376) 0 (3,376) (1,022) (3) (1,025) (158) (3) (161) (1,531) 0 (1,531) (6,086) (6) (6,092) 0 (102) (102) 0 (7,985) (7,985) 0 (1,394) (1,394) (15,539) (2,400) (17,939) (15,539) (11,881) (27,420) 0 (904) (904) (2,853) 0 (2,853) (2,853) (904) (3,757) 0 (1,081) (1,081) 0 (2) (2) 0 (1,058) (1,058) RR16 - Page 331 of

276 Page 189 of 270 Adjustments to Incentive No. Description Account 120 Total Station Equipment Overhead s - H/S Overhead s - Texas Overhead s - New Mexico Overhead s Total Overhead s Underground s - H/S Underground s - Texas Underground s - New Mexico Underground s Total Underground s Street Lighting - H/S Street Lighting - Texas Street Lighting - New Mexico Street Lighting Total Street Lighting Metering - H/S Metering - Texas Metering - New Mexico Metering Total Metering Customer Installations - H/S Customer Installations - Texas Customer Installations - New Mexico Customer Installations Total Customer Installations Miscellaneous - H/S Miscellaneous - Texas Miscellaneous - New Mexico Miscellaneous Total Miscellaneous Rents Rents - H/S Rents - Texas Rents - New Mexico Total Rents Total Distribution Operations 158 Remove Financial Based Goals XES SPS Total 17.90% 11.20% Incentive Incentive Incentive 0 (2,141) (2,141) 0 (2,735) (2,735) 0 (961) (961) (820) (5) (825) (820) (3,702) (4,522) 0 (212) (212) 0 (36) (36) 0 (0) (0) 0 (248) (248) 0 (2) (2) 0 (18) (18) 0 (2,001) (2,001) 0 (2,022) (2,022) 0 (6,784) (6,784) 0 (3,819) (3,819) (5,137) (3,245) (8,382) (5,137) (13,848) (18,986) 0 (872) (872) 0 (20) (20) 0 (2,818) (2,818) 0 (3,710) (3,710) 0 (320) (320) 0 (4,852) (4,852) 0 (2,307) (2,307) (903) (2,859) (3,762) (903) (10,338) (11,241) (25,252) (48,795) (74,046) RR16 - Page 332 of

277 Page 190 of 270 Adjustments to Incentive No. Description Account 159 Distribution Maintenance: 160 Supervision So - H/S Supervision - TX Supervision - NM Supervision Total Supervision Structures So - H/S Structures - TX Structures - NM Structures Total Structures Station Equipment So - H/S Station Equipment - TX Station Equipment - NM Station Equipment Total Station Equipment Overhead s So - H/S Overhead s - TX Overhead s - NM Overhead s Total Overhead s Underground s So - H/S Underground s - TX Underground s - NM Underground s Total Underground s Transformers So - H/S Transformers - TX Transformers - NM Transformers Total Transformers Street Lighting So - H/S Street Lighting - TX Street Lighting - NM Street Lighting Total Street Lighting Metering So - H/S Metering - TX Metering - NM Metering Total Metering Miscellaneous So - H/S Remove Financial Based Goals XES SPS Total 17.90% 11.20% Incentive Incentive Incentive 0 (236) (236) 0 (101) (101) (345) (549) (894) (345) (885) (1,230) 0 (1,738) (1,738) 0 (58) (58) 0 (1,853) (1,853) 0 (3,649) (3,649) 0 (5,573) (5,573) 0 (1,707) (1,707) (680) (216) (896) (680) (7,495) (8,175) 0 (267) (267) 0 (162) (162) 0 (14) (14) 0 (443) (443) 0 (80) (80) 0 (207) (207) 0 (287) (287) 0 (11) (11) 0 (8) (8) 0 (91) (91) 0 (109) (109) 0 (17) (17) 0 (3) (3) 0 (44) (44) 0 (63) (63) RR16 - Page 333 of

278 Page 191 of 270 Adjustments to Incentive No. Description Account 201 Miscellaneous - TX Miscellaneous - NM Miscellaneous Total Miscellaneous Total Distribution Maintenance Total Distribution O&M Customer Accounting Expense: 211 Supervision Meter Reading Billing & Cashiering Uncollectible Accounts Uncollectible Accounts Total Uncollectible Accounts Customer Deposit Interest - Texas 218 Miscellaneous Total Miscellaneous Total Customer Accounting Expense Customer Service Expense: 225 Supervision Customer Assistance - Historic EE Amortization - Texas 0908HDSMTX 227 Customer Assistance - EE Tracker Amortization - Texas 0908DSMTX 228 Customer Assistance - EE - New Mexico 0908DSMNM 229 Customer Assistance - ICO Credits 0908ICO 230 Customer Assistance - Saver Switch & EE Labor 0908SVR 231 Customer Assistance - Other Customer Assistance - Total Advertisement Miscellaneous Total Customer Service Expense 237 Remove Financial Based Goals XES SPS Total 17.90% 11.20% Incentive Incentive Incentive 0 (0) (0) 0 (0) (0) (1,025) (12,931) (13,957) (26,277) (61,726) (88,003) (534) (0) (534) (731) (9,730) (10,461) (58,033) 0 (58,033) (59,298) (9,730) (69,028) (533) 0 (533) (9,398) (6,446) (15,844) (9,930) (6,446) (16,376) (9,930) (6,446) (16,376) RR16 - Page 334 of

279 Page 192 of 270 Adjustments to Incentive No. Description Account 238 Sales Expense: 239 Sales Expense - Supv Demonstrations & Selling Advertising Expense - Sales Miscellaneous Sales Expense Total Sales Expense Total Customer Service & Sales Expense Total Customer Operations Expense Administrative & General Expense: 251 Administrative Salaries Office Supplies & Expense A&G Expense Transferred Outside Services - Legal Property Insurance Injuries and Damages Pensions & Benefits Deferred Pensions & Benefits Regulatory Commission Expense - Texas Regulatory Commission Expense - New Mexico Regulatory Commission Expense - Wholesale Regulatory Commission Expense - NERC Fees Regulatory Commission Expense - Misc Total Regulatory Commission Expense Duplicate Charges - Electric Miscellaneous 930M 267 Rents - Retail Allocated Rents - Other 931O 269 Rents Maintenance of Structures Maintenance of General Plant Contributions &, Dues 273 Total Administrative & General Expense Total O&M Expense Remove Financial Based Goals XES SPS Total 17.90% 11.20% Incentive Incentive Incentive (850) (583) (1,432) (850) (583) (1,432) (10,780) (7,029) (17,809) (70,078) (16,758) (86,837) (339,610) (12,834) (352,444) (339,610) (12,834) (352,444) (716,740) (242,479) (959,219) RR16 - Page 335 of

280 Page 193 of 270 Business Area Adjustments BL INC OC LTI No. Description Account Base Labor Incentive Other Comp Long Term Incentive 1 Operating & Maintenance Expenses: 2 3 Steam Production Operation: 4 Supervision & Engineering Fuel (Transportation & Handling) Steam Expense Electric Expense Miscellaneous Rent Supplies and Expenses Allowances Total Steam Production Operation Steam Production Maintenance: 15 Supervision & Engineering Structures Boilers ,632-9, Electric Plant ,632 9, Miscellaneous Plant Steam Production (Nonmajor) Total Steam Production Maintenance Total Steam Production O&M Combustion Turbine Production Operation: 26 Supervision & Engineering Fuel Handling Generation Expense Miscellaneous Rents Total Combustion Turbine Production Operation Combustion Turbine Production Maintenance: 34 Supervision & Engineering Structures Electric Plant Miscellaneous Plant Total Combustion Turbine Production Maintenance Total Combustion Turbine Production O&M 0 RR16 - Page 336 of

281 Page 194 of 270 Business Area Adjustments BL INC OC LTI No. Description Account Base Labor Incentive Other Comp Long Term Incentive System Control and Dispatch: 43 System Load Control ,50 44 Other Expenditures 557-2, , Other Expenditures - New Mexico 557NM 46 Other Expenditures - Texas 557TX 47 Total System Control and Dispatch -2,236-1,828 20, Total Non-Fuel Production O&M -2,220-1,827 20, Transmission Operations: 52 Supervision & Engineering Load Dispatch Load Dispatch - Reliability Load Dispatch - Monitor/Operate Load Dispatch - Transmission Serv/Sch Load Dispatch - Sch/Con/Disp Serv Rel/Plan/Standards Dev Serv Trans Service Studies Generation Interconnection Studies Rel/Plan/Standards Dev Serv Station Equipment Overhead s Underground s Miscellaneous Rents Total Transmission Operations Transmission Maintenance: 70 Supervision & Engineering Structures Station Equipment Overhead s Underground s Miscellaneous Total Transmission Maintenance RR16 - Page 337 of

282 Page 195 of 270 Business Area Adjustments BL INC OC LTI No. Description Account Base Labor Incentive Other Comp Long Term Incentive 78 Wheeling: 79 Wheeling - Wholesale 0565W 80 Wheeling - Long Term Purchases 0565P 81 Wheeling - Reliability Purchases 0565T 82 Wheeling - Schedule 9 - Non SPS Zone Network 0565T 83 Wheeling - Schedule 11 - LT Purchases 0565P 84 Wheeling - Schedule 11 - Retail 0565R 85 Wheeling - Schedule 11 - Wholesale 0565W 86 Wheeling - Schedule 11 - K&M 0565T 87 Wheeling - Schedule 12 - Retail 0565R 88 Wheeling - Schedule 12 - Wholesale 0565W 89 Wheeling - ST Purchases 0565T 90 Total Wheeling Total Transmission O&M Regional Market Expenses: 95 Operation Supervision DA & RT Mkt Admin ,50 97 Trans Rights Mkt Admin Cap Mkt Admin Ancillary Serv Mkt Admin Market Monitoring/Compliance Mkt Fac/Mon/Comp Serv Regional Market Rents Total Regional Market Expenses 0 1, Distribution Operations: 106 Supervision - H/S Supervision - Texas Supervision - New Mexico Supervision Total Supervision Load Dispatch - H/S Load Dispatch - Texas Load Dispatch - New Mexico Load Dispatch Total Load Dispatch Station Equipment - H/S Station Equipment - Texas Station Equipment - New Mexico RR16 - Page 338 of

