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Utility Consumer Representation Fund Annual Report 2016

UTILITY CONSUMER REPRESENTATION FUND ANNUAL REPORT

CALENDAR YEAR 2016

UTILITY CONSUMER PARTICIPATION BOARD

Mr. James MacInnes, Chair Dr. Paul Isely, Vice Chair Mr. Conan Smith Mrs. Susan Licata Haroutunian Mr. Ryan Dinkgrave Mr. Brian Vilmont Mr. Sam Passmore December 2016 appointed to the Board replacing: Mr. Conan Smith Mr. Ryan Dinkgrave

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EXECUTIVE SUMMARY

PA 304 of 1982 established a separate proceeding that allows energy utilities to more quickly recover costs for power supply and purchased gas than they otherwise could in a full rate case. It further created the Utility Consumer Representation Fund (UCRF) to provide financial resources for customers who pay these costs to be represented in these utility cost recovery proceedings.

UCRF funds are collected by certain utilities in their rates. The UCRF funds collected are split between the Attorney General (AG) and the Utility Consumer Participation Board (UCPB). The Attorney General uses the funding to advocate on behalf of the interests of the State of Michigan utility customers in general, and the UCPB is responsible for granting funding to specific interest groups to advocate on behalf of the residential consumer groups they represent.

In 2016, Michigan’s six largest investor-owned utilities that use cost recovery proceedings collected and remitted $1,180,500 to the Utility Consumer Representation Fund. The UCPB was allocated $560,738. The remaining 5 percent ($59,025) was allocated for administrative costs.

The FY 2016 budget authorization for the UCPB was $750,000. Of that amount, $690,975 was available for awarding FY 2016 grants and $59,025 was allocated for administrative costs.

In 2016, AY 2017 grants totaling $267,000 were awarded to: Citizens Against Rate Excess (CARE), Michigan Environmental Council (MEC), the Residential Customer Group (RCG), and the Great Lakes Renewable Energy Association (GLREA). The board also awarded $252,800 in grants from AY 2016 to support interventions in new and ongoing cases. The total amount of grants from the 2016 authorization was $690,975, leaving an unspent authorization of $171,175.

In 2016, UCRF funding assisted consumer representation groups, directly and in collaboration with other parties, achieve significant benefits for Michigan residential utility customers. Major areas of impact for residential customers included Power Supply Recover (PSCR) related decisions on transfer prices, reliability and adequacy of electricity supply, PSCR 5-year and load forecasting, offsets to Gas Cost Recovery (GCR) cost of gas sold to GCR customers, improved Fixed Price Purchasing (FPP) practices and results, addressing peak power costs by exploring net metering, Renewable Energy Plan (REP) strategies, and monitoring developments at the Midcontinent Independent System Operator (MISO). UCPB grants resulted in millions of savings to residential and other ratepayers as outlined in Section 3.

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TABLE OF CONTENTS

1. Introduction

2. UCPB Major Responsibilities 2.1. UCPB Board Action 2016 2.2. UCRF Grants Awarded in 2016 2.3. UCRF Resource Availability 2.4. UCPB Resource Efficiency and Non-Duplication Due Diligence 2.5. UCPB Administrative Efficiency

3. UCRF Results

3.1. Cost/Benefit Analysis 3.2. Grant Activity and Results

4. Financial Reporting and Administrative Process

4.1. Calendar year 2016 Remittances 4.2. Calendar year 2016 Appropriation and Accrued Funds 4.3. Notification of Readiness to Proceed 4.4. Scope of Work 4.5. Application and Selection Process

5. Update on the Legislative Review of Act 304 ATTACHMENT A UCRF Grant Activity and Results for 2016 Calendar Year ATTACHMENT B UCRF 2016 Grantees Membership Scope and Description Questions regarding this report should be addressed to: Utility Consumer Participation Board Attention: Kristin Myers Finance and Administrative Services Licensing and Regulatory Affairs 611 W. Ottawa Lansing, MI 48933 (517) 335-5968 [email protected]

mailto:[email protected]

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1. INTRODUCTION Public Act 304 of 1982, as amended, provides for the establishment and implementation of gas and power supply cost recovery clauses in the rates and rate schedules of public utilities. The Utility Consumer Participation Board (UCPB) and the Utility Consumer Representation Fund (UCRF) were created by the Act to achieve equitable representation of interest of energy utility customers in energy cost recovery proceedings. The purpose of the UCPB is to make grants from the fund to qualified nonprofit organizations and local units of government to represent the interests of residential utility customers in energy cost recovery and reconciliation proceedings before the Michigan Public Service Commission. This annual report to the Legislature, which is required under Section 6m (22) of the Act, covers the activities of the UCPB for the 2016 calendar year. From January 1, 2016, to December 31, 2016, the board awarded $252,800 from FY 2016 funds to a consortium of several nonprofit consumer groups. Grant recipients in 2016 included Citizens Against Rate Excess (CARE), Michigan Environmental Council (MEC), the Residential Customer Group (RCG), and the Great Lakes Renewable Energy Association (GLREA). Combined, the grantees represent statewide nonprofit groups with tens of thousands of individual members focused on issues related to energy costs, consumer protection, environmental, public health, emerging energy, energy conservation and community action. The actions of these grantees influence energy costs for more than 3 million residential natural gas customers and 3.5 million residential electric customers in the State of Michigan. In 2016, UCRF grant recipients participated in proceedings on behalf of residential customers in the State of Michigan. UCRF funds helped Michigan citizen advocates achieve, directly and in collaboration with other parties, significant benefits for residential utility customers across the state. In certain cases, UCRF grantees were the only advocates for Michigan residential customers. Major areas of impact for residential customers included PSCR-related decisions on transfer prices, reliability and adequacy of electricity supply, PSCR 5-year and load forecasting, offsets to Gas Cost Recovery (GCR) cost of gas sold to GCR customers, improved Fixed Price Purchasing (FPP) practices and results, addressing peak power costs by exploring net metering, monitoring developments at the Midcontinent Independent System Operator (MISO). The Attorney General’s Office also receives UCRF funding for intervention on behalf of the utility ratepayers of Michigan. Coordination between the Attorney General, MPSC staff and other participants in UCRF funded cases is monitored by the board. Thorough review of grant applications, grant amendments, and regular reporting on case status and interventions by the UCPB continue to improve coordination of grantees’ efforts with the Attorney General. This provides efficient use of resources and maximizes coverage of cases and issues without duplication of effort. The Attorney General’s office is also consulted in its role as legal counsel to the board. Expenditures and results of the Attorney General’s office are provided in a separate annual report submitted by its office to the legislature. In 2014, the board, based on financial reports from LARA, had interpreted the proper use of the reserve funds to be for funding future grants. The Attorney General interpreted that the funds were to be split 50/50 between the grant program and funding for their office. As a result, the board agreed to reduce future grant awards to allow the reserve fund to be rebalanced to reflect the 50/50 allocation. Once informed of the issue, the board took immediate steps to reduce and curtail 2015 grant approvals and has since reduced grant awards in order to rebalance the fund. Honoring an agreement between the board and the Attorney General’s office regarding unspent UCPB funds, the board continued to re-balance the fund for the second year of a four-year agreement. The understanding going forward is that any unspent UCPB funds at the end of the fiscal year will be split between the UCPB, for grants, and the Attorney General’s office.

