First Revised Sheet No. 2758L. Formula Rate - Non-Levelized Rate Formula Template For the 12 months ended 12/31/10 Utilizing FERC Form 1 Data VECTREN

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1 Midwest ISO FERC Electric Tariff, Fourth Revised Volume No. 1 First Revised Sheet No. 2758L Superseding Original Sheet No. 2758L Formula Rate - Non-Levelized Rate Formula Template For the 12 months ended 12/31/10 Utilizing FERC Form 1 Data VECTREN Line Allocated No. Amount 1 GROSS REVENUE REQUIREMENT (page 3, line 31) $ 28,571,406 Attachment O page 1 of 5 REVENUE CREDITS (Note T) Total Allocator 2 Account No. 454 (page 4, line 34) 0 TP Account No (page 4, line 37) 4,369,520 TP ,369,520 4 Revenues from Grandfathered Interzonal Transactions 0 TP Revenues from service provided by the ISO at a discount 0 TP TOTAL REVENUE CREDITS (sum lines 2-5) 4,369,520 6a Historic Year Actual ATRR 6b Projected ATRR from Historic Year Input from Historic Year 6c Historic Year ATRR True-Up (line 6a - line 6b) 6d Historic Year Divisor True-Up (Note Z) 6e Interest on Historic Year True-Up 7 NET REVENUE REQUIREMENT (line 1 minus line 6 + ln 6c through 6e) $ 24,201,886 DIVISOR 8 Average of 12 coincident system peaks for requirements (RQ) service (Note A) 950,583 9 Plus 12 CP of firm bundled sales over one year not in line 8 (Note B) 0 10 Plus 12 CP of Network Load not in line 8 (Note C) 0 11 Less 12 CP of firm P-T-P over one year (enter negative) (Note D) 0 12 Plus Contract Demand of firm P-T-P over one year 0 13 Less Contract Demand from Grandfathered Interzonal Transactions over one year (enter negative) (Note S) 0 14 Less Contract Demands from service over one year provided by ISO at a discount (enter negative) 0 15 Divisor (sum lines 8-14) 950, Annual Cost ($/kw/yr) (line 7 / line 15) Network & P-to-P Rate ($/kw/mo) (line 16 / 12) Peak Rate Off-Peak Rate 18 Point-To-Point Rate ($/kw/wk) (line 16 / 52; line 16 / 52) $ Point-To-Point Rate ($/kw/day) (line 16 / 260; line 16 / 365) Capped at weekly rate $ Point-To-Point Rate ($/MWh) (line 16 / 4,160; line 16 / 8,760) Capped at weekly $2.914 times 1,000) and daily rates 21 FERC Annual Charge($/MWh) (Note E) $0.000 Short Term $0.000 Short Term 22 $0.000 Long Term $0.000 Long Term Issued by: Stephen G. Kozey, Issuing Officer Effective: January 6, 2009 Issued on: February 27, 2009