283 Page 196 of 270 Business Area Adjustments BL INC OC LTI No. Description Account Base Labor Incentive Other Comp Long Term Incentive 119 Station Equipment Total Station Equipment Overhead s - H/S Overhead s - Texas Overhead s - New Mexico Overhead s Total Overhead s Underground s - H/S Underground s - Texas Underground s - New Mexico Underground s Total Underground s Street Lighting - H/S Street Lighting - Texas Street Lighting - New Mexico Street Lighting Total Street Lighting Metering - H/S Metering - Texas Metering - New Mexico Metering Total Metering Customer Installations - H/S Customer Installations - Texas Customer Installations - New Mexico Customer Installations Total Customer Installations Miscellaneous - H/S Miscellaneous - Texas Miscellaneous - New Mexico Miscellaneous 588 1, Total Miscellaneous 588 1, Rents Rents - H/S Rents - Texas Rents - New Mexico Total Rents Total Distribution Operations 753 (29) RR16 - Page 339 of

284 Page 197 of 270 Business Area Adjustments BL INC OC LTI No. Description Account Base Labor Incentive Other Comp Long Term Incentive 159 Distribution Maintenance: 160 Supervision So - H/S Supervision - TX Supervision - NM Supervision Total Supervision Structures So - H/S Structures - TX Structures - NM Structures Total Structures Station Equipment So - H/S Station Equipment - TX Station Equipment - NM Station Equipment Total Station Equipment Overhead s So - H/S Overhead s - TX Overhead s - NM Overhead s Total Overhead s Underground s So - H/S Underground s - TX Underground s - NM Underground s Total Underground s Transformers So - H/S Transformers - TX Transformers - NM Transformers Total Transformers Street Lighting So - H/S Street Lighting - TX Street Lighting - NM Street Lighting Total Street Lighting Metering So - H/S Metering - TX Metering - NM Metering Total Metering RR16 - Page 340 of

285 Page 198 of 270 Business Area Adjustments BL INC OC LTI No. Description Account Base Labor Incentive Other Comp Long Term Incentive 200 Miscellaneous So - H/S Miscellaneous - TX Miscellaneous - NM Miscellaneous Total Miscellaneous Total Distribution Maintenance Total Distribution O&M Customer Accounting Expense: 211 Supervision Meter Reading Billing & Cashiering Uncollectible Accounts Uncollectible Accounts Total Uncollectible Accounts Customer Deposit Interest - Texas 218 Miscellaneous Total Miscellaneous Total Customer Accounting Expense (401) (40) Customer Service Expense: 225 Supervision Customer Assistance - Historic EE Amortization - Texas 0908HDSMTX 227 Customer Assistance - EE Tracker Amortization - Texas 0908DSMTX 228 Customer Assistance - EE - New Mexico 0908DSMNM 229 Customer Assistance - ICO Credits 0908ICO 230 Customer Assistance - Saver Switch & EE Labor 0908SVR 231 Customer Assistance - Other ,654-11, Customer Assistance - Total ,654-11, Advertisement Miscellaneous Total Customer Service Expense (48,654) (11,465) RR16 - Page 341 of

286 Page 199 of 270 Business Area Adjustments BL INC OC LTI No. Description Account Base Labor Incentive Other Comp Long Term Incentive 238 Sales Expense: 239 Sales Expense - Supv Demonstrations & Selling Advertising Expense - Sales Miscellaneous Sales Expense Total Sales Expense Total Customer Service & Sales Expense (48,654) (11,465) Total Customer Operations Expense (49,055) (11,505) Administrative & General Expense: 251 Administrative Salaries ,847-29, ,809-1,308, Office Supplies & Expense A&G Expense Transferred Outside Services - Legal Property Insurance Injuries and Damages Pensions & Benefits Deferred Pensions & Benefits Regulatory Commission Expense - Texas Regulatory Commission Expense - New Mexico Regulatory Commission Expense - Wholesale Regulatory Commission Expense - NERC Fees Regulatory Commission Expense - Misc Total Regulatory Commission Expense Duplicate Charges - Electric Miscellaneous Rents - Retail Allocated Rents - Other 931O Rents Maintenance of Structures Maintenance of General Plant Contributions &, Dues 273 Total Administrative & General Expense (187,847) (29,411) (119,809) (1,308,488) Total O&M Expense (238,229) (41,294) (99,275) (1,308,488) RR16 - Page 342 of

287 Page 200 of 270 Business Area Adjustments No. Description Account 1 Operating & Maintenance Expenses: 2 3 Steam Production Operation: 4 Supervision & Engineering Fuel (Transportation & Handling) Steam Expense Electric Expense Miscellaneous Rent Supplies and Expenses Allowances Total Steam Production Operation Steam Production Maintenance: 15 Supervision & Engineering Structures Boilers Electric Plant Miscellaneous Plant Steam Production (Nonmajor) Total Steam Production Maintenance Total Steam Production O&M Combustion Turbine Production Operation: 26 Supervision & Engineering Fuel Handling Generation Expense Miscellaneous Rents Total Combustion Turbine Production Operation Combustion Turbine Production Maintenance: 34 Supervision & Engineering Structures Electric Plant Miscellaneous Plant Total Combustion Turbine Production Maintenance Total Combustion Turbine Production O&M INJ INS PEN Injuries Insurance Pension & Benefits RR16 - Page 343 of

288 Page 201 of 270 Business Area Adjustments No. Description Account System Control and Dispatch: 43 System Load Control Other Expenditures Other Expenditures - New Mexico 557NM 46 Other Expenditures - Texas 557TX 47 Total System Control and Dispatch Total Non-Fuel Production O&M Transmission Operations: 52 Supervision & Engineering Load Dispatch Load Dispatch - Reliability Load Dispatch - Monitor/Operate Load Dispatch - Transmission Serv/Sch Load Dispatch - Sch/Con/Disp Serv Rel/Plan/Standards Dev Serv Trans Service Studies Generation Interconnection Studies Rel/Plan/Standards Dev Serv Station Equipment Overhead s Underground s Miscellaneous Rents Total Transmission Operations Transmission Maintenance: 70 Supervision & Engineering Structures Station Equipment Overhead s Underground s Miscellaneous Total Transmission Maintenance 77 INJ INS PEN Injuries Insurance Pension & Benefits RR16 - Page 344 of

289 Page 202 of 270 Business Area Adjustments No. Description Account 78 Wheeling: 79 Wheeling - Wholesale 0565W 80 Wheeling - Long Term Purchases 0565P 81 Wheeling - Reliability Purchases 0565T 82 Wheeling - Schedule 9 - Non SPS Zone Network 0565T 83 Wheeling - Schedule 11 - LT Purchases 0565P 84 Wheeling - Schedule 11 - Retail 0565R 85 Wheeling - Schedule 11 - Wholesale 0565W 86 Wheeling - Schedule 11 - K&M 0565T 87 Wheeling - Schedule 12 - Retail 0565R 88 Wheeling - Schedule 12 - Wholesale 0565W 89 Wheeling - ST Purchases 0565T 90 Total Wheeling Total Transmission O&M Regional Market Expenses: 95 Operation Supervision DA & RT Mkt Admin Trans Rights Mkt Admin Cap Mkt Admin Ancillary Serv Mkt Admin Market Monitoring/Compliance Mkt Fac/Mon/Comp Serv Regional Market Rents Total Regional Market Expenses Distribution Operations: 106 Supervision - H/S Supervision - Texas Supervision - New Mexico Supervision Total Supervision Load Dispatch - H/S Load Dispatch - Texas Load Dispatch - New Mexico Load Dispatch Total Load Dispatch Station Equipment - H/S Station Equipment - Texas Station Equipment - New Mexico INJ INS PEN Injuries Insurance Pension & Benefits RR16 - Page 345 of

290 Page 203 of 270 Business Area Adjustments No. Description Account 119 Station Equipment Total Station Equipment Overhead s - H/S Overhead s - Texas Overhead s - New Mexico Overhead s Total Overhead s Underground s - H/S Underground s - Texas Underground s - New Mexico Underground s Total Underground s Street Lighting - H/S Street Lighting - Texas Street Lighting - New Mexico Street Lighting Total Street Lighting Metering - H/S Metering - Texas Metering - New Mexico Metering Total Metering Customer Installations - H/S Customer Installations - Texas Customer Installations - New Mexico Customer Installations Total Customer Installations Miscellaneous - H/S Miscellaneous - Texas Miscellaneous - New Mexico Miscellaneous Total Miscellaneous Rents Rents - H/S Rents - Texas Rents - New Mexico Total Rents Total Distribution Operations 158 INJ INS PEN Injuries Insurance Pension & Benefits RR16 - Page 346 of

291 Page 204 of 270 Business Area Adjustments No. Description Account 159 Distribution Maintenance: 160 Supervision So - H/S Supervision - TX Supervision - NM Supervision Total Supervision Structures So - H/S Structures - TX Structures - NM Structures Total Structures Station Equipment So - H/S Station Equipment - TX Station Equipment - NM Station Equipment Total Station Equipment Overhead s So - H/S Overhead s - TX Overhead s - NM Overhead s Total Overhead s Underground s So - H/S Underground s - TX Underground s - NM Underground s Total Underground s Transformers So - H/S Transformers - TX Transformers - NM Transformers Total Transformers Street Lighting So - H/S Street Lighting - TX Street Lighting - NM Street Lighting Total Street Lighting Metering So - H/S Metering - TX Metering - NM Metering Total Metering 597 INJ INS PEN Injuries Insurance Pension & Benefits RR16 - Page 347 of

292 Page 205 of 270 Business Area Adjustments No. Description Account 200 Miscellaneous So - H/S Miscellaneous - TX Miscellaneous - NM Miscellaneous Total Miscellaneous Total Distribution Maintenance Total Distribution O&M Customer Accounting Expense: 211 Supervision Meter Reading Billing & Cashiering Uncollectible Accounts Uncollectible Accounts Total Uncollectible Accounts Customer Deposit Interest - Texas 218 Miscellaneous Total Miscellaneous Total Customer Accounting Expense Customer Service Expense: 225 Supervision Customer Assistance - Historic EE Amortization - Texas 0908HDSMTX 227 Customer Assistance - EE Tracker Amortization - Texas 0908DSMTX 228 Customer Assistance - EE - New Mexico 0908DSMNM 229 Customer Assistance - ICO Credits 0908ICO 230 Customer Assistance - Saver Switch & EE Labor 0908SVR 231 Customer Assistance - Other Customer Assistance - Total Advertisement Miscellaneous Total Customer Service Expense 237 INJ INS PEN Injuries Insurance Pension & Benefits RR16 - Page 348 of

293 Page 206 of 270 Business Area Adjustments No. Description Account 238 Sales Expense: 239 Sales Expense - Supv Demonstrations & Selling Advertising Expense - Sales Miscellaneous Sales Expense Total Sales Expense Total Customer Service & Sales Expense Total Customer Operations Expense Administrative & General Expense: 251 Administrative Salaries Office Supplies & Expense A&G Expense Transferred Outside Services - Legal Property Insurance Injuries and Damages Pensions & Benefits Deferred Pensions & Benefits Regulatory Commission Expense - Texas Regulatory Commission Expense - New Mexico Regulatory Commission Expense - Wholesale Regulatory Commission Expense - NERC Fees Regulatory Commission Expense - Misc Total Regulatory Commission Expense Duplicate Charges - Electric Miscellaneous Rents - Retail Allocated Rents - Other 931O 269 Rents Maintenance of Structures Maintenance of General Plant Contributions &, Dues 273 Total Administrative & General Expense Total O&M Expense INJ INS PEN Injuries Insurance Pension & Benefits ,468-40,792 (517) (37,468) (40,792) (517) (37,468) (40,792) RR16 - Page 349 of