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2. UCPB MAJOR RESPONSIBILITES MCL 460.6l provides for the creation of a Utility Consumer Participation Board (UCPB), defines its membership, and prescribes its duties. MCL 460.6m creates the Utility Consumer Representation Fund (UCRF), establishes provisions for its generation, distribution and use, limits the beginning dates of cost recovery proceedings, and places reporting requirements on both fund recipients and the Board. The duties and responsibilities of the Act under these two sections were discharged as described in sections 2.1 and 2.2. 2.1 UCPB Board Activities 2016 The Board approved and maintained a bimonthly meeting schedule in 2016. Regular meetings were held February 8, April 4, June 7, August 1, August 29, October 3, and December 5. All meeting notices were published and held in compliance with the Open Meetings Act. Members of the public were present at all meetings, given opportunity for public comment, and participated in board education. The board held education sessions on the following topics:

• December 5, 2016 Summary of Senate Bill 437, James Clift, MEC • December 5, 2016 MISO presentation, Laura Rauch, MISO

The Board approved an adjustment to the remuneration for board members to $150.00 per board meeting, not to exceed $1500.00 per calendar year. Amendments and approval of new grants occurred on February 8, April 4, June 7, August 1, August 29, and December 5. The 2016 UCRF Grant Announcement and Application were distributed on July 8, 2016. The 2016 regular meeting schedule was approved on December 17, 2016. Transcripts are available for all meetings and the minutes are available on the web site www.michigan.gov/lara under “All About LARA”, “Utility Consumer Participation Board.” 2.2 UCRF Grants and Contracts Awarded by UCPB in Calendar Year 2016

2/8/2016 MEC Amendment to Grant 2016-04 for an increase of $105,050 was approved and divided between U-18014 $5,050 (DTE Rate Case, new), U-17680-R $55,000 (DTE PSCR-R), and U-17678-R $45,000 (CEC PSCR-R, 2015). CARE Amendment to Grant 2015-01 for increased funding of $5,000 was approved for case U-17312-R (WEPCO). Amendment to Grant 16-01 for increased funding of $10,000 was approved and divided between U-17911 $5,000 (UPPCO PSCR Plan Case), U-17671-R $1908.90 (UPPCO PSCR, 2015), U-17674-R $1635.70 (WEPCO, 2015), U-17672-R $727.20 (WPS, 2015), and U-17673-R $727.20 (NSP, 2015). Amendment to Grant 2016-06 for increased funding of $10,000 was approved for U-17895 (UPPCO Rate Case). GLREA Amendment to grant 2016-03 was approved for a zero-dollar redistribution of funding ($2,626) from U-17792 (CECO Plan Case) and ($10,626.21) from U-17793 (DTE Plan Case) to U-17918 $2,626 (CECO PSCR Plan Case) and to U-17920 $10,626.21 (DTE PSCR Plan Case). 4/4/2016 MEC Amendment to Grant 2016-04 for an increase of $30,000 was approved for case U-18014 $20,000 (DTE Rate Case) and U-17990 $10,000 (CECO new Rate Case). CARE Amendment to Grant 2016-01 for an increase of $30,000 was approved and divided between U-17911 $10,000 (UPPCO Plan Case), U-17674-R $10,000 (WEPCO Reconciliation Case) and U-17671-R $10,000 (UPPCO Reconciliation Case).

http://www.michigan.gov/lara

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Amendment to Grant 2016-06 for an increase of $10,000 was approved for U-17895 (UPPCO Rate Case). 6/7/2016 MEC Amendment to Grant 2016-04 for an increase of $17,500 was approved for case U-17990 (CECO Rate Case). CARE Amendment to Grant 2016-01 for an increase of $27,500 was approved and divided between U-17911 $10,000 (UPPCO Plan Case), U-17676-R $7,500 and U-17671-R $10,000 (UPPCO Reconciliation Case. Board approved the addition of Olson, Bzdok, and Howard Law Firm to CARE as an authorized firm. 8/1/2016 MEC Amendment to Grant 201-04 was a approved for a zero-dollar redistribution of funding ($7,421) from U-17918 (CECO PSCR Plan Case) to U-18014 $7,421 (DTE General Rate Case). GLREA Amendment to Grant 2016-03 was approved for a redistribution of funding from U-17792 ($2,545), (CECO Renewable Energy Plan Case) to U-17920 along with additional funding of $2,250 (DTE PSCR Plan Case). Amendment for an increase of $7,750 was approved for a new case U-18111 (DTE Renewable Energy Plan Case amending U-17793). 8/29/2016 CARE 2017-01 UCRF Grant request for $40,000 was approved and divided between $20,000 (UPPCO Plan Case, 2017) and $20,000 (WEPCO Plan Case, 2017). CARE 2017-02 UCRF Grant request for $17,500 was approved for FERC or MISO proceedings. GLREA 2017-04 UCRF Grant request for $40,000 was approved and divided among U-18090 $12,000 (CECO PURPA Case), U-18091 $12,000 (DTE PURPA Case) and U-18143 $16,000 (DTE PSCR Plan Case). MEC 2017-04 UCRF Grant request for $96,100 was approved and divided among U-18143 $46,000 (DTE PSCR Plan Case, 2017), U-18142 $40,000 (CECO PSCR Plan Case, 2017), and U-17990 $10,100 (CEC Rate Case). RCG 2017-05 UCRF Grant request for $18,000 was approved for U-18142 (CECO PSCR Plan Case). 10/3/2016 GLREA Extension was approved to Grant U-17920 (DTE PSCR Plan Case) to 6/30/2017. 12/5/2016 MEC Amendment to Grant 2016-04 for a zero-dollar redistribution of funding from U-17918 (PSCR Plan Case) and U-17920 (DTE PSCR Plan) to U-18014 (DTE Rate Case). Amendment to Grant 2017-04 was approved for $55,400 and divided between U-18142 $30,700 (CECO PSCR Plan Case) and U-18143 $24,700 (DTE PSCR Case). Total Amount of 2016 UCRF Grant Funding Awarded in 2016 = $252,800 Total 2016 Grant Authorization = $690,000 Total 2016 Grants Awarded (All Years) = $519,800 Unspent 2016 Grant Authorization = $171,175 Total Amount of 2017 UCRF Grant Funding Awarded in 2016 = $267,000 Rebalancing Amount (End of 2016) = $207,426 2.3 Resource Availability The total UCRF funding requested by applicants in the initial 2016 authorization year grant cycle was: $256,360. The UCRF

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authorization for grants was $486,6741. The board determined that grants would be prioritized and awarded in phases. This allowed the board to examine work plans for cases more closely and more proximate to the actual filing dates. This also allowed grantees to refine and modify grant requests prior to full consideration and approval. Grantees deferred many requests due to the phase-in approval process adopted by the board. The board was unable to fund or was forced to reduce funding to later phase grant requests due to the rebalancing issue and funding deficiency. In addition to intervener funds, the board approved a 2016 administrative support contract at the June 7, 2016 meeting. 2.4 Resource Efficiency and Non-Duplication/Due Diligence To further resource efficiency, the board has modified its grant review process to consider and award grants in phases closer to the actual filing dates and has also made very conservative approvals based on the work plans presented by grantees. The board has encouraged grantees to use resources carefully but to also return to the board if developments in or demands of the case require additional resources. This allows detailed work plans based on the proceedings and expected results in the case can be provided and evaluated. The UCRF grant application requires each applicant to provide a work plan specifying, among other things, the cases they intend to intervene in, the issues and strategies they intend to pursue and potential benefits to consumers. Individual board members, the UCRF board assistant, and Attorney General staff review the proposals in advance and provide comments to the board. Any potential duplication among grantees or with the Attorney General is identified and reviewed for purpose and justification. The board has not approved or reduced funding in some cases for unsupported duplication. When multiple grantees are approved for funding in the same case, grantees must report to the board on their distinct contributions and strategies in those cases. Bi-monthly case status reports are required from grantees and testimony reviewed in order to prevent or address any potential duplication of effort. The board encourages coordination of effort where it serves the interest of consumers. 2.5 Administrative Efficiency The Board achieved administrative efficiency in the following ways:

1. Continued a grant review process requiring more detailed work plans. 2. Awarded grants in phases closer to the filing dates of actual cases and analyzed potential issues. 3. Used the grant review process to encourage more defined strategic focus areas by grantees through case updates. 4. Used the revised UCRF grant application designed by LARA Purchasing and Grant Services and the Michigan Attorney

General’s Office. 5. Requested the opinion of the Attorney General’s office during grant review regarding the legal compliance of the individual

grant applications with the governing statute or case law prior to the approval of grants and whether there was any objection to either the approval or the submission of individual grants to the State Administrative Board.

6. Requested the opinion of utility representatives present during grant review as to concerns or objections regarding the legal compliance of the individual grant applications with the governing statue or case law prior to the approval of grants and whether there was any objection to either the approval or the submission of individual grants to the State Administrative Board.

7. Renewed the contract position for a part-time contractor to assist the Board and coordinate efforts with other parties of interest.

8. Followed regular bi-monthly meeting schedule. 9. Continued to request bi-monthly case status reports from grantees. 10. Formalized process of written grant amendments and documented board approval prior to submission to LARA. 11. Continued regular board education sessions. 12. Updated annual report. 13. Coordinated with LARA staff to distribute board information and post public information on a web site.