2 Midwest ISO FERC Electric Tariff, Fourth Revised Volume No. 1 First Revised Sheet No. 2758M Superseding Original Sheet No. 2758M Attachment O page 2 of 5 Formula Rate - Non-Levelized Rate Formula Template For the 12 months ended 12/31/10 Utilizing FERC Form 1 Data VECTREN (1) (2) (3) (4) (5) Form No. 1 Transmission Line Page, Line, Col. Company Total Allocator (Col 3 times Col 4) No. RATE BASE: GROSS PLANT IN SERVICE (Note X) 1 Production g 1,365,823,638 NA 2 Transmission g 296,501,564 TP ,501,564 3 Distribution g 484,769,249 NA 4 General & Intangible g & g 27,995,061 W/S ,352,955 5 Common ,098,934 CE ,682,593 6 TOTAL GROSS PLANT (sum lines 1-5) 2,225,188,446 GP= % 302,537,113 ACCUMULATED DEPRECIATION (Note X) 7 Production c 639,539,456 NA 8 Transmission c 87,940,284 TP ,940,284 9 Distribution c 189,299,825 NA 10 General & Intangible c 17,158,677 W/S ,442, Common ,166,197 CE ,702, TOTAL ACCUM. DEPRECIATION (sum lines 7-11) 957,104,439 91,085,317 NET PLANT IN SERVICE (Note X) 13 Production (line 1- line 7) 726,284, Transmission (line 2- line 8) 208,561, ,561, Distribution (line 3 - line 9) 295,469, General & Intangible (line 4 - line 10) 10,836, , Common (line 5 - line 11) 26,932,737 1,979, TOTAL NET PLANT (sum lines 13-17) 1,268,084,007 NP= % 211,451,796 18a 100% CWIP Recovery for Commission accepted 216.b 29,186, ,186,368 or Approved Order No. 679 Transmission Incentive Project (Note X) ADJUSTMENTS TO RATE BASE (Note F, Note X) 19 Account No. 281 (enter negative) 0 NA zero 0 20 Account No. 282 (enter negative) k -25,393,478 NP (4,234,338) 21 Account No. 283 (enter negative) k -39,560,157 NP (6,596,618) 22 Account No c -2,283,031 NP (380,693) 23 Account No. 255 (enter negative) h -4,085,356 NP (681,229) 23a Unamortized Balance of Cancelled or Abandoned Plant (Note W) TOTAL ADJUSTMENTS (sum lines 19-23a) (71,322,021) (11,892,879) 25 LAND HELD FOR FUTURE USE (Note Y) 214.x.d (Note G) 289,273 TP ,273 WORKING CAPITAL (Note H) 26 CWC calculated 5,266, , Materials & Supplies (Note G, Note Y) c &.16.c 1,895,304 TE ,604, Prepayments (Account 165, Note Y) c 0 GP TOTAL WORKING CAPITAL (sum lines 26-28) 7,161,679 2,296, RATE BASE (sum lines 18, 18a, 24, 25, & 29) 1,233,399, ,330,774 Issued by: Stephen G. Kozey, Issuing Officer Effective: January 6, 2009 Issued on: February 27, 2009

3 Midwest ISO FERC Electric Tariff, Fourth Revised Volume No. 1 First Revised Sheet No. 2758N Superseding Original Sheet No. 2758N Formula Rate - Non-Levelized Rate Formula Template For the 12 months ended 12/31/10 Utilizing FERC Form 1 Data VECTREN (1) (2) (3) (4) (5) Line Form No. 1 Transmission No. Page, Line, Col. Company Total Allocator (Col 3 times Col 4) O&M 1 Transmission b 13,567,000 TE ,485,000 1a Less LSE Expenses included in Transmission O&M Accounts (Note V) 9,118, ,118,000 2 Less Account b A&G b 38,568,000 W/S ,241,600 4 Less FERC Annual Fees 0 W/S Less EPRI & Reg. Comm. Exp. & Non-safety Ad. (Note I) 886,000 W/S ,467 5a Plus Transmission Related Reg. Comm. Exp. (Note I) 0 TE Common CE Transmission Lease Payments TOTAL O&M (sum lines 1, 3, 5a, 6, 7 less lines 1a, 2, 4, 5) 42,131,000 5,534,132 DEPRECIATION EXPENSE 9 Transmission b 5,938,000 TP ,938,000 9a Abandoned or Cancelled Plant Amortization (Note W) General b 1,191,000 W/S , Common b 1,472,000 CE , TOTAL DEPRECIATION (Sum lines 9-11) 8,601,000 6,146,304 TAXES OTHER THAN INCOME TAXES (Note J) LABOR RELATED 13 Payroll 263.i 0 W/S Highway and vehicle 263.i 0 W/S PLANT RELATED 16 Property 263.i 9,450,000 GP ,284, Gross Receipts 263.i 7,250,000 NA zero 0 18 Other 263.i 0 GP Payments in lieu of taxes 0 GP TOTAL OTHER TAXES (sum lines 13-19) 16,700,000 1,284,824 Attachment O page 3 of 5 INCOME TAXES (Note K) 21 T=1 - {[(1 - SIT) * (1 - FIT)] / (1 - SIT * FIT * p)} = 40.53% 22 CIT=(T/1-T) * (1-(WCLTD/R)) = 44.54% where WCLTD=(page 4, line 27) and R= (page 4, line30) and FIT, SIT & p are as given in footnote K / (1 - T) = (from line 21) Amortized Investment Tax Credit (266.8f) (enter negative) -599, Income Tax Calculation = line 22 * line 28 48,908,492 NA 9,173, ITC adjustment (line 23 * line 24) (1,007,146) NP (167,941) 27 Total Income Taxes (line 25 plus line 26) 47,901,346 9,005, RETURN 109,807,985 NA 20,595,087 [ Rate Base (page 2, line 30) * Rate of Return (page 4, line 30)] 29 REV. REQUIREMENT (sum lines 8, 12, 20, 27, 28) 225,141,332 42,565, LESS ATTACHMENT GG ADJUSTMENT [Attachment GG, page 1, line 26, column 5] (Note AA) [Revenue Requirement for facilities included on page 2, line 2 and also included in Attachment GG] 13,994,056 13,994, REV. REQUIREMENT TO BE COLLECTED UNDER ATTACHMENT O 211,147,276 28,571,406 (line 29 - line 30) Issued by: Stephen G. Kozey, Issuing Officer Effective: January 6, 2009 Issued on: February 27, 2009

