MONTANA-DAKOTA UTILITIES CO. INCOME STATEMENT GAS UTILITY - MONTANA TWELVE MONTHS ENDED DECEMBER 31, 2016

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1 Docket No. Rule Page 1 of 7 MONTANA-DAKOTA UTILITIES CO. INCOME STATEMENT TWELVE MONTHS ENDED DECEMBER 31, 2016 Total Company Montana Other Reference Operating Revenues Sales $196,686,631 $55,781,839 $140,904,792 Rule Transportation 4,219,653 1,298,998 2,920,655 Rule Other 5,296, ,750 4,820,157 Rule Total Revenues 206,203,191 57,557, ,645,604 Operating Expenses Operation and Maintenance Cost of Gas 117,374,561 33,821,847 83,552,714 Rule Other O&M 45,242,070 12,074,047 33,168,023 Rule Total O&M 162,616,631 45,895, ,720,737 Depreciation 17,438,193 4,783,296 12,654,897 Rule Taxes Other Than Income 8,065,837 4,831,147 3,234,690 Rule Current Income Taxes 7,736,239 1,132,863 6,603,376 Rule Deferred Income Taxes (3,352,966) (735,217) (2,617,749) Rule Total Expenses 192,503,934 55,907, ,595,951 Operating Income $13,699,257 $1,649,604 $12,049,653 Rate Base $246,172,865 $53,265,199 $192,907,666 Rate of Return 5.565% 3.097% 6.246%

2 Docket No. Rule Page 2 of 7 MONTANA-DAKOTA UTILITIES CO. AVERAGE RATE BASE TWELVE MONTHS ENDED DECEMBER 31, 2016 Total Company Montana Other Reference Gas Plant in Service $506,603,934 $121,936,429 $384,667,505 Rule Accumulated Reserve for Depreciation 222,611,178 63,879, ,731,354 Rule Net Gas Plant in Service $283,992,756 $58,056,605 $225,936,151 Additions Materials and Supplies $3,651,141 $873,659 $2,777,482 Rule Fuel Stocks 137, ,392 Rule Gas in Underground Storage 4,103,611 4,103,611 0 Rule Prepayments 1,261,594 1,173,061 88,533 Rule Loss on Debt 1,183, , ,592 Rule Provision for Pensions & Benefits 26,432,500 6,953,896 19,478,604 Rule Provision for Injuries & Damages 35,642 7,651 27,991 Rule Other (144,938) 0 (144,938) Rule Total Additions $36,660,090 $13,355,434 $23,304,656 Total Before Deductions $320,652,846 $71,412,039 $249,240,807 Deductions Accumulated Deferred Income Taxes $57,743,296 $16,278,539 $41,464,757 Rule Customer Advances 16,736,685 1,868,301 14,868,384 Rule Total Deductions $74,479,981 $18,146,840 $56,333,141 Total Rate Base $246,172,865 $53,265,199 $192,907,666

3 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF PRO FORMA ADJUSTMENTS Docket No. Rule Page 3 of 7 Adjustment Pro Forma No. Adjustment Reference Revenue Current Rates 1 $4,593,915 Rule Statement H, page 3 Normal Weather 2 6,685,522 Rule Statement H, page 4 Annualized Volumes 3 511,542 Rule Statement H, page 5 Other Revenue 4 25,260 Rule Statement H, page 8 Total Adjustments to Revenue $11,816,239 Expenses Cost of Gas 5 $9,755,417 Rule Statement G, page 3 Other O&M Labor 6 $200,248 Rule Statement G, page 4 Benefits 7 (12,841) Rule Statement G, page 5 Vehicles & Work Equipment 8 202,008 Rule Statement G, page 6 Company Consumption 9 10,886 Rule Statement G, page 7 Uncollectible Accounts 10 67,500 Rule Statement G, page 8 Advertising 11 (44,755) Rule Statement G, page 9 Subcontract Labor 12 (28,707) Rule Statement G, page 10 Software Maintenance ,404 Rule Statement G, page 11 Insurance 14 52,895 Rule Statement G, page 12 Industry Dues 15 1,841 Rule Statement G, page 13 Regulatory Commission Expense 16 (104,457) Rule Statement G, page 14 Total Adjustments to Other O&M $453,022 Depreciation Expense 17 $124,876 Rule Statement I, page 2 Pref. Stock Redemption Amort. 17 1,338 Rule Statement I, page 2 Discontinued Service - Saco ,000 Rule Statement I, page 2 Total Depreciation Expense $226,214 Taxes Other than Income Ad Valorem 18 $590,818 Rule Statement K, page 1 Payroll Taxes 19 14,668 Rule Statement K, page 2 MCC and PSC Taxes 20 (69,294) Rule Statement K, page 3 Total Adj. to Taxes Other than Income $536,192 Current Income Taxes Interest Annualization 21 $79,785 Rule Statement J, page 8 Tax Depreciation on Plant Additions 22 (565,726) Rule Statement J, page 9 Elimination of Pref. Stock Deduction 23 (9,425) Rule Statement J, page 10 Income Taxes on Pro Forma Adj ,092 Rule Statement J, page 11 Elimination of Closing/Filing and Prior Period 25 (298,057) Rule Statement J, page 12 Total Adj. to Current Income Taxes $230,035 Deferred Income Taxes Plant Additions 22 ($222,825) Rule Statement J, page 9 Elimination of Closing/Filing ,201 Rule Statement J, page 12 and Prior Period Total Adj. to Deferred Income Taxes $87,376 Total Expenses $11,288,256 Net Adjustments to Operating Income $527,983

4 Docket No. Rule Page 4 of 7 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF PRO FORMA RATE BASE ADJUSTMENTS Adjustment Amount Reference Plant in Service Plant Additions A $6,050,975 Rule Statement C Page 2 Accumulated Reserve Plant Additions B 4,285,021 Rule Statement D Page 2 Total Gas Plant in Service $1,765,954 Additions: Materials and Supplies C ($22,273) Rule Statement E Page 1 Gas in Underground Storage D (1,353,577) Rule Statement E Page 2 Prepaid Insurance E 97,644 Rule Statement E Page 3 Prepaid Demand and Commodity F (450,166) Rule Statement E Page 4 Unamortized Loss on Debt G (50,762) Rule Statement E Page 5 Provision for Pensions & Benefits H (138,954) Rule Statement E Page 6 Provision for Injuries & Damages I 14,497 Rule Statement E Page 7 Unamort. Redemption Cost of Pref. Stk. J 18,739 Rule Statement E Page 8 Discontinued Service - Saco, MT K 100,000 Rule Statement E Page 9 Total Additions ($1,784,852) Deductions: Accumulated Def. Inc. Tax Liberalized Depreciation M ($479,258) Rule Statement J Page 18 Full Normalization N (57,659) Rule Statement J Page 18 R&D Tax Carryforward P (17,646) Rule Statement J Page 18 Prepaid Demand Charges P 37,023 Rule Statement J Page 18 Customer Advances P (45,090) Rule Statement J Page 18 Unamortized Loss on Debt G (20,274) Rule Statement J Page 18 Pensions & Benefits H (20,966) Rule Statement J Page 18 Injuries and Damages I 5,536 Rule Statement J Page 18 Discontinued Service - Saco K (39,388) Rule Statement J Page 18 Customer Advances for Construction O 141,811 Rule Statement E Page 10 Total Deductions ($495,911) Total Pro Forma Adjustments $477,013

5 Docket No. Rule Page 5 of 7 MONTANA-DAKOTA UTILITIES CO. PRO FORMA INCOME STATEMENT TWELVE MONTHS ENDED DECEMBER 31, 2016 Total Pro Forma Adjusted Per Books Adjustments Amount Operating Revenues Sales $55,781,839 $11,952,423 $67,734,262 Transportation 1,298,998 (161,444) 1,137,554 Other 476,750 25, ,010 Total Revenues 57,557,587 11,816,239 69,373,826 Operating Expenses Operation and Maintenance Cost of Gas 33,821,847 9,755,417 43,577,264 Other O&M 12,074, ,022 12,527,069 Total O&M 45,895,894 10,208,439 56,104,333 Depreciation 4,783, ,214 5,009,510 Taxes Other Than Income 4,831, ,192 5,367,339 Current Income Taxes 1,132, ,035 1,362,898 Deferred Income Taxes (735,217) 87,376 (647,841) Total Expenses 55,907,983 11,288,256 67,196,239 Operating Income $1,649,604 $527,983 $2,177,587 Rate Base $53,265,199 $477,013 $53,742,212 Rate of Return 3.097% 4.052%

6 Docket No. Rule Page 6 of 7 MONTANA-DAKOTA UTILITIES CO. AVERAGE RATE BASE TWELVE MONTHS ENDED DECEMBER 31, 2016 PRO FORMA Average Pro Forma 12/31/2016 Adjustments Pro Forma Gas Plant in Service $121,936,429 $6,050,975 $127,987,404 Accumulated Reserve for Depreciation 63,879,824 4,285,021 68,164,845 Net Gas Plant in Service $58,056,605 $1,765,954 $59,822,559 Additions Materials and Supplies $873,659 ($22,273) $851,386 Gas in Underground Storage 4,103,611 (1,353,577) 2,750,034 Prepayments 1,173,061 (352,522) 820,539 Unamortized Gain (Loss) on Debt 243,556 (50,762) 192,794 Provision for Pensions & Benefits 6,953,896 (138,954) 6,814,942 Provision for Injuries & Damages 7,651 14,497 22,148 Unamort. Redemption Cost of Pref. Stk. 0 18,739 18,739 Discontinued Service - Saco 0 100, ,000 Total Additions $13,355,434 ($1,784,852) $11,570,582 Total Before Deductions $71,412,039 ($18,898) $71,393,141 Deductions Accumulated Deferred Income Taxes $16,278,539 ($637,722) $15,640,817 Customer Advances 1,868, ,811 2,010,112 Total Deductions $18,146,840 ($495,911) $17,650,929 Total Rate Base $53,265,199 $477,013 $53,742,212

7 MONTANA-DAKOTA UTILITIES CO. PRO FORMA OPERATING INCOME AND RATE OF RETURN REFLECTING ADDITIONAL REVENUE REQUIREMENTS Before Reflecting Additional Gas Tax Tracker Additional Additional Revenue Filing Effective Base Gas Tax Revenue Revenue Requirements 1/ January 1, 2018 Tracker T/Up Requirements Requirements Operating Revenues Sales $67,734,262 $216,784 $605,842 $2,213,289 $70,770,177 Transportation 1,137,554 1,137,554 Other 502, ,010 Total Revenues $69,373,826 $2,213,289 $72,409,741 Operating Expenses Operation and Maintenance Cost of Gas $43,577,264 $43,577,264 Other O&M 12,527,069 12,527,069 Total O&M $56,104,333 $56,104,333 Depreciation 5,009,510 5,009,510 Taxes Other Than Income 5,367,339 $8,804 2/ 5,376,143 Current Income Taxes 1,362,898 1,192,303 2/ 2,555,201 Deferred Income Taxes (647,841) (647,841) Total Expenses $67,196,239 $1,201,107 $68,397,346 Operating Income $2,177,587 $1,834,807 $4,012,394 Rate Base $53,742,212 $53,742,212 Rate of Return 4.052% 7.466% 1/ See Rule , page 5 and 6. 2/ Reflects taxes at % after deducting Consumer Counsel tax of 0.046% and PSC tax of 0.244%. Docket No. Rule Page 7 of 7

8 Docket No. Rule Statement A Page 1 of 4 MDU RESOURCES GROUP, INC. NONCONSOLIDATED BALANCE SHEET December 31, 2015 AND December 31, Assets and Other Debits Utility Plant $2,313,925,710 $2,418,364,465 Construction Work in Progress 49,427,086 67,808,467 Less Acc. Provision for Depreciation and Amortization 835,120, ,703,820 Net Utility Plant $1,528,231,852 $1,607,469,112 Gas Stored Underground - Noncurrent $2,372,868 $2,692,161 Other Property and Investments Nonutility Property $15,640,751 $16,090,676 (Less) Accum. Prov. for Depr. And Amort. 3,678,472 4,352,234 Investment in Subsidiary Companies 1,722,350,774 1,603,873,802 Other investments 66,784,202 70,369,897 Net Other Property and Investments $1,801,097,255 $1,685,982,141 Current and Accrued Assets Cash $2,770,168 $3,946,952 Special Deposits 14,275 2,279,900 Working Fund 150, ,131 Temporary Cash Investments 0 0 Customer Accounts Receivable 20,902,043 24,806,476 Other Accounts Receivable 3,953,301 3,663,520 (Less) Accum.Prov. For Uncollectible Acct. - Credit 448, ,777 Notes Receivable from Assoc. Companies 0 0 Accounts Receivable from Assoc.Companies 33,128,824 34,423,691 Fuel Stock 5,373,602 4,528,869 Plant Materials and Operating Supplies 19,057,339 17,336,690 Merchandise 0 0 Stores Expense Undistributed 0 0 Gas Stored Underground - Current 11,509,418 12,822,648 Prepayments 5,671,080 5,936,055 Accrued Utility Revenues 39,280,240 47,631,992 Miscellaneous Current and Accrued Assets 0 0 Total Current and Accrued Assets $141,362,967 $157,107,147 Deferred Debits Unamortized Debt Expenses $2,533,923 $2,276,700 Unrecovered Plant and Regulatory Study Costs 2,993,931 3,406,606 Other Regulatory Assets 203,700, ,540,263 Prelim. Survey and Investigation Charges (Electric) 619, ,016 Prelim. Survey and Investigation Charges (Natural Gas) 0 12,888 Clearing Accounts 985 (35,372) Miscellaneous Deferred Debits 21,453,443 26,117,491 Unamortized Loss on Reaquired Debt 5,968,060 5,297,814 Accumulated Deferred Income Taxes 69,928,510 87,892,895 Unrecovered Purchased Gas Costs (3,670,064) 1,874,756 Total Deferred Debits $303,528,842 $345,332,057 Total Assets and Other Debits $3,776,593,784 $3,798,582,618

9 Docket No. Rule Statement A Page 2 of 4 MDU RESOURCES GROUP, INC. NONCONSOLIDATED BALANCE SHEET December 31, 2015 AND December 31, Liabilities and Other Credits Proprietary Capital Common Stock Issued $195,804,665 $195,843,297 Preferred Stock Issued 15,000,000 15,000,000 Premium on Capital Stock 1,236,677,978 1,239,047,477 (Less) Capital Stock Expense 6,558,718 6,569,697 Retained Earnings 570,240, ,204,310 Unappropriated Undistributed Sub Earnings 426,114, ,077,496 (Less) Reacquired Capital Stock 3,625,813 3,625,813 Accumulated Other Comprehensive Income (37,148,174) (35,732,744) Total Proprietary Capital $2,396,505,155 $2,316,244,326 Long-Term Debt Bonds $0 $0 Other Long-Term Debt 625,264, ,754,986 (Less) Unamortized Discount on Long-Term Debt-Debit 0 0 Total Long-Term Debt $625,264,519 $681,754,986 Other Noncurrent Liabilities Accumulated Provision for Injuries and Damages $1,073,542 $122,938 Accumulated Provision for Pensions and Benefits 53,421,814 46,541,513 Accumulated Provision for Rate Refunds 916,543 1,343,280 Asset Retirement Obligations 103,736, ,521,302 Total Other Noncurrent Liabilities $159,148,446 $167,529,033 Current and Accrued Liabilities Notes Payable $0 $0 Accounts Payable 53,267,087 36,758,884 Accounts Payable to Associated Companies 6,621,950 5,591,989 Customer Deposits 1,479,642 1,425,667 Taxes Accrued 10,994,840 14,992,270 Interest Accrued 8,195,895 7,531,734 Dividends Declared 36,783,577 37,767,342 Tax Collections Payable 1,008, ,989 Miscellaneous Current and Accrued Liabilities 21,606,234 30,518,735 Total Current and Accrued Assets $139,957,451 $135,524,610 Deferred Credits Customer Advances for Construction $22,189,157 $23,481,419 Accumulated Deferred Investment Tax Credit 1,752,301 1,640,385 Other Deferred Credits 94,382,563 91,493,076 Other Regulatory Liabilities 12,397,095 22,896,238 Accumulated Deferred Income Taxes 324,997, ,018,545 Total Deferred Credits $455,718,213 $497,529,663 Total Liabilities and Equity $3,776,593,784 $3,798,582,

10 Docket No. Rule Statement A Page 3 of 4 MDU RESOURCES GROUP, INC. NONCONSOLIDATED BALANCE SHEET June 30, 2016 AND June 30, Assets and Other Debits Utility Plant $2,334,524,854 $2,427,365,476 Construction Work in Progress 88,780,977 96,668,621 Less Acc. Provision for Depreciation and Amortization 852,998, ,935,174 Net Utility Plant $1,570,307,007 $1,621,098,923 Gas Stored Underground - Noncurrent $2,372,868 $2,692,161 Other Property and Investments Nonutility Property $15,762,669 $16,134,873 (Less) Accum. Prov. for Depr. And Amort. 3,971,215 4,888,711 Investment in Subsidiary Companies 1,551,138,744 1,592,101,251 Other investments 70,152,548 73,722,925 Net Other Property and Investments $1,633,082,746 $1,677,070,338 Current and Accrued Assets Cash $2,591,351 $3,407,170 Special Deposits 8,982,906 5,203,050 Working Fund 212, ,750 Temporary Cash Investments 0 0 Customer Accounts Receivable 18,090,772 22,674,687 Other Accounts Receivable 7,532,860 2,527,704 (Less) Accum.Prov. For Uncollectible Acct. - Credit 547, ,284 Notes Receivable from Assoc. Companies 0 0 Accounts Receivable from Assoc.Companies 33,179,141 31,710,429 Fuel Stock 4,911,653 4,783,096 Plant Materials and Operating Supplies 19,946,976 18,290,197 Merchandise 0 0 Stores Expense Undistributed 25,281 34,804 Gas Stored Underground - Current 7,097,427 3,452,094 Prepayments 3,174,296 2,591,709 Accrued Utility Revenues 16,503,973 19,962,247 Miscellaneous Current and Accrued Assets 1,460, ,947 Total Current and Accrued Assets $123,161,019 $114,518,600 Deferred Debits Unamortized Debt Expenses $2,370,919 $2,526,259 Unrecovered Plant and Regulatory Study Costs 2,814,009 3,183,706 Other Regulatory Assets 211,287, ,325,429 Prelim. Survey and Investigation Charges (Electric) 699,635 1,447,366 Prelim. Survey and Investigation Charges (Natural Gas) 0 3,000 Other Prelim. Survey and Investigation Charges 0 1,428 Clearing Accounts 78, ,969 Miscellaneous Deferred Debits 22,187,761 26,612,378 Unamortized Loss on Reaquired Debt 5,608,304 5,011,957 Accumulated Deferred Income Taxes 78,565,646 83,683,544 Unrecovered Purchased Gas Costs (2,995,294) 414,384 Total Deferred Debits $320,616,428 $340,767,420 Total Assets and Other Debits $3,649,540,068 $3,756,147,442

11 Docket No. Rule Statement A Page 4 of 4 MDU RESOURCES GROUP, INC. NONCONSOLIDATED BALANCE SHEET June 30, 2016 AND June 30, Liabilities and Other Credits Proprietary Capital Common Stock Issued $195,843,297 $195,843,297 Preferred Stock Issued 15,000,000 0 Premium on Capital Stock 1,236,900,572 1,238,461,380 (Less) Capital Stock Expense 6,558,718 6,569,697 Retained Earnings 582,480, ,187,549 Unappropriated Undistributed Sub Earnings 255,776, ,444,102 (Less) Reacquired Capital Stock 3,625,813 3,625,813 Accumulated Other Comprehensive Income (38,206,116) (35,788,834) Total Proprietary Capital $2,237,610,425 $2,302,951,984 Long-Term Debt Bonds $0 $0 Other Long-Term Debt 646,759, ,841,354 (Less) Unamortized Discount on Long-Term Debt-Debit 0 0 Total Long-Term Debt $646,759,827 $655,841,354 Other Noncurrent Liabilities Accumulated Provision for Injuries and Damages $374,714 $66,250 Accumulated Provision for Pensions and Benefits 51,742,347 45,168,041 Accumulated Provision for Rate Refunds 1,232,555 1,053,026 Asset Retirement Obligations 106,787, ,603,731 Total Other Noncurrent Liabilities $160,136,752 $168,891,048 Current and Accrued Liabilities Notes Payable $0 $0 Accounts Payable 37,176,265 31,448,394 Accounts Payable to Associated Companies 6,031,295 5,634,679 Customer Deposits 1,407,802 1,321,163 Taxes Accrued 9,121,474 13,985,121 Interest Accrued 8,240,567 8,122,291 Dividends Declared 36,790,821 37,596,092 Tax Collections Payable 601, ,303 Miscellaneous Current and Accrued Liabilities 24,736,359 26,037,410 Total Current and Accrued Assets $124,106,297 $124,813,453 Deferred Credits Customer Advances for Construction $21,466,075 $23,053,307 Accumulated Deferred Investment Tax Credit 1,693,984 1,879,834 Other Deferred Credits 96,868,086 93,947,210 Other Regulatory Liabilities 18,395,492 21,654,684 Accumulated Deferred Income Taxes 342,503, ,114,568 Total Deferred Credits $480,926,767 $503,649,603 Total Liabilities and Equity $3,649,540,068 $3,756,147,

12 NOTES TO THE FINANCIAL STATEMENTS

13 Definitions The following abbreviations and acronyms used in the Notes are defined below: Abbreviation or Acronym AFUDC ASC Big Stone Station Cascade Centennial Company Coyote Station EBITDA FASB FERC GAAP Great Plains IFRS Intermountain K-Plan MDU Energy Capital MISO MNPUC Montana-Dakota MTPSC MW NDPSC SDPUC Stock Purchase Plan Wygen III WYPSC Allowance for funds used during construction FASB Accounting Standards Codification 475-MW coal-fired electric generating facility near Big Stone City, South Dakota (22.7 percent ownership) Cascade Natural Gas Corporation, an indirect wholly owned subsidiary of MDU Energy Capital Centennial Energy Holdings, Inc., a direct wholly owned subsidiary of the Company MDU Resources Group, Inc. 427-MW coal fired electric generating facility near Beulah, North Dakota (25 percent ownership) Earnings before interest, taxes, depreciation and amortization Financial Accounting Standards Board Federal Energy Regulatory Commission Accounting principles generally accepted in the United States of America Great Plains Natural Gas Co., a public utility division of the Company International Financial Reporting Standards Intermountain Gas Company, an indirect wholly owned subsidiary of MDU Energy Capital Company s 401(k) Retirement Plan MDU Energy Capital, LLC, a direct wholly owned subsidiary of the Company Midcontinent Independent System Operator, Inc. Minnesota Public Utilities Commission Montana-Dakota Utilities Co., a public utility division of the Company Montana Public Service Commission Megawatt North Dakota Public Service Commission South Dakota Public Utilities Commission Company's Dividend Reinvestment and Direct Stock Purchase Plan which was terminated effective December 5, MW coal-fired electric generating facility near Gillette, Wyoming (25 percent ownership) Wyoming Public Service Commission 1

14 Notes to Financial Statements Note 1 - Summary of Significant Accounting Policies Basis of presentation The Company is a diversified natural resource company, which was incorporated under the laws of the state of Delaware in Montana-Dakota and Great Plains are public utility divisions of the Company. Montana-Dakota generates, transmits, and distributes electricity and distributes natural gas in Montana, North Dakota, South Dakota, and Wyoming. Great Plains distributes natural gas in western Minnesota and southeastern North Dakota. These operations also supply related value-added services. The Company provides service to approximately 143,000 electric and 294,000 natural gas residential, commercial, industrial and municipal customers in 278 communities and adjacent rural areas as of December 31, Montana-Dakota is subject to regulation by the FERC, NDPSC, MTPSC, SDPUC, and WYPSC. Great Plains is subject to regulation by the MNPUC and the NDPSC. The Company owns two wholly owned subsidiaries, Centennial and MDU Energy Capital, as well as ownership interests in the assets, liabilities and expenses of jointly owned electric generating facilities. The financial statements were prepared in accordance with the accounting requirements of the FERC set forth in its applicable Uniform System of Accounts and published accounting releases, which is a comprehensive basis of accounting other than GAAP. These requirements differ from GAAP related to the presentation of certain items including, but not limited to, the current portion of long-term debt, deferred income taxes, cost of removal liabilities, and current unrecovered purchased gas costs. As required by the FERC for Form 1 report purposes, the Company reports its subsidiary investments using the equity method rather than consolidating the assets, liabilities, revenues and expenses of the subsidiaries, as required by GAAP. If GAAP were followed, utility plant, other property and investments would increase by $761.0 million; current and accrued assets would increase by $820.4 million; deferred debits would increase by $904.5 million; long-term debt would increase by $1.1 billion; other noncurrent liabilities and current and accrued liabilities would increase by $366.6 million; and deferred credits would increase by $1.1 billion as of December 31, Furthermore, operating revenues would increase by $3.6 billion and operating expenses, excluding income taxes, would increase by $3.3 billion for the twelve months ended December 31, In addition, net cash provided by operating activities would increase by $221.4 million; net cash used in investing activities would increase by $156.5 million; net cash used in financing activities would increase by $103.9 million; the effect of exchange rate changes on cash would increase by $4,000; and the net change in cash and cash equivalents would be a decrease of $39.0 million for the twelve months ended December 31, Reporting its subsidiary investments using the equity method rather than GAAP has no effect on net income or retained earnings. The Notes to Financial Statements accompanying this FERC Form No. 1 relate to the nonconsolidated parent company and its two public utility divisions. For information on disclosures of the subsidiary companies, refer to the Company s Form 10-K. Montana-Dakota and Great Plains are regulated businesses which account for certain income and expense items under the provisions of regulatory accounting, which requires these businesses to defer as regulatory assets or liabilities certain items that would have otherwise been reflected as expense or income, respectively, based on the expected regulatory treatment in future rates. The expected recovery or flowback of these deferred items generally is based on specific ratemaking decisions or precedent for each item. Regulatory assets and liabilities are being amortized consistently with the regulatory treatment established by the FERC and the applicable state public service commissions. See Note 3 for more information regarding the nature and amounts of these regulatory deferrals. 2

15 Management has also evaluated the impact of events occurring after December 31, 2016, up to the date of issuance of these financial statements. Cash and cash equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Accounts receivable and allowance for doubtful accounts Accounts receivable consists primarily of trade receivables from the sale of goods and services which are recorded at the invoiced amount. The total balance of receivables past due 90 days or more was $856,000 and $963,000 at December 31, 2016 and 2015, respectively. The allowance for doubtful accounts is determined through a review of past due balances and other specific account data. Account balances are written off when management determines the amounts to be uncollectible. The Company's allowance for doubtful accounts at December 31, 2016 and 2015 was $482,000 and $448,000, respectively. Inventories and natural gas in storage Inventories, other than natural gas in storage, were stated at the lower of average cost or market value. Natural gas in storage is carried at cost using the last-in, first-out method. The portion of the cost of natural gas in storage expected to be used within one year was included in inventories. Inventories at December 31 consisted of: (In thousands) Plant materials and operating supplies $ 17,337 $ 19,057 Gas stored underground-current 12,822 11,509 Fuel stock 4,529 5,374 Total $ 34,688 $ 35,940 The remainder of natural gas in storage, which largely represents the cost of gas required to maintain pressure levels for normal operating purposes, was $2.7 million and $2.4 million at December 31, 2016 and 2015, respectively. Investments The Company's investments include its investment in subsidiary companies, the cash surrender value of life insurance policies, an insurance contract, and other miscellaneous investments. The Company measures its investment in the insurance contract at fair value with any unrealized gains and losses recorded on the Statement of Income. The Company has not elected the fair value option for its other investments. For more information, see Notes 4 and 12. Property, plant and equipment Additions to property, plant and equipment are recorded at cost. When regulated assets are retired, or otherwise disposed of in the ordinary course of business, the original cost of the asset is charged to accumulated depreciation. With respect to the retirement or disposal of all other assets, the resulting gains or losses are recognized as a component of income. The Company is permitted to capitalize AFUDC on regulated construction projects and to include such amounts in rate base when the related facilities are placed in service. The amount of AFUDC capitalized for the years ended December 31 was as follows: (In thousands) AFUDC - borrowed $ 357 $ 3,909 AFUDC - equity $ (3) $ 7,275 Property, plant and equipment are depreciated on a straight-line basis over the average useful lives of the assets. The Company collects removal costs for plant 3

16 assets in regulated utility rates. These amounts are included in accumulated provision for depreciation, amortization and depletion. Property, plant and equipment at December 31 was as follows: Weighted Average Depreciable Life in Years (Dollars in thousands, where applicable) Electric: Generation $ 1,036,373 $ 1,003, Distribution 398, , Transmission 284, , Construction in progress 62,110 42,435 - Other 103, , Natural gas distribution: Distribution 481, , Construction in progress 5,698 6,992 - Other 114, , Less accumulated depreciation, depletion and amortization 878, ,121 Net utility plant $ 1,607,469 $ 1,528,232 Nonutility property $ 16,091 $ 15,641 Less accumulated depreciation, depletion and amortization 4,352 3,678 Net nonutility property $ 11,739 $ 11,963 Impairment of long-lived assets The Company reviews the carrying values of its long-lived assets, excluding goodwill, whenever events or changes in circumstances indicate that such carrying values may not be recoverable. The determination of whether an impairment has occurred is based on an estimate of undiscounted future cash flows attributable to the assets, compared to the carrying value of the assets. If impairment has occurred, the amount of the impairment recognized is determined by estimating the fair value of the assets and recording a loss if the carrying value is greater than the fair value. No impairment losses were recorded in 2016 and Unforeseen events and changes in circumstances could require the recognition of impairment losses at some future date. Goodwill Goodwill represents the excess of the purchase price over the fair value of identifiable net tangible and intangible assets acquired in a business combination. Goodwill is required to be tested for impairment annually, which is completed in the fourth quarter, or more frequently if events or changes in circumstances indicate that goodwill may be impaired. The goodwill impairment test is a two-step process performed at the reporting unit level. The Company has determined that the reporting units for its goodwill impairment test are its operating segments, or components of an operating segment, that constitute a business for which discrete financial information is available and for which segment management regularly reviews the operating results. The first step of the impairment test involves comparing the fair value of each reporting unit to its carrying value. If the fair value of a reporting unit exceeds its carrying value, the test is complete and no impairment is recorded. If the fair value of a reporting unit is less than its carrying value, step two of the test is performed to determine the amount of impairment loss, if any. The impairment is computed by comparing the implied fair value of the reporting unit's goodwill to the carrying value of that goodwill. If the carrying value is greater than the implied fair value, an impairment loss must be recorded. For the years ended December 31, 2016 and 2015, there were no impairment losses recorded. At December 31, 2016, the fair value of the natural gas distribution 4

17 reporting unit substantially exceeded its carrying value. For more information on goodwill, see Note 2. Determining the fair value of a reporting unit requires judgment and the use of significant estimates which include assumptions about the Company's future revenue, profitability and cash flows, amount and timing of estimated capital expenditures, inflation rates, weighted average cost of capital, operational plans, and current and future economic conditions, among others. The fair value of each reporting unit is determined using a weighted combination of income and market approaches. The Company uses a discounted cash flow methodology for its income approach. Under the income approach, the discounted cash flow model determines fair value based on the present value of projected cash flows over a specified period and a residual value related to future cash flows beyond the projection period. Both values are discounted using a rate which reflects the best estimate of the weighted average cost of capital at each reporting unit. The weighted average cost of capital of 4.9 percent, and a long-term growth rate projection of 3.3 percent were utilized in the goodwill impairment test performed in the fourth quarter of Under the market approach, the Company estimates fair value using multiples derived from comparable sales transactions and enterprise value to EBITDA for comparative peer companies for each respective reporting unit. These multiples are applied to operating data for each reporting unit to arrive at an indication of fair value. In addition, the Company adds a reasonable control premium when calculating the fair value utilizing the peer multiples, which is estimated as the premium that would be received in a sale in an orderly transaction between market participants. The Company believes that the estimates and assumptions used in its impairment assessments are reasonable and based on available market information, but variations in any of the assumptions could result in materially different calculations of fair value and determinations of whether or not an impairment is indicated. Revenue recognition Revenue is recognized when the earnings process is complete, as evidenced by an agreement between the customer and the Company, when delivery has occurred or services have been rendered, when the fee is fixed or determinable and when collection is reasonably assured. The Company recognizes utility revenue each month based on the services provided to all utility customers during the month. Accrued utility revenues represent revenues recognized in excess of amounts billed. Accrued utility revenues were $47.6 million and $39.3 million at December 31, 2016 and 2015, respectively. The Company recognizes all other revenues when services are rendered or goods are delivered. The Company presents revenues net of taxes collected from customers at the time of sale to be remitted to governmental authorities, including sales and use taxes. Asset retirement obligations The Company records the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the Company capitalizes a cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, the Company either settles the obligation for the recorded amount or incurs a regulatory asset or liability. For more information on asset retirement obligations, see Note 6. Legal costs The Company expenses external legal fees as they are incurred. Natural gas costs recoverable or refundable through rate adjustments Under the terms of certain orders of the applicable state public service commissions, the Company is deferring natural gas commodity, transportation and storage costs that are greater or less than amounts presently being recovered through its existing rate schedules. Such orders generally provide that these amounts are recoverable or refundable through rate adjustments which are filed annually. Natural gas costs recoverable or refundable, as applicable, through rate adjustments were $1.9 million 5

18 and $(3.7) million at December 31, 2016 and 2015, respectively, which is included in unrecovered purchased gas costs. Income taxes The Company and its subsidiaries file consolidated federal income tax returns and combined and separate state income tax returns. Federal income taxes paid by the Company, as parent of the consolidated group, are allocated to the individual subsidiaries based on the ratio of the separate company computations of tax. The Company makes a similar allocation for state income taxes paid in connection with combined state filings. The Company provides deferred federal and state income taxes on all temporary differences between the book and tax basis of the Company's assets and liabilities. Taxes recoverable from customers have been recorded as regulatory assets. Taxes refundable to customers and excess deferred income tax balances associated with the Company's rate-regulated activities have been recorded as regulatory liabilities. These regulatory assets and liabilities are expected to be recovered from or refunded to customers in future rates in accordance with applicable regulatory procedures. The Company uses the deferral method of accounting for investment tax credits and amortizes the credits on regulated electric and natural gas distribution plant over various periods that conform to the ratemaking treatment prescribed by the applicable state public service commissions. Tax positions taken or expected to be taken in an income tax return are evaluated for recognition using a more-likely-than-not threshold, and those tax positions requiring recognition are measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in interest and penalties, respectively. Use of estimates The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Estimates are used for items such as impairment testing of longlived assets and goodwill; fair values of acquired assets and liabilities under the acquisition method of accounting; property depreciable lives; tax provisions; uncollectible accounts; environmental and other loss contingencies; accumulated provision for revenues subject to refund; unbilled revenues; actuarially determined benefit costs; asset retirement obligations; and the valuation of stock-based compensation. As additional information becomes available, or actual amounts are determinable, the recorded estimates are revised. Consequently, operating results can be affected by revisions to prior accounting estimates. New accounting standards Revenue from Contracts with Customers In May 2014, the FASB issued guidance on accounting for revenue from contracts with customers. The guidance provides for a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry specific guidance. This guidance was to be effective for the Company on January 1, In August 2015, the FASB issued guidance deferring the effective date of the revenue guidance one year and allowing entities to early adopt. With this decision, the guidance will be effective for the Company on January 1, Entities will have the option of using either a full retrospective or modified retrospective approach to adopting the guidance. Under the modified approach, an entity would recognize the cumulative effect of initially applying the guidance with an adjustment to the opening balance of retained earnings in the period of adoption. In addition, the modified approach will require additional disclosures. The Company is planning to adopt the guidance using the modified retrospective approach and continues to evaluate the effects it will have on its results of operations, financial position, cash flows and disclosures. 6

19 Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or its Equivalent) In May 2015, the FASB issued guidance on fair value measurement and disclosure requirements removing the requirement to include investments in the fair value hierarchy for which fair value is measured using the net asset value per share practical expedient. The new guidance also removes the requirement to make certain disclosures for all investments that are eligible to be measured at net asset value using the practical expedient, and rather limits those disclosures to investments for which the practical expedient has been elected. This guidance was effective for the Company on January 1, 2016, with early adoption permitted. The application of this guidance affected the Company's disclosures; however, it did not impact the Company's results of operations, financial position or cash flows. Simplifying the Measurement of Inventory In July 2015, the FASB issued guidance regarding inventory that is measured using the first-in, first-out or average cost method. The guidance does not apply to inventory measured using the last-in, first-out or the retail inventory method. The guidance requires inventory within its scope to be measured at the lower of cost or net realizable value, which is the estimated selling price in the normal course of business less reasonably predictable costs of completion, disposal and transportation. These amendments more closely align GAAP with IFRS. This guidance was effective for the Company on January 1, 2017, on a prospective basis. The Company does not anticipate the guidance will have a material effect on its results of operations, financial position or cash flows. Recognition and Measurement of Financial Assets and Financial Liabilities In January 2016, the FASB issued guidance regarding the classification and measurement of financial instruments. The guidance revises the way an entity classifies and measures investments in equity securities, the presentation of certain fair value changes for financial liabilities measured at fair value and amends certain disclosure requirements related to the fair value of financial instruments. This guidance will be effective for the Company on January 1, 2018, with early adoption of certain amendments permitted. The guidance should be applied using a modified retrospective approach with the exception of equity securities without readily determinable fair values which will be applied prospectively. The Company is evaluating the effects the adoption of the new guidance will have on its results of operations, financial position, cash flows and disclosures. Leases In February 2016, the FASB issued guidance regarding leases. The guidance requires lessees to recognize a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term on the statement of financial position for leases with terms of more than 12 months. This guidance also requires additional disclosures. This guidance will be effective for the Company on January 1, 2019, and should be applied using a modified retrospective approach with early adoption permitted. The Company is evaluating the effects the adoption of the new guidance will have on its results of operations, financial position, cash flows and disclosures. Improvements to Employee Share-Based Payment Accounting In March 2016, the FASB issued guidance regarding simplification of several aspects of the accounting for share-based payment transactions. The guidance will affect the income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows and calculation of dilutive shares. Certain amendments of this guidance are to be applied retrospectively and others prospectively. The Company adopted the guidance on January 1, All amendments in the guidance that apply to the Company were adopted on a prospective basis resulting in no adjustments being made to retained earnings. The Company anticipates the guidance will impact the Consolidated Statements of Income and the Consolidated Balance Sheets, as well as the dilutive earnings per share calculation, on a prospective basis with all taxes related to share-based payments recognized as income tax expense or benefit and no longer recognized in additional paid-in capital. The Company anticipates the guidance will not have a material impact on its cash flows. 7

20 Classification of Certain Cash Receipts and Cash Payments In August 2016, the FASB issued guidance to clarify the classification of certain cash receipts and payments in the statement of cash flows. The guidance is intended to standardize the presentation and classification of certain transactions, including cash payments for debt prepayment or extinguishment, proceeds from insurance claim settlements and distributions from equity method investments. In addition, the guidance clarifies how to classify transactions that have characteristics of more than one class of cash flows. This guidance will be effective for the Company on January 1, 2018, with early adoption permitted. An entity that elects early adoption must adopt all the amendments in the same period and apply any adjustments as of the beginning of the fiscal year. Entities must apply the guidance retrospectively unless it is impracticable to do so, in which case they may apply it prospectively as of the earliest date practicable. The Company is evaluating the effects the adoption of the new guidance will have on its cash flows and disclosures. Clarifying the Definition of a Business In January 2017, the FASB issued guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The guidance provides a screen to determine when an integrated set of assets and activities is not a business. The guidance will also affect other aspects of accounting, such as determining reporting units for goodwill testing. The guidance will be effective for the Company on January 1, 2018, and should be applied on a prospective basis with early adoption permitted for transactions that occur before the issuance or effective date of the amendments and only when the transactions have not been reported in the financial statements or made available for issuance. The Company is evaluating the effects the adoption of the new guidance will have on its results of operations, financial position, cash flows and disclosures. Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued guidance on simplifying the test for goodwill impairment by eliminating Step 2, which required an entity to measure the amount of impairment loss by comparing the implied fair value of reporting unit goodwill with the carrying amount of such goodwill. This guidance requires entities to perform a quantitative impairment test, previously Step 1, to identify both the existence of impairment and the amount of impairment loss by comparing the fair value of a reporting unit to its carrying amount. Entities will continue to have the option of performing a qualitative assessment to determine if the quantitative impairment test is necessary. The guidance also requires additional disclosures if an entity has one or more reporting units with zero or negative carrying amounts of net assets. The guidance will be effective for the Company on January 1, 2020, and should be applied on a prospective basis with early adoption permitted. The Company is evaluating the effects the adoption of the new guidance will have on its results of operations, financial position, cash flows and disclosures. Comprehensive income (loss) Comprehensive income (loss) is the sum of net income (loss) as reported and other comprehensive income (loss). The Company's other comprehensive income (loss) resulted from postretirement liability adjustments and other comprehensive income (loss) recorded by its subsidiaries. The postretirement liability adjustment in other comprehensive income was $1.7 million and $(2.0) million, net of tax of $(1.0) million and $1.2 million, for the years ended December 31, 2016 and 2015, respectively. 8

21 The after-tax changes in the components of accumulated other comprehensive loss were as follows: Total Subsidiary Accumulated Postretirement Other Other Liability Comprehensive Comprehensive Twelve Months Ended December 31, 2016 Adjustment Loss Loss (In thousands) Balance at December 31, 2015 $ (5,952) $ (31,196) $ (37,148) Other comprehensive income (loss) before reclassifications 310 (1,911) (1,601) Amounts reclassified from accumulated other comprehensive loss 1,355 1,661 3,016 Net current-period other comprehensive income (loss) 1,665 (250) 1,415 Balance at December 31, 2016 $ (4,287) $ (31,446) $ (35,733) Total Subsidiary Accumulated Postretirement Other Other Liability Comprehensive Comprehensive Twelve Months Ended December 31, 2015 Adjustment Loss Loss (In thousands) Balance at December 31, 2014 $ (3,994) $ (38,109) $ (42,103) Other comprehensive income (loss) before reclassifications 249 (680) (431) Amounts reclassified from accumulated other comprehensive loss 103 3,028 3,131 Amounts reclassified from accumulated other comprehensive loss to a regulatory asset (2,310) 4,565 2,255 Net current-period other comprehensive income (loss) (1,958) 6,913 4,955 Balance at December 31, 2015 $ (5,952) $ (31,196) $ (37,148) Reclassifications out of accumulated other comprehensive loss were as follows: Twelve Months Ended December 31, Location on Statement of Income (In thousands) Amortization of postretirement liability losses included in net periodic benefit cost (credit) $ (2,182) $ (165) (a) Income taxes (1,355) (103) Subsidiary reclassifications out of accumulated Equity in earnings of Subsidiary other comprehensive loss (1,661) (3,028) Companies Total reclassifications $ (3,016) $ (3,131) (a) Included in net periodic benefit cost (credit). For more information, see Note 12. Note 2 - Goodwill and Other Intangible Assets The carrying amount of goodwill, which is related to the natural gas distribution business, remained unchanged at $4.8 million for the years ended December 31, 2016 and This amount is included in miscellaneous deferred debits. No impairments have been recorded in any periods. 9

22 Note 3 - Regulatory Assets and Liabilities The following table summarizes the individual components of unamortized regulatory assets and liabilities as of December 31: Estimated Recovery Period * (In thousands) Regulatory assets: Pension and postretirement benefits (a) (h) $ 101,611 $ 107,595 Taxes recoverable from customers (a) Over plant lives 15,989 16,714 Asset retirement obligations (a) (b) --- 9,437 8,000 Unamortized loss on required debt Up to 10 years 5,298 5,968 Costs related to identifying generation development (c) Up to 10 years 3,407 3,808 Unrecovered purchased gas costs Up to 1 year 1,875 (3,670) Other (a) (d) (e) Largely within 1 year 18,754 2,740 Total regulatory assets 156, ,155 Regulatory liabilities: Plant removal and decommissioning costs (b) (f) 57,363 56,735 Pension and postretirement benefits (f) 9,099 3,591 Taxes refundable to customers (f) 6,177 7,045 Accumulated provision for rate refunds 1, Other (f) (g) 2,992 3,158 Total regulatory liabilities 76,974 71,446 Net regulatory position $ 79,397 $ 69,709 * Estimated recovery period for regulatory assets currently being recovered in rates charged to customers. (a) Included in other regulatory assets on the Comparative Balance Sheet. (b) Included in accumulated provision for depreciation, amortization and depletion on the Comparative Balance Sheet. (c) Included in unrecovered plant and regulatory study costs on the Comparative Balance Sheet. (d) Included in prepayments on the Comparative Balance Sheet. (e) Included in miscellaneous deferred debits on the Comparative Balance Sheet. (f) Included in other regulatory liabilities on the Comparative Balance Sheet. (g) Included in accumulated deferred investment tax credits on the Comparative Balance Sheet. (h) Recovered as expense is incurred. The regulatory assets are expected to be recovered in rates charged to customers. A portion of the Company's regulatory assets are not earning a return; however, these regulatory assets are expected to be recovered from customers in future rates. As of December 31, 2016 and 2015, approximately $121.2 million and $122.2 million respectively, of regulatory assets were not earning a rate of return. If, for any reason, the Company's regulated business ceases to meet the criteria for application of regulatory accounting for all or part of their operations, the regulatory assets and liabilities relating to those portions ceasing to meet such criteria would be removed from the balance sheet and included in the statement of income or accumulated other comprehensive income (loss) in the period in which the discontinuance of regulatory accounting occurs. Note 4 - Fair Value Measurements The Company measures its investments in certain fixed-income and equity securities at fair value with changes in fair value recognized in income. The Company anticipates using these investments, which consist of an insurance contract, to satisfy its obligations under its unfunded, nonqualified benefit plan for executive officers and certain key management employees, and invests in these fixed-income and equity securities for the purpose of earning investment returns and capital appreciation. These investments, which totaled $47.9 million and $45.2 million as of December 31, 2016 and 2015, respectively, are classified as Other Investments on the Comparative 10