1 This was the amount of funds the board understood was available for the grant year based on financial reports provided by LARA, the spending authorization approved and the adequacy of current and reserve funds. The issue of a 50/50 “shared” reserve fund was brought to the attention of the board in August 2014 and addressed thereafter.

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3. UCRF GRANT RECIPIENT RESULTS 3.1 Cost/Benefit Analysis and Discussion In creating cost recovery mechanisms that allowed utilities to recover energy supply costs from ratepayers outside of a contested rate case, the Michigan Legislature assured that Michigan’s residential energy customers would be effectively represented through the creation of the Utility Consumer Representation Fund (UCRF). UCRF funding is collected from assessments on utilities that use the cost recovery mechanism. This cost is paid by customers through their rates. Therefore, the revenue for the fund is generated from ratepayers and expended to assure their representation in utility cost recovery proceedings. The PSCR and GCR cases have “plan” and “reconciliation” phases. The plan cases for each utility set the framework and establish the cost of fuel recoverable from all customers. The reconciliation phase looks back at the assumptions and performance of the utility under the plan and “corrects” or “trues-up” the plan factors with reality. The differences are then passed through to customers through collections, credits or refunds. UCRF grant funded parties advocate for the interests of residential customers in this process. There are many factors that impact assessment of effectiveness of UCRF funded intervention on behalf of residential customers including: 1) certain cases and proceedings span more than one grant year; 2) proceedings, through the appeal process, may remain pending for several years; 3) impact of a decision in one year often continues to benefit ratepayers in future years; 4) outcomes may result from multiple parties interventions and may be reported (in whole or part) by each party; 5) lack of a standardized reporting approach and validation method; and 6) indirect benefits not reflected in direct cost reductions. UCRF funded intervention in cases decided in 2016 calendar year (based on actual orders issued) again yielded substantial benefits for residential utility customers. The following are highlights of measurable benefits and results achieved for residential customers by consumer advocates using UCRF grant funds. Details of UCRF Grant Activity and Results are provided in Attachment A: MEC efforts in U-17317 did not create immediate results for the benefit of ratepayers although the commission did comment in their ruling that they would prefer to see a better presentation by the company of how the MISO tariff dictates the company’s cost estimates in generator dispatch. The commission also agreed with the ALJ and MEC that it would be appropriate for Consumers to demonstrate in its PSCR reconciliation why units were not decommitted when the NEV was negative, in the event that any units were operated at a loss. MEC arguments in U-17678 resulted in a finding that the utility’s projected market price of energy was not based on a credible analysis. The commission cautioned that Consumer’s costs based on unsubstantiated conclusions may be disallowed. This finding will be relevant in the pending PSCR reconciliation case, where Consumers reported an $86 million downward variance in MISO interchange revenue based on lower-than-projected market energy prices. The commission also cautioned Consumers that not preparing for adequate coal deliveries may be disallowed if they are not demonstrated to be reasonable and prudent. MEC identified in U-17918 costs that Consumers tried to recover as a PSCR expense that did not adhere to the statute MCL 460.6j(1)(a), the commission agreed and reduced the PSCR factor by $2.2 million. Additionally, Consumers had used the same argument in the 2015 U-17678-R, but removed those costs, $3.4 million, after this ruling. MEC also argued the terms of a natural gas management agreement, which the commission agreed should be reviewed in future cases to determine if the agreement provided the best value for customers. CARE arguments in U-17911 resulted in the disallowance of a capacity contract of $127,750 which both the ALJ and the commission agreed with which was a direct savings to ratepayers. CARE preserved issues in U-17671-R and settled the case for a $3,662 savings for rate payers. The issues that arose surrounded SSR cost projections and their disproportionate allocation to ratepayers rather than on interruptible customers. CARE arguments in U-17674-R resulted in WEPCO accepting a PSCR factor of $.00176 saving ratepayers $8,000. CARE arguments in U-17914 resulted in the negotiation of a partial “true-up” in the settlement agreement with WPS resulting in $52,812 savings to ratepayers. CARE represented ratepayers in two FERC cases, ER-16-2528 and ER17-248. CARE worked in concert with MPSC, MAE and the AG. The cases collectively garnered a $14 million dollar savings to ratepayers over two years as well as $17 million plus interest in refunds. CARE fully litigated U-17895 which resulted in the commission granting a $4,647,975 increase when UPPCO was seeking $13,155,928.

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The savings CARE subscribes to their intervention is $3,052,025. CARE has filed an appeal in this case and is seeking an additional $70 million disallowance in UPPCO’s rate base. GLREA involvement in U-17317 raised the issue of Consumers not adequately incorporating an analysis of the growth of solar resources for the forecast period. The commission stated that there was too much uncertainty in the market at present, but to continue to monitor, analyze and update its forecasts of customer generation. GLREA arguments in U-17678 and U-17680 continued to stress the need for more renewable energy analysis in the utilities plans. The commission again cited uncertainty in the forecasting and the adoption of new energy legislation. GLREA involvement in case U-18111 resulted in support of DTE’s REP application which concurred with GLREA’s policy recommendations of incorporating more solar and renewable resources into the energy plan. 4. FINANCIAL REPORTING AND GRANT ADMINISTRATION 4.1 Calendar Year 2016 Remittances The following information is compiled and provided by the Michigan Department of Licensing and Regulatory Affairs (LARA) for purposes of the Annual Report. Public Act 304 of 1982 requires annual remittances to the Fund from any regulated utility company serving at least 100,000 customers. The total size of the fund is set at $500,000 multiplied by a factor "set by the Board at a level not to exceed the percentage increase in… The consumer price index for the Detroit standard metropolitan statistical area...between January 1981 and January of the year in which the payment is required to be made." Since enactment of Act 304, total remittances have been as follows:

1982 $630,600 2000 $899,000 1983 $653,400 2001 $930,650 1984 $582,250 2002 $946,150 1985 $569,600 2003 $981,150 1986 $592,650 2004 $988,350 1987 $596,050 2005 $1,013,299 1988 $615,250 2006 $1,052,150 1989 $650,450 2007 $1,069,450 1990 $683,450 2008 $1,096,950 1991 $715,300 2009 $1,088,750 1992 $728,650 2010 $1,103,851 1993 $745,838 2011 $1,125,700 1994 $760,266 2012 $1,176,700 1995 $791,900 2013 $1,198,650 1996 $813,000 2014 $1,204,750 1997 $834,050 2015 $1,173,850 1998 $851,728 2016 $1,180,500 1999 $864,600

Remittances due from the six utilities serving at least 100,000 customers are calculated from the proportion of each "company's jurisdictional 1981 operating revenues...compared to the 1981 total operating revenues of all energy utility companies" contributing to the fund. This proportion, initially calculated in 1982 and recalculated in 1996, remains constant, and was applied to the six remitting utilities in the amounts shown in the table below.

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Source of Distribution of Calendar Year 2016 Remittance Revenue Calendar year 2016 Revenue Amount Amount Utility Contributed Recipient Allocated Consumers Energy $477,363 Attorney General (47.5%) $ 560,738 Detroit Edison Co. 350,480 Intervenor Grants (47.5%) 560,738 MichCon Gas Co. 287,570 Administration (5%) 59,025 Michigan Gas Utilities 25,949 $1,180,500 SEMCO 27,923 Indiana Michigan Power 11,214 TOTAL $1,180,500 Letters were sent to each utility on 3/25/16 and all remittances were made by 09/8/2016. In addition to the calendar year 2016 utility fees, interest was earned for the Fiscal Year ending 9/30/16. This was allocated proportionately between the Attorney General and the intervenor grants. The intervenor proportion totaled $4,616.00. 4.2 Fiscal Year 2015 Appropriation and Accrued Funds Total funding available for awarding intervenor grants was $690,975 for FY16 as shown below and $750,000 FY16 authorization subject to budget approval. Intervenor Grant Funding for fiscal year 2016: Appropriation (Public Act 252 of 2014) $750,000 Less 5% for Administration (59,025) Appropriation Available for Intervenor Grants $ 690,975 New Revenue $560,738 Fiscal Year 2015 Unreserved Fund Balance 0 Fiscal Year Interest Earned from Common Cash Fund 616.00 Total Available if sufficient spending authorization $565,354 4.3 Notification of Readiness to Proceed The Act requires that the Public Service Commission not act on "an application for an energy cost recovery proceeding...until 30 days after it has been notified by the Board or the director of the Energy Administration...that the Board or the director is ready to process grant applications, will transfer funds payable to the Attorney General immediately upon [their] receipt...and will within 30 days approve grants and remit funds to qualified grant applicants." Additionally, the Act requires that "in order to implement the gas [or power supply] cost recovery clause.... a utility annually shall file...a complete gas [or power supply] cost recovery plan...The plan shall be filed not less than 3 months before the beginning of the 12-month period covered by the plan." The electric utilities selected January 1 - December 31 as the 12-month plan period. Most of the gas utilities selected April 1 – March 31 as their 12-month period. 4.4 Scope of Work Money from the UCRF, less administrative costs, "may be used only for participation in administrative and judicial proceedings under sections 6h, 6i, 6j, and 6k [of P.A. 304] and in federal administrative and judicial proceedings which directly affect the energy costs paid by Michigan energy utilities." The Attorney General has issued formal and informal opinions to guide the Board regarding cost matters that may be covered by Act 304 grants. The Act describes several kinds of proceedings. Cases required by statute are:

Gas supply and cost review Power supply and cost review Gas cost reconciliation Power supply cost reconciliation

Decisions in any of these four proceedings may be appealed to the appropriate courts. Grant proposals compliant with the provisions of

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the Act were solicited for intervention in on-going and new GCR Plan cases, GCR Reconciliation proceedings, PSCR Plan cases, PSCR Reconciliation proceedings and other cases eligible under Act 304. 4.5 Application and Selection Process Act 304 limits eligibility for funding to non-profit organizations or local units of government in Michigan, places specific additional restrictions on applicants, and suggests criteria that could be used in the selection process. Applications for grants were received from the Residential Customer Group (RCG), the Michigan Environmental Council (MEC), Citizens Against Rate Excess (CARE) and Great Lakes Renewable Energy Association (GLREA). The board followed a phased-in approach to awarding grants. Funding decisions were made as close to the filing of cases as possible in order to review the grant application work plans in more detail and render better decisions on potential benefits to consumers. 5. UPDATE ON THE LEGISLATIVE REVIEW OF ACT 304 Section 6m (23) of Act 304 requires a three-year legislative review of the costs and benefits attributable to the Act. The most recent review was conducted in 1986 by the House Public Utilities Committee. No further reviews have been conducted since the 1986 review. The findings and results of the 1986 review are presented below. 1986 Legislative Review Findings In the fall of 1986, the Michigan Public Service Commission sought to resolve some of the issues identified in the public hearings by initiating a review of the various suggestions that were directed toward the Commission by the Board, interveners, and the utilities. Recommendations resulting from this review were submitted to the Commission in the spring of 1987. The following discusses the issues identified by the Board and their current status. ISSUE ONE: The Public Service Commission should refrain from dismembering Act 304 by holding separate proceedings for certain energy cost issues. The shifting of these issues to non-Act 304 cases strains resources available for intervention on behalf of residential ratepayers. Interveners may have difficulty getting status and funding in the non-Act 304 cases. If they are able to intervene, they may be required to duplicate prior Act 304 efforts in the new proceeding. The Board is concerned that the wording of Section 6m (17) of Act 304 unduly limits the ability to award UCRF funds for non-Act 304 cases that have a direct impact on energy costs paid by residential electric and gas customers of Michigan utilities. STATUS: While there has been improvement in the detail provided in the Commission's Notices of Hearing to alert the public that in the non-Act 304 cases, there may be issues that affect purchased gas or electric power supply costs, the Board remains restricted in its ability to grant funds outside of Act 304 cases. New options should be considered for protecting Michigan’s residential customers in light of restructuring and escalating gas and electric rates. However, the restrictive language of this section restricts the Board’s ability to solicit and award grants for innovative proposals. The urgency of this issue is heightened in 2007 with the energy legislation package under consideration in the Michigan Legislature. The effect of some aspects of this legislation will seriously compromise the ability for effective UCRF funded intervention on behalf of ratepayers. ISSUE TWO: Numerous and lengthy delays in the Act 304 process were a serious problem up to 1991. STATUS: The Commission has taken steps to reduce the delays with the goal of issuing orders within nine months of the filing. It has also initiated a staggered filing schedule for gas cost recovery cases. Since the Board cannot accept a utility’s filing until 30 days after certification of readiness, early certification was needed to implement the staggered schedule. The Board supported the Commission's actions and in 1991, to allow for more staggering, the Board accelerated the entire grant award process by two months. Also in 1991, the Commission issued Proposed Guidelines for Completion of Cases (Order No. U-9832). In 1992, the Commission's new policy effectively solved the problem of delays in the Act 304 process. The Board commends the Commission for its actions. ISSUE THREE: The Public Service Commission should adopt a more aggressive review of the utilities' five-year cost projections. Annual review of a utility's five-year forecast, as required by Act 304, is intended to provide an opportunity for future cost containment and increased efficiency. STATUS: The Board encourages the Commission to continue to increase its scrutiny of the five-year forecasts and to create more rigorous filing requirements. Further the Board encourages the Commission to place greater emphasis on conservation and energy

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efficiency as part of reasonable and prudent supply planning, particularly in light of increasing energy prices and limited mitigation options for residential energy customers. ISSUE FOUR: The Public Service Commission should disallow the recovery of costs that were not allowed prior to Act 304. STATUS: This issue is resolved. Michigan courts have endorsed the Commission's designation of energy costs that may be recovered by electric and gas utilities under Act 304. ISSUE FIVE: Information provided by the utilities should be standardized to reduce the time and effort required by interveners spent in obtaining information needed for presenting cases to the Public Service Commission. STATUS: Filing of standardized information was recognized as an area of need during the Public Service Commission's review in 1987. However, the Commission has issued no formalized requirement for standardized information, and there has been no increase in voluntary compliance by the utilities. This issue was examined again during 1989, but final recommendations were not reached on this issue. The Board continues its support for standardized filings as a means of reducing intervention costs and improving time frames for hearing cases. Further, standardized filing will improve the Board’s ability to independently analyze the impact of UCRF funded intervention in Act 304 proceedings. ISSUE SIX: There is a need for increased intervener funding. The amount of funding available for intervention has been limited to the annual appropriation less administrative and operating costs incurred. The board does not have the advantage of a large number of in-house experts during the plan and reconciliation case proceedings. Adequate funding is needed to secure technical assistance of expert witnesses to aid in the process of case investigation, analysis and cross-examination. STATUS: Fees charged by the most prominent expert witnesses have increased at a faster rate than funds available for intervention, resulting in a net decrease in expert witness testimony on behalf of residential ratepayers. If the Attorney General is not participating in a case, and therefore not available to jointly sponsor an expert witness, the interveners are often forced to reject bids from the most qualified expert consultants due to the lack of funds. Additionally, utilities are becoming more active in sponsoring rebuttal testimony. The interveners' legal counsel continues to donate time for carry-over cases. This need for increased resources is heightened by recent, dramatic structural changes in the electric and natural gas industries. Those changes have a profound effect on the energy costs paid by residential utility customers. Without additional funding to support interventions in the various forums in which key decisions about those costs are being made, there is a real danger that the interests of homeowners and renters will not be advocated and that they will ultimately bear an unreasonable share of those costs. The Board specifically requested an increase in the UCRF annual appropriation for the 2006-07 fiscal year. The annual appropriation for 2007 was increased substantially using accrued, unspent funds from previous years. Increasing the spending authorization will be effective until the reserve is depleted. Questions regarding this report should be addressed to: Utility Consumer Participation Board Attention: Kristin Myers Finance and Administrative Services Licensing and Regulatory Affairs 611 W. Ottawa Lansing, MI 48933 (517) 335-5968 [email protected]

mailto:[email protected]

12

ATTACHMENT A: UCRF Grant Activity and Results The following are results in cases in which an ORDER(S) has been issued in the period January 1, 2016-December 31, 2016. Some of the cases in which UCRF grantees participate in 2016 will not conclude until subsequent years. Results for those cases will be reported in future annual reports. Results are reported by grantees and audited by UCPB board staff based on an independent review of the record and edited for purposes of this annual report. Complete dockets related to the majority of cases are available through the Michigan Public Service Commission’s Electronic Docket Filing System (eDocket) at www.michigan.gov/mpsc. Results for individual cases may be verified by reviewing the case docket. MPSC case numbers have been included for purposes of research and validation.