294 Page 207 of 270 Business Area Adjustments No. Description Account 1 Operating & Maintenance Expenses: 2 3 Steam Production Operation: 4 Supervision & Engineering Fuel (Transportation & Handling) Steam Expense Electric Expense Miscellaneous Rent Supplies and Expenses Allowances Total Steam Production Operation Steam Production Maintenance: 15 Supervision & Engineering Structures Boilers Electric Plant Miscellaneous Plant Steam Production (Nonmajor) Total Steam Production Maintenance Total Steam Production O&M Combustion Turbine Production Operation: 26 Supervision & Engineering Fuel Handling Generation Expense Miscellaneous Rents Total Combustion Turbine Production Operation Combustion Turbine Production Maintenance: 34 Supervision & Engineering Structures Electric Plant Miscellaneous Plant Total Combustion Turbine Production Maintenance Total Combustion Turbine Production O&M Total Total Total Labor Adj Non-Labor Adjustments ,389 2, ,508 10, ,613 12,630-47, ,124 47, , ,342 12, RR16 - Page 350 of

295 Page 208 of 270 Business Area Adjustments No. Description Account System Control and Dispatch: 43 System Load Control Other Expenditures Other Expenditures - New Mexico 557NM 46 Other Expenditures - Texas 557TX 47 Total System Control and Dispatch Total Non-Fuel Production O&M Transmission Operations: 52 Supervision & Engineering Load Dispatch Load Dispatch - Reliability Load Dispatch - Monitor/Operate Load Dispatch - Transmission Serv/Sch Load Dispatch - Sch/Con/Disp Serv Rel/Plan/Standards Dev Serv Trans Service Studies Generation Interconnection Studies Rel/Plan/Standards Dev Serv Station Equipment Overhead s Underground s Miscellaneous Rents Total Transmission Operations Transmission Maintenance: 70 Supervision & Engineering Structures Station Equipment Overhead s Underground s Miscellaneous Total Transmission Maintenance 77 Total Total Total Labor Adj Non-Labor Adjustments -1,084-1,364-2,448 17,438-3,490 13, ,354-4,854 11,500 16,370 7,479 23, ,674-2, ,017-1, ,934-3, ,459 13, ,353 13,331 RR16 - Page 351 of

296 Page 209 of 270 Business Area Adjustments No. Description Account 78 Wheeling: 79 Wheeling - Wholesale 0565W 80 Wheeling - Long Term Purchases 0565P 81 Wheeling - Reliability Purchases 0565T 82 Wheeling - Schedule 9 - Non SPS Zone Network 0565T 83 Wheeling - Schedule 11 - LT Purchases 0565P 84 Wheeling - Schedule 11 - Retail 0565R 85 Wheeling - Schedule 11 - Wholesale 0565W 86 Wheeling - Schedule 11 - K&M 0565T 87 Wheeling - Schedule 12 - Retail 0565R 88 Wheeling - Schedule 12 - Wholesale 0565W 89 Wheeling - ST Purchases 0565T 90 Total Wheeling Total Transmission O&M Regional Market Expenses: 95 Operation Supervision DA & RT Mkt Admin Trans Rights Mkt Admin Cap Mkt Admin Ancillary Serv Mkt Admin Market Monitoring/Compliance Mkt Fac/Mon/Comp Serv Regional Market Rents Total Regional Market Expenses Distribution Operations: 106 Supervision - H/S Supervision - Texas Supervision - New Mexico Supervision Total Supervision Load Dispatch - H/S Load Dispatch - Texas Load Dispatch - New Mexico Load Dispatch Total Load Dispatch Station Equipment - H/S Station Equipment - Texas Station Equipment - New Mexico Total Total Total Labor Adj Non-Labor Adjustments 118 9,419 9, ,107-2,107 1, ,500 1,500-2, ,267 1, ,267 1, RR16 - Page 352 of

297 Page 210 of 270 Business Area Adjustments No. Description Account 119 Station Equipment Total Station Equipment Overhead s - H/S Overhead s - Texas Overhead s - New Mexico Overhead s Total Overhead s Underground s - H/S Underground s - Texas Underground s - New Mexico Underground s Total Underground s Street Lighting - H/S Street Lighting - Texas Street Lighting - New Mexico Street Lighting Total Street Lighting Metering - H/S Metering - Texas Metering - New Mexico Metering Total Metering Customer Installations - H/S Customer Installations - Texas Customer Installations - New Mexico Customer Installations Total Customer Installations Miscellaneous - H/S Miscellaneous - Texas Miscellaneous - New Mexico Miscellaneous Total Miscellaneous Rents Rents - H/S Rents - Texas Rents - New Mexico Total Rents Total Distribution Operations 158 Total Total Total Labor Adj Non-Labor Adjustments ,079 10,440 11,519 1,079 10,440 11, ,702 12,427 RR16 - Page 353 of

298 Page 211 of 270 Business Area Adjustments No. Description Account 159 Distribution Maintenance: 160 Supervision So - H/S Supervision - TX Supervision - NM Supervision Total Supervision Structures So - H/S Structures - TX Structures - NM Structures Total Structures Station Equipment So - H/S Station Equipment - TX Station Equipment - NM Station Equipment Total Station Equipment Overhead s So - H/S Overhead s - TX Overhead s - NM Overhead s Total Overhead s Underground s So - H/S Underground s - TX Underground s - NM Underground s Total Underground s Transformers So - H/S Transformers - TX Transformers - NM Transformers Total Transformers Street Lighting So - H/S Street Lighting - TX Street Lighting - NM Street Lighting Total Street Lighting Metering So - H/S Metering - TX Metering - NM Metering Total Metering 597 Total Total Total Labor Adj Non-Labor Adjustments RR16 - Page 354 of

299 Page 212 of 270 Business Area Adjustments No. Description Account 200 Miscellaneous So - H/S Miscellaneous - TX Miscellaneous - NM Miscellaneous Total Miscellaneous Total Distribution Maintenance Total Distribution O&M Customer Accounting Expense: 211 Supervision Meter Reading Billing & Cashiering Uncollectible Accounts Uncollectible Accounts Total Uncollectible Accounts Customer Deposit Interest - Texas 218 Miscellaneous Total Miscellaneous Total Customer Accounting Expense Customer Service Expense: 225 Supervision Customer Assistance - Historic EE Amortization - Texas 0908HDSMTX 227 Customer Assistance - EE Tracker Amortization - Texas 0908DSMTX 228 Customer Assistance - EE - New Mexico 0908DSMNM 229 Customer Assistance - ICO Credits 0908ICO 230 Customer Assistance - Saver Switch & EE Labor 0908SVR 231 Customer Assistance - Other Customer Assistance - Total Advertisement Miscellaneous Total Customer Service Expense 237 Total Total Total Labor Adj Non-Labor Adjustments 0 (317) (317) ,386 12, ,037 6, ,100 11, (324) 18,019 17, ,119 1,358-58,762-60,119 1,358-58, (60,119) 1,351 (58,768) RR16 - Page 355 of

300 Page 213 of 270 Business Area Adjustments No. Description Account 238 Sales Expense: 239 Sales Expense - Supv Demonstrations & Selling Advertising Expense - Sales Miscellaneous Sales Expense Total Sales Expense Total Customer Service & Sales Expense Total Customer Operations Expense Administrative & General Expense: 251 Administrative Salaries Office Supplies & Expense A&G Expense Transferred Outside Services - Legal Property Insurance Injuries and Damages Pensions & Benefits Deferred Pensions & Benefits Regulatory Commission Expense - Texas Regulatory Commission Expense - New Mexico Regulatory Commission Expense - Wholesale Regulatory Commission Expense - NERC Fees Regulatory Commission Expense - Misc Total Regulatory Commission Expense Duplicate Charges - Electric Miscellaneous Rents - Retail Allocated Rents - Other 931O 269 Rents Maintenance of Structures Maintenance of General Plant Contributions &, Dues 273 Total Administrative & General Expense Total O&M Expense Total Total Total Labor Adj Non-Labor Adjustments (60,119) 1,351 (58,768) (60,443) 19,370 (41,073) -1,645, ,645, , , , , ,802 59,285-78, , ,554-10, ,037-8, ,037-8, (1,724,332) (292,054) (2,016,385) (1,766,063) (246,508) (2,012,570) RR16 - Page 356 of

301 TUCO Fuel Handling & Margins No. Description Amount Attachment DAB-RR-2 Page 214 of Operating Expenses for calendar year 2002-as amended 1,050,000 2 Increase by 5% per Margin Agreement eff. 01/01/03 1,102,500 3 Increase by 5% per Margin Agreement eff. 01/01/04 1,157,625 4 Increase by 5% per Margin Agreement eff. 01/01/05 1,215,506 5 Increase by 5% per Margin Agreement eff. 01/01/06 1,276,282 6 Increase by 5% per Margin Agreement eff. 01/01/07 1,340,096 7 Increase by 5% per Margin Agreement eff. 01/01/08 1,407,100 8 Increase by 5% per Margin Agreement eff. 01/01/09 1,477,455 9 Increase by 5% per Margin Agreement eff. 01/01/10 1,551, Change per Agreement (eff. 01/01/12 ) 1,527, Increase by 2.5% per Margin Agreement eff. 01/01/13 1,565, Margin increase of 2.5% effective 01/01/14 1,604, Estimate Margin increase of 2.5% effective 01/01/15 1,644, Projected Increase 40,117 RR16 - Page 357 of

302 Environmental Chemical Costs Adjustment Attachment DAB-RR-2 Page 215 of 270 Costs for chemicals to meet emissions standards are now recovered through the fuel clause starting June 10, The following chemical costs are removed from base rate recovery No. Description Account Amount 1 Chemicals - Mercury Sorbent Chemicals - ARKAY ,083 3 Total 127,083 RR16 - Page 358 of

303 Page 216 of 270 Summary of Ongoing REC Costs No. Description A B C = A - B D E = C * D Less Gross Annual Wholesale Net Annual Total Annual Generation Transfers Generation REC Price REC Costs (MWh) (MWh) (MWh) ($/MWh) ($) 1 Llano 278,376 78, ,415 $ 0.95 $ 189,445 2 Wildorado 670, , ,496 $ ,612,479 3 Spinning Spur 728, , ,797 $ , ,676, ,284 1,242,708 3,296,681 RR16 - Page 359 of

