Jackson, MI 49201 Fax: (517) 768-3644 Tel: (202) 778-3340

fl0719-1-223

A CMS Energy Company July 22, 2019 Ms. Barbara Kunkel Acting Executive Secretary Michigan Public Service Commission 7109 West Saginaw Highway Post Office Box 30221 Lansing, MI 48909 RE: MPSC Case No. U-20497 – In the matter of the application of Michigan Electric

Transmission Company, LLC Wolverine Power Supply Cooperative, Inc and Midwest Energy and Communication for an administrative determination regarding the proper classification of transmission facilities and to submit findings to the Federal Energy Regulatory Commission.

Dear Ms. Kunkel: Enclosed for electronic filing in the above-captioned case, please find Consumers Energy Company’s Corrected Direct Testimony of Company witness Donald A. Lynd. This filing has been made to correct one item on page 37, line 11 and can be found in redline. This is a paperless filing and is therefore being filed only in PDF. I have included a Proof of Service showing electronic service upon the parties. Sincerely, Emerson J. Hilton cc: Hon. Dennis W. Mack, Administrative Law Judge Parties per Attachment 1 to Proof of Service

General Offices: LEGAL DEPARTMENT One Energy Plaza Tel: (517) 788-0550 SHAUN M. JOHNSON

Senior Vice President and General Counsel

Robert W. Beach Ian F. Burgess Don A. D’Amato Robert A. Farr Gary A. Gensch, Jr. Matthew D. Hall Emerson J. Hilton Chantez P. Knowles Jason M. Milstone Rhonda M. Morris Deborah A. Moss* Michael C. Rampe Scott J. Sinkwitts Theresa A.G. Staley Janae M. Thayer Anne M. Uitvlugt Aaron L. Vorce

Attorney

Jackson, MI 49201 Fax: (517) 768-3644 *Washington Office: 1730 Rhode Island Ave. N.W. Suite 1007

Tel: (202) 778-3340 MELISSA M. GLEESPEN Vice President, Corporate Secretary and Chief Compliance Officer

KELLY M. HALL Vice President and Deputy General Counsel

Eric V. Luoma Adam C. Smith Bret A. Totoraitis Assistant General Counsel

Washington, DC 20036 Fax: (202) 778-3355 Writer’s Direct Dial Number: (517) 788-1241 Writer’s E-mail Address: [email protected]

S T A T E O F M I C H I G A N

BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION

In the matter of the Application of ) MICHIGAN ELECTRIC TRANSMISSION COMPANY, ) LLC, WOLVERINE POWER SUPPLY COOPERATIVE, ) INC and MIDWEST ENERGY & COMMUNICATION ) for an administrative determination regarding the proper ) Case No. U-20497 classification of certain facilities and to submit ) findings to the Federal Energy Regulatory Commission. ) )

CORRECTED DIRECT TESTIMONY

OF

DONALD A. LYND

ON BEHALF OF

CONSUMERS ENERGY COMPANY

July 2019

DONALD A. LYND CORRECTED DIRECT TESTIMONY

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INTRODUCTION 1

Q. Please state your name and business address. 2

A. My name is Donald A. Lynd, and my business address is 1945 West Parnall Road, 3

Jackson, Michigan 49201. 4

Q. By whom are you employed and in what capacity? 5

A. I am employed by Consumers Energy Company (“Consumers Energy” or the 6

“Company”) as Director of Electric Transmission Planning and Protection. 7

Q. Please describe your educational background. 8

A. I earned a Bachelor of Science degree in Electrical Engineering, with an emphasis in 9

Power & Machinery, from Michigan Technological University in 1999. My education 10

included training in system modeling and power flow analysis. 11

Q. Please describe your work experience. 12

A. I began my career with Consumers Energy in 1999 in the Transmission Planning and 13

Performance Department as an Engineer. My duties included conducting planning 14

studies of the Company’s 46 kV system and 138/46 kV substations to develop alternate 15

solutions to correct projected capacity or low voltage system issues under the direction of 16

a Senior Engineer. From these alternate solutions, I identified economic alternatives, and 17

developed those into project specifications to be engineered and constructed. In 2000, 18

my responsibilities increased to include oversight of the Company’s power quality 19

monitoring program, planning of industrial customer substations, and planning of 20

generator interconnections. In 2005, my responsibilities increased to serving as the lead 21

planning engineer for approximately one-third of the Company’s 46 kV and 138 kV 22

systems. In May 2012, I became the lead planning and reliability engineer for one-half of 23