4 Midwest ISO FERC Electric Tariff, Fourth Revised Volume No. 1 First Revised Sheet No. 2758O Superseding Original Sheet No. 2758O Attachment O page 4 of 5 Formula Rate - Non-Levelized Rate Formula Template For the 12 months ended 12/31/10 Utilizing FERC Form 1 Data Line No. TRANSMISSION PLANT INCLUDED IN ISO RATES VECTREN SUPPORTING CALCULATIONS AND NOTES 1 Total transmission plant (page 2, line 2, column 3) 296,501,564 2 Less transmission plant excluded from ISO rates (Note M) 0 3 Less transmission plant included in OATT Ancillary Services (Note N ) 0 4 Transmission plant included in ISO rates (line 1 less lines 2 & 3) 296,501,564 5 Percentage of transmission plant included in ISO Rates (line 4 divided by line 1) TP= TRANSMISSION EXPENSES 6 Total transmission expenses (page 3, line 1, column 3) 13,567,000 7 Less transmission expenses included in OATT Ancillary Services (Note L) 2,082,000 8 Included transmission expenses (line 6 less line 7) 11,485,000 9 Percentage of transmission expenses after adjustment (line 8 divided by line 6) Percentage of transmission plant included in ISO Rates (line 5) TP Percentage of transmission expenses included in ISO Rates (line 9 times line 10) TE= WAGES & SALARY ALLOCATOR (W&S) Form 1 Reference $ TP Allocation 12 Production b 13,529, Transmission b 1,889, ,889, Distribution b 4,857, W&S Allocator 15 Other ,25,26.b 2,200, ($ / Allocation) 16 Total (sum lines 12-15) 22,475,000 1,889,000 = = WS COMMON PLANT ALLOCATOR (CE) (Note O) $ % Electric W&S Allocator 17 Electric c 1,262,000,000 (line 17 / line 20) (line 16) CE 18 Gas d 181,000, * = Water e 0 20 Total (sum lines 17-19) 1,443,000,000 RETURN (R) $ 21 Long Term Interest (117, sum of 62.c through 67.c) $43,690, Preferred Dividends (118.29c) (positive number) $ - Development of Common Stock: 23 Proprietary Capital ( c) 666,114, Less Preferred Stock (line 28) 0 25 Less Account ( c) (enter negative) 0 26 Common Stock (sum lines 23-25) 666,114,000 Cost $ % (Note P) Weighted 27 Long Term Debt (112, sum of 18.c through 21.c) 750,910,000 53% =WCLTD 28 Preferred Stock ( c) 0 0% Common Stock (line 26) 666,114,000 47% Total (sum lines 27-29) 1,417,024, =R REVENUE CREDITS Load ACCOUNT 447 (SALES FOR RESALE) ( ) (Note Q) 31 a. Bundled Non-RQ Sales for Resale (311.x.h) 0 32 b. Bundled Sales for Resale included in Divisor on page Total of (a)-(b) 0 34 ACCOUNT 454 (RENT FROM ELECTRIC PROPERTY) (Note R) $0 ACCOUNT (OTHER ELECTRIC REVENUES) (Note U) (330.x.n) 35 a. Transmission charges for all transmission transactions $4,369, b. Transmission charges for all transmission transactions included in Divisor on Page 1 $0 36a c. Transmission charges associated with Schedule 26 (Note BB) $0 37 Total of (a)-(b)-(c) $4,369,520 Issued by: Stephen G. Kozey, Issuing Officer Effective: January 6, 2009 Issued on: February 27, 2009