304 Page 217 of 270 Summary of REC Tracker Balances No. Description Amount 1 REC Tracker Layer 2 Annual Amortization (1) 801, REC Tracker Layer 3 Annual Amortization (1) 2,035, Annual Amortization 2,836, Tracker Interest (Sept. 1, Jun. 30, 2014) (2) 12, Total REC Tracker Expense 2,849,222 (1) REC Tracker Amortization Period September February 2017 (2) Interest Rate is 0.21% for 2013 and 0.15% for 2014 RR16 - Page 360 of

305 REC Tracker Reconciliation Attachment DAB-RR-2 Page 218 of 270 No. Description Dollars 1 Additions to the REC Tracker: 2 Projected Balance at 6/30/13 per Docket No $ 9,927,994 3 Actual Balance at 6/30/13 $ 10,148,058 4 Difference between Actual and Projected Balance $ 220, Reductions to the REC Tracker After 6/30/13: 7 Accounting Corrections $ (5,108) 8 Sales $ (1,050,525) 9 Wholesale Transfers $ (373,787) 10 Total Reductions to the REC Tracker $ (1,429,420) Final REC Tracker Adjustments (Negative is a Reduction) $ (1,209,356) Monthly Amortization Impact (Based on 42 month amortization) $ (28,794) Annual Amortization Impact $ (345,530) RR16 - Page 361 of

306 Summary of SPP Admin Fees and Assessments Attachment DAB-RR-2 Page 219 of 270 No. Description Account Amount 1 Per Book ,806, Eliminate Wholesale Schedule 1A Fee (1,054,121) 4 Impact Due to Rate Change 281, ProForma Schedule 1A Fee (Retail Only) ,033, Per Book ,022, Eliminate Wholesale Schedule 1A Fee (560,002) 11 Impact Due to Rate Change 149, ProForma Schedule 1A Fee (Retail Only) ,611, Per Book ,066, Eliminate Wholesale Schedule 1A Fee (1,680,005) 18 Impact Due to Rate Change 447, ProForma Schedule 1A Fee (Retail Only) ,834, TOTAL Admin Fee (Retail Only) 9,479,871 RR16 - Page 362 of

307 Wheeling Expense Eliminations Attachment DAB-RR-2 Page 220 of 270 No. Description Amount 1 Eliminate Schedule 9 Charges (24,828,360) 2 Eliminate PNM Charges (3,292,873) 3 Eliminate Wholesale Ancillary Charges - Sch 1, Sch 2, facilities (1,153,757) 4 Eliminate Wholesale Ancillary Charges - Sch 3, 5 & 6 (1,653,421) 5 Eliminate Per Book Schedule 11 (54,595,476) 6 Eliminate Wholesale Schedule 12 FERC Assessment 6,575 RR16 - Page 363 of

308 Base Plan Schedule 11 Charges for 2014 Attachment DAB-RR-2 Page 221 of 270 SPS Load No. Description Total Ratio SPS Share 1 SPP Base Plan Region Wide ATRR 196,669, % 25,736, SPP Balanced Portfolio Region Wide ATRR 100,126, % 13,102, Balanced Portfolio Transfer Payment 61,574, % 7,116, SPP Zonal ATRR 38,008, % 38,008, Total SPP Schedule 11 Charges 83,965,026 RR16 - Page 364 of

309 Page 222 of 270 Annualize Lamar DC Tie No. Description Account Amount 1 Per Book 0565P 8,475, Known and Measurable Change to PSCo Tie Transmission Rates 0565P 8,865, Adjustment 0565P 390,182 RR16 - Page 365 of

310 Page 223 of 270 Schedule 9 Adjustments No. Description Amount 1 Include Lea County Schedule 9 Expenses 388,000 2 Include Imbalance Penalty Distribution (57) 3 Total Schedule 9 Adjustments 387,943 RR16 - Page 366 of

311 Eliminate O&M on Transmission Sold Attachment DAB-RR-2 Page 224 of 270 No. Description Account Amount 1 Outside Services and Transaction Costs 566 1,062 2 Vegetation Management Expenses 571 6,664 3 Outside Services and Transaction Costs ,469 RR16 - Page 367 of

312 Page 225 of 270 Customer Deposit Interest No. Description Texas 1 Customer Deposit Balance 8,136, Texas Customer Deposit Interest Rate 0.09% 4 5 Customer Deposit Interest 7,322 RR16 - Page 368 of

313 Page 226 of 270 Calculation of EE Costs No. Description Amount 1 Prior EE Costs Year amortization amount per year (1) 1,155, Ending Balance June 30, ,200, Twelve Months Ended June 30, 2013 Carrying costs at 7.07% 367,685 (1) Per Unanimous Stipulation Agreement in PUC Docket No (2008 SPS Texas Rate Case). The amount was reduced in November 2010 for the sale of Lubbock Assets RR16 - Page 369 of

314 Page 227 of 270 Pro Forma ICO Credits For Rate Year July 1, June 30, 2016 No. Description Amount 1 Per Book ICO Credits 190, ICO Credits included in request 190,534 RR16 - Page 370 of

315 Page 228 of 270 Wholesale Account Manager Costs Bus. Area Bus. Area Bus. Area Bus. Area Bus. Area Bus. Area XES Billed Adjustments Adjustments Adjustments Adjustments Adjustments Adjustments No. FERC Description Base Labor Incentive Other Labor Total Labor Non Labor Per Book Base Labor Incentive Other Labor Total Labor Non Labor Total Customer Assistance 48,654 11,465 60,119 2,411 62,530 (48,654) (11,465) (60,119) (1,670) (61,790) Injuries and Damages (108) (108) (108) Pensions & Benefits 15,618 15,618 15,618 (15,079) (15,079) (15,079) Rents (1) Payroll Taxes (2) - 4,523 4,523 - (4,523) (4,523) Other Deductions (3) - 3,315 3, Total 48,654 11,465 15,725 75,845 10,249 86,094 (48,654) (11,465) (15,186) (75,306) (6,194) (81,500) (1) Included in Rents - Other (2) Eliminated in cost of service as part of adjustment to payroll taxes for all labor adjustments (3) Account not included in Texas Cost of Service RR16 - Page 371 of

316 Page 229 of 270 Wholesale Account Manager Costs No. FERC Description Customer Assistance Injuries and Damages Pensions & Benefits Rents (1) Payroll Taxes (2) Other Deductions (3) 7 8 Total XES Billed Remaining in Test Year Direct Billed Total Wholesale Acct Mgr Adj Base Labor Incentive Other Labor Total Labor Non Labor Total Non Labor Labor Non Labor Total ,565-7,565 7, ,315 3,315-3,315 3, ,055 4,594 7, ,798 12,337 RR16 - Page 372 of

317 Adjustment to Eliminate Prior Period EECRF Costs Attachment DAB-RR-2 Page 230 of 270 No. Description Account Base Labor Incentive Other Labor Total Labor Non Labor Total 1 Customer Assistance 908 (3,100) (367) (3,468) 400 (3,067) 2 Injuries and Damages 925 (7) (7) (7) 3 Pensions & Benefits 926 (1,081) (1,081) (1,081) 4 Rents (1,422) (1,422) 5 Payroll Taxes (1) (258) (258) 6 Total (3,100) (367) (1,088) (4,555) (1,280) (5,835) (1) Eliminated in cost of service as part of adjustment to payroll taxes for all labor adjustments RR16 - Page 373 of

318 Page 231 of 270 Long-Term Incentive Bus. Area Remaining Total No. Description Account XES Adjustments XES SPS Adjustment 1 Restricted Stock Units 2 Administrative Salaries ,507,481 (1,248,720) 258, , ,069 3 Total Restricted Stock Units 1,507,481 (1,248,720) 258, , , Performance Share Plan 6 Administrative Salaries ,767 (59,767) (0) 1,137 1,137 7 Total Performance Share Plan 59,767 (59,767) (0) 1,137 1, Total Long-Term Incentive 10 Administrative Salaries ,567,248 (1,308,488) 258, , , Total Long-Term Incentive 1,567,248 (1,308,488) 258, , ,206 RR16 - Page 374 of

319 Page 232 of 270 Aviation Adjustment Equivalent Base Other Total Total Commercial Total No. Description Account Labor Incentive Labor Labor Non Labor Per Book Airfare Adjustment 1 A&G Salaries and Wages 920 (90,530) (14,632) (105,162) (105,162) (105,162) 2 Office Supplies & Equipment (391,716) (391,716) 60,910 (330,806) 3 Outside Services (7,409) (7,409) (7,409) 4 Property Insurance (5,016) (5,016) (5,016) 5 Injuries & Damages 925 (204) (204) (204) (204) 6 Pension & Benefits 926 (30,040) (30,040) (30,040) (30,040) 7 Maintenance of General Plant (120,127) (120,127) (120,127) 8 Payroll Taxes (1) (7,335) (7,335) (7,335) 9 Other Deductions (2) Total (90,530) (14,632) (30,245) (135,407) (531,602) (667,009) 60,910 (606,098) (1) Eliminated in cost of service as part of adjustment to payroll taxes for all labor adjustments (2) Account not included in Texas Cost of Service RR16 - Page 375 of

320 Page 233 of 270 Xcel Foundation No. Description Account Base Labor Incentive XES Billed Other Labor Total Labor Non Labor Per Book 1 A&G Salaries and Wages ,399 15, , ,611 2 Office Supplies & Equipment ,699 20,699 3 Outside Services ,783 11,783 4 Injuries & Damages Pension & Benefits ,077 31,077 31,077 6 Rent ,986 7,986 7 Maintenance of General Plant Payroll Taxes (1) 408 7,799 7,799 9 Other Deductions (2) , , Total 95,399 15,121 35, , , ,309 (1) Eliminated in cost of service as part of adjustment to payroll taxes for all labor adjustments (2) Account not included in Texas Cost of Service RR16 - Page 376 of

321 Page 234 of 270 Xcel Foundation No. Description Account 1 A&G Salaries and Wages Office Supplies & Equipment Outside Services Injuries & Damages Pension & Benefits Rent Maintenance of General Plant Payroll Taxes (1) Other Deductions (2) Total Bus. Area Bus. Area Bus. Area Bus. Area Bus. Area Bus. Area Adjustments Adjustments Adjustments Adjustments Adjustments Adjustments Base Labor Incentive Other Labor Labor Non Labor Total (54,500) (8,559) (63,059) (63,059) (6,732) (6,732) 0 (122) (122) (122) (17,749) (17,749) (17,749) (7,986) 0 (4,458) (4,458) 0 (54,500) (8,559) (17,871) (80,930) (19,176) (100,107) RR16 - Page 377 of