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the Company’s 138 kV and 46 kV networks, including substations. In December 2014, 1

I was promoted to my present position. 2

Q. What are your responsibilities as Director of Electric Transmission Planning and 3

Protection? 4

A. My responsibilities include planning the development of Consumers Energy’s electric 5

transmission and high voltage distribution (“HVD”) systems, ensuring adequate and 6

reliable service, as measured by both the North American Electric Reliability Corporation 7

Transmission Planning standards and the Michigan Public Service Commission 8

(“MPSC” or the “Commission”). I am also responsible for engineering design of 9

transmission and HVD lines; engineering design of substations; creating and maintaining 10

the system models for planning studies; and the adequate protection of the entire 11

Consumers Energy electric system. My responsibilities in planning the development of 12

Consumers Energy’s electric transmission and HVD system include: (i) adding or 13

modifying lines and substations to maintain adequate voltage and maintain electrical 14

loading within the capability of the equipment; (ii) identifying and planning new reactive 15

supply additions required to maintain adequate voltage; (iii) planning new 16

interconnections; and (iv) planning interconnection facilities associated with generation 17

facilities. 18

Q. Have you previously testified before a court or regulatory commission on utility 19

matters? 20

A. Yes. I provided testimony in MPSC Case No. U-17598 regarding Consumers Energy’s 21

application to reclassify certain assets from distribution to transmission pursuant to the 22

Seven Factor Test established by the Federal Energy Regulation Commission (“FERC”) 23


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in its Order No. 888. This testimony was subsequently filed in FERC Docket No. 1

ER15-910. I also provided testimony regarding transmission matters in MPSC Case No. 2

U-20165 regarding Consumers Energy’s application for approval of an Integrated 3

Resource Plan. In addition, I provided pre-filed direct testimony on behalf of Consumers 4

Energy in FERC Docket No. EL19-59, a case currently pending at FERC, in which I 5

address topics very similar to those at issue in this proceeding. I have also provided 6

expert testimony to support the Company in two condemnation cases. These cases, 7

Consumers Energy v. Engle, et al. and Consumers Energy v. Hopson, et al., were tried 8

before Michigan circuit courts in Leelanau and Monroe Counties, respectively. The 9

purpose of my testimony in those cases was to establish project necessity relative to the 10

capacity, voltage, and reliability needs for the projects. 11

Q. What is the purpose of your direct testimony in this proceeding? 12

A. The purpose of my direct testimony is to demonstrate that the “Morenci Project,” an 13

electric line proposed by Michigan Electric Transmission Company, LLC (“METC”) and 14

approved by the Midcontinent Independent System Operator, Inc. (“MISO”) as part of 15

the 2018 MISO Transmission Expansion Plan (“MTEP18”), should be classified as a 16

local distribution facility rather than a transmission facility under FERC’s Seven Factor 17

Test. The MPSC should therefore reject the request of METC, Wolverine Power Supply 18

Cooperative (“Wolverine”), and Midwest Energy & Communications (“Midwest 19

Energy”) (collectively “Joint Applicants”) – that the Morenci Project instead be classified 20

as transmission. 21


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Q. Are you sponsoring any exhibits with your direct testimony? 1

A. Yes. I am sponsoring the following exhibits: 2

Exhibit CE-1 (DAL-1) August 30, 2018 East Subregional Planning 3 Meeting Minutes; 4

Exhibit CE-2 (DAL-2) Consumers Energy’s Response and Attachment to 5

Staff’s First Discovery Requests, 6 U-20497-ST-CE-2; 7

Exhibit CE-3 (DAL-3) Confidential - METC EPR Request Form [CEII]; 8 Exhibit CE-4 (DAL-4) February 22, 2019 METC Letter to Consumers; 9 Exhibit CE-5 (DAL-5) October 12, 2018 MISO Presentation; 10 Exhibit CE-6 (DAL-6) Midwest Energy Rate Book, Original Sheet No. 11

A-5.00; 12 Exhibit CE-7 (DAL-7) November 29, 2018 MISO Presentation; 13 Exhibit CE-8 (DAL-8) October 22, 2018 METC Response to Consumers 14