5 Midwest ISO FERC Electric Tariff, Fourth Revised Volume No. 1 First Revised Sheet No. 2758P Superseding Original Sheet No. 2758P Attachment O page 5 of 5 Formula Rate - Non-Levelized Rate Formula Template For the 12 months ended 12/31/10 Utilizing FERC Form 1 Data VECTREN General Note: References to pages in this formulary rate are indicated as: (page#, line#, col.#) References to data from FERC Form 1 are indicated as: #.y.x (page, line, column) Note Letter A Peak as would be reported on page 401, column d of Form 1 at the time of the ISO coincident monthly peaks. B Labeled LF, LU, IF, IU on pages of Form 1at the time of the ISO coincident monthly peaks. C Labeled LF on page 328 of Form 1 at the time of the ISO coincident monthly peaks. D Labeled LF on page 328 of Form 1 at the time of the ISO coincident monthly peaks. E The FERC's annual charges for the year assessed the Transmission Owner for service under this tariff. F The balances in Accounts 190, 281, 282 and 283, as adjusted by any amounts in contra accounts identified as regulatory assets or liabilities related to FASB 106 or 109. Balance of Account 255 is reduced by prior flow throughs and excluded if the utility chose to utilize amortization of tax credits against taxable income as discussed in Note K. Account 281 is not allocated. G Identified in Form 1 as being only transmission related. H Cash Working Capital assigned to transmission is one-eighth of O&M allocated to transmission at page 3, line 8, column 5. Prepayments are the electric related prepayments booked to Account No. 165 and reported on Page 111 line 57 in the Form 1. I Line 5 - EPRI Annual Membership Dues listed in Form 1 at 353.f, all Regulatory Commission Expenses itemized at 351.h, and non-safety related advertising included in Account Line 5a - Regulatory Commission Expenses directly related to transmission service, ISO filings, or transmission siting itemized at 351.h. J Includes only FICA, unemployment, highway, property, gross receipts, and other assessments charged in the current year. Taxes related to income are excluded. Gross receipts taxes are not included in transmission revenue requirement in the Rate Formula Template, since they are recovered elsewhere. K The currently effective income tax rate, where FIT is the Federal income tax rate; SIT is the State income tax rate, and p = "the percentage of federal income tax deductible for state income taxes". If the utility is taxed in more than one state it must attach a work paper showing the name of each state and how the blended or composite SIT was developed. Furthermore, a utility that elected to utilize amortization of tax credits against taxable income, rather than book tax credits to Account No. 255 and reduce rate base, must reduce its income tax expense by the amount of the Amortized Investment Tax Credit (Form 1, f) multiplied by (1/1-T) (page 3, line 26). Inputs Required: FIT = 35.00% SIT= 8.50% (State Income Tax Rate or Composite SIT) p = 0.00% (percent of federal income tax deductible for state purposes) L Removes dollar amount of transmission expenses included in the OATT ancillary services rates, including Account Nos , 561.2, 561.3, and 561.BA. M Removes transmission plant determined by Commission order to be state-jurisdictional according to the seven-factor test (until Form 1 balances are adjusted to reflect application of seven-factor test). N Removes dollar amount of transmission plant included in the development of OATT ancillary services rates and generation step-up facilities, which are deemed to included in OATT ancillary services. For these purposes, generation step-up facilities are those facilities at a generator substation on which there is no through-flow when the generator is shut down. O Enter dollar amounts P Debt cost rate = long-term interest (line 21) / long term debt (line 27). Preferred cost rate = preferred dividends (line 22) / preferred outstanding (line 28). ROE will be supported in the original filing and no change in ROE may be made absent a filing with FERC. Q Line 33 must equal zero since all short-term power sales must be unbundled and the transmission component reflected in Account No and all other uses are to be included in the divisor. R Includes income related only to transmission facilities, such as pole attachments, rentals and special use. S Grandfathered agreements whose rates have been changed to eliminate or mitigate pancaking - the revenues are included in line 4 page 1 and the loads are included in line 13, page 1. Grandfathered agreements whose rates have not been changed to eliminate or mitigate pancaking - the revenues are not included in line 4, page 1 nor are the loads included in line 13, page 1. T The revenues credited on page 1 lines 2-5 shall include only the amounts received directly (in the case of grandfathered agreements) or from the ISO (for service under this tariff) reflecting the Transmission Owner's integrated transmission facilities. They do not include revenues associated with FERC annual charges, gross receipts taxes, ancillary services, facilities not included in this template (e.g., direct assignment facilities and GSUs) which are not recovered under this Rate Formula Template. U Account entry shall be the annual total of the quarterly values reported at Form 1, 330.x.n. V Account Nos , 561.8, and consist of RTO expenses billed to load-serving entities and are not included in Transmission Owner revenue requirements. W Vectren would need to make a separate Section 205 filing and obtain Commission acceptance or approval for the specific amounts that Vectren would propose to include in the formula rate placeholders for cancelled or abandoned plant for the Project. Page 2 line 23a includes any unamortized balances related to the recovery of abandoned or cancelled plant costs accepted or approved by FERC. Page 3 line 9a includes the unamortization expense of abandoned or cancelled plant costs accepted or approved by FERC. X Calculate using 13 month average balance, reconciling to FERC Form No. 1 by page, line and column as shown in Column 2. Y Calculate using average of beginning of year and end of year balance reconciling to FERC Form 1 by page, line and column as shown in Column 2. Z Calculation of Historic year Divisor True-Up: Historic Year Actual Divisor Pg 1, Line 15 0 Projected Historic Year Divisor Pg 1, Line 15 0 Difference between Actual and Projected Historic Year Divisor 0 Historic Year Projected Annual Cost ($ per kw per yr.) Pg 1, Line Historic Year Divisor True-up (Difference * Historic Year Projected Annual Cost) 0 AA Pursuant to Attachment GG of the Midwest ISO Tariff, removes dollar amount of revenue requirement calculated pursuant to Attachment GG and recovered under Schedule 26 of the Midwest ISO Tariff. BB Removes from revenue credits revenues that are distributed pursuant to Schedule 26 of the Midwest ISO Tariff, since the Transmission Owner's Attachment O revenue requirements have already been reduced by the Attachment GG revenue requirement. Issued by: Stephen G. Kozey, Issuing Officer Effective: January 6, 2009 Issued on: February 27, 2009

