STATE OF MICHIGAN
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
In the matter, on the Commission’s own
motion, to commence a proceeding to
implement the provisions of Public Act 169
of 2014; MCL 460.11(3) et seq., with regard
to DTE ELECTRIC COMPANY.
Case No. U-17689
(e-file paperless)
/
MICHIGAN PUBLIC SERVICE COMMISSION STAFF’S
EXCEPTIONS TO THE PROPOSAL FOR DECISION
The Michigan Public Service Commission (MPSC or Commission) Staff (Staff)
files the following Exceptions to the Proposal for Decision (PFD) issued by the
Administrative Law Judge (ALJ). In the PFD, the ALJ underwent an extensive
review and summary of the testimony and issues that arose out of the matter, on
the Commission’s own motion, to commence a proceeding to implement the
provisions of Public Act 169 of 2014; MCL 460.11(3) et seq., with regard to DTE
Electric Company (DTE Electric or the Company). While appreciating the effort
and recommendations of the ALJ, Staff believes that the PFD requires clarification
in a few areas.
Production Cost Allocator
The ALJ recommends that the Commission reject proposals to modify the
production cost allocator. At page 74, the ALJ stated, “no party has established
that increasing the demand weighting in the formula otherwise established by 2008
PA 286 and 2014 PA 169 better aligns cost with causation.” However, Staff submits
that it fully supported its position that 75-25 weighting is the best allocator to
match costs with causative elements. At page 108 of the PFD, the ALJ
acknowledged that Staff’s proposal represents “a reasonable attempt to find a
middle ground between the positions of the parties in this case…” The ALJ found
Staff did not establish that this alternative is better than the current method,
apparently because staff indicated in its testimony that the current method is also
reasonable. Staff stands by its testimony. The current 50-25-25 method is a
reasonable means of matching costs with their causation, but the 75-25 method
proposed by Staff is historically more appropriate.
Change in the Demand Portion of the Production Allocator
Under the current method, the demand portion of the weighting of the
production allocator is based on an average of the total system peak hour demands,
or coincident peaks (CP), in each of the 12 months of the year (12 CP). In this case,
the company proposes switching to 4 CP, which bases demand on only 4 hours of the
year, the peak hours in the summer months June, July, August, and September.
The Company supported its 4 CP proposal via FERC tests, and Staff believes these
tests provide sufficient evidence to support using 4 CP.
Commercial and Residential Secondary Classes
The PFD states that Staff witness Revere testified that there should not be a
distinction in the allocation to and collection of distribution costs from residential
and commercial secondary customers. However, this is not an accurate
interpretation of Mr. Revere’s testimony. Mr. Revere explained that in this case the
Company is advocating eliminating the existing definitions of class for distribution.
Mr. Revere did not take a position on whether this was or was not reasonable,
though Staff witness Putnam stated Staff was in agreement with the Company’s
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proposal. 2 TR 304. Rather, Mr. Revere testified that if the Commission accepted
the Company’s proposed change to one secondary class split into residential and
commercial, then in that case, there should also be a move to in-class parity. 3 TR
462-464. On cross-examination, Mr. Revere explained that “if you want to have a
class based on secondary rather than the previous definitions of class, that to the
extent practical, the rates within that class should be the same.” 3 TR 462. When
asked to clarify the classes for which he was recommending in-class parity as a goal,
Mr. Revere stated separately for “residential secondary and commercial secondary.”
3 TR 463. Mr. Revere advocated moving toward in-class parity by continuing to
“equalize[e] the distribution rates over time subject to some reasonable restriction
on the amount that any given distribution rate increases.” 3 TR 464. Mr. Revere
however was not advocating parity between the residential secondary and
commercial secondary classes – only parity within them.
Dynamic Peak and Seasonal Rates
The ALJ does not recommend that the Commission undertake steps to
establish dynamic pricing or seasonal rates for all rate schedules in this proceeding
due to the complexity of these issues and the time allotted by the legislature for
conduct of this proceeding. Staff suggests that these issues could be fully dealt with
either in the Company’s current rate case, in the Company’s next rate case, or in a
separate proceeding dedicated to those issues. Any of these approaches would be
reasonable.
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Conclusion
Staff requests that the Commission accept its recommendations as stated
herein, and in Staff’s briefs.
Respectfully submitted,
MICHIGAN PUBLIC SERVICE COMMISSION
STAFF
Lauren D. Donofrio (P66026)
Bryan A. Brandenburg (P77216)
Assistant Attorneys General
Public Service Division
7109 W. Saginaw Hwy., 3rd Floor
Lansing, MI 48917
Dated: May 5, 2015
17689/Exceptions to PFD
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STATE OF MICHIGAN
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
In the matter, on the Commission’s own
motion, to commence a proceeding to
implement the provisions of Public Act 169
of 2014; MCL 460.11(3) et seq., with regard
to DTE ELECTRIC COMPANY.
Case No. U-17689
(e-file paperless)
/
PROOF OF SERVICE
STATE OF MICHIGAN )
) ss
COUNTY OF EATON
)
CORINNA C. SWAFFORD, being first duly sworn, deposes and says that on
May 5, 2015, she served a true copy of the Michigan Public Service
Commission Staff’s Exceptions to the Proposal for Decision upon the
following parties VIA E-MAIL ONLY:
DTE Electric Company
Michael J. Solo, Jr.
DTE Electric Company
One Energy Plaza, 688 WCB
Detroit, MI 48226
[email protected]
[email protected]
Association of Businesses
Advocating Tariff Equity (ABATE)
Robert A.W. Strong
Clark Hill PLC
151 S. Old Woodward
Suite 200
Birmingham, MI 48009
[email protected]
Administrative Law Judge
Hon. Sharon L. Feldman
Administrative Law Judge
Michigan Public Service Comm.
7109 W. Saginaw Hwy., 3rd Floor
Lansing, MI 48917
[email protected]
Energy Michigan Inc.
Laura Chappelle
Timothy J. Lundgren
Varnum
201 N. Washington Square, Suite 910
Lansing, MI 48933
[email protected]
[email protected]
Citizens Against Rate Excess
(CARE)
John R. Liskey
921 N. Washington Ave.
Lansing, MI 48906
[email protected]
Michigan Agri-Business Association
(MABA)
Laura Chappelle
Timothy Lundgren
Varnum
201 N. Washington Square, Suite 910
Lansing, MI 48933
[email protected]
[email protected]
Michigan Environmental Council
(MEC)
Christopher M. Bzdok
Emerson Hilton
Olson, Bzdok & Howard
420 East Front Street
Traverse City, MI 49686
[email protected]
[email protected]
National Resources Defense Council
Christopher M. Bzdok
Emerson Hilton
Olson, Bzdok & Howard
420 East Front Street
Traverse City, MI 49686
[email protected]
[email protected]
Kimberly Flynn, Legal Assistant
[email protected]
Attorney General Bill Schuette
John A. Janiszewski
Donald E. Erickson
Assistant Attorney General
Environment, Natural Resources, and
Agriculture Div.
G. Mennen Williams Bldg., 6th Floor
525 W. Ottawa St; P.O. Box 30755
Lansing, MI 48909
[email protected]
[email protected]
Ruth Ann Liebziet, Legal Assistant
[email protected]
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________________________________________
CORINNA C. SWAFFORD
Subscribed and sworn to before me
this 5th day of May, 2015.
_________________________________
Tina L. Bibbs, Notary Public
State of Michigan, County of Clinton
Acting in the County of Eaton
My Commission Expires: 11-13-2021
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