322 Page 235 of 270 Xcel Foundation No. Description Account 1 A&G Salaries and Wages Office Supplies & Equipment Outside Services Injuries & Damages Pension & Benefits Rent Maintenance of General Plant Payroll Taxes (1) Other Deductions (2) Total XES Billed Remaining in Test Year Direct Total Xcel Foundation Adj Base Labor Incentive Other Labor Labor Non Labor Total Non Labor Labor Non Labor Total 40,898 6,563 4,091 51, ,552 51, , ,966 13,966 36, ,138 50, ,783 11, ,986 17, ,328 13, ,328 13, ,328 6, ,451 6, ,341 3, ,341 3, , , , ,529 40,898 6,563 17,512 64, , ,202 55,246 64, , ,448 RR16 - Page 378 of

323 Eliminate Accounting Corrections Attachment DAB-RR-2 Page 236 of 270 No. Description Account Amount 1 Other Compensation 920 (59,802) 2 Injuries and Damages 925 (119,604) 3 4 Total (179,406) RR16 - Page 379 of

324 SPP Letter of Credit Fee Attachment DAB-RR-2 Page 237 of 270 No. Description Account Amount 1 Service fee on Letter of Credit for SPP ,021 2 Per Book Fees on SPP Letter of Credit , Adjustment ,243 RR16 - Page 380 of

325 Page 238 of 270 Eliminate Self-Insured Workers Compensation Costs Adjusted No. Description Account Per Book Adjustment Test Year 1 Insurance Premiums 925 1,144,747 1,144,747 2 FAS 112 Worker's Compensation 925 (271,725) 271,725-3 Other 925 3,049 3, Total 876, ,725 1,147,796 RR16 - Page 381 of

326 Eliminate FAS 88 Costs Attachment DAB-RR-2 Page 239 of 270 No. Description Account Amount 1 Self Insure Workers Compensation 198,918 RR16 - Page 382 of

327 Adjustment to Active Healthcare Expenses - FERC 926 Attachment DAB-RR-2 Page 240 of 270 Adjusted No. Description Per Book Test Year Adjustment 1 Active Healthcare Expenses 2 Affiliate Charges 2,313 0 (2,313) 3 SPS Direct Charges 9,325,774 10,098, ,015 4 XES Charges to SPS 3,884,900 4,256, , Total 13,212,986 14,354,924 1,141,938 RR16 - Page 383 of

328 Amortization of Deferred Pension & OPEB Costs Attachment DAB-RR-2 Page 241 of 270 No. Month Amortization of 12/31/2012 Balance (amounts deferred in 2011 & 2012) Amortization of 5/31/2014 Balance Costs Deferred / (Add'l Expense) Total Costs Deferred and Amortization 1 Costs Deferred as of December 31, ,600,000 6,600,000 2 January , ,333 3 February , ,333 4 March , ,333 5 April , ,333 6 May 2013 (275,000) 254,455 (20,545) 7 June 2013 (275,000) 254,455 (20,545) 8 Deferral and Amortization of Costs as of June 30, 2013 (550,000) 8,542,244 7,992,244 9 July 2013 (275,000) 254,455 (20,545) 10 August 2013 (275,000) 254,455 (20,545) 11 September 2013 (275,000) 254,455 (20,545) 12 October 2013 (275,000) 254,455 (20,545) 13 November 2013 (275,000) 254,455 (20,545) 14 December 2013 (275,000) 254,455 (20,545) 15 January 2014 (275,000) 39,206 (235,794) 16 February 2014 (275,000) 39,206 (235,794) 17 March 2014 (275,000) 39,206 (235,794) 18 April 2014 (275,000) 39,206 (235,794) 19 May 2014 (275,000) 39,206 (235,794) 20 June 2014 (275,000) 39,206 (235,794) 21 Deferral and Amortization of Costs as of June 30, 2014 (3,850,000) 10,304,214 6,454, July 2014 (275,000) 39,206 (235,794) 23 August 2014 (275,000) 39,206 (235,794) 24 September 2014 (275,000) 39,206 (235,794) 25 October 2014 (275,000) 39,206 (235,794) 26 November ,375,000 (1,115,001) (788,028) (528,029) 27 December (185,834) (98,666) (284,500) 28 Total Deferral and Amortization of Costs thru Dec 2014 (3,575,000) (1,300,835) 9,574,345 4,698, January 2015 (185,834) (185,834) 30 February 2015 (185,834) (185,834) 31 March 2015 (185,834) (185,834) 32 April 2015 (185,834) (185,834) 33 May 2015 (185,834) (185,834) 34 June 2015 (185,834) (185,834) 35 Total Deferral and Amortization of Costs thru June 2015 (3,575,000) (2,415,836) 9,574,345 3,583,510 RR16 - Page 384 of

329 Adjustment to 401k Match Expense - FERC 926 Attachment DAB-RR-2 Page 242 of 270 No. Description SPS XES Total 1 April k O&M Expense 135,390 66,611 2 May k O&M Expense 132,882 70,968 3 June k O&M Expense 164, ,837 4 Less: June YTD True-up (34,314) (45,577) 5 Add: 3 Months of June True-up 17,157 22,789 6 Total 3 Month Accrual 415, , Annualized Accrual 1,663, ,510 9 Escalation Percent 3.00% 3.00% K with Escalator Due to Budgeted 3% Merit Increase 1,713, , Amount in the Test Year 1,642, , Amount of 401k Match Adjustment 71,308 36, ,166 RR16 - Page 385 of

330 Adjust PUCT Regulatory Fees to Present Revenue Attachment DAB-RR-2 Page 243 of 270 No. Description Amount 1 Total Test Year Present Revenue 967,633, PUCT Regulatory Fee $ PUCT Fee at Present Revenue 1,613, Per Book PUCT Fees 1,521, Adjustment 91,827 RR16 - Page 386 of

331 Page 244 of 270 Test Year Rate Case Amortization No. Description Account Amount 1 Per Book Rate Case Amortization: Rate Case - Docket No ,370,858 3 EECRF Case Expense Amortization , Total 1,402,517 RR16 - Page 387 of

332 Rate Case Expenses Estimate Attachment DAB-RR-2 Page 245 of 270 No. Description Amount 1 Total 2014 Rate Case Expenses 4,345, Unamortized Balance of Rate Case Expenses in Docket No at June 30, , Unamortized Balance of Rate Case Expenses in Docket No at June 30, ,737, Total Rate Case Expenses 6,867, Less: Unamortized Balance of Lubbock Gain (2,226,277) Less: Unamortized Balance of TUCO Audit Refund (83,753) Total to be Amortized 4,557, Annual Amortization 4,557,311 RR16 - Page 388 of

333 Page 246 of 270 Charitable Contributions & Organization Memberships/Dues No. Description Amount 1 Advertising 1,372,964 2 Contributions/Donations 1,242,300 3 Organization Memberships/Dues 527, Total (1) 3,143, Dollar Limitation on Expenses 2,902, Less Advertising in FERC 908 (2) 1, Less Advertising in FERC 909 (2) 344, Amount included in Request 2,556,117 (1) Per Schedule G-4 (2) Per Schedule G-4.1 RR16 - Page 389 of

334 Page 247 of 270 Depreciation Expense - Financial Rules to Texas Rules Adjustment No. Description Account Financial Rules Texas Rules Adjustment 1 Steam Production ,124,293 21,730,987 (14,393,306) 2 Steam Production Land Rights ,853 37,662 7,809 3 Steam Production Water Rights , ,622 8,710 4 Total Steam Production: ,282,058 21,905,271 (14,376,787) 5 Other Production 403 7,851,376 5,994,361 (1,857,015) 6 Other Production Land Rights (12) 7 Total Other Production: 403 7,851,398 5,994,371 (1,857,027) 8 Transmission Plant ,529,855 33,933,028 2,403,172 9 Transmission Land Rights ,034, ,918 (219,445) 10 Total Transmission: ,564,218 34,747,946 2,183, Texas Distribution Plant ,303,869 17,303, Texas Distribution Land Rights ,407 25, New Mexico Distribution Plant 403 8,589,010 8,589, NM Distribution Land Rights ,864 43, Total Distribution Plant: ,962,151 25,962, Intangible Plant ,979,493 7,380, , Intangible Software-CRS ,585,372 1,585, Total Intangible Plant: ,564,865 8,965, , General Plant Land Rights (108) 20 General Plant - Call Center , ,733 (40,735) 21 General Plant 403 9,228,256 9,017,357 (210,899) 22 Total General Plant: 403 9,456,425 9,204,684 (251,741) Total Electric Plant in Service 120,681, ,779,880 (13,901,235) RR16 - Page 390 of

335 Page 248 of 270 Depreciation Expense - Annualization Adjustment Per Book Annualized No. Description Account Texas Rules Texas Rules Adjustment 1 Steam Production ,730,987 21,950, ,237 2 Steam Production Land Rights ,662 38,970 1,308 3 Steam Production Water Rights , ,567 (55) 4 Total Steam Production: ,905,271 22,125, ,490 5 Other Production 403 5,994,361 6,091,554 97,193 6 Other Production Land Rights Total Other Production: 403 5,994,371 6,091,638 97,267 8 Transmission Plant ,933,028 37,986,094 4,053,066 9 Transmission Land Rights , ,089 71, Total Transmission: ,747,946 38,872,182 4,124, Texas Distribution Plant ,303,870 17,763, , Texas Distribution Land Rights ,407 25, New Mexico Distribution Plant 403 8,589,010 7,309,678 (1,279,333) 14 NM Distribution Land Rights ,864 45,126 1, Total Distribution Plant: ,962,151 25,144,277 (817,874) 16 Intangible Plant ,380,086 10,623,493 3,243, Intangible Software-CRS ,585,372 1,585, Total Intangible Plant: ,965,458 12,208,865 3,243, General Plant Land Rights General Plant - Call Center , ,173 4, General Plant 403 9,017,357 12,438,048 3,420, Adjust Capitalized Transportation Depreciation (867,062) (867,062) 23 Adjusted General Plant 403 9,204,684 11,762,752 2,558, Total Electric Plant in Service 106,779, ,205,475 9,425,595 RR16 - Page 391 of

