October 1, Northern States Power Company a Wisconsin corporation Tax Reform Calculation C - Gas Case No. U

Founded in 1852 by Sidney Davy Miller SHERRI A. WELLMAN TEL (517) 4834954 FAX (517) 3746304 EMAIL wellmans@millercanfield.com Miller, Canfield, Paddock and Stone, P.L.C. One Michigan Avenue, Suite 900 Lansing, Michigan 48933 TEL (517) 4872070 FAX (517) 3746304 www.millercanfield.com October 1, 2018 MICHIGAN: Ann Arbor Detroit Grand Rapids Kalamazoo Lansing Troy FLORIDA: Tampa ILLINOIS: Chicago NEW YORK: New York OHIO: Cleveland CANADA: Windsor CHINA: Shanghai MEXICO: Monterrey POLAND: Gdynia Warsaw Wrocław Ms. Kavita Kale Executive Secretary Michigan Public Service Commission 7109 W. Saginaw Highway, 3rd Floor Lansing, MI 48917 Re: Northern States Power Company a Wisconsin corporation Tax Reform Calculation C Gas Case No. U20312 Dear Ms. Kale: Pursuant to the Commission s orders issued in Case Nos. U18494 and U20109, Northern States Power Company hereby files the enclosed Application, Direct Testimony and Exhibits of Julie A. McRea to address the Calculation C effects of the federal Tax Cuts and Jobs Act of 2017. Also enclosed are the Appearances of Sherri A. Wellman and Paul M. Collins. Should you have any questions, please kindly advise. Very truly yours, Miller, Canfield, Paddock and Stone, P.L.C. SAW/ark Enclosures cc: Karl Hoesly Julie McRea Mara Ascheman By: Sherri A. Wellman

STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION ***** In the matter on the Commission s own motion, ) to consider changes in the rates of all the ) Michigan rateregulated electric, steam and ) natural gas utilities to reflect the effects of the ) Case No. U20312 federal Tax Cuts and Jobs Act of 2017 ) Cuts and Jobs Act of 2017: ) NORTHERN STATES POWER COMPANY (Gas) ) files an application for determination of ) Calculation C as described in orders U18494 and ) U20109. ) APPLICATION Northern States Power Company, a Wisconsin corporation ( NSPW or the Company ), as directed in the February 22, 2018 Order of the Michigan Public Service Commission ( MPSC or the Commission ) issued in Case No. U18494 ( February 22 Order ) and in the May 30, 2018 Order Approving Revised Settlement Agreement issued in Case No. U20109, hereby files its application for Calculation C to address the outstanding impacts of federal corporate tax reduction arising from the Tax Cuts and Jobs Act of 2017 ( TCJA ). In support of this Application, NSPW respectfully represents to the Commission as follows: 1. NSPW is a public service corporation organized under the laws of Wisconsin with its principal offices located in Eau Claire, Wisconsin, and is engaged primarily in public utility operations. The Company is also authorized to do business in Michigan. 2. NSPW is engaged, in part, in the transportation, distribution, and sale of natural gas in portions of two counties in the Upper Peninsula of Michigan and portions of Wisconsin.

3. NSPW s retail natural gas business is subject to the jurisdiction of the Commission pursuant to 1919 PA 419, as amended, MCL 460.51 et seq.; and 1939 PA 3, as amended; MCL 460.1 et seq. Pursuant to said statutory provisions, the Commission has power and jurisdiction to regulate NSPW s retail natural gas rates for service rendered in the State of Michigan. 4. NSPW s last general base rate case for retail gas service was in Case No. U 18140, with a final order issued by the Commission in that case on March 28, 2017. 5. As relevant to this application, in the Commission s February 22 Order, NSPW was directed to file an application, with supporting testimony and exhibits to address Calculation C, to capture all remaining impacts of the tax law change, including excess deferred taxes, bonus depreciation, and any other impacts not captured through Credits A and B, or any other rate mechanism. 6. Consistent with the Commission s directives made in Case Nos. U18494 and U 20114, NSPW is filing herewith the supporting testimony and exhibits of Julie A. McRea for purposes of addressing Calculation C and recommending credit amounts associated with Calculation C. 7. As reflected in its supporting testimony and exhibits, NSPW proposes to reflect credits beginning January 1, 2019. 6. NSPW represents that the proposed credits, as supported by its testimony and exhibits, are just, reasonable, in the public interest, and provide for its Michigan gas customers to enjoy the benefits of the tax reduction on a timely basis. WHEREFORE, Northern States Power Company requests that the Commission: A. Approve this Application; 2

B. Find and determine that NSPW s proposed credits as supported by its testimony and exhibits are reasonable and prudent; C. Authorize NSPW to file and make effective its proposed credits effective January 1, 2019; and D. Grant NSPW such other and further relief and authorizations as shall be lawful and proper. Respectfully submitted, Dated: October 1, 2018 NORTHERN STATES POWER COMPANY Ujgttk!C/! Ygnnocp Fkikvcnn{!ukipgf!d{<!Ujgttk!C/!Ygnnocp FP<!EP!?!Ujgttk!C/!Ygnnocp!gockn!?! ygnnocpuboknngtecphkgnf/eqo!e!?!wu Fcvg<!3129/21/12!25<47<42!.15(11( By: One of its Attorneys Sherri A. Wellman (P38989) Paul M. Collins (P69719) MILLER, CANFIELD, PADDOCK AND STONE, P.L.C. One Michigan Avenue, Suite 900 Lansing, MI 48933 (517) 4872070 Attorneys for Northern States Power Company 3

STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the matter on the Commission s own ) motion, to consider changes in the rates ) of all the Michigan rateregulated ) electric, steam and natural gas utilities ) Case No. U20312 to reflect the effects of the federal Tax ) Cuts and Jobs Act of 2017: ) NORTHERN STATES POWER COMPANY (Gas) ) files an application for determination of Calculation C ) as described in order U18494 and U20109. *! Direct Testimony and Exhibits of Julie A. McRea on Behalf of Northern States Power Company, a Wisconsin Corporation October 1, 2018

DIRECT TESTIMONY OF JULIE A. MCREA 2! 3! 4! 5! 6! 7! 8! 9! ;! 21! 22! 23! 24! 25! 26! 27! 28! 29! 2;! 31! 32! 33! Q. Please state your full name and business address. A. My name is Julie A. McRea. My business address is 1414 W. Hamilton Avenue, P.O. Box 8, Eau Claire, Wisconsin 547020008. Q. By whom are you employed and in what capacity? A. I am the Manager of Regulatory Affairs for Northern States Power Company, a Wisconsin corporation ( NSPW or the Company ) and wholly owned subsidiary of Xcel Energy Inc. ( Xcel Energy ). Q. Would you state briefly the duties of your present position? A. I am primarily responsible for the calculation and analysis of revenue requirements, rates (pricing), and other regulatory administration functions for the electric and gas utilities of NSPW in Wisconsin and Michigan. Q. What is your educational and professional background? A. I have a Bachelor of Arts degree in Accounting and Business Administration along with a Master of Business Administration, all from Lakeland College, Sheboygan, Wisconsin. In addition, I am a Certified Public Accountant licensed in the State of Wisconsin. Prior to coming to NSPW, I worked for 10 years in the healthcare industry in various financial, consulting and accounting roles. I began my career at Xcel Energy in March 2010 as a Senior Accounting/Financial Analyst in the Regulatory Accounting department of Xcel Energy Services, Inc., the service company subsidiary of Xcel Energy. I joined the NSPW Regulatory Affairs department in August 2014 and held positions of increasing responsibility including Senior Rate Analyst and Principle Rate Analyst. I was promoted to my current position in June 2018. 3!

2! 3! 4! 5! 6! 7! 8! 9! ;! 21! 22! 23! 24! 25! 26! 27! 28! 29! 2;! 31! 32! 33! Q. Have you previously testified before, or filed testimony with, state regulatory agencies? A. Yes. I have previously filed testimony with the Michigan Public Service Commission ( MPSC or the Commission ) and the Public Service Commission of Wisconsin ( PSCW ). Q. What is the purpose of your testimony? A. As directed in the February 22, 2018 Order by the MPSC issued in Case No. U18494 ( February 22 Order ), I will address the Company s Calculation C tax related adjustment to natural gas base rates to reflect all remaining impacts of the tax law change arising from the Tax Cuts and Jobs Act of 2017 ( TCJA ) not captured through Credit A (Case No. U20109) and Credit B (Case No. U20186). These remaining impacts will address three components of the TCJA: 1. Plantrelated excess deferred income taxes and adjusting this balance over the life of the underlying assets using the average rate assumption method ( ARAM ) as prescribed by the TCJA and Internal Revenues Service s ( IRS ) normalization requirements. 2. The expiration of bonus depreciation. 3. The onetime remeasurement of nonplant deferred tax assets and liabilities and the associated tax gross up from the federal tax law change and the resulting regulatory tax assets and liabilities. The calculations that will be presented will show the difference between the previously approved revenue requirement and revenue deficiency in Case No. U 4!

2! 3! 4! 5! 18140, prior to the TCJA impacts and the new revenue requirement and revenue deficiency reflecting the TCJA impacts. Q. Are you sponsoring any exhibits? A. Yes, I am sponsoring the following exhibits: 6! 7! 8! 9! ;! 21! Exhibit A1 (JAM1) Exhibit A2 (JAM2) Exhibit A3 (JAM3) Exhibit A4 (JAM4) Exhibit A5 (JAM5) Exhibit A6 (JAM6) TCJA Calculation C Revenue Deficiency TCJA Calculation C Rate Base TCJA Calculation C Net Operating Income TCJA Calculation C Revenue Conversion Factor TCJA Calculation C Federal Income Taxes TCJA Calculation C Rate of Return Summary 22! 23! 24! 25! 26! 27! 28! 29! 2;! 31! 32! 33! 34! 35! 36! 37! 38! 39! 3;! Exhibit A7 (JAM7) TCJA Calculation C 2018 Jurisdictional Cost of Service Exhibit A8 (JAM8) TCJA Calculation C 2019 Jurisdiction Cost of Service Exhibit A9 (JAM9) TCJA Calculation C Onetime Refund Proposed Rate Design & TCJA Credits Exhibit A10 (JAM10) TCJA Calculation C Ongoing Rate Design & TCJA Credits Exhibit A11 (JAM11) TCJA Calculation C Proposed Tariff Sheets Q. Were these exhibits prepared under your direction and supervision? A. Yes. Q. Please explain Exhibit A1 (JAM1). A. Exhibit A1 (JAM1) shows the computation of the change in revenue deficiency for the approved base rates in Case No. U18140 based on 12month period ending December 31, 2018 using a 13month average rate base. This was based on a 13 month average as filed rate base of $7,036,940 for the Michigan jurisdiction and a required rate of return on rate base of 6.01 percent. The adjusted required rate of return 5!