23 Balance Sheet. The net unrealized gains on these investments for the years ended December 31, 2016 and 2015, were $2.3 million and $1.1 million, respectively. The change in fair value, which is considered part of the cost of the plan, is classified in Other Income and Deductions as Life Insurance on the Statement of Income. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The ASC establishes a hierarchy for grouping assets and liabilities, based on the significance of inputs. The estimated fair values of the Company's assets and liabilities measured on a recurring basis are determined using the market approach. The Company s Level 2 money market funds are valued at the net asset value of shares held at the end of the period, based on published market quotations on active markets, or using other known sources including pricing from outside sources. The estimated fair value of the Company s Level 2 insurance contract is based on contractual cash surrender values that are determined primarily by investments in managed separate accounts of the insurer. These amounts approximate fair value. The managed separate accounts are valued based on other observable inputs or corroborated market data. Though the Company believes the methods used to estimate fair value are consistent with those used by other market participants, the use of other methods or assumptions could result in a different estimate of fair value. For the years ended December 31, 2016 and 2015, there were no transfers between Levels 1 and 2. The Company's assets and liabilities measured at fair value on a recurring basis were as follows: Fair Value Measurements at December 31, 2016, Using Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Balance at Identical Assets Inputs Inputs December 31, (Level 1) (Level 2) (Level 3) 2016 (In thousands) Assets: Money market funds $ $ 513 $ $ 513 Insurance contract* 47,861 47,861 Total assets measured at fair value $ $ 48,374 $ $ 48,374 *The insurance contract invests approximately 52 percent in fixed-income investments, 22 percent in common stock of large-cap companies, 13 percent in common stock of midcap companies, 10 percent in common stock of small-cap companies, 1 percent in target date investments and 2 percent in cash equivalents. 11

24 Fair Value Measurements at December 31, 2015, Using Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Balance at Identical Assets Inputs Inputs December 31, (Level 1) (Level 2) (Level 3) 2015 (In thousands) Assets: Money market funds $ $ 410 $ $ 410 Insurance contract* 45,192 45,192 Total assets measured at fair value $ $ 45,602 $ $ 45,602 *The insurance contract invests approximately 63 percent in fixed-income investments, 19 percent in common stock of large-cap companies, 9 percent in common stock of midcap companies, 7 percent in common stock of small-cap companies, 1 percent in target date investments and 1 percent in cash equivalents. The Company's long-term debt is not measured at fair value on the Comparative Balance Sheet and the fair value is being provided for disclosure purposes only. The fair value was based on discounted future cash flows using current market interest rates. The estimated fair value of the Company's Level 2 long-term debt at December 31 was as follows: Carrying Carrying Amount Fair Value Amount Fair Value (In thousands) Long-term debt $ 681,755 $ 717,599 $ 625,265 $ 652,415 The carrying amounts of the Company's remaining financial instruments included in current assets and current liabilities approximate their fair values. Note 5 - Debt Certain debt instruments of the Company, including those discussed later, contain restrictive covenants and provisions. In order to borrow under the respective credit agreement, the Company must be in compliance with the applicable covenants and certain other conditions. In the event the Company does not comply with the applicable covenants and other conditions, alternative sources of funding may need to be pursued. The following table summarizes the outstanding revolving credit facilities of the Company: Amount Amount Letters of Outstanding at Outstanding at Credit at Facility December 31, December 31, December 31, Expiration Company Facility Limit Date (Dollars in millions) Commercial MDU Resources paper/revolving Group, Inc. credit agreement (a) $ $ (b) $ 44.5 (b) $ 5/8/19 (a) The commercial paper program is supported by a revolving credit agreement with various banks (provisions allow for increased borrowings, at the option of the Company on stated conditions, up to a maximum of $225.0 million). There were no amounts outstanding under the credit agreement. (b) Amount outstanding under commercial paper program included in other long-term debt on the Comparative Balance Sheet. 12

25 The Company's commercial paper program is supported by a revolving credit agreement. While the amount of commercial paper outstanding does not reduce available capacity under the revolving credit agreement, the Company does not issue commercial paper in an aggregate amount exceeding the available capacity under its credit agreement. The following includes information related to the preceding table. Long-term debt MDU Resources Group, Inc. The Company's revolving credit agreement supports its commercial paper program. Commercial paper borrowings under this agreement are classified as long-term debt as they are intended to be refinanced on a long-term basis through continued commercial paper borrowings. The credit agreement contains customary covenants and provisions, including covenants of the Company not to permit, as of the end of any fiscal quarter, (A) the ratio of funded debt to total capitalization (determined on a consolidated basis) to be greater than 65 percent or (B) the ratio of funded debt to capitalization (determined with respect to the Company alone, excluding its subsidiaries) to be greater than 65 percent. Other covenants include limitations on the sale of certain assets and on the making of certain loans and investments. There are no credit facilities that contain cross-default provisions between the Company and any of its subsidiaries. On November 21, 2016, the Company entered into a $100.0 million note purchase agreement. The Company issued $40.0 million of Senior Notes under the agreement on November 21, 2016, with a due date of November 21, 2046, at an interest rate of 4.15 percent. The Company contracted to issue an additional $60.0 million of Senior Notes under the agreement on March 21, 2017, with due dates ranging from March 2032 to March 2037 at a weighted average interest rate of 3.61 percent. Long-term Debt Outstanding Long-term debt outstanding at December 31 was as follows: (In thousands) Senior Notes at a weighted average rate of 5.02%, due on dates ranging from September 16, 2018 to November 21, 2046 $ 570,000 $ 580,000 Commercial paper at an interest rate of 1.07%, supported by revolving credit agreement 111,000 44,500 Credit agreements at a weighted average rate of 5.63%, due on dates ranging from January 1, 2020 to November 30, Total long-term debt $ 681,755 $ 625,265 Schedule of Debt Maturities Long-term debt maturities for the five years and thereafter following December 31, 2016, were as follows: Thereafter (In thousands) Long-term debt maturities $ 110 $100,111 $111,111 $21 $13 $ 470,389 Note 6 - Asset Retirement Obligations The Company records obligations related to retirement costs of natural gas distribution mains and lines, decommissioning of certain electric generating facilities, special handling and disposal of hazardous materials at certain electric generating facilities, natural gas distribution facilities and buildings, and certain other obligations as asset retirement obligations. 13

26 A reconciliation of the Company's liability for the years ended December 31 was as follows: (In thousands) Balance at beginning of year $ 103,737 $ 6,510 Liabilities incurred 10, Liabilities settled (995) --- Accretion expense 5, Revisions in estimates (31) 96,288 Balance at end of year $ 119,521 $ 103,737 The 2015 revisions in estimates consist principally of updated natural gas distribution mains and lines asset retirement obligation costs. The Company believes that largely all expenses related to asset retirement obligations at the Company's regulated operations will be recovered in rates over time and, accordingly, defers such expenses as regulatory assets. Note 7 - Preferred Stocks Preferred stocks at December 31 were as follows: (In thousands, except shares and per share amounts) Authorized: Preferred - 500,000 shares, cumulative, par value $100, issuable in series Preferred stock A - 1,000,000 shares, cumulative, without par value, issuable in series (none outstanding) Preference - 500,000 shares, cumulative, without par value, issuable in series (none outstanding) Outstanding: 4.50% Series - 100,000 shares $ 10,000 $ 10, % Series - 50,000 shares 5,000 5,000 Total preferred stocks $ 15,000 $ 15,000 For the years 2016 and 2015, dividends declared on the 4.50% Series and 4.70% Series preferred stocks were $4.50 and $4.70 per share, respectively. The 4.50% Series and 4.70% Series preferred stocks outstanding are subject to redemption, in whole or in part, at the option of the Company with certain limitations on 30 days notice on any quarterly dividend date at a redemption price, plus accrued dividends, of $105 per share and $102 per share, respectively. In the event of a voluntary or involuntary liquidation, all preferred stock series holders are entitled to $100 per share, plus accrued dividends. The affirmative vote of two-thirds of a series of the Company's outstanding preferred stock is necessary for amendments to the Company's charter or bylaws that adversely affect that series; creation of or increase in the amount of authorized stock ranking senior to that series (or an affirmative majority vote where the authorization relates to a new class of stock that ranks on parity with such series); a voluntary liquidation or sale of substantially all of the Company's assets; a merger or consolidation, with certain exceptions; or the partial retirement of that series of preferred stock when all dividends on that series of preferred stock have not been paid. The consent of the holders of a particular series is not required for such corporate actions if the equivalent vote of all outstanding series of preferred stock voting together has consented to the given action and no particular series is affected 14

27 differently than any other series. Subject to the foregoing, the holders of common stock exclusively possess all voting power. However, if cumulative dividends on preferred stock are in arrears, in whole or in part, for one year, the holders of preferred stock would obtain the right to one vote per share until all dividends in arrears have been paid and current dividends have been declared and set aside. Note 8 - Common Stock For the years 2016 and 2015, dividends declared on common stock were $.7550 and $.7350 per common share, respectively. The Company s Stock Purchase Plan provided interested investors the opportunity to make optional cash investments and to reinvest all or a percentage of their cash dividends in shares of the Company's common stock. The K-Plan provides participants the option to invest in the Company's common stock. From January 2014 through August 2015, the Stock Purchase Plan and K-Plan, with respect to Company stock, purchased shares of authorized but unissued common stock from the Company. From September 2015 through December 2016, the K-Plan purchased shares of common stock on the open market. At December 31, 2016, there were 7.8 million shares of common stock reserved for original issuance under the K-Plan. From September 2015 through December 4, 2016, the Stock Purchase Plan purchased shares of common stock on the open market. On December 5, 2016, the Stock Purchase Plan was terminated and all remaining shares reserved for original issuance under the plan have been de-registered. The Company depends on earnings from its divisions and dividends from its subsidiaries to pay dividends on common stock. The declaration and payment of dividends is at the sole discretion of the board of directors, subject to limitations imposed by the Company's credit agreements, federal and state laws, and applicable regulatory limitations. In addition, the Company and Centennial are generally restricted to paying dividends out of capital accounts or net assets. The following discusses the most restrictive limitations. Pursuant to a covenant under a credit agreement, Centennial may only declare or pay distributions if as of the last day of any fiscal quarter, the ratio of Centennial s average consolidated indebtedness as of the last day of such fiscal quarter and each of the preceding three fiscal quarters to Centennial s Consolidated EBITDA does not exceed 3 to 1; and after giving effect to such distribution, all distributions made during the 12-month period ending on the last day of the fiscal quarter in which such distribution is made will not exceed the remainder of Centennial s Consolidated EBITDA minus Centennial s capital expenditures less the net cash proceeds from all sales of capital assets from continuing operations, for the immediately preceding 12-month period. Intermountain and Cascade have regulatory limitations on the amount of dividends each can pay. Based on these limitations, approximately $1.3 billion of the net assets of the Company's subsidiaries were restricted from being used to transfer funds to the Company at December 31, In addition, the Company's credit agreement also contains restrictions on dividend payments. The most restrictive limitation requires the Company not to permit the ratio of funded debt to capitalization (determined with respect to the Company alone, excluding its subsidiaries) to be greater than 65 percent. Based on this limitation, approximately $351 million of the Company's (excluding its subsidiaries) net assets, which represents common stockholders equity including retained earnings, would be restricted from use for dividend payments at December 31, In addition, state regulatory commissions may require the Company to maintain certain capitalization ratios. These requirements are not expected to affect the Company's ability to pay dividends in the near term. Note 9 - Stock-Based Compensation The Company has several stock-based compensation plans under which it is currently authorized to grant restricted stock and stock. As of December 31, 2016, there are 5.5 million remaining shares available to grant under these plans. The Company generally issues new shares of common stock to satisfy employee performance share 15

28 awards and purchases shares on the open market for nonemployee director stock awards. Total stock-based compensation expense (after tax), excluding the amount recognized by the Company s subsidiaries, was $808,000 and $721,000 in 2016 and 2015, respectively. As of December 31, 2016, total remaining unrecognized compensation expense, excluding the amount to be recognized by the Company s subsidiaries, related to stock-based compensation was approximately $1.4 million (before income taxes) which will be amortized over a weighted average period of 1.5 years. Stock awards Nonemployee directors may receive shares of common stock instead of cash in payment for directors' fees under the nonemployee director stock compensation plan. There were 37,218 shares with a fair value of $1.1 million and 58,181 shares with a fair value of $1.1 million issued under this plan during the years ended December 31, 2016 and 2015, respectively. Performance share awards Since 2003, key employees of the Company and its subsidiaries have been awarded performance share awards each year. Entitlement to performance shares is based on the Company's total shareholder return over designated performance periods as measured against a selected peer group. Target grants of performance shares outstanding at December 31, 2016, were as follows: Grant Date Performance Period Target Grant of Shares February ,901 February ,112 June ,441 February ,583 March ,151 Participants may earn from zero to 200 percent of the target grant of shares based on the Company's total shareholder return relative to that of the selected peer group. Compensation expense is based on the grant-date fair value as determined by Monte Carlo simulation. The blended volatility term structure ranges are comprised of 50 percent historical volatility and 50 percent implied volatility. Risk-free interest rates were based on U.S. Treasury security rates in effect as of the grant date. Assumptions used for grants of performance shares issued in 2016 and 2015 were: Weighted average grant-date fair value $ $ Blended volatility range % % % % Risk-free interest rate range.47% -.92%.05% % Weighted average discounted dividends per share $ 1.56 $ 1.57 The fair value of the performance shares that vested during the year ended December 31, 2016 was $953,000. There were no performance shares that vested in

29 A summary of the status of the performance share awards for the year ended December 31, 2016, was as follows: Weighted Average Number of Grant-Date Shares Fair Value Nonvested at beginning of period 565,896 $ Granted 324, Less: Vested 58, Forfeited 167, Nonvested at end of period 664,188 $ Note 10 - Income Taxes Income before income taxes for the years ended December 31, 2016 and 2015, respectively was $62,176 and $62,282. Income tax expense for the years ended December 31 was as follows: (In thousands) Current: Federal $ (5,774) $ 12,202 State (1,657) 1,879 (7,431) 14,081 Deferred: Income taxes: Federal 11,595 1,566 State 2, Investment tax credit - net (112) (659) 13,786 1,413 Total income tax expense $ 6,355 $ 15,494 Components of deferred tax assets and deferred tax liabilities at December 31 were as follows: (In thousands) Deferred tax assets: Postretirement $ 41,319 $ 43,312 Production Tax Credits 16,944 3,400 Compensation-related 13,049 9,406 Customer advances 8,852 8,375 Other 7,729 5,435 Total deferred tax assets 87,893 69,928 Deferred tax liabilities: Depreciation and basis differences on property, plant and equipment 297, ,128 Postretirement 41,039 40,922 Regulatory matters 5,937 6,195 Cost recovery mechanisms 4, Other 8, Total deferred tax liabilities 358, ,997 Net deferred income tax liability $ (270,126) $ (255,069) As of December 31, 2016 and 2015, the Company had a federal income tax credit carryforward of $16.9 million and $3.4 million respectively. The federal income tax credit carryforwards will expire in 2036 and 2037 if not utilized. As of December 31, 17

30 2016 and 2015, no valuation allowances have been recorded associated with previously identified deferred tax assets. Changes in tax regulations or assumptions regarding current and future taxable income could require valuation allowances in the future. The following table reconciles the change in the net deferred income tax liability from December 31, 2015, to December 31, 2016, to deferred income tax expense: 2016 (In thousands) Change in net deferred income tax liability from the preceding table $ 15,057 Deferred taxes associated with other comprehensive income (1,016) Other (255) Deferred income tax expense for the period $ 13,786 Total income tax expense differs from the amount computed by applying the statutory federal income tax rate to income before taxes. The reasons for this difference were as follows: Years ended December 31, Amount % Amount % (Dollars in thousands) Computed tax at federal statutory rate $ 21, $ 21, Increases (reductions) resulting from: Production tax credit (13,544) (21.8) (3,400) (5.5) Deductible K-Plan dividends (1,180) (1.9) (1,109) (1.8) Nonqualified benefit plan (1,085) (1.7) (590) (0.9) Amortization and deferral of investment tax credit (73) (0.1) AFUDC equity (2,546) (4.1) State income taxes, net of federal income tax 1, , Tax compliance and uncertain tax positions Other (709) (1.2) (95) (0.1) Total income tax expense $ 6, $ 15, The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for years ending prior to With few exceptions, as of December 31, 2016, the Company is no longer subject to state and local income tax examinations by tax authorities for years ending prior to For the year ended December 31, 2015, the Company recognized approximately $428,000 in interest expense, and $192,000 in interest income, related to income taxes. The Company had accrued assets of approximately $18,000 at both December 31, 2016 and 2015, for the receipt of interest income. Note 11 Cash Flow Information Cash expenditures for interest and income taxes for the years ended December 31 were as follows: (In thousands) Interest, net of amount capitalized and AFUDC borrowed of $357 and $3,909 in 2016 and 2015, respectively $ 30,867 $ 21,479 Income taxes refunded, net $ (8,641) $ (37,361) 18

31 Noncash investing transactions at December 31 were as follows: (In thousands) Property, plant and equipment additions in accounts payable $ 9,495 $ 28,359 Note 12 - Employee Benefit Plans Pension and other postretirement benefit plans The Company has noncontributory defined benefit pension plans and other postretirement benefit plans for certain eligible employees. The Company uses a measurement date of December 31 for all of its pension and postretirement benefit plans. Other postretirement plans presented here include certain of the Company s subsidiaries. Prior to 2015, all of the Company s defined pension plans were frozen. These employees were eligible to receive additional defined contribution plan benefits. Effective January 1, 2010, eligibility to receive retiree medical benefits was modified at certain of the Company's businesses. Employees who had attained age 55 with 10 years of continuous service by December 31, 2010, will be provided the current retiree medical insurance benefits or can elect the new benefit, if desired, regardless of when they retire. All other current employees must meet the new eligibility criteria of age 60 and 10 years of continuous service at the time they retire. These employees will be eligible for a specified company funded Retiree Reimbursement Account. Employees hired after December 31, 2009, will not be eligible for retiree medical benefits. In 2012, the Company modified health care coverage for certain retirees. Effective January 1, 2013, post-65 coverage was replaced by a fixed-dollar subsidy for retirees and spouses to be used to purchase individual insurance through an exchange. 19

32 Changes in benefit obligation and plan assets for the years ended December 31, 2016 and 2015, and amounts recognized in the Comparative Balance Sheet at December 31, 2016 and 2015, were as follows: Other Pension Benefits Postretirement Benefits (In thousands) Change in benefit obligation: Benefit obligation at beginning of year $ 251,676 $ 269,583 $ 46,752 $ 53,003 Service cost Interest cost 9,679 9,678 1,749 1,835 Plan participants' contributions Actuarial gain (99) (13,276) (6,444) (6,049) Benefits paid (15,398) (14,309) (3,331) (3,757) Benefit obligation at end of year 245, ,676 40,267 46,752 Change in net plan assets: Fair value of plan assets at beginning of year 183, ,078 47,449 50,124 Actual gain (loss) on plan assets 14,566 (5,906) 2, Employer contribution 2, Plan participants' contributions Benefits paid (15,398) (14,309) (3,331) (3,757) Fair value of net plan assets at end of year 182, ,045 47,253 47,449 Funded status over (under) $ (63,645) $ (68,631) $ 6,986 $ 697 Amounts recognized in the Comparative Balance Sheet at December 31: Other deferred debits (credits) $ (63,645) $ (68,631) $ 6,986 $ 697 Net amount recognized $ (63,645) $ (68,631) $ 6,986 $ 697 Amounts recognized in accumulated other comprehensive (income) loss/regulatory assets (liabilities) consist of: Actuarial loss $ 108,983 $ 115,715 $ 3,416 $ 10,046 Prior service credit (9,204) (10,181) Total $ 108,983 $ 115,715 $ (5,788) $ (135) Employer contributions and benefits paid in the preceding table include only those amounts contributed directly to, or paid directly from, plan assets. The above table includes amounts related to regulated operations, which are recorded as regulatory assets (liabilities) and are expected to be reflected in rates charged to customers over time. For more information on regulatory assets (liabilities), see Note 3. Unrecognized pension actuarial losses in excess of 10 percent of the greater of the projected benefit obligation or the market-related value of assets are amortized over the average life expectancy of plan participants for frozen plans. The market-related value of assets is determined using a five-year average of assets. The pension plans all have accumulated benefit obligations in excess of plan assets. The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for these plans at December 31 were as follows: (In thousands) Projected benefit obligation $ 245,858 $ 251,676 Accumulated benefit obligation $ 245,858 $ 251,676 Fair value of plan assets $ 182,213 $ 183,045 20

33 Components of net periodic benefit cost (credit) for the Company's pension and other postretirement benefit plans for the years ended December 31 were as follows: 21 Other Pension Benefits Postretirement Benefits (In thousands) Components of net periodic benefit cost (credit): Service cost $ $ $ 716 $ 914 Interest cost 9,679 9,678 1,749 1,835 Expected return on assets (11,467) (12,295) (2,591) (2,681) Amortization of prior service credit (976) (976) Recognized net actuarial loss 3,535 4, Net periodic benefit cost (credit) 1,747 1,399 (600) 77 Other changes in plan assets and benefit obligations recognized in accumulated other comprehensive (income) loss/regulatory assets (liabilities): Net (gain) loss (3,198) 4,926 (6,127) (3,608) Amortization of actuarial loss (3,535) (4,016) (502) (985) Amortization of prior service credit Total recognized in accumulated other comprehensive (income) loss/regulatory assets (liabilities) (6,733) 910 (5,653) (3,617) Total recognized in net periodic benefit cost and accumulated other comprehensive (income) loss/regulatory assets (liabilities) $ (4,986) $ 2,309 $ (6,253) $ (3,540) The estimated net loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive loss or regulatory asset (liability), as applicable, into net periodic benefit cost in 2017 is $3.6 million. The estimated net loss and prior service credit for the other postretirement benefit plans that will be amortized from accumulated other comprehensive loss or regulatory asset(liability), as applicable, into net periodic benefit cost in 2017 are $62,000 and $976,000, respectively. Prior service cost is amortized on a straight line basis over the average remaining service period of active participants. Weighted average assumptions used to determine benefit obligations at December 31 were as follows: Other Pension Benefits Postretirement Benefits Discount rate 3.81 % 3.97 % 3.83 % 4.04 % Expected return on plan assets 6.75 % 6.75 % 5.75 % 5.75 % Weighted average assumptions used to determine net periodic benefit cost for the years ended December 31 were as follows: Other Pension Benefits Postretirement Benefits Discount rate 3.98 % 3.69 % 4.04 % 3.73 % Expected return on plan assets 6.75 % 7.00 % 5.75 % 6.00 % The expected rate of return on pension plan assets is based on a targeted asset allocation range determined by the funded ratio of the plan. As of December 31, 2016, the expected rate of return on pension plan assets is based on the targeted asset allocation range of 40 percent to 50 percent equity securities and 50 percent to 60 percent fixed-income securities and the expected rate of return from these asset categories. The expected rate of return on other postretirement plan assets is based on the targeted asset allocation range of 30 percent to 40 percent equity securities

34 and 60 percent to 70 percent fixed-income securities and the expected rate of return from these asset categories. The expected return on plan assets for other postretirement benefits reflects insurance-related investment costs. Health care rate assumptions for the Company's other postretirement benefit plans as of December 31 were as follows: Health care trend rate assumed for next year 10.7 % 4.0 % Health care cost trend rate - ultimate 4.5 % 6.0 % Year in which ultimate trend rate achieved The Company's other postretirement benefit plans include health care and life insurance benefits for certain retirees. The plans underlying these benefits may require contributions by the retiree depending on such retiree's age and years of service at retirement or the date of retirement. The accounting for the health care plans anticipates future cost-sharing changes that are consistent with the Company's expressed intent to generally increase retiree contributions each year by the excess of the expected health care cost trend rate over six percent. Assumed health care cost trend rates may have a significant effect on the amounts reported for the health care plans. A one percentage point change in the assumed health care cost trend rates would have had the following effects at December 31, 2016: 1 Percentage 1 Percentage Point Increase Point Decrease (In thousands) Effect on total of service and interest cost components $ 30 $ (26) Effect on postretirement benefit obligation $ 1,692 $ (1,453) Outside investment managers manage the Company's pension and postretirement assets. The Company's investment policy with respect to pension and other postretirement assets is to make investments solely in the interest of the participants and beneficiaries of the plans and for the exclusive purpose of providing benefits accrued and defraying the reasonable expenses of administration. The Company strives to maintain investment diversification to assist in minimizing the risk of large losses. The Company's policy guidelines allow for investment of funds in cash equivalents, fixed-income securities and equity securities. The guidelines prohibit investment in commodities and futures contracts, equity private placement, employer securities, leveraged or derivative securities, options, direct real estate investments, precious metals, venture capital and limited partnerships. The guidelines also prohibit short selling and margin transactions. The Company's practice is to periodically review and rebalance asset categories based on its targeted asset allocation percentage policy. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The ASC establishes a hierarchy for grouping assets and liabilities, based on the significance of inputs. The estimated fair values of the Company's pension plans assets are determined using the market approach. The carrying value of the pension plans' Level 2 cash equivalents approximates fair value and is determined using observable inputs in active markets or the net asset value of shares held at year end, which is determined using other observable inputs including pricing from outside sources. The estimated fair value of the pension plans' Level 1 equity securities is based on the closing price reported on the active market on which the individual securities are traded. 22

35 The estimated fair value of the pension plans' Level 1 and Level 2 collective and mutual funds are based on the net asset value of shares held at year end, based on either published market quotations on active markets or other known sources including pricing from outside sources. The estimated fair value of the pension plans' Level 2 corporate and municipal bonds is determined using other observable inputs, including benchmark yields, reported trades, broker/dealer quotes, bids, offers, future cash flows and other reference data. The estimated fair value of the pension plans' Level 1 U.S. Government securities are valued based on quoted prices on an active market. The estimated fair value of the pension plans' Level 2 U.S. Government securities are valued mainly using other observable inputs, including benchmark yields, reported trades, broker/dealer quotes, bids, offers, to be announced prices, future cash flows and other reference data. Some of these securities are valued using pricing from outside sources. Though the Company believes the methods used to estimate fair value are consistent with those used by other market participants, the use of other methods or assumptions could result in a different estimate of fair value. For the years ended December 31, 2016 and 2015, there were no transfers between Levels 1 and 2. The fair value of the Company's pension plans assets (excluding cash) by class were as follows: Fair Value Measurements at December 31, 2016, Using Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Balance at Identical Assets Inputs Inputs December 31, (Level 1) (Level 2) (Level 3) 2016 (In thousands) Assets: Cash equivalents $ $ 3,467 $ $ 3,467 Equity securities: U.S. companies 6,200 6,200 International companies Collective and mutual funds * 88,539 34, ,534 Corporate bonds 37,522 37,522 Municipal bonds 6,011 6,011 U.S. Government securities 2,377 1,117 3,494 Total assets measured at fair value $ 97,982 $ 83,112 $ $ 181,094 *Collective and mutual funds invest approximately 29 percent in common stock of international companies, 21 percent in corporate bonds, 20 percent in common stock of large-cap U.S. companies, 8 percent in cash equivalents, 7 percent in U.S. Government securities and 15 percent in other investments. 23

36 Fair Value Measurements at December 31, 2015, Using Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Balance at Identical Assets Inputs Inputs December 31, (Level 1) (Level 2) (Level 3) 2015 (In thousands) Assets: Cash equivalents $ $ 4,610 $ $ 4,610 Equity securities: U.S. companies 8,328 8,328 International companies 1,283 1,283 Collective and mutual funds * 84,957 34, ,934 Corporate bonds 34,194 34,194 Municipal bonds 6,427 6,427 U.S. Government securities 2,909 3,755 6,664 Total assets measured at fair value $ 97,477 $ 83,963 $ $ 181,440 *Collective and mutual funds invest approximately 29 percent in common stock of international companies, 19 percent in common stock of large-cap U.S. companies, 16 percent in corporate bonds, 16 percent in cash equivalents, 6 percent in common stock of mid-cap U.S. companies and 14 percent in other investments. The estimated fair values of the Company's other postretirement benefit plans assets are determined using the market approach. The estimated fair value of the other postretirement benefit plans' Level 2 cash equivalents is valued at the net asset value of shares held at year end, based on published market quotations on active markets, or using other known sources including pricing from outside sources. The estimated fair value of the other postretirement benefit plans' Level 1 equity securities is based on the closing price reported on the active market on which the individual securities are traded. The estimated fair value of the other postretirement benefit plans Level 2 insurance contract is based on contractual cash surrender values that are determined primarily by investments in managed separate accounts of the insurer. These amounts approximate fair value. The managed separate accounts are valued based on other observable inputs or corroborated market data. Though the Company believes the methods used to estimate fair value are consistent with those used by other market participants, the use of other methods or assumptions could result in a different estimate of fair value. For the years ended December 31, 2016 and 2015, there were no transfers between Levels 1 and 2. 24

37 The fair value of the Company's other postretirement benefit plans assets (excluding cash) by asset class were as follows: Fair Value Measurements at December 31, 2016, Using Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Balance at Identical Assets Inputs Inputs December 31, (Level 1) (Level 2) (Level 3) 2016 (In thousands) Assets: Cash equivalents $ $ 101 $ $ 101 Equity securities: U.S. companies 1,040 1,040 Insurance contract* 46,112 46,112 Total assets measured at fair value $ 1,040 $ 46,213 $ $ 47,253 *The insurance contract invests approximately 38 percent in corporate bonds, 25 percent in common stock of large-cap U.S. companies, 20 percent in U.S. Government securities, 9 percent in mortgage-backed securities and 8 percent in other investments. Fair Value Measurements at December 31, 2015, Using Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Balance at Identical Assets Inputs Inputs December 31, (Level 1) (Level 2) (Level 3) 2015 (In thousands) Assets: Cash equivalents $ $ 1,856 $ $ 1,856 Equity securities: U.S. companies Insurance contract* 44,653 44,653 Total assets measured at fair value $ 940 $ 46,509 $ $ 47,449 *The insurance contract invests approximately 36 percent in corporate bonds, 22 percent in U.S. Government securities, 19 percent in common stock of large-cap U.S. companies, 10 percent in mortgage-backed securities and 13 percent in other investments. The Company expects to contribute approximately $1.1 million to its defined benefit pension plans in The Company does not expect to contribute to its postretirement benefit plans in

38 The following benefit payments, which reflect future service, as appropriate, and expected Medicare Part D subsidies are as follows: Other Expected Pension Postretirement Medicare Years Benefits Benefits Part D Subsidy (In thousands) 2017 $ 14,593 $ 2,785 $ ,702 2, ,759 2, ,891 2, ,011 2, ,508 12, Nonqualified benefit plans In addition to the qualified plan defined pension benefits reflected in the table at the beginning of this note, the Company also has unfunded, nonqualified benefit plans for executive officers and certain key management employees that generally provide for defined benefit payments at age 65 following the employee's retirement or, upon death, to their beneficiaries for a 15-year period. In February 2016, the Company froze the unfunded, nonqualified defined benefit plans to new participants and eliminated benefit increases. Vesting for participants not fully vested was retained. The Company's net periodic benefit cost for these plans was $509,000 and $3.8 million in 2016 and 2015, respectively, which reflects a curtailment gain of $2.2 million in the first quarter of The total projected benefit obligation for these plans was $59.1 million and $64.1 million at December 31, 2016 and 2015, respectively. The accumulated benefit obligation for these plans was $59.1 million and $60.0 million at December 31, 2016 and 2015, respectively. A discount rate of 3.54 percent and 3.76 percent at December 31, 2016 and 2015, respectively, and a rate of compensation increase of 4.00 percent at December 31, 2015, were used to determine benefit obligations. No rate of compensation increase was used to determine the benefit obligation at December 31, 2016, due to the plans being froze. A discount rate of 3.76 percent and 3.50 percent for the years ended December 31, 2016 and 2015, respectively, and a rate of compensation increase of 4.00 percent and 4.00 percent for the years ended December 31, 2016 and 2015, respectively, were used to determine net periodic benefit cost. The amount of benefit payments for the unfunded, nonqualified benefit plans are expected to aggregate $3.8 million in 2017; $4.0 million in 2018; $4.2 million in 2019; $4.5 million in 2020, $4.5 million in 2021 and $21.6 million for the years 2022 through In 2012, the Company established a nonqualified defined contribution plan for certain key management employees. Expenses incurred under this plan for 2016 and 2015 were $33,000 and $30,000, respectively. The Company had investments of $68.2 million and $64.6 million at December 31, 2016 and 2015, respectively, consisting of equity securities of $42.2 million and $34.2 million, respectively, life insurance carried on plan participants (payable upon the employee's death) of $20.4 million and $19.7 million, respectively, and other investments of $5.6 million and $10.7 million, respectively. The Company anticipates using these investments to satisfy obligations under these plans. Defined contribution plans The Company sponsors various defined contribution plans for eligible employees, and costs incurred under these plans were $10.7 million in 2016 and $10.4 million in Note 13 - Jointly Owned Facilities The financial statements include the Company's ownership interests in the assets, liabilities and expenses of the Big Stone Station, Coyote Station and Wygen III. Each owner of the stations is responsible for financing its investment in the jointly owned 26

39 facilities. The Company's share of the stations operating expenses was reflected in the appropriate categories of operating expenses (fuel, operation and maintenance, and taxes, other than income) in the Statement of Income. At December 31, the Company's share of the cost of utility plant in service and related accumulated depreciation for the stations was as follows: (In thousands) Big Stone Station: Utility plant in service $ 157,144 $ 157,761 Less accumulated depreciation 49,568 48,242 $ 107,576 $ 109,519 Coyote Station: Utility plant in service $ 156,334 $ 140,895 Less accumulated depreciation 105,928 94,755 $ 50,406 $ 46,140 Wygen III: Utility plant in service $ 66,251 $ 65,023 Less accumulated depreciation 7,550 6,788 $ 58,701 $ 58,235 Note 14 - Regulatory Matters and Revenues Subject to Refund On September 30, 2015, Great Plains filed an application for a natural gas rate increase with the MNPUC. Great Plains requested a total increase of approximately $1.6 million annually or approximately 6.4 percent above current rates to recover increased operating expenses along with increased investment in facilities, including the related depreciation expense and taxes. An interim increase of approximately $1.5 million or approximately 6.4 percent, subject to refund, was effective with service rendered on and after January 1, The MNPUC issued an order on September 6, 2016, authorizing an increase of approximately $1.1 million annually or approximately 5.2 percent with the requirement that Great Plains submit a compliance filing within 30 days. On September 22, 2016, Great Plains submitted the required compliance filing which included a refund plan to return the amount of interim revenues collected above the final rates. On December 22, 2016, the MNPUC issued an order approving the rates to be implemented January 1, Great Plains issued refunds for the difference with interest to customers no later than March 1, On October 26, 2015, Montana-Dakota filed an application with the NDPSC requesting a renewable resource cost adjustment rider for the recovery of the Thunder Spirit Wind project. On January 5, 2016, the NDPSC approved the rider to be effective January 7, 2016, resulting in an annual increase on an interim basis, subject to refund, of $15.1 million based upon a 10.5 percent return on equity. The interim rate is pending the determination of the return on equity in the general rate case application filed on October 14, 2016, as discussed in this note. On October 26, 2015, Montana-Dakota filed an application with the NDPSC for an update to the electric generation resource recovery rider. On March 9, 2016, the NDPSC approved the rider to be effective with service rendered on and after March 15, 2016, which resulted in interim rates, subject to refund, of $9.7 million based upon a 10.5 percent return on equity. The interim rates include recovery of Montana-Dakota's investment in the 88-MW simple-cycle natural gas turbine and associated facilities near Mandan, North Dakota, and the 19 MW of new generation from natural gas-fired internal combustion engines and associated facilities near Sidney, Montana. The net investment authorized for the natural gas-fired internal combustion engines and the return on equity on both investments are pending in the general rate case application filed October 14, 2016, as discussed in this note. 27

40 On November 25, 2015, Montana-Dakota filed an application with the NDPSC for an update of its transmission cost adjustment rider for recovery of MISO-related charges and two transmission projects in North Dakota. On February 10, 2016, the NDPSC approved the transmission cost adjustment effective with service rendered on and after February 12, 2016, resulting in an annual increase on an interim basis, subject to refund, of $6.8 million based upon a 10.5 percent return on equity. The interim rate is pending the determination of the return on equity in the general rate case application filed October 14, 2016, as discussed in this note. On June 10, 2016, Montana-Dakota filed an application for an increase in electric rates with the WYPSC. Montana-Dakota requested an increase of approximately $3.2 million annually or approximately 13.1 percent above current rates to recover Montana- Dakota's increased investment in facilities along with additional depreciation, operation and maintenance expenses including increased fuel costs, and taxes associated with the increases in investment. On December 28, 2016, Montana-Dakota and the interveners of the case filed a stipulation and agreement reflecting an increase of approximately $2.7 million annually or approximately 11.1 percent above current rates effective for service rendered on and after March 1, The WYPSC rendered a bench decision approving the stipulation and agreement on January 18, New electric rates were implemented for service rendered on and after March 1, On September 1, 2016, and as amended on January 10, 2017, Montana-Dakota submitted an update to its transmission formula rate under the MISO tariff including a revenue requirement for the Company's multivalue project along with a true-up of prior year expenditures of $11.1 million, which was effective January 1, On October 14, 2016, Montana-Dakota filed an application with the NDPSC for an electric rate increase of approximately $13.4 million annually or 6.6 percent above current rates. The request includes rate recovery associated with increased investment in facilities, along with the related depreciation, operation and maintenance expenses and taxes associated with the increased investment. Montana-Dakota requested an interim increase of approximately $13.0 million or approximately 6.5 percent, subject to refund, to be effective within 60 days of the filing. On November 21, 2016, Montana-Dakota filed a revised interim increase of approximately $11.7 million, based on adjustments accepted by the NDPSC, or approximately 5.8 percent above current rates, subject to refund. The NDPSC approved the revised interim rates effective with service rendered on or after December 13, A technical hearing is scheduled to begin on April 10, This matter is pending before the NDPSC. On December 2, 2016, Montana-Dakota filed an application with the MTPSC requesting authority to implement gas and electric tax tracking adjustments for Montana state and local taxes and fees that reflect the changes in state and local property taxes applicable to gas and electric utilities pursuant to Montana law. The requested tax tracking adjustments would result in an increase in revenues of approximately $814,000. On January 17, 2017, the MTPSC issued an order on the tax tracking adjustments. The gas tracking adjustment was approved as an increase to revenues of approximately $474,000 effective January 1, The electric tax tracking adjustment was approved as an increase to revenues of approximately $251,000 effective May 15, Montana-Dakota filed a motion for reconsideration of the electric tax tracking adjustment on January 27, The motion for reconsideration is pending before the MTPSC. On December 21, 2016, Great Plains filed an application with the MNPUC requesting authority to implement a gas utility infrastructure cost tariff of approximately $456,000 annually effective beginning with service rendered May 20, The tariff will allow Great Plains to recover infrastructure investments, not previously included in rates, mandated by federal or state agencies associated with Great Plains' pipeline integrity programs. This matter is pending before the MNPUC. On March 1, 2017, Montana-Dakota filed its annual updates to its Infrastructure Rider and Transmission Cost Recovery Rider with the SDPUC. No change in rates was proposed for the Infrastructure Rider with a change of approximately $127,000 proposed over 28

41 current rates to be recovered through the Transmission Cost Recovery Rider. The matters are pending before the SDPUC. On April 1, 2017, Phase 2 of the revenue increase, approved by the MTPSC as part of the application for an electric rate increase filed on June 25, 2015, was implemented. This resulted in an additional increase of $4.7 million effective with service rendered on and after April 1, Note 15 - Commitments and Contingencies Claims and Litigation The Company is party to claims and lawsuits arising out of its business. The Company accrues a liability for those contingencies when the incurrence of a loss is probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Company does not accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is probable or reasonably possible and which are material, the Company discloses the nature of the contingency and, in some circumstances, an estimate of the possible loss. The Company had accrued liabilities of $1.7 million and $1.1 million for contingencies related to litigation as of December 31, 2016 and 2015, respectively. Operating leases The Company leases certain equipment, facilities and land under operating lease agreements. The amounts of annual minimum lease payments due under these leases as of December 31, 2016, were $2.1 million in 2017, $1.8 million in 2018, $1.8 million in 2019, $1.7 million in 2020, $1.6 million in 2021 and $27.0 million thereafter. Rent expense was $2.0 million and $3.6 million for the years ended December 31, 2016 and 2015, respectively. Purchase commitments The Company has entered into various commitments, largely natural gas and coal supply, purchased power, and natural gas transportation and storage contracts, some of which are subject to variability in volume and price. These commitments range from one to 27 years. The commitments under these contracts as of December 31, 2016, were $144.2 million in 2017, $71.2 million in 2018, $66.3 million in 2019, $49.3 million in 2020, $44.1 million in 2021 and $137.8 million thereafter. These commitments were not reflected in the Company's financial statements. Amounts purchased under various commitments for the years ended December 31, 2016 and 2015, were $228.1 million and $417.1 million, respectively. Note 16 Subsequent Event On March 1, 2017, the Company provided notice of its intent to redeem all outstanding shares of preferred stock. Effective April 1, 2017, all outstanding preferred shares were redeemed. 29

42 Docket No. Rule Statement B Page 1 of 4 MDU RESOURCES GROUP, INC. NONCONSOLIDATED INCOME STATEMENT TWELVE MONTHS ENDING DECEMBER 31, 2016 Operating Income Electric Utility Operating Revenues $321,162,370 Operating Expenses: Operation Expenses $168,442,439 Maintenance Expenses 22,320,344 Depreciation Expenses 50,003,828 Taxes Other Than Income Taxes 12,747,568 Income Taxes: Federal Taxes on Income (12,175,706) State Taxes on Income (1,575,121) Deferred Income Taxes 16,422,490 Total Electric Expenses $256,185,842 Net Electric Operation $64,976,528 Gas Utility Operating Revenues $231,629,344 Operating Expenses: Operation Expenses $178,451,048 Maintenance Expenses 5,229,417 Depreciation Expenses 19,468,348 Taxes Other Than Income Taxes 9,066,338 Income Taxes: Federal Taxes on Income 7,114,261 State Taxes on Income 678,904 Deferred Income Taxes (3,307,693) Total Gas Expenses $216,700,623 Net Gas Operation $14,928,721 Net Utility Operating Income $79,905,249 Revenues from Merchandising, Jobbing and Contract Work $100,033 (Less) Costs and Exp. Of Merch., Jobbing and Contract Work 71,515 Revenues from Nonutility Operations 6,686,433 (Less) Expense from Nonutility Operations 3,546,711 Equity in Earnings of Subsidiary Companies 8,611,755 Interest and Dividend Income 2,679,301 Allowance for Other Funds Used During Construction (3,391) Miscellaneous Nonoperating Income 503,222 Gain on Disposition of Property 6,613 Total Other Income $14,965,740 Loss on Disposition of Property $177,706 Miscellaneous Income Deductions (756,932) Total Other Income Deductions ($579,226)

43 Docket No. Rule Statement B Page 2 of 4 MDU RESOURCES GROUP, INC. NONCONSOLIDATED INCOME STATEMENT TWELVE MONTHS ENDING DECEMBER 31, 2016 Taxes other than Income Taxes $300,545 Income Taxes - Federal (712,193) Income Taxes - State (760,954) Provision for Deferred Income Taxes 782,656 Investment Tax Credits 111,917 Total Taxes on Other Income and Deductions ($501,863) Net Other Income and Deductions $16,046,829 Interest On Long-Term Debt $30,559,947 Amortization of Debt Discount and Expense 337,723 Amortization of Loss on Reacquired Debt 670,246 Other Interest Expense 308,257 (Less) Allow for Borrowed Funds Used during Const. 356,915 Net Interest Charges $31,519,258 Net Income $64,432,820

44 Docket No. Rule Statement B Page 3 of 4 MDU RESOURCES GROUP, INC. NONCONSOLIDATED INCOME STATEMENT SIX MONTHS ENDING JUNE 30, 2017 Operating Income Electric Utility Operating Revenues $162,249,479 Operating Expenses: Operation Expenses $85,708,127 Maintenance Expenses 10,779,581 Depreciation Expenses 23,222,167 Taxes Other Than Income Taxes 7,350,782 Income Taxes: Federal Taxes on Income (7,245,313) State Taxes on Income (1,292) Deferred Income Taxes 9,333,963 Total Electric Expenses $129,148,015 Net Electric Operation $33,101,464 Gas Utility Operating Revenues $153,062,400 Operating Expenses: Operation Expenses $122,019,876 Maintenance Expenses 3,004,622 Depreciation Expenses 9,923,536 Taxes Other Than Income Taxes 4,880,724 Income Taxes: Federal Taxes on Income 4,231,377 State Taxes on Income 436,279 Deferred Income Taxes (886,265) Total Gas Expenses $143,610,149 Net Gas Operation $9,452,251 Net Utility Operating Income $42,553,715 Revenues from Merchandising, Jobbing and Contract Work $48,007 (Less) Costs and Exp. Of Merch., Jobbing and Contract Work 31,712 Revenues from Nonutility Operations 3,407,543 (Less) Expense from Nonutility Operations 1,719,377 Equity in Earnings of Subsidiary Companies 46,745,739 Interest and Dividend Income 1,024,017 Allowance for Other Funds Used During Construction 135,311 Miscellaneous Nonoperating Income 21,453 Gain on Disposition of Property 187,704 Total Other Income $49,818,685 Loss on Disposition of Property $30,925 Miscellaneous Income Deductions (1,380,758) Total Other Income Deductions ($1,349,833)

45 Docket No. Rule Statement B Page 4 of 4 MDU RESOURCES GROUP, INC. NONCONSOLIDATED INCOME STATEMENT SIX MONTHS ENDING JUNE 30, 2017 Taxes other than Income Taxes $63,196 Income Taxes - Federal (1,118,054) Income Taxes - State (473,385) Provision for Deferred Income Taxes 750,504 Investment Tax Credits (239,449) Total Taxes on Other Income and Deductions ($538,290) Net Other Income and Deductions $51,706,808 Interest On Long-Term Debt $15,321,217 Amortization of Debt Discount and Expense 170,180 Amortization of Loss on Reacquired Debt 312,143 Other Interest Expense 121,250 (Less) Allow for Borrowed Funds Used during Const. 203,926 Net Interest Charges $15,720,864 Net Income $78,539,659

46 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF PLANT IN SERVICE FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2016 Average Pro Forma Pro Forma Function 12/31/ /31/ /31/2016 Adjustment 1/ 12/31/2017 Distribution $92,501,357 $96,881,640 $94,691,499 $4,684,337 $99,375,836 General 6,974,561 12,829,189 9,901,875 3,729,881 13,631,756 General Intangible 447, , ,496 60, ,437 Common 10,843,067 5,305,309 8,074,188 (2,680,460) 5,393,728 Common Intangible 8,866,426 8,772,316 8,819, ,276 9,075,647 Total $119,632,462 $124,240,395 $121,936,429 $6,050,975 $127,987,404 1/ See Rule , Statement C, pages 3-4. Docket No. Rule Statement C Page 1 of 4

47 MONTANA-DAKOTA UTILITIES CO. PLANT IN SERVICE FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2016 Average Pro Forma Average Additions Pro Forma Function 12/31/ /31/ /31/2016 to Plant 1/ 12/31/ /31/2017 Adjustment Distribution $92,501,357 $96,881,640 $94,691,499 $4,988,393 $101,870,033 $99,375,836 $4,684,337 General 6,974,561 12,829,189 9,901,875 1,605,134 14,434,323 13,631,756 3,729,881 General Intangible 447, , , , , ,437 60,941 Common 10,843,067 5,305,309 8,074, ,838 5,482,147 5,393,728 (2,680,460) Common Intangible 8,866,426 8,772,316 8,819, ,663 9,378,979 9,075, ,276 Total $119,632,462 $124,240,395 $121,936,429 $7,494,019 $131,734,414 $127,987,404 $6,050,975 1/ See Rule , Statement C, pages 4-6. Docket No. Rule Statement C Page 2 of 4