Energy Information Requests; 15 Exhibit CE-9 (DAL-9) Consumers Energy’s Response and Attachments to 16

Staff’s Second Discovery Requests, 17 U-20497-ST-CE-008; 18

Exhibit CE-10 (DAL-10) Joint Applicants’ Response to Staff’s Second 19

Discovery Requests, ST-JA-2-6; 20 Exhibit CE-11 (DAL-11) Morenci Interconnection Seven Factor Test 21

Whitepaper [Redacted]; 22 Exhibit CE-12 (DAL-12) February 15, 2019 MISO Letter to Consumers 23

Energy and January 31, 2019 Consumers Energy 24 Letter to MISO; 25

Exhibit CE-13 (DAL-13) Michigan Joint Zone Settlement Agreement; 26 Exhibit CE-14 (DAL-14) Consumers Energy’s Response to Staff’s First 27

Discovery Requests, U-20497-ST-CE-1; 28 Exhibit CE-15 (DAL-15) February 19, 2019 Midwest Energy Letter to 29

Consumers Energy; 30


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Exhibit CE-16 (DAL-16) March 6, 2018 - April 9, 2018 Consumers Energy-1

Wolverine Email Exchange; and 2 Exhibit CE-17 (DAL-17) March 14, 2019 Consumers Energy Correspondence 3

to Midwest Energy. 4

Q. Were these exhibits prepared by you or under your supervision? 5

A. Yes. 6

BACKGROUND – CONSUMERS ENERGY 7

Q. Please provide an overview of Consumers Energy’s electric utility business. 8

A. Consumers Energy is a public utility serving more than 1.8 million residential, 9

commercial, and industrial electric customers. The Company is also both an electric 10

distribution and transmission utility. Consumers Energy’s electric service territory is 11

fully within the Michigan Joint Zone of MISO, a FERC-approved joint pricing zone for 12

the allocation of transmission costs. Consumers Energy owns and operates 66,700 miles 13

of distribution line at voltages of 25 kV or less. Consumers Energy also owns and 14

operates an HVD system consisting of 4,450 miles operating at 46 kV and 69 kV, and 15

209 miles of radial distribution lines operating at 138 kV.1 Consumers Energy is a 16

transmission-owning member of MISO with 214 miles of transmission line and 17

transmission assets in 74 substations.2 Consumers Energy’s transmission facilities have 18

1 The number of Consumers Energy 138 kV distribution line miles has increased since prior filings, as the Company has completed construction of additional 138 kV distribution lines to serve new substations. While other filings have referred to 192 miles of such lines – including my testimony in FERC Docket No. EL19-59 and Exhibit CE-11 in this case – that number was based on a 2017 report that is no longer current. The correct number as of the date of this testimony is 209 miles. 2 Later this year, Consumers Energy and METC intend to execute a transaction that would result in the transfer to METC of certain Consumers Energy transmission assets, including all Consumers Energy transmission assets at 67 specific substations and most Consumers Energy transmission assets at 2 additional substations. At the close of this transaction, Consumers Energy will still own transmission assets in 7 substations and retain ownership of all 214 miles of transmission line. FERC recently approved one component of this pending transaction in Docket No. EC19-83.


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been transferred to MISO’s functional control pursuant to Appendix H of MISO’s 1

Transmission Owners Agreement, which is Rate Schedule 01 to MISO’s Open Access 2

Transmission, Energy and Operating Reserve Markets Tariff. Although Consumers 3

Energy owns certain transmission assets, the Consumers Energy distribution system is 4

largely interconnected to the transmission system of METC, with a few interconnections 5

to Wolverine’s transmission system. 6

Q. Please provide an overview of the service Consumers Energy provides to Midwest 7

Energy. 8

A. Consumers Energy currently provides wholesale distribution service to Midwest Energy 9

through an agreement with Wolverine. That agreement is on file with MISO pursuant to 10

Schedule 11 of the MISO Tariff, and publicly available on MISO’s website. In Lenawee 11

County, Michigan, where the Morenci Project would be located, there are three existing 12

interconnections between Consumers Energy and Wolverine that provide service to 13