2! 3! 4! 5! 6! 7! 8! 9! ;! 21! 22! 23! 24! 25! 26! 27! 28! 29! 2;! 31! 32! 33! 34! on rate base after the TCJA impacts is 6.03 percent (column f). This exhibit indicates a decrease in the revenue deficiency related to the impacts of Calculation C of $20,881 for the year. Q. Please explain Exhibit A2 (JAM2). Exhibit A2 (JAM2) presents NSPW s 2018 natural gas utility Total Rate Base for the Michigan Jurisdiction as authorized in Case No. U18140, which is $7,036,940. The rate base amounts reflect 13month average balances and are not affected by Calculation C impacts. Q. Please explain Exhibit A3 (JAM3) through Exhibit A5 (JAM5). A. As shown on Line 20, column (c) of Exhibit A3 (JAM3), NSPW s adjusted authorized 2018 operating income in Case No. U18140 prior to TCJA impacts is $422,920. The adjusted operating income reflecting TCJA impacts is $488,959 (column f), a change of $16,609 related to Calculation C (column g). Exhibit A4 (JAM4) illustrates the 2018 authorized revenue conversion factor of 1.6695, based federal income tax rate of 35 percent. The revenue conversion factor based on a federal tax rate of 21 percent is shown as 1.3737. Exhibit A5 (JAM5) shows 2018 authorized federal income taxes, total net provision for deferred income tax expense and net investment tax credit for the Michigan jurisdiction prior to TCJA impacts in Column (c) with the TCJA impacts in Column (d) through Column (g). Q. Please explain Exhibit A6 (JAM6). A. Exhibit A6 (JAM6) presents NSPW s authorized capital structure from Case No. U 18140 reflecting a return on equity of 10.00 percent. The capital structure has been 6!

2! 3! 4! 5! 6! 7! 8! 9! ;! 21! 22! 23! 24! 25! 26! 27! 28! 29! 2;! 31! 32! 33! updated for TCJA impacts on Accumulated Deferred Income Taxes shown on line 5. As shown on line 11 of Exhibit A6, the adjusted required rate of return on rate base after TCJA impacts is 6.03 percent. Q. Please describe Exhibit A7 (JAM7). A. Exhibit A7 (JAM7) is the natural gas Jurisdictional Cost of Service Study ( JCOSS ) that begins with the 2017 authorized revenue requirement from Case No. U18140 (column a). The revenue requirement related to the step increase effective January 1, 2018 (column b) is then added to the 2017 test year authorized amount to reflect the revenue requirement and base rates in effect as of January 1, 2018 (column c) when the TCJA went into effect. Columns ac are presented prior to TCJA impacts and reflective of the 35 percent federal tax rate. The 21 percent federal tax rate change addressed in the Credit A proceeding (Case No. U20109) is shown in Column (d). The total TCJA updates of Credit A and Calculation C is shown in Column (e) with the change related to Calculation C indicated in Column (f). Q. Please describe Exhibit A8 (JAM8). A. Exhibit A8 (JAM8) for the 2019 approved step increase takes the same approach as Exhibit A7 (JAM7) described above. The revenue requirement related to the step increase effective January 1, 2019 is presented in Column (a) presented prior to TCJA impacts and reflective of the 35 percent federal tax rate. The 21 percent federal tax rate change addressed in the Credit A proceeding (Case No. U20109) is shown in Column (b) and Column (c). The total TCJA updates of Credit A and Calculation C is shown in Column (d) with the change related to Calculation C indicated in Column (e). 34! 7!

2! 3! 4! 5! 6! 7! 8! 9! ;! 21! 22! 23! 24! 25! 26! 27! 28! 29! 2;! 31! 32! 33! Q. What is the total Michigan natural gas TCJA Calculation C impact? A. The total TCJA Calculation C impact is presented on Exhibit A7 (JAM7), JCOSS, in the amount of a $20,882 reduction in the revenue deficiency. The TCJA Calculation C impact is based on the previously approved revenue requirement using a 2017 test year in the Company s last natural gas general rate case Case No. U18140, along with the January 1, 2018 step increase also approved in that case. In addition, a step increase is also approved effective January 1, 2019 and the change in 2019 increase related to TCJA Calculation C is presented on Exhibit A8 (JAM8), in the amount of $10,148. Q. Are there any other impacts of the TCJA not already addressed? A. Yes. The one remaining impact of TCJA is the onetime remeasurement of nonplant deferred tax assets and liabilities based on December 31, 2017 balances and the associated tax gross up from the federal tax law change and the resulting regulatory tax assets and liabilities. The resulting allocation of these regulatory assets and liabilities between the jurisdictions produces a regulatory liability for Michigan gas of $20,009. Q. Please describe the adjustment to rates that is necessary to address Calculation C? A. An adjustment to rates is necessary to credit to customers the impacts of Calculation C from January December 2018 along with the credit for the regulatory liability related to the onetime remeasurement of nonplant deferred tax assets and liabilities as a onetime credit. In addition, ongoing credits are needed for Calculation C in 2019. These onetime credits and ongoing credits to customers are reflected in Exhibits A9 8!