GRANTEE: MICHIGAN ENVIRONMENTAL COUNCIL (MEC)

Docket No. Case Title UCRF Grant No. UCRF Grant

Amt Awarded (as amended)

Balance (12/31/2016)

Other financial support (matching funds, pro bono

support, etc.) U-17680

Order: January 19, 2016

DTE 2015 PSCR Plan 15-02 $42,793 $0.00 $524.40

Issues MEC raised in this case included:

• Designation of all coal units as must-run during all months of the plan year and the five-year forecast, which commits them to run at least at minimum level regardless of whether such operation is economic.

• The potential for difficulties in transportation and delivery of coal from 2014 carrying over into 2015.

• The potential for an impact on emissions allowance prices in the PROMOD modeling since the U.S. Supreme Court reversed a lower court’s abrogation of the Cross-State Air Pollution Rule (CSAPR) in April of 2014.

• DTE’s forecast of MISO market prices appears to be high, given recent actual market prices and DTE’s natural gas price forecast. The Commission reversed a favorable PFD in a final order dated January 27, 2015. The hearing in this case established that due to the result in a prior case concerning transfer prices (U-16656), DTE will collect between $23.8 and $30.7 million more surcharge revenue than needed over the next couple years if a surcharge reduction is delayed until the company’s next Renewable Energy (RE) plan case. Following the Commission's recent order in the renewable generating assets depreciation case (U-16991), the amount of excess surcharge revenue that DTE plans to collect will increase even further.

The Commission’s final order did not grant any relief on these issues.



Balance (12/31/2016)


support, etc.)

U-17317 Order: May 20, 2016

Consumers Energy 2014 PSCR Plan

14-03 $57,423.00 $0.00 $33,227.52

The Commission order in this case diluted some of the favorable recommendations in the PFD, but did still grant some relief on MEC’s issues:

1. Burned vs. replacement costs

The ALJ found that Consumers’ use of (lower) spot market costs for coal instead of (higher) actual contract costs in the preparation of its generating unit dispatch bids was not reasonable and led to over-dispatching the coal units beyond the point where they were economic to operate in some instances. The ALJ also found that accepting MEC’s recommendation would save $1.4 million in PSCR costs during the plan year and $9 million over the five-year forecast. The ALJ specifically found that cross examination showed the company’s witnesses were not credible on this issue.

The Commission reversed. While acknowledging that Consumers’ evidence in this case was weak on this issue, the Commission found that the issue had been litigated in prior cases. The order did leave the door open, however:

“That said, in future proceedings, the Commission would prefer to see a better presentation by the company of how the MISO tariff dictates the company’s cost estimates in generator dispatch.” (Page 15).

2. Must-run designation of coal units

MEC raised two issues concerning the must-run designation of coal units:

a. The reasonableness of Consumers’ designation of its coal units as “must run” in PROMOD; and

b. The reasonableness of Consumers’ methods for deciding whether its plants are must run or economic resources when the plants are actually bid into MISO during the plan year.

http://www.michigan.gov/mpsc

13

On issue (a), the ALJ found that Consumers’ projections for the plan year indicated that all of the company’s coal units, except for Karn 1, were projected to have positive net revenue; and therefore, the modeling for the plan year was reasonable. However, the ALJ also found that for the remainder of the five-year forecast, there was significant negative net revenue projected for certain units over extended periods of time. The ALJ concluded that Consumers failed to adequately explain why it intended to operate its units in a fashion that is detrimental to ratepayers over the five-year forecast. Therefore, the ALJ recommended a warning under MCL 460.6j(7) (a Section 7 warning) that some of these costs may be disallowed.

On issue (b), the ALJ found that it was not clear whether Consumers actually adhered to the practice of removing a unit’s must-run designation when it was projected to have negative net revenue under the short-term outlooks prepared during the course of operation in the plan year. The ALJ noted that Consumers’ witness was unable to clearly articulate other considerations that are taken into account in designating units as must run or economic. The ALJ found that this issue should be addressed in the PSCR reconciliation.

The Commission reversed the ALJ on issue (a), finding that previous cases had determined that no warning was necessary regarding must-run designations in the modeling. However, the Commission upheld the ALJ on issue (b), stating:

“[T]he Commission agrees with the ALJ and MEC that it is appropriate for Consumers to demonstrate in its PSCR reconciliation why units were not decommitted when the NEV was negative, in the event that any units were operated at a loss.” (Pages 15-16).



Balance (12/31/2016)


support, etc.)

U-17678 Order: June 9, 2016

Consumers Energy 2015 PSCR Plan 15-02 $56,969.05 $0.00 $30,250.19

This case involved some of the same issues as the prior year PSCR plan case, plus a new issue:

1. Burned vs. replacement costs

The Commission rejected our argument concerning the use of replacement coal cost instead of actual burned cost in the PROMOD modeling, based on its order in Case No. U-17317 three weeks earlier.

2. Market energy price forecast

The Commission adopted the ALJ’s recommendation to caution Consumers that additional PSCR costs incurred due to the company’s unreasonable market energy price may be disallowed. The Commission stated:

“The Commission … finds persuasive the ALJ’s conclusion that the utility would have to provide a credible analysis to justify a claim that the … futures market ignored the expected retirements associated with MATS compliance.

Moreover, the Commission recognizes the ALJ’s concern that Consumers’ forecast is substantially higher than the average over the past six years and the 2014 plan case projection. Thus, as the ALJ found, to the extent that Consumers actually bases its coal purchases or other significant determinations on the market sales projections resulting from these price estimates, it is making unreasonable decisions. The Commission also agrees with the ALJ that Consumers is essentially betting that the market has underestimated the impacts of MATS-related retirements without a solid analytical foundation.

The Commission therefore adopts the recommendation of the ALJ to caution Consumers that additional PSCR costs based on the unsubstantiated inclusion of the MATS adder may be disallowed.”

This finding is particularly important for the (still pending) 2015 PSCR reconciliation case, because Consumers reported an $86 million downward variance in MISO interchange revenue, which the company attributed to lower-than-projected market energy prices.

3. Wintertime coal deliveries

Consumers had difficulties obtaining sufficient coal shipments during the winter of 2014, which caused the company to incur substantial extra PSCR costs. We argued that Consumers should not have assumed that these problems would vanish in the winter of 2015, and that the company should have planned for the possibility of additional difficulties. The ALJ agreed, and the Commission upheld the ALJ’s recommendation that Consumers inadequately prepared for wintertime problems with coal deliveries:

“The Commission adopts the recommendation of the ALJ to caution the utility that its expectation that the 2014 coal transportation issues would be resolved during 2015 was unreasonable and may result in disallowance of related costs during the reconciliation phase of its 2015 PSCR year if increased costs are actually incurred and not demonstrated to be reasonable and prudent.”

14



Balance (12/31/2016)


support, etc.)

U-17918 Order: October 11, 2016

Consumers Energy 2016 PSCR Plan 16-04 $45,000.00 $0.00 $4,745.36

The Commission order in this case provided a specific customer savings and reserved further review of a new gas agreement for future cases. A summary of the results is:

1. Surface Transportation Board Litigation Expense. Consumers Energy filed a complaint against rail carrier CSXT with the Federal Surface Transportation Board (STB). Consumers alleged that CSXT’s rates for transport of coal to the Campbell plant are too high. In the PSCR case, Consumers sought to recover its outside litigation costs for the STB case in 2016 as PSCR expense. The 2016 costs totaled $2.2 million. MEC opposed recovery of these costs in the PSCR, arguing that outside litigation costs do not fall within the definition of “booked costs, including transportation costs, reclamation costs, and disposal and reprocessing costs, of fuel burned by the utility for electric generation…” under MCL 460.6j(1)(a). The Commission agreed, and removed the $2.2 million from Consumers’ PSCR plan costs. In addition, Consumers claimed another $3.4 million in litigation costs for the same STB case in the company’s 2015 PSCR Reconciliation, Case No. U-17678-R. However, after the result in the 2016 plan case and our continued opposition, Consumers removed the $3.4 million in costs from the 2015 reconciliation. MEC was aligned (in separate testimony) with the Attorney General on this issue.

Amount saved for residential ratepayers in the 2016 reporting year: $2.2 million.