336 Page 249 of 270 Depreciation Expense - New Rates Adjustment New Annualized Depreciation No. Description Account Texas Rules Rates Adjustment 1 Steam Production ,950,224 41,040,084 19,089,860 2 Steam Production Land Rights ,970 35,625 (3,345) 3 Steam Production Water Rights , ,530 (13,037) 4 Total Steam Production: ,125,761 41,199,239 19,073,477 5 Other Production 403 6,091,554 7,281,260 1,189,706 6 Other Production Land Rights (84) 7 Total Other Production: 403 6,091,638 7,281,260 1,189,622 8 Transmission Plant ,986,094 39,153,439 1,167,345 9 Transmission Land Rights , ,212 49, Total Transmission: ,872,182 40,088,650 1,216, Texas Distribution Plant ,763,586 18,989,328 1,225, Texas Distribution Land Rights ,887 25,477 (410) 13 New Mexico Distribution Plant 403 7,309,678 7,712, , NM Distribution Land Rights ,126 44,412 (715) 15 Total Distribution Plant: ,144,277 26,772,114 1,627, Intangible Plant ,623,493 10,623, Intangible Software-CRS ,585,372 1,585, Total Intangible Plant: ,208,865 12,208, General Plant Land Rights , General Plant - Call Center , , , General Plant ,438,048 15,209,620 2,771, Adjust Capitalized Transportation Depreciation 403 (867,062) (1,188,586) (321,524) 23 Adjusted General Plant ,762,752 14,339,055 2,576, Total Electric Plant in Service 116,205, ,889,183 25,683,708 RR16 - Page 392 of

337 Page 250 of 270 Depreciation Expense - Annualization Adjustment 6/30/14 12/31/14 New New Depreciation Depreciation No. Description Account Rates Rates Adjustment 1 Steam Production ,040,084 41,585, ,791 2 Steam Production Land Rights ,625 35, Steam Production Water Rights , , Total Steam Production: ,199,239 41,745, ,791 5 Other Production 403 7,281,260 7,401, ,371 6 Other Production Land Rights Total Other Production: 403 7,281,260 7,401, ,371 8 Transmission Plant ,153,439 47,990,419 8,836,981 9 Transmission Land Rights ,212 1,100, , Total Transmission: ,088,650 49,090,811 9,002, Texas Distribution Plant ,989,328 19,494, , Texas Distribution Land Rights ,477 25, New Mexico Distribution Plant 403 7,712,898 8,099, , NM Distribution Land Rights ,412 46,390 1, Total Distribution Plant: ,772,114 27,666, , Intangible Plant ,623,493 13,979,304 3,355, Intangible Software-CRS ,585,372 1,585, Total Intangible Plant: ,208,865 15,564,676 3,355, General Plant Land Rights ,133 1, General Plant - Call Center , , General Plant ,209,620 17,508,470 2,298, Adjust Capitalized Transportation Depreciation 403 (1,188,586) (1,188,586) 0 23 Total General Plant: ,339,055 16,637,905 2,298, Total Electric Plant in Service 141,889, ,106,272 16,217,089 RR16 - Page 393 of

338 Page 251 of 270 Property Tax Expense No. Texas New Mexico Oklahoma Kansas Total 1 Plant in Service at 12/31/13 3,689,719, ,580,606 29,825,132 55,645,496 4,633,771, Property Tax 26,900,000 4,400, , ,000 32,300,000 3 PT as a % of Plant 0.73% 0.51% 1.68% 0.90% 4 Plant in Service at 6/30/14 3,843,288, ,535,600 77,749,729 56,527,063 4,900,101,221 5 Property Tax Expense 28,019,599 4,727,753 1,303, ,921 34,558, Per Book Property Tax 27,506, Adjustment 7,052,613 RR16 - Page 394 of

339 Page 252 of 270 Property Tax Expense No. Texas New Mexico Oklahoma Kansas Total 1 Plant in Service at 12/31/13 3,689,719, ,580,606 29,825,132 55,645,496 4,633,771, Property Tax 26,900,000 4,400, , ,000 32,300,000 3 PT as a % of Plant 0.73% 0.51% 1.68% 0.90% 4 Plant in Service at 12/31/14 4,177,489,254 1,031,072,529 40,756,940 77,350,300 5,326,669,022 5 Property Tax Expense 30,456,096 5,283, , ,027 37,118, Property Tax Expense for Plant in 6/30/14 34,558, Adjustment 2,559,665 RR16 - Page 395 of

340 Page 253 of 270 Calculation of Payroll Tax Adjustment No. Description Amount 1 Payroll Tax Expense 7,860, O&M Labor Expense - Subject to Payroll Tax (1) 110,204, Rate ( 1 Divided by 3) 7.13% 6 7 Labor Adjustments - Subject to Payroll Tax (2) 3,503, Payroll Tax Adjustment ( 5 Multiplied by 7) 249,765 Note 1: O&M Labor Expense - Per Book 147,240,699 Exclude: FERC Injuries and Damages 876,073 FERC Pensions & Benefits 34,621,643 FERC Deferred Pensions & Benefits 1,538,030 O&M Labor Expense - Subject to Payroll Tax 110,204,952 Note 2: Labor Adjustments 6,869,114 Exclude Adjustments for : FERC Injuries and Damages 390,523 FERC Pensions & Benefits 930,099 FERC Deferred Pensions & Benefits 2,045,479 Labor Adjustments - Subject to Payroll Tax 3,503,012 RR16 - Page 396 of

341 Page 254 of 270 Texas Franchise Fees - TY Adjusted Franchise Fee Revenue No. Description Amount 1 Franchise Fees at Present Rates $ 9,875, Test Year Actuals Per Book $ 9,294, Adjustment $ 581,009 RR16 - Page 397 of

342 Page 255 of 270 Gross Up of Taxes Other Than Income Items Franchise Fees Texas Texas Gross No. Description Texas (1) Franchise Tax Receipts Tax 1 Per Book 9,294,948 3,380,717 6,267, Adjustments 581, Adjusted Balance 9,875,957 3,380,717 6,267, Grossed Up Amount for Revenue Requirement 11,081,812 3,625,726 6,970, Adjustment ( 7 minus 5) 1,205, , ,435 (1) Amount includes franchise fee for Miscellaneous Service Revenues RR16 - Page 398 of

343 Page 256 of 270 Schedule Ms No. Description Amount Adjusted Amount 1 Plant Related: 2 Post Test Year Adjustments - Permanent 3 Production 498, ,933 4 Transmission (4,089,260) (4,089,260) 5 Texas Distribution Plant: (44,113) (44,113) 6 New Mexico Distribution Plant: (18,127) (18,127) 7 Intangible Plant (474,536) (474,536) 8 General Plant - Call Center General Plant (91,754) (91,754) 10 (4,218,857) (4,218,857) Post Test Year Adjustments - Temporary 13 Production 2,334,086 2,334, Transmission (85,810,088) (85,810,088) 15 Texas Distribution Plant: (7,710,889) (7,710,889) 16 New Mexico Distribution Plant: (3,168,569) (3,168,569) 17 Intangible Plant 540, , General Plant - Call Center (295,455) (295,455) 19 General Plant 920, , (93,189,520) (93,189,520) Depreciation Adjustments - Permanent 23 Production 185, , Transmission 433, , Texas Distribution Plant: 15,792 15, New Mexico Distribution Plant: 6,489 6, Intangible Plant 205, , General Plant 80,670 80, , , Depreciation Adjustments - Temporary 32 Production 4,827,896 4,827, Transmission 16,092,766 16,092, Texas Distribution Plant: 1,191,979 1,191, New Mexico Distribution Plant: 489, , Intangible Plant 6,795,166 6,795, General Plant 7,100,270 7,100, ,497,886 36,497, RR16 - Page 399 of

344 Page 257 of 270 Schedule Ms No. Description Amount Adjusted Amount 40 AFUDC, Avoided Cost - Permanent 41 Production 522, , Transmission 12,297,687 12,297, Texas Distribution Plant: 1,016,550 1,016, New Mexico Distribution Plant: 417, , Intangible Plant 1,776,278 1,776, General Plant 197, , ,227,835 16,227, AFUDC, Avoided Cost - Temporary 50 Production (43,871,709) (43,871,709) 51 Transmission (28,730,344) (28,730,344) 52 Texas Distribution Plant: 4,471,199 4,471, New Mexico Distribution Plant: 1,837,311 1,837, Intangible Plant 398, , General Plant (417,523) (417,523) 56 (66,312,541) (66,312,541) Sharyland - Permanent 59 Production - 60 Transmission 161, , Texas Distribution Plant: - 62 New Mexico Distribution Plant: - 63 Intangible Plant - 64 General Plant , , Sharyland - Temporary 68 Production - 69 Transmission 12,595,820 12,595, Texas Distribution Plant: - 71 New Mexico Distribution Plant: - 72 Intangible Plant - 73 General Plant ,595,820 12,595, RR16 - Page 400 of

345 Page 258 of 270 Schedule Ms No. Description Amount Adjusted Amount 76 Recap - Permanent 77 Production 1,206,827 1,206, Transmission 8,804,039 8,804, Texas Distribution Plant: 988, , New Mexico Distribution Plant: 406, , Intangible Plant 1,506,926 1,506, General Plant - Call Center General Plant 185, , Total Plant Permanent 13,098,033 13,098, Recap - Temporary 87 Production (36,709,727) (36,709,727) 88 Transmission (85,851,847) (85,851,847) 89 Texas Distribution Plant: (2,047,712) (2,047,712) 90 New Mexico Distribution Plant: (841,449) (841,449) 91 Intangible Plant 7,734,596 7,734, General Plant - Call Center (295,455) (295,455) 93 General Plant 7,603,238 7,603, Total Plant Temporary (110,408,355) (110,408,355) Non-Plant: 97 REC Amortization (excl tracker interest) 2,836,570 2,836, Historic EE Amortization (excl interest) 1,155,696 1,155, Unamortized Rate Case Expense Amortization 102 Amount from Docket No at June 30, , , Amount from Docket No at June 30, ,737,216 1,737, Unamortized Pension/OPEB Reg Asset Amortization 3,583,510 3,583, Total Non-Plant 10,097,716 RR16 - Page 401 of

346 Lubbock Sale Amortization Adjustment Attachment DAB-RR-2 Page 259 of 270 No. Description Amount 1 Eliminate Per Book Amortization 4,898,862 RR16 - Page 402 of

347 Misc. Revenue - Increase in Meter Tampering Fee Attachment DAB-RR-2 Page 260 of 270 No. Description Amount 1 Increase in Meter Tampering Fee $ Number of Customers Increase in Meter Tampering Revenues 19,120 RR16 - Page 403 of

348 Page 261 of 270 Substation Lease Revenues Adustment No. Description Lease Charge per Month Test Year Amount Annualized Increase/ (Decrease) 1 New Substation Lease (1) 3,628 14,513 43,539 29, Adjustment 29,026 (1) Lease started March 2014 RR16 - Page 404 of

349 Schedule 7 Firm Point to Point Revenue Adjustments Attachment DAB-RR-2 Page 262 of 270 No. Description Account Amount 1 Per Book (4,086,694) 2 3 Adjust Per Book Revenue for 2015 Rates (642,812) 4 Eliminate 2011 PTP Transmission Resettlement 310,522 5 Eliminate 2010 PTP Resettlement 2,838 6 Eliminate 2009 PTP Resettlement 1,889 7 Total Adjustment (327,563) 8 9 Total (4,414,257) RR16 - Page 405 of