2! 3! (JAM9) through Exhibits A11 (JAM11). In addition, the table below also summarizes these credits: 4! 5! 6! 7! 8! 9! ;! 21! 22! 23! 24! 25! Description Origin Amount Proposed Disposition A. Plant related balance sheet items Calculation C JanuaryDecember 2018 $20,882 Onetime refund Jan. to April 2019 (allocated by 2017 B. Onetime NonPlant ReMeasurement balance sheet items C Interest Interest on amount A and B, above D E Plant related balance sheet items Plant related balance sheet items rate base) TCJA December 2017 $20,009 Onetime refund Jan. to April 2019 (allocated by 2017 rate base) Calculation C 2019 Ongoing Q. Please describe Exhibit A9 (JAM9). Calculation C 2019 Step Increase Ongoing $789 Onetime refund Jan. to April 2019 (allocated by 2017 rate base) $20,882 Ongoing credit (allocated by 2017 rate base) $10,148 Ongoing credit (allocated by 2017 rate base) Exhibit A9 (JAM9) is NSPW s proposed TCJA Calculation C allocation for the onetime refund for the time period of January 2019 April 2019. Table 1 (columns AB) starting point is the CCOSS from Case No. U18140. The total credit to be allocated to customers includes the $20,882 credit related to 2018 Calculation C impacts and the $20,009 credit of onetime remeasurement of nonplant deferred tax assets and liabilities to arrive at a total onetime credit to customers of $41,755 including interest. The interest calculation is shown in Table 2. In addition, on Table 1 (Columns CE), the Company proposes the revenue sufficiency of $41,755 is divided by the annual estimated sales based on Case No. U18140 to derive the amount to be 9!

2! 3! 4! 5! 6! 7! 8! 9! ;! 21! 22! 23! 24! 25! 26! 27! 28! 29! 2;! 31! 32! 33! 34! credited to customers over January 2019 April 2019. The onetime credit for Calculation C would expire on April 30, 2019. A typical residential customer using 75 therms per month would see a decrease in the monthly bill of $1.18 or 2.3 percent from 2019 authorized rates. A typical commercial customer using 350 therms per month would see a decrease in the monthly bill of $3.61 or 1.9 percent from 2019 authorized rates. Customer impacts will vary by individual usage levels. Q. Please describe Exhibit A10 (JAM10). A. Exhibit A10 (JAM10) is NSPW s proposed TCJA Calculation C allocation for the ongoing credit of $31,030 related to Calculation C 2018 impacts along with the Calculation C impact on the 2019 step rate increase. Table 1 (columns AB) starting point is the CCOSS from Case No. U18140. In addition, on Table 1 (Columns CE), the proposed the revenue sufficiency is divided by the annual estimated sales, based on Case No. U18140, to derive the amount to be credited to customers. A typical residential customer using 75 therms per month would see a decrease in the monthly bill of $0.36 or 0.7 percent from 2019 authorized rates. A typical commercial customer using 350 therms per month would see a decrease in the monthly bill of $1.05 or 0.6 percent from authorized rates. Customer impacts will vary by individual usage levels. Q. Please describe Exhibit A11 (JAM11). A. Exhibit A10 (JAM10) includes draft rate tariff sheet (Sheet No D13 Revision 3) changes to reflect the proposed TCJA onetime refund for Calculation C for January 2019 through April 2019 along with the ongoing credit. A second draft tariff sheet ;!

2! 3! 4! 5! 6! 7! 8! 9! (Sheet No. D13 Revision 4) reflects the ongoing credit which continues after April 2019, after the onetime refund has expired. The first page of Exhibit A11 is an index sheet of the tariff pages and a description of the changes made. Draft tariff sheets for the index or checklist sheets from Section A of the rate book have not been provided because the effective date of these sheets will be determined during the course of this docket. Q. Does this conclude your direct testimony at this time? A. Yes. 21!

Schedule A1 Michigan Public Service Commission Case No: U20312 Northern States Power Company, a Wisconsin Corporation Exhibit No: A1 (JAM1) 2018 Authorized Revenue Deficiency (Sufficiency) Page: 1 of 1 Witness: Julie A. McRea (a) (b) (c) (d) (e) (f) (g) 35% Federal Tax Rate 21% Federal Tax Rate Change 21% Federal Tax Rate Change Credit A (U20109) Credit A (U20109) Credit A & Calculation C Calculation C Line Description Source Retail MI Retail MI Retail MI Retail MI Retail MI 1 2 Rate Base Exh. A2 $7,036,940 $7,036,940 $0 $7,036,940 $0 3 4 Adjusted Net Operating Income Exh. A3 $422,920 $472,350 $49,430 $488,959 $16,609 5 6 Overall Rate of Return Line 4 / Line 2 6.01% 6.71% 6.95% 7 8 Required Rate of Return Exh. A6 6.01% 6.01% 6.03% 9 10 Income Requirements Line 2 x Line 8 $422,920 $422,920 $0 $424,327 $1,407 11 12 Income Deficiency (Sufficiency) Line 10 Line 4 $0 ($49,429) ($49,429) ($64,632) ($15,203) 13 14 Revenue Conversion Factor Exh. A4 1.6696 1.3737 1.3737 15 16 Revenue Deficiency (Sufficiency) Line 12 x Line 14 $0 ($67,905) ($67,905) ($88,786) ($20,881)