6 Plant in Service Budgeted for the period ending December 31,2010 Gross Plant in Service Production Transmission Distribution General &Intangible Common December-09 $1,355,651,923 $282,191,441 $474,435,970 $27,612,602 $49,285,876 January-10 $1,357,174,027 $282,712,609 $474,937,659 $27,710,189 $49,314,207 February-10 $1,357,845,038 $282,954,045 $475,498,653 $27,726,957 $49,320,831 March-10 $1,358,014,363 $283,497,460 $476,504,673 $27,799,121 $49,325,508 April-10 $1,359,074,451 $283,844,685 $478,001,291 $27,819,351 $49,334,800 May-10 $1,365,854,398 $283,942,783 $479,324,319 $27,885,086 $49,783,507 June-10 $1,366,250,886 $284,044,590 $486,416,778 $28,084,124 $50,557,622 July-10 $1,366,665,512 $285,140,880 $487,660,052 $28,093,600 $50,559,427 August-10 $1,369,070,138 $287,178,555 $490,261,515 $28,134,832 $50,559,702 September-10 $1,369,173,795 $287,861,164 $491,126,116 $28,166,289 $50,567,865 October-10 $1,375,531,307 $334,431,988 $491,998,001 $28,214,361 $50,588,683 November-10 $1,376,687,447 $337,112,369 $494,872,937 $28,264,982 $50,589,552 December-10 $1,378,714,006 $339,607,768 $500,962,275 $28,424,297 $51,498, month Average $1,365,823,638 $296,501,564 $484,769,249 $27,995,061 $50,098,934 Accumulated Depreciation & Amortization Production Transmission Distribution General &Intangible Common December-09 $ (616,944,576) $ (85,373,373) $ (182,777,194) $ (16,534,346) (22,601,403) January-10 (620,861,700) (85,812,077) (183,905,285) (16,634,503) (22,716,315) February-10 (624,656,165) (86,269,584) (185,036,311) (16,742,387) (22,835,667) March-10 (628,542,334) (86,707,443) (186,146,742) (16,845,140) (22,955,434) April-10 (632,270,205) (87,159,257) (187,224,044) (16,953,052) (23,074,273) May-10 (634,981,503) (87,628,210) (188,333,112) (17,056,774) (23,103,714) June-10 (639,115,037) (88,097,083) (189,237,879) (17,148,246) (23,068,121) July-10 (643,261,013) (88,500,071) (190,369,968) (17,258,292) (23,191,740) August-10 (647,053,464) (88,842,390) (191,409,495) (17,365,396) (23,315,675) September-10 (651,264,273) (89,278,185) (192,485,575) (17,473,580) (23,438,005) October-10 (654,360,095) (89,412,411) (193,622,781) (17,580,329) (23,557,781) November-10 (658,404,684) (89,849,717) (194,695,087) (17,687,029) (23,681,673) December-10 (662,297,882) (90,293,888) (195,654,252) (17,783,730) (23,620,758) 13 month Average $ (639,539,456) $ (87,940,284) $ (189,299,825) $ (17,158,677) $ (23,166,197)

