20130308PAC to Monsanto 10-035-124 DPU 57.12.docx

DPUData Request 57.12In reference to Attachment E, please explain how the customer risk tolerance levels used in the TEVaR metric were established.
Response to DPUData Request 57.12The Company notes that the DPU is referencing Confidential Attachment E of the Semi-Annual Hedging Report, filed with the Public Service Commission of Utah on November 1, 2012.The maximum hedge targets were established based on the target amount of change in net power cost (NPC) due to market price driven changes. The target amount of change in NPC was based on reasonable continuity with the prior hedge program. The maximum target for Year 4 was set near the maximum of the four 12-month forward periods’ un-hedged four-year price exposures observed on January 29, 2010 and April 30, 2010. The minimum target for Year 4 was set near the minimum of these exposures to avoid a large amount of hedging in Year 4. The Year 1 minimum target was set to zero to allow for full hedging and the Year 1 maximum target was set to be largely consistent with the hedge program in effect through April 2010.