2020 Compared to 2019 Reconciliation of Year Ended December 31, 2019 to Year Ended December 31, 2020 Net Income (in millions) The major components of the increase in Gross Margin, defined as revenues less the related direct cost of purchased electricity and amortization of generation deferrals were as follows: These increases were partially offset by: 189 • Retail Margins  increased $59 million primarily due to the following: • A $69 million net increase related to other various rider revenues. This increase was partially offset in other expense items below. • A $61 million increase in rider revenues associated with the DIR. This increase was partially offset in other expense items below. • A $6 million increase in revenues associated with smart grid riders. This increase was partially offset in other expense items below. • A $58 million decrease due to a reversal of a regulatory provision in the first quarter of 2019. A $17 million net decrease in margin for the Rate Stability Rider including associated amortizations which ended in the third quarter of 2019. • A $10 million decrease in usage primarily in the commercial class, partially offset by an increase in the retail class. • Margins from Off-system Sales  increased $11 million primarily due to the following: • A $26 million increase due to higher OVEC PPA deferrals. This increase was offset in Retail Margins above. • A $17 million decrease in sales due to lower market prices and decreased sales volumes in 2020. This decrease was offset in Retail Margins above. • A $16 million increase from the annual transmission formula rate true-up. A $6 million increase due to additional investment in transmission assets. • Transmission Revenues  increased $23 million primarily due to the following: This increase was partially offset by: Year Ended December 31, 2019 $ 297.1  Changes in Gross Margin: Retail Margins 58.8  Margins from Off-system Sales 10.7  Transmission Revenues 22.6  Other Revenues 19.1  Total Change in Gross Margin 111.2  Changes in Expenses and Other: Other Operation and Maintenance (57.0) Depreciation and Amortization (35.7) Taxes Other Than Income Taxes (16.0) Interest Income (2.2) Carrying Costs Income 0.6  Allowance for Equity Funds Used During Construction (5.7) Non-Service Cost Components of Net Periodic Benefit Cost 0.4  Interest Expense (11.0) Total Change in Expenses and Other (126.6) Income Tax Expense (10.3) Year Ended December 31, 2020 $ 271.4 