Midwest Energy, one of which, at the Seneca Substation, is located approximately five 14

miles north of the City of Morenci. 15

BACKGROUND - MORENCI PROJECT 16

Q. You explained above that the Morenci Project was included in MISO’s MTEP18. 17

When did you first learn of this project? 18

A. I first learned of the project at MISO’s August 30, 2018 East Subregional Planning 19

Meeting. At this meeting, METC notified stakeholders via a verbal report that it had 20

submitted an Expedited Project Review (“EPR”) request for the Morenci Project. MISO 21

noted that it would collaborate with METC on how to move this request forward in the 22


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process. This topic was recorded by MISO in its meeting minutes. See Exhibit CE-1 1

(DAL-1). 2

Q. Did you review the EPR request? 3

A. Yes. 4

Q. What did you determine from your review of the project proposed in the EPR 5

request? 6

A. It was my opinion that the Morenci Project being proposed within the EPR request should 7

be classified as distribution under FERC’s Seven Factor Test, and, therefore, that the 8

project should not be considered or approved as part of MISO’s MTEP process, which is 9

limited to transmission assets. 10

Q. Is the Morenci Project included in METC’s EPR request the same Morenci Project 11

that is the subject of this case? 12

A. Yes. 13

Q. Please describe the Morenci Project. 14

A. As described by METC and MISO, the Morenci Project would be made up of a tap pole 15

and line switch additions to an existing looped METC transmission line, and a new radial 16

line to be operated at 138 kV. The proposed new radial line would terminate at a new 17

distribution substation, to be owned by Wolverine, that would transform from 138 kV to 18

12.47 kV for distribution to end users on the Midwest Energy system. See Confidential 19

Exhibit CE-3 (DAL-3); Exhibits CE-5 (DAL-5) and CE-7 (DAL-7). 20

Q. What is the stated purpose of the new Morenci Project? 21

A. In its filed materials and subsequent MISO stakeholder discussions, METC indicated that 22

the Morenci Project was designed to supply the existing Midwest Energy distribution 23


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system, as well as new components of that system that Midwest Energy has planned to 1

build, in order to serve some existing and projected new Midwest Energy load in the area. 2

Q. How do Joint Applicants propose to classify the Morenci Project? 3

A. Joint Applicants have represented that the facilities it would construct should be 4

classified as transmission. See Exhibit CE-4 (DAL-4). That is consistent with METC’s 5

proposal that the project be included in the MTEP process, which, again, is limited to 6

transmission projects. In discussions, the new Morenci Substation to be owned by 7

Wolverine was represented as being classified as distribution. 8

Q. Do you agree with this classification? 9

A. Only in part. I concur that the proposed tap poles and line switch additions would 10

properly be classified as transmission as they would be modifications to an existing 11

looped transmission line. I also agree that the new Morenci Substation to be owned by 12

Wolverine should be classified as distribution. However, I do not agree with Joint 13

Applicants’ assertion that the new radial line, which comprises the majority of the 14

Morenci Project, should be classified as transmission. It should be classified as 15

distribution. 16

Q. What is the length of the Morenci Project? 17

A. In some instances, METC has described the new radial line as being 10.5 miles in length. 18

See Confidential Exhibit CE-3 (DAL-3); Exhibits CE-5 (DAL-5) and CE-7 (DAL-7). In 19

other instances, METC has described the new radial line as being 12 miles in length. See 20

Confidential Exhibit CE-3 (DAL-3). I do not know which of these descriptions is 21

correct; however, Joint Applicants stated in their Application in this case that the radial 22

line length would be 10.5 miles. 23


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BACKGROUND - SEVEN FACTOR TEST 1

Q. Please describe the Seven Factor Test established by FERC in Order No. 888. 2

A. In Section I of Order No. 888,3 FERC established a method for analyzing whether an 3

electric delivery system should be classified as a transmission or a distribution asset. 4

Instead of providing a bright line between transmission and distribution, FERC 5

established a test which examines seven factors for the purpose of determining whether 6

certain electric delivery system assets should be classified as distribution or transmission 7

for regulatory and jurisdictional purposes. The seven factors are: 8

1. Local distribution facilities are normally in close proximity to retail 9 customers. 10

2. Local distribution facilities are primarily radial in character. 11

3. Power flows into local distribution systems; it rarely, if ever, flows out. 12

4. When power enters a local distribution system, it is not reconsigned or 13 transported on to some other market. 14

5. Power entering a local distribution system is consumed in a comparatively 15

restricted geographic area. 16 6. Meters are based at the transmission/local distribution interface to measure 17

flows into the local distribution system. 18 7. Local distribution systems will be of reduced voltage level. 19

Q. How does Order No. 888 say that the seven factors should be interpreted and 20

applied? 21

A. Order No. 888 suggests that application of the seven factors to an asset determines 22

whether the asset has distribution characteristics – i.e., whether it is more like distribution 23

or transmission. The Seven Factor Test is a balancing analysis that weighs each factor in 24

3 75 FERC ¶ 61,080, pages 435-440.