48 MONTANA-DAKOTA UTILITIES CO. PLANT IN SERVICE FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2016 ADJUSTMENT A Pro Forma Average Average Acct. Plant No. Account 12/31/ /31/ /31/2016 Additions 1/ 12/31/ /31/2017 Adjustment Distribution Plant Land $15,962 $15,962 $15,962 $15,962 $15, Rights of Way 22,846 22,846 22,846 22,846 22, Structures & Improvements 228, , , , ,248 $13, Mains 35,591,191 37,034,463 36,312,827 $2,190,000 39,224,463 38,129,463 1,816, Meas. & Reg. Equip.-General 660, , ,775 57, , ,952 66, Meas. & Reg. Equip.-City Gate 125, , , , , Services 29,259,589 31,316,527 30,288,058 1,540,000 32,856,527 32,086,527 1,798, Meters 21,726,438 22,310,042 22,018, ,805 23,132,847 22,721, , Service Regulators 2,903,130 3,006,598 2,954, ,654 3,163,252 3,084, , Ind. Meas. & Reg. Station Eqpt. 313, , , , ,819 10, Cathodic Protection Equip. 1,536,261 1,600,117 1,568, ,740 1,820,857 1,710, , Other Distribution Equip. 117, , , , ,408 3,493 Total Distribution Plant $92,501,357 $96,881,640 $94,691,499 $4,988,393 $101,870,033 $99,375,836 $4,684,337 General Plant 389 Land $7,131 $858,877 $433,004 $858,877 $858,877 $425, Structures and Improvements 449,416 4,715,194 2,582,305 $5,251 4,720,445 4,717,820 $2,135, Office Furniture and Fixtures 39, , ,076 6, , ,080 79, Computer Equip. - PC 41,819 87,007 64,413 87,007 87,007 22, Transport. Equip.-Trailers 119, , , , ,205 (51) Transport. Equip.-Vehicles 2,687,192 2,734,204 2,710, ,089 3,167,293 2,950, , Stores Equipment 14,254 14,254 14,254 14,254 14, Tools, Shop & Garage Equip. 885,366 1,107, , ,326 1,445,453 1,276, , Vehicle Maintenance Equip. 5,924 36,373 21,148 36,373 36,373 15, Laboratory Equipment 29,467 27,164 28,316 27,164 27,164 (1,152) Work Equipment Trailers 210, , , , ,078 26, Power Operated Equip. 2,062,517 2,154,157 2,108, ,946 2,961,103 2,557, , Radio Comm. Equip.-Fixed 287, , ,414 14, , ,266 17, Radio Comm. Equip.-Mobile 123, , , , ,350 2, Telephone and Telex Equip. 58,294 29,147 58,294 58,294 29, Miscellaneous Equipment 12,424 28,320 20,372 28,320 28,320 7,948 Docket No. Rule Statement C Page 3 of 4

49 MONTANA-DAKOTA UTILITIES CO. PLANT IN SERVICE FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2016 ADJUSTMENT A Pro Forma Average Average Acct. Plant No. Account 12/31/ /31/ /31/2016 Additions 1/ 12/31/ /31/2017 Adjustment Total General Plant $6,974,561 $12,829,189 $9,901,875 $1,605,134 $14,434,323 $13,631,756 $3,729, Intangible Plant - General $447,051 $451,941 $449,496 $116,991 $568,932 $510,437 $60,941 Common Plant 389 Land $976,785 $134,489 $555,637 ($18,416) $116,073 $125,281 ($430,356) 390 Structures and Improvements 7,004,842 2,834,764 4,919,803 10,445 2,845,209 2,839,986 (2,079,817) Office Furniture and Fixtures 400, , ,386 14, , ,236 (94,150) Computer Equip.-PC 213, , ,080 21, , ,981 (18,099) Computer Equip.-Other 270, , , , ,291 (10,529) Transport. Equip.-Trailers 233 7,155 3,694 7,155 7,155 3, Transport. Equip.-Vehicles 861, , ,694 78, , ,367 (3,327) Aircraft 406, , , , ,522 (15,213) 393 Stores Equipment 29,224 20,738 24,981 20,738 20,738 (4,243) Tools, Shop & Garage Equip. 65,365 57,059 61,212 3,253 60,312 58,686 (2,526) Vehicle Maint. Equip. 35,268 5,370 20,319 5,370 5,370 (14,949) Vehicle Refueling Equip. 1, (38) Radio Comm. Equip.-Fixed 193, , ,080 65, , ,445 20, Radio Comm. Equip.-Mobile 134, , , , ,603 4, General Tele. Comm. Equip. 115,278 59,173 87,226 1,850 61,023 60,098 (27,128) Supervisory & Tele. Equip. 2,509 2,321 2,415 2,321 2,321 (94) Network Equipment 4,375 10,837 7,606 10,837 10,837 3, Miscellaneous Equipment 127, , , , ,880 (11,443) Total Common Plant $10,843,067 $5,305,309 $8,074,188 $176,838 $5,482,147 $5,393,728 ($2,680,460) 303 Intangible Plant - Common $8,866,426 $8,772,316 $8,819,371 $606,663 $9,378,979 $9,075,647 $256,276 Total Gas Plant in Service $119,632,462 $124,240,395 $121,936,429 $7,494,019 $131,734,414 $127,987,404 $6,050,975 1/ See Rule , Statement C, pages 4-6. Docket No. Rule Statement C Page 4 of 4

50 MONTANA-DAKOTA UTILITIES CO. DETAILED COST OF PLANT GAS UTILITY FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2016 Acct. No. Account 12/31/15 Additions Retirements Transfers 12/31/16 Distribution Plant Land $1,016,239 $45,437 $10,875 $1,072, Rights of Way 431, ,100 (10,875) 675, Structures & Improvements 842, ,848 ($2,645) 1,223, Mains 205,779,701 6,555,480 (605,695) (32,922) 211,696, Meas. & Reg. Equip.-General 3,438, , (1,338) 3,672, Meas. & Reg. Equip.-City Gate 6,204, ,419 (8,268) 5,150 6,639, Services 94,007,382 6,524,405 (410,494) 23, ,144, Positive Meters 70,002,134 2,597,855 (417,093) 72,182, Service Regulators 9,356, ,216 (56,446) 9,729, Ind. Meas. & Reg. Station Eqpt. 1,276,281 90,104 (3,815) 2,074 1,364, Misc. Property on Customer Premise 1,680 1, Other Property on Cust. Premise 113, , Cathodic Protection Equip. 3,157, ,640 (26,825) 3,284, Other Distribution Equip. 663,051 36,631 (15,090) 684,592 Total Distribution Plant $396,291,173 $17,744,125 ($1,546,349) ($3,398) $412,485,551 General Plant 389 Land $1,519,439 $866,497 $2,385, Structures and Improvements 8,943,375 59,003 (1,777) 4,339,789 13,340, Furniture and Fixtures 288,341 4,120 (1,115) 156, , Computer Equip. - PC 363,388 (86,841) 49, , Trans. Equip., Non-Unitized 456,602 (13,283) 443, Trans. Equip., Unitized 9,713,348 1,528,796 (1,270,125) (118,505) 9,853, Stores Equipment 57,183 57, Miscellaneous Tools - Utilized 2,982, ,100 10,594 3,562, Vehicle Maintenance Equipment 5,923 30,450 36, Laboratory Equipment 195,762 (2,167) 193, Work Equipment Trailers 804, ,235 (44,293) (7,782) 981, Power Operated Equip. 8,408,368 5,508,584 (5,342,618) (107,681) 8,466,653 Docket No. Rule Statement C Page 1 of 7

51 MONTANA-DAKOTA UTILITIES CO. DETAILED COST OF PLANT GAS UTILITY FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2016 Acct. No. Account 12/31/15 Additions Retirements Transfers 12/31/ Fixed Radio Comm. Equipment 995,297 70,309 (20,763) 33,184 1,078, Moblile Radio Comm. Equipment 392,159 10, , General Telephone Comm. Equipment 16,430 59,387 75, Miscellaneous Equipment 42,189 (1,371) 16,412 57,230 Total General Plant $35,185,142 $7,980,144 ($6,784,353) $5,328,293 $41,709, Intangible Plant - General 6,467,430 81,336 (5,886) 6,542,880 Common Plant - Gas 1/ 30,343,027 23,433,876 Common Intangible Plant 2/ 30,525,275 30,472,126 Acquisition Adjustment 97,266 97,266 Total Gas Plant in Service $498,909,313 $25,805,605 ($8,330,702) $5,319,009 $514,740,925 1/ Common plant is either directly assigned or allocated to gas and electric plant. Total common plant additions, retirements, transfers and adjustments for the twelve months ended December 31, 2016 are $4,004,540, ($6,890,958) and ($5,952,538) respectively. 2/ Common intangible plant is either directly assigned or allocated to gas and electric plant. Total common intangible plant additions for the twelve months ended December 31, 2016 are $1,332,919. Docket No. Rule Statement C Page 2 of 7

52 MONTANA-DAKOTA UTILITIES CO. BOOK CHANGES IN GAS PLANT IN SERVICE TWELVE MONTHS ENDING DECEMBER 31, 2016 Funding Construction Date Placed Beginning Major Major Ending Project Description Location Period In Service Balance Additions Retirements Transfers Balance $438,041,011 FP Main extension along 8th St, Dickinson ND 2/1/16-11/4/16 11/4/2016 $898,321 FP Replace Main along Bench Blvd, Billings MT 3/15/15-5/9/16 5/9/ ,296 FP Construct new TBS, Ross ND 1/4/16-11/7/16 11/7/ ,616 FP Replace Main along Orchard Lane, Billings MT 3/1/16-9/9/16 9/9/ ,267 FP Replace Services along Orchard Lane, Billings MT 3/1/16-9/9/16 9/9/ ,786 FP Extend IP Main along 51st Ave NE, Williston ND 12/1/13-9/7/16 9/7/ ,170 FP Replace Mains in southern Glasgow, Glasgow MT 5/19/16-12/15/16 12/15/ ,523 FP Construct new meter station at TBS, Ross ND 1/14/16-10/26/16 10/26/ ,943 FP Reconstruct and expand TBS, Epping ND 7/15/15-10/31/16 10/31/ ,419 Major Projects Subtotal 438,041,011 3,709,341 Miscellaneous Projects 22,096,264 (8,330,702) 5,319,009 Subtotal 438,041,011 25,805,605 (8,330,702) 5,319, ,834,923 Common Plant Allocated to Gas 60,868,302 53,906,002 Total Gas Plant $498,909,313 $514,740,925 Docket No. Rule Statement C Page 3 of 7

53 Docket No. Rule Statement C Page 4 of 7 MONTANA-DAKOTA UTILITIES CO PLANT ADDITIONS SUMMARY Montana Distribution $4,988,393 General Other $359,848 Structures & Improvements 5,251 Computer Equipment 0 Vehicles 433,089 Work Equipment 806,946 Total General $1,605,134 General Intangible $116,991 Common Other $66,590 Structures & Improvements 10,445 Computer Equipment 21,679 Vehicles 78,124 Work Equipment 0 Total Common Plant $176,838 Common Intangible $606,663 Total Additions $7,494,019

54 MONTANA-DAKOTA UTILITIES CO PLANT ADDITIONS Funding Project Acct. # Description Montana Region Distribution FP Gas Mains Replace $150,000 Rocky Mountain FP Gas Mains Replace 40,000 Badlands FP System Safety & Integrity - Mains 2,000,000 FP Gas Measuring & Regulating Equipment 11,960 Rocky Mountain FP Gas Measuring & Regulating Equipment 45,414 Badlands FP Gas Serv Lines Replace 150,000 Rocky Mountain FP Gas Serv Lines Replace 40,000 Badlands FP System Safety & Integrity - Services 1,350,000 FP Gas Meters 822,805 General Office FP Gas Regulators 156,654 General Office FP Industrial Measuring & Regulating Equipment 820 Badlands FP Gas Cathodic Protection 120,740 Rocky Mountain FP Gas Cathodic Protection 100,000 Badlands Total Distribution $4,988,393 General FP Replace Fire Alarm Panels, Billings, MT $487 Rocky Mountain FP Repair flood damage to office, Billings, MT 4,764 Rocky Mountain FP Office Equipment 6,646 Rocky Mountain FP Vehicles 433,089 General Office FP Tools and Minor Work Equipment 18,517 Rocky Mountain FP Tools and Minor Work Equipment 25,349 Badlands FP Purchase Kleiss Stopper Tool - Billings 210,000 FP Purchase Sensit Gold - Glendive 52,000 FP Purchase Sensit Gold - Wolf Point 30,000 FP Purchase Pipeline Current Mapper 2,460 General Office FP Power Operated Equipment 806,946 General Office FP Communication Equipment 14,876 Rocky Mountain Total General $1,605,134 General Intangible FP GMS Purchase Software $449 General Office FP Install RTU at West Glendive TBS 90,875 Badlands Docket No. Rule Statement C Page 5 of 7

55 MONTANA-DAKOTA UTILITIES CO PLANT ADDITIONS Funding Project Acct. # Description Montana Region Cyber Security Related: FP SCADA System Enhancements 25,667 General Office Total General Intangible $116,991 Common FP Sale of Land to NDDOT, Dickinson, ND ($18,416) Badlands FP Replace MDU Office Sign, Dickinson, ND 1,043 Badlands FP Replace Furnaces in Shop and Office, Glendive, MT 5,075 Badlands FP Replace warehouse sewer line to street - Baker, MT 782 Badlands FP Install Panel Board for Welding Bay, Dickinson, ND 214 Badlands FP Upgrade Security Cameras 526 General Office FP Replace Landscaping 2,805 General Office FP Toughbook Replacements 8,622 General Office FP Personal Computers & Peripherals 4,866 General Office FP Replace Data Center & Networking Equip. 8,137 General Office FP Scanning Units for Payment Processing 54 General Office FP Worksurfaces for Communications Depart. 331 Dakota Heartland FP Office Equipment 7,998 Badlands FP Office Equipment 6,199 General Office FP Vehicles 78,124 General Office FP Tools and Minor Work Equipment 1,534 General Office FP Tools and Minor Work Equipment 268 Badlands FP Tools and Minor Work Equipment 1,451 Badlands FP Upgrade CISCO VoIP 1,850 General Office FP Communication Equipment 20,055 Badlands FP Communication Equipment 32,789 General Office FP Purchase Radio Communications Facility 12,531 Badlands Total Common $176,838 Common - Intangible FP GL Essentials Software $81,071 General Office FP IVR Web Software 148,794 General Office FP Communications Equipment 3,675 General Office FP GIS Enhancements 27,765 General Office FP GIS Data Conversion 145,458 General Office FP CC&B Upgrade 55,673 General Office Docket No. Rule Statement C Page 6 of 7

56 MONTANA-DAKOTA UTILITIES CO PLANT ADDITIONS Funding Project Acct. # Description Montana Region FP PowerPlan Upgrade 1,459 General Office FP Human Capital Management Software 8,949 General Office FP PCAD Upgrade 67,006 General Office FP MDU Gates System migration to CC&B 24,829 General Office FP Payment Processing Software 8,198 General Office FP ThoughtSpot Implementation Project 33,786 General Office Total Common Intangible $606,663 Total Plant Additions $7,494,019 Docket No. Rule Statement C Page 7 of 7

57 Docket No. Rule Statement C Page 1 of 1 MONTANA-DAKOTA UTILITIES CO. METHODS AND PROCEDURES FOLLOWED IN CAPITALIZING THE ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION AND OTHER CONSTRUCTION OVERHEADS Montana-Dakota's Allowance for Funds Used During Construction (AFUDC) policy statement sets forth the procedure used to determine work order charges AFUDC should be applied to. 1. The AFUDC rate is calculated at the beginning of the accounting year and applied to work order balances, including AFUDC, each month. The estimated AFUDC rate will be reviewed quarterly. 2. Work order eligible for AFUDC application are those that provide construction duration of at least thirty (30) calendar days and a budget estimate of at least $25, AFUDC is applied to eligible work orders in the month following the first month any charges are applied to the work order. The current AFUDC policy became effective in August The changes in the policy were made to align the procedure with industry standards and to align the procedure at the companies within the MDU Resources Utility Group.

58 Docket No. Rule Statement C Page 1 of 1 MONTANA-DAKOTA UTILITIES CO. SIGNIFICANT CHANGES IN INTANGIBLE PLANT There have been no significant changes in Common, Electric, or Gas intangible plant during the year ending December 31, 2016.

59 Docket No. Rule Statement C Page 1 of 1 MONTANA-DAKOTA UTILITIES CO. WORKING PAPERS ON PLANT NOT USED & USEFUL Montana-Dakota has no such plant.

60 Docket No. Rule Statement C Page 1 of 1 MONTANA-DAKOTA UTILITIES CO. DESCRIPTION OF PROPERTY RECORDS The Company s Continuing Property Records are maintained in accordance with the Uniform System of Accounts as prescribed by the Federal Energy Regulatory Commission (FERC). The Plant Accounting System, which is computerized, records additions to utility plant at original cost (including overhead costs and an allowance for funds used during construction) through charges to work orders maintained in the Plant Accounting Construction Work in Progress (CWIP) System. As construction projects are completed and the plant is placed in service, the costs accumulated in related work orders are transferred to Account 106, Completed Construction Not Classified. When detailed work order information is available the costs are then transferred from Account 106 to the appropriate sub plant account of Account 101, Plant in Service. Such costs in Accounts 101 and 106 are recovered from utility customers through depreciation charges to cost of service. Upon retirement or other disposition of the plant property units, in the ordinary course of business, the original cost if transferred from Account 101 and charge to Account 108, Accumulated Provision for Depreciation of Utility Plant, plus or minus any net salvage.

61 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF ACCUMULATED RESERVE FOR DEPRECIATION FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2016 Average Pro Forma Pro Forma Function 12/31/ /31/ /31/2016 Adjustment 1/ 12/31/2017 Distribution $53,347,940 $56,366,171 $54,857,056 $3,447,925 $58,304,981 General 2,952,091 3,544,074 3,248, ,153 3,841,235 General Intangible 45, ,936 78,453 55, ,292 Common 3,220,613 2,380,796 2,800,705 (304,396) 2,496,309 Common Intangible 2,685,973 3,105,084 2,895, ,500 3,388,028 Total $62,252,587 $65,507,061 $63,879,824 $4,285,021 $68,164,845 1/ Page 2. Docket No. Rule Statement D Page 1 of 2

62 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF ACCUMULATED RESERVE FOR DEPRECIATION FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2016 ADJUSTMENT B Average Pro Forma Average Provision for Pro Forma Function 12/31/ /31/ /31/2016 Depreciation 1/ 12/31/ /31/2017 Adjustment Distribution $53,347,940 $56,366,171 $54,857,056 $3,877,620 $60,243,791 $58,304,981 $3,447,925 General 2,952,091 3,544,074 3,248, ,322 4,138,396 3,841, ,153 General Intangible 45, ,936 78,453 46, , ,292 55,839 Common 3,220,613 2,380,796 2,800, ,026 2,611,822 2,496,309 (304,396) Common Intangible 2,685,973 3,105,084 2,895, ,887 3,670,971 3,388, ,500 Total $62,252,587 $65,507,061 $63,879,824 $5,315,566 $70,822,627 $68,164,845 $4,285,021 1/ See Rule , Statement I, pages 3-4 for the provision for depreciation. Docket No. Rule Statement D Page 2 of 2

63 MONTANA-DAKOTA UTILITIES CO. BOOK CHANGES IN ACCUMULATED PROVISION FOR DEPRECIATION AND AMORTIZATION - GAS UTILITY FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2016 Beginning Ending Balance Annual Retirements Removal Reclass/ Balance Gas Utility 12/31/2015 Provision (Original Cost) Salvage Costs Adjustments 12/31/2016 Account Intangible $1,040,961 $445,681 ($182) $1,486,460 Account 108 Distribution 182,893,382 13,573,292 (1,546,349) 53,960 (769,650) (231) 194,204,404 General 13,394, ,877 (6,784,353) 3,213,568 (7,084) 894,659 11,507,726 Total Account ,287,441 14,370,169 (8,330,702) 3,267,528 (776,734) 894, ,712,130 Total $197,328,402 $14,815,850 ($8,330,702) $3,267,528 ($776,734) $894,246 $207,198,590 Common 1/ $9,991,663 $8,973,746 Common Intangible 1/ $10,084,189 $11,584,637 1/ Common Plant is assigned by state on an actual site and use basis when applicable, and the remainder is allocated by state to gas and electric on a plant in service basis. Total common changes for the twelve months ended December 31, 2016 are: Beginning Ending Balance Annual Retirements Removal Reclass/ Balance Common Utility 12/31/2015 Provision (Original Cost) Salvage Costs Adjustments 12/31/2016 Account 111 $21,477,251 $3,236,076 $24,713,327 Account ,076,006 2,935,213 (6,890,958) 1,274,174 (21,490) 1,803,023 26,175,968 Total Accounts 111 and 108 $48,553,257 $6,171,289 ($6,890,958) $1,274,174 ($21,490) $1,803,023 $50,889,295 Docket No. Rule Statement D Page 1 of 1

64 Docket No. Rule Statement D Page 1 of 1 MONTANA-DAKOTA UTILITIES CO. PROCEDURES FOLLOWED IN DEPRECIATING OR AMORTIZING PLANT AND RECORDING ABANDONMENT There has been no policy change with respect to the methodology employed or procedures followed in depreciating and amortizing plant investments and recording plant abandonments since the end of the year reported in the company's last FERC Form 1.

65 Docket No. Rule Statement D Page 1 of 1 MONTANA-DAKOTA UTILITIES CO. ALLOCATION OF OVERALL ACCUMULATED RESERVE ACCOUNTS TO FUNCTIONAL GROUPS OF PLANTS This schedule is not applicable because the Company provides and records its accumulated reserves for depreciation by functional groups of plant accounts.

66 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF WORKING CAPITAL AND OTHER DEDUCTIONS FOR THE TWELVE MONTHS ENDED DECEMBER 31, Pro Forma Pro Forma Working Capital 12/31/15 12/31/16 Average Adjustments Balances Adjustment Materials and Supplies $923,142 $824,176 $873,659 ($22,273) $851,386 C Gas in Underground Storage 3,853,449 4,353,773 4,103,611 (1,353,577) 2,750,034 D Prepayments Insurance 29,185 32,698 30,942 97, ,586 E Demand and Commodity 1,112,636 1,171,602 1,142,119 (450,166) 691,953 F Unamortized Loss on Debt 281, , ,556 (50,762) 192,794 G Provision for Pensions & Benefits 7,092,850 6,814,942 6,953,896 (138,954) 6,814,942 H Provision for Injuries & Damages (6,846) 22,148 7,651 14,497 22,148 I Unamort. Redemption Cost of Pref. Stock ,739 18,739 J Discontinued Service - Saco, MT , ,000 K Total Working Capital $13,285,477 $13,425,389 $13,355,434 ($1,784,852) $11,570,582 Customer Advances for Construction $1,798,426 $1,938,175 $1,868,301 $141,811 $2,010,112 O Docket No. Rule Statement E Page 1 of 1

67 Docket No. Rule Statement E Page 1 of 10 MONTANA-DAKOTA UTILITIES CO. MATERIALS AND SUPPLIES FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2016 ADJUSTMENT C Pro Forma Per Books Pro Forma 1/ Adjustment December 2015 $923,142 $824,176 January , ,308 February 860, ,820 March 839, ,826 April 877, ,501 May 856, ,105 June 899, ,052 July 879, ,707 August 938, ,326 September 939, ,366 October 864, ,620 November 842, ,035 December 824, ,176 Beginning and ending average $873,659 Thirteen month average $851,386 ($22,273) 1/ Reflects actual balances December 2015 through June July to December 2017 reflect per books 2016.

68 Docket No. Rule Statement E Page 2 of 10 MONTANA-DAKOTA UTILITIES CO. GAS IN UNDERGROUND STORAGE FOR THE TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT D Pro Forma Per Books Pro Forma 1/ Adjustment December 2015 $3,853,449 $4,353,773 January ,026,461 1,283,267 February 1,125,901 (118,959) March 820,242 (990,428) April 857,057 (812,494) May 1,929, ,047 June 3,123,127 1,842,830 July 4,444,834 3,536,060 August 5,637,847 5,193,355 September 6,600,127 6,580,515 October 7,228,943 6,658,378 November 6,864,186 5,331,919 December 4,353,773 2,532,176 Beginning and ending average $4,103,611 Thirteen month average $2,750,034 ($1,353,577) 1/ Reflects actual balances December 2015 through May June through December 2017 reflect expected storage injection and withdrawal volumes and forecasted pricing.

69 Docket No. Rule Statement E Page 3 of 10 MONTANA-DAKOTA UTILITIES CO. PREPAID INSURANCE FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2016 ADJUSTMENT E Pro Forma Per Books Pro Forma 1/ Adjustment December 2015 $29,185 $32,698 January , ,345 February 237, ,947 March 211, ,626 April 187, ,299 May 163, ,982 June 139, ,665 July 115, ,063 August 91, ,459 September 67,003 73,855 October 42,994 47,256 November 54,522 58,084 December 32,698 31,338 Beginning and ending average $30,942 Thirteen month average $128,586 $97,644 1/ Reflects actual balances December 2015 through June July to December reflects Pro Forma 2017 expenses.

70 Docket No. Rule Statement E Page 4 of 10 MONTANA-DAKOTA UTILITIES CO. PREPAID DEMAND AND COMMODITY CHARGES FOR THE TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT F Pro Forma Per Books Pro Forma 1/ Adjustment December 2015 $1,112,636 $1,171,602 January 2016 (173,651) (151,003) February (1,043,949) (1,123,991) March (1,555,004) (1,677,555) April (1,451,208) (1,574,555) May (770,463) (874,616) June 166,699 97,547 July 1,080,212 1,112,046 August 2,038,381 2,104,656 September 2,895,675 3,022,179 October 3,065,468 3,165,018 November 2,453,686 2,521,842 December 1,171,602 1,202,216 Beginning and ending average $1,142,119 Thirteen month average $691,953 ($450,166) 1/ Reflects actual balances December 2015 through June July to December 2017 are based on storage activity and average pricing.

71 Docket No. Rule Statement E Page 5 of 10 MONTANA-DAKOTA UTILITIES CO. UNAMORTIZED GAIN(LOSS) ON DEBT FOR THE TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT G Accumulated Deferred Loss on Debt Income Taxes Balance at December 31, 2015 $281,061 ($112,608) Balance at December 31, ,050 (82,778) Average Balance $243,556 ($97,693) 2017 Amortization (26,512) 10,719 Balance at December 31, 2017 $179,538 ($72,059) Average Balance at December 31, 2017 $192,794 ($77,419) Pro Forma Adjustment ($50,762) $20,274

72 Docket No. Rule Statement E Page 6 of 10 MONTANA-DAKOTA UTILITIES CO. PROVISION FOR PENSIONS AND BENEFITS ACCUMULATED DEFERRED INCOME TAXES ON PENSIONS FOR THE TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT H Provision DIT for Pensions on Pensions Total and Benefits and Benefits Balance at December 31, / 2/ $4,359,401 $7,092,850 ($2,733,449) Balance at December 31, / 2/ 4,123,425 6,814,942 (2,691,517) Average Balance $4,241,413 $6,953,896 ($2,712,483) Balance at December 31, ,123,425 6,814,942 (2,691,517) Average Balance $4,123,425 $6,814,942 ($2,691,517) Pro Forma Adjustment ($117,988) ($138,954) $20,966 1/ Allocated on Utility Factor 24 - Gross Plant. 2/ Allocated on Jurisdictional Factor 37 - Gas Gross Plant in Service.

73 Docket No. Rule Statement E Page 7 of 10 MONTANA-DAKOTA UTILITIES CO. PROVISION FOR INJURIES AND DAMAGES FOR THE TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT I Provision for DIT on Injuries and Injuries and Total Damages Damages Balance at December 31, / 2/ ($4,138) ($6,846) $2,708 Balance at December 31, / 2/ 13,784 22,148 (8,364) Average Balance $4,823 $7,651 ($2,828) Balance at December 31, ,784 22,148 (8,364) Average Balance $13,784 $22,148 ($8,364) Pro Forma Adjustment $8,961 $14,497 ($5,536) 1/ Allocated on Utility Factor 24 - Gross Plant. 2/ Allocated on Jurisdictional Factor 37 - Gas Gross Plant in Service.

74 Docket No. Rule Statement E Page 8 of 10 MONTANA-DAKOTA UTILITIES CO. UNAMORTIZED REDEMPTION OF PREFERRED STOCK COST FOR THE TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT J Unamortized Loss on Preferred Stock Balance at December 31, 2016 $0 Redemption cost on 6/30/17 1/ 2/ 20,077 Balance at December 31, 2017 $20,077 Average Balance 3/ $20,077 Amortization 4/ ($1,338) Pro Forma Adjustment $18,739 1/ Allocated on Utility Factor Average Rate Base. 2/ Allocated on Jurisdictional Factor Average Gas Rate Base. 3/ Balance not averaged to match treatment reflected in Capital Structure. 4/ Amortization period of 15 years.

75 Docket No. Rule Statement E Page 9 of 10 MONTANA-DAKOTA UTILITIES CO. DISCONTINUED SERVICE - SACO, MT FOR THE TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT K DIT on Discontinued Discontinued Total Service Service Balance at December 31, 2016 $0 $0 $0 Est. cost to discontinue service 1/ $181,837 $300,000 ($118,163) Amortization 2/ (60,612) (100,000) 39,388 Balance at December 31, 2017 $121,225 $200,000 ($78,775) Average Balance 60, ,000 (39,388) Pro Forma Adjustment $60,612 $100,000 ($39,388) 1/ Estimated cost: $5,000/customer x 41 customers, plus $95,000 to cut and cap pipelines. 2/ Amortization period of 3 years.

76 Docket No. Rule Statement E Page 10 of 10 MONTANA-DAKOTA UTILITIES CO. CUSTOMER ADVANCES FOR CONSTRUCTION FOR THE TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT O Pro Forma Per Books Pro Forma 1/ Adjustment December 2015 $1,798,426 $1,938,175 January ,782,479 1,932,152 February 1,786,985 1,963,402 March 1,786,691 1,956,270 April 1,820,427 2,004,960 May 1,840,138 2,042,374 June 1,839,844 2,042,018 July 1,862,681 2,042,018 August 1,901,841 2,042,018 September 1,920,917 2,042,018 October 1,924,285 2,042,018 November 1,926,145 2,042,018 December 1,938,175 2,042,018 Beginning and ending average $1,868, month average $2,010,112 $141,811 1/ Reflects actual balances December 2015 through June 2017.

77 Docket No. Rule Statement F Page 1 of 2 MONTANA-DAKOTA UTILITIES CO. UTILITY CAPITAL STRUCTURE TWELVE MONTHS ENDING DECEMBER 31, 2016 PRO FORMA 2017 Required Balance Ratio Cost Return Average Long Term Debt $575,451, % 5.448% 2.320% Short Term Debt 1/ 82,230, % 1.249% 0.076% Preferred Stock 15,308, % 4.581% 0.052% Common Equity 678,262, % 9.900% 4.969% Total $1,351,252, % 7.417% Pro Forma Average Long Term Debt $600,440, % 5.250% 2.243% Short Term Debt 1/ 73,107, % 2.216% 0.115% Preferred Stock 7,654, % 4.581% 0.025% Common Equity 724,059, % 9.900% 5.101% Total $1,405,261, % 7.484% Pro Forma Year End Balance Long Term Debt $630,435, % 5.177% 2.244% Short Term Debt 1/ 73,107, % 2.216% 0.111% Preferred Stock % 0.000% 0.000% Common Equity 750,748, % 9.900% 5.111% Total $1,454,291, % 7.466% 1/ Reflects average monthly balance.

78 Docket No. Rule Statement F Page 2 of 2 MONTANA-DAKOTA UTILITIES CO. AVERAGE UTILITY COMMON EQUITY TWELVE MONTHS ENDING DECEMBER 31, 2016 PRO FORMA 2017 Description Amount Common Equity - 12/31/2015 $2,381,505,155 Investment in Subsidiaries 1,722,350,774 Utility Common Equity - 12/31/2015 $659,154,381 Common Equity - 12/31/2016 $2,301,244,327 Investment in Subsidiaries 1,603,873,802 Utility Common Equity - 12/31/2016 $697,370,525 12/31/2016 $678,262,453 Common Equity - 12/31/2017 $2,357,074,938 Investment in Subsidiaries 1,606,326,776 Utility Common Equity - 12/31/2017 $750,748,162 12/31/2017 $724,059,344

79 Docket No. Rule Statement F Page 1 of 5 MONTANA-DAKOTA UTILITIES CO. AVERAGE LONG-TERM DEBT TWELVE MONTHS ENDING DECEMBER 31, 2016 PRO FORMA 2017 Adjusted Balance Annual Embedded Outstanding Cost Cost Balance at 12/31/2015 $580,000,000 $32,222, % Minot Air Force Base Payable 455,919 27, % Amortization of Gain/Loss 43,469 1/ Balance at 12/31/2015 $580,455,919 $32,292, % Balance at 12/31/2016 $570,000,000 $30,341, % Minot Air Force Base Payable 446,386 26, % Amortization of Gain/Loss 43,469 1/ 12/31/2016 $570,446,386 $30,411, % 12/31/2016 $575,451,153 $31,352, % Balance at 12/31/ ,000,000 32,567, % Minot Air Force Base Payable 435,420 26, % Amortization of Gain/Loss 43,469 1/ 12/31/17 $630,435,420 $32,636, % 12/31/2017 $600,440,903 $31,524, % 1/ Page 4.

80 MONTANA-DAKOTA UTILITIES CO. LONG-TERM DEBT CAPITAL DECEMBER 31, 2016 Loss on Reacquirement Redemption Principal Underwriters' Commission and Issuance Expense Date of Date of Interest Amount Gross % Gross % Gross Description Issuance Maturity Rate of Issue Proceeds Amount Proceeds Amount Proceeds Unsecured Long-Term Debt: 5.98% - Senior Note 12/15/ /15/ % $30,000,000 $30,000,000 $624, % % 6.33% - Senior Note 8/24/2006 8/24/ % 100,000, ,000, , % 10,532, % 6.04% - Senior Note 9/16/2008 9/16/ % 100,000, ,000, , % % 5.18% - Senior Note 4/15/2014 4/15/ % 50,000,000 50,000, , % % 4.24% - Senior Note 7/15/2014 7/15/ % 60,000,000 60,000, , % % 4.34% - Senior Note 7/15/2014 7/15/ % 40,000,000 40,000, , % % 3.78% - Senior Note 10/29/ /30/ % 87,000,000 87,000, , % % 4.87% - Senior Note 10/29/ /30/ % 11,000,000 11,000,000 59, % % 4.03% - Senior Note 12/10/ /10/ % 52,000,000 52,000, , % % 4.15% - Senior Note 11/21/ /21/ % 40,000,000 40,000, , % % Total Long-Term Debt Capital $570,000,000 $570,000,000 $3,102,337 $10,532,009 Net Proceeds Cost of Principal Embedded Description Amount Per Unit Money 1/ Outstanding Annual Cost Cost Unsecured Long-Term Debt: 5.98% - Senior Note $29,375, % 6.210% $30,000,000 $1,863, % - Senior Note 89,123, % 7.514% 100,000,000 7,514, % - Senior Note 99,637, % 6.181% 100,000,000 6,181, % - Senior Note 49,760, % 5.280% 50,000,000 2,640, % - Senior Note 59,708, % 4.346% 60,000,000 2,607, % - Senior Note 39,802, % 4.442% 40,000,000 1,776, % - Senior Note 86,528, % 3.883% 87,000,000 3,378, % - Senior Note 10,940, % 4.964% 11,000, , % - Senior Note 51,713, % 4.122% 52,000,000 2,143, % - Senior Note 39,773, % 4.228% 40,000,000 1,691,200 Total Long-Term Debt Capital $556,365,654 $570,000,000 $30,341, % 1/ Yield to maturity based upon the life, net proceeds and semiannual compounding of stated interest rate. Docket No. Rule Statement F Page 2 of 5

81 MONTANA-DAKOTA UTILITIES CO. LONG-TERM DEBT CAPITAL DECEMBER 31, 2017 Loss on Reacquirement Redemption Principal Underwriters' Commission and Issuance Expense Date of Date of Interest Amount Gross % Gross % Gross Description Issuance Maturity Rate of Issue Proceeds Amount Proceeds Amount Proceeds Unsecured Long-Term Debt 5.98% - Senior Note 12/15/ /15/ % $30,000,000 $30,000,000 $624, % % 6.33% - Senior Note 8/24/2006 8/24/ % 100,000, ,000, , % 10,532, % 6.04% - Senior Note 9/16/2008 9/16/ % 100,000, ,000, , % % 5.18% - Senior Note 4/15/2014 4/15/ % 50,000,000 50,000, , % % 4.24% - Senior Note 7/15/2014 7/15/ % 60,000,000 60,000, , % % 4.34% - Senior Note 7/15/2014 7/15/ % 40,000,000 40,000, , % % 3.78% - Senior Note 10/29/ /30/ % 87,000,000 87,000, , % % 4.87% - Senior Note 10/29/ /30/ % 11,000,000 11,000,000 59, % % 4.03% - Senior Note 12/10/ /10/ % 52,000,000 52,000, , % % 4.15% - Senior Note 11/21/ /21/ % 40,000,000 40,000, , % % 3.73% - Senior Note 3/21/2017 3/31/ % 40,000,000 40,000, , % 0.000% 3.36% - Senior Note 3/21/2017 3/ % 20,000,000 20,000,000 86, % % Total Long-Term Debt Capital $630,000,000 $630,000,000 $3,360,533 $10,532,009 Net Proceeds Cost of Principal Embedded Description Amount Per Unit Money 1/ Outstanding Annual Cost Cost Unsecured Long-Term Debt 5.98% - Senior Note 29,375, % 6.210% 30,000,000 1,863, % - Senior Note 89,123, % 7.514% 100,000,000 7,514, % - Senior Note 99,637, % 6.181% 100,000,000 6,181, % - Senior Note 49,760, % 5.280% 50,000,000 2,640, % - Senior Note 59,708, % 4.346% 60,000,000 2,607, % - Senior Note 39,802, % 4.442% 40,000,000 1,776, % - Senior Note 86,528, % 3.883% 87,000,000 3,378, % - Senior Note 10,940, % 4.964% 11,000, , % - Senior Note 51,713, % 4.122% 52,000,000 2,143, % - Senior Note 39,773, % 4.228% 40,000,000 1,691, % - Senior Note 39,827, % 3.795% 40,000,000 1,518, % - Senior Note 19,913, % 3.539% 20,000, ,800 Total Long-Term Debt Capital $616,107,458 $630,000,000 $32,567, % Docket No. Rule Statement F Page 3 of 5 1/ Yield to maturity based upon the life, net proceeds and semiannual compounding of stated interest rate.

82 Docket No. Rule Statement F Page 4 of 5 MONTANA-DAKOTA UTILITIES CO. AMORTIZATION OF LOSS ON REACQUIRED DEBT TWELVE MONTHS ENDING DECEMBER 31, 2016 PRO FORMA 2017 Acct Unamortized Loss Amortization PCN Notes Loss/Unamortized Expense $43,469 PCN Notes Loss/Unamortized Expense ,469 PCN Notes Loss/Unamortized Expense ,469

83 Docket No. Rule Statement F Page 5 of 5 MONTANA-DAKOTA UTILITIES CO. AVERAGE SHORT-TERM DEBT TWELVE MONTHS ENDING DECEMBER 31, 2016 PRO FORMA 2017 Balance Annual Average Outstanding Cost Cost 2016 Average Balance 1/ $82,230,080 $677, % Amortization of Fees 2/ 350,004 Total $82,230,080 $1,027, % Pro Forma 2017 Average Balance 1/ $73,107,435 $1,269, % Amortization of Fees 2/ 350,611 Total $73,107,435 $1,620, % 1/ Twelve month average balance. 2/ Negotiation and commitment fees.

84 Docket No. Rule Statement F Page 1 of 3 MONTANA-DAKOTA UTILITIES CO. AVERAGE PREFERRED STOCK TWELVE MONTHS ENDING DECEMBER 31, 2016 PRO FORMA 2017 Adjusted Balance Annual Embedded Description Outstanding Cost Cost Balance at 12/31/2015 $15,308,600 $701, % 2016 Redemptions: 5.1% Series Balance at 12/31/2016 $15,308,600 $701, % 12/31/2016 $15,308,600 $701, % 2017 Redemptions: 4.5% Series (10,000,000) % 4.7% Series (5,000,000) % 5.1% Series (308,600) % Balance at 12/31/2017 $0 $ % 12/31/2017 $7,654,300 $350, %

85 MONTANA-DAKOTA UTILITIES CO. PREFERRED STOCK CAPITAL DECEMBER 31, 2016 Call Gross Underwriters' Commission Issuance Expense Date of (Redemption) Dividend Par Value Proceeds % Gross % Gross Description Issuance Price Rate of Issue (000's) Amount Proceeds Amount Proceeds 4.5% Series 01/01/51 $ % $100 $10, % Series 12/07/ % 100 5, % Series 05/23/61 100/ % 100 5,000 $25, % $27, % Net Proceeds December 31, 2016 Method Amount Cost of Principal Annual Embedded of Description (000's) Per Unit Money 1/ 2/ Outstanding Cost Cost Offering 4.5% Series $10, % 4.500% $10,000,000 $450,000 Public 4.7% Series 5, % 4.700% 5,000, ,000 Public 5.1% Series 4, % 5.285% 308,600 16,310 Private Total $15,308,600 $701, % 1/ Yield to maturity based upon the life, net proceeds, and quarterly compounding of the stated dividend rate of each issue. 2/ 4.5% Series and 4.7% Series issue expense fully recovered. Docket No. Rule Statement F Page 2 of 3

86 MONTANA-DAKOTA UTILITIES CO. PREFERRED STOCK CAPITAL DECEMBER 31, 2017 Call Gross Underwriters' Commission Issuance Expense Date of (Redemption) Dividend Par Value Proceeds % Gross % Gross Description Issuance Price Rate of Issue (000's) Amount Proceeds Amount Proceeds 4.5% Series 01/01/51 $ % $100 $10, % Series 12/07/ % 100 5, % Series 05/23/61 100/ % 100 5,000 $25, % $27, % Net Proceeds December 31, 2017 Method Amount Cost of Principal Annual Embedded of Description (000's) Per Unit Money 1/ 2/ Outstanding Cost Cost Offering 4.5% Series $10, % 4.500% $0 $0 Public 4.7% Series 5, % 4.700% 0 0 Public 5.1% Series 4, % 5.285% 0 0 Private Total $0 $ % 1/ Yield to maturity based upon the life, net proceeds, and quarterly compounding of the stated dividend rate of each issue. 2/ 4.5% Series and 4.7% Series issue expense fully recovered. Docket No. Rule Statement F Page 3 of 3

87 MDU RESOURCES GROUP INC. EQUITY (COMMON STOCK) ISSUANCE Acquisition Equity Draw Down Employee Stock Exercise/Awards 1/ Flotation Flotation Flotation Shares Period Shares Dollars Costs Shares Dollars Costs Shares Dollars Costs Outstanding Beginning Balance 189,332,485 Jan ,332,485 Feb-12 11, ,711 25, , ,369,450 Mar ,369,450 Apr ,369,450 May ,369,450 Jun ,369,450 Jul ,369,450 Aug ,369,450 Sep ,369,450 Oct ,369,450 Nov ,369,450 Dec ,369,450 Jan ,369,450 Feb ,369,450 Mar ,369,450 Apr ,369,450 May ,369,450 Jun ,369,450 Jul ,369,450 Aug ,369,450 Sep ,369,450 Oct ,369,450 Nov ,369,450 Dec ,330 14,701, ,868,780 Jan-14 1,624 50, ,870,404 Feb ,617 4,516, ,330,021 Mar-14 1,508,699 50,877, ,838,720 Apr ,861 10,305, ,141,581 May ,312 16,473, ,631,893 Jun-14 1,506,761 50,675, ,138,654 Jul ,747 10,401, ,441,401 Aug-14 99,157 3,111, ,540,558 Sep-14 7, , ,548,389 Oct-14 97,469 2,672, ,645,858 Nov-14 48,100 1,237, ,693,958 Docket No. Rule Statement F Page 1 of 2

88 MDU RESOURCES GROUP INC. EQUITY (COMMON STOCK) ISSUANCE Acquisition Equity Draw Down Employee Stock Exercise/Awards 1/ Flotation Flotation Flotation Shares Period Shares Dollars Costs Shares Dollars Costs Shares Dollars Costs Outstanding Dec-14 60,854 1,398, ,754,812 Jan ,146 4,637, ,950,958 Feb-15 58,849 1,276, ,009,807 Mar ,322 3,970, ,191,129 Apr ,747 2,583, ,309,876 May-15 54,198 1,111, ,364,074 Jun-15 47, , ,411,301 Jul ,377 3,666, ,602,678 Aug ,987 3,759, ,804,665 Sep ,804,665 Oct ,804,665 Nov ,804,665 Dec ,804,665 Jan ,804,665 Feb-16 38, ,843,297 Mar ,843,297 Apr ,843,297 May ,843,297 Jun ,843,297 Jul ,843,297 Aug ,843,297 Sep ,843,297 Oct ,843,297 Nov ,843,297 Dec ,843,297 Totals 11, , ,499, ,179,892-1/ Includes 401(k), Dribble and DRIP purchases beginning 7/1/06. Docket No. Rule Statement F Page 2 of 2

89 MDU RESOURCES GROUP, INC. STOCK DIVIDENDS, STOCK SPLITS OR CHANGES IN PAR OR STATED VALUE FOR THE FIVE-YEAR PERIOD ENDING DECEMBER 31, 2016 Docket No. Rule Statement F Page 1 of 1 MDU Resources Group, Inc. did not issue shares in connection with a stock split or stock dividend during the five years ended December 2016.