Benefit-to-cost ratio: 49 to 1.

2. Wind Contracts. Last fall, in a renewable energy docket, Consumers sought approval of a wind power purchase agreement with Apple Blossom wind farm. Consumers stated in its application that the levelized cost of the Apple Blossom contract was less than Consumers’ average PSCR cost. Consumers also stated that it selected Apple Blossom from among three unsolicited offers. We obtained more information on these offers via a discovery motion. The discovery indicated that for each of the three projects, Consumers received multiple offers, which varied by price per MWh, price structure, and term in years. Consumers prepared a Net Present Value (NPV) analysis of each project and each offer. The NPV analysis compared the total projected PPA payments for each project and offer with the cost of otherwise obtaining equivalent energy and capacity, and calculated the NPV of the difference. The NPV analysis showed that every offer made for each of the three projects resulted in savings to customers compared with business as usual. MEC asked the Commission to find that Consumers had not satisfactorily explained the decisions underlying the five-year PSCR forecast as they related to the wind PPAs. MEC also asked the Commission to direct Consumers to explain its decision to forego opportunities to reduce PSCR costs represented by these wind PPA offers. In the Final Order, the Commission declined to grant us relief on these requests, holding only that Consumers’ decision to enter into the Apple Blossom PPA was reasonable.

3. Natural Gas Management Agreement. Consumers entered into a natural gas management agreement with a third-party agent to provide gas to both the Zeeland and Jackson combined cycle power plants. MEC sponsored testimony contending that certain aspects of that agreement introduced contractual risk and unreasonable cost for PSCR customers, including:

a. The pricing terms in the agreement are not clearly defined and thus do not allow the price to be verified as competitive.

b. The pricing term is open to interpretation in certain key situations.

c. Consumers is paying a premium for the services of the management agent, yet the contract does not allocate risk and responsibility to that agent commensurate with the cost of that premium.

d. Consumers has assumed too much contractual risk related to the firmness of fuel delivery under the agreement.

The Final Order did not grant relief on these concerns in this case. However, the Commission did give a certain amount of credence to them, stating “the Commission finds it is appropriate to evaluate the agreement over time under different market conditions to determine if the risks…materialize, and to ensure the agreements are adequate for fuel assurance purposes while still representing the best value for customers.” Because MEC undertook this effort to raise potential issues with a new agreement, we are satisfied with that outcome.

15

GRANTEE: CITIZENS AGAINST RATE EXCESS (CARE)

Docket No. Case Title UCRF Grant No. UCRF Grant Amt Awarded Balance


support, etc.)

U-17911 UPPCO 2016 PSCR Plan Case 16-01 $42,187.70 $0.00 None Reported

CARE submitted testimony and argued for the disallowance of a short-term capacity contract of $127,750 and UPPCO eventually amended its request, an action that was supported by both the ALJ and the Commission and therefore a savings of $127,750 was achieved, a 3:1 ratio of money spent to savings.



support, etc.) U-17671-R UPPCO 2015

Reconciliation 16-01 $16,953.00 $0.00 None Reported

CARE raised several issues in this case; 1.) UPPCO estimated that its SSR costs exceeded previous projections by $8,118,329 and calculated interest based on those projections for which it sought recovery from ratepayers. 2.) CARE contended that UPPCO should not have sought to pass on capacity charges for its interruptible customers to other ratepayers. CARE concluded that because the capacity value credited to its interruptible customers is phantasmagorical, UPPCO’s interruptible customer tariff over compensates its interruptible customers and shifts excessive share of costs to uninterruptible customers. Given limited resources to continue the fight to full litigation, a settlement agreement was reached and CARE executed a non-objection statement preserving the issues it raised to fight for on another day. The case was settled for $3,662 less than originally filed. Order adopting settlement was issued 11/22/16. Savings: $3,662 for a ratio of 0.2:1.



support, etc.)

U-17912 WEPCO 2016 Plan Case 16-01 $5,863 $0.00 None Reported.

RESULTS: WEPCO had sought a maximum PSCR factor of $0.00181 per kilowatt-hour. CARE researched the issues and WEPCO settled for a final factor of $0.00176 per kilowatt-hour for its residential ratepayers as opposed to a PSCR factor of $0.00181 factor for the MINES. This seemingly minor difference saved residential ratepayers approximately $8,000 for a ratio of 1.4:1.



support, etc.)

U-17674-R WEPCO 2015 Reconciliation 16-01 $10,090 $0.00 None Reported

RESULTS: WEPCO filed its case seeking acknowledgement of $703,565 as an over-recovery from the previous year. Therefore, an interest amount of $25,485 was due. CARE reviewed the materials and initially protested the inclusion of several out-of-state generation facilities in their power supply costs. However, due to previous Commission orders there was no value at relitigating this issue and the case was settled as originally filed. Savings $0.00



support, etc.)

U-17914 Wisconsin Public

Service Corporation 2016 Plan Case

16-01 $636.00 $0.00 None Reported

The forecasted 2016 purchased power volumes were expected to decrease approximately 27% as compared to 2015 actuals. The decrease was primarily the result of higher LMPs forecasted in 2016 relative to the variable cost of generation. The higher LMPs resulted in higher levels of generation, which in turn reduced the quantity of market energy purchases. As of the filing, year to date purchased power costs were expected to decrease by $31.2 million compared to costs for year to date in 2015. However, the filing did not include any true-up estimate. This was corrected in a settlement agreement and residential ratepayers saved approximately $52,812 for a ratio of 83:1.



support, etc.)

U-17672-R Wisconsin Public

Service Corporation 2015 Reconciliation

16-01

$545.00

$0.00

None Reported

CARE intervened in the case, reviewed the filed testimony and found it to be in order and the case was settled as filed.

16



support, etc.)

U-17913 Northern States Power Company 16-01 $727.00 $0.00 None Reported.

CARE intervened in the case and reviewed the filing. The parties agreed that NSP should be authorized to roll a non-reconciled 2015 year end over-recovery of $244,387 into the 2016 PSCR plan factor. The combination of (i) NSP-W's 2016 plan year factor of negative $0.00267 per kWh, and (ii) a factor of negative $0.00171 per kWh to reflect the non-reconciled PSCR over-recovery for 2015, results in a 2016 PSCR negative factor of $0.00438 per kWh which was the amount originally requested. Savings $0.00.



support, etc.)

U-17673-R Northern States

Power 2015 Reconciliation Case

16-01 $592.00 $0.00 None Reported.

NSP sold 136,236,000 kWh subject to a Michigan PSCR billing factor during the 12-month period ending December 31, 2015. They collected $8,054,411 in base and PSCR revenues and had $7,698,650 in power supply costs during this period resulting in an over-recovery of $355,761. The 2015 over-recovery of $355,761 when added to the 2014 PSCR under-recovery of $58,584 which was the PSCR reconciliation beginning balance as authorized by the Commission in Case No. U-17311-R, resulted in a net over-recovery of $297,177. When interest of $6,227 was added to the over-recovery, the cumulative PSCR over-recovery of $303,404 was agreed to as originally filed. Savings $0.00.

Docket No. Case Title UCRF Grant No.

UCRF Grant Amt Awarded

Balance


support, etc.) MISO/FERC MISO 16-01 $35,000 $291.00 None Reported.

CARE continued its effort to increase capacity import limits in the calculation Planning Reserve Margin requirements and monitored the Planning Resource Auction which, for MISO North had a dramatic increase from $3.48/MW/day to $72.00/MW/day. But of greater significance, CARE, at the encouragement of the Governor’s office, intervened in two FERC cases; the White Pine SSR case (ER16-2528) and the Prevailing State Compensation Mechanism (PSCM) case (ER17-248). The White Pine case saved all U.P. ratepayers approximately $7 million/year or $14 million through June of 2018. Additionally, during 2016, FERC recommended that U.P. ratepayers receive at least $17 million, plus interest, in refunds. The most egregious issue was the fact that the utility had included in its PIPP SSR costs over $10 million in charges for improvements that were never made. It is difficult to calculate a set amount of savings in these cases, or how much credit CARE should receive. Suffice it to say that it was a team effort with the MPSC, MAE and the AG. As the only residential ratepayer consumer advocate attempting to reduce energy costs to U.P. ratepayers, we felt our voice should be heard. CARE only takes credit for 1% of the savings, or $140,000. Ratio of 4:1.



support, etc.) U-17895 UPPCO RATE CASE 16-06 $70,000 $371.00 None Reported.