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determining whether a particular asset should be classified as transmission or distribution. 1

After an asset is evaluated under each factor, an overall conclusion can be drawn. No one 2

factor under the test is dispositive, and instead the test is described as a functional test. 3

Q. Is the Seven Factor Test designed to consider the types of transactions that may be 4

made across facilities? 5

A. No. The Seven Factor Test is a measure of facility design rather than the nature of the 6

transactions that may be made using a given facility. 7

BACKGROUND – PAST SEVEN FACTOR TEST ANALYSES 8

Q. Has Consumers Energy previously performed any Seven Factor Test analyses? 9

A. Yes. Consumers Energy first performed a Seven Factor Test analysis in MPSC Case No. 10

U-11283, which was filed in 1996, shortly after FERC issued Order No. 888. Consumers 11

Energy was one of the first utilities to perform a Seven Factor Test analysis. 12

Q. Have you reviewed the Seven Factor Test analysis presented by Consumers Energy 13

in MPSC Case No. U-11283? 14

A. Yes. 15

Q. Please describe the purpose of MPSC Case No. U-11283. 16

A. The purpose of MPSC Case No. U-11283 was to assess the Consumers Energy electric 17

system under the Seven Factor Test, which FERC had recently established in Order No. 18

888. 19

Q. What did the MPSC decide in Case No. U-11283? 20

A. In its Order dated January 14, 1998, the MPSC stated that “the proposal submitted by 21

Consumers Energy Company for classifying certain facilities is adopted.” 22


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Q. Did FERC approve this classification? 1

A. Yes. By a letter order issued on July 29, 1998, in FERC Docket No. EL98-21, FERC 2

approved the MPSC’s determination in Case No. U-11283. 3

Q. How did Consumers Energy classify its facilities with regard to the Seven Factor 4

Test analysis presented in U-11283? 5

A. The filed testimony in that case states: 6

Application of the seven FERC criteria leads to the 7 conclusion that, with the exception of radial 138 kV lines 8 and associated facilities, lines of Consumers Energy which 9 transmit electricity at 120 kV and above and associated 10 facilities should be classified as transmission under the 11 FERC criteria and lines of less than 120 kV and associated 12 facilities should be classified as local distribution facilities. 13 (Emphasis added.) 14

The testimony further describes radial 138 kV facilities, which supply distribution 15

substations as follows: 16

These facilities serve the sole function of supplying 17 distribution substations with secondary voltages of less 18 than 25 kV. These substations may directly serve large 19 customers or may be connected to radial distribution 20 circuits which are routed to supply residential, commercial 21 or small industrial customers. (Emphasis added.) 22

Q. Is this classification applicable to METC? 23

A. Yes. In April 2002, Consumers Energy sold the assets that were classified as 24

transmission under MPSC Case No. U-11283 to METC. 25

Q. Have there been subsequent Seven Factor Test analyses that adjusted the 26

classification of radial 138 kV lines on the Consumers Energy electric system? 27

A. Yes. In MPSC Case No. U-17598, Consumers Energy sought to reclassify certain assets 28

from distribution to transmission pursuant to the Seven Factor Test. The outcome of that 29


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case was that certain 138 kV substation assets, and certain 138 kV radial lines supplying 1

networked distribution substations with secondary voltages of 46 kV (i.e., “bulk power 2

substations”), were reclassified to transmission. However, Consumers Energy’s radial 3

138 kV facilities, including many that supply distribution substations with secondary 4

voltages of less than 25 kV, were not part of MPSC Case No. U-17598 and thus remain 5

classified as distribution, consistent with their prior classification in MPSC Case No. 6

U-11283. The parties to MPSC Case No. U-17598, including METC and Wolverine, 7

executed a settlement agreement under which they committed not to dispute the Seven 8