90 MDU RESOURCES GROUP, INC. COMMON STOCK DATA FOR THE FIVE YEARS ENDED DECEMBER 31, 2016 Avg. Number Annual of Shares Diluted Annual Dividend/ Average Price/ Dividend/ Outstanding Earnings Dividends Earnings Market Earnings Price (000's) (per share) 1/ (per share) Ratio Price 2/ Ratio Ratio Year Ended December 31: , % % , % % , % % , % % , % % Twelve Months: January , % % February 195, % % March 195, % % April 195, % % May 195, % % June 195, % % July 195, % % August 195, % % September 195, % % October 195, % % November 195, % % December 195, % % 1/ Annual diluted earnings (per share) before discontinued operations. January - May 2016 not restated for discontinued operations. 2/ The average market price is based on monthly high and low for the year. Docket No. Rule Statement F Page 1 of 1

91 Docket No. Rule Statement F Page 1 of 1 MONTANA-DAKOTA UTILITIES CO. REACQUISITION OF BONDS OR PREFERRED STOCK PRO FORMA 2017 For the 18-month period prior to the filing, Montana-Dakota has reacquired the following: First Mortgage Bonds Retired September 30, 2016: $25,000,000, 6.61% Senior Unsecured Note due September 30, 2016 $25,000,000, 6.66% Senior Unsecured Note due September 30, 2016 No gain or loss was incurred. Preferred Stock On April 1, 2017, Montana-Dakota reacquired all outstanding preferred stock: Principal Reacquisition Amount Cost Loss 4.5% Series $10,000,000 $10,500,000 $500, % Series 5,000,000 5,100, , % Series 308, ,886 26,286 Total $15,308,600 $15,934,886 $626,286 The loss on reacquisition of preferred stock is not deductible for tax purposes.

92 Docket No. Rule Statement G Page 1 of 3 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF OPERATION AND MAINTENANCE EXPENSES FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2016 Pro Forma Montana Adjustments Pro Forma Cost of Gas $33,821,847 $9,755,417 $43,577,264 Other Gas Supply 208,060 5, ,751 Distribution 4,776, ,728 5,043,768 Customer Accounts 2,157, ,976 2,288,090 Customer Service & Infor. 80,602 1,127 81,729 Sales 88,224 (31,906) 56,318 Administrative and General 4,764,007 79,406 4,843,413 Total O&M Expenses $45,895,894 $10,208,439 $56,104,333

93 Docket No. Rule Statement G Page 2 of 3 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF OPERATION AND MAINTENANCE EXPENSES FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2016 Account Pro Forma No. Description Per Books Adjustments Pro Forma Other Gas Supply Expenses 804 Natural Gas City Gate Purchases $35,286, Purchased Gas Cost Adjustments (345,372) Gas Withdrawn from Storage 6,126, Gas Delivered to Storage (7,246,203) 813 Other Gas Supply Expenses 208,060 Total Other Gas Supply Expenses $34,029,907 $9,761,108 $43,791,015 Distribution Expenses Operation 870 Supervision and Engineering $609, Distribution Load Dispatching 6, Mains and Services 1,449, Measuring & Reg. Station Exp. - General 42, Measuring & Reg. Station Exp. - Industrial 12, Meters and House Regulators 407, Customer Installations 422, Other Expenses 1,018, Rents 38,013 Total Operation Expenses $4,006,116 Maintenance 885 Supervision & Engineering $211, Structures & Improvements 9, Mains 36, Measuring & Reg. Station Exp. - General 51, Measuring & Reg. Station Exp. - Industrial 37, Services 72, Meters and House Regulators 143, Other Equipment 207,677 Total Maintenance Expenses $769,924 Total Distribution Expenses $4,776,040 $267,728 $5,043,768

94 Docket No. Rule Statement G Page 3 of 3 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF OPERATION AND MAINTENANCE EXPENSES FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2016 Account Pro Forma No. Description Per Books Adjustments Pro Forma Customer Accounts Expenses Operation 901 Supervision $68, Meter Reading Expenses 174, Customer Records and Collection Exp. 1,628, Uncollectible Accounts 235, Misc. Customer Accounts Expenses 49,858 Total Customer Accounts Expenses $2,157,114 $130,976 $2,288,090 Customer Service & Information Expenses Operation 907 Supervision $26, Customer Assistance Expenses 5, Informational and Instructional Expenses 48, Misc. Customer Service & Info. Exp. (1) Total Customer Service & Info. Exp. $80,602 $1,127 $81,729 Sales Expenses Operation 911 Supervision $ Demonstrating and Selling Expenses 52, Advertising Expenses 33, Misc. Sales Expenses 2,086 Total Sales Expenses $88,224 ($31,906) $56,318 Administrative & General Expenses Operation 920 Administrative and General Salaries $1,252, Office Supplies and Expenses 702, Outside Services Employed 100, Property Insurance 113, Injuries and Damages 299, Employee Pensions and Benefits 1,637, Regulatory Commission Expenses 203, Miscellaneous General Expenses 132, Rents 215,986 Total Operation Expenses $4,657,460 Maintenance 935 Maintenance of General Plant $106,547 Total Maintenance Expenses $106,547 Total Administrative & General Expenses $4,764,007 $79,406 $4,843,413 Total Operation & Maintenance Expenses $45,895,894 $10,208,439 $56,104,333

95 MONTANA-DAKOTA UTILITIES CO. OPERATION & MAINTENANCE EXPENSE TWELVE MONTHS ENDING DECEMBER 31, 2016 PRO FORMA Vehicles & Cost of Work Company Uncollectible Function Pro Forma Gas Labor Benefits Equipment Consumption Accounts Cost of Gas $43,577,264 $43,577,264 Other Gas Supply 213,751 $166,948 $1,300 Distribution 5,043,768 3,539, ,247 $45,229 Customer Accounting 2,288,090 1,365,113 46, ,036 Customer Service 81,729 30, Sales 56,318 46,032 1,288 Administrative & General 4,843,413 1,348,450 $1,613,881 14,426 28,304 Total Other O&M 12,527, ,497,336 1,613, ,244 73, ,036 Total O&M $56,104,333 $43,577,264 $6,497,336 $1,613,881 $481,244 $73,533 $303,036 Adjustment No Page No Docket No. Rule Statement G Page 1 of 17

96 MONTANA-DAKOTA UTILITIES CO. OPERATION & MAINTENANCE EXPENSE TWELVE MONTHS ENDING DECEMBER 31, 2016 PRO FORMA Function Cost of Gas Other Gas Supply Distribution Customer Accounting Customer Service Sales Administrative & General Total Other O&M Total O&M Adjustment No. Page No. Regulatory Subcontract Software Industry Commission All Other Advertising Labor Maintenance Insurance Dues Expense O&M $656 $3,755 $41, ,850 45, ,533 49,587 59, ,216 $47,923 2,088 4,703 4, , ,394 $365,673 $42,207 $99, ,600 47,923 1,007, , ,673 42,207 99,161 1,645,824 $47,923 $1,007,113 $350,138 $365,673 $42,207 $99,161 $1,645, Docket No. Rule Statement G Page 2 of 17

97 Docket No. Rule Statement G Page 3 of 17 MONTANA-DAKOTA UTILITIES CO. COST OF GAS ADJUSTMENT NO. 5 Dk Adjusted Pro Forma Pro Forma for Distribution Commodity Cost Dk Sales 1/ Losses 2/ Charge 3/ of Gas Residential 5,968,846 6,012,133 $4.303 $25,870,208 Firm General Service 3,937,862 3,966, ,067,505 Small Interruptible 142, , ,016 Large Interruptible 57,372 57, ,535 Total 10,106,628 10,179,923 $43,577,264 Per Books Cost of Gas 33,821,847 Pro Forma Adjustment $9,755,417 1/ Rule , Statement H, page 2. 2/ Distribution loss factor of.72%. 3/ May 2017 gas cost tracking adjustment adjusted to reflect annual commodity costs.

98 Docket No. Rule Statement G Page 4 of 17 MONTANA-DAKOTA UTILITIES CO. LABOR EXPENSE TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT NO. 6 Per Books Pro Forma Gas Utility Montana Pro Forma 1/ Adjustment Other Gas Supply $592,316 $161, ,948 $5,145 Distribution 13,661,869 3,430,750 3,539, ,098 Customer Accounting 4,297,498 1,323,040 1,365,113 42,073 Customer Service 315,030 29,991 30, Sales 138,116 44,613 46,032 1,419 A&G 5,036,403 1,306,891 1,348,450 41,559 Total $24,041,232 $6,297,088 $6,497,336 $200,248 1/ Reflects an overall increase of 3.18%.

99 Docket No. Rule Statement G Page 5 of 17 MONTANA-DAKOTA UTILITIES CO. BENEFITS EXPENSE TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT NO. 7 Per Books Pro Forma Gas Utility Montana Pro Forma Adjustment Medical/Dental $2,783,800 $758, ,308 1/ $54,625 Pension expense 406, , ,530 2/ (22,127) Post-retirement (92,232) (51,148) (121,354) 2/ (70,206) 401-K 2,519, , ,554 3/ 22,456 Workers compensation 159,230 53,865 55,610 3/ 1,745 Other Benefits 74,251 20,567 21,233 3/ 666 Total $5,851,112 $1,626,722 $1,613,881 ($12,841) 1/ Pro Forma increase of 7.20% based on effective premiums for / Pro Forma based on 2017 Actuarial expense decrease of 14.59% for pension and a % decrease for post-retirement. 3/ Pro Forma reflects the straight time labor increase of 3.24%.

100 Docket No. Rule Statement G Page 6 of 17 MONTANA-DAKOTA UTILITIES CO. VEHICLES AND WORK EQUIPMENT TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT NO. 8 Per Books Pro Forma Gas Utility Montana Pro Forma 1/ Adjustment Other Gas Supply $2,759 $754 $1,300 $546 Distribution 1,040, , , ,141 Customer Accounting 93,012 26,818 46,210 19,392 Customer Service 6, Sales 3, , A&G 34,015 8,365 14,426 6,061 Total $1,180,792 $279,236 $481,244 $202,008 1/ Based on pro forma plant and proposed depreciation rates.

101 Docket No. Rule Statement G Page 7 of 17 MONTANA-DAKOTA UTILITIES CO. COMPANY CONSUMPTION TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT NO. 9 Per Books - Total Pro Forma Gas Utility Montana Pro Forma Adjustment Distribution $236,021 $38,392 $45,229 $6,837 A&G 98,322 24,255 28,304 4,049 Total $334,343 $62,647 $73,533 $10,886 Per Books - Electric Pro Forma Gas Utility Montana Pro Forma 1/ Adjustment Distribution $118,369 $18,556 $21,543 $2,987 A&G 81,125 19,907 23,112 3,205 Total Electric $199,494 $38,463 $44,655 $6,192 Per Books - Gas Pro Forma Gas Utility Montana Pro Forma 2/ Adjustment Distribution $117,652 $19,836 $23,686 $3,850 A&G 17,197 4,348 5, Total Gas $134,849 $24,184 $28,878 $4,694 1/ Reflects volumes at current rates. 2/ Reflects normalized volumes at current rates.

102 Docket No. Rule Statement G Page 8 of 17 MONTANA-DAKOTA UTILITIES CO. UNCOLLECTIBLE ACCOUNTS TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT NO. 10 Per Books Pro Forma Gas Utility Montana Pro Forma 1/ Adjustment Customer Accounting $720,399 $235,536 $303,036 $67,500 Total $720,399 $235,536 $303,036 $67,500 1/ Based on 3 year average of write-offs to revenues applied to pro forma revenues. Total Pro Forma Sales & Transportation Revenue $68,871,816 Three-Year Average Write-Offs 0.44% Pro Forma Uncollectible Accounts $303,036

103 Docket No. Rule Statement G Page 9 of 17 MONTANA-DAKOTA UTILITIES CO. ADVERTISING TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT NO. 11 Per Books Pro Forma Gas Utility Montana Pro Forma 1/ Adjustment Customer Service $192,232 $48,073 $47,923 ($150) Sales 117,574 33,870 0 (33,870) A&G 86,939 10,735 0 (10,735) Total Advertising $396,745 $92,678 $47,923 ($44,755) 1/ Eliminates promotional and institutional advertising expenses and informational expenses not applicable to Montana gas operations.

104 Docket No. Rule Statement G Page 10 of 17 MONTANA-DAKOTA UTILITIES CO. SUBCONTRACT LABOR TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT NO. 12 Per Books Pro Forma Gas Utility Montana Pro Forma Adjustment Other Gas Supply $2,402 $656 $656 $0 Distribution 2,792, , ,850 1/ (28,707) Customer Accounts 158,628 49,587 49,587 0 Sales 15,181 4,703 4,703 0 A&G 718, , ,317 0 Total Subcontract Labor $3,687,231 $1,035,820 $1,007,113 ($28,707) 1/ Pro Forma reflects a decrease in leak survey costs (four year cycle) and an increase in locating costs.

105 Docket No. Rule Statement G Page 11 of 17 MONTANA-DAKOTA UTILITIES CO. SOFTWARE MAINTENANCE TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT NO. 13 Per Books Pro Forma Gas Utility Montana Pro Forma 1/ Adjustment Other Gas Supply $13,746 $3,755 $3,755 $0 Distribution 161,227 39,702 45,061 5,359 Customer Accounts 187,120 57,917 59,928 2,011 A&G 537, , , ,034 Total Software Maintenance $899,813 $241,734 $350,138 $108,404 1/ Pro Forma based on current and estimated levels.

106 Docket No. Rule Statement G Page 12 of 17 MONTANA-DAKOTA UTILITIES CO. INSURANCE EXPENSE FOR THE TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT NO. 14 Per Books Pro Forma Gas Utility Montana Pro Forma 1/ Adjustment Director's & Officer's Liability Insurance $114,670 $26,161 29,556 $3,395 Excess Liability Fiduciary & Employee Benefits Liability 24,542 5,599 6, Public Liab. & Property Damage of Others 689, , ,386 26,085 Employee Practice Liability 14,534 3,316 0 (3,316) All Risk 490, , ,658 (1,169) Blanket Crime 5,863 1,338 1, Special Contingency Self Insurance 31,324 7,146 33,966 26,820 Total $1,370,962 $312,778 $365,673 $52,895 1/ Adjusted to reflect insurance expense at current levels.

107 Docket No. Rule Statement G Page 13 of 17 MONTANA-DAKOTA UTILITIES CO. INDUSTRY DUES TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT NO. 15 Per Books Pro Forma Montana Pro Forma Adjustment American Gas Association $19,421 $23,973 1/ $4,552 Big Sky Economic Development 2,500 2,500 1/ 0 Billings Industrial Revitalization Chamber of Commerce-Baker 2/ / 48 Chamber of Commerce-Billings 2/ 3,850 1,947 1/ (1,903) Chamber of Commerce-Glasgow 2/ / 60 Chamber of Commerce-Hardin 2/ / (100) Chamber of Commerce-Laurel 2/ / 96 Chamber of Commerce-Malta 2/ / (136) Chamber of Commerce-Miles City 2/ / (200) Chamber of Commerce-Sidney 2/ / 132 Chamber of Commerce-Wolf Point 2/ / (285) Common Ground Alliance / 188 Dawson County Economic Development Electronic Technicians Assoc Energy Solutions Center 1,711 1,742 1/ 31 Home Builders Association of Billings / 467 Midwest Energy Association 2,560 3,930 1/ 1,370 Midwest Region Gas Task Force Miles City Area Economic Development Council Montana Water Resources Association / 0 NILE (Northern International Livestock Exposition) Richland Economic Development 660 2,640 1/ 1,980 Utility Solid Waste Activities Group / (3) Utility Telecom Council Other 3/ 4,456 0 (4,456) Total Industry Dues $40,366 $42,207 $1,841 1/ Pro Forma reflects actual amount through June 30, / Pro Forma reflects the elimination of lobbying expenses as a percentage (40%) of annual dues per Docket No. D / Dues not applicable to Montana gas operations.

108 Docket No. Rule Statement G Page 14 of 17 MONTANA-DAKOTA UTILITIES CO. REGULATORY COMMISSION EXPENSE TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT NO. 16 Per Books Pro Forma Montana Pro Forma Adjustment Rate Case Expense 1/ $184,747 $72,177 ($112,570) Recurring Level of Expense 15,973 22,531 6,558 Depreciation Study Expense 2/ 2,898 4,453 1,555 Regulatory Commission Expense $203,618 $99,161 ($104,457) 1/ Reflects a three year amortization of rate case expense. 2/ Expenses related to the Common and Gas depreciation studies. Amortized over five years.

109 Docket No. Rule Statement G Page 15 of 17 MONTANA-DAKOTA UTILITIES CO. OTHER O&M TWELVE MONTHS ENDING DECEMBER 31, 2016 Per Books Items Adjusted Other Function O & M Individually O&M Other Gas Supply $208,060 $166,968 $41,092 Distribution 4,776,040 4,548, ,533 Customer Accounting 2,157,114 1,692, ,216 Customer Service & Information 80,602 78,514 2,088 Sales 88,224 83,929 4,295 Administrative and General 4,764,007 3,857, ,600 Total Other O&M $12,074,047 $10,428,223 $1,645,824

110 MONTANA-DAKOTA UTILITIES CO. OPERATION & MAINTENANCE EXPENSE TWELVE MONTHS ENDING DECEMBER 31, 2016 PER BOOKS Vehicles & Cost of Work Company Uncollectible Function Per Books Gas Labor Benefits Equipment Consumption Accounts Cost of Gas $33,821,847 $33,821,847 Other Gas Supply 208,060 $161,803 $754 Distribution 4,776,040 3,430, ,106 $38,392 Customer Accounting 2,157,114 1,323,040 26,818 $235,536 Customer Service 80,602 29, Sales 88,224 44, Administrative & General 4,764,007 1,306,891 $1,626,722 8,365 24,255 Total Other O&M $12,074,047 $0 $6,297,088 $1,626,722 $279,236 $62,647 $235,536 Total O&M $45,895,894 $33,821,847 $6,297,088 $1,626,722 $279,236 $62,647 $235,536 Docket No. Rule Statement G Page 16 of 17

111 MONTANA-DAKOTA UTILITIES CO. OPERATION & MAINTENANCE EXPENSE TWELVE MONTHS ENDING DECEMBER 31, 2016 PER BOOKS Function Cost of Gas Other Gas Supply Distribution Customer Accounting Customer Service Sales Administrative & General Total Other O&M Total O&M Regulatory Total items Subcontract Software Industry Commission adjusted Other Advertising Labor Maintenance Insurance Dues Expense individually O&M $33,821,847 $656 $3, ,968 $41, ,557 39,702 4,548, ,533 49,587 57,917 1,692, ,216 $48,073 78,514 2,088 33,870 4,703 83,929 4,295 10, , ,360 $312,778 $40,366 $203,618 3,857, ,600 $92,678 $1,035,820 $241,734 $312,778 $40,366 $203,618 $10,428,223 $1,645,824 $92,678 $1,035,820 $241,734 $312,778 $40,366 $203,618 $44,250,070 $1,645,824 Docket No. Rule Statement G Page 17 of 17

112 Docket No. Rule Statement G Page 1 of 1 MONTANA-DAKOTA UTILITIES CO. COST OF GAS - GAS UTILITY FOR THE TWELVE MONTHS ENDING DECEMBER 31, 2016 The cost of gas for the twelve months ending December 31, 2016 is on Rule , Statement G, page 1. The adjusted cost of gas is on Rule , Statement G, page 3.

113 Docket No. Rule Statement G Page 1 of 2 MONTANA-DAKOTA UTILITIES CO. ADMINISTRATIVE AND GENERAL OPERATION AND MAINTENANCE EXPENSES GAS UTILITY FOR THE TWELVE MONTHS ENDING DECEMBER 31, 2016 Administrative and general operation and maintenance expenses by account are shown on Rule , Statement G, page 2 and 3. See Rule , Statement G, page 2 for advertising expense detail. See Rule for details on intercompany transactions.

114 Docket No. Rule Statement G Page 2 of 2 MONTANA-DAKOTA UTILITIES CO. ADVERTISING EXPENSE TWELVE MONTHS ENDING DECEMBER 31, 2016 Gas Utility Montana Informational - Acct Radio $33,627 $7, Newspaper 6,069 1, Television 54,982 9, Other 97,554 29,805 Total 192,232 48,073 Promotional - Acct Radio $10,080 $ Newspaper 5,096 2, Television Other 101,948 31,509 Total 117,574 33,870 Institutional - Acct Radio $8,289 $ Newspaper 9, Television Other 68,983 10,192 Total 86,939 10,735 Total Advertising $396,745 $92,678 Summary Radio 51,996 7,377 Newspaper 20,530 4,603 Television 55,734 9,192 Other 268,485 71,506 Total $396,745 $92,678

115 Company Name: Montana-Dakota Utilities Co. SCHEDULE 6 AFFILIATE TRANSACTIONS - PRODUCTS & SERVICES PROVIDED TO UTILITY - GAS Year: 2016 (a) (b) (c) (d) (e) (f) Line Charges % Total Charges to No. Affiliate Name Products & Services Method to Determine Price to Utility Affil. Revs. MT Utility 1 KNIFE RIVER CORPORATION Expense Actual Costs Incurred 2 Contract Services $0 $0 3 Materials Capital Actual Costs Incurred 6 Contract Services 30,470 2,625 7 Materials 15,257 15,257 8 Miscellaneous Other 11 Balance Sheet Accts 2,306, Resources Cost Centers 13, Total Knife River Corporation Operating Revenues for the Year 2016 $1,874,270, Excludes Intersegment Eliminations 17 TOTAL Grand Total Affiliate Transactions $2,366, % $18, WBI HOLDINGS, INC. Natural Gas Actual Costs Incurred 19 Purchases/Transportation $49,436,254 $14,191, Expense Actual Costs Incurred 22 Contract Services 37,792 11, Materials 6,422 2, Miscellaneous 9,066 2, Capital Actual Costs Incurred 27 Contract Services 450, Materials 50,510 32, Miscellaneous (1) Other 32 Balance sheet accounts 172, Resources Cost Centers 28, Total WBI Operating Revenues for the Year 2016 $141,506, Excludes Intersegment Eliminations 38 TOTAL Grand Total Affiliate Transactions $50,191, % $14,239,005 Docket No. Rule Statement G Page 1 of 19

116 Company Name: Montana-Dakota Utilities Co. SCHEDULE 6 AFFILIATE TRANSACTIONS - PRODUCTS & SERVICES PROVIDED TO UTILITY - GAS Year: 2016 (a) (b) (c) (d) (e) (f) Line Charges % Total Charges to No. Affiliate Name Products & Services Method to Determine Price to Utility Affil. Revs. MT Utility 1 MDU CONSTRUCTION 2 SERVICES GROUP, INC. Expense Actual Costs Incurred 3 Material $267 ($63) 4 5 Capital Actual Costs Incurred 6 Contract Services 132,057 23,735 7 Material Other Actual Costs Incurred 10 Resources Cost Centers 30, Balance Sheet Accounts 274, Total MDU Construction Services Group, Inc Operating Revenues for the Year 2016 $1,073,272, Excludes Intersegment Eliminations 16 TOTAL Grand Total Affiliate Transactions $437, % $23,672 Docket No. Rule Statement G Page 2 of 19

117 Company Name: Montana-Dakota Utilities Co. SCHEDULE 6 AFFILIATE TRANSACTIONS - PRODUCTS & SERVICES PROVIDED TO UTILITY - GAS Year: 2016 (a) (b) (c) (d) (e) (f) Line Charges % Total Charges to No. Affiliate Name Products & Services Method to Determine Price to Utility Affil. Revs. MT Utility 1 CENTENNIAL HOLDINGS Expense 1/ Various Corporate Overhead 2 CAPITAL, LLC Contract Services Allocation Factors and/or $167,467 $38,207 3 Corporate Aircraft Actual Costs Incurred 19,707 6,802 4 Office Expense 242,532 55,332 5 Miscellaneous 523, , Capital 8 Corporate Aircraft Actual Costs Incurred 1, Other 11 Resources Cost Centers 139, Balance Sheet Accounts 3,881, Total Centennial Holdings Capital, LLC Operating Revenues for the Year 2016 $8,643, Excludes Intersegment Eliminations 16 TOTAL Grand Total Affiliate Transactions $4,975, % $220,159 Docket No. Rule Statement G Page 3 of 19

118 Company Name: Montana-Dakota Utilities Co. SCHEDULE 6 AFFILIATE TRANSACTIONS - PRODUCTS & SERVICES PROVIDED TO UTILITY - GAS Year: 2016 (a) (b) (c) (d) (e) (f) Line Charges % Total Charges to No. Affiliate Name Products & Services Method to Determine Price to Utility Affil. Revs. MT Utility 1 MDU ENERGY CAPITAL Expense Actual Costs Incurred 2 Cost of Service $368,632 $84,101 3 Office Expenses 4,903 1,395 4 Payroll 183,895 42,452 5 Other 8,022 1, Capital Actual Costs Incurred 8 Contract Services 49,937 10,660 9 Other Other Transactions/Reimbursements Actual Costs Incurred 12 Clearing (3,989) 0 13 Balance Sheet Accounts 19, Other Total MDU Energy Capital Operating Revenues for the Year 2016 $527,205, TOTAL Grand Total Affiliate Transactions $631, % $140,523 1/Corporate overhead allocation factors are derived from the invested capital balance as a percentage of the total corporate invested capital. Montana-Dakota Utilities Co. cost of service amounts are calculated for the general office complex, the printing department, and the budget and forecast system. The general office complex amounts are payroll and floor space costs for employees that perform services for MDU Resources. These include accounts payable, general accounting, fixed asset accounting, and miscellaneous other services. The charges are based on the percentage of system users that are MDU Resources employees. Both the general office complex and amounts for MDU Resources are allocated to affiliated companies based on corporate overhead allocation factors. The printing department amount is allocated to affiliated companies based on the direct printing images processed for them and their percentage of the corporate overhead allocation for the corporate printed image amount. Docket No. Rule Statement G Page 4 of 19

119 Company Name: Montana-Dakota Utilities Co. SCHEDULE 7 AFFILIATE TRANSACTIONS - PRODUCTS & SERVICES PROVIDED BY UTILITY Year: 2016 (a) (b) (c) (d) (e) (f) Charges % Total Revenues Affiliate Name Products & Services Method to Determine Price to Affiliate Affil. Exp. to MT Utility 1 KNIFE RIVER MDU RESOURCES GROUP, INC. 2 CORPORATION Corporate Overhead 1/ Various Corporate Overhead Allocation 3 Audit Costs Factors, Time Studies and/or Actual $69,607 4 Advertising Costs Incurred 33,771 5 Air Service 15,925 6 Automobile 1,883 7 Bank Services 85,752 8 Corporate Aircraft 15,977 9 Consultant Fees 255, Contract Services 809, Computer Rental Directors Expenses 698, Employee Benefits 29, Employee Meeting 1, Employee Reimbursable Expense 26, Express Mail - 17 Insurance - 18 Legal Retainers & Fees 237, Moving Allowance - 20 Meal Allowance Cash Donations 20, Meals & Entertainment 21, Industry Dues & Licenses 21, Office Expenses 21, Supplemental Insurance (333,756) 26 Permits & Filing Fees 7, Postage Payroll 5,139, Reimbursements (690) 30 Reference Materials 38, Rental Seminars & Meeting Registrations 15, Software Maintenance 418, Telephone/Cell Expenses 97, Training 7, Total MDU Resources Group, Inc. $7,754, % Line No. Docket No. Rule Statement G Page 5 of 19

120 Company Name: Montana-Dakota Utilities Co. SCHEDULE 7 AFFILIATE TRANSACTIONS - PRODUCTS & SERVICES PROVIDED BY UTILITY Year: 2016 (a) (b) (c) (d) (e) (f) Charges % Total Revenues Affiliate Name Products & Services Method to Determine Price to Affiliate Affil. Exp. to MT Utility 1 KNIFE RIVER MONTANA-DAKOTA UTILITIES CO. 2 CORPORATION Other Direct Charges Actual Costs Incurred 3 Contract Services $59,073 4 Communications 258,819 5 Employee Discounts 17,244 6 Dues, Permits, and Filing Fees 61,150 7 Legal 19,800 8 Sponsorship 49,070 9 Electric Consumption 207, Gas Consumption 158,532 $21, Bank Fees 31, Computer/Software Support 1,170, Office Expense 22, Cost of Service 717, , Audit Costs 700, Auto Travel 15, Employee Benefits 63, Total Montana-Dakota Utilities Co. $3,553, % $181, OTHER TRANSACTIONS/REIMBURSEMENTS Actual Costs Incurred Federal & State Tax Liability Payments $70,204, Miscellaneous Reimbursements (590,992) Total Other Transactions/Reimbursements $69,613, % Grand Total Affiliate Transactions $80,921, % $181,835 Line No Total Knife River Corporation Operating Expenses for 2016-Excludes Intersegment Eliminations $1,695,551,000 Docket No. Rule Statement G Page 6 of 19

121 Company Name: Montana-Dakota Utilities Co. SCHEDULE 7 AFFILIATE TRANSACTIONS - PRODUCTS & SERVICES PROVIDED BY UTILITY Year: 2016 KNIFE RIVER CORPORATION 1/Corporate overhead allocation factors are derived from the invested capital balance as a percentage of the total corporate invested capital. Montana-Dakota Utilities Co. cost of service amounts are calculated for the general office complex, the printing department, and the budget and forecast system. The general office complex amounts are payroll and floor space costs for employees that perform services for MDU Resources. These include accounts payable, general accounting, fixed asset accounting, and miscellaneous other services. The charges are based on the percentage of system users that are MDU Resources employees. Both the general office complex and amounts for MDU Resources are allocated to affiliated companies based on corporate overhead allocation factors. The printing department amount is allocated to affiliated companies based on the direct printing images processed for them and their percentage of the corporate overhead allocation for the corporate printed image amount. Docket No. Rule Statement G Page 7 of 19

122 Company Name: Montana-Dakota Utilities Co. SCHEDULE 7 AFFILIATE TRANSACTIONS - PRODUCTS & SERVICES PROVIDED BY UTILITY Year: 2016 (a) (b) (c) (d) (e) (f) Charges % Total Revenues Affiliate Name Products & Services Method to Determine Price to Affiliate Affil. Exp. to MT Utility 1 WBI ENERGY, INC. MDU RESOURCES GROUP, INC. 2 Corporate Overhead 1/ Various Corporate Overhead 3 Audit Costs Allocation Factors, Time $46,010 4 Advertising Studies and/or Actual Costs 22,276 5 Air Service Incurred 4,975 6 Automobile 1,090 7 Bank Services 56,686 8 Corporate Aircraft 10,297 9 Consultant Fees 169, Contract Services 244, Computer Rental Directors Expenses 461, Employee Benefits 19, Employee Meeting Employee Reimbursable Expense 12, Express Mail - 17 Insurance - 18 Legal Retainers & Fees 157, Moving Allowance - 20 Meal Allowance Cash Donations 13, Meals & Entertainment 13, Industry Dues & Licenses 14, Office Expenses 12, Supplemental Insurance (220,719) 26 Permits & Filing Fees 4, Postage Payroll 3,377, Reimbursements (456) 30 Reference Materials 25, Rental Seminars & Meeting Registrations 10, Software Maintenance 268, Telephone/Cell Expenses 74, Training 5, Total MDU Resources Group, Inc. $4,804, % Line No. Docket No. Rule Statement G Page 8 of 19

123 Docket No. Rule Statement G Page 9 of 19 Company Name: Montana-Dakota Utilities Co. SCHEDULE 7 AFFILIATE TRANSACTIONS - PRODUCTS & SERVICES PROVIDED BY UTILITY Year: 2016 (a) (b) (c) (d) (e) (f) Line Charges % Total Revenues No. Affiliate Name Products & Services Method to Determine Price to Affiliate Affil. Exp. to MT Utility 1 WBI ENERGY, INC. MONTANA-DAKOTA UTILITIES CO. 2 Other Direct Charges Actual Costs Incurred 3 Audit Costs $307,741 4 Auto Bank Fees 14,719 6 Communication Services 32,906 7 Computer/Software Support 388,087 8 Contract Services 200,587 9 Utility/Merchandise Discounts 23, Dues, Permits, and Filing Fees 86, Misc Employee Benefits 261, Electric Consumption 397,280 $250, Gas Consumption 30,381 18, Cost of Service 158,427 35, Legal Fees 10, Office Expense 15, Sponsorship 32, Training Registration - 19 Travel 14, Total Montana-Dakota Utilities Co. 1,975, % $304,097

124 Company Name: Montana-Dakota Utilities Co. SCHEDULE 7 AFFILIATE TRANSACTIONS - PRODUCTS & SERVICES PROVIDED BY UTILITY Year: 2016 (a) (b) (c) (d) (e) (f) Line Charges % Total Revenues No. Affiliate Name Products & Services Method to Determine Price to Affiliate Affil. Exp. to MT Utility 1 WBI ENERGY, INC. 2 3 OTHER TRANSACTIONS/REIMBURSEMENTS Actual Costs Incurred 4 5 Federal & State Tax Liability Payments $18,754,677 6 Miscellaneous Reimbursements (93,573) 7 Total Other Transactions/Reimbursements $18,661, % 8 9 Grand Total Affiliate Transactions $25,440, % $304, Total WBI Energy Operating Expenses for Excludes Intersegment Eliminations $101,903,000 1/Corporate overhead allocation factors are derived from the invested capital balance as a percentage of the total corporate invested capital. Montana-Dakota Utilities Co. cost of service amounts are calculated for the general office complex, the printing department, and the budget and forecast system. The general office complex amounts are payroll and floor space costs for employees that perform services for MDU Resources. These include accounts payable, general accounting, fixed asset accounting, and miscellaneous other services. The charges are based on the percentage of system users that are MDU Resources employees. Both the general office complex and amounts for MDU Resources are allocated to affiliated companies based on corporate overhead allocation factors. The printing department amount is allocated to affiliated companies based on the direct printing images processed for them and their percentage of the corporate overhead allocation for the corporate printed image amount. Docket No. Rule Statement G Page 10 of 19

125 Company Name: Montana-Dakota Utilities Co. SCHEDULE 7 AFFILIATE TRANSACTIONS - PRODUCTS & SERVICES PROVIDED BY UTILITY Year: 2016 (a) (b) (c) (d) (e) (f) Line Charges % Total Revenues No. Affiliate Name Products & Services Method to Determine Price to Affiliate Affil. Exp. to MT Utility 1 MDU CONSTRUCTION MDU RESOURCES GROUP, INC. 2 SERVICES GROUP INC Corporate Overhead 1/ Various Corporate Overhead 3 Audit Costs Allocation Factors, Time $24,800 4 Advertising Studies and/or Actual Costs 12,222 5 Air Service Incurred 17,186 6 Automobile Bank Services 30,455 8 Corporate Aircraft 6,257 9 Consultant Fees 91, Contract Services 160, Computer Rental Directors Expenses 248, Employee Benefits 10, Employee Meeting Employee Reimbursable Expense 17, Express Mail - 17 Insurance - 18 Legal Retainers & Fees 84, Moving Allowance - 20 Meal Allowance 8 21 Cash Donations 7, Meals & Entertainment 10, Industry Dues & Licenses 7, Office Expenses 11, Supplemental Insurance (115,419) 26 Permits & Filing Fees 2, Postage Payroll 2,063, Reimbursements (249) 30 Reference Materials 13, Rent Seminars & Meeting Registrations 6, Software Maintenance 232, Telephone/Cell Expenses 58, Training 3, Total MDU Resources Group, Inc. $3,007, % Docket No. Rule Statement G Page 11 of 19

126 Company Name: Montana-Dakota Utilities Co. SCHEDULE 7 AFFILIATE TRANSACTIONS - PRODUCTS & SERVICES PROVIDED BY UTILITY Year: 2016 (a) (b) (c) (d) (e) (f) Line Charges % Total Revenues No. Affiliate Name Products & Services Method to Determine Price to Affiliate Affil. Exp. to MT Utility 1 MDU CONSTRUCTION Intercompany Settlements Actual Costs Incurred 2 SERVICES GROUP INC Audit Costs $474,742 3 Auto 8,200 4 Bank Fees 71,569 5 Communication Services 140,226 6 Computer/Software Support 797,751 7 Contract Services 54,246 8 Cost of Service 234,644 $52,500 9 Electric Consumption - 10 Gas Consumption 3,144 3, Legal 1, Dues, Permits, and Filing Fees 41, Misc Employee Benefits 263, Office Expense 22, Payroll 1,250, Sponsorship 17, Travel 19, Total Montana-Dakota Utilities Co. $3,399, % $55, OTHER TRANSACTIONS/REIMBURSEMENTS Actual Costs Incurred 22 Federal & State Tax Liability Payments $15,171, Miscellaneous Reimbursements (435,737) Total Other Transactions/Reimbursements $14,735, % Grand Total Affiliate Transactions $21,143, % $55, Total MDU Construction Services Group, Inc. Operating Expenses for 2016 $1,019,567, Excludes Intersegment Eliminations 1/Corporate overhead allocation factors are derived from the invested capital balance as a percentage of the total corporate invested capital. Montana-Dakota Utilities Co. cost of service amounts are calculated for the general office complex, the printing department, and the budget and forecast system. The general office complex amounts are payroll and floor space costs for employees that perform services for MDU Resources. These include accounts payable, general accounting, fixed asset accounting, and miscellaneous other services. The charges are based on the percentage of system users that are MDU Resources employees. Both the general office complex and amounts for MDU Resources are allocated to affiliated companies based on corporate overhead allocation factors. The printing department amount is allocated to affiliated companies based on the direct printing images processed for them and their percentage of the corporate overhead allocation for the corporate printed image amount. Docket No. Rule Statement G Page 12 of 19

127 Company Name: Montana-Dakota Utilities Co. SCHEDULE 7 AFFILIATE TRANSACTIONS - PRODUCTS & SERVICES PROVIDED BY UTILITY Year: 2016 (a) (b) (c) (d) (e) (f) Line Charges % Total Revenues No. Affiliate Name Products & Services Method to Determine Price to Affiliate Affil. Exp. to MT Utility 1 CENTENNIAL ENERGY MONTANA-DAKOTA UTILITIES CO. 2 RESOURCES INT 3 Other Direct Charges Actual costs incurred 4 Dues, Permits, and Filing Fees $550 5 Bank Fees 2, Intercompany Settlements Actual costs incurred 10 Dues, Permits, and Filing Fees Total Montana-Dakota Utilities Co. $3, % $ OTHER TRANSACTIONS/REIMBURSEMENTS Actual costs incurred 14 Federal & State Tax Liability Payments $852, Total Other Transactions/Reimbursements $852, % $ Grand Total Affiliate Transactions $855, % $ Total Centennial Energy Resources International Operating Expenses for 2016 $71, Excludes Intersegment Eliminations Docket No. Rule Statement G Page 13 of 19

128 Company Name: Montana-Dakota Utilities Co. SCHEDULE 7 AFFILIATE TRANSACTIONS - PRODUCTS & SERVICES PROVIDED BY UTILITY Year: 2016 (a) (b) (c) (d) (e) (f) Line Charges % Total Revenues No. Affiliate Name Products & Services Method to Determine Price to Affiliate Affil. Exp. to MT Utility 1 CENTENNIAL HOLDINGS MONTANA-DAKOTA UTILITIES CO. 2 CAPITAL CORP. AND Direct and Intercompany charges Actual costs incurred 3 FUTURESOURCE Bank Fees $1,169 4 Contract Services Materials 566,488 6 Office Expense 27,368 7 Travel - 8 Electric Consumption 173,418 9 Gas Consumption 10, Payroll 364, Legal Dues, Permits, and Filing Fees Miscellaneous Total Montana-Dakota Utilities Co. $1,145, % $0 17 OTHER TRANSACTIONS/REIMBURSEMENTS 18 Miscellaneous Reimbursements ($9,140) 19 Federal & State Tax Liability Payments 2,933, Total Other Transactions/Reimbursements $2,924, % $ Grand Total Affiliate Transactions $4,069, % $ Total CHCC Operating Expenses for 2016 $4,990, Excludes Intersegment Eliminations Docket No. Rule Statement G Page 14 of 19

129 Company Name: Montana-Dakota Utilities Co. SCHEDULE 7 AFFILIATE TRANSACTIONS - PRODUCTS & SERVICES PROVIDED BY UTILITY Year: 2016 (a) (b) (c) (d) (e) (f) Charges % Total Revenues Affiliate Name Products & Services Method to Determine Price to Affiliate Affil. Exp. to MT Utility 1 MDU ENERGY MDU RESOURCES GROUP, INC. 2 CAPITAL 2/ Corporate Overhead 1/ Various Corporate Overhead 3 Audit Costs Allocation Factors, Time $67,775 4 Advertising Studies and/or Actual Costs 33,135 5 Air Service Incurred 10,223 6 Automobile 1,543 7 Bank Services 82,567 8 Corporate Aircraft 14,138 9 Consultant Fees 254, Contract Services 294, Computer Rental Directors Expenses 675, Employee Benefits 26, Employee Meeting 1, Employee Reimbursable Expense 18, Express Mail - 17 Insurance - 18 Legal Retainers & Fees 234, Moving Allowance - 20 Meal Allowance Cash Donations 20, Meals & Entertainment 19, Industry Dues & Licenses 20, Office Expenses 13, Supplemental Insurance (291,688) 26 Permits & Filing Fees 6, Postage Payroll 4,411, Reimbursements (702) 30 Reference Materials 37, Rental Seminars & Meeting Registrations 13, Software Maintenance 248, Telephone/cell Expenses 42, Training 7, Total MDU Resources Group, Inc. $6,264, % Line No. Docket No. Rule Statement G Page 15 of 19

130 Company Name: Montana-Dakota Utilities Co. SCHEDULE 7 AFFILIATE TRANSACTIONS - PRODUCTS & SERVICES PROVIDED BY UTILITY Year: 2016 (a) (b) (c) (d) (e) (f) Line Charges % Total Revenues No. Affiliate Name Products & Services Method to Determine Price to Affiliate Affil. Exp. to MT Utility 1 MDU ENERGY MONTANA-DAKOTA UTILITIES CO. 2 CAPITAL 2/ Executive Departments 1/ Various Corporate Overhead 3 Automobile Allocation Factors, Cost of $464 4 Materials Service Factors, Time Studies 5 5 Employee Benefits and/or Actual Costs Incurred 12,598 6 Office Expenses 5,890 7 Contract Services 40,047 8 Payroll 1,138,989 9 Travel 58, Other 10, General & Administrative 1/ Various Corporate Overhead 13 Office Expenses Allocation Factors, Cost of Service Factors, Time Studies 15 and/or Actual Costs Incurred Other Miscellaneous Departments 18 Payroll 1/ Various Corporate Overhead 30, Travel Allocation Factors, Cost of 2, Office Expenses Service Factors, Time Studies Employee Benefits and/or Actual Costs Incurred Automobile Docket No. Rule Statement G Page 16 of 19

131 Company Name: Montana-Dakota Utilities Co. SCHEDULE 7 AFFILIATE TRANSACTIONS - PRODUCTS & SERVICES PROVIDED BY UTILITY Year: 2016 (a) (b) (c) (d) (e) (f) Charges % Total Revenues Affiliate Name Products & Services Method to Determine Price to Affiliate Affil. Exp. to MT Utility 1 MDU ENERGY MONTANA-DAKOTA UTILITIES CO. 2 CAPITAL 2/ Payroll & HR 3 Employee Benefits 1/ Various Corporate Overhead $47 4 Payroll Allocation Factors, Cost of 72 5 Travel Service Factors, Time Studies - 6 Office Expenses and/or Actual Costs Incurred 17 7 Automobile Other Direct Charges 10 Audit Actual costs incurred - 11 Bank Fees 28, Communications 4, Computer Equip/Software 16, Contract Services 97, Employee Benefits (5,308) 16 Filing Fees 88, Office Expenses Automobile - 19 Travel Legal 41, Intercompany Settlements 24 O&M Actual costs incurred 25 Auto Contract Services 773, Cost of Service 1,992,876 $445, Employee Benefits 57, Marketing 42, Material 20, Miscellaneous 436, Office Expenses 653, Payroll 11,201, SISP 115,752 Line No. 35 Software Maintenance 1,465, Travel 182, Docket No. Rule Statement G Page 17 of 19

132 Company Name: Montana-Dakota Utilities Co. SCHEDULE 7 AFFILIATE TRANSACTIONS - PRODUCTS & SERVICES PROVIDED BY UTILITY Year: 2016 (a) (b) (c) (d) (e) (f) Line Charges % Total Revenues No. Affiliate Name Products & Services Method to Determine Price to Affiliate Affil. Exp. to MT Utility 1 MDU ENERGY MONTANA-DAKOTA UTILITIES CO. 2 CAPITAL 2/ Other Actual costs incurred 3 Audit $448,886 4 LTIP 384,975 5 MII 240,414 6 Payflex (28,292) 7 Prepaid 442,232 8 Miscellaneous (4,787) 9 10 Capital Actual costs incurred 11 Contract Services 44, Material 287, Misc Employee Benefit Misc Other 25, Office Expenses 37, Payroll 1,258, Travel 39, Utility Group Project Allocation 1,574, Total Montana-Dakota Utilities Co. $23,265, % $445, OTHER TRANSACTIONS/REIMBURSEMENTS 22 Federal & State Tax Liability Payments $6,633, Miscellaneous Reimbursements (400,596) Total Other Transactions/Reimbursements $6,232, % $ Grand Total Affiliate Transactions $35,762, % $445, Total MDU Energy Capital Operating Expenses for 2016 $485,898, Excludes Intersegment Eliminations 1/Corporate overhead allocation factors are derived from the invested capital balance as a percentage of the total corporate invested capital. Montana-Dakota Utilities Co. cost of service amounts are calculated for the general office complex, the printing department, and the budget and forecast system. The general office complex amounts are payroll and floor space costs for employees that perform services for MDU Resources. These include accounts payable, general accounting, fixed asset accounting, and miscellaneous other services. The charges are based on the percentage of system users that are MDU Resources employees. Both the general office complex and amounts for MDU Resources are allocated to affiliated companies based on corporate overhead allocation factors. The printing department amount is allocated to affiliated companies based on the direct printing images processed for them and their percentage of the corporate overhead allocation for the corporate printed image amount. 2/ MDU Energy Capital is the parent company for Cascade Natural Gas Company and Intermountain Gas Company. Docket No. Rule Statement G Page 18 of 19

133 Company Name: Montana-Dakota Utilities Co. SCHEDULE 7 AFFILIATE TRANSACTIONS - PRODUCTS & SERVICES PROVIDED BY UTILITY Year: 2016 (a) (b) (c) (d) (e) (f) Line Charges % Total Revenues No. Affiliate Name Products & Services Method to Determine Price to Affiliate Affil. Exp. to MT Utility 1 CENTENNIAL ENERGY MONTANA-DAKOTA UTILITIES CO. 2 HOLDING INC 3 Other Direct Charges Actual costs incurred 4 Audit Costs $141,185 5 Dues, Permits, and Filing Fees Contract Services 220,489 7 Bank Fees 2,729 8 Legal 42,601 9 Miscellaneous Total Montana-Dakota Utilities Co. $407, Grand Total Affiliate Transactions $407, Docket No. Rule Statement G Page 19 of 19

134 Docket No. Rule Statement H Page 1 of 8 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF REVENUES TWELVE MONTHS ENDING DECEMBER 31, 2016 Pro Forma Per Books Adjustments Pro Forma Sales Residential $33,080,390 $8,127,087 $41,207,477 Firm General 19,886,291 5,789,582 25,675,873 Small Interruptible 719,917 (98,891) 621,026 Large Interruptible 235,753 (5,867) 229,886 Unbilled Revenue 1,859,488 (1,859,488) 0 Total Sales $55,781,839 $11,952,423 $67,734,262 Transportation Small Interruptible $519,151 $27,536 $546,687 Large Interruptible 793,872 (203,005) 590,867 Unbilled Revenue (14,025) 14,025 0 Total Transportation $1,298,998 ($161,444) $1,137,554 Total Sales and Transportation $57,080,837 $11,790,979 $68,871,816 Other Revenue Misc. Service Revenue $49,722 $904 $50,626 Rent from Property 334,505 (23,935) 310,570 Other Revenue 92,523 48, ,814 Total Other Revenue $476,750 $25,260 $502,010 Total Operating Revenue $57,557,587 $11,816,239 $69,373,826

135 Per Books 1/ Per Current Rates 1/ Current Rates 2/ Current Rates 3/ Dk Revenue Dk Revenue Dk Revenue Dk Revenue Sales Residential 5,230,675 $33,080,390 5,230,675 $37,000,454 5,943,314 $41,036,646 5,968,846 $41,207,477 Firm General Service 3,373,896 19,886,291 3,373,896 22,273,267 3,884,786 25,335,162 3,937,862 25,675,873 Small Interruptible 193, , , , , , , ,026 Large Interruptible 71, ,753 71, ,396 57, ,886 57, ,886 Unbilled Revenue 0 1,859, Total Sales 8,869,129 $55,781,839 8,869,129 $60,382,553 10,028,020 $67,222,720 10,106,628 $67,734,262 Transportation Small Interruptible 546,098 $519, ,098 $519, ,787 $546, ,787 $546,687 Large Interruptible 4,505, ,872 4,505, ,798 2,946, ,867 2,946, ,867 Unbilled Revenue 0 (14,025) Total Transportation 5,051,920 $1,298,998 5,051,920 $1,292,199 3,526,395 $1,137,554 3,526,395 $1,137,554 Total 13,921,049 $57,080,837 13,921,049 $61,674,752 13,554,415 $68,360,274 13,633,023 $68,871,816 Docket No. Rule Statement H Page 2 of 8 MONTANA-DAKOTA UTILITIES CO. SALES AND TRANSPORTATION REVENUES TWELVE MONTHS ENDING DECEMBER 31, / See page 3. 2/ See page 4. 3/ See page 5.