Michigan Public Service Commission Case No.: U20312 Northern States Power Company, a Wisconsin Corporation Exhibit No.: A2 (JAM2) 2018 Authorized Rate Base Page: 1 of 1 Witness: Julie A. McRea (b) (c) (d) (e) 35% Federal Tax Rate 21% Federal Tax Rate Change Line Description Source Retail MI Retail MI Retail MI 1 5 8 2 Plant in Service Authorized U18140 $ 14,745,188 $ 14,745,188 $ 3 Plant in Service 2018 Step Increase Authorized U18140 $ 648,688 $ 648,688 $ 3 Construction Work in Progress Authorized U18140 $ 189,361 $ 189,361 $ 4 Total Utility Plant Sum of Lines 2 to 3 $ 15,583,237 $ 15,583,237 $ 6 Less: Depreciation Reserve Authorized U18140 $ 9,459,633 $ 9,459,633 $ 7 Less: Depreciation Reserve 2018 Step Increase Authorized U18140 $ 32,267 $ 32,267 $ 9 Net Utility Plant Line 5 Line 6 Line 7 $ 6,091,337 $ 6,091,337 $ 10 11 Additions to Rate Base 12 Materials & Supply Authorized U18140 46,605 46,605 $ 13 Fuel Inventory Authorized U18140 269,476 269,476 $ 14 15 Line 12 + Line 13 316,081 316,081 0 16 17 Deductions to Rate Base 18 Less: Customer Advances Authorized U18140 $ $ $ 19 20 Net Plant Line 9 + Line 15 Line 18 $ 6,407,418 $ 6,407,418 $ 21 22 Allowance for Working Capital Authorized U18140 629,522 629,522 0 23 24 Total Rate Base (a) Authorized U18140 Line 20 + Line 22 $ 7,036,940 $ 7,036,940 $

Michigan Public Service Commission Case No.: U20312 Northern States Power Company, a Wisconsin Corporation Exhibit No.: A3 (JAM3) 2018 Authorized Net Operating Income Page: 1 of 1 Witness: Julie A. McRea (a) (b) (c) (d) (e) (f) (g) 35% Federal Tax Rate 21% Federal Tax Rate Change 21% Federal Tax Rate Change Credit A (U20109) Credit A (U20109) Credit A & Calculation C Calculation C Line Description Source Retail MI Retail MI Retail MI Retail MI Retail MI 6 1 Operating Revenues 2 Sales Revenue Authorized U18140 $ 5,321,024 $ 5,321,024 $ $ 5,321,024 $ 3 MI Gas Rate Increase U18140 Authorized U18140 $ 406,000 $ 406,000 $ $ 406,000 $ 4 Other Operating Revenues Authorized U18140 $ 24,793 $ 24,793 $ $ 24,793 $ 5 Total Operating Revenues Sum of Lines 2 4 $ 5,751,817 $ 5,751,817 $ $ 5,751,817 $ 7 Operating Expenses 8 Cost of Gas Authorized U18140 $ 3,476,119 $ 3,476,119 $ $ 3,476,119 $ 9 Operations and Maintenance Expenses Authorized U18140 $ 994,142 $ 994,142 $ $ 994,142 $ 10 Depreciation and Amortization Authorized U18140 $ 572,845 $ 572,845 $ $ 572,845 $ 11 General Taxes Authorized U18140 $ 101,960 $ 101,960 $ $ 101,960 $ 12 Income Taxes Exh. A6, Sch. F1.1 $ 192,157 $ 142,727 $ (49,430) $ 126,118 $ (16,609) 13 Total Operating Expenses Sum Lines 8 12 $ 5,337,223 $ 5,287,793 $ (49,430) $ 5,271,184 $ (16,609) 14 15 Operating Income Line 5 Line 12 $ 414,594 $ 464,024 $ 49,430 $ 480,633 $ 16,609 16 17 Operating Income Adjustments 18 Allowance for Funds Used During Construction Authorized U18140 $ 8,326 $ 8,326 $ $ 8,326 $ 19 20 Adjusted Net Operating Income Line 15 + Line 18 $ 422,920 $ 472,350 $ 49,430 $ 488,959 $ 16,609

Michigan Public Service Commission Case No.: U20312 Northern States Power Company, a Wisconsin Corporation Exhibit No.: A4 (JAM4) 2018 Authorized Gross Revenue Conversion Factor Page: 1 of 1 Witness: Julie A. McRea 35% Federal Tax Rate (a) (b) (c) Line Description Source Total 1 2 Base Prior to Income Tax 100.0000% 3 Composite WI and MI State Income Tax Rate WPA4 pg 1 7.8548% 4 Federal Tax Base Line 2 Line 3 92.1452% 5 Federal Income Tax Line 4 x 35% 32.2508% 6 Base After Taxes Line 4 Line 5 59.8944% 7 Revenue Conversion Factor Line 2 / Line 6 1.6696 21% Federal Tax Rate (a) (b) (c) Line Description Source Total 1 2 Base Prior to Income Tax 100.0000% 3 Composite WI and MI State Income Tax Rate WPA4 pg 2 7.8548% 4 Federal Tax Base Line 2 Line 3 92.1452% 5 Federal Income Tax Line 4 x 21% 19.3505% 6 Base After Taxes Line 4 Line 5 72.7947% 7 Revenue Conversion Factor Line 2 / Line 6 1.3737