350 Schedule 8 Firm Point to Point Revenue Adjustments Attachment DAB-RR-2 Page 263 of 270 No. Description Account Amount 1 Per Book (782,943) 2 3 Adjust Per Book Revenue for 2015 Rates (130,287) 4 Total Adjustment (130,287) 5 6 Total (913,230) RR16 - Page 406 of

351 Eliminate Out of Period Adjustments to Schedule 1 Revenue Attachment DAB-RR-2 Page 264 of 270 No. Description Account Amount 1 Per Book (2,029,014) 2 3 Through and Out Resettlement Accrual 673,095 4 Amortization of 2012 Attach O True Up - Sch 1 75,320 5 Total Adjustment 748, Total (1,280,599) RR16 - Page 407 of

352 Page 265 of 270 Transmission Revenue Adjustment No. Description Account Per Book Adjustments 1 Eliminate Network Transmission Revenue 2 Schedule 9 -Network (40,574,055) 40,574, Eliminate Offsystem Wheeling 5 FERC Pass-thru ,506 (286,506) 6 7 Eliminate Test Period Schedule 11 Network Base Plan Revenues 8 Transmission Expansion Plan (52,405,377) 52,405,377 RR16 - Page 408 of

353 Page 266 of 270 FERC Texas - Out of Period Adjustments No. Description Amount 1 Out-of-Period Amount related to Lubbock (1) Out-of-Period Related to Sharyland (2) (5,222,262) 3 Out-of-Period Related to TUCO (3) 638,281 4 Total (4,583,454) (1) - Amounts related to true-ups for the sale of Lubbock assets. Amounts are not ongoing and are excluded from the cost of service. (2) - Amounts related to refund of the Sharyland Gain Amounts are not ongoing and are excluded from the cost of service. (3) - Amounts related to TUCO audit refund. Amounts are not ongoing and are excluded from the cost of service. RR16 - Page 409 of

354 Base Plan Schedule 11 Revenue for 2014 Attachment DAB-RR-2 Page 267 of 270 No. Description Total 1 SPS Schedule 11 Revenue (76,230,194) RR16 - Page 410 of

355 Page 268 of 270 Revenue Credit for Wholesale Incremental Capacity Contracts Central No. Description Account Valley Farmers Roosevelt Total 1 Revenue Credit Expected in 2014: 2 Backup Sales Fixed Charge ,576 82,944 58, , Planning Reserve , ,462 83, , Adjustment 587, , , ,127 RR16 - Page 411 of

356 Allocation Factors Attachment DAB-RR-2 Page 269 of 270 No. Description Allocator Texas All Others 1 Demand - 12 Coincident Peak - Production (kw) 12CP-PROD ,117,877 1,923, Demand - 12 Coincident Peak - Transmission (kw) 12CP-TRAN ,124,969 2,455, Retail Tranmssion RETAIL-TRAN ,124, , Demand - Non Coincident Peak - Distribution - TX Only (kw) NCP-DIST ,048,564 1, Input KWH excluding Celanese Source Allocation) ENERGY ,129,281,002 12,428,905, Retail Input KWH including Celanese Source Allocation) RETAIL-ENERGY ,129,281,002 5,438,637, Year-end Customers CUST-YE Year-end Meters MET-YE Average Customers CUST-AVG , , Adjusted Average Customers CUST-ADJ Average Customers - Retail CUST-RET , , Customer Deposits DEPOSITS (8,136,028) (2,168,851) Total O&M Expense TOM ,760, ,622, Total O&M excluding Fuel & Purchased Power TOMXFP ,760, ,622, Plant in Service - Production, Transmission, Distribution PIS-PTD ,676,433,058 2,299,382, Plant in Service Retail - Production, Transmission, Distribution PISRET-PTD ,676,433,058 1,031,842, Plant in Service - General PIS-GEN ,301, ,225, Plant in Service - Intangible PIS-INT ,248,839 42,135, RR16 - Page 412 of

357 Allocation Factors Attachment DAB-RR-2 Page 270 of 270 No. Description Allocator Texas All Others 55 Plant in Service - Production PIS-PROD ,069,434, ,166, Plant in Service - Distribution PIS-DIST ,628, ,215, Plant in Service - Transmission PIS-TRAN ,369,940 1,033,001, Plant in Service - Net PIS-NET ,912,905,539 1,651,663, Plant in Service - Electric PIS-ELEC ,918,983,762 2,466,743, Plant in Service - Retail PIS-RET ,912,905, ,283, Construction Work in Progress CWIP Labor - Production, Transmission, Distribution LAB-PTD ,798,321 35,931, Labor Excluding A&G LABXAG ,706,847 38,737, Total Labor LABOR ,708,978 62,400, Hobbs/Seminole Customers CUST-H/S ,321 14, Retail Revenue REV-RET (512,886,811) (314,174,729) Wholesale Revenue REV-WHL Rate Base Excluding Cash Working Capital RBXCWC ,582,308,433 1,399,618, All Texas Retail TX All New Mexico Retail NM All Wholesale WHLS No Allocation N/A RR16 - Page 413 of

358 Attachment DAB-RR-3 Page 1 of 9 Lead Lag Study General Description A lead lag study is a widely used and acceptable method for developing the Cash Working Capital (CWC) component of rate base in connection with the determination of revenue requirements in public utility rate case proceedings. The underlying objective is to measure the average length of time between the utility s provision of service and subsequent payment by customers (revenue lag), and between the incurrence of costs necessary for the provision of service and subsequent payment by the utility (expense lead). The measurement is in days. The lead lag study does not produce the computed cash working capital allowance. It provides the factors resulting from the revenue lag and various expense leads used in the Cost of Service Study model. Total cash working capital is the sum of the net working capital required or provided for each includible element of cost of service. The CWC factors are calculated with this formula. (Composite Revenue Lag - Applicable Expense lead) / 365 days = CWC factor The CWC factor is applied to the appropriate test year expense amount. A positive result indicates a CWC requirement. A positive result represents an investor source of capital. A negative result indicates, on average, cash is received from customers before the Company must pay the applicable expense. A negative result represents a non-investor source of capital. The CWC results of each appropriate expense are added together. This total CWC requirement is included in rate base. A positive CWC requirement is added to rate base. A negative CWC requirement is deducted from rate base. To complete a lead lag study, a twelve-month period of time is used. Revenue receipts and payment disbursements are analyzed. The revenue receipts are from electric sales. The payment disbursements are placed in categories such as fuel, purchased power, labor, payroll taxes, O&M expenses, property tax, federal and state income taxes, sales tax paid and franchise fees paid. RR16 - Page 414 of

359 Attachment DAB-RR-3 Page 2 of 9 Revenue Lag The revenue lag is the average time period from the date that customers receive service from the company and the date they pay for those services. Revenue lag is measured in days and is calculated for each rate group. Data for calculating revenue lags comes from the actual billing and payment history of customers as captured in the company s billing system. The rate groups were split into census and sample groups, depending on the rate class population and billing information available. The census groups, which were the rate classes with fewer than 1,200 accounts, contained all the customers and all revenue with metered consumption or lighting loads in that rate class. The average lag days for the remaining rate classes were estimated using a random sample for each rate class. The mean and standard deviation from the 2013 Southwestern Public Service Lag Study were used as a proxy to determine estimated sample sizes to achieve a 95% confidence that the mean lag day would be within + 5% of the estimated mean at the sample rate class level. (Table 1, which is found in WP/E-4(V)(CONF), page 1). To account for missing data and ensure that a narrow confidence interval was obtained for all rate classes, the calculated sample size was increased by 50% for the sampled rate groups. It is important to remember that these proxy variables (namely the 2013 mean and standard deviation) were used to determine sample sizes only. Once actual values for the 2014 mean and standard deviation were calculated from the new sample, they were used in all analysis. After the census and sample data was extracted, lag days were calculated for each invoice. All Debtors with an Account Status code indicating the account was in receivership, pending writeoff, written off or bankrupt were excluded from the analysis. Each payment or transaction date that was applied to an invoice was used in the calculation of lag days. The calculation for the revenue lag is: Service Period = Invoice To Date Invoice From Date + 1 Midpoint Date = Invoice From Date + Service Period / 2 Lag Days = Payment Date Midpoint Date +.5 An average lag day value for each rate group was calculated and weighted based on each rate group s percent of total revenue shown in Table 2, located in WP/E-4(V)(CONF), page 2. The sum of these weighted means equals the overall average lag days shown in Table 3. Standard deviation and confidence intervals were also calculated and are also shown in Table 3. Table 3. Revenue Lag Statistics for Retail Electric Number Weighted Weighted Variance 95% 99% of Average of Lag Confidence 95% Confidence 99% Invoices Lag Days Days Interval Precision Interval Precision 86, % % RR16 - Page 415 of

360 Attachment DAB-RR-3 Page 3 of 9 Expense Leads The expense lead is the average time period from the receipt of goods or services by the utility to the date the utility pays for the goods and services. Expense lead is measured in days. Costs may be incurred over a period of time (i.e. month, year). The expense lead is measured from the midpoint of the service period to the bank clear date of payment. A separate expense lead is computed for each major category of operating expenses or account class (fuel, labor, payroll taxes, taxes, etc.). This expense lead is compared to the overall composite revenue lag to determine whether working capital is required from the company s investors (net revenue lag), or provided by the company s customers (net expense lead). Expenses leads are broken into a service period, midpoint date and lead days. The calculations for these are: Service Period = To Service Date From Service Date + 1 Midpoint Date = From Service Date + Service Period / 2 Lead Days = Payment Date Midpoint Date +.5 The From Service Date is the first day goods or services were received. The To Service Date is the last day goods or services were received. If goods or services were received on just one day, the From Service Date and the To Service Date are the same. For those expense account classes with invoices, the invoices were reviewed for service date information. If no information about the service dates was available, the invoice date was used. After service dates were determined, the lead day values are calculated. The expense lead day value is measured from the midpoint of the dates the service was received to the date the cash was disbursed. Expense leads are calculated using statistical samples for some expense categories, while other expense categories have statutory payment dates that are strictly adhered to for payment. The expense categories where statistical sampling was done are those with invoices generated from vendors including: fuel gas for generation, fuel coal, fuel oil for generation, purchased power and operations & maintenance expenses. For those expense categories where statistical sampling was done, the sample population had to be determined. Appropriate general ledger accounts for each expense category are reviewed to obtain the accounts payable records population. Only records that were actually paid can be used for the expense lead. A transaction was included if it was expensed to an account included in the expense category during the test period and paid. Once the population is determined, the population is reviewed to determine if the entire population ( census group ) or a statistical sample will determine the expense lead. Once records are selected for the census group or sample, invoices are viewed to determine dates the goods and/or services were received. Payment dates are generally included in the record. Once all service dates are determined and midpoint dates and lead days are calculated, the sample is ready for the overall expense lead mean to be determined. RR16 - Page 416 of