136 Docket No. Rule Statement H Page 3 of 8 MONTANA-DAKOTA UTILITIES CO. SALES AND TRANSPORTATION REVENUE TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT NO. 1 Per Books Per Current Rates Dk Revenue Dk Revenue 1/ Adjustment Sales Residential 5,230,675 $33,080,390 5,230,675 $37,000,454 $3,920,064 Firm General Service 3,373,896 19,886,291 3,373,896 22,273,267 2,386,976 Small Interruptible 193, , , , ,519 Large Interruptible 71, ,753 71, ,396 46,643 Unbilled Revenue 0 1,859, (1,859,488) Total Sales 8,869,129 $55,781,839 8,869,129 $60,382,553 $4,600,714 Transportation Small Interruptible 546,098 $519, ,098 $519,401 $250 Large Interruptible 4,505, ,872 4,505, ,798 (21,074) Unbilled Revenue 0 (14,025) ,025 Total Transportation 5,051,920 $1,298,998 5,051,920 $1,292,199 ($6,799) Total 13,921,049 $57,080,837 13,921,049 $61,674,752 $4,593,915 1/ Rates effective 1/1/2017, Docket No. D and the May 2017 gas cost tracking adjustment with annualized commodity costs.

137 Docket No. Rule Statement H Page 4 of 8 MONTANA-DAKOTA UTILITIES CO. SALES AND TRANSPORTATION REVENUE TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT NO. 2 Per Current Rates Normalized Current Rates Dk Revenue Dk Revenue 1/ Adjustment Sales Residential 5,230,675 $37,000,454 5,943,314 $41,036,646 $4,036,192 Firm General Service 3,373,896 22,273,267 3,884,786 25,335,162 3,061,895 Small Interruptible 193, , , ,026 (205,410) Large Interruptible 71, ,396 57, ,886 (52,510) Unbilled Revenue Total Sales 8,869,129 $60,382,553 10,028,020 $67,222,720 6,840,167 Transportation Small Interruptible 546,098 $519, ,787 $546,687 $27,286 Large Interruptible 4,505, ,798 2,946, ,867 (181,931) Unbilled Revenue Total Transportation 5,051,920 $1,292,199 3,526,395 $1,137,554 ($154,645) Total 13,921,049 $61,674,752 13,554,415 $68,360,274 $6,685,522 1/ Rates effective 1/1/2017, Docket No. D and the May 2017 gas cost tracking adjustment with annualized commodity costs.

138 Docket No. Rule Statement H Page 5 of 8 MONTANA-DAKOTA UTILITIES CO. SALES AND TRANSPORTATION REVENUE TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT NO. 3 Normalized Current Rates Annualized Current Rates Dk Revenue DK Revenue 1/ Adjustment Sales Residential 5,943,314 $41,036,646 5,968,846 $41,207,477 $170,831 Firm General Service 3,884,786 25,335,162 3,937,862 25,675, ,711 Small Interruptible 142, , , ,026 0 Large Interruptible 57, ,886 57, ,886 0 Unbilled Revenue Total Sales 10,028,020 $67,222,720 10,106,628 $67,734,262 $511,542 Transportation Small Interruptible 579,787 $546, ,787 $546,687 $0 Large Interruptible 2,946, ,867 2,946, ,867 0 Unbilled Revenue Total Transportation 3,526,395 $1,137,554 3,526,395 $1,137,554 $0 Total 13,554,415 $68,360,274 13,633,023 $68,871,816 $511,542 1/ Rates effective 1/1/2017, Docket No. D and the May 2017 gas cost tracking adjustment with annualized commodity costs.

139 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF REVENUES - ANNUALIZED FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2016 Rate Reporting Class Billing Units Dk Basic Service Revenue 1/ Distribution Delivery Revenue 1/ Annualized Tax Tracking Adjustment 1/ Total Distribution Margin Cost of Gas 2/ Total Revenue Sales Residential Rate 60 74,574 5,968,846 $6,260,487 $6,768,671 $2,309,340 $15,338,498 $25,868,979 $41,207,477 Total Residential 74,574 5,968,846 6,260,487 6,768,671 2,309,340 15,338,498 25,868,979 41,207,477 Firm General - Rate 70 Rate 70 < 500 cubic feet 7,172 1,109,554 1,047,112 1,565, ,084 3,075,777 4,808,807 7,884,584 Rate 70 > 500 cubic feet 2,419 2,815, ,348 3,972, ,303 5,508,179 12,201,939 17,710,118 9,591 3,924,953 1,753,460 5,538,109 1,292,387 8,583,956 17,010,746 25,594,702 Optional Seasonal - Rate 72 Rate 72 > 500 cubic feet 6 12,909 1,752 18,215 3,539 23,506 57,665 81, ,909 1,752 18,215 3,539 23,506 57,665 81,171 Total Firm General 9,597 3,937,862 1,755,212 5,556,324 1,295,926 8,607,462 17,068,411 25,675,873 Small Interruptible Rate ,548 42,098 98,073 24, , , ,026 Total Small Interruptible ,548 42,098 98,073 24, , , ,026 Large Interruptible Rate ,372 13,614 25,760 6,979 46, , ,886 Total Large Interruptible 2 57,372 13,614 25,760 6,979 46, , ,886 Total Sales 84,191 10,106,628 $8,071,411 $12,448,828 $3,637,089 $24,157,328 $43,576,934 $67,734,262 Transportation Small Interruptible Rate ,787 65, ,893 82,308 $546,687 $0 $546,687 Large Interruptible Rate ,946,608 27, ,679 88, , ,867 Total Transportation 32 3,526,395 $92,714 $873,572 $171,268 $1,137,554 $0 $1,137,554 Total Sales & Transportation 84,223 13,633,023 $8,164,125 $13,322,400 $3,808,357 $25,294,882 $43,576,934 $68,871,816 1/ Rates effective with service rendered on and after 1/1/2017 in Docket No. D / May 2017 gas cost tracking adjustment adjusted to reflect annual commodity costs. Docket No. Rule Statement H Page 6 of 8

140 MONTANA-DAKOTA UTILITIES CO. REVENUES UNDER CURRENT AND PROPOSED RATES Pro Forma D Pro Forma with 1/1/18 Tax Tracker Increase Customer Class/Rate Customers 1/ Dk 1/ Revenue 1/ 1/1/18 Tax Increase 2/ Total Revenue Base Gas Tax Increase 2/ Distribution Increase 3/ Proposed Total Revenues Total Revenue $ Increase % Increase Residential - Rate 60 74,574 5,968,846 $41,207,477 $131,456 $41,338,933 $456,090 $1,796,780 $43,591,803 $2,252, % Firm General Service - Rates 70 & 72 9,597 3,937,862 25,675,873 73,768 25,749, , ,546 26,307, , % Small Interruptible Sales - Rate , ,026 1, ,440 Transport - Rates , ,687 4, ,372 Total Small Interruptible ,335 1,167,713 6,099 1,173,812 4, ,178,686 4, % Large Interruptible Sales - Rate , , ,283 Transport - Rate ,946, ,867 5, ,931 Total Large Interruptible 6 3,003, ,753 5, ,214 4, ,577 4, % Total Montana 84,223 13,633,023 $68,871,816 $216,784 $69,088,600 $605,842 $2,214,326 $71,908,768 $2,820, % 1/ Rule , Statement H, Page 5 & 6. 2/ Rule , page 7. 3/ Rule , Statement M, Page 2. Docket No. Rule Statement H Page 7 of 8

141 Docket No. Rule Statement H Page 8 of 8 MONTANA-DAKOTA UTILITIES CO. OTHER OPERATING REVENUES TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT NO. 4 Pro Forma Per Books Adjustments Pro Forma Miscellaneous Service Revenue Seasonal Reconnect Fee $8,294 $0 $8,294 Reconnect Fee - Nonpayment 9, ,084 NSF Check Fees 21, ,150 Work for Construction of Others 6,995 2,413 1/ 9,408 Other Miscellaneous Service Revenue 4,199 (1,509) 1/ 2,690 Total Miscellaneous Service Revenue $49,722 $904 $50,626 Rent from Property 334,505 (23,935) 1/ 310,570 Other Revenue Sale of Sundry Junk Material $508 $0 $508 Sale of Operating Material (39) 0 (39) Patronage Dividends Late Payment Revenue 53,826 16,423 2/ 70,249 Miscellaneous 25, ,966 Gain/(Loss) on Disposal of Property 0 (13,457) 3/ (13,457) Penalty Revenue 11,769 45,325 4/ 57,094 Total Other Revenue $92,523 $48,291 $140,814 Total Other Operating Revenue $476,750 $25,260 $502,010 1/ Reflects annualized 2017 revenue. 2/ Late payment revenue is a percentage (0.102%) of late payment revenue to projected sales and transporation revenue. Projection is based on a three year average of late payment revenue to sales and transportation revenue. 3/ Amortization of gain/(loss) on sale of plant over five year period. 4/ Restates penalty revenue to a three year average.

142 Docket No. Rule Statement I Page 1 of 6 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF DEPRECIATION EXPENSE FOR THE TWELVE MONTHS ENDING DECEMBER 31, Pro Forma Pro Forma Function Per Books Adjustment Expense 1/ Distribution $3,788,282 $89,338 $3,877,620 General 121, , ,150 General Intangible 66,243 (19,532) 46,711 Common 265,465 (88,661) 176,804 Common - Intangible 541,481 24, ,887 Pref. Stock Redemption Amort. 1,338 1,338 Discontinued Service - Saco 100, ,000 Total $4,783,296 $226,214 $5,009,510 1/ See page 2.

143 Docket No. Rule Statement I Page 2 of 6 MONTANA-DAKOTA UTILITIES CO. AVERAGE DEPRECIATION EXPENSE FOR THE TWELVE MONTHS ENDING DECEMBER 31, 2016 PRO FORMA ADJUSTMENT NO Pro Forma Pro Forma Function Per Books Expense Adjustment Distribution 1/ $3,788,282 $3,877,620 $89,338 General 1/ 121, , ,325 General Intangible 1/ 66,243 46,711 (19,532) Common 1/ 265, ,804 (88,661) Common - Intangible 1/ 541, ,887 24,406 Total $4,783,296 $4,908,172 $124,876 Pref. Stock Redemption Amort. 2/ $0 $1,338 $1,338 Discontinued Service - Saco 3/ 0 100, ,000 $0 $101,338 $101,338 Total Depreciation Expense $4,783,296 $5,009,510 $226,214 Pro Forma Adjustment to Accumulated Reserve $5,315,566 1/ Average annual depreciation expense on pro forma plant in service, see Rule , Statement I, pages / See Rule , Statement E, page 8. 3/ See Rule , Statement E, page 9.

144 Docket No. Rule Statement I Page 3 of 6 MONTANA-DAKOTA UTILITIES CO. AVERAGE DEPRECIATION EXPENSE FOR THE TWELVE MONTHS ENDING DECEMBER 31, 2016 PRO FORMA ADJUSTMENT NO. 17 Pro Forma Acct. Average Depreciation Annual Accumulated No. Account Plant 1/ Rate Depreciation Reserve Distribution Plant Land $15, Rights of Way 22, % $313 $ Structures & Improvements 256, % 6,381 6, Mains 38,129, % 957, , Meas. & Reg. Equip.-General 763, % 18,335 18, Meas. & Reg. Equip.-City Gate 125, % 3,144 3, Services 32,086, % 2,031,077 2,031, Meters 22,721, % 774, , Service Regulators 3,084, % 45,348 45, Ind. Meas. & Reg. Station Eqpt. 333, % 10,115 10, Cathodic Protection Equip. 1,710, % 28,394 28, Other Distribution Equip. 124, % 2,662 2,662 Total Distribution Plant $99,375,836 $3,877,620 $3,877,620 General Plant 389 Land $858, Structures and Improvements 4,717, % $114,171 $114, Office Furniture and Fixtures 194, % 7,550 7, Computer Equip. - PC 87, % 14,983 14, Transport. Equip.-Trailers 119, % 2/ Transport. Equip.-Vehicles 2,950, % 2/ 213, Stores Equipment 14, % Tools, Shop & Garage Equip. 1,276, % 71,727 71, Vehicle Maintenance Equip. 36, % 2,044 2, Laboratory Equipment 27, % Work Equipment Trailers 263, % 2/ 3, Power Operated Equip. 2,557, % 2/ 135, Radio Comm. Equip.-Fixed 315, % 19,736 19, Radio Comm. Equip.-Mobile 127, % 8,074 8, Telephone and Telex Equip. 58, % 5,054 5, Miscellaneous Equipment 28, % (3,135) (3,135) Total General Plant $13,631,756 $241,150 $594, Intangible Plant - General $510,437 4/ $46,711 $46,711

145 Docket No. Rule Statement I Page 4 of 6 MONTANA-DAKOTA UTILITIES CO. AVERAGE DEPRECIATION EXPENSE FOR THE TWELVE MONTHS ENDING DECEMBER 31, 2016 PRO FORMA ADJUSTMENT NO. 17 Pro Forma Acct. Average Depreciation Annual Accumulated No. Account Plant 1/ Rate Depreciation Reserve Common Plant 389 Land $125, Structures and Improvements 2,839, % $24,140 $24, Office Furniture and Fixtures 205, % 13,689 13, Computer Equip.-PC 165, % 33,196 33, Computer Equip.-Other 249, % 49,858 49, Transport. Equip.-Trailers 7, % 3/ Transport. Equip.-Vehicles 815, % 2/ 54, Aircraft 376, % 15,061 15, Stores Equipment 20, % Tools, Shop & Garage Equip. 58, % 3,263 3, Vehicle Maint. Equip. 5, % Vehicle Refueling Equip % Radio Comm. Equip.-Fixed 201, % 13,436 13, Radio Comm. Equip.-Mobile 143, % 9,578 9, General Tele. Comm. Equip. 60, % 6,010 6, Supervisory & Tele. Equip. 2, % Network Equipment 10, % 2,167 2, Miscellaneous Equipment 104, % 5,244 5,244 Total Common Plant $5,393,728 $176,804 $231, Intangible Plant - Common $9,075,647 4/ $565,887 $565,887 Total Gas Plant in Service $127,987,404 $4,908,172 $5,315,566 1/ See Rule , Statement C, pages / Charged to a clearing account. 3/ Fully amortized/depreciated. 4/ Amortization based on the life of each item.

146 Docket No. Rule Statement I Page 5 of 6 MONTANA-DAKOTA UTILITIES CO. DEPRECIATION EXPENSE ON PLANT ADDITIONS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2017 Acct. Annual Depreciation No. Account Additions Rate Amount Distribution 376 Mains $2,190, % $54, Meas. & Reg. Equip.-General 57, % 1, Services 1,540, % 97, Meters 822, % 28, Service Regulators 156, % 2, Ind. Meas. & Reg. Station Eqpt % Cathodic Protection Equip. 220, % 3,664 Total Distribution $4,988,393 $187,878 General 390 Structures and Improvements $5, % $ Office Furniture and Fixtures 6, % Transport. Equip.-Vehicles 433, % 31, Tools, Shop & Garage Equip. 338, % 19, Power Operated Equip. 806, % 42, Radio Comm. Equip.-Fixed 14, % 931 Total General $1,605,134 $94, Intangible Plant - General $116,991 1/ $11,700 Common 389 Land ($18,416) 390 Structures and Improvements 10, % $ Office Furniture and Fixtures 14, % Computer Equip.-PC 21, % 4, Transport. Equip.-Vehicles 78, % 5, Tools, Shop & Garage Equip. 3, % Radio Comm. Equip.-Fixed 65, % 4, Radio Comm. Equip.-Mobile % General Tele. Comm. Equip. 1, % 185 Total Common $176,838 $15, Intangible Plant - Common $606,663 1/ $60,668 Total $7,494,019 $370,060 1/ Amortization based on the life of each item.

147 Docket No. Rule Statement I Page 6 of 6 MONTANA-DAKOTA UTILITIES CO. RECONCILIATION OF DEPRECIABLE GAS PLANT DECEMBER 31, 2015 AND DECEMBER 31, 2016 Balance Balance 12/31/16 Balance Depreciable Plant Distribution $92,485,395 $96,865,678 $94,675,537 General 1,888,108 6,699,668 4,293,888 General Intangible- Amortized 447, , ,496 $94,820,554 $104,017,287 $99,418,921 Depreciable Plant Charged to a Clearing Account Transportation Equipment $2,806,499 $2,853,409 $2,829,954 Work Equipment 210, , ,692 Power Operated Equipment 2,062,517 2,154,157 2,108,337 $5,079,322 $5,270,644 $5,174,983 Non-Depreciable Plant Distribution $15,962 $15,962 15,962 General 7, , ,004 $23,093 $874,839 $448,966 Common Plant in Service - Gas Depreciable $8,598,018 $4,010,838 $6,304,428 Charged to Clearing Account 1,268,264 1,159,982 1,214,123 Intangible - Amortized 8,866,426 8,772,316 8,819,371 Non-Depreciable 976, , ,637 $19,709,493 $14,077,625 $16,893,559 Total Gas Plant in Service $119,632,462 $124,240,395 $121,936,429

148 Docket No. Rule Statement I Page 1 of 1 MONTANA-DAKOTA UTILITIES CO. DEPRECIATION EXPENSE CHARGED TO OTHER THAN PRESRIBED DEPRECIATION AND AMORTIZATION EXPENSE The Company charges all depreciation and amortization expense to prescribed accounts, with the exception of the following: 1. Depreciation of transportation and work equipment in FERC plant accounts 392 and 396 is charged to FERC clearing account

149 Docket No. Rule Statement J Page 1 of 21 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF ADJUSTMENTS TO PER BOOKS TAXABLE INCOME FOR THE TWELVE MONTHS ENDING DECEMBER 31, 2016 Adjustment Pro Forma Operating Income No. Adjustment Reference Current Income Taxes Interest Expense Annualization 1/ 21 $79,785 Statement J, Page 8 Tax Depreciation on Plant Additions 1/ 22 (565,726) Statement J, Page 9 Elimination of Pref. Stock Deduction 1/ 23 (9,425) Statement J, Page 10 Total Adjustment to Taxable Income ($495,366) Income Taxes on Pro Forma Adjustments ,092 Statement J, Page 11 Elimination of Closing/Filing and prior-period 25 (298,057) Statement J, Page 12 Total Adjustment to Current Income Taxes $230,035 Deferred Income Taxes Elimination of Closing/Filing and prior-period ,201 Statement J, Page 12 Deferred Income Taxes on Plant Additions 22 (222,825) Statement J, Page 9 Total Adjustment to Deferred Income Taxes $87,376 Rate Base Accumulated Deferred Income Taxes - Liberalized Depreciation M (479,258) Statement J, Page 18 Prepaid Demand, R&D & Customer Advances P (25,713) Statement J, Page 18 Full Normalization N (57,659) Statement J, Page 18 Unamortized Loss on Debt G (20,274) Statement J, Page 18 Provision for Pension, Benefits, Inj. & Damages H & I (15,430) Statement J, Page 18 Discontinued Service - Saco K (39,388) Statement J, Page 18 Total Adjustment to Current Income Taxes ($637,722) 1/ Amount is shown before income tax effect.

150 MONTANA-DAKOTA UTILITIES CO. CALCULATION OF RECORDED STATE AND FEDERAL INCOME TAXES TAX DEDUCTIONS TWELVE MONTHS ENDING DECEMBER 31, 2016 Total Non- Total Gas Electric Company Regulated Company Property M-1's AFUDC CWIP ($21,280) ($325,585) ($346,865) ($3,412) ($350,277) AFUDC Equity (104,989) (626,906) (731,895) (731,895) CWIP 17,664 (100,317) (82,653) (254) (82,907) Contributions in Aid of Construction (CIAC) (1,777,898) (2,996,477) (4,774,375) (621,064) (5,395,439) Net Negative Salvage 6,764,148 6,764,148 6,764,148 Liberalized Depreciation and Other Property Timing Differences (716,153) 76,065,290 75,349,137 (144,341) 75,204,796 Property Timing Differences-Common (770,765) (892,889) (1,663,654) (1,663,654) SD Decommisinng (35,090) (35,090) (35,090) Total Property M-1's ($3,373,421) $77,852,174 $74,478,753 ($769,071) $73,709,682 Other M-1's Abandoned Power Plant Cost Recovery $412,675 $412,675 $412,675 Bad Debt Expense $665 (27,145) (26,480) ($683) (27,163) Board of Directors Retirement Benefit 47,599 (7,748) 39,851 39,851 Bonus & 401k Profit Sharing (3,300,385) (5,586,124) (8,886,509) (8,886,509) Capacity Revenue 81,806 81,806 81,806 Charitable Contributions (166,660) (166,660) Contingency Reserve 200, ,000 Customer Advances (1,044,488) (171,416) (1,215,904) (1,215,904) Deferred Compensation- Directors (383,611) (713,592) (1,097,203) (1,097,203) Deferred Medicare Part D 132, , , ,345 Deferred Pension Expense (3,379,927) (2,604,819) (5,984,746) (5,984,746) Deferred Postretirement Benefit Costs (FAS 106) (2,788,673) (2,320,549) (5,109,222) (5,109,222) F&PP Deferral (2,052) (2,052) (2,052) Gain/Loss on Buildings 803,421 2,043,990 2,847,411 2,847,411 Management Incentive 114,885 (196,596) (81,711) (81,711) Manufactured Gas Plant (6,648) (6,648) (6,648) MISO MVP Reserve 165, , , ,751 MT Decommissioning (5,965,841) (5,965,841) (5,965,841) MT PSC/MCC Tax Deferral (81,578) (59,390) (140,968) (140,968) ND Generation Resource Recovery Rider 2,460,587 2,460,587 2,460,587 ND Transmission Cost Adjustment 4,489,959 4,489,959 4,489,959 ND Environmental Cost Recovery Rider 2,580,097 2,580,097 2,580,097 ND Renewable Resource Recovery Rider 1,446,222 1,446,222 1,446,222 Docket No. Rule Statement J Page 2 of 21

151 MONTANA-DAKOTA UTILITIES CO. CALCULATION OF RECORDED STATE AND FEDERAL INCOME TAXES TAX DEDUCTIONS TWELVE MONTHS ENDING DECEMBER 31, 2016 Total Non- Total Gas Electric Company Regulated Company PCB Related Income 30,990 30,990 30,990 Pension Expense 3,119,854 2,334,436 5,454,290 5,454,290 Performance Share Program 426, ,354 1,137,061 1,137,061 Postretirement Benefits Cost (FAS 158) 2,973,476 2,542,125 5,515,601 5,515,601 Prepaid Demand Charge 447, , ,020 Prepaid Expenses 386, ,541 1,030,114 1,030,114 Property Insurance 120, , , ,386 Purchased Gas Adjustment 1,021,421 1,021,421 1,021,421 Regulatory Assets Awaiting Recovery (814,359) (814,359) (814,359) Regulatory Commission Expense (288,132) 660, , ,227 Reserved Revenues 916,543 (1,013,873) (97,330) (97,330) Retired Power Plant 51,884 51,884 51,884 SD Infrastructure Rider 184, , ,772 SD Transmission Cost Recovery Rider 78,036 78,036 78,036 SISP/SERP Expense 2,506,517 2,506,517 Sundry Reserves 24,156 19,392 43,548 43,548 Unamortized Loss on Reacquired Debt (339,372) (327,009) (666,381) (666,381) Uniform Capitalization (67,055) (67,055) (67,055) Vacation Pay (126,557) (108,198) (234,755) (234,755) WAPA Fiber Demand Revenue 49,315 49,315 49,315 Total Other M-1's ($1,240,293) $1,549,568 $309,275 $2,674,104 $2,983,379 Permanent M-1's 50% Meals and Entertainment ($68,891) ($114,684) ($183,575) ($1,433) ($185,008) 401K Dividend Deduction 3,129,857 3,129,857 Dividend Received Deduction Fuel Tax Credit (10,061) (16,749) (26,810) (26,810) Lobbying (111,393) (111,393) Preferred Stock Expense Amortization (3,444) (11,947) (15,391) (15,391) SISP/SERP Premium and CSV 880, ,771 Unrealized Gain/Loss on SISP/SERP Inv. 2,061,665 2,061,665 Total Permanent M-1's ($82,375) ($143,344) ($225,719) $5,959,467 $5,733,748 Total M-1 Deductions ($4,696,089) $79,258,398 $74,562,309 $7,864,500 $82,426,809 Docket No. Rule Statement J Page 3 of 21

152 MONTANA-DAKOTA UTILITIES CO. CALCULATION OF RECORDED STATE AND FEDERAL INCOME TAXES TAX DEDUCTIONS TWELVE MONTHS ENDING DECEMBER 31, 2016 Total Non- Total Gas Electric Company Regulated Company Operating Revenue $206,203,191 $321,162,370 $527,365,561 $527,365,561 Non-Utility Income (before income taxes) $9,288,483 $9,288,483 Total Revenue $206,203,191 $321,162,370 $527,365,561 $9,288,483 $536,654,044 Operating Expense: O&M Expense $162,616,631 $190,762,783 $353,379,414 $2,208,046 $355,587,460 Depreciation Expense 17,438,193 50,003,829 67,442, ,707 68,122,729 Taxes Other than Income 8,065,837 12,747,568 20,813, ,955 21,152,360 Total Operating Expense $188,120,661 $253,514,180 $441,634,841 $3,227,708 $444,862,549 Operating Income $18,082,530 $67,648,190 $85,730,720 $6,060,775 $91,791,495 Interest Expense 5,918,312 24,981,387 30,899,699 30,899,699 Book Taxable Income before Adjustments $12,164,218 $42,666,803 $54,831,021 $6,060,775 $60,891,796 Deductions and Adjustments to Book Income: Tax Deductions 1/ ($4,696,089) $79,258,398 $74,562,309 $7,864,500 $82,426,809 Preferred Dividend Paid Deduction 39, , , ,020 Total Deductions and Adjustments ($4,656,706) $79,395,035 $74,738,329 $7,864,500 $82,602,829 Taxable Income - Before State Income Tax $16,820,924 ($36,728,232) ($19,907,308) ($1,803,725) ($21,711,033) Less: Deductible State Income Taxes 750,418 1,735,218 2,485,636 (80,480) 2,405,156 Federal Taxable Income $16,070,506 ($38,463,450) ($22,392,944) ($1,723,245) ($24,116,189) Federal Income 35% $5,624,677 ($13,462,208) ($7,837,531) ($603,136) ($8,440,667) Credits and Adjustments (10,061) (16,749) (26,810) (26,810) State Income Taxes 750,418 1,735,218 2,485,636 (80,480) 2,405,156 Federal and State Income Taxes $6,365,034 ($11,743,739) ($5,378,705) ($683,616) ($6,062,321) Closing and Prior Year's Adjustment 1,371,205 (75,685) 1,295,520 (772,066) 523,454 Total Federal and State Income Taxes $7,736,239 ($11,819,424) ($4,083,185) ($1,455,682) ($5,538,867) 1/ See pages 2-3. Docket No. Rule Statement J Page 4 of 21

153 Docket No. Rule Statement J Page 5 of 21 MONTANA DAKOTA UTILITIES CO. COMPUTATION OF INCOME TAX LIABILITY AND TAX SAVINGS BASED ON MDU RESOURCES GROUP, INC CONSOLIDATED FEDERAL INCOME TAX RETURN Montana-Dakota MDU Resources Utilities Co. Group, Inc. 1/ Net Taxable Income (Loss) $22,161,533 ($256,496,035) Federal Income Tax: Statutory 35% $0 $0 Less Credits: Foreign Tax Credit General Business Credit Total Tax $0 $0 Tax Savings Arising From Consolidation $0 Montana Dakota Utilities Co. is a member of a group that files a consolidated Federal Income Tax Return. There are no tax savings available to Montana-Dakota Utilities Co. as a result of being included in a consolidated tax return during the test period. 1/ Reflects MDU Resources Group, Inc. and includible subsidiaries.

154 Docket No. Rule Statement J Page 6 of 21 MONTANA-DAKOTA UTILITIES CO. CALCULATION OF RECORDED STATE AND FEDERAL INCOME TAXES FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2016 Montana Operating Revenue $57,557,587 Operating Expense: O&M Expense 45,895,894 Depreciation Expense 4,783,296 Taxes Other than Income 4,831,147 Total Operating Expense 55,510,337 Operating Income 2,047,250 Interest Expense 1,185,844 Book Taxable Income before Adjustments 861,406 Deductions and Adjustments to Book Income: Tax Deductions 1/ (1,086,126) Total Deductions and Adjustments (1,086,126) Taxable Income - Before State Income Tax 1,947,532 Less: State Income Taxes 239,714 Other Closing/Filing Adjustment 0 Federal Taxable Income 1,707,818 Federal Income 35% 597,736 Credits and Adjustments (2,644) State Income Taxes 239,714 Federal and State Income Taxes 834,806 Closing/Filing and Prior Period Adjustment 298,057 Total Federal and State Income Taxes $1,132,863 1/ See page 7.

155 Docket No. Rule Statement J Page 7 of 21 MONTANA-DAKOTA UTILITIES CO. CALCULATION OF RECORDED STATE AND FEDERAL INCOME TAXES FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2016 Property M-1's Montana AFUDC CWIP ($6,822) AFUDC Equity (29,376) CWIP 1,537 Liberalized Depreciation and Other Property Timing Differences (163,509) Property Timing Differences-Common (253,558) Other M-1's Bad Debt Expense (7,780) Bonus & 401k Profit Sharing (866,942) Customer Advances (148,839) Prepaid Demand Charge 187,998 Prepaid Expense 101,588 Property Insurance 28,993 Purchased Gas Adjustment 345,372 Sundry Reserves 6,282 Uniform Capitalization (17,621) Vacation Pay (33,258) Board of Directors Retirement Benefit 12,859 Deferred Compensation- Directors (100,507) Deferred Medicare Part D 34,758 Deferred Pension Expense (949,846) Deferred Postretirement Benefit Costs (FAS 106) (709,283) Management Incentive 30,701 Manufactured Gas Plant Site 84,132 MT PSC/MCC Tax Deferral (81,577) PCB Related Income 7,064 Pension Expense 819,870 Performance Share Program 112,135 Postretirement Benefits Cost (FAS 158) 781,404 Regulatory Commission Expense (184,747) Unamortized Loss on Reacquired Debt (75,012) Permanent M-1's 50% Meals and Entertainment (18,104) Dividend Received Deduction 5 Fuel Tax Credit (2,644) Preferred Stock Dividends Paid 9,425 Preferred Stock Expense Amortization (824) Total M-1 Deductions ($1,086,126)

156 Docket No. Rule Statement J Page 8 of 21 MONTANA-DAKOTA UTILITIES CO. ADJUSTMENT FOR INTEREST EXPENSE ANNUALIZATION ADJUSTMENT NO. 21 Per Pro Forma Books Adjustment Pro Forma Rate Base 1/ $53,265,199 $477,013 $53,742,212 Weighted Cost of Debt 2/ 2.355% Interest Expense - Pro Forma $1,265,629 Interest Charges as Recorded 3/ 1,185,844 Interest Expense Annualization Adjustment $79,785 1/ Rule , Overall Cost of Service, page 6. 2/ Rule , Statement F, page 1, Long and Short Term Debt. 3/ Reflects long and short term interest and amortization of loss on debt.

157 MONTANA-DAKOTA UTILITIES CO. DEFERRED INCOME TAX ON PLANT FOR THE TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT NO. 22 Docket No. Rule Statement J Page 9 of 21 Tax Depreciation 1/ $4,749,840 Book Depreciation 2/ 5,315,566 Net Depreciation on Plant ($565,726) Deferred Income Taxes on Plant Adjustment ($222,825) 1/ See Rule , Statement J, page 19. 2/ Includes depreciation on accounts charged to clearing accounts.

158 Docket No. Rule Statement J Page 10 of 21 MONTANA-DAKOTA UTILITIES CO. ADJUSTMENT TO CURRENT INCOME TAXES TO ELIMINATE THE PREFERRED STOCK DIVIDEND DEDUCTION TWELVE MONTHS ENDED DECEMBER 31, 2016 ADJUSTMENT NO. 23 Adjustment to Eliminate the Preferred Stock Dividend Deduction Due to Redemption ($9,425)

159 Docket No. Rule Statement J Page 11 of 21 MONTANA-DAKOTA UTILITIES CO. CALCULATION OF ADJUSTMENT TO CURRENT INCOME TAXES ADJUSTMENT NO. 24 Pro Forma Adjustments Operating Revenues Sales Revenues $11,952,423 Transportation Revenues (161,444) Other Revenues 25,260 Total Operating Revenues 11,816,239 Operating Expenses Operation and Maintenance Cost of Gas 9,755,417 Other O&M 453,022 Total O&M 10,208,439 Depreciation Expense 226,214 Taxes other Than Income 536,192 Total Operating Expenses 10,970,845 Gross Adjustments to Operating Income 845,394 Deductions and Adjustments to Book Income: Interest Annualization 1/ 79,785 Tax Depreciation on Plant 2/ (565,726) Total Adjustments to Taxable Income (485,941) Taxable Income 1,331,335 Eliminate Pref. Stock Perm Deduct 3/ (9,425) Total Taxable Income 1,340,760 Federal & State Income % $528,092 Elimination of Federal & State Prior Period Adj. 4/ (298,057) Total Adjustment to Current Income Taxes $230,035 1/ Rule , Statement J, page 8. 2/ Rule , Statement J, page 9. 3/ Rule , Statement J, page 10. 4/ Rule , Statement J, page 12.

160 Docket No. Rule Statement J Page 12 of 21 MONTANA-DAKOTA UTILITIES CO. ADJUSTMENT TO CURRENT AND DEFERRED INCOME TAXES FOR ROUNDING AND PRIOR YEAR'S AND CLOSING/FILING TWELVE MONTHS ENDED DECEMBER 31, 2016 ADJUSTMENT NO. 25 Adjustment to Current Federal Income Taxes to Eliminate Closing/Filing and Prior Period Adjustments ($298,057) Adjustment to Deferred Income Taxes to Eliminate Closing/Filing and Prior Period Adjustments $310,201

161 MONTANA-DAKOTA UTILITIES CO./GREAT PLAINS NATURAL GAS CO. ACCUMULATED DEFERRED INCOME TAXES FOR THE YEAR ENDED DECEMBER 31, 2016 Total Company Electric Gas Non-Utility Account 190: January ,706,181 $24,813,091 $26,604,511 20,288,579 February 73,541,758 25,965,196 27,300,281 20,276,281 March 73,677,405 26,409,633 27,496,327 19,771,445 April 77,768,392 30,471,712 27,551,911 19,744,769 May 77,886,562 31,783,219 26,686,888 19,416,455 June 78,565,646 33,210,978 25,721,218 19,633,450 July 78,798,842 34,511,601 24,698,656 19,588,585 August 81,362,635 35,760,269 26,066,469 19,535,897 September 83,441,342 37,500,981 26,450,461 19,489,900 October 85,947,880 38,564,634 27,939,342 19,443,904 November 86,731,859 39,880,611 27,439,301 19,411,947 December 87,892,895 41,777,924 27,515,948 18,599,023 Account 281: (L&C Pollution Control) January $0 February 0 0 March 0 0 April 0 0 May 0 0 June 0 0 July 0 0 August 0 0 September 0 0 October 0 0 November 0 0 December (499,023) (499,023) Account 282: (Other Property) January 2016 (273,052,680) ($212,944,992) ($55,700,544) (4,407,144) February (275,311,294) (215,170,217) (55,738,363) (4,402,714) March (277,572,106) (217,397,397) (55,776,424) (4,398,285) April (282,404,191) (222,197,365) (55,812,970) (4,393,856) May (284,667,758) (224,427,581) (55,850,750) (4,389,427) June (286,931,809) (226,658,274) (55,888,537) (4,384,998) July (289,244,135) (228,932,879) (55,930,687) (4,380,569) August (291,515,951) (231,170,582) (55,969,230) (4,376,139) September (293,766,070) (233,385,911) (56,008,449) (4,371,710) October (295,952,627) (235,547,809) (56,037,537) (4,367,281) November (297,969,353) (238,375,671) (55,229,772) (4,363,910) December (297,349,295) (240,015,620) (52,987,249) (4,346,426) Docket No. Rule Statement J Page 13 of 21

162 MONTANA-DAKOTA UTILITIES CO./GREAT PLAINS NATURAL GAS CO. ACCUMULATED DEFERRED INCOME TAXES FOR THE YEAR ENDED DECEMBER 31, 2016 Total Company Electric Gas Non-Utility Account 283: (Other) January 2016 (53,870,231) ($28,631,333) ($25,170,966) (67,932) February (54,504,003) (29,138,116) (25,297,955) (67,932) March (55,652,083) (30,251,681) (25,332,470) (67,932) April (56,216,271) (30,843,424) (25,304,915) (67,932) May (56,824,553) (31,514,238) (25,242,383) (67,932) June (55,571,320) (30,283,788) (25,219,600) (67,932) July (55,912,690) (30,514,131) (25,330,627) (67,932) August (57,860,108) (30,189,878) (27,602,298) (67,932) September (59,479,032) (30,627,331) (28,783,769) (67,932) October (60,196,064) (31,070,055) (29,058,077) (67,932) November (60,825,907) (31,655,872) (29,105,789) (64,246) December (60,170,226) (32,369,503) (27,736,477) (64,246) Total Company January 2016 (255,216,730) (216,763,234) (54,266,999) 15,813,503 February (256,273,539) (218,343,137) (53,736,037) 15,805,635 March (259,546,784) (221,239,445) (53,612,567) 15,305,228 April (260,852,070) (222,569,077) (53,565,974) 15,282,981 May (263,605,749) (224,158,600) (54,406,245) 14,959,096 June (263,937,483) (223,731,084) (55,386,919) 15,180,520 July (266,357,983) (224,935,409) (56,562,658) 15,140,084 August (268,013,424) (225,600,191) (57,505,059) 15,091,826 September (269,803,760) (226,512,261) (58,341,757) 15,050,258 October (270,200,811) (228,053,230) (57,156,272) 15,008,691 November (272,063,401) (230,150,932) (56,896,260) 14,983,791 December (270,125,649) (231,106,222) (53,207,778) 14,188,351 Docket No. Rule Statement J Page 14 of 21

163 Docket No. Rule Statement J Page 15 of 21 MONTANA-DAKOTA UTILITIES CO. DEFERRED INCOME TAXES FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2016 Montana Gas Utility - Rate Base Deductions: Customer Advances ($58,624) Depreciation, Retirements and Other Timing Differences Required to be Normalized (167,712) South Georgia Normalization - Excess DIT's (57,659) Unamortized Loss on Reacquired Debt (29,831) Total Rate Base Deductions (313,826) Gas Utility - Timing Differences: AFUDC Debt 26 Bad Debt Expense (3,064) Board of Directors Retirement Benefits 5,007 Bonus & 401k Profit Sharing (334,141) CWIP 676 Deferred Compensation - Directors (38,705) Deferred Medicare Part D 13,555 Deferred Pension Expense (334,333) Deferred Postretirement Benefit Costs (FAS 106) (273,321) Management Incentive 12,017 Manufactured Gas Plant Site 33,137 MT PSC/MCC Tax Deferral (32,131) PCB Related Income 2,844 Pension Expense 320,866 Performance Share Program 44,239 Postretirement Benefit Costs (FAS 158) 301,073 Prepaid Demand Charge 74,048 Prepaid Expenses 39,141 Property Insurance 11,751 Purchased Gas Adjustment 136,034 Regulatory Commission Expense (72,767) Sundry Reserves 2,461 Uniform Capitalization (6,789) Vacation Pay (12,814) Closing/Filing and Prior Period Adjustment (310,201) Total Timing Differences (421,391) Total Utility ($735,217)

164 MONTANA-DAKOTA UTILITIES CO. ANALYSIS OF ACCUMULATED DEFERRED INCOME TAXES DECEMBER 31, 2015 AND DECEMBER 31, 2016 Total Gas Utility Montana Balance Balance Balance Balance Average 12/31/15 12/31/16 12/31/15 12/31/16 Balance Gas Utility - Rate Base Deductions: Depreciation, Retirements and Other Timing Differences Required to be Normalized $54,837,714 $53,032,814 $13,916,764 $13,181,073 $13,548,919 Full Normalization 1,382,945 1,149, , , ,128 R&D Tax Carryforward (109,387) (35,293) (17,647) Contributions In Aid of Construction (1,691,698) (2,529,953) Unamortized Loss on Debt 513, , ,608 82,778 97,693 Provision for Pension & Benefits 10,379,113 10,242,031 2,733,449 2,691,517 2,712,483 Provision for Injuries & Damages (12,113) 38,485 (2,708) 8,364 2,828 Gain on Building Sale (123,481) (116,816) Prepaid Demand Charges 310, , , , ,001 Rate Case Expense 82,259 Customer Advances (6,137,450) (6,531,949) (701,553) (760,178) (730,866) Total Rate Base Deductions $59,459,914 $56,026,677 $16,715,494 $15,841,583 $16,278,539 Docket No. Rule Statement J Page 16 of 21

165 MONTANA-DAKOTA UTILITIES CO. ANALYSIS OF ACCUMULATED DEFERRED INCOME TAXES DECEMBER 31, 2015 AND DECEMBER 31, 2016 Docket No. Rule Statement J Page 17 of 21 Total Gas Utility Balance Balance 12/31/15 12/31/16 Gas Utility - Timing Differences: Partnership Ordinary Income/Loss 24,138 25,086 AMT Carryforward Federal (4,664) 0 Postretirement Benefit Costs 92,512 1,219,466 Property Insurance - Net 1,026 (3,542) Contingency Reserve 162, ,953 Manufactured Gas Plant Site - Billings 117, ,202 Manufactured Gas Plant Site - Bismarck 0 34,306 Regulatory Assets Awaiting Recovery 70, Regulatory Commission Expense 249,457 52,223 Deferred Pension Expense - ND Gas 18,785 57,148 Loss on Buildings 0 297,066 Prepaid Demand Charges (excluding MT) 864, ,858 Prepaid Expenses 0 146,512 Purchased Gas Adjustment 58, ,310 MT PSC/MCC Tax Deferral 31,886 (245) AFUDC Equity 1,432,970 1,311,229 Non-utility Plant 3,807,979 3,747,383 AFUDC CWIP (181,024) (147,454) Charitable Contributions (110,655) (132,595) Contingency Reserve (75,800) 0 SISP Expense (5,900,526) (5,544,027) C. I. A. C. 'S (334,537) (419,972) SISP ( OCI ) (1,677,947) (1,315,955) Board of Directors Retirement Benefits (234,115) (216,029) Deferred Copmpensation - Directors (201,773) (347,141) Management Incentive (340,403) (296,717) Performance Share Program (1,200,077) (1,037,631) PCB Related Income (63,138) (51,334) Deferred Postretirement Benefit costs (689,635) (1,746,463) Deferred Medicare Part D (307,034) (189,944) Uniform Capitalization (386,970) (409,993) Bad Debts Expense (74,365) (74,403) Reserved Revenues (346,467) 0 Bonus & 401k Profit Sharing (246,404) (1,497,325) Vacation Pay (1,535,455) (1,584,624) Sundry Reserves (37,135) (27,953) Net Normalization (2,818,680) (2,457,359) (9,833,532) (8,897,953) Total Gas Utility $49,626,382 $47,128,724

166 MONTANA-DAKOTA UTILITIES CO. ACCUMULATED DEFERRED INCOME TAXES FOR THE TWELVE MONTHS ENDING DECEMBER 31, 2016 Average Pro Forma Average Balance Pro Forma 12/31/ /31/ /31/2016 Adjustments 12/31/ /31/2017 Adjustment Adjustment Liberalized Depreciation $13,916,764 $13,181,073 $13,548,919 ($222,825) 1/ $12,958,248 $13,069,661 ($479,258) M Full Normalization 345, , ,128 (57,659) 2/ 230, ,469 (57,659) N R&D Tax Carryforward 0 (35,293) (17,647) 0 (35,293) (35,293) (17,646) P Prepaid Demand Charges 310, , , , ,024 37,023 P Unamortized Loss on Debt 112,608 82,778 97,693 (10,719) 3/ 72,059 77,419 (20,274) G Provision for Pensions & Benefits 2,733,449 2,691,517 2,712, ,691,517 2,691,517 (20,966) H Provision for Injuries & Damages (2,708) 8,364 2, ,364 8,364 5,536 I Discontinued Service - Saco, MT (39,388) 4/ (78,775) (39,388) (39,388) K Customer Advances (701,553) (760,178) (730,866) (31,555) 5/ (791,733) (775,956) (45,090) P Balance $16,715,494 $15,841,583 $16,278,539 ($362,146) $15,440,050 $15,640,817 ($637,722) 1/ Deferred taxes on plant additions. See page 19. 2/ See page 20. 3/ See Rule , Statement E, page 5. 4/ See Rule , Statement E, page 9. 5/ Reflects changes as shown on Rule , Statement E, page 10. Docket No. Rule Statement J Page 18 of 21