This case was filed on Sept 18, 2015 with UPPCO requesting a $13,155,928 rate increase. A disproportionate percent of that increase would be borne by residential ratepayers due to unjust and unreasonable cost allocation formulas adopted by a previous Commission Order. CARE fully litigated the case, held 3 days of hearings, several rounds of discovery and filed briefs, exceptions to the PFD and a rehearing request. The record consists of 53 exhibits and 1173 pages of transcript. The Commission issued an Order in the case granting UPPCO an increase of $4,647,975. Had CARE not intervened in this case it would have likely settled somewhere between $5.5 million and $9.9 million. Estimating that the halfway point between these two amounts would have been a $7.7 million settlement amount, CARE submits that its Intervention saved ratepayers $3,052,025 for a 43:1 cost/savings ratio. (CARE has appealed the case seeking an additional $70 million disallowance in UPPCO’s rate base which would save ratepayers an additional $5,229,000 per year.)

GRANTEE: GREAT LAKES RENEWABLE ENERGY ASSOCIATION (GLREA)

I. ELECTRIC CASES


UCRF Grant Amt Awarded (as

amended) Balance

(12/31/2016)


support, etc.) U-17317 CECO 2014 PSCR 14-05 $34,024.88 $0 $9,365.00 (pro bono)

Status/Results Order issued on 5/20/2016 approving the PSCR

The MPSC Issued its order on 05/20/2016 This case commenced with the filing by Consumers Energy Company (CECO) on 09/30/2013 of its application and testimony in support of its Power Supply Cost Recovery (PSCRF) plan for the year 2014 and five-year forecast. This case involved issues of regulatory policy raised by grantee Great Lakes Renewable Energy Association (GLREA) involving the presentation of evidence and briefing arguments that CECO’s five-year forecast was incomplete and deficient for

17

failure to recognize increased solar capacity and energy resources despite significant growth in the implementation of solar facilities. This case also involved efforts by CECO to oppose the intervention of GLREA, and to strike the testimony of GLREA’s Expert Witness, which motions were rejected by the Administrative Law Judge (ALJ). On appeals to the Commission filed by CECO, the Commission affirmed the ALJ’s rulings, finding in its March 2014 Order that GLREA’s intervention should be granted by right, and also affirming the ALJ’s ruling denying DCECO’s Motion to Strike, finding that GLREA’s evidence should be included in the record. GLREA’s primary activities in this case included: November 14, 2013: Petition to Intervene by GLREA filed December 10, 2013: GLREA’s response in opposition to CECO’s objections to GLREA’s intervention filed (with supporting affidavits filed on December 11 and 12, 2013 January 3, 2014: GLREA’s response in opposition to MPSC Staff’s application for leave to appeal the ruling of the ALJ granting GLREA intervention January 6, 2014: GLREA response in opposition to application for leave to appeal and brief of CECO filed January 14, 2014: GLREA served its first discovery request on CECO January 31, 2014: GLREA served its second discovery request on CECO February 21, 2014: GLREA response in opposition to CECO’s supplement to its appeal of ALJ rulings granting GLREA intervention filed August 12, 2014: GLREA’s expert testimony and exhibits filed October 8, 2014: GLREA’s response in opposition to CECO’s motion to strike testimony and exhibits of GLREA witness filed October 21 – October 23, 2014: hearings held; GLREA testimony and exhibits admitted at October 21, 2014 hearing November 13, 2014: GLREA’s answer in opposition to application for leave to appeal and motion for immediate consideration of CECO filed November 21, 2014: GLREA’s initial brief filed December 22, 2014: GLREA’s reply brief filed November 20, 2015: ALJ’s proposal for decision (PFD) filed December 11, 2015: GLREA’s exceptions to ALJ’s PFD filed May 20, 2016: MPSC Order issued The Commission’s final order of May 20, 2016 referenced the Commission’s March 6, 2014 Order determining that GLREA was entitled to intervention in the PSCR plan and forecast case by right under the applicable statutes and Commission rules. The Commission Order also referenced the Commission’s affirmance of the ALJ rulings granting GLREA’s intervention, and denying CECO’s Motion to Strike the testimony and exhibit of GLREA’s Expert. The Commission’s order (pp 27-31) also discussed GLREA’s issues concerning the lack of completeness of CECO’s five year forecast due to its failure to adequately incorporate any analysis of the growth of solar resources for the forecast period among related issues. The Commission Order essentially agreed with the ALJ’s finding that there existed too much uncertainty concerning the direction of energy policy in Michigan to adopt GLREA’s recommendations. The Commission’s Order (p 30) nevertheless stated that “the Commission also expects Consumers to continue to monitor, analyze, and update its forecasts to ensure that reasonable projections of customer generation are included, especially in light of the rapidly declining costs of solar and other renewable technologies.” The Commission order also noted that energy policy in Michigan remains unsettled. The Commission Order did not adopt any rate adjustments applicable to GLREA’s testimony because GLREA’s testimony focused principally upon the regulatory policy issues justifying more complete and accurate five-year forecasts to include an analysis of growing solar resources. The Commission also indicated some reticence to rule upon regulatory policy since Michigan’s new energy acts were being debated in the Legislature but were not yet adopted by the Legislature.



amended) Balance

(12/31/2016)


support, etc.) U-17678 CECO 2015 PSCR 15-04 $30,000.00 $0 $1,078.00 (pro bono)

Status/Results Order issued on 06/09/2016 approving the PSCR

This case involved Consumers Energy Company ‘s PSCR plan case for the year 2015, and five-year forecast. The Company filed its application and testimony on September 30, 2014. GLREA participated in all phases of this case, as follows: November 25, 2014: GLREA intervention filed March 16-17, 2015: First and second discovery requests sent to CECO April 13, 2015: GLREA’s expert testimony and exhibits filed

18

May 14, 2015: GLREA response in opposition to CECO’s motion to strike testimony and exhibits of GLREA expert filed May 18, 2015: GLREA participation in hearing, GLREA testimony and exhibits admitted July 1, 2015: GLREA’s initial brief filed August 7, 2015: GLREA’s reply brief filed November 13, 2015: PFD of the ALJ filed December 4, 2015: GLREA exceptions filed December 16, 2015: GLREA’s replies to exceptions filed June 9, 2016: MPSC Order issued The Commission order discussed GLREA’s solar generation issues at pp 10-13. GLREA asserted that CECO’s 2015 plan and five-year forecast was incomplete and inaccurate with respect to solar resources given the future increases expected to occur with respect to the implementation and expansion of solar facilities. The Commission cited its May 14, 2015 order in DTE Electric Company’s case U-17319 that “the direction that Michigan will take in addressing its energy future is uncertain, thus, the Commission is reluctant to make significant changes to the requirement for PSCR plan and forecast.” The Commission order (p 11), also recited its May 20, 2016 Order in CECO Case U-17317, wherein the Commission stated that it expects CECO to monitor, analyze, and update its forecast to ensure that reasonable projections of customer generation are included, especially in light of the rapidly declining cost of solar and other renewable technologies. The Commission Order (p 12) stated that any significant changes to PSCR forecasts are not practical at this time because energy policy in Michigan remained unsettled. The Commission Order thus did not adopt GLREA’s regulatory policy recommendations noting the Commission’s reluctance to make significant changes in the requirements for PSCR plans and forecasts given the uncertainty in Michigan’s direction concerning future energy policies.



amended) Balance

(12/31/2016)


support, etc.) U-17680 DECO 2015 PSCR 15-04 $20,000.00 $0 $2,212.00 (pro bono)

Status/Results Order issued on 01/19/2016 approving DTE’s PSCR

This case involves the 2015 PSCR plan case for DTE Electric (DTE) and its five-year forecast. DTE filed its application and testimony on September 30, 2014. GLREA participated in all phases of this case, as follows: November 17, 2014: GLREA intervention filed February 16, 2015: GLREA discovery to DTE sent March 19, 2015: GLREA’s expert testimony and exhibits filed May 4, 2015: GLREA participation in hearing; GLREA testimony and exhibits admitted June 18, 2015: GLREA’s initial brief filed November 13, 2015: ALJ’s proposal for decision (PFD) filed December 4, 2015: GLREA’s exceptions to PFD filed January 19, 2016: MPSC Order issued GLREA asserted in evidence and briefing that DTE’s plan and forecast did not adequately address the contribution of solar resources given expected growth in such resources. The Commission in its order (pp 4-5) again indicated its reluctance to make changes to plan and forecast requirements because Michigan energy policy remained uncertain, and recognizing that the Legislature was still debating proposed new energy legislation which had not yet been adopted.



amended) Balance

(12/31/2016)


support, etc.) U-17792 CECo PA 295 Renewable

Energy Plan 16-03 $7,328.80 $0 $197.00 (pro bono)

Status/Results Order issued on 03/29/2016 approving CECO’s PA 295 plan; Order denying rehearing issued on 06/09/2016

This case involved the biennial renewable energy plan (REP) required to be filed by Consumers Energy Company (CECO) under the provisions of 2008 PA 295. This case again involved issues concerning regulatory policy, and did not involve the setting of rates.