361 Attachment DAB-RR-3 Page 4 of 9 Fuel, Purchased Power and Operations & Maintenance Gas for Generation Gas for generation purchases are invoiced monthly. Since there are many records in this account class, a statistical sample was selected to calculate the lead day analysis. Coal and Rail Transportation The expense lead is calculated on the purchases made for inventory replenishment during the test period. Coal for generation is purchased from one vendor. The vendor owns the coal inventory used by SPS. SPS is billed monthly for the coal used in the prior month. The coal SPS buys is charged to expense. Since there are only 12 invoices in this account class, all invoices were selected to calculate the lead day analysis. Oil for Generation The expense lead is calculated on the purchases made for inventory replenishment during the test period. Purchases are invoiced as shipments are made. Since there were few records in this account class, all invoices were selected to calculate the lead day analysis. Purchased Power Purchased power is purchased from many vendors. Purchases are invoiced monthly. Since there are many records in this account class, a statistical sample was selected to calculate the lead day analysis. Other Non-Labor Operations & Maintenance Expense Other non-fuel operations and maintenance (O&M) expense encompasses the non-labor O&M expense for production, transmission, distribution, customer operations and administrative and general expenses. This category has a large volume of transactions. As a result, a statistical sample was selected to calculate the lead day analysis. RR16 - Page 417 of

362 Attachment DAB-RR-3 Page 5 of 9 Expense Sample Results In order to estimate the average expense lead days for the Company, expenses were divided by account class. The lead days for the Fuel Coal and Fuel Oil account classes were calculated exactly based on test year expense amounts and actual lead days. A random sample was used to estimate the average lead time for the expenses from the remaining account classes. For all account classes, the expenses were grouped together by payment reference number, which combined those expenses that were paid together into payment groups. Each population was split into two strata, with the largest expense payments in each population included in the first stratum and the remaining expense payments in the second stratum. All elements in the first stratum were included in the sample, to reduce the uncertainty of the overall estimate. Since the second group contained records that varied widely in size (dollars), the company used random sampling with the probability proportional to size, known as pps sampling. Random pps sampling, with replacement, gives an unbiased estimate of the mean. The sample described above, including the stratification scheme and the associated sample sizes, was designed to achieve a 90% confidence interval that was approximately +/10% of the mean lead day value. The mean and the variance by account class from the 2013 Southwestern Public Service Company Lead Study were used as a proxy to determine sample size. A minimum of 30 sample points was required and at least twenty percent of the calculated sample size of the second stratum was added to account for missing data and unknown differences between the 2013 and 2014 data (Table 4). It is important to remember that the estimates were used for planning purposes only. Once actual values for the mean and variance were calculated from the new sample, they were used in all analysis. Table 4. Census or Sample Size by Expense Category Census or Sample 2013 Mean Lead Days 2013 Variance Lead Days Stratum 1 Percent of Expense Category Stratum 2 with 20% Alternates Expense Category Total Invoices Stratum 1 Size Stratum 2 Size Fuel Coal 12 Census N/A N/A N/A N/A N/A N/A 12 Fuel Oil 9 Census N/A N/A N/A N/A N/A N/A 9 Fuel Gas 612 Sample % O&M 11,199 Sample % Purchased Power 506 Sample % Total Census or Sample RR16 - Page 418 of

363 Attachment DAB-RR-3 Page 6 of 9 Once the payment date, payment due date, and service dates were determined for all available expense items, lead day values were calculated for each payment and a weighted lead day value was calculated for each payment reference number. A mean and variance were calculated by stratum and then a weighted mean and the associated stratified variance were calculated for the entire account class. The variance of this estimator was also calculated, which was then used to calculate a 90% confidence interval and a 95% confidence interval for the account class mean (Table 5). Table 5. Statistics by Expense Category Weighted Average Lead 90% Confidence Interval 95% Confidence Interval Expense Category Record Count Weighted Variance 90% Precision 95% Precision Fuel Gas % % Fuel Coal % % Fuel Oil % % Purchased Power % % O&M % % Labor Payroll expenses are separated into two groups, Regular Payroll and Incentive Compensation. Employer taxes are discussed in the Taxes section of this study. Regular Payroll There are two types of payrolls at the Company, Semi-monthly and Bi-weekly. Semi-monthly payrolls are paid twice a month. The first pay period covers the first through the fifteenth of the month with the pay date on the fifteenth or the prior business day. The second pay period of the month covers the sixteenth through the end of the month with the pay date on the last business day of the month. Bi-weekly payrolls run from Monday through Sunday with a pay date the following Friday or prior business day. Employees are paid either by a direct deposit to their bank or by a check mailed to their home. Checks are mailed so that receipt is on or before the pay date. For net pay, the expense lead period is measured from the midpoint of the payroll period to the paycheck/pay advice issue date for net pay. For payroll deductions, the expense lead period is measured from the midpoint of the payroll period to the date funds are remitted to the vendor. RR16 - Page 419 of

364 Attachment DAB-RR-3 Page 7 of 9 To determine the average expense leads for each of the payrolls, payroll reports showing the breakdown of gross payroll by withholding tax (FICA Withheld, Federal Income Tax Withheld, State Income Tax Withheld) or employee deduction (Union Dues, 401k deductions and Other Deductions) were obtained. This payroll information was summarized by type of payroll by pay period. The summary dollar information was used to dollar-weight the components of gross pay (net pay, taxes withheld, other employee deductions) in the calculations of average expense lead of each component. Next, an average expense lead for each gross pay component was computed. The lead for net pay and each of the various withholdings was computed for each of the two payroll types. For net pay, the actual payroll check clear date was used to calculate the expense lead. For tax withholdings the actual payment dates that correspond with the dates required by the IRS or state statute were used to calculate the expense lead. Other Employee Deductions were summarized by type of payroll by pay period. Deductions having the same payment date were grouped together. Then the scheduled payment date was used to calculate the expense lead of that group. Once expense leads for all the groups were determined, the average Other Employee Deductions expense lead was determined by dollar-weighting the various group expense leads. Other Employee Deductions are a component for Regular Payroll. Incentive Compensation Incentive compensation is processed similarly to Regular Payroll. Separate payrolls, Semimonthly and Bi-weekly, are run for incentive compensation. Other employee deductions are treated similar to regular payroll. The Incentive Compensation was dollar weighted by its components. Tax Expense Leads The average expense leads computed for the various tax categories are based on actual amounts paid during the test year and the payment dates presently required by statute. Property Taxes Statutory payment dates are used to determine the property tax lead days. Employer Payroll Taxes FICA matching and employer unemployment taxes are included in this section. The Employer FICA Tax expense lead is the same as the FICA tax withheld expense lead in the payroll expense lead. The statutory payment dates for the taxes are used to calculate the unemployment tax expense lead days. RR16 - Page 420 of

365 Attachment DAB-RR-3 Page 8 of 9 Franchise Fees Paid As consideration for franchise rights granted to the Company, the Company pays a franchise fee to furnish, sell, transmit and distribute electricity. The Company charges a franchise fee to its customers. The fees are considered a pass through from customers to the city. The company collects the fees and remits them to the city. Sales and Use Taxes The Company pays both sales and use taxes. Sales tax occurs in two instances. The first instance occurs when the Company bills customers for sales tax in connection with sales of taxable goods and services. This type of sales tax is not an expense to the Company. The Company is the collection agent and remits the sales tax to the state. The second instance of sales tax occurs when the Company makes purchases of taxable goods and services from vendors that are required to charge the tax and remit it to the state. The tax paid in this instance is considered an expense to the Company. The use tax is a complement of the sales tax and designed to level the playing field for companies that are required to collect the sales tax. It typically occurs in a situation where a taxable purchase is made by the Company from a vendor that is not required to collect a sales tax, usually because the vendor lacks a physical presence (nexus) in the taxing jurisdiction. Here, the Company must self-assess and pay the use tax directly to the state. Use tax is an expense to the Company. Sales tax and use tax are remitted together. The statutory payment dates were used in the calculation of the sales tax expense lead. State sales and use tax are on a monthly reporting basis. New Mexico gross receipts tax and compensating tax are due the 25 th of the following month. If the 25 th falls on a Saturday, Sunday or legal holiday, the tax is due the next business day. Texas sales and use tax is due the 20 th of the following month. If the 20 th falls on a Saturday, Sunday or legal holiday, the tax is due the next business day. Texas Gross Margin (Franchise) Tax Expense Texas has a franchise tax (privilege tax) paid in lieu of an income tax. It is based on the higher of net worth or taxable income. The tax is paid for a calendar year based on a calculation of 1% on the Texas margin of the prior calendar year. The May estimated payment is 90% of the current year liability or 100% of the prior year liability, to avoid penalties and interest for underpayment of the estimate. The August estimated/extension payment is supposed to be 100% of the current year liability less any amount paid in May, to avoid the penalties and interest for underpayment. With the May and August estimated/extension payments, the report due date is November 15 th. Otherwise the report is due May 15 th following the calendar year. RR16 - Page 421 of

366 Attachment DAB-RR-3 Page 9 of 9 The Texas Franchise Tax is commonly referred to as the Texas Gross Margin Tax or Texas Margin Tax because under the current liability calculation the tax is levied on the margin. The margin is calculated as Texas gross revenue less cost-of-goods-sold, or payroll, or 70% of gross revenue. The margin is calculated each of the three ways and then the liability is based on which ever calculation yields the lowest amount. SPS has always used the margin as revenue less COGS. Texas Gross Receipts Tax A tax calculated on electric sales to cities. The rate is based on the city size. The tax is payable in advance for the current calendar quarter based on taxable receipts for the previous quarter. Federal and State Income Taxes The expense leads computed for Federal and State Income Taxes reflect corporate payment dates and required minimum estimate payment levels. By law, required minimum estimated payments during the tax year are 100% for Federal and partial payments for New Mexico with the final payment the following year. Corporate policy is consistent across all state jurisdictions. Xcel Energy makes four estimated payments during the tax year of 25% each for 100%. The payment dates are April 15, June 15, September 15 and December 15. RR16 - Page 422 of

367 Attachment DAB-RR-4 Page 1 of 3 RR16 - Page 423 of

368 Attachment DAB-RR-4 Page 2 of 3 RR16 - Page 424 of

369 Attachment DAB-RR-4 Page 3 of 3 RR16 - Page 425 of

370 Attachment DAB-RR-5(CD) Page 1 of 1 RR16 - Page 426 of