167 MONTANA-DAKOTA UTILITIES CO. TAX DEPRECIATION ON PLANT ADDITIONS ADJUSTMENT M Plant Annual Book Book Depr. 1/ Tax 2/ Book/Tax Deferred 2017 Plant Additions Additions Depreciation for Taxes Depreciation Difference Income Taxes Distribution $4,988,393 $187,878 $93,939 $187,065 $93,126 $36,680 General Other $359,848 $20,204 $10,102 $51,408 $41,306 $16,269 Structures & Improvements 5, Computer Equipment Vehicles 433,089 31,399 15,700 86,618 70,918 27,933 Work Equipment 806,946 42,768 21, ,280 93,896 36,983 Total General $1,605,134 $94,498 $47,250 $253,379 $206,129 $81,189 General Intangible $116,991 $11,700 $5,850 $38,993 $33,143 $13,054 Common Other $66,590 $5,696 $2,848 $9,513 $6,665 $2,625 Structures & Improvements 10, Computer Equipment 21,679 4,336 2,168 4,336 2, Vehicles 78,124 5,195 2,598 15,625 13,027 5,131 Work Equipment Total Common Plant $176,838 $15,316 $7,659 $29,619 $21,960 $8,649 Common Intangible $606,663 $60,668 $30,334 $202,201 $171,867 $67,694 Total Depreciable Additions $7,494,019 $370,060 $185,032 $711,257 $526,225 $207,266 Total Depreciation Existing Plant $5,130,534 $4,038,583 ($1,091,951) ($430,091) Grand Total Depreciation Adjustment $5,315,566 $4,749,840 ($565,726) ($222,825) 1/ Annual depreciation divided by 2 to reflect half year convention. 2/ Tax depreciation rates are: Distribution 3.750% General & Common % Structures & Improvements 1.391% Transportation & Computer % Intangible % Bonus Depreciation 0.000% Docket No. Rule Statement J Page 19 of 21

168 MONTANA-DAKOTA UTILITIES CO. ADJUSTMENT TO ACCUMULATED DEFERRED INCOME TAXES TO REFLECT FULL NORMALIZATION FOR THE TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT N Docket No. Rule Statement J Page 20 of 21 Amortization of deferred taxes to reflect full normalization ($57,659)

169 MONTANA-DAKOTA UTILITIES CO. ACCUMULATED DEFERRED INCOME TAXES FOR THE TWELVE MONTHS ENDING DECEMBER 31, 2016 ADJUSTMENT P Average Pro Forma Average Balance Pro Forma 12/31/ /31/ /31/ /31/ /31/2017 Adjustment R&D Tax Carryforward $0 ($35,293) ($17,647) ($35,293) ($35,293) ($17,646) Prepaid Demand Charges 310, , , , ,024 37,023 Customer Advances (701,553) (760,178) (730,866) (791,733) (775,956) (45,090) Balance ($390,576) ($410,447) ($400,512) ($442,002) ($426,225) ($25,713) Docket No. Rule Statement J Page 21 of 21

170 MDU RESOURCES GROUP, INC. RECONCILIATION OF NET INCOME PER BOOKS WITH TAXABLE INCOME PER FEDERAL INCOME TAX RETURN FOR THE 2015 TAX YEAR Docket No. Rule Statement J Page 1 of 2 M-1 Line No. 1 Net Income per Books 2015 ($622,434,595) 2 Federal Income Tax 11,558,978 3 Excess of Capital Losses Over Capital Gains 0 4 Income Subject to Tax not Recorded on Books This Year: Other Dividends Received from Subsidiary Companies $117,972,000 G/L on Intercompany Trans. Under Reg Sec ,835 Jt Venture & Partnership Ordinary Income (6,402) Contributions in Aid of Construction 4,904,703 Book Gain(Loss) on Disposition of Property 60,713 Ordinary Gain(Loss) on Retirement of Assets - Tax 172,346 Capital Gain(Loss) on Retirement of Assets - Tax 0 Federal Non-highway Use Tax Credit 24,274 Total $123,170,469 5 Expenses Recorded on Books This Year not Deducted on This Return: Depreciation $51,586,491 Meals & Entertainment 236,621 Other Capitalized Overheads $49,159 Bad Debt Expense per Books 1,993,972 Charitable Contributions 695,406 Capitalized Property Taxes 719,200 State Income Tax Accrual per Books 1,538,812 Accrued Vacation Pay 451,713 Amortization per Books 3,734,663 Amortization of Loss on Bond Retirements 719,511 Book Depreciation Charged to Expense 965,627 Capitalized Tax Depreciation 1,245,355 Pension Expense per Return 1,399,148 Lobbying Expense 88,730 Capitalized Interest Expense - Net 6,083,852 Unrecovered Purchased Gas Cost 10,103,857 MISO MVP Reserve 300,751 Deferred Compensation 174,303 Reserved Revenue 466,543 Preferred Stock Expense - Amortization 15,739 Property Insurance Adjustment 773,668 Prepaid Demand Charges 70,640 Contingency Reserve 200,000 Big Stone II - Assets Awaiting Recovery & Amortization 356,572 MT PSC/MCC Tax Deferral 229,288 MT Net Neg Salv Amort - Fed & State 168,451 ND Environmental Cost Recovery Rider 810,363 MDU/FutureSource Aircraft Transfer 42,835 Restricted Stock Bonus Plan 6,455,061 Total Other $39,853,219

171 MDU RESOURCES GROUP, INC. RECONCILIATION OF NET INCOME PER BOOKS WITH TAXABLE INCOME PER FEDERAL INCOME TAX RETURN FOR THE 2015 TAX YEAR Docket No. Rule Statement J Page 2 of 2 M-1 Line No Total of Lines 1 Through 5 ($396,028,817) 7 Income Recorded on Books This Year not Included on This Return: Other Equity in Earnings of Subsidiary Companies ($663,432,026) Supplemental Income Security Plan-Cash Value Increase 638,271 Unrealized Gains/Losses on SISP 1,046,978 Allowance for Funds Used During Construction 7,275,431 ($654,471,346) 8 Deductions on This Return not Charged Against Book Income This Year: Depreciation $91,998,720 Other Bad Debt Expense per Return $2,031,144 Amortization per Return 1,274 Fuel & Purchased Power Deferral 249,992 Bonus Accrual & 401(k) Profit Sharing 5,471,134 State Income Tax Accrual per Return 932,031 Sundry Reserves 81,148 Deferred Compensation for Directors 687, (k) Dividend Deduction 3,168,426 Capitalized Pensions 337,449 Capitalized Vacation Pay 50,945 Capitalized Meals & Entertainment 75,935 Customer Advances 461,924 Management Incentive Compensation 294,277 Gain on Building Sale - Reg Liab 20,714 Transmission Cost Adjustment 441,081 Medicare Part D Subsidy 349,290 Mor-Gran-Sou Capacity Revenue 81,806 WAPA Fiber Demand Revenue 49,315 Repairs Deduction 4,600,820 PCB Related Income 33,713 Rate Case Expense 538,669 Research and Development - CC&B 3,120,284 Research and Development - Big Stone AQCS 392,390 Reg Assets Awaiting Recovery 206,433 Amortization of Retired Power Plants 56,210 Restricted Stock Bonus Plan - Dividends 2,396,357 Total Other $26,130,215 9 Add Lines 7 and 8 (536,342,411) 10 Income (Form 1120, Page 1, Line 28) - Line 6 less Line 9 $140,313,594 Less: Special Deductions 118,152,061 Taxable Income (Form 1120, Page 1, Line 30) $22,161,533

172 Docket No. Rule Statement J Page 1 of 1 MONTANA-DAKOTA UTILITIES CO. DIFFERENCE IN BOOK AND TAX DEPRECIATION - GAS UTILITY FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2015 Tax Depreciation Depreciation $11,869,822 Allowance for Funds Used During Construction - Book Interest 40,286 Allowance for Funds Used During Construction - Tax Interest (85,494) Contributions in Aid of Construction (1,697,566) Allowance for Funds Used During Construction - Equity 76,837 Tax Repairs 492,011 Book Depreciation Charged to Expense 307,902 Capitalized Tax Depreciation (509,789) Capitalized Property Taxes (74,563) Capitalized Pensions 142,611 Capitalized Vacation Pay 26,491 Capitalized Meals & Entertainment 11,008 Contributions in Aid of Construction-Not Yet in Service (33,168) Allowance For Funds Used During Construction-Not Yet in Service (925,756) Total Gas $9,640,632 Book Depreciation Depreciation Expense $13,462,937 Amortization Expense 104,330 Total Book Depreciation $13,567,267 Book over Tax Depreciation $3,926,635 NOTE: Excludes Common plant activity allocation to Gas Utility.

173 Docket No. Rule Statement J Page 1 of 2 MONTANA DAKOTA UTILITIES, CO. CLAIMED ALLOWANCES FOR STATE INCOME TAXES ACCRUAL AND PAYMENT RECORD FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2016 Reserve for Reserve for State Inc. Tax (Payments)/ State Inc. Tax Beg. Balance Refunds Provisions End. Balance January ($880,062) $838,293 $297,135 $255,366 February 255, ,254 (61,897) 335,723 March 335, ,345 (817,164) 287,904 April 287, ,512 (243,371) 879,045 May 879,045 (26) (457,640) 421,379 June 421,379 (28,555) (125,344) 267,480 July 267,480 (62,842) (222,542) (17,904) August (17,904) 33 (168,583) (186,454) September (186,454) (271,510) (430,371) (888,335) October (888,335) 62,775 (3,094) (828,654) November (828,654) 0 (40,118) 1/ (868,772) December (868,772) 4,751, ,818 4,498,113 $7,035,346 ($1,657,171) 1/ Provision for: November Provision ($171,746) 2015 Closing/Filing Adj. 131,628 ($40,118)

174 MONTANA DAKOTA UTILITIES CO. CLAIMED ALLOWANCES FOR STATE INCOME TAXES ACCRUAL OF STATE INCOME TAXES - GAS UTILITY FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2016 Docket No. Rule Statement J Page 2 of 2 North Total Montana Dakota Gas Federal Taxable Income $1,707,816 $7,932,045 Minnesota Adjustments Bonus Depreciation 0 0 Dividend Deduction 5 10 Preferred Stock Dividend 9,425 19,045 State Income Taxes 239, ,704 1,956,960 8,461,804 Apportionment Factor % % Minnesota Taxable Income $120,040 $519,047 Federal Taxable Income $1,707,816 $7,932,045 Montana Adjustments Dividend Deduction (73,279) 10 Preferred Stock Dividend 9,425 19,045 Fuel Tax Credit 0 0 State Income Taxes 239, ,704 1,883,676 8,461,804 Apportionment Factor % % Montana Taxable Income $340,795 $1,530,910 Federal Taxable Income $1,707,816 $7,932,045 North Dakota Adjustments Dividend Deduction 5 10 Preferred Stock Dividend 9,425 19,045 State Income Taxes 239, ,704 Depreciation: ACRS/ADR 0 (36,995) 1,956,960 8,424,809 Apportionment Factor % % North Dakota Taxable Income $ 1,198,491 $ 5,159,564 State Income Taxes: Minnesota (9.8%) $11,764 $50,867 $62,631 Montana (6.75%) 23, , ,340 North Dakota (4.31%) 51, , ,032 Consolidating Adjustment - State 153, , ,415 Total State Income Taxes $239,714 $510,704 $750,418

175 Docket No. Rule Statement K Page 1 of 1 MONTANA-DAKOTA UTILITIES CO. TAXES OTHER THAN INCOME TWELVE MONTHS ENDED DECEMBER 31, 2016 Total Pro Forma Adjustment Type of Tax Company Montana Adjustments Pro Forma No. Ad Valorem Distribution $5,080,695 $3,645,854 $531,271 $4,177,125 General 237, ,234 17, ,214 General Intangible 25, Common 354, ,604 41, ,917 Common Intangible 87,329 20, ,874 Total Ad Valorem Taxes $5,785,730 $4,087,312 $590,818 $4,678, O&M Related Taxes - Other Payroll Taxes $1,747,107 $457,039 $14,668 $471, Franchise 95, Delaware Franchise 64,136 16,854 16,854 Total O&M Related Taxes $1,907,223 $473,893 $14,668 $488,561 Revenue Taxes Montana PSC $171,687 $171,687 ($3,374) $168, Montana Consumer Counsel 97,651 97,651 (65,920) 31, South Dakota 65, Wyoming 35, $370,496 $269,338 ($69,294) $200,044 Other Highway Use Tax $1,473 $364 $364 Secretary of State Total Other $2,388 $604 $0 $604 Total Taxes Other Than Income $8,065,837 $4,831,147 $536,192 $5,367,339

176 Docket No. Rule Statement K Page 1 of 3 MONTANA-DAKOTA UTILITIES CO. AD VALOREM TAXES ADJUSTMENT NO. 18 Montana Direct Ad Valorem Taxes Pro Forma Function Per Books Pro Forma 1/ Adjustments Distribution $3,635,498 $4,165,917 $530,419 General 123, ,214 17,980 Common 282, ,852 41,233 Total 4,041,351 4,630, ,632 Allocated Ad Valorem Taxes Pro Forma Function Per Books Pro Forma 2/ Adjustments Common $14,985 $15,065 $80 Intangible 20,620 20, Total 35,605 35, Tribal Ad Valorem Taxes Pro Forma Function Per Books Pro Forma 2/ Adjustments Distribution $10,356 $11,208 $852 Total Ad Valorem Taxes $4,087,312 $4,678,130 $590,818 1/ Based on the increase of 14.59% in the Department of Revenue's final 2017 ad valorem valuation for Montana-Dakota's gas properties. 2/ Pro forma increase is based on the change in the average allocated pro forma plant balances. 3/ Pro forma increase is based on the average increase over the last three years.

177 Docket No. Rule Statement K Page 2 of 3 MONTANA-DAKOTA UTILITIES CO. PAYROLL TAXES TWELVE MONTHS ENDED DECEMBER 31, 2016 ADJUSTMENT NO. 19 Per Books Pro Forma Gas Utility Montana Pro Forma 1/ Adjustment Payroll Taxes $1,747,107 $457,039 $471,707 $14,668 1/ Pro Forma labor expense multiplied by ratio of 2016 payroll taxes to 2016 labor expense. Per Books 2016 Payroll Taxes $457,039 Gas Labor 6,297,088 % Payroll Taxes to Labor 7.26% Pro Forma Labor Expense 6,497,336

178 Docket No. Rule Statement K Page 3 of 3 MONTANA-DAKOTA UTILITIES CO. ADJUSTMENT TO CONSUMER COUNSEL TAX AND PSC TAX TWELVE MONTHS ENDED DECEMBER 31, 2016 ADJUSTMENT NO. 20 Pro Forma Revenue 1/ $68,871,816 Miscellaneous Revenue 2/ 108,777 Taxable Revenue 68,980,593 Consumer Counsel 0.046% 3/ 31,731 Per Books Consumer Counsel Tax 97,651 Pro Forma Adjustment (65,920) PSC 0.244% 3/ 168,313 Per Books PSC Tax 171,687 Pro Forma Adjustment (3,374) Pro Forma Adjustment ($69,294) 1/ Rule , Statement H, page 5. 2/ Includes revenues for reconnect fees, NSF check fees, and late payment revenue. 3/ Tax rate effective October 1, 2017.

179 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Cost of Service by Component Pro Forma Excluding Tax Tracker Residential Total Total Montana Demand Energy Customer Residential Rate Base 53,265,199 7,765,286 1,906,173 28,877,548 38,549,007 Adjustments to Rate Base 477,013 (35,613) (615,411) 1,292, ,095 Pro Forma Rate Base 53,742,212 7,729,673 1,290,762 30,169,667 39,190,102 Operating Income for Proposed Return 4,012, ,098 96,368 2,252,467 2,925,933 Current Operating Income 1,649,604 (1,140,957) 3,581,146 (3,208,549) (768,360) Adjustment to Operating Income 1,026,598 (169,627) 748, , ,530 Required Increase in Operating Income 1,336,192 1,887,682 (4,233,193) 5,175,274 2,829,763 Related Taxes for Increase Federal Income 868,293 1,226,665 (2,750,830) 3,363,016 1,838,851 Revenue Tax 8,804 12,440 (27,907) 34,118 18,651 Total Increase in Revenue 2,213,289 3,126,787 (7,011,930) 8,572,408 4,687,265 Retail Revenue Before Increase Per Books 57,557,587 8,932,570 18,134,152 7,473,318 34,540,040 Pro Forma Adjustments 8,007,882 1,556,256 4,499,846 (1,327,420) 4,728,682 Total Retail Revenue Before Increase 65,565,469 10,488,826 22,633,998 6,145,898 39,268,722 Total Cost of Service Required from Rates 67,778,758 13,615,613 15,622,068 14,718,306 43,955,987 Less Cost of Gas 43,577,265 11,048,465 14,821, ,870,209 Net Distribution Cost of Service 24,201,493 2,567, ,324 14,718,306 18,085,778 Pro Forma Rate of Return 4.980% (16.955%) % (9.688%) 0.245% Pro Forma Billing Units Dk 13,575,651 5,968,846 5,968,846 5,968,846 Bills 1,010, ,888 Unit Cost of Service Energy cost per Dk $0.134 Demand cost per DK $0.430 Customer Cost Per Month $ Docket No. Rule Statement L Schedule L-1 Page 1 of 5

180 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Cost of Service by Component Pro Forma Excluding Tax Tracker Total Montana Rate Base 53,265,199 Adjustments to Rate Base 477,013 Pro Forma Rate Base 53,742,212 Operating Income for Proposed Return 4,012,394 Current Operating Income 1,649,604 Adjustment to Operating Income 1,026,598 Required Increase in Operating Income 1,336,192 Related Taxes for Increase Federal Income 868,293 Revenue Tax 8,804 Total Increase in Revenue 2,213,289 Retail Revenue Before Increase Per Books 57,557,587 Pro Forma Adjustments 8,007,882 Total Retail Revenue Before Increase 65,565,469 Small Firm General Total Large Firm General Total Small Firm Large Firm Demand Energy Customer General Demand Energy Customer General 1,717, ,886 3,254,566 5,293,139 3,180, ,665 3,898,481 8,024,264 (1,415) (102,897) 152,842 48,530 (34,401) (306,201) 89,071 (251,531) 1,716, ,989 3,407,408 5,341,669 3,145, ,464 3,987,552 7,772, ,137 16, , , ,859 47, , ,312 (238,519) 646,718 (120,524) 287,675 (495,700) 2,251,835 (307,357) 1,448,778 (41,491) 363,691 (25,618) 296,582 (31,396) 153,884 (17,035) 105, ,147 (994,134) 400,539 (185,448) 761,955 (2,357,977) 622,103 (973,919) 265,223 (646,012) 260,279 (120,510) 495,137 (1,532,269) 404,257 (632,875) 2,691 (6,554) 2,641 (1,222) 5,023 (15,545) 4,101 (6,421) 676,061 (1,646,700) 663,459 (307,180) 1,262,115 (3,905,791) 1,030,461 (1,613,215) 1,885,054 3,228,906 1,253,398 6,367,358 3,947,240 9,509, ,219 14,316, ,153 1,038,018 (255,752) 1,102, ,807 2,213,432 (264,586) 2,712,653 2,205,207 4,266, ,646 7,469,777 4,711,047 11,722, ,633 17,029,118 Total Cost of Service Required from Rates 67,778,758 Less Cost of Gas 43,577,265 Net Distribution Cost of Service 24,201,493 Pro Forma Rate of Return 4.980% 2,881,268 2,620,224 1,661,105 7,162,597 5,973,162 7,816,647 1,626,094 15,415,903 2,331,708 2,477, ,809,033 4,882,744 7,375, ,258, , ,899 1,661,105 2,353,564 1,090, ,919 1,626,094 3,157,431 (16.315%) % (4.289%) % (16.756%) % (8.135%) % Pro Forma Billing Units Dk 13,575,651 Bills 1,010,652 Unit Cost of Service Energy cost per Dk Demand cost per DK Customer Cost Per Month 1,109,554 1,109,554 1,109,554 2,828,308 2,828,308 2,828,308 86,064 29,100 $0.129 $0.156 $0.495 $0.386 $ $ Docket No. Rule Statement L Schedule L-1 Page 2 of 5

181 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Cost of Service by Component Pro Forma Excluding Tax Tracker Total Montana Rate Base 53,265,199 Adjustments to Rate Base 477,013 Pro Forma Rate Base 53,742,212 Operating Income for Proposed Return 4,012,394 Current Operating Income 1,649,604 Adjustment to Operating Income 1,026,598 Required Increase in Operating Income 1,336,192 Related Taxes for Increase Federal Income 868,293 Revenue Tax 8,804 Total Increase in Revenue 2,213,289 Retail Revenue Before Increase Per Books 57,557,587 Pro Forma Adjustments 8,007,882 Total Retail Revenue Before Increase 65,565,469 Small Interruptible Total Large Interruptible Total Small Large Demand Energy Customer Interruptible Demand Energy Customer Interruptible 376,258 47, , , ,440 21,558 39, ,041 18,260 (15,390) 4,790 7,660 37,719 (6,697) , ,518 32, , , ,159 14,861 39, ,300 29,455 2,430 23,394 55,279 48,018 1,110 2,933 52,061 (72,760) 362,561 17, ,153 (112,430) 468,185 18, ,358 19,196 (76,797) (13,557) (71,158) 31,464 (187,359) (12,914) (168,809) 83,019 (283,334) 19,599 (180,716) 128,984 (279,716) (2,756) (153,488) 53,948 (184,117) 12,736 (117,433) 83,817 (181,766) (1,791) (99,740) 547 (1,868) 129 (1,192) 850 (1,844) (18) (1,012) 137,514 (469,319) 32,464 (299,341) 213,651 (463,326) (4,565) (254,240) 71,949 1,071, ,638 1,276,440 23, ,900 48,042 1,057,284 14,849 (182,947) (41,272) (209,370) 3,647 (306,337) (23,812) (326,502) 86, ,906 91,366 1,067,070 26, ,563 24, ,782 Total Cost of Service Required from Rates 67,778,758 Less Cost of Gas 43,577,265 Net Distribution Cost of Service 24,201,493 Pro Forma Rate of Return 4.980% 224, , , , , ,237 19, ,542 85, , ,016 22, , , ,818 49, , , ,119 55,223 19, ,007 (13.577%) % 1.211% % (12.589%) % % % Pro Forma Billing Units Dk 13,575,651 Bills 1,010,652 Unit Cost of Service Energy cost per Dk Demand cost per DK Customer Cost Per Month 722, , ,335 2,946,608 2,946,608 2,946, $0.068 $0.019 $0.192 $0.074 $ $ Docket No. Rule Statement L Schedule L-1 Page 3 of 5

182 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Summary Report Twelve Months Ended December 31, 2016 Pro Forma 2017 Total Total Total Total Operating Income and Total Total Small Firm Large Firm Small Large Rate of Return Montana Residential General General Interruptible Interruptible Sales Revenues 57,080,837 34,184,570 6,321,973 14,252,319 1,270,358 1,051,617 Adjustments to Sales Revenues 7,982,622 4,713,567 1,099,527 2,706,128 (209,797) (326,803) Total Sales Revenues 65,063,459 38,898,137 7,421,500 16,958,447 1,060, ,814 Other Revenues 476, ,470 45,385 64,146 6,082 5,667 Adjustments to Other Revenues 25,260 15,115 2,892 6, Total Other Revenues 502, ,585 48,277 70,671 6,509 5,968 Total Operating Revenues 65,565,469 39,268,722 7,469,777 17,029,118 1,067, ,782 Operating Expense Cost of Gas 33,821,848 20,112,924 3,845,488 9,196, , ,103 Adj. to Cost of Gas 9,755,417 5,757, ,545 3,062,432 (36,277) 8,432 Total Cost of Gas 43,577,265 25,870,209 4,809,033 12,258, , ,535 Other O&M Expense 12,074,046 9,200,221 1,134,033 1,482, , ,379 Adjustments to Other O&M 453, ,539 42,368 52,831 4,837 4,447 Total Other O&M Expense 12,527,068 9,548,760 1,176,401 1,535, , ,826 Total Operation & Maintenance Expense 56,104,333 35,418,969 5,985,434 13,793, , ,361 Depreciation Expense 4,783,296 3,713, , ,215 48,452 43,662 Adjustment to Depreciation Expense 226, ,709 22,661 32,038 3,374 3,432 Total Depreciation Expense 5,009,510 3,878, , ,253 51,826 47,094 Taxes Other Than Income Taxes 4,831,147 3,475, , ,652 73,162 71,965 Adjustment to Taxes Other Than Income (4,094,792) (2,949,392) (412,898) (605,048) (63,529) (63,925) Total Taxes Other Than Income 736, ,491 73, ,604 9,633 8,040 Docket No. Rule Statement L Schedule L-1 Page 4 of 5

183 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Summary Report Twelve Months Ended December 31, 2016 Pro Forma 2017 Total Total Total Total Operating Income and Total Total Small Firm Large Firm Small Large Rate of Return Montana Residential General General Interruptible Interruptible Current Income Taxes - Fed. & State 1,132,863 (660,634) 206,238 1,076, , ,889 Adjustment to Current Income Taxes 554, , ,437 52,781 (47,892) (111,376) Total Current Income Taxes 1,686,910 (181,537) 387,675 1,129, , ,513 Deferred Income Taxes (735,217) (533,466) (71,056) (109,902) (10,721) (10,072) Adjustment to Deferred Income Tax 87,376 63,913 8,724 12,166 1,276 1,297 Total Deferred Income Taxes (647,841) (469,553) (62,332) (97,736) (9,445) (8,775) Total Operating Expenses 62,889,267 39,172,551 6,885,520 15,474, , ,233 Pro Forma Operating Income 2,676,202 96, ,257 1,554, , ,549 Rate Base 53,265,199 38,549,007 5,293,139 8,024, , ,041 Adjustment to Rate Base 477, ,095 48,530 (251,531) 7,660 31,259 Total Pro Forma Rate Base 53,742,212 39,190,102 5,341,669 7,772, , ,300 Pro Forma Rate of Return 4.980% 0.245% % % % % Docket No. Rule Statement L Schedule L-1 Page 5 of 5

184 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Residential Allocation Total Total Factor Montana Demand Energy Customer Residential Rate Base Gas Plant in Service Production Plant Distribution Plant Land 13 15,962 6, ,539 10,262 Rights of Way 13 22,846 9, ,064 14,686 Structures & Improvements ,258 94, , ,792 Direct to Small IT Direct 14, Direct to Large IT Direct 2, Mains - $36,312,827 Demand Related 75% 2 27,234,620 15,293, ,293,642 Customer Related 25% 9 9,078, ,047,769 8,047,769 Meas. & Reg. Equip. - General , , , ,521 Meas. & Reg. Equip. - City Gate 13 26,213 11, ,809 16,850 Direct to Small IT Direct 83, Direct to Large IT Direct 16, Services 37 30,288, ,883,259 25,883,259 Meters 10 22,018, ,258,412 15,258,412 Service Regulators 10 2,915, ,020,244 2,020,244 Direct to Firm General Direct 27, Direct to Small IT Direct 12, Ind. Meas. & Reg. Station Equipment , , , ,535 Direct to Small IT Direct 8, Direct to Large IT Direct 15, Cathodic Protection & Other Equipment 13 1,689, , ,344 1,085,733 Distribution Plant 94,691,499 16,547, ,869,388 68,416,705 General Plant 15 9,901,875 1,730, ,423,974 7,154,324 Intangible Plant - General ,496 78, , ,773 Common Plant 15 8,074,187 1,410, ,422,819 5,833,781 Intangible Plant - Common Excluding CC&B 15 2,163, , ,185,032 1,563,080 Intangible Plant - Common (CC&B) 8 6,656, ,893,462 5,893,462 Gas Plant Leased to Others Docket No. Rule Statement L Schedule L-2 Page 1 of 30

185 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Allocation Factor Total Montana Firm General-Meter < 500 cubic feet Firm General > 500 cubic feet Total Small Total Large Demand Energy Customer Firm General Demand Energy Customer Firm General Rate Base Gas Plant in Service Production Plant 3 0 Distribution Plant Land 13 15,962 Rights of Way 13 22,846 Structures & Improvements ,258 Direct to Small IT Direct 14,273 Direct to Large IT Direct 2,868 Mains - $36,312,827 Demand Related 75% 2 27,234,620 Customer Related 25% 9 9,078,207 Meas. & Reg. Equip. - General ,775 Meas. & Reg. Equip. - City Gate 13 26,213 Direct to Small IT Direct 83,476 Direct to Large IT Direct 16,066 Services 37 30,288,058 Meters 10 22,018,240 Service Regulators 10 2,915,258 Direct to Firm General Direct 27,085 Direct to Small IT Direct 12,521 Ind. Meas. & Reg. Station Equipment ,532 Direct to Small IT Direct 8,161 Direct to Large IT Direct 15,976 Cathodic Protection & Other Equipment 13 1,689,104 Distribution Plant 94,691,499 General Plant 15 9,901,875 Intangible Plant - General ,496 Common Plant 15 8,074,187 Intangible Plant - Common Excluding CC&B 15 2,163,366 Intangible Plant - Common (CC&B) 8 6,656,006 Gas Plant Leased to Others , ,744 2, ,039 2, ,497 4, ,350 19, ,761 24,615 41, ,599 42, ,200, ,200,546 6,657, ,657, , , , ,774 61, ,748 76, , , ,876 2, ,864 4, , ,209,236 3,209, ,152,439 1,152, ,760,853 1,760, ,564,797 4,564, , , , , ,085 27, , ,331 32,731 54, ,126 57, , , , , , ,654 3,462, ,060,752 9,523,659 7,202, ,600,527 13,803, , , , , ,216 1,443,428 16, ,770 45,208 34, ,332 65, , , , , ,816 1,177,000 79, , , , , , , , , , Docket No. Rule Statement L Schedule L-2 Page 2 of 30

186 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Allocation Factor Total Montana Small Interruptible Total Large Interruptible Total Small Large Demand Energy Customer Interruptible Demand Energy Customer Interruptible Rate Base Gas Plant in Service Production Plant 3 0 Distribution Plant Land 13 15,962 Rights of Way 13 22,846 Structures & Improvements ,258 Direct to Small IT Direct 14,273 Direct to Large IT Direct 2,868 Mains - $36,312,827 Demand Related 75% 2 27,234,620 Customer Related 25% 9 9,078,207 Meas. & Reg. Equip. - General ,775 Meas. & Reg. Equip. - City Gate 13 26,213 Direct to Small IT Direct 83,476 Direct to Large IT Direct 16,066 Services 37 30,288,058 Meters 10 22,018,240 Service Regulators 10 2,915,258 Direct to Firm General Direct 27,085 Direct to Small IT Direct 12,521 Ind. Meas. & Reg. Station Equipment ,532 Direct to Small IT Direct 8,161 Direct to Large IT Direct 15,976 Cathodic Protection & Other Equipment 13 1,689,104 Distribution Plant 94,691,499 General Plant 15 9,901,875 Intangible Plant - General ,496 Common Plant 15 8,074,187 Intangible Plant - Common Excluding CC&B 15 2,163,366 Intangible Plant - Common (CC&B) 8 6,656,006 Gas Plant Leased to Others , ,003 7, ,952 10, ,568 14, , , , ,646 1,281, ,281, ,814 4, , ,497 24, , , ,869 83, , ,017 16, ,412 39, ,712 3, , , ,129 50, ,849 50, ,637 6, ,521 12, , ,653 10, ,574 6, ,040 8, , ,994 15,976 37, ,513 59, , , ,517 1,465,310 1,412, ,560 1,482,341 99, , , , , ,008 4, ,461 6,955 6, ,036 80, , , , , ,396 21, ,846 33,477 32, ,589 33, ,635 3, Docket No. Rule Statement L Schedule L-2 Page 3 of 30

187 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Residential Allocation Total Total Factor Montana Demand Energy Customer Residential Total Gas Plant in Service 121,936,429 20,145, ,040,899 89,186,125 Less: Accumulated Depreciation Production Plant Distribution Plant Rights of Way 13 15,906 6, ,526 10,225 Structures & Improvements ,379 73, , ,928 Mains 13 21,978,524 9,256, ,870,953 14,127,508 Meas. & Reg. Equip. - General , , , ,317 Meas. & Reg. Equip. - City Gate ,613 12, ,680 19,375 Services 37 22,333, ,085,954 19,085,954 Meters 10 7,528, ,217,363 5,217,363 Service Regulators 20 1,022, , ,211 Ind. Meas. & Reg. Station Equipment ,903 39, ,900 60,618 Cathodic Protection & Other Equipment , , , ,684 Distribution Plant 54,857,056 10,038, ,285,206 40,324,183 General Plant 15 3,248, , ,779,209 2,346,811 Intangible Plant - General 15 78,453 13, ,973 56,683 Common Plant 15 2,800, , ,534,149 2,023,572 Intangible Plant - Common Excluding CC&B 15 1,560, , ,583 1,127,211 Intangible Plant - Common (CC&B) 8 1,335, ,182,429 1,182,429 Gas Plant Leased to Others Less: Total Accumulated Reserve for Depreciation 63,879,824 11,382, ,678,549 47,060,889 Net Gas Plant in Service 58,056,605 8,762, ,362,350 42,125,236 CWIP in Service Total Gas Plant in Service 58,056,605 8,762, ,362,350 42,125,236 Additions Materials & Supplies , , , ,238 Prepaid Insurance 24 30,942 4, ,782 22,452 Gas in Underground Storage 33 4,103,611 1,040,419 1,395, ,436,162 Prepaid Demand/Commodity 33 1,142, , , ,034 Other 24 7,651 1, ,395 5,550 Provision for Pension & Benefits 31 6,953, , ,966 4,482,394 5,298,753 Unamortized Loss on Debt ,556 36, , ,722 Total Additions 13,355,434 2,219,641 1,906,173 5,123,097 9,248,911 Total Before Deductions 71,412,039 10,982,527 1,906,173 38,485,447 51,374,147 Docket No. Rule Statement L Schedule L-2 Page 4 of 30

188 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Allocation Factor Total Montana Total Gas Plant in Service 121,936,429 Less: Accumulated Depreciation Production Plant 3 0 Distribution Plant Rights of Way 13 15,906 Structures & Improvements ,379 Mains 13 21,978,524 Meas. & Reg. Equip. - General ,887 Meas. & Reg. Equip. - City Gate ,613 Services 37 22,333,991 Meters 10 7,528,775 Service Regulators 20 1,022,684 Ind. Meas. & Reg. Station Equipment ,903 Cathodic Protection & Other Equipment ,394 Distribution Plant 54,857,056 General Plant 15 3,248,082 Intangible Plant - General 15 78,453 Common Plant 15 2,800,705 Intangible Plant - Common Excluding CC&B 15 1,560,107 Intangible Plant - Common (CC&B) 8 1,335,421 Gas Plant Leased to Others 15 0 Less: Total Accumulated Reserve for Depreciation 63,879,824 Net Gas Plant in Service 58,056,605 CWIP in Service 15 0 Total Gas Plant in Service 58,056,605 Additions Materials & Supplies ,659 Prepaid Insurance 24 30,942 Gas in Underground Storage 33 4,103,611 Prepaid Demand/Commodity 33 1,142,119 Other 24 7,651 Provision for Pension & Benefits 31 6,953,896 Unamortized Loss on Debt ,556 Total Additions 13,355,434 Total Before Deductions 71,412,039 Firm General-Meter < 500 cubic feet Firm General > 500 cubic feet Total Small Total Large Demand Energy Customer Firm General Demand Energy Customer Firm General 4,215, ,945,342 12,161,194 8,769, ,227,334 16,996, , ,738 2, ,029 15, ,680 19,028 31, ,236 33,159 1,937, ,547 2,401,694 4,029, ,019 4,185,348 48, ,749 60, , , ,857 2, ,293 5, , ,366,445 2,366, , , , , ,560,857 1,560, ,064 90, , ,180 8, ,993 10,305 17, ,958 87, , , , , ,028 2,100, ,562,416 5,663,303 4,369, ,789,036 7,158, , , , , , ,483 2, ,021 7,890 5, ,469 11, , , , , , ,268 57, , , , , , , , ,450 38, ,382, ,168,164 6,550,181 4,954, ,363,337 8,318,010 1,833, ,777,178 5,611,013 3,814, ,863,997 8,678, ,833, ,777,178 5,611,013 3,814, ,863,997 8,678,431 31, ,919 87,869 66, , , ,013 2,990 2, ,592 4, , , , , , ,154,363 61,112 64, , , , , , ,321 22, , , ,270 57, , ,770 7, ,846 23,539 16, ,405 36, , , ,416 1,347, , , ,245 2,498,948 2,300, ,886 4,336,594 6,958,184 4,789, ,665 5,442,242 11,177,379 Docket No. Rule Statement L Schedule L-2 Page 5 of 30

189 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Allocation Factor Total Montana Total Gas Plant in Service 121,936,429 Less: Accumulated Depreciation Production Plant 3 0 Distribution Plant Rights of Way 13 15,906 Structures & Improvements ,379 Mains 13 21,978,524 Meas. & Reg. Equip. - General ,887 Meas. & Reg. Equip. - City Gate ,613 Services 37 22,333,991 Meters 10 7,528,775 Service Regulators 20 1,022,684 Ind. Meas. & Reg. Station Equipment ,903 Cathodic Protection & Other Equipment ,394 Distribution Plant 54,857,056 General Plant 15 3,248,082 Intangible Plant - General 15 78,453 Common Plant 15 2,800,705 Intangible Plant - Common Excluding CC&B 15 1,560,107 Intangible Plant - Common (CC&B) 8 1,335,421 Gas Plant Leased to Others 15 0 Less: Total Accumulated Reserve for Depreciation 63,879,824 Net Gas Plant in Service 58,056,605 CWIP in Service 15 0 Total Gas Plant in Service 58,056,605 Additions Materials & Supplies ,659 Prepaid Insurance 24 30,942 Gas in Underground Storage 33 4,103,611 Prepaid Demand/Commodity 33 1,142,119 Other 24 7,651 Provision for Pension & Benefits 31 6,953,896 Unamortized Loss on Debt ,556 Total Additions 13,355,434 Total Before Deductions 71,412,039 Small Interruptible Total Large Interruptible Total Small Large Demand Energy Customer Interruptible Demand Energy Customer Interruptible 1,152, ,893 1,787,548 1,719, ,158 1,805, , ,781 14,900 7, , , , , , ,860 12, ,346 19, ,623 72, ,002 96,665 14, ,619 19, ,062 29, ,737 2, , , ,141 17, ,932 21, ,297 2,297 4, ,664 7, ,258 8,358 21, ,929 34, , , , , , , ,336 32, ,786 50,263 48, ,386 50, ,214 1, ,229 28, ,336 43,339 41, ,057 43,843 15, ,543 24,142 23, ,146 24, , , , , ,562 1,009, , , , , , , , , , , , ,348 8, ,784 13,519 13, , ,051 34, ,943 2,121 15, ,283 2,241 9, , , , ,118 3,339 35,877 78,334 62,024 2,176 5,706 69,906 1, ,591 3,552 3, ,336 60,417 47,942 42, ,863 81,389 21,558 6, , ,797 47, , , ,141 21,558 57, ,889 Docket No. Rule Statement L Schedule L-2 Page 6 of 30

190 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Residential Allocation Total Total Factor Montana Demand Energy Customer Residential Deductions Accumulated Deferred Income Tax 24 (16,278,539) (2,457,033) 0 (9,354,496) (11,811,529) Accumulated Investment Tax Credit Customer Advances For Construction Direct (1,868,301) (760,208) 0 (253,403) (1,013,611) Total Deductions (18,146,840) (3,217,241) 0 (9,607,899) (12,825,140) Total Rate Base 53,265,199 7,765,286 1,906,173 28,877,548 38,549,007 Income Statement Gas Operating Revenues Retail Sales & Transportation Residential Direct 33,080,390 8,575,102 17,492,154 7,013,134 33,080,390 Firm General Direct 19,886, Small Interruptible Direct 1,239, Large Interruptible Direct 1,029, Total Sales & Transportation Revenues 55,235,374 8,575,102 17,492,154 7,013,134 33,080,390 Other Operating Revenue Miscellaneous Reconnect Fees 11 17, ,396 15,396 NSF Check Fees 11 21, ,739 18,739 Miscellaneous 24 11,194 1, ,432 8,122 Rent From Gas Property ,505 50, , ,712 Other Gas Revenues Miscellaneous 31 26,928 2, ,357 20,518 Late Payment and Penalty Revenues 31 65,595 6,550 1,150 42,283 49,983 Total Other Operating Revenue 476,750 61,418 1, , ,470 Unbilled Revenue 26 1,845, , , ,754 1,104,180 Total Operating Revenues 57,557,587 8,932,570 18,134,152 7,473,318 34,540,040 Operation & Maintenance Expenses Cost of Purchased Gas Direct 33,821,848 8,575,102 11,537, ,112,924 Production Expense Production Expense Other Gas Supply Expenses 3 208, , ,580 Total Production Expense 208, , ,580 Docket No. Rule Statement L Schedule L-2 Page 7 of 30

191 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Allocation Factor Total Montana Firm General-Meter < 500 cubic feet Firm General > 500 cubic feet Total Small Total Large Demand Energy Customer Firm General Demand Energy Customer Firm General Deductions Accumulated Deferred Income Tax 24 (16,278,539) Accumulated Investment Tax Credit 24 0 Customer Advances For Construction Direct (1,868,301) Total Deductions (18,146,840) Total Rate Base 53,265,199 Income Statement Gas Operating Revenues Retail Sales & Transportation Residential Direct 33,080,390 Firm General Direct 19,886,291 Small Interruptible Direct 1,239,068 Large Interruptible Direct 1,029,625 Total Sales & Transportation Revenues 55,235,374 Other Operating Revenue Miscellaneous Reconnect Fees 11 17,378 NSF Check Fees 11 21,150 Miscellaneous 24 11,194 Rent From Gas Property ,505 Other Gas Revenues Miscellaneous 31 26,928 Late Payment and Penalty Revenues 31 65,595 Total Other Operating Revenue 476,750 Unbilled Revenue 26 1,845,463 Total Operating Revenues 57,557,587 Operation & Maintenance Expenses Cost of Purchased Gas Direct 33,821,848 Production Expense Production Expense 3 0 Other Gas Supply Expenses 3 208,060 Total Production Expense 208,060 (514,191) 0 (1,059,086) (1,573,277) (1,069,532) 0 (1,363,820) (2,433,352) (68,826) 0 (22,942) (91,768) (539,822) 0 (179,941) (719,763) (583,017) 0 (1,082,028) (1,665,045) (1,609,354) 0 (1,543,761) (3,153,115) 1,717, ,886 3,254,566 5,293,139 3,180, ,665 3,898,481 8,024, ,809,720 3,107,869 1,193,111 6,110,700 3,789,669 9,181, ,650 13,775, ,809,720 3,107,869 1,193,111 6,110,700 3,789,669 9,181, ,650 13,775, ,481 1, ,802 1, , ,673 10, ,763 32,329 21, ,025 50, ,879 2,530 1, ,912 3,307 1, ,576 6,161 2, ,657 8,053 12, ,229 45,385 26, ,642 64,146 62, ,735 28, , , ,965 18, ,728 1,885,054 3,228,906 1,253,398 6,367,358 3,947,240 9,509, ,219 14,316,465 1,809,720 2,035, ,845,488 3,789,669 5,406, ,196, , , , , , , , ,557 Docket No. Rule Statement L Schedule L-2 Page 8 of 30

192 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Allocation Factor Total Montana Small Interruptible Total Large Interruptible Total Small Large Demand Energy Customer Interruptible Demand Energy Customer Interruptible Deductions Accumulated Deferred Income Tax 24 (16,278,539) Accumulated Investment Tax Credit 24 0 Customer Advances For Construction Direct (1,868,301) Total Deductions (18,146,840) Total Rate Base 53,265,199 Income Statement Gas Operating Revenues Retail Sales & Transportation Residential Direct 33,080,390 Firm General Direct 19,886,291 Small Interruptible Direct 1,239,068 Large Interruptible Direct 1,029,625 Total Sales & Transportation Revenues 55,235,374 Other Operating Revenue Miscellaneous Reconnect Fees 11 17,378 NSF Check Fees 11 21,150 Miscellaneous 24 11,194 Rent From Gas Property ,505 Other Gas Revenues Miscellaneous 31 26,928 Late Payment and Penalty Revenues 31 65,595 Total Other Operating Revenue 476,750 Unbilled Revenue 26 1,845,463 Total Operating Revenues 57,557,587 Operation & Maintenance Expenses Cost of Purchased Gas Direct 33,821,848 Production Expense Production Expense 3 0 Other Gas Supply Expenses 3 208,060 Total Production Expense 208,060 (131,049) 0 (106,323) (237,372) (208,822) 0 (14,187) (223,009) (20,490) 0 (6,830) (27,320) (11,879) 0 (3,960) (15,839) (151,539) 0 (113,153) (264,692) (220,701) 0 (18,147) (238,848) 376,258 47, , , ,440 21,558 39, , ,355 1,045, ,020 1,239, , ,576 46,570 1,029,625 66,355 1,045, ,020 1,239,068 17, ,576 46,570 1,029, , ,185 4,878 4, , , ,735 6,082 5, ,667 2,291 26,116 2,883 31, ,295 1,094 21,992 71,949 1,071, ,638 1,276,440 23, ,900 48,042 1,057,284 66, , ,293 17, , , , , , , Docket No. Rule Statement L Schedule L-2 Page 9 of 30

193 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Residential Allocation Total Total Factor Montana Demand Energy Customer Residential Distribution Expenses Operation Distribution Load Dispatching 1 6, , ,706 Mains and Services 22 1,449, , ,450 1,071,291 Measuring Stations - General 18 42,065 17, ,321 27,037 Measuring Stations - Industrial 21 12,453 4, ,553 7,406 Measuring Stations - City Gate Meters & House Regulators , , ,902 Customer Installations , , ,798 Other Gas Distribution 27 1,018, ,701 1, , ,630 Rents 27 38,013 5, ,525 27,342 Supervision & Engineering ,440 92, , ,348 Total Operation Expense 4,006, ,445 4,633 2,268,382 2,881,460 Maintenance Structures & Improvements 17 9,203 3, ,895 5,497 Mains 13 36,823 15, ,161 23,669 Measuring Stations - General 18 51,102 21, ,326 32,847 Measuring Stations - Industrial 21 37,656 14, ,723 22,400 Measuring Stations - City Gate Services 37 72, ,620 61,620 Meters & House Regulators , ,325 99,325 Other Equipment ,677 32, , ,402 Supervision & Engineering ,800 33, , ,286 Total Maintenance Expense 769, , , ,046 Total Distribution Expenses 4,776, ,956 4,633 2,685,917 3,420,506 Customer Accounts 8 68, ,053 61,053 Meter Reading , , ,825 Customer Records & Collection 8 1,628, ,441,855 1,441,855 Uncollectible Accounts , , ,681 Miscellaneous Customer Accounts 8 49, ,145 44,145 Customer Service & Information 8 80, ,367 71,367 Sales Expenses 8 88, ,117 78,117 Administration & General Expenses 30 4,764, ,718 83,557 3,070,817 3,630,092 Total Gas O&M Expenses 45,895,894 9,780,776 11,749,592 7,782,777 29,313,145 Docket No. Rule Statement L Schedule L-2 Page 10 of 30