Factor Test classifications approved in that case in subsequent MPSC or FERC 9

proceedings. 10

Q. Did FERC approve the classifications made in MPSC Case No. U-17598? 11

A. Yes. In an Order dated April 16, 2015, in FERC Docket No. ER15-910, FERC approved 12

the asset classifications made in MPSC Case No. U-17598. 13

Q. Does Consumers Energy still own radial 138 kV lines classified as distribution 14

under the Seven Factor Test? 15

A. Yes. Consumers Energy owns and operates 174 radial line segments operating at 16

138 kV, with a total line length of 209 miles, that are classified as distribution. Of these, 17

153 line segments, totaling 160 miles, are single circuit radial lines whose sole function is 18

to supply distribution substations with secondary voltages of less than 25 kV. An 19

additional 4 line segments, totaling less than 1 mile, are single circuit radial lines that 20

supply customer-owned distribution substations with a secondary voltage of 34.5 kV. 21

The remaining 17 line segments, totaling 49 miles, are radial lines which supply two or 22

more of the 153 radial segments to the 138 kV transmission system owned by METC or 23


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Consumers Energy. A list of the Company’s 174 138 kV distribution line segments and 1

their associated lengths is provided in Exhibit CE-9 (DAL-9). 2

Q. How does the Morenci Project compare to the Consumers Energy 138 kV 3

distribution lines? 4

A. The Morenci Project is directly comparable to 157 Consumers Energy line segments 5

classified as distribution, totaling more than 160 miles, as described above. The Morenci 6

Project will be a radial line operated at 138 kV; it will directly connect to a distribution 7

substation that will transform the voltage to 12.47 kV (which is less than 25 kV); and it 8

will bring power to a distribution substation from an existing, looped 138 kV 9

transmission line. 10

Q. Is the Morenci Project comparable to the Consumers Energy 138 kV lines that are 11

classified as Transmission? 12

A. No. Consumers Energy’s 138 kV transmission lines connect the bulk power substations 13

which supply the Company’s networked 46 kV system to the METC 138 kV transmission 14

system. Midwest Energy does not operate a transmission system or a 46 kV networked 15

system. 16

Q. Is the Morenci Project comparable to any radial 138 kV lines in the Michigan Joint 17

Zone that are classified as transmission? 18

A. No, not to my knowledge, as discussed further later in my testimony. 19

Q. How would the Morenci Project be classified under the Seven Factor Test analysis 20

completed and approved by the MPSC in Case Nos. U-11283 and U-17598? 21

A. As described earlier, the Morenci Project includes a radial 138 kV line serving one 22

distribution substation that has a secondary voltage of less than 25 kV; therefore, that 23


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radial line would be classified as distribution under the previously established Seven 1

Factor Test framework approved by the MPSC in Case Nos. U-11283 and U-17598, and 2

affirmed by FERC in both instances. Classifying the Morenci Project as distribution 3

would be comparable to the longstanding (and current) classification of many Consumers 4

Energy assets. 5

Q. Have there been any Seven Factor Test analyses of METC’s facilities subsequent to 6

MPSC Case No. U-11283? 7

A. No, not to my knowledge. It is my understanding that the only MPSC Seven Factor Test 8

determination applicable to METC’s assets was made in Case No. U-11283, prior to 9

METC’s purchase of the former Consumers Energy assets determined in that case to be 10

transmission. As mentioned previously, the Morenci Project would be classified as 11

distribution under the framework used by the MPSC in that case. 12

Q. Does the MPSC’s Seven Factor Test framework from Case Nos. U-11283 and 13

U-17598 apply to the Morenci Project? 14

A. Yes. FERC has stated that assets of Michigan Joint Zone members, including METC, 15

should be classified on a comparable basis using the MPSC’s framework. METC appears 16

to agree with this direction from FERC, with respect to the Morenci Project, as it 17

explained in a letter sent to me on February 22, 2019. See Exhibit CE-4 (DAL-4). 18

Further, Joint Applicants support facility classifications made on a comparable basis, as 19

stated, for example, in the Pre-Filed Direct Testimony of Joint Applicants witness 20

Charles Marshall, page 6, lines 1 through 4. 21


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INDEPENDENT SEVEN FACTOR TEST ANALYSIS 1