Michigan Public Service Commission Case No.: U20313 Northern States Power Company, a Wisconsin Corporation Exhibit No.: A5 (JAM5) 2018 Authorized Federal and Other Income Taxes Page: 1 of 1 Witness: Julie A. McRea (a) (b) (c) (d) (e) (d) (e) 35% Federal Tax Rate 21% Federal Tax Rate Change 21% Federal Tax Rate Change Credit A (U20109) Credit A (U20109) Credit A & Calculation C Calculation C Line Description Source Retail MI Retail MI Retail MI Retail MI Retail MI 1 2 Federal and Other Income Taxes: 3 Federal Income Taxes Exh. A7, ln 52 $ (163,679) $ (98,207) $ 65,472 $ (41,956) $ 56,251 4 Net Provision for Deferred Income Taxes 1 Exh. A7, ln 42 $ 350,524 $ 235,622 $ (114,902) $ 162,762 $ (72,860) 5 Net Investment Tax Credit 1 Exh. A7, ln 41 $ (873) $ (873) $ $ (873) $ 6 7 Total Federal and Other Income Taxes Sum of Lines 3 5 $ 185,972 $ 136,542 $ (49,430) $ 119,933 $ (16,609) 1 Based on a Composite State and Federal Income Tax Rate

Michigan Public Service Commission Case No. U20312 Northern States Power Company, a Wisconsin Corporation Exhibt No. A6 (JAM6) 2017/2018 Authorized Rate of Return Summary Page 1 of 1 12 Month Period Ending, December 2017 Witness Julie A. McRea (a) (b) (c) (d) (e) (f) (g) (h) % Amount % Amount Weighted Cost Weighted Cost 13 Month Avg of Permanent Total Annual of Permanent Total Line Description Source Amount Capital Capital Cost Rate Capital Capital 1 LongTerm Debt Authorized U18140 $730,586,760 44.73% 35.86% 4.88% 2.18% 1.75% 2 ShortTerm Debt Authorized U18140 $44,232,195 2.71% 2.17% 1.20% 0.03% 0.03% 3 Common Stock Authorized U18140 $ 858,383,247 52.56% 42.13% 10.00% 5.26% 4.21% 4 Subtotal Sum of Lines 1 to 3 $1,633,202,202 100.00% 80.17% 7.47% 5 Accum. Deferred Income Taxes WPA6 pg 1 $392,004,599 19.24% 0.00% 0.00% Job Development ITC 6 Def. JDITC LongTerm Debt $5,394,590 0.26% 4.88% 0.01% 7 Def. JDITC ShortTerm Debt $326,835 0.02% 1.20% 0.00% 8 Def. JDITC Common Equity $6,338,914 0.31% 10.00% 0.03% 9 Total JDITC Sum of Lines 6 to 8 Authorized U18140 $12,060,340 0.59% 10 Deferred ITC Authorized U18140 $1,822 0.00% 0.00% 0.00% 11 Total Line 4 + Line 5 + Line 9 + Line 10 $2,037,268,963 100.00% 6.03%

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Northern States Power CompanyWisconsin Page 1 of 1 Gas UtilityMichigan Jurisdiction Tax Cut Jobs Act Calculation of Refund factor from 2017 rates Case No. U20312 Exhibit A9 (JAM9) Witness Julie A. McRea Table 1 Calculation of Credit C Refund factor One time TCJA Factor (Plant related, nonplant related, and bonus depreciation) Credit C + 2017 Rate Base interest From Case No. U18140 Allocated on (A) Estimated Sales Jan Apr TCJA Credit C "Refund" Estimated Credit From Case U18140 (B) / (C) (C) * (D) Residential Service (Rate schedule 301) Commercial Service (Rate schedule 302) Interruptible Service/Partial Firm Service (Rate schedules 303, 304) (A) (B) (C) (D) (E) 4,507,793 $29,263 2,680,659 $0.0109 $29,219 1,636,716 $10,625 1,455,050 $0.0073 $10,622 276,009 $1,792 599,510 $0.0030 $1,799 Total (a + b + c) a Refund (TCJA plant related Exhibit A7 JAM7) d Refund (TCJA nonplant related) 6,420,518 $41,680 4,735,219 $41,640 $20,882 $20,009 c Interest (From Table 2) $789 $789 Expected Sales JanApr 2018 are the sales included in NSPW's most recent 2017 test year case U18140. Table 2 Calculation of Interest on Credit C refunds Month Balance (BOM) Refund Amount Balance (EOM) Interest Rate* Interest Dec17 20,009 20,009 Jan18 20,009 1,740 21,749 1.7% $ 30 Feb18 21,779 1,740 23,519 1.8% $ 34 Mar18 23,553 1,740 25,293 2.0% $ 41 Apr18 25,334 1,740 27,074 2.2% $ 48 May18 27,122 1,740 28,862 2.2% $ 51 Jun18 28,913 1,740 30,654 2.2% $ 55 Jul18 30,708 1,740 32,448 2.2% $ 58 Aug18 32,506 1,740 34,246 2.2% $ 61 Sep18 34,308 1,740 36,048 2.2% $ 64 Oct18 36,112 1,740 37,852 2.2% $ 68 Nov18 37,920 1,740 39,660 2.2% $ 71 Dec18 39,732 1,740 41,472 2.2% $ 74 Sub Total 40,891 Jan19 41,546 (12,872) 28,674 2.2% $ 64 Feb19 28,739 (11,841) 16,898 2.2% $ 42 Mar19 16,940 (10,547) 6,393 2.2% $ 21 Apr19 6,414 (6,421) (6) 2.2% $ 6 May19 2.2% $ Sub Total (789) 789 Total 40,102 * Reflects NSPW's actual short term cost of debt for Jan Aug 2018