194 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Allocation Total Factor Montana Distribution Expenses Operation Distribution Load Dispatching 1 6,154 Mains and Services 22 1,449,458 Measuring Stations - General 18 42,065 Measuring Stations - Industrial 21 12,453 Measuring Stations - City Gate 19 0 Meters & House Regulators ,438 Customer Installations ,515 Other Gas Distribution 27 1,018,580 Rents 27 38,013 Supervision & Engineering ,440 Total Operation Expense 4,006,116 Maintenance Structures & Improvements 17 9,203 Mains 13 36,823 Measuring Stations - General 18 51,102 Measuring Stations - Industrial 21 37,656 Measuring Stations - City Gate 19 0 Services 37 72,107 Meters & House Regulators ,556 Other Equipment ,677 Supervision & Engineering ,800 Total Maintenance Expense 769,924 Total Distribution Expenses 4,776,040 Customer Accounts 8 68,953 Meter Reading ,354 Customer Records & Collection 8 1,628,413 Uncollectible Accounts ,536 Miscellaneous Customer Accounts 8 49,858 Customer Service & Information 8 80,602 Sales Expenses 8 88,224 Administration & General Expenses 30 4,764,006 Total Gas O&M Expenses 45,895,894 Firm General-Meter < 500 cubic feet Firm General > 500 cubic feet Total Small Total Large Demand Energy Customer Firm General Demand Energy Customer Firm General , ,282 69, , , , , ,575 3, ,597 7, ,011 1, ,260 2, , ,974 32, ,336 84, ,790 33, ,595 87,595 32, ,226 99,820 67, , ,261 1, ,509 3,725 2, ,298 5,832 19, ,223 59,725 40, ,869 93, , , , ,855 2, , , , ,629 3, ,024 6, ,012 4, ,080 5,584 9, ,732 3, ,808 6, , ,640 7, ,744 2, ,618 11, ,715 29,715 6, ,057 19,916 14, ,788 34,056 6, ,317 20,313 14, ,181 34,732 25, ,408 73,838 52, , , , , , ,751 2, , , ,872 5, ,985 1, ,944 13, ,147 36, , , ,886 46, ,069 20, ,786 6, ,246 4, ,436 1, ,864 6, ,321 2, ,513 7, ,540 2,540 99,557 15, , , ,081 39, , ,906 2,062,040 2,075, ,348 4,979,521 4,314,501 5,506, ,225 10,678,442 Docket No. Rule Statement L Schedule L-2 Page 11 of 30

195 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Allocation Total Factor Montana Distribution Expenses Operation Distribution Load Dispatching 1 6,154 Mains and Services 22 1,449,458 Measuring Stations - General 18 42,065 Measuring Stations - Industrial 21 12,453 Measuring Stations - City Gate 19 0 Meters & House Regulators ,438 Customer Installations ,515 Other Gas Distribution 27 1,018,580 Rents 27 38,013 Supervision & Engineering ,440 Total Operation Expense 4,006,116 Maintenance Structures & Improvements 17 9,203 Mains 13 36,823 Measuring Stations - General 18 51,102 Measuring Stations - Industrial 21 37,656 Measuring Stations - City Gate 19 0 Services 37 72,107 Meters & House Regulators ,556 Other Equipment ,677 Supervision & Engineering ,800 Total Maintenance Expense 769,924 Total Distribution Expenses 4,776,040 Customer Accounts 8 68,953 Meter Reading ,354 Customer Records & Collection 8 1,628,413 Uncollectible Accounts ,536 Miscellaneous Customer Accounts 8 49,858 Customer Service & Information 8 80,602 Sales Expenses 8 88,224 Administration & General Expenses 30 4,764,006 Total Gas O&M Expenses 45,895,894 Small Interruptible Total Large Interruptible Total Small Large Demand Energy Customer Interruptible Demand Energy Customer Interruptible , ,336 17, ,410 27, , , , , ,300 7, ,370 7, , ,842 15,196 13, , , ,094 9,092 7, ,780 32, ,910 59,766 51,776 2,288 3,647 57, , ,300 1, ,135 1, ,804 1, ,723 2, , ,572 2, , ,812 4,192 3, ,111 2, ,848 4,276 3, ,193 8, ,717 15,542 13, ,817 15,242 41, ,627 75,308 65,201 2,288 5,464 72, ,041 3, ,799 2,287 24,579 53,665 42,492 1,491 3,909 47, , ,735 62, , , ,403 9, ,482 Docket No. Rule Statement L Schedule L-2 Page 12 of 30

196 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Residential Allocation Total Total Factor Montana Demand Energy Customer Residential O&M Excl. Cost of Gas and A&G 7,310, , ,213 4,711,960 5,570,129 O&M Excl. Cost of Gas 12,074,046 1,205, ,770 7,782,777 9,200,221 Depreciation Expense Production Plant Distribution Plant Rights of Way Structures & Improvements 17 6,368 2, ,311 3,803 Mains , , , ,550 Meas. & Reg. Equip. - General 18 21,369 9, ,735 13,735 Meas. & Reg. Equip. - City Gate 19 4, Services 37 2,147, ,835,511 1,835,511 Meters , , ,050 Service Regulators 20 52, ,921 35,921 Ind. Meas. & Reg. Station Equipment 21 10,569 4, ,168 6,287 Cathodic Protection & Other Equipment 13 50,515 21, ,196 32,470 Total Distribution Plant 3,788, , ,544,003 2,923,163 General Plant ,825 21, ,733 88,022 Amort. of Intangible Plant - General 15 66,243 11, ,285 47,861 Common Plant ,465 46, , ,805 Amort. of Intangible Plant - Common (less CC&B) ,279 18, ,573 74,621 Amort. of Intangible Plant - CC&B 8 438, , ,000 Gas Plant Leased to Others Total Depreciation Expense 4,783, , ,237,009 3,713,472 Taxes Other Than Income Ad Valorem Taxes-Production Ad Valorem Taxes-Other 15 4,087, , ,238,916 2,953,173 Other Taxes - Payroll, Franchise, Other ,497 47,382 8, , ,560 Other Taxes - Revenue ,338 43,207 93,461 24, ,150 Total Taxes Other Than Income Taxes 4,831, , ,783 2,569,254 3,475,883 Total Operating Expense 55,510,337 11,062,085 11,851,375 13,589,040 36,502,500 Interest Expense 24 1,185, , , ,437 Taxable Income Before Adjustments 861,406 (2,308,503) 6,282,777 (6,797,171) (2,822,897) Docket No. Rule Statement L Schedule L-2 Page 13 of 30

197 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Allocation Total Factor Montana O&M Excl. Cost of Gas and A&G 7,310,040 O&M Excl. Cost of Gas 12,074,046 Depreciation Expense Production Plant 3 0 Distribution Plant Rights of Way Structures & Improvements 17 6,368 Mains ,388 Meas. & Reg. Equip. - General 18 21,369 Meas. & Reg. Equip. - City Gate 19 4,716 Services 37 2,147,877 Meters ,623 Service Regulators 20 52,539 Ind. Meas. & Reg. Station Equipment 21 10,569 Cathodic Protection & Other Equipment 13 50,515 Total Distribution Plant 3,788,282 General Plant ,825 Amort. of Intangible Plant - General 15 66,243 Common Plant ,465 Amort. of Intangible Plant - Common (less CC&B) ,279 Amort. of Intangible Plant - CC&B 8 438,202 Gas Plant Leased to Others 15 0 Total Depreciation Expense 4,783,296 Taxes Other Than Income Ad Valorem Taxes-Production 3 0 Ad Valorem Taxes-Other 15 4,087,312 Other Taxes - Payroll, Franchise, Other ,497 Other Taxes - Revenue ,338 Total Taxes Other Than Income Taxes 4,831,147 Total Operating Expense 55,510,337 Firm General-Meter < 500 cubic feet Firm General > 500 cubic feet Total Small Total Large Demand Energy Customer Firm General Demand Energy Customer Firm General 152,763 23, , , ,751 60, , , ,320 39, ,348 1,134, , , ,225 1,482, , ,127 71, ,150 88, , , ,512 1, ,335 3, , , , ,725 81, ,591 54, , , ,627 4, ,746 10, ,069 1, ,862 4, ,068 5,520 9, ,620 79, , , , , ,430 4, ,797 12,252 9, ,492 17,759 2, ,240 6,663 5, ,618 9,657 9, ,991 26,699 20, ,504 38,697 3, ,610 10,387 7, ,199 15, ,315 37, ,617 12, , , , , , , , , , , , ,820 9,916 1,547 33,103 44,566 20,625 3,943 33,688 58,256 9,119 17,621 4,095 30,835 19,095 47,719 2,762 69, ,510 19, , , ,632 51, , ,652 2,330,261 2,094,301 1,519,939 5,944,501 4,872,535 5,558,378 1,470,396 11,901,309 Interest Expense 24 1,185,844 Taxable Income Before Adjustments 861,406 37, , ,608 77, , ,262 (482,664) 1,134,605 (343,692) 308,249 (1,003,207) 3,950,628 (709,527) 2,237,894 Docket No. Rule Statement L Schedule L-2 Page 14 of 30

198 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Allocation Total Factor Montana O&M Excl. Cost of Gas and A&G 7,310,040 O&M Excl. Cost of Gas 12,074,046 Depreciation Expense Production Plant 3 0 Distribution Plant Rights of Way Structures & Improvements 17 6,368 Mains ,388 Meas. & Reg. Equip. - General 18 21,369 Meas. & Reg. Equip. - City Gate 19 4,716 Services 37 2,147,877 Meters ,623 Service Regulators 20 52,539 Ind. Meas. & Reg. Station Equipment 21 10,569 Cathodic Protection & Other Equipment 13 50,515 Total Distribution Plant 3,788,282 General Plant ,825 Amort. of Intangible Plant - General 15 66,243 Common Plant ,465 Amort. of Intangible Plant - Common (less CC&B) ,279 Amort. of Intangible Plant - CC&B 8 438,202 Gas Plant Leased to Others 15 0 Total Depreciation Expense 4,783,296 Taxes Other Than Income Ad Valorem Taxes-Production 3 0 Ad Valorem Taxes-Other 15 4,087,312 Other Taxes - Payroll, Franchise, Other ,497 Other Taxes - Revenue ,338 Total Taxes Other Than Income Taxes 4,831,147 Total Operating Expense 55,510,337 Small Interruptible Total Large Interruptible Total Small Large Demand Energy Customer Interruptible Demand Energy Customer Interruptible 41,122 3,510 37,714 82,346 65,201 2,288 5,998 73,487 67,921 5,797 62, , ,693 3,779 9, , , ,020 28, , , , ,795 2, ,907 11, ,554 1, ,127 1, , ,122 1, ,783 22, ,893 39,596 32, ,243 34,914 1, ,885 1, , , ,037 2, ,454 4,108 3, ,156 1, ,599 1, , , ,182 48,452 40, ,683 43, , ,382 63,250 60, ,003 63,985 2, ,448 5,345 4, , , , , ,210 43,871 4,040 25,251 73,162 65,302 3,111 3,552 71, , , , , , ,514 16, ,109 Interest Expense 24 1,185,844 Taxable Income Before Adjustments 861,406 9, ,745 17,292 15, ,033 16,245 (144,015) 636,078 17, ,230 (223,323) 821,386 30, ,930 Docket No. Rule Statement L Schedule L-2 Page 15 of 30

199 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Residential Allocation Total Total Factor Montana Demand Energy Customer Residential Deductions Purchased Gas Adjustment Other Income Tax Charges 24 (1,086,126) (163,937) 0 (624,143) (788,080) Preferred Stock Dividends Paid Total Deductions (1,086,126) (163,937) 0 (624,143) (788,080) Taxable Income (Before State Income Tax) 1,947,532 (2,144,566) 6,282,777 (6,173,028) (2,034,817) Less: State Income Tax & Misc. Adjustment ,714 (263,966) 773,322 (759,813) (250,457) Federal Taxable Income 1,707,818 (1,880,600) 5,509,455 (5,413,215) (1,784,360) Federal Income Current Rate of 35% 35.00% 597,736 (658,210) 1,928,309 (1,894,625) (624,526) State Income Taxes ,714 (263,966) 773,322 (759,813) (250,457) Credits and Adjustments 40 (2,644) (399) 0 (1,519) (1,918) Rounding & Prior Year's Adjustments - Federal ,057 44, , ,267 Federal and State Income Taxes 1,132,863 (877,587) 2,701,631 (2,484,678) (660,634) Rounding & Prior Year's Adjustment - State Federal & State Income Taxes 1,132,863 (877,587) 2,701,631 (2,484,678) (660,634) Deferred Income Taxes Purchased Gas Adjustment Other Deferred Income Tax Chgs 24 (735,217) (110,971) 0 (422,495) (533,466) Closing/Filing & Out of Period Total Deferred Income Taxes (735,217) (110,971) 0 (422,495) (533,466) Total Operating Expenses 55,907,983 10,073,527 14,553,006 10,681,867 35,308,400 Total Operating Income 1,649,604 (1,140,957) 3,581,146 (3,208,549) (768,360) Docket No. Rule Statement L Schedule L-2 Page 16 of 30

200 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Allocation Total Factor Montana Deductions Purchased Gas Adjustment 33 0 Other Income Tax Charges 24 (1,086,126) Preferred Stock Dividends Paid 24 0 Total Deductions (1,086,126) Taxable Income (Before State Income Tax) 1,947,532 Less: State Income Tax & Misc. Adjustment ,714 Federal Taxable Income 1,707,818 Federal Income Current Rate of 35% 35.00% 597,736 State Income Taxes ,714 Credits and Adjustments 40 (2,644) Rounding & Prior Year's Adjustments - Federal ,057 Federal and State Income Taxes 1,132,863 Rounding & Prior Year's Adjustment - State 24 0 Federal & State Income Taxes 1,132,863 Deferred Income Taxes Purchased Gas Adjustment 33 0 Other Deferred Income Tax Chgs 24 (735,217) Closing/Filing & Out of Period 24 0 Total Deferred Income Taxes (735,217) Total Operating Expenses 55,907,983 Total Operating Income 1,649,604 Firm General-Meter < 500 cubic feet Firm General > 500 cubic feet Total Small Total Large Demand Energy Customer Firm General Demand Energy Customer Firm General (34,307) 0 (70,664) (104,971) (71,361) 0 (90,996) (162,357) (34,307) 0 (70,664) (104,971) (71,361) 0 (90,996) (162,357) (448,357) 1,134,605 (273,028) 413,220 (931,846) 3,950,628 (618,531) 2,400,251 (55,186) 139,654 (33,606) 50,862 (114,697) 486,267 (76,133) 295,437 (393,171) 994,951 (239,422) 362,358 (817,149) 3,464,361 (542,398) 2,104,814 (137,610) 348,233 (83,798) 126,825 (286,002) 1,212,526 (189,839) 736,685 (55,186) 139,654 (33,606) 50,862 (114,697) 486,267 (76,133) 295,437 (84) 0 (172) (256) (174) 0 (222) (396) 9, ,392 28,807 19, ,971 44,554 (183,465) 487,887 (98,184) 206,238 (381,290) 1,698,793 (241,223) 1,076, (183,465) 487,887 (98,184) 206,238 (381,290) 1,698,793 (241,223) 1,076, (23,223) 0 (47,833) (71,056) (48,305) 0 (61,597) (109,902) (23,223) 0 (47,833) (71,056) (48,305) 0 (61,597) (109,902) 2,123,573 2,582,188 1,373,922 6,079,683 4,442,940 7,257,171 1,167,576 12,867,687 (238,519) 646,718 (120,524) 287,675 (495,700) 2,251,835 (307,357) 1,448,778 Docket No. Rule Statement L Schedule L-2 Page 17 of 30

201 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Allocation Total Factor Montana Deductions Purchased Gas Adjustment 33 0 Other Income Tax Charges 24 (1,086,126) Preferred Stock Dividends Paid 24 0 Total Deductions (1,086,126) Taxable Income (Before State Income Tax) 1,947,532 Less: State Income Tax & Misc. Adjustment ,714 Federal Taxable Income 1,707,818 Federal Income Current Rate of 35% 35.00% 597,736 State Income Taxes ,714 Credits and Adjustments 40 (2,644) Rounding & Prior Year's Adjustments - Federal ,057 Federal and State Income Taxes 1,132,863 Rounding & Prior Year's Adjustment - State 24 0 Federal & State Income Taxes 1,132,863 Deferred Income Taxes Purchased Gas Adjustment 33 0 Other Deferred Income Tax Chgs 24 (735,217) Closing/Filing & Out of Period 24 0 Total Deferred Income Taxes (735,217) Total Operating Expenses 55,907,983 Total Operating Income 1,649,604 Small Interruptible Total Large Interruptible Total Small Large Demand Energy Customer Interruptible Demand Energy Customer Interruptible (8,744) 0 (7,094) (15,838) (13,933) 0 (947) (14,880) (8,744) 0 (7,094) (15,838) (13,933) 0 (947) (14,880) (135,271) 636,078 24, ,068 (209,390) 821,386 31, ,810 (16,650) 78,292 2,986 64,628 (25,773) 101,101 3,916 79,244 (118,621) 557,786 21, ,440 (183,617) 720,285 27, ,566 (41,517) 195,225 7, ,154 (64,266) 252,100 9, ,598 (16,650) 78,292 2,986 64,628 (25,773) 101,101 3,916 79,244 (21) 0 (17) (38) (34) 0 (2) (36) 2, ,947 4,346 3, ,083 (55,789) 273,517 12, ,090 (86,250) 353,201 13, , (55,789) 273,517 12, ,090 (86,250) 353,201 13, , (5,919) 0 (4,802) (10,721) (9,431) 0 (641) (10,072) (5,919) 0 (4,802) (10,721) (9,431) 0 (641) (10,072) 144, , , , , ,715 29, ,926 (72,760) 362,561 17, ,153 (112,430) 468,185 18, ,358 Docket No. Rule Statement L Schedule L-2 Page 18 of 30

202 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Residential Allocation Total Total Factor Montana Demand Energy Customer Residential Summary of Pro Forma Rate Base Adjustments Plant Production Plant Additions - Adj. A Distribution- Mains Demand Related 2 1,362, , ,102 Distribution- Mains Customer Related 9 454, , ,609 Meas. & Reg. Equip. General 13 66,177 27, ,665 42,536 Services 37 1,798, ,536,918 1,536,918 Meters , , ,313 Service Regulators , ,131 90,131 Cathodic Protection & Other Equip ,941 65, , ,237 Structures & Improvements 13 13,849 5, ,068 8,901 Total Distribution Plant Additions 4,684, , ,569,264 3,433,747 General 15 3,790, , ,076,509 2,738,954 Common Plant 15 (2,680,460) (468,410) 0 (1,468,282) (1,936,692) Common Intangible - Excluding CC&B ,676 36, , ,329 Common Intangible - CC&B 8 49, ,916 43,916 Total Plant Additions - Adj. A 6,050,975 1,094, ,334,619 4,429,254 Accumulated Reserve for Depreciation Plant Additions - Adj. B Production Distribution 23 3,447, , ,888,793 2,492,909 General , , , ,911 Common 15 (304,396) (53,193) 0 (166,738) (219,931) Common Intangible - Excluding CC&B ,308 65, , ,444 Common Intangible - CC&B 8 118, , ,651 Total Accumulated Reserve - Adj. B 4,285, , ,387,240 3,116,984 CWIP in Service Pending Reclassification Net Adjustment to Plant 1,765, , ,379 1,312,270 Additions Materials and Supplies - Adj. C 15 (22,273) (3,892) 0 (12,200) (16,092) Gas in Underground Storage - Adj. D 33 (1,353,577) (343,182) (460,386) 0 (803,568) Prepaid Insurance - Adj. E 24 97,644 14, ,111 70,849 Prepaid Demand and Commodity - Adj. F 33 (450,166) (114,135) (153,113) 0 (267,248) Unamortized Loss on Debt - Adj. G 41 (50,762) (8,424) 0 (28,705) (37,129) Provision for Pensions & Benefits - Adj. H 31 (138,954) (13,875) (2,437) (89,569) (105,881) Provision for Injuries & Damages - Adj. I 31 14,497 1, ,345 11,047 Unamort. Redemption Cost of Pref. Stk. - Adj. J 41 18,739 3, ,596 13,706 Discontinued Service - Saco - Adj. K ,000 16, ,549 73,144 Total (1,784,852) (447,617) (615,682) 2,127 (1,061,172) Docket No. Rule Statement L Schedule L-2 Page 19 of 30

203 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Allocation Total Factor Montana Summary of Pro Forma Rate Base Adjustments Plant Production 3 0 Plant Additions - Adj. A Distribution- Mains Demand Related 2 1,362,477 Distribution- Mains Customer Related 9 454,159 Meas. & Reg. Equip. General 13 66,177 Services 37 1,798,469 Meters ,205 Service Regulators ,061 Cathodic Protection & Other Equip ,941 Structures & Improvements 13 13,849 Total Distribution Plant Additions 4,684,338 General 15 3,790,822 Common Plant 15 (2,680,460) Common Intangible - Excluding CC&B ,676 Common Intangible - CC&B 8 49,599 Total Plant Additions - Adj. A 6,050,975 Accumulated Reserve for Depreciation Plant Additions - Adj. B Production 3 0 Distribution 23 3,447,925 General ,992 Common 15 (304,396) Common Intangible - Excluding CC&B ,308 Common Intangible - CC&B 8 118,192 Total Accumulated Reserve - Adj. B 4,285,021 CWIP in Service Pending Reclassification 15 0 Net Adjustment to Plant 1,765,954 Additions Materials and Supplies - Adj. C 15 (22,273) Gas in Underground Storage - Adj. D 33 (1,353,577) Prepaid Insurance - Adj. E 24 97,644 Prepaid Demand and Commodity - Adj. F 33 (450,166) Unamortized Loss on Debt - Adj. G 41 (50,762) Provision for Pensions & Benefits - Adj. H 31 (138,954) Provision for Injuries & Damages - Adj. I 31 14,497 Unamort. Redemption Cost of Pref. Stk. - Adj. J 41 18,739 Discontinued Service - Saco - Adj. K ,000 Total (1,784,852) Firm General-Meter < 500 cubic feet Firm General > 500 cubic feet Total Small Total Large Demand Energy Customer Firm General Demand Energy Customer Firm General , , , , ,397 38, ,896 12,896 5, ,399 7,232 12, , , , ,430 68, ,237 56, , , ,401 10, ,964 26,964 13, ,296 17,040 28, ,107 29,696 1, ,514 2, , , , , , , , , , , , , ,600 (98,026) 0 (171,563) (269,589) (203,896) 0 (186,843) (390,739) 7, ,228 20,786 15, ,406 30, ,224 4, ,428 1, , , , , , , , , , , , ,853 23, ,539 65,273 49, ,238 94,605 (11,132) 0 (19,483) (30,615) (23,155) 0 (21,218) (44,373) 13, ,958 37,647 28, ,091 54, ,065 10, ,403 3, , , , , , , , , , , , ,421 (815) 0 (1,426) (2,241) (1,694) 0 (1,553) (3,247) (72,426) (76,950) 0 (149,376) (151,666) (229,101) 0 (380,767) 3, ,353 9,437 6, ,181 14,596 (24,087) (25,591) 0 (49,678) (50,440) (76,193) 0 (126,633) (1,763) 0 (3,306) (5,069) (3,667) 0 (3,402) (7,069) (2,904) (453) (9,694) (13,051) (6,040) (1,155) (9,865) (17,060) ,011 1, ,029 1, ,220 1,871 1, ,256 2,610 3, ,512 9,985 7, ,701 13,925 (94,484) (102,947) 670 (196,761) (197,884) (306,329) 2,347 (501,866) Docket No. Rule Statement L Schedule L-2 Page 20 of 30

204 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Allocation Total Factor Montana Summary of Pro Forma Rate Base Adjustments Plant Production 3 0 Plant Additions - Adj. A Distribution- Mains Demand Related 2 1,362,477 Distribution- Mains Customer Related 9 454,159 Meas. & Reg. Equip. General 13 66,177 Services 37 1,798,469 Meters ,205 Service Regulators ,061 Cathodic Protection & Other Equip ,941 Structures & Improvements 13 13,849 Total Distribution Plant Additions 4,684,338 General 15 3,790,822 Common Plant 15 (2,680,460) Common Intangible - Excluding CC&B ,676 Common Intangible - CC&B 8 49,599 Total Plant Additions - Adj. A 6,050,975 Accumulated Reserve for Depreciation Plant Additions - Adj. B Production 3 0 Distribution 23 3,447,925 General ,992 Common 15 (304,396) Common Intangible - Excluding CC&B ,308 Common Intangible - CC&B 8 118,192 Total Accumulated Reserve - Adj. B 4,285,021 CWIP in Service Pending Reclassification 15 0 Net Adjustment to Plant 1,765,954 Additions Materials and Supplies - Adj. C 15 (22,273) Gas in Underground Storage - Adj. D 33 (1,353,577) Prepaid Insurance - Adj. E 24 97,644 Prepaid Demand and Commodity - Adj. F 33 (450,166) Unamortized Loss on Debt - Adj. G 41 (50,762) Provision for Pensions & Benefits - Adj. H 31 (138,954) Provision for Injuries & Damages - Adj. I 31 14,497 Unamort. Redemption Cost of Pref. Stk. - Adj. J 41 18,739 Discontinued Service - Saco - Adj. K ,000 Total (1,784,852) Small Interruptible Total Large Interruptible Total Small Large Demand Energy Customer Interruptible Demand Energy Customer Interruptible , ,104 64, , , ,470 2, , ,340 2, ,266 12, ,601 1, ,269 2, , ,464 5, , , ,148 62,462 72, ,135 74,575 37, ,758 58,661 56, ,785 59,343 (26,801) 0 (14,678) (41,479) (39,992) 0 (1,969) (41,961) 2, ,132 3,198 3, , , ,387 82,869 92, ,107 95, , ,585 53,007 51, ,488 54,019 6, ,554 10,043 9, ,160 (3,044) 0 (1,667) (4,711) (4,542) 0 (224) (4,766) 3, ,050 5,793 5, , , ,587 64,197 62, ,024 65, , ,800 18,672 29, ,916 (223) 0 (122) (345) (332) 0 (16) (348) (2,656) (11,509) 0 (14,165) (700) (5,001) 0 (5,701) ,424 1, ,338 (883) (3,828) 0 (4,711) (233) (1,663) 0 (1,896) (480) 0 (261) (741) (719) 0 (35) (754) (782) (67) (717) (1,566) (1,239) (43) (114) (1,396) ,461 1, ,485 (3,033) (15,397) 225 (18,205) (160) (6,702) 14 (6,848) Docket No. Rule Statement L Schedule L-2 Page 21 of 30

205 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Residential Allocation Total Total Factor Montana Demand Energy Customer Residential Deductions Accumulated Def. Inc. Tax Liberalized Depreciation - Adj. M 41 (479,258) (79,534) 0 (271,015) (350,549) Full Normalization - Adj. N 41 (57,659) (9,569) 0 (32,605) (42,174) R&D Tax Carryforward - Adj. P 41 (17,646) (2,928) 0 (9,979) (12,907) Prepaid Demand Charges - Adj. P 41 37,023 6, ,936 27,080 Customer Advances - Adj. P 41 (45,090) (7,483) 0 (25,499) (32,982) Unamortized Loss on Debt - Adj. G 41 (20,274) (3,365) 0 (11,464) (14,829) Pensions & Benefits - Adj. H 31 (20,966) (2,094) (368) (13,514) (15,976) Injuries and Damages - Adj. I 31 5, ,567 4,217 Discontinued Service - Saco - Adj. K 41 (39,388) (6,537) 0 (22,273) (28,810) Customer Advances for Construction - Adj. O Direct 141,811 57, ,233 76,933 Total (495,911) (47,113) (271) (342,613) (389,997) Total Pro Forma Adjustments - Rate Base 477,013 (35,613) (615,411) 1,292, ,095 Pro Forma Adjustments - Operating Income Pro Forma Revenue Adjustments Revenue Adjustments - Adj. No. 1-3 to Proforma Residential Direct 8,127,087 2,473,362 6,406,372 (752,647) 8,127,087 Firm General Direct 5,789,582 0 Small Interruptible Direct (71,355) 0 Large Interruptible Direct (208,872) 0 Total Retail Sales Adjustment 13,636,442 2,473,362 6,406,372 (752,647) 8,127,087 Tax Tracker Revenue Direct (3,808,357) (625,108) (1,274,915) (409,317) (2,309,340) Unbilled Revenue 26 (1,845,463) (296,050) (640,376) (167,754) (1,104,180) Total 7,982,622 1,552,204 4,491,081 (1,329,718) 4,713,567 Other Revenue - Adj. No ,260 4,052 8,765 2,298 15,115 Total Pro Forma Revenue Adjustments 8,007,882 1,556,256 4,499,846 (1,327,420) 4,728,682 Docket No. Rule Statement L Schedule L-2 Page 22 of 30

206 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Allocation Factor Total Montana Firm General-Meter < 500 cubic feet Firm General > 500 cubic feet Total Small Total Large Demand Energy Customer Firm General Demand Energy Customer Firm General Deductions Accumulated Def. Inc. Tax Liberalized Depreciation - Adj. M 41 (479,258) Full Normalization - Adj. N 41 (57,659) R&D Tax Carryforward - Adj. P 41 (17,646) Prepaid Demand Charges - Adj. P 41 37,023 Customer Advances - Adj. P 41 (45,090) Unamortized Loss on Debt - Adj. G 41 (20,274) Pensions & Benefits - Adj. H 31 (20,966) Injuries and Damages - Adj. I 31 5,536 Discontinued Service - Saco - Adj. K 41 (39,388) Customer Advances for Construction - Adj. O Direct 141,811 Total (495,911) Total Pro Forma Adjustments - Rate Base 477,013 (16,644) 0 (31,209) (47,853) (34,621) 0 (32,115) (66,736) (2,002) 0 (3,755) (5,757) (4,165) 0 (3,864) (8,029) (613) 0 (1,149) (1,762) (1,275) 0 (1,182) (2,457) 1, ,411 3,697 2, ,481 5,155 (1,566) 0 (2,936) (4,502) (3,257) 0 (3,021) (6,278) (704) 0 (1,320) (2,024) (1,465) 0 (1,359) (2,824) (438) (68) (1,463) (1,969) (911) (174) (1,489) (2,574) (1,368) 0 (2,565) (3,933) (2,845) 0 (2,639) (5,484) 5, ,742 6,967 40, ,658 54,633 (16,708) (50) (39,858) (56,616) (4,649) (128) (29,137) (33,914) (1,415) (102,897) 152,842 48,530 (34,401) (306,201) 89,071 (251,531) Pro Forma Adjustments - Operating Income Pro Forma Revenue Adjustments Revenue Adjustments - Adj. No. 1-3 to Proforma Residential Direct 8,127,087 Firm General Direct 5,789,582 Small Interruptible Direct (71,355) Large Interruptible Direct (208,872) Total Retail Sales Adjustment 13,636,442 Tax Tracker Revenue Direct (3,808,357) Unbilled Revenue 26 (1,845,463) Total 7,982,622 Other Revenue - Adj. No ,260 Total Pro Forma Revenue Adjustments 8,007, ,988 1,397,895 (145,999) 1,773,884 1,093,075 3,020,925 (98,302) 4,015, ,988 1,397,895 (145,999) 1,773,884 1,093,075 3,020,925 (98,302) 4,015,698 (140,210) (240,795) (82,079) (463,084) (200,223) (485,003) (147,616) (832,842) (62,480) (120,735) (28,058) (211,273) (130,836) (326,965) (18,927) (476,728) 319,298 1,036,365 (256,136) 1,099, ,016 2,208,957 (264,845) 2,706, , ,892 1,791 4, , ,153 1,038,018 (255,752) 1,102, ,807 2,213,432 (264,586) 2,712,653 Docket No. Rule Statement L Schedule L-2 Page 23 of 30

207 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Allocation Factor Total Montana Small Interruptible Total Large Interruptible Total Small Large Demand Energy Customer Interruptible Demand Energy Customer Interruptible Deductions Accumulated Def. Inc. Tax Liberalized Depreciation - Adj. M 41 (479,258) Full Normalization - Adj. N 41 (57,659) R&D Tax Carryforward - Adj. P 41 (17,646) Prepaid Demand Charges - Adj. P 41 37,023 Customer Advances - Adj. P 41 (45,090) Unamortized Loss on Debt - Adj. G 41 (20,274) Pensions & Benefits - Adj. H 31 (20,966) Injuries and Damages - Adj. I 31 5,536 Discontinued Service - Saco - Adj. K 41 (39,388) Customer Advances for Construction - Adj. O Direct 141,811 Total (495,911) Total Pro Forma Adjustments - Rate Base 477,013 (4,535) 0 (2,469) (7,004) (6,785) 0 (331) (7,116) (546) 0 (297) (843) (816) 0 (40) (856) (167) 0 (91) (258) (250) 0 (12) (262) (427) 0 (232) (659) (638) 0 (31) (669) (192) 0 (104) (296) (287) 0 (14) (301) (118) (10) (108) (236) (187) (7) (17) (211) (373) 0 (203) (576) (558) 0 (27) (585) 1, , ,203 (4,421) (7) (2,765) (7,193) (8,046) (5) (140) (8,191) 18,260 (15,390) 4,790 7,660 37,719 (6,697) ,259 Pro Forma Adjustments - Operating Income Pro Forma Revenue Adjustments Revenue Adjustments - Adj. No. 1-3 to Proforma Residential Direct 8,127,087 Firm General Direct 5,789,582 Small Interruptible Direct (71,355) Large Interruptible Direct (208,872) Total Retail Sales Adjustment 13,636,442 Tax Tracker Revenue Direct (3,808,357) Unbilled Revenue 26 (1,845,463) Total 7,982,622 Other Revenue - Adj. No ,260 Total Pro Forma Revenue Adjustments 8,007, ,139 (71,058) (19,436) (71,355) 0 0 5,042 (208,186) (5,728) (208,872) 19,139 (71,058) (19,436) (71,355) 5,042 (208,186) (5,728) (208,872) (2,030) (86,130) (18,992) (107,152) (800) (78,134) (17,005) (95,939) (2,291) (26,116) (2,883) (31,290) (603) (20,295) (1,094) (21,992) 14,818 (183,304) (41,311) (209,797) 3,639 (306,615) (23,827) (326,803) ,849 (182,947) (41,272) (209,370) 3,647 (306,337) (23,812) (326,502) Docket No. Rule Statement L Schedule L-2 Page 24 of 30

208 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Residential Allocation Total Total Factor Montana Demand Energy Customer Residential OPERATION & MAINTENANCE EXPENSES Cost of Gas - Adj. No. 5 Direct 9,755,417 2,473,363 3,283,922 5,757,285 Production Adj Labor Expense - Adj. No. 6 Other Gas Supply 30 5, ,315 3,919 Production Distribution ,098 16, ,355 78,135 Customer Accounting 8 42, ,253 37,253 Customer Service Sales 8 1, ,256 1,256 A&G 30 41,559 4, ,790 31,669 Total -Labor Expense - Adj. No ,248 21, , ,077 Benefits Expense - Adj. No (12,841) (1,282) (225) (8,277) (9,784) Vehicles & Work Equipment - Adj ,008 20,172 3, , ,926 Company Consumption - Adj ,886 1, ,020 8,298 Uncollectible Accounts - Adj , ,803 59,803 Advertising - Adj (44,755) 0 0 (39,628) (39,628) Subcontract Labor - Adj (28,707) (2,867) (504) (18,502) (21,873) Software Maintenance - Adj ,404 10,825 1,901 69,877 82,603 Insurance - Adj ,895 5, ,096 40,306 Industry Dues - Adj , ,188 1,404 Regulatory Commission Expense - Adj (104,457) (10,431) (1,832) (67,330) (79,593) Total (Adjustments 8-16) 453,022 44,308 4, , ,539 Total Adjustments to O&M 10,208,439 2,517,671 3,288, ,272 6,105,824 DEPRECIATION EXPENSE Average Annual Depreciation - Adj. No. 17 Production Plant Distribution Plant 23 89,338 15, ,939 64,592 General Plant 41 99,793 16, ,432 72,993 Common 41 (64,255) (10,663) 0 (36,335) (46,998) Pref. Stock Redemption Amort. 41 1, Discontinued Service - Saco ,000 16, ,549 73,144 Total Average Annual Depreciation Adj ,214 38, , ,709 Docket No. Rule Statement L Schedule L-2 Page 25 of 30

209 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Allocation Total Factor Montana OPERATION & MAINTENANCE EXPENSES Cost of Gas - Adj. No. 5 Direct 9,755,417 Production Adj. 3 0 Labor Expense - Adj. No. 6 Other Gas Supply 30 5,145 Production 3 0 Distribution ,098 Customer Accounting 8 42,073 Customer Service Sales 8 1,419 A&G 30 41,559 Total -Labor Expense - Adj. No ,248 Benefits Expense - Adj. No (12,841) Vehicles & Work Equipment - Adj ,008 Company Consumption - Adj ,886 Uncollectible Accounts - Adj ,500 Advertising - Adj (44,755) Subcontract Labor - Adj (28,707) Software Maintenance - Adj ,404 Insurance - Adj ,895 Industry Dues - Adj ,841 Regulatory Commission Expense - Adj (104,457) Total (Adjustments 8-16) 453,022 Total Adjustments to O&M 10,208,439 DEPRECIATION EXPENSE Average Annual Depreciation - Adj. No. 17 Production Plant 3 0 Distribution Plant 23 89,338 General Plant 41 99,793 Common 41 (64,255) Pref. Stock Redemption Amort. 41 1,338 Discontinued Service - Saco ,000 Total Average Annual Depreciation Adj ,214 Firm General-Meter < 500 cubic feet Firm General > 500 cubic feet Total Small Total Large Demand Energy Customer Firm General Demand Energy Customer Firm General 521, , ,545 1,093,075 1,969,357 3,062, , ,145 10,655 7, ,614 16, ,583 3, ,211 1, ,899 3,902 1, ,951 5,102 4, ,188 18,826 9, ,209 23,935 (268) (42) (896) (1,206) (558) (107) (912) (1,577) 4, ,093 18,974 8,781 1,679 14,342 24, , , ,752 5, ,945 1, (3,811) (3,811) 0 0 (1,289) (1,289) (600) (94) (2,003) (2,697) (1,248) (239) (2,038) (3,525) 2, ,563 10,181 4, ,696 13,309 1, ,690 4,967 2, ,755 6, (2,183) (341) (7,287) (9,811) (4,541) (868) (7,416) (12,825) 9, ,176 42,368 19,286 2,349 31,196 52, , ,477 32,176 1,005,913 1,112,361 1,971,706 31,196 3,115, , ,719 8,995 6, ,164 12,978 3, ,498 9,964 7, ,687 13,896 (2,232) 0 (4,184) (6,416) (4,642) 0 (4,306) (8,948) , ,512 9,985 7, ,701 13,925 8, ,632 22,661 16, ,336 32,038 Docket No. Rule Statement L Schedule L-2 Page 26 of 30

210 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Allocation Total Factor Montana OPERATION & MAINTENANCE EXPENSES Cost of Gas - Adj. No. 5 Direct 9,755,417 Production Adj. 3 0 Labor Expense - Adj. No. 6 Other Gas Supply 30 5,145 Production 3 0 Distribution ,098 Customer Accounting 8 42,073 Customer Service Sales 8 1,419 A&G 30 41,559 Total -Labor Expense - Adj. No ,248 Benefits Expense - Adj. No (12,841) Vehicles & Work Equipment - Adj ,008 Company Consumption - Adj ,886 Uncollectible Accounts - Adj ,500 Advertising - Adj (44,755) Subcontract Labor - Adj (28,707) Software Maintenance - Adj ,404 Insurance - Adj ,895 Industry Dues - Adj ,841 Regulatory Commission Expense - Adj (104,457) Total (Adjustments 8-16) 453,022 Total Adjustments to O&M 10,208,439 DEPRECIATION EXPENSE Average Annual Depreciation - Adj. No. 17 Production Plant 3 0 Distribution Plant 23 89,338 General Plant 41 99,793 Common 41 (64,255) Pref. Stock Redemption Amort. 41 1,338 Discontinued Service - Saco ,000 Total Average Annual Depreciation Adj ,214 Small Interruptible Total Large Interruptible Total Small Large Demand Energy Customer Interruptible Demand Energy Customer Interruptible 19,139 (55,416) (36,277) 5,042 3,390 8, ,720 1, , , ,034 2,271 1, ,139 (72) (6) (66) (144) (115) (4) (11) (130) 1, ,042 2,275 1, , (24) (24) 0 0 (3) (3) (161) (14) (148) (323) (256) (9) (24) (289) , , (588) (50) (539) (1,177) (932) (33) (86) (1,051) 2, ,196 4,837 3, ,447 21,635 (55,271) 2,196 (31,440) 8,999 3, , ,374 1, , ,458 1, ,482 (608) 0 (331) (939) (910) 0 (44) (954) ,461 1, ,485 2, ,187 3,374 3, ,432 Docket No. Rule Statement L Schedule L-2 Page 27 of 30

211 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Residential Allocation Total Total Factor Montana Demand Energy Customer Residential TAXES OTHER THAN INCOME Ad Valorem Taxes - Adj. No. 18 Production Plant Distribution Plant 42 (3,634,646) (635,154) 0 (1,990,958) (2,626,112) General Plant 42 (123,234) (21,535) 0 (67,503) (89,038) Common Plant 42 (282,285) (49,329) 0 (154,628) (203,957) Total Ad Valorem Taxes (4,040,165) (706,018) 0 (2,213,089) (2,919,107) Payroll Taxes - Adj. No ,668 1, ,453 11,175 MCC & PSC Tax - Adj (69,295) (11,116) (24,045) (6,299) (41,460) Total Adjustments to Taxes Other than Income (4,094,792) (715,669) (23,788) (2,209,935) (2,949,392) CURRENT INCOME TAXES Interest Annualization - Adj. No ,785 13, ,116 58,357 Tax Depreciation on Plant Additions - Adj. No (565,726) (93,884) 0 (319,912) (413,796) Elimination of Pref. Stock Deduction - Adj. No (9,425) (1,564) 0 (5,330) (6,894) (495,366) (82,207) 0 (280,126) (362,333) Net Adjustments to Operating Income 2,163,387 (201,907) 1,234, ,028 1,769,874 Income Taxes on Pro Forma Adj. - Adj. No. 24 (Calculated) 852,104 (79,526) 486, , , Elimination of Closing/Filing&Res. - Adj. No (298,057) (49,463) 0 (168,549) (218,012) Total Adjustments to Current Income Taxes 554,047 (128,989) 486, , ,097 DEFERRED INCOME TAXES Plant Additions - Adj. No (222,825) (36,978) 0 (126,004) (162,982) Elimination of Closing/Filing - Adj. No ,201 51, , ,895 Other Tax Deductions Total Adjustments to Deferred Income Taxes 87,376 14, ,412 63,913 Total Adjustments: 1,026,598 (169,627) 748, , ,530 Docket No. Rule Statement L Schedule L-2 Page 28 of 30

212 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Allocation Total Factor Montana TAXES OTHER THAN INCOME Ad Valorem Taxes - Adj. No. 18 Production Plant 3 0 Distribution Plant 42 (3,634,646) General Plant 42 (123,234) Common Plant 42 (282,285) Total Ad Valorem Taxes (4,040,165) Payroll Taxes - Adj. No ,668 MCC & PSC Tax - Adj (69,295) Total Adjustments to Taxes Other than Income (4,094,792) CURRENT INCOME TAXES Interest Annualization - Adj. No ,785 Tax Depreciation on Plant Additions - Adj. No (565,726) Elimination of Pref. Stock Deduction - Adj. No (9,425) (495,366) Net Adjustments to Operating Income 2,163,387 Income Taxes on Pro Forma Adj. - Adj. No. 24 (Calculated) 852, Elimination of Closing/Filing&Res. - Adj. No (298,057) Total Adjustments to Current Income Taxes 554,047 DEFERRED INCOME TAXES Plant Additions - Adj. No (222,825) Elimination of Closing/Filing - Adj. No ,201 Other Tax Deductions 24 0 Total Adjustments to Deferred Income Taxes 87,376 Total Adjustments: 1,026,598 Firm General-Meter < 500 cubic feet Firm General > 500 cubic feet Total Small Total Large Demand Energy Customer Firm General Demand Energy Customer Firm General (132,921) 0 (232,636) (365,557) (276,479) 0 (253,355) (529,834) (4,507) 0 (7,888) (12,395) (9,374) 0 (8,590) (17,964) (10,323) 0 (18,068) (28,391) (21,473) 0 (19,677) (41,150) (147,751) 0 (258,592) (406,343) (307,326) 0 (281,622) (588,948) ,023 1, ,041 1,801 (2,346) (4,533) (1,054) (7,933) (4,913) (12,277) (711) (17,901) (149,790) (4,485) (258,623) (412,898) (311,601) (12,155) (281,292) (605,048) 2, ,196 7,967 5, ,346 11,110 (19,647) 0 (36,840) (56,487) (40,867) 0 (37,909) (78,776) (327) 0 (614) (941) (681) 0 (632) (1,313) (17,203) 0 (32,258) (49,461) (35,784) 0 (33,195) (68,979) (52,143) 600,026 (11,679) 536,204 (17,871) 253,881 3, ,379 (20,538) 236,335 (4,600) 211,197 (7,039) 99,997 1,327 94,285 (10,351) 0 (19,409) (29,760) (21,531) 0 (19,973) (41,504) (30,889) 236,335 (24,009) 181,437 (28,570) 99,997 (18,646) 52,781 (7,739) 0 (14,510) (22,249) (16,097) 0 (14,931) (31,028) 10, ,200 30,973 22, ,786 43, , ,690 8,724 6, ,855 12,166 (41,491) 363,691 (25,618) 296,582 (31,396) 153,884 (17,035) 105,453 Docket No. Rule Statement L Schedule L-2 Page 29 of 30