7 CWIP Budgeted for the period ending December 31,2010 Gibson-Brown-Reid 345 kv Project Pre 12/31/2009 to 12/31/2010 Projected Capital Expenditures December-09 21,842,421 January-10 24,176,930 February-10 29,357,080 March-10 33,221,516 April-10 35,773,707 May-10 37,988,859 June-10 39,979,113 July-10 42,510,640 August-10 44,420,588 September-10 46,161,771 October-10 7,453,333 November-10 7,848,247 December-10 8,688, month Average 29,186,368

8 Adjustments to Rate Base Average of Beginning and End of Year Balance Accumulated Deferred Income Taxes (Balance at beginning of year and end of year) December-09 $ (111,069,501) $ (24,516,872) $ (39,130,559) $ (2,276,084) $ (4,062,709) January-10 $ (111,179,760) $ (24,559,312) $ (39,164,919) $ (2,283,734) $ (4,064,266) February-10 $ (111,279,252) $ (24,590,321) $ (39,226,381) $ (2,285,975) $ (4,066,328) March-10 $ (111,319,647) $ (24,645,215) $ (39,319,519) $ (2,292,488) $ (4,067,655) April-10 $ (111,426,996) $ (24,652,138) $ (39,405,389) $ (2,291,887) $ (4,064,381) May-10 $ (111,649,177) $ (24,595,416) $ (39,410,724) $ (2,291,222) $ (4,090,519) June-10 $ (111,369,330) $ (24,534,059) $ (39,886,531) $ (2,301,051) $ (4,142,354) July-10 $ (111,379,248) $ (24,626,990) $ (39,980,508) $ (2,301,300) $ (4,141,546) August-10 $ (111,334,153) $ (24,754,269) $ (40,105,719) $ (2,299,496) $ (4,132,222) September-10 $ (111,374,276) $ (24,822,484) $ (40,188,588) $ (2,302,727) $ (4,134,050) October-10 $ (109,678,724) $ (27,744,678) $ (39,305,433) $ (2,251,942) $ (4,037,616) November-10 $ (109,522,949) $ (27,965,560) $ (39,446,943) $ (2,250,813) $ (4,028,394) December-10 $ (109,067,670) $ (28,107,904) $ (39,710,824) $ (2,250,680) $ (4,077,581) BOY/EOY Average $ (110,896,206.39) $ (25,393,478.48) $ (39,560,156.62) $ (2,283,030.59) $ (4,085,355.61)

9 Land Held for Future Use (Balances at beginning of year and end of year) Average of Beginning and End of Year Balance Land Held for Future Use (Balances at beginning of year and end of year) Account 105* December-09 $289,273 January-10 - February-10 - March-10 - April-10 - May-10 - June-10 - July-10 - August-10 - September-10 - October-10 - November-10 - December ,273 BOY/EOY Average $289,273 * Only Land Held for Future Use that is Transmission Related

