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## Reconciliation of Year Ended December 31, 2019 to Year Ended December 31, 2020 Net Income (in millions) 

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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: 

• 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. 

These increases were partially offset by: 

• 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. 

This increase was partially offset by: 

• 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. 

• Transmission Revenues  increased $23 million primarily due to the following: 

• A $16 million increase from the annual transmission formula rate true-up. 

A $6 million increase due to additional investment in transmission assets. 