Case No. U20312 Exhibit A10 (JAM10) Witness Julie A. McRea Northern States Power CompanyWisconsin Page 1 of 1 Gas UtilityMichigan Jurisdiction Tax Cut Jobs Act Calculation of Refund factor from 2019 rates Table 1 Calculation of Credit C Refund factor Ongoing TCJA Factor (bonus depreciation) 2017 Rate Base Credit C + interest Estimated Sales Jan Dec TCJA Credit C "Refund" Estimated Credit From Case No. U18140 Allocated on (A) From Case U18140 (B) / (C) (C) * (D) Residential Service (Rate schedule 301) Commercial Service (Rate schedule 302) Interruptible Service/Partial Firm Service (Rate schedules 303, 304) Total (a + b) a Refund (TCJA plant related Exhibit A7 JAM7) b Refund (TCJA plant related Exhibit A7 JAM7) (A) (B) (C) (D) (E) 4,507,793 $21,786 4,557,541 $0.0048 $21,876 0.00262 0.00218 1,636,716 $7,910 2,633,957 $0.0030 $7,902 0.01837 0.01537 276,009 $1,334 1,434,297 $0.0009 $1,291 0.0115 0.0106 6,420,518 $31,030 8,625,795 $31,069 $20,882 $10,148 Expected Sales JanDec 2018 are the sales included in NSPW's most recent 2017 test year case U18140.

Michigan Public Service Commission Case No. U20312 Northern States Power Company, a Wisconsin Corporation Exhib#t No.A11 (JAM11) TCJA Tariff Sheets Index Page 1 of " Witness Julie A. McRea SHEET NO. TITLE/DESCRIPTION REVISION DESCRIPTION OF CHANGE Section A A4.0 Index 6 Revision numbers, dates A6.0 Table of Contents Checklist 39 Revision numbers, dates A8.0 Table of Contents Checklist 36 Revision numbers, dates Section D D13.0 Tax Cuts and Jobs Act Credit 3 TCJA Credit C factors effective January 1, 2019 through April 30, 2019 D13.0 Tax Cuts and Jobs Act Credit 4 TCJA Credit C factors effective May 1, 2019

Case No. U20312 Exhib#t No.A11 (JAM11) Page! of " Witness Julie A. McRea M. P. S. C. No. 3 Gas 12 sndt Revised Sheet No. D13.0 NORTHERN STATES POWER COMPANY, Cancels Original1 st Revised Sheet No. D13.0 a Wisconsin corporation (Case U2018620312) SECTION D TAX CUTS AND JOBS ACT ( TCJA ) CREDITS Hqtocvvgf<!Uwrgtuetkrv A) On December 22, 2017, the Tax Cuts and Jobs Act of 2017, Pub. L. No. 11597, 131 Stat. 2054 (TCJA) was signed into law. The TCJA contains provisions reducing the corporate tax rate and revising the federal tax structure. These new federal requirements affect the current tax expense and deferred tax accounting methods used by corporations, including utilities. B) The approved Tax Cuts and Jobs Act credits are shown below. Tax Cuts and Jobs Act Credit A (Case No. U20109) Effective beginning the month of July 2018 Rate Schedule Credit Factor ($/therm) Residential Service 301 $ (0.00262) / therm Commercial and Industrial General Service 302 $ (0.01837) / therm Commercial and Industrial General Service 304 $ (0.01150) / therm Commercial and Industrial Interruptible Use 303 $ (0.01150) / therm Commercial and Industrial Transportation Service $ (0.01150) / therm Tax Cuts and Jobs Act Credit B (Case No. U20186) Effective the month of October 2018 through December 2018 Rate Schedule Credit Factor ($/therm) Residential Service 301 $ (0.00580) / therm Commercial and Industrial General Service 302 $ (0.04146) / therm Commercial and Industrial General Service 304 $ (0.02225) / therm Commercial and Industrial Interruptible Use 303 $ (0.02225) / therm Commercial and Industrial Transportation Service $ (0.02225) / therm Tax Cuts and Jobs Act Credit C (Case No. U20312) Effective beginning the month of January 2019 through April 2019 Rate Schedule Credit Factor ($/therm) Residential Service 301 $ (0.01570) / therm Commercial and Industrial General Service 302 $ (0.01030) / therm Commercial and Industrial General Service 304 $ (0.00390) / therm Commercial and Industrial Interruptible Use 303 $ (0.00390) / therm Commercial and Industrial Transportation Service $ (0.00390) / therm Tax Cuts and Jobs Act Credit A & BC Total Monthly Credit Factor Effective beginning the month of January 2019 through April 2019October 2018 through December 2018 Rate Schedule Credit Factor ($/therm) Residential Service 301 $ (0.008111832) / therm Commercial and Industrial General Service 302 $ (0.057702867) / therm Commercial and Industrial General Service 304 $ (0.032421540) / therm Commercial and Industrial Interruptible Use 303 $ (0.015403242) / therm Commercial and Industrial Transportation Service $ (0.015403242) / therm