213 MONTANA-DAKOTA UTILITIES CO. Embedded Class Cost of Service Study Twelve Months Ended December 31, 2016 Pro Forma 2017 Allocation Total Factor Montana TAXES OTHER THAN INCOME Ad Valorem Taxes - Adj. No. 18 Production Plant 3 0 Distribution Plant 42 (3,634,646) General Plant 42 (123,234) Common Plant 42 (282,285) Total Ad Valorem Taxes (4,040,165) Payroll Taxes - Adj. No ,668 MCC & PSC Tax - Adj (69,295) Total Adjustments to Taxes Other than Income (4,094,792) CURRENT INCOME TAXES Interest Annualization - Adj. No ,785 Tax Depreciation on Plant Additions - Adj. No (565,726) Elimination of Pref. Stock Deduction - Adj. No (9,425) (495,366) Net Adjustments to Operating Income 2,163,387 Income Taxes on Pro Forma Adj. - Adj. No. 24 (Calculated) 852, Elimination of Closing/Filing&Res. - Adj. No (298,057) Total Adjustments to Current Income Taxes 554,047 DEFERRED INCOME TAXES Plant Additions - Adj. No (222,825) Elimination of Closing/Filing - Adj. No ,201 Other Tax Deductions 24 0 Total Adjustments to Deferred Income Taxes 87,376 Total Adjustments: 1,026,598 Small Interruptible Total Large Interruptible Total Small Large Demand Energy Customer Interruptible Demand Energy Customer Interruptible (36,342) 0 (19,903) (56,245) (54,228) 0 (2,670) (56,898) (1,232) 0 (675) (1,907) (1,839) 0 (91) (1,930) (2,822) 0 (1,546) (4,368) (4,212) 0 (207) (4,419) (40,396) 0 (22,124) (62,520) (60,279) 0 (2,968) (63,247) (86) (981) (108) (1,175) (23) (762) (41) (826) (40,399) (974) (22,156) (63,529) (60,171) (757) (2,997) (63,925) ,166 1, ,185 (5,353) 0 (2,914) (8,267) (8,010) 0 (390) (8,400) (89) 0 (49) (138) (133) 0 (6) (139) (4,687) 0 (2,552) (7,239) (7,013) 0 (341) (7,354) 36,113 (126,702) (19,947) (110,536) 58,559 (309,109) (20,984) (271,534) 14,224 (49,905) (7,857) (43,537) 23,065 (121,750) (8,265) (106,950) (2,820) 0 (1,535) (4,355) (4,220) 0 (206) (4,426) 11,404 (49,905) (9,392) (47,892) 18,845 (121,750) (8,471) (111,376) (2,109) 0 (1,148) (3,257) (3,155) 0 (154) (3,309) 2, ,598 4,533 4, , ,276 1, ,297 19,196 (76,797) (13,557) (71,158) 31,464 (187,359) (12,914) (168,809) Docket No. Rule Statement L Schedule L-2 Page 30 of 30

214 MONTANA-DAKOTA UTILITIES CO. EMBEDDED CLASS COST OF SERVICE STUDY ALLOCATION FACTOR REPORT TWELVE MONTHS ENDED DECEMBER 31, 2016 PRO FORMA AVERAGE PLANT Total Residential Montana Demand Energy Customer 13,575, ,968, Dk Throughput % % % % 135,350 76, Peak Day Distribution % % % % 10,049, ,968, Dk Sales % % % % 139,672 77, Peak Day Design % % % % 84, ,574 8 Average Customers % % % % 82, ,555 9 Average Distribution % % % % 107, , Total Weighted Customers % % % % 84, , Average Res. & Firm General Cust % % % % 105, , Weighted Distribution % % % % 36,312,827 15,293, ,047, Distribution Mains % % % % 94,691,499 16,547, ,869, Distribution Plant % % % % Docket No. Rule Statement L Schedule L-3 Page 1 of 9

215 MONTANA-DAKOTA UTILITIES CO. EMBEDDED CLASS COST OF SERVICE STUDY ALLOCATION FACTOR REPORT TWELVE MONTHS ENDED DECEMBER 31, 2016 PRO FORMA AVERAGE PLANT Total Montana 13,575,652 1 Dk Throughput % 135,350 2 Peak Day Distribution % 10,049,256 3 Dk Sales % 139,672 5 Peak Day Design % 84,223 8 Average Customers % 82,973 9 Average Distribution % 107, Total Weighted Customers % 84, Average Res. & Firm General Cust % 105, Weighted Distribution % 36,312, Distribution Mains % 94,691, Distribution Plant % Small Firm General Large Firm General Demand Energy Customer Demand Energy Customer 0 1,109, ,828, % % % % % % 15, , % % % % % % 0 1,109, ,828, % % % % % % 16, , % % % % % % 0 0 7, , % % % % % % 0 0 7, , % % % % % % 0 0 8, , % % % % % % 0 0 7, , % % % % % % 0 0 8, , % % % % % % 3,200, ,522 6,657, , % % % % % % 3,462, ,060,752 7,202, ,600, % % % % % % Docket No. Rule Statement L Schedule L-3 Page 2 of 9

216 MONTANA-DAKOTA UTILITIES CO. EMBEDDED CLASS COST OF SERVICE STUDY ALLOCATION FACTOR REPORT TWELVE MONTHS ENDED DECEMBER 31, 2016 PRO FORMA AVERAGE PLANT Total Montana 13,575,652 1 Dk Throughput % 135,350 2 Peak Day Distribution % 10,049,256 3 Dk Sales % 139,672 5 Peak Day Design % 84,223 8 Average Customers % 82,973 9 Average Distribution % 107, Total Weighted Customers % 84, Average Res. & Firm General Cust % 105, Weighted Distribution % 36,312, Distribution Mains % 94,691, Distribution Plant % Small Interruptible Large Interruptible Demand Energy Customer Demand Energy Customer 0 722, ,946, % % % % % % 3, , % % % % % % 0 142, % % % % % % 4, , % % % % % % % % % % % % % % % % % % 0 0 1, % % % % % % % % % % % % 0 0 1, % % % % % % 801, ,814 1,281, % % % % % % 946, ,517 1,412, , % % % % % % Docket No. Rule Statement L Schedule L-3 Page 3 of 9

217 MONTANA-DAKOTA UTILITIES CO. EMBEDDED CLASS COST OF SERVICE STUDY ALLOCATION FACTOR REPORT TWELVE MONTHS ENDED DECEMBER 31, 2016 PRO FORMA AVERAGE PLANT Total Montana Demand Residential Energy Customer 24,973, ,278, Meters & Regulators % % % % 242,399 94, , Structures & Improvements % % % % 697, , , Meas. & Reg. Sta. Eqpt.- General % % % % 125,755 11, , Meas. & Reg. Eqpt.- City Gate % % % % 2,954, ,020, Service Regulators % % % % 323, , , Ind. Meas. & Reg. Sta. Eqpt % % % % 66,600,885 15,293, ,931, Mains & Services % % % % 99,375,837 17,411, ,438, Pro Forma Distribution Plant % % % % 58,056,605 8,762, ,362, Net Gas Plant in Service % % % % 121,936,429 20,145, ,040, Total Gas Plant in Service % % % % 68,871,816 11,048,464 23,898,526 6,260, Pro Forma Operating Revenue % % % % Docket No. Rule Statement L Schedule L-3 Page 4 of 9

218 MONTANA-DAKOTA UTILITIES CO. EMBEDDED CLASS COST OF SERVICE STUDY ALLOCATION FACTOR REPORT TWELVE MONTHS ENDED DECEMBER 31, 2016 PRO FORMA AVERAGE PLANT Total Montana 24,973, Meters & Regulators % 242, Structures & Improvements % 697, Meas. & Reg. Sta. Eqpt.- General % 125, Meas. & Reg. Eqpt.- City Gate % 2,954, Service Regulators % 323, Ind. Meas. & Reg. Sta. Eqpt % 66,600, Mains & Services % 99,375, Pro Forma Distribution Plant % 58,056, Net Gas Plant in Service % 121,936, Total Gas Plant in Service % 68,871, Pro Forma Operating Revenue % Small Firm General Large Firm General Demand Energy Customer Demand Energy Customer 0 0 2,021, ,169, % % % % % % 19, ,761 41, , % % % % % % 61, , , , % % % % % % 2, , % % % % % % , , % % % % % % 26, ,331 54, , % % % % % % 3,200, ,976,758 6,657, ,410, % % % % % % 3,643, ,361,336 7,579, ,856, % % % % % % 1,833, ,777,178 3,814, ,863, % % % % % % 4,215, ,945,342 8,769, ,227, % % % % % % 2,331,708 4,505,764 1,047,112 4,882,744 12,202, , % % % % % % Docket No. Rule Statement L Schedule L-3 Page 5 of 9

219 MONTANA-DAKOTA UTILITIES CO. EMBEDDED CLASS COST OF SERVICE STUDY ALLOCATION FACTOR REPORT TWELVE MONTHS ENDED DECEMBER 31, 2016 PRO FORMA AVERAGE PLANT Total Montana 24,973, Meters & Regulators % 242, Structures & Improvements % 697, Meas. & Reg. Sta. Eqpt.- General % 125, Meas. & Reg. Eqpt.- City Gate % 2,954, Service Regulators % 323, Ind. Meas. & Reg. Sta. Eqpt % 66,600, Mains & Services % 99,375, Pro Forma Distribution Plant % 58,056, Net Gas Plant in Service % 121,936, Total Gas Plant in Service % 68,871, Pro Forma Operating Revenue % Small Interruptible Large Interruptible Demand Energy Customer Demand Energy Customer , , % % % % % % 15, ,598 10, % % % % % % 15, , % % % % % % 63, ,872 12, , % % % % % % , , % % % % % % 12, ,080 22, , % % % % % % 801, ,226 1,281, , % % % % % % 992, ,665 1,485, , % % % % % % 467, , , , % % % % % % 1,152, ,893 1,719, , % % % % % % 85, , ,584 22, ,390 40, % % % % % % Docket No. Rule Statement L Schedule L-3 Page 6 of 9

220 MONTANA-DAKOTA UTILITIES CO. EMBEDDED CLASS COST OF SERVICE STUDY ALLOCATION FACTOR REPORT TWELVE MONTHS ENDED DECEMBER 31, 2016 PRO FORMA AVERAGE PLANT Total Residential Montana Demand Energy Customer 2,340, ,410 2,706 1,325, All Other Dist. Operation Exp % % % % 350,447 55, , All Other Dist. Maintenance Exp % % % % 4,776, ,956 4,633 2,685, Distribution O&M % % % % 7,310, , ,213 4,711, O&M Excl. Cost of Gas and A&G % % % % 12,074,046 1,205, ,770 7,782, O&M Excl. Cost of Gas % % % % 43,577,265 11,048,465 14,821, Cost of Gas % % % % 1,947,532 (2,144,566) 6,282,777 (6,173,028) 35 Taxable Income % % % % 86, , Weighted Distribution % % % % (1,086,126) (163,937) 0 (624,143) 40 Total Tax Deductions & Adjustments % % % % 127,987,404 21,239, ,375, Total Pro Forma Plant % % % % 4,087, , ,238, Per Books Ad Valorem Tax % % % % Docket No. Rule Statement L Schedule L-3 Page 7 of 9

221 MONTANA-DAKOTA UTILITIES CO. EMBEDDED CLASS COST OF SERVICE STUDY ALLOCATION FACTOR REPORT TWELVE MONTHS ENDED DECEMBER 31, 2016 PRO FORMA AVERAGE PLANT Total Montana 2,340, All Other Dist. Operation Exp % 350, All Other Dist. Maintenance Exp % 4,776, Distribution O&M % 7,310, O&M Excl. Cost of Gas and A&G % 12,074, O&M Excl. Cost of Gas % 43,577, Cost of Gas % 1,947, Taxable Income % 86, Weighted Distribution % (1,086,126) 40 Total Tax Deductions & Adjustments % 127,987, Total Pro Forma Plant % 4,087, Per Books Ad Valorem Tax % Small Firm General Large Firm General Demand Energy Customer Demand Energy Customer 74, , ,709 1, , % % % % % % 11, ,034 24, , % % % % % % 152, , ,751 2, , % % % % % % 152,763 23, , ,751 60, , % % % % % % 252,320 39, , , , , % % % % % % 2,331,708 2,477, ,882,744 7,375, % % % % % % (448,357) 1,134,605 (273,028) (931,846) 3,950,628 (618,531) % % % % % % 0 0 9, , % % % % % % (34,307) 0 (70,664) (71,361) 0 (90,996) % % % % % % 4,444, ,334,447 9,245, ,576, % % % % % % 149, , , , % % % % % % Docket No. Rule Statement L Schedule L-3 Page 8 of 9

222 MONTANA-DAKOTA UTILITIES CO. EMBEDDED CLASS COST OF SERVICE STUDY ALLOCATION FACTOR REPORT TWELVE MONTHS ENDED DECEMBER 31, 2016 PRO FORMA AVERAGE PLANT Total Montana 2,340, All Other Dist. Operation Exp % 350, All Other Dist. Maintenance Exp % 4,776, Distribution O&M % 7,310, O&M Excl. Cost of Gas and A&G % 12,074, O&M Excl. Cost of Gas % 43,577, Cost of Gas % 1,947, Taxable Income % 86, Weighted Distribution % (1,086,126) 40 Total Tax Deductions & Adjustments % 127,987, Total Pro Forma Plant % 4,087, Per Books Ad Valorem Tax % Small Interruptible Large Interruptible Demand Energy Customer Demand Energy Customer 18, ,719 30,244 1,336 2, % % % % % % 4, ,057 6, % % % % % % 41, ,627 65,201 2,288 5, % % % % % % 41,122 3,510 37,714 65,201 2,288 5, % % % % % % 67,921 5,797 62, ,693 3,779 9, % % % % % % 85, , , , % % % % % % (135,271) 636,078 24,261 (209,390) 821,386 31, % % % % % % % % % % % % (8,744) 0 (7,094) (13,933) 0 (947) % % % % % % 1,211, ,280 1,812, , % % % % % % 40, ,382 60, , % % % % % % Docket No. Rule Statement L Schedule L-3 Page 9 of 9

223 MONTANA-DAKOTA UTILITIES CO. ALLOCATION OF REVENUE INCREASE & RATE DESIGN RESULTS Pro Forma D Billing Determinants 1/ Pro Forma w/ Tax True Up Basic Service Distribution Tax Tracking Total Revs Excl 1/1/18 Tax Total Rate Class Customers Dk Charge Delivery Adjustment Gas Costs Revenues Tax Tracker Increase 2/ Revenue Residential 74,574 5,968,846 $6,260,487 $6,768,671 $2,309,340 $25,868,979 $41,207,477 $38,898,137 $131,456 $41,338,933 Firm General Small Firm General 7,172 1,109,554 1,047,112 1,565, ,084 4,808,807 7,884,584 7,421,500 26,360 7,910,944 Large Firm General 2,425 2,828, ,100 3,990, ,842 12,259,604 17,791,289 16,958,447 47,408 17,838,697 Total Firm General 9,597 3,937,862 1,755,212 5,556,324 1,295,926 17,068,411 25,675,873 24,379,947 73,768 25,749,641 Small Interruptible Sales ,548 42,098 98,073 24, , , ,182 1, ,440 Transportation ,787 65, ,893 82, , ,379 4, ,372 Total Small IT , , , , ,011 1,167,713 1,060,561 6,099 1,173,812 Large Interruptible ceiling 2 57,372 13,614 25,760 6, , , , ,283 ceiling 1 52,815 6,807 23,714 5, ,931 30, ,239 Flex 3 2,893,793 20, ,965 83, , ,386 4, ,692 Total Large IT 6 3,003,980 40, ,439 95, , , ,814 5, ,214 Total Montana 84,223 13,633,023 $8,164,125 $13,322,400 $3,808,357 $43,576,934 $68,871,816 $65,063,459 $216,784 $69,088,600 Embedded COS Before Increase 3/ Overall Return Operating Rate Rate Of Operating Increase in % Rate Class Income Base Return Income 3/ Revenue Increase Residential $96,170 $39,190, % $2,925,933 $4,687, % Firm General Small Firm General 584,257 5,341, % 398, , % Large Firm General 1,554,231 7,772, % 580,312-1,613, % Total Firm General 2,138,488 13,114, % 979,121-1,920, % Small Interruptible 235, , % 55, , % Large Interruptible 205, , % 52, , % Total Montana $2,676,202 $53,742, % $4,012,394 $2,213, % 1/ Rule , Statement H, page 6. 2/ Gas Tax Tracker increase estimated to be effective January 1, See Rule , page 7. 3/ Rule , Statement L, Schedule L-1. Docket No. Rule Statement M Page 1 of 9

224 MONTANA-DAKOTA UTILITIES CO. ALLOCATION OF REVENUE INCREASE & RATE DESIGN RESULTS Pro Forma D Target Rate Design Rate Design Results Excluding Tax Tracker Excluding Tax Tracker Total Proposed Revenues Increase In Operating Rate Of Basic Service Distribution Dist. Rev Increase In Rate of Base Tax Distribution Total Total % Rate Class Revenue % Increase Income Return Charge Delivery Excl Tracker Revenue Return Increase 5/ Increase Increase Revenues Increase Residential 1/ $1,795, % $1,181, % $8,982,438 $5,843,500 $14,825,938 $1,796, % $456,090 $1,796,780 $2,252,870 $43,591, % Firm General Small Firm General 2/ 127, % 661, % 1,465,957 1,477,925 2,943, , % 85, , ,959 8,327, % Large Firm General 2/ 290, % 1,729, % 1,017,894 3,767,306 4,785,200 86, % 54,745 86, ,102 17,979, % Total Firm General 417, % 2,390, % 2,483,851 5,245,231 7,729, , % 140, , ,061 26,307, % Small Interruptible Sales 3/ 48,600 94, ,394 3,223 1,760 3,223 4, , % Transportation 3/ 75, , ,156-3,223 3,114-3, , % Total Small IT % 235, % 124, , , % 4, ,874 1,178, % Large Interruptible ceiling 4/ 0 13,614 25,760 39, , % ceiling 4/ 0 6,807 23,714 30, , % Flex 4/ 0 20, , , , , , % Total Large IT % 205, % 40, , , % 4, , , % Total Montana $2,213, % $4,013, % $11,631,331 $12,069,520 $23,700,851 $2,214, % $605,842 $2,214,326 $2,820,168 $71,908, % 1/ Rule , Statement M, page 3. 2/ Rule , Statement M, page 4. 3/ Rule , Statement M, page 5. 4/ Rule , Statement M, page 6. 5/ Rule , page 7. Proposed Tax Tracker Rate (4,630,983 / 23,700,851) = % Docket No. Rule Statement M Page 2 of 9

225 Docket No. Rule Statement M Page 3 of 9 MONTANA-DAKOTA UTILITIES CO. RATE DESIGN & RECONCILIATION RESIDENTIAL GAS SERVICE - RATE 60 Pro Forma D Current Proposed Rate Amount Rate Amount Change Residential Rate 60 Basic Service Charge 74,574 Customers $0.23 $6,260, $8,982,438 $2,721,951 Distribution Charge 5,968,846 Dk ,768, ,843,500 (925,171) Cost of Gas 5,968,846 Dk ,868, ,868,979 0 Distribution Revenue Excluding Tax Tracker Adj. $13,029,158 $14,825,938 $1,796,780 Tax Tracker Adjustment Percent % 2,309, % 2,896, ,546 Total Revenue Rate 60 $41,207,477 $43,591,803 $2,384,326 Excluding Tax Tracker Adjustment Total Distribution Revenues Per Design $14,825,938 Target Distribution Revenues 14,824,745 Difference $1,193 Current Non-Gas Revenues $13,029,158 Proposed Revenue Increase 1,795,587 Total Revenue Requirement $14,824,745 Less: Basic Service Charge Revenues 8,982,438 Remaining Revenues To Be Collected 5,842,307 Total Rate 60 Consumption 5,968,846 Distribution Delivery Charge $0.979

226 Docket No. Rule Statement M Page 4 of 9 MONTANA-DAKOTA UTILITIES CO. RATE DESIGN & RECONCILIATION FIRM GENERAL GAS SERVICE - RATES 70 & 72 Pro Forma D Current Proposed Rate Amount Rate Amount Change Firm General Rate 70 Basic Service Chg < 500 7,172 Customers $0.40 $1,047,112 $0.56 $1,465,957 $418,845 Basic Service Chg > 500 2,425 Customers ,100 $1.15 1,017, ,794 Subtotal 9,597 $1,755,212 $2,483, ,639 Distribution Delivery < 500 1,109,554 Dk ,565, ,477,925 (87,656) Distribution Delivery > 500 2,828,308 Dk ,990, ,767,306 (223,437) Cost of Gas < 500 1,109,554 Dk ,808, ,808,807 0 Cost of Gas > 500 2,815,399 Dk ,201, ,201,939 0 Cost of Gas > 500 seasonal 12,909 Dk , ,665 0 Distribution Revenue Excluding Tax Tracker Adj. 7,311,536 7,729, ,546 Tax Tracker Adjustment < 500 Percent % 463, % 575, ,130 Tax Tracker Adjustment > 500 Percent % 832, % 934, ,153 1,295,926 1,510, ,283 Total Rates 70 and 72 Revenue $25,675,873 $24,739,828 $631,829 Excluding Tax Tracker Adjustment Total Distribution Revenues Per Design $7,729,082 Target Distribution Revenues 7,729,238 Difference ($156) Current Non-Gas Revenues $7,311,536 Proposed Revenue Increase 417,702 Total Revenue Requirement $7,729,238 Less: Basic Service Charge Revenues 2,483,851 Remaining Revenues To Be Collected 5,245,387 Total Rates 70 & 72 Consumption 3,937,862 Distribution Delivery Charge $1.332

227 Docket No. Rule Statement M Page 5 of 9 MONTANA-DAKOTA UTILITIES CO. RATE DESIGN & RECONCILIATION SMALL INTERRUPTIBLE - RATES 71 & 81 Pro Forma D Current Proposed Rate Amount Rate Amount Change Basic Service Charge Rate 71 Sales 18 Customers $ $42,098 $ $48,600 $6,502 Rate 81 Transport 28 Customers , ,600 10,114 Subtotal ,584 $124,200 $16,616 Distribution Delivery Rate 71 Sales 142,548 Dk $ ,073 $ ,794 (3,279) Rate 81 Transport 579,787 Dk , ,556 (13,337) Cost of Gas 142,548 Dk , ,011 0 Distribution Revenue Excluding Tax Tracker Adj. 604, ,550 0 Tax Tracker Adjustment - 71 Percent % 24, % 28,018 3,174 Tax Tracker Adjustment - 81 Percent % 82, % 90,107 7,799 Total Rates 71 and 81 Revenue $1,167,713 $1,178,686 $10,973 Excluding Tax Tracker Adjustment Total Distribution Revenues Per Design $604,550 Target Distribution Revenues 604,550 Difference $0 Current Non-Gas Revenues $604,550 Proposed Revenue Increase 0 Total Revenue Requirement $604,550 Less: Basic Service Charge Revenue 124,200 Remaining Revenues To Be Collected $480,350 Total Throughput Rates 71 & ,335 Distribution Delivery Charge $0.665

228 Docket No. Rule Statement M Page 6 of 9 MONTANA-DAKOTA UTILITIES CO. RATE DESIGN & RECONCILIATION LARGE INTERRUPTIBLE SERVICE - RATE 82 & 85 Pro Forma D Current Proposed CLASS Rate Amount Rate Amount Change Basic Service Charge Rate 85 2 Customers $ $13,614 $ $13,614 $0 Rate 82 Ceiling 1 Customers , ,807 0 Rate 82 Flex 3 Customers , ,421 0 Subtotal 40,842 40,842 $0 Distribution Delivery Rate 85 Sales 57,372 Dk $25, $25,760 0 Rate 82 Ceiling 52,815 Dk , ,714 0 Rate 82 Flex 2,893,793 Dk 1/ 450,965 1/ 450,965 0 Cost of Gas 57,372 Dk , ,533 0 Tax Tracker Adj - 85 Percent % 6, % 7, Tax Tracker Adj Max Percent % 5, % 5, Tax Tracker Adj Flex 1/ Percent % 83, % 92,106 8,556 Distribution Revenue Excluding Tax Tracker Adj. 541, ,281 0 Total Revenue $820,753 $830,577 $9,824 Excluding Tax Tracker Adjustment Total Distribution Revenues Per Design $69,895 Target Distribution Revenues 69,895 Difference $0 Current Distribution Delivery Revenues at Ceiling 69,895 Proposed Revenue Increase 0 Total Revenue Requirement at Ceiling $69,895 Less: Basic Service Charge $20,421 Remaining Revenues to be collected $49,474 DK 110,187 Distribution Delivery Charge $ / Flexed Contracts Customer ID Bills Base Rev Dk Rate Dist Rev Total Rev ,807 2,150, , , , , ,568 23, , , ,950 62,757 Total 36 $20,421 2,893,793 $450,965 $471,386

229 MONTANA-DAKOTA UTILITIES CO. Bill Comparison Annual Effects Residential - Rate 60 Docket No. Rule Statement M Page 7 of 9 Overall Annual Effect in Dollars Overall Annual Effect by Percent Total Average Total Average Range Customers Customers Monthly Use Range Customers Customers Monthly Use > than ($150) > than (20%) ($150) to ($100) (20%) to (15%) ($100) to ($50) (15%) to (10%) ($50) to ($25) (10%) to (5%) ($25) to $ (5%) to 0% $0 to $15 1,076 1, % to 3% 4,860 5, $15 to $25 6,258 7, % to 5% 11,695 16, $25 to $30 13,378 20, % to 7% 16,612 33, $30 to $35 26,568 47, % to 10% 18,650 52, $35 to $40 15,983 63, % to 15% 9,976 62, $40 to $50 2,138 65, % to 25% 2,861 64, > than $ ,626 - > than 25% , Current Rates BSC (per Day) $ 0.23 Distribution Charge $ Tax Tracker 1/ % Cost of Gas $ MDU Rate 60 Rates BSC (per Day) Distribution Charge Tax Tracker 2/ Cost of Gas Maximum Increase Average Increase Maximum Decrease 1/ Rule , Statement M, page 7. 2/ Rule , Statement M, page 2. $ $ $ $ $ $ % (139.41)

230 MONTANA-DAKOTA UTILITIES CO. Bill Comparison Annual Effects Firm General Gas Service Rate 70 - Small Docket No. Rule Statement M Page 8 of 9 Overall Annual Effect in Dollars Overall Annual Effect by Percent Total Average Total Average Range Customers Customers Monthly Use Range Customers Customers Monthly Use > than ($50) > than (20%) ($50) to ($25) (20%) to (15%) ($25) to ($15) (15%) to (10%) ($15) to ($5) (10%) to (5%) ($5) to $ (5%) to 0% $0 to $ % to 5% 1,693 1, $15 to $ % to 10% 1,835 3, $25 to $ % to 15% 1,224 4, $50 to $60 1,501 2, % to 20% 730 5, $60 to $70 3,681 6, % to 30% 627 6, $70 to $ , % to 40% 259 6, > than $80 0 6,521 - > than 40% 120 6, Current Rates BSC (per Day) $ 0.40 Distribution Charge $ Tax Tracker 1/ % Cost of Gas $ MDU Rate 70 (<500 cf/hr) Rates BSC (per Day) Distribution Charge Tax Tracker 2/ Cost of Gas Maximum Increase Average Increase Maximum Decrease $ $ $ $ $ $ % (54.27) 1/ Rule , Statement M, page 7. 2/ Rule , Statement M, page 2.

231 MONTANA-DAKOTA UTILITIES CO. Bill Comparison Annual Effects Firm General Gas Service Rate 70 - Large Docket No. Rule Statement M Page 9 of 9 Overall Annual Effect in Dollars Overall Annual Effect by Percent Total Average Total Average Range Customers Customers Monthly Use Range Customers Customers Monthly Use > than ($750) 8 8 1,526.0 > than (15%) ($750) to ($500) (15%) to (10%) ($500) to ($250) (10%) to (5%) ($250) to ($100) (5%) to (0%) ($100) to $ (0%) to 3% 857 1, $0 to $ % to 5% 372 1, $25 to $ % to 7% 253 1, $50 to $ % to 10% 184 1, $75 to $ % to 15% 133 2, $100 to $150 1,136 2, % to 20% 42 2, $150 to $ , % to 25% 27 2, > than $ ,224 - > than 25% 77 2, Current Rates BSC (per Day) $ 0.80 Distribution Charge $ Tax Tracker 1/ % Cost of Gas $ MDU Rate 70 (>500 cf/hr) Rates BSC (per Day) Distribution Charge Tax Tracker 2/ Cost of Gas Maximum Increase Average Increase Maximum Decrease $ $ $ $ $ $ % (2,348.90) 1/ Rule , Statement M, page 7. 2/ Rule , Statement M, page 2.

232 Docket No. Rule Statement O Part A Page 1 of 13 MONTANA-DAKOTA UTILITIES CO. FLOWCHART OF PRO FORMA ADJUSTMENTS TO OPERATING INCOME Sales & Current Rates $4,593,915 Weather Normalization $6,685,522 Revenue Adjustments Depreciation Expense Depreciation Expense $11,816,239 $226,214 $226,214 Annualization $511,542 Ad Valorem Taxes Other Revenues $590,818 $25,260 Payroll Taxes Taxes Other Than Income $14,668 Cost of Gas $536,192 $9,755,417 Montana Consumer Counsel ($3,374) Labor Expense $200,248 Total Montana PSC Pro Forma ($65,920) Benefits Expense Adjustments ($12,841) $527,983 Income Taxes on Pro Vehicles & Work Equipment Current Income Taxes Forma Adj. $528,092 $202,008 $230,035 Elimination of Closing/Filing Company Consumption O&M Expenses & Prior Period ($298,057) $10,886 $10,208,439 Uncollectible Accounts $67,500 Deferred Income Taxes on Advertising Expense Deferred Income Taxes Plant Add. ($222,825) ($44,755) $87,376 Elimination of Closing/Filing Subcontract Labor & Prior Period $310,201 ($28,707) Software Maintenance Insurance Expense Industry Dues $108,404 $52,895 $1,841 Regulatory Commission Expense ($104,457)

233 Docket No. Rule Statement O Part A Page 2 of 13 MONTANA-DAKOTA UTILITIES CO. FLOWCHART OF PRO FORMA ADJUSTMENTS TO RATE BASE Plant Additions $6,050,975 Gas Plant in Service $1,765,954 Accumulated Reserve for Depreciation on Plant Additions $4,285,021 Materials & Supplies ($22,273) Gas in Underground Storage Total ($1,353,577) Pro Forma Adjustments Prepaid Insurance $477,013 $97,644 Prepaid Demand & Commodity Unamortized Loss on Debt Provision for Pensions & Benefits Provision for Injuries & Damages ($450,166) Additions ($1,784,852) ($50,762) ($138,954) $14,497 Unamort. Redemption cost of Pref. Stk. Discontinued Service - Saco $18,739 $100,000 Accumulated Def. Inc. Tax - Liberalized Depreciation ($479,258) Accumulated Def. Inc. Tax - Full Normalization ($57,659) Deductions ($495,911) Accumulated Def. Inc. Tax - R&D Tax Carryforward ($17,646) Accumulated Def. Inc. Tax - Prepaid Demand Charges $37,023 Accumulated Def. Inc. Tax - Customer Advances ($45,090) Accumulated Def. Inc. Tax - Unamortized Loss on Debt ($20,274) Accumulated Def. Inc. Tax - Pensions & Benefits ($20,966) Accumulated Def. Inc. Tax - Injuries and Damages $5,536 Accumulated Def. Inc. Tax - Discontinued Service - Saco ($39,388) Customer Advances for Construction $141,811

234 Docket No. Rule Statement O Part A Page 3 of 13 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF REVENUE REQUIREMENTS Cost of Gas 60% Return 6% Income Taxes 3% Other O&M 17% Taxes Other 7% Depreciation 7% Revenue Requirement Cost of Gas $43,577,264 Other O&M 12,527,069 Depreciation 5,009,510 Taxes Other 5,376,143 Income Taxes 1,907,360 Return 4,012,394 Miscellaneous Revenue (502,010) Total $71,907,730

235 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF INCOME STATEMENTS PRO FORMA Authorized Pro Forma Revenues Sales $67,734,262 $55,781,839 $63,466,828 $81,219,127 $66,755,983 $55,547,802 $85,562,753 Transportation 1,137,554 1,298,998 1,278,574 1,436,304 1,278,299 1,217,426 1,206,651 Other 502, , , , , , ,912 Total Revenues 69,373,826 57,557,587 65,177,598 83,242,850 68,458,944 57,140,765 87,209,316 O&M Expenses Cost of Gas 43,577,264 33,821,847 41,700,847 59,970,778 47,103,734 37,615,656 62,481,865 Other Gas Supply 213, , , ,129 69,612 76,295 70,959 Production , ,961 0 Distribution 5,043,768 4,776,040 4,568,424 4,528,224 4,823,406 4,477,304 4,928,576 Customer Accounting 2,288,090 2,157,114 1,983,065 2,225,102 2,132,983 1,768,589 2,146,401 Customer Service & Info. 81,729 80,602 77,915 83,838 75, ,148 75,134 Sales 56,318 88, , , , ,291 83,936 Administrative & General 4,843,413 4,764,007 4,254,676 4,233,120 4,226,897 3,931,481 4,307,788 Other O&M 12,527,069 12,074,047 11,206,623 11,377,543 11,616,516 10,646,069 11,612,794 Total O&M 56,104,333 45,895,894 52,907,470 71,348,321 58,720,250 48,261,725 74,094,659 Depreciation & Amortization 5,009,510 4,783,296 4,477,040 4,255,795 3,652,286 3,118,691 4,295,582 Taxes Other Than Income Ad Valorem 4,678,130 4,087,312 3,613,351 3,377,009 3,282,000 3,125,051 3,345,285 O&M Related 488, , , , , , ,965 Revenue 200, , , ,942 (15,657) 172, ,911 Other Total Taxes Other 5,367,339 4,831,147 4,506,945 4,128,512 3,756,688 3,739,199 4,100,702 Income Taxes Current Income Taxes 1,362,898 1,132,863 2,369,293 (1,951,930) (1,981,742) (3,914,125) (1,518,775) Deferred Income Taxes (647,841) (735,217) (1,529,178) 2,969,371 2,374,229 4,205,089 2,893,581 Total Income Taxes 715, , ,115 1,017, , ,964 1,374,806 Net Income $2,177,587 $1,649,604 $2,446,028 $2,492,781 $1,937,233 $1,730,186 $3,343,567 Docket No. Rule Statement O Part A Page 4 of 13

236 Docket No. Rule Statement O Part A Page 5 of 13 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF SALES REVENUE PRO FORMA $90,000 $75,000 Thousands $60,000 $45,000 $30,000 $15,000 $ Pro Forma Sales Revenue Pro Forma $55,547,802 $66,755,983 $81,219,127 $63,466,828 $55,781,839 $67,734,262 $1,500 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF TRANSPORTATION REVENUE PRO FORMA $1,200 Thousands $900 $600 $300 $ Pro Forma Transportation Revenue Pro Forma $1,217,426 $1,278,299 $1,436,304 $1,278,574 $1,298,998 $1,137,554

237 Docket No. Rule Statement O Part A Page 6 of 13 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF OTHER REVENUE PRO FORMA $600 $500 Thousands $400 $300 $200 $100 $ Pro Forma Other Revenue Pro Forma $375,537 $424,662 $587,419 $432,196 $476,750 $502,010 $90,000 $75,000 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF TOTAL REVENUE PRO FORMA Thousands $60,000 $45,000 $30,000 $15,000 $ Pro Forma Total Revenue Pro Forma $57,140,765 $68,458,944 $83,242,850 $65,177,598 $57,557,587 $69,373,826

238 Docket No. Rule Statement O Part A Page 7 of 13 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF COST OF GAS PRO FORMA $60,000 $50,000 Thousands $40,000 $30,000 $20,000 $10,000 $ Pro Forma Cost of Gas Pro Forma $37,615,656 $47,103,734 $59,970,778 $41,700,847 $33,821,847 $43,577,264 $250 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF OTHER GAS SUPPLY O&M PRO FORMA $200 Thousands $150 $100 $50 $ Pro Forma Other Gas Supply O&M Pro Forma $76,295 $69,612 $140,129 $172,550 $208,060 $213,751

239 Docket No. Rule Statement O Part A Page 8 of 13 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF PRODUCTION O&M PRO FORMA $200 $160 Thousands $120 $80 $40 $ Pro Forma Production O&M Pro Forma $176,961 $169,041 $0 $0 $0 $0 $6,000 $5,000 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF DISTRIBUTION O&M PRO FORMA Thousands $4,000 $3,000 $2,000 $1,000 $ Pro Forma Distribution O&M Pro Forma $4,477,304 $4,823,406 $4,528,224 $4,568,424 $4,776,040 $5,043,768

240 Docket No. Rule Statement O Part A Page 9 of 13 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF CUSTOMER ACCOUNTING O&M PRO FORMA $2,500 $2,000 Thousands $1,500 $1,000 $500 $ Pro Forma Customer Accounting O&M Pro Forma $1,768,589 $2,132,983 $2,225,102 $1,983,065 $2,157,114 $2,288,090 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF CUSTOMER SERVICE & INFORMATION O&M PRO FORMA Thousands $120 $105 $90 $75 $60 $45 $30 $15 $ Pro Forma Customer Service & Information O&M Pro Forma $109,148 $75,080 $83,838 $77,915 $80,602 $81,729

241 Docket No. Rule Statement O Part A Page 10 of 13 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF SALES O&M PRO FORMA $200 $160 Thousands $120 $80 $40 $ Pro Forma Sales O&M Pro Forma $106,291 $119,497 $167,130 $149,993 $88,224 $56,318 $5,000 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF ADMINISTRATIVE & GENERAL O&M PRO FORMA $4,000 Thousands $3,000 $2,000 $1,000 $ Pro Forma Administrative & General O&M Pro Forma $3,931,481 $4,226,897 $4,233,120 $4,254,676 $4,764,007 $4,843,413

242 Docket No. Rule Statement O Part A Page 11 of 13 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF TOTAL O&M PRO FORMA $75,000 $60,000 Thousands $45,000 $30,000 $15,000 $ Pro Forma Total O&M Pro Forma $48,261,725 $58,720,250 $71,348,321 $52,907,470 $45,895,894 $56,104,333 $14,000 $12,000 $10,000 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF O&M EXCLUDING COST OF GAS PRO FORMA Thousands $8,000 $6,000 $4,000 $2,000 $ Pro Forma O&M Excluding Cost of Gas Pro Forma $10,646,069 $11,616,516 $11,377,543 $11,206,623 $12,074,047 $12,527,069

243 Docket No. Rule Statement O Part A Page 12 of 13 $6,000 $5,000 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF DEPRECIATION & AMORTIZATION EXPENSE PRO FORMA Thousands $4,000 $3,000 $2,000 $1,000 $ Pro Forma Depreciation & Amortization Expense Pro Forma $3,118,691 $3,652,286 $4,255,795 $4,477,040 $4,783,296 $5,009,510 $6,000 $5,000 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF TAXES OTHER THAN INCOME PRO FORMA Thousands $4,000 $3,000 $2,000 $1,000 $ Pro Forma Taxes Other Than Income Pro Forma $3,739,199 $3,756,688 $4,128,512 $4,506,945 $4,831,147 $5,367,339

244 Docket No. Rule Statement O Part A Page 13 of 13 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF INCOME TAXES PRO FORMA $1,200 $1,000 Thousands $800 $600 $400 $200 $ Pro Forma Income Taxes Pro Forma $290,964 $392,487 $1,017,441 $840,115 $397,646 $715,057 $2,500 MONTANA-DAKOTA UTILITIES CO. SUMMARY OF NET INCOME PRO FORMA $2,000 Thousands $1,500 $1,000 $500 $ Pro Forma Net Income Pro Forma $1,730,186 $1,937,233 $2,492,781 $2,446,028 $1,649,604 $2,177,587

245 Docket No. Rule Statement O Part B Page 1 of 12 MONTANA-DAKOTA UTILITIES CO. EMBEDDED CLASS COST OF SERVICE 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Residential Firm General Small Firm General Large Small Interruptible Large Interruptible Pro Forma Rate of Return Residential 0.245% Small Interruptible % Firm General Small % Large Interruptible % Firm General Large %

246 Docket No. Rule Statement O Part B Page 2 of 12 MONTANA-DAKOTA UTILITIES CO. EMBEDDED CLASS COST OF SERVICE COST OF SERVICE BY COMPONENT Class Cost of Service - Residential Demand 31% Commodity 36% Customer 33% Commodity $15,622,068 Demand $13,615,613 Customer $14,718,306

247 Docket No. Rule Statement O Part B Page 3 of 12 MONTANA-DAKOTA UTILITIES CO. EMBEDDED CLASS COST OF SERVICE COST OF SERVICE BY COMPONENT Class Cost of Service - Firm General-Small Demand 40% Commodity 37% Customer 23% Commodity $2,620,224 Demand $2,881,268 Customer $1,661,105 Class Cost of Service - Firm General-Large Commodity 60% Demand 39% Customer 10% Commodity $7,816,647 Demand $5,973,162 Customer $1,626,094

248 Docket No. Rule Statement O Part B Page 4 of 12 MONTANA-DAKOTA UTILITIES CO. EMBEDDED CLASS COST OF SERVICE COST OF SERVICE BY COMPONENT Class Cost of Service - Small Interruptible Commodity 55% Demand 29% Customer 16% Commodity $419,587 Demand $224,312 Customer $123,830 Class Cost of Service - Large Interruptible Demand 51% Customer 4% Commodity 45% Commodity $216,237 Demand $240,640 Customer $19,665

249 Docket No. Rule Statement O Part B Page 5 of 12 MONTANA-DAKOTA UTILITIES CO. EMBEDDED CLASS COST OF SERVICE PRO FORMA 2017 Residential Service Operation & Maintenance 89% Depreciation 10% Taxes Other Than Income 1% Operation & Maintenance $35,418,969 Taxes Other Than Income $526,491 Depreciation $3,878,181 Income Taxes ($651,090)

250 Docket No. Rule Statement O Part B Page 6 of 12 MONTANA-DAKOTA UTILITIES CO. EMBEDDED CLASS COST OF SERVICE PRO FORMA 2017 Firm General Service-Small Depreciation 7% Taxes Other Than Income 5% Operation & Maintenance 87% Income Taxes 5% Operation & Maintenance $5,985,434 Taxes Other Than Income $73,587 Depreciation $501,156 Income Taxes $325,343 Firm General Service-Large Depreciation 3% Taxes Other Than Income 3% Operation & Maintenance 91% Income Taxes 7% Operation & Maintenance $13,793,705 Taxes Other Than Income $118,604 Depreciation $531,253 Income Taxes $1,031,325

251 Docket No. Rule Statement O Part B Page 7 of 12 MONTANA-DAKOTA UTILITIES CO. EMBEDDED CLASS COST OF SERVICE PRO FORMA 2017 Small Interruptible Service Depreciation 6% Taxes Other Than Income 1% Operation & Maintenance 72% Income Taxes 21% Operation & Maintenance $596,864 Taxes Other Than Income $9,633 Depreciation $51,826 Income Taxes $172,753 Large Interruptible Service Taxes Other Than Income 15% Depreciation 9% Income Taxes 27% Operation & Maintenance 48% Operation & Maintenance $309,361 Taxes Other Than Income $8,040 Depreciation $47,094 Income Taxes $160,738

252 Docket No. Rule Statement O Part B Page 8 of 12 MONTANA-DAKOTA UTILITIES CO. EMBEDDED - PRO FORMA 2017 FUNCTIONALIZED COST BY CLASS Firm General - Small 11% Revenue Firm General- Large 26% Small Interruptible 2% Residential 60% Large Interuptible 1% Residential $39,268,722 Small Interruptible $1,067,070 Firm General-Small $7,469,777 Large Interruptible $730,782 Firm General-Large $17,029,118 Cost of Purchased Gas Firm General- Small 11% Residential 59% Firm General- Large 28% Small Interruptible 1% Large Interuptible 1% Residential $25,870,209 Small Interruptible $456,016 Firm General-Small $4,809,033 Large Interruptible $183,535 Firm General-Large $12,258,472

253 Docket No. Rule Statement O Part B Page 9 of 12 MONTANA-DAKOTA UTILITIES CO. EMBEDDED - PRO FORMA 2017 FUNCTIONALIZED COST BY CLASS Other O&M Expense Residential 76% Firm General- Small 10% Firm General- Large 12% Small Interruptible 1% Large Interruptible 1% Residential $9,548,760 Small Interruptible $140,848 Firm General-Small $1,176,401 Large Interruptible $125,826 Firm General-Large $1,535,233 Depreciation Expense Small Interruptible 1% Large Interruptible 1% Residential 77% Firm General- Large 11% Firm General- Small 10% Residential $3,878,181 Small Interruptible $51,826 Firm General-Small $501,156 Large Interruptible $47,094 Firm General-Large $531,253

254 Docket No. Rule Statement O Part B Page 10 of 12 MONTANA-DAKOTA UTILITIES CO. EMBEDDED - PRO FORMA 2017 FUNCTIONALIZED COST BY CLASS Taxes Other Than Income Large Interruptible 1% Small Interruptible 1% Residential 72% Firm General- Large 16% Firm General- Small 10% Residential $526,491 Small Interruptible $9,633 Firm General-Small $73,587 Large Interruptible $8,040 Firm General-Large $118,604 Income Taxes Firm General- Small 19% Large Interruptible 9% Firm General- Large 57% Small Interruptible 15% Residential ($651,090) Small Interruptible $172,753 Firm General-Small $325,343 Large Interruptible $160,738 Firm General-Large $1,031,325

255 MONTANA-DAKOTA UTILITIES CO. EMBEDDED - PRO FORMA 2017 FUNCTIONALIZED COST BY CLASS $40,000 Revenue $ (Thousands) $30,000 $20,000 $10,000 $0 Residential Firm General- Small Firm General- Large Small Interruptible Large Interruptible Cost of Gas Non-Gas Items Firm Firm General General Small Large Residential Small Large Interruptible Interruptible Cost of Gas $25,870,209 $4,809,033 $12,258,472 $456,016 $183,535 Non-Gas Items $18,085,778 $2,353,564 $3,157,431 $311,713 $293,007 Docket No. Rule Statement O Part B Page 11 of 12

256 Docket No. Rule Statement O Part B Page 12 of 12 MONTANA-DAKOTA UTILITIES CO. Large Interruptible 22% Small Interruptible 6% Firm General-Large 21% Residential 44% Firm General-Small 8% Pro Forma Billing Determinants Dk Residential 5,968,846 Small Interruptible 722,335 Firm General-Small 1,109,554 Large Interruptible 2,946,608 Firm General-Large 2,828,308 $50 Revenues $ (Millions) $40 $30 $20 $10 $0 Residential Firm General Small Interruptible Large Interruptible Pro Forma Revenue Proposed Revenue Revenues Under Current & Proposed Rates Residential Firm General Small Interruptible Large Interruptible Pro Forma Revenue $41,338,933 $25,749,641 $1,173,812 $826,214 Proposed Revenue $43,591,803 $26,307,702 $1,178,686 $830,577 Percent Increase 5.45% 2.17% 0.42% 0.53%