GLREA fully participated in the hearings and briefing in this case, as indicated by the following case events:

January 27, 2015: Issuance of MPSC Order directing companies to file their REP plans May 26, 2015: Application and testimony filed by CECO July 6, 2015: GLREA Petition to Intervene filed July 10, 2015: GLREA Petition to Intervene granted August 19, 2015: GLREA expert testimony and exhibits filed November 6, 2015: GLREA response in opposition to CECO motion to strike portions of GLREA expert testimony November 10, 2015: GLREA participation in hearings at which GLREA testimony and exhibits admitted December 4, 2015: GLREA initial brief filed December 18, 2015: GLREA reply brief filed

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March 29, 2016: MPSC Order approving CECO’s renewable energy plan December 18, 2015: GLREA reply brief filed March 29, 2016: MPSC Order approving CECO’s renewable energy plan May 16, 2016: GLREA reply in support of petition for rehearing filed by the Environmental Law and Policy Center June 9, 2016: MPSC Order denying Petition for Rehearing GLREA’s evidence and briefing in this case advocated that CECO should implement a far more robust strategy to expand and implement solar generation.

The Commission Order rejected requiring further action to expand solar generation in this particular case, citing in part the pending proposed energy legislation being considered by the legislature, among other factors (Order, pp 24, 27-28). The MPSC Order (pp 27-28) stated in relevant part:

As the parties acknowledge, Consumers has met the renewable portfolio requirements of Act 295, and Michigan’s energy policy future is still in development. Thus, rejecting the Company’s amended REP at this juncture could potentially be ineffectual, and Consumers has little, if any, motivation to consent to changes to the REP directed by the Commission.

Since this case involves regulatory policy matters, and not rate adjustments, no rate adjustment resulted from this case.



amended) Balance

(12/31/2016)


support, etc.) U-17918 CECo 2016 PSCR Plan 16-03 $15,126.00 $0 $233.00 (pro bono)

Status/Results Order issued on 10/11/2016 approving the plan as amended

This case involved CECO’s PSCR plan case for 2016 and five-year forecast. In this case, Great Lakes Renewable Energy Association (GLREA) presented expert testimony and briefing demonstrating that CECO’s plan and forecast case was deficient for failure to analyze the impact upon Act 304 PSCR costs resulting from the growing installation of customer-owned solar facilities. GLREA’s testimony and exhibits also incorporated specific proposed downward PSCR rate adjustments to reflect the amount of decreased PSCR costs resulting from the implementation of customer-owned solar facilities during the plan year, and projected for the five year forecast. GLREA participated in all phases of the hearings and briefing in this case as indicated by the following case events: September 30, 2015: CECO application and testimony filed November 11, 2015: GLREA Petition to Intervene filed December 4, 2015: GLREA participation in prehearing; GLREA intervention granted March 7, 2016: GLREA discovery request to CECO issued March 30, 2016: GLREA’s expert testimony and exhibits filed April 13, 2016: GLREA response to CECO’s first discovery request issued April 22, 2016: GLREA’s response to CECO’s second discovery request issued May 26, 2016: GLREA participation in hearing; GLREA testimony and exhibits admitted July 15, 2016: GLREA’s initial brief filed August 17, 2016: GLREA’s reply brief filed October 11, 2016: MPSC Order issued The MPSC order (pp 13-14, 22-23) discussed GLREA’s evidence and the Commission’s findings. The Commission did not adopt GLREA’s recommendations involving the growth of solar facilities, and did not adopt the downward rate adjustment presented by GLREA’s witness to reflect the growth in solar owned facilities, and the resulting downward impact on PSCR costs for the plan year and for the five year forecast. The Commission Order (p 23) concluded:

Earlier this year, the Commission addressed in Case No. U-17792, its reluctance to undertake the examination of solar resources requested by GLREA in the context of a PSCR plan proceeding. The Commission rejected GLREA’s request in light of uncertainties about legislative changes in the area of resource planning. The Commission maintains this position given the ongoing legislative discussion on integrated resource planning, pricing for customer-owned generation, and related issues. See, the March 19, 2016 Order in Case U-17792, p 24.

As with other cases, decided by the Commission in 2016, the Commission order in this case predated the adoption by the Legislature in December 2016 of Michigan’s new energy acts, Act 341 and 342, effective April 20, 2017.

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amended) Balance

(12/31/2016)


support, etc.) U-18111 DTE Renewable Energy

Plan 16-03 $7,750.00 $0 $3,694.23 (pro bono)

Status/Results Order issued on 09/23/2016 approving the amended plan

This case involves an application by DTE Electric (DTE) to amend its renewable energy plan case which the Commission approved in DTE Case U-17793 by its Order dated December 11, 2015. GLREA had participated in U-17793 to advocate that DTE undertake a more robust solar and renewable energy plan, which recommendations were not adopted by the Commission. DTE in this case, however, proposed to amend its REP plan approved in U-17793 to increase its renewable energy resources, including solar facilities, by 325 MWs. GLREA in this case supported DTE’s application, but further recommended that DTE propose in the future yet further expansion of its renewable energy (including solar) resources. The following events summarize the proceedings in the case and GLREA’s participation: May 31, 2016: DTE notice of intent to file an amended REP filed June 30, 2016: DTE’s application and testimony and exhibits filed July 5, 2016: GLREA intervention filed July 11, 2016: GLREA participation in prehearing; GLREA intervention granted August 9, 2016: Evidentiary hearing held; GLREA’s testimony and exhibits admitted August 11, 2016: GLREA’s first discovery request to DTE issued August 30, 2016: GLREA’s initial brief filed September 6, 2016: GLREA’s reply brief filed September 23, 2016: MPSC Order issued approving DTE’s amended REP This case involved matters of regulatory policy, and not ratemaking issues. DTE’s amended REP approved by the Commission was consistent with GLREA’s previous case recommendations advocating expansion of renewable (including solar) energy resources.

Michigan Environmental Council (MEC) www.environmentalcouncil.org. Statewide nonprofit public interest and environmental organization consisting of over 70 public health and environmental organizations, having over 200,000 members. Citizens Against Rate Excess (CARE) www.utilityratewatch.org. Michigan non-profit corporation that serves as a consumer watchdog group to focus on utility rates. They have members across the State of Michigan, mostly in outstate Michigan, including the Upper Peninsula. The goal of the organization is to seek grants from the UCPB and help the Board “maximize the number of hearings and proceedings with intervener participation” as provided by MCL 460.6m (18). For example, Intervener participation in PSCR cases of the electric utility companies that serve the upper peninsula have been rare and this organization has filled that gap. The organization also sought to fill the void in the lack of Michigan residential ratepayer participation in federal proceedings “which directly affect the energy costs paid by Michigan utilities,” MCL 460.6m (17). The objective to participation in these federal proceedings is to 1.) advocate for a U.P. solution that avoids SSR charges, and 2.) encourage regional transmission authorities to approve transmission construction that decreases congestion and brings low-cost renewable energy to Michigan thereby savings ratepayers money. Great Lakes Renewable Energy Association (GLREA) www.glrea.org. GLREA is a state-wide non-profit that promotes renewable energy by advocating for stronger state policies and by informing and educating Michigan citizens, organizations, and leaders on how they can achieve a greater use of renewable energy and its many economic and environmental benefits.

http://www.utilityratewatch.org/

UTILITY CONSUMER REPRESENTATION FUND … · Utility Consumer Representation Fund Annual Report 2016...

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