Case No. U20312 Exhib#t No.A11 (JAM11) Page! of " Witness Julie A. McRea Issued by Effective: January 1, 2019 M.E. Stoering Issued Under Authority of the President Michigan Public Service Commission Eau Claire, Wisconsin dated, 2018 in Case No. U20312

M. P. S. C. No. 3 Gas 23 nrd Revised Sheet No. D13.0 NORTHERN STATES POWER COMPANY, Cancels 21 sndt Revised Sheet No. D13.0 a Wisconsin corporation (Case U20312) SECTION D TAX CUTS AND JOBS ACT ( TCJA ) CREDITS A) On December 22, 2017, the Tax Cuts and Jobs Act of 2017, Pub. L. No. 11597, 131 Stat. 2054 (TCJA) was signed into law. The TCJA contains provisions reducing the corporate tax rate and revising the federal tax structure. These new federal requirements affect the current tax expense and deferred tax accounting methods used by corporations, including utilities. B) The approved Tax Cuts and Jobs Act credits are shown below. Tax Cuts and Jobs Act Credit A (Case No. U20109) Effective beginning the month of July 2018 Rate Schedule Credit Factor ($/therm) Residential Service 301 $ (0.00262) / therm Commercial and Industrial General Service 302 $ (0.01837) / therm Commercial and Industrial General Service 304 $ (0.01150) / therm Commercial and Industrial Interruptible Use 303 $ (0.01150) / therm Commercial and Industrial Transportation Service $ (0.01150) / therm Tax Cuts and Jobs Act Credit C (Case No. U20312) Effective beginning the month of January2019 May 2019through April 2019 Rate Schedule Credit Factor ($/therm) Residential Service 301 $ (0.00640480) / therm Commercial and Industrial General Service 302 $ (0.00400300) / therm Commercial and Industrial General Service 304 $ (0.00090130) / therm Commercial and Industrial Interruptible Use 303 $ (0.00090130) / therm Commercial and Industrial Transportation Service $ (0.00090130) / therm Tax Cuts and Jobs Act Credit A & C Total Monthly Credit Factor Effective beginning the month of January May 2019through April 2019 Rate Schedule Credit Factor ($/therm) Residential Service 301 $ (0.00871742) / therm Commercial and Industrial General Service 302 $ (0.021372024) / therm Commercial and Industrial General Service 304 $ (0.012401147) / therm Commercial and Industrial Interruptible Use 303 $ (0.012401147) / therm Commercial and Industrial Transportation Service $ (0.012401147) / therm Issued by Effective: May 1, 2019 M.E. Stoering Issued Under Authority of the President Michigan Public Service Commission Eau Claire, Wisconsin dated, 2018 in Case No. U20312

MICHIGAN DEPARTMENT OF LICENSING AND REGULATORY AFFAIRS PUBLIC SERVICE COMMISSION ENTRY OF APPEARANCE IN AN ADMINISTRATIVE HEARING This form is issued as provided for by 1939 PA 3, as amended, and by 1933 PA 254, as amended. The filing of this form, or an acceptable alternative, is necessary to ensure subsequent service of any hearing notices, Commission orders, and related hearing documents. General Instructions: Type or print legibly in ink. For assistance or clarification, please contact the Public Service Commission at (517) 2)'")$*0. $)'%' #+.'" The #ommission will provide ')'&.,+*(& service of documents.* $(( +$,.'& in this proceeding" THIS APPEARANCE TO BE ENTERED IN ASSOCIATION WITH THE ADMINISTRATIVE HEARING: Case / Company Name: Northern States Power Company U20312 Please enter my appearance in the aboveentitled matter on behalf of: 1. (Name) Northern States Power Company (Gas) 2. (Name) 3. (Name) 4. (Name) 5. (Name) 6. (Name) 7. (Name) Docket No. Sherri A. Wellman Name One Michigan Avenue, Ste. 900 Address Lansing MI City State 48933 517 4834954 Zip Phone ( ) wellmans@millercanfield.com Email October 1, 2018 Date Ujgttk!C/! Ygnnocp Fkikvcnn{!ukipgf!d{<!Ujgttk!C/!Ygnnocp FP<!EP!?!Ujgttk!C/!Ygnnocp!gockn!?! ygnnocpuboknngtecphkgnf/eqo!e!?!wu Fcvg<!3129/21/12!25<47<69!.15(11( Signature: Save "#($!&'% Form " I am not an attorney " I am an attorney whose: 38989 Michigan Bar # is P Bar # is: ( state ) EAHR1 $*#&*#&$%(