10 Working Capital Average of Beginning and End of Year Balance Working Capital (Balances at beginning of year and end of year) Materials and Supplies * December-09 $22,600,000 January-10 - February-10 - March-10 - April-10 - May-10 - June-10 - July-10 - August-10 - September-10 - October-10 - November-10 - December-10 22,500,000 BOY/EOY Average $22,550, % * Only Materials and Supplies that are Transmission Related $1,895,304 * Percentage allocation based on budgeted 2010 salary allocator

11 Transmission Expenses (Dollars in 000's) Budgeted for the period ending December 31, 2010 Account Number OPERATION Load Dispatching - Reliability $ Load Dispatching -Monitor & Operate Transmission System 1, Load Dispatching- Transmission Service & Scheduling Scheduling, System Control & Dispatch Service 9, Station Expense Overhead Line Expense Miscellaneous Transmission Expenses Rents 1 Total Operation $11,341 MAINTENANCE Structures $ Computer Hardware Computer Software Communication Equipment Station Equipment 1, Overhead Lines 684 Total Maintenance $2,226 Total Operations and Maintenance $13,567 REGULATORY COMMISSION EXPENSES As listed in Form 1 on page 351 column h $ 886

12 Administrative and General Expenses (dollars in 000's) Depreciation Expenses / Taxes Other than Income Budgeted for the period ending December 31, 2010 Account Number ADMINISTRATIVE AND GENERAL EXPENSES Administrative and General Salaries $13, Office Supplies and Expenses 5,375 Less Administrative Expenses Transferred- Credit (1,759) Outside Services Employed 14, Property Insurance Injuries and Damages 1, Employees Pensions and Benefits Regulatory Commission Expenses Miscellaneous General Expenses 2, Rents Maintenances of General Plant 84 Total Administrative and General $ 38,568 DEPRECIATION EXPENSE Transmission $5,938 General 1,191 Common 1,472 TAXES OTHER THAN INCOME TAXES Property $9,450 Gross Receipts 7,250 Amortized Investment Tax Credit 599

13 Wages and Salary / Common Plant Allocator WAGES & SALARY ALLOCATOR (W&S) Budgeted for the period ending December 31, 2010 Production $13,529 Transmission 1,889 Distribution 4,857 Other 2,200 COMMON PLANT ALLOCATOR Allocation based on historical 2007 figures Electric $1,262 Gas 181 Water - $1,443

14 Capital Structure Pro Forma 12/31/09 ($ in 000s) Long-Term Debt Long-Term Debt Balance $ 750,910 Annualized Long-Term Debt Interest 43,691 Cost of Long Term Debt 5.82% Common Equity Common Equity $ 666,114 $ 666,114 Capital Structure Balance PercentagCost Weighted Long-Term Debt $ 750,910 53% 5.82% 3.08% Common Equity $ 666,114 47% 12.38% 5.82% TOTAL $ 1,417, % 8.90%

15 Monthly Peaks and Output in (Mw) DIVISOR Monthly Peaks and Output in (Mw) Year ended December 31, 2010 January 942 February 920 March 865 April 828 May 891 June 1095 July 1152 August 1144 September 1074 October 853 November 786 December ,407 Average (Mw) Average (kwh) 950,583

16 Account (Other Electric Revenues) Transmission of Electricity for Others (Account 456.1) Midwest ISO $3,350,083 Hoosier Energy 81,579 ALCOA 937,858 $4,369,520 Less: Muni Load $0 Total Revenue Credit $4,369,520 Municipal load 2010 Municipal Revenue Total January-10 $205, February-10 $151, March-10 $219, April-10 $212, May-10 $224, June-10 $230, July-10 $221, August-10 $237, September-10 $234, October-10 $221, November-10 $194, December-10 $176, $2,530,084.47

17 12 months Ended 12/31/10 2,082,000 Acct , 561.BA included in Line 7 $589,996 Acct 561.BA for Schedule 24 $1,492, Acct available for Schedule 1 Revenue Credits for Sched 1 Acct $ - transactions <1 yr Schedule 1 Recoverable Expenses non-firm transactions w/ load not in divisor $0 total Revenue Credits $1,492,004 Net Schedule 1 Expenses (Acct minus Credits)