Q. Did you complete your own Seven Factor Test analysis of the Morenci Project? 2

A. Yes. 3

Q. How did you analyze each factor of the Seven Factor Test? 4

A. Before forming an opinion on whether the Morenci Project should be classified as 5

transmission or distribution, I analyzed whether it was more like transmission or more 6

like distribution on a factor-by-factor basis. After performing this analysis on a 7

factor-by-factor basis, I concluded that this radial 138 kV line should be classified as 8

distribution rather than transmission. My independent analysis and conclusion under 9

each factor is as follows: 10

FACTOR NO. 1: Local Distribution Facilities are Normally in Close 11 Proximity to Retail Customers 12

Q. Please describe the methodology that you used to evaluate Factor No. 1. 13

A. I reviewed materials submitted by METC as part of its EPR request, as well as publicly 14

filed documents regarding Midwest Energy’s area of service. I also utilized my 15

knowledge of the service Consumers Energy presently provides. 16

Q. What did the EPR request reveal regarding proximity to retail customers? 17

A. The EPR request form, attached to my direct testimony as Confidential Exhibit CE-3 18

(DAL-3),4 itself does not identify where all of Midwest Energy’s customers to be served 19

are located; however, it implies that the Morenci Project will serve customers in and 20

around the Morenci area. The document states that “[Midwest Energy] is experiencing 21

4 MISO originally provided this document, titled “Expedited Project Review Request Form - Morenci Interconnection281436.pdf”, on its publicly-accessible website. I downloaded this document on October 8, 2018. The document is no longer publicly available on MISO’s website, and is being filed as a confidential exhibit in this case because it contains information that METC has designated as Critical Energy/Electric Infrastructure Information (“CEII”).


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load growth from both existing and new customer requests in and around the area of 1

Morenci, MI.” 2

Q. What other documents did you review to determine proximity of the 3

interconnection to retail customers? 4

A. Original Sheet No. A-5.00 of the Midwest Energy Rate Book for Electric Service, filed 5

with the MPSC and attached to my testimony as Exhibit CE-6 (DAL-6), identifies 6

Midwest Energy’s service territory. This service territory is shown covering most of 7

Lenawee County, Michigan, as well as the northernmost portion of Fulton County, Ohio. 8

Q. How does the location of the Morenci Project compare to Midwest Energy’s service 9

territory? 10

A. The Morenci Project is entirely within Lenawee County and entirely within Midwest 11

Energy’s service territory. The entire Morenci Project is located in the same single 12

county where Midwest Energy’s customers to be served by the project are located. 13

Q. Is a geographic analysis a reasonable measure of “proximity”? 14

A. Yes. Geographical analysis was utilized in the Seven Factor Test analyses completed in 15

both MPSC Case Nos. U-11283 and U-17598. Further, this methodology was utilized in 16

Case No. U-13862, in which the MPSC approved the reclassification of some Wolverine 17

assets from distribution to transmission. 18

Q. What is your Factor No. 1 conclusion for the Morenci Project? 19

A. I conclude that, with respect to Factor No. 1, the radial line included in the Morenci 20

Project is more like distribution than transmission because it is in “close proximity” to the 21

Midwest Energy customers the line will serve. 22


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FACTOR NO. 2: Local Distribution Facilities are Primarily Radial in 1 Character 2

Q. What methodology did you use to evaluate Factor No. 2? 3

A. I conducted a review of the one-line diagrams, which are also called wiring diagrams, 4

submitted by METC as part of its EPR request for the Morenci Project. Please see 5

Appendix B of Confidential Exhibit CE-3 (DAL-3). I conducted this review in order to 6

determine the degree of network connectivity associated with the project. 7

Q. Please define network connectivity. 8

A. Network connectivity refers to whether electric delivery assets are connected together. If 9

the assets have network connectivity, then the assets are also referred to as looped. 10

Q. How are assets classified if they are not looped? 11

A. If assets are not looped, then they are classified as radial. 12

Q. How are radial assets defined? 13

A. A radial asset emanates from a single point of supply to serve a load. Radial assets do 14

not connect back to the larger network at any other point. 15

Q. How do you determine whether an asset is looped? 16

A. By examining one-line diagrams, it is possible to determine whether there is more than 17

one route from a source to a load. If more than one route exists, the line is looped. If 18

only one path exists, the line is radial. 19

Q. What did your review of the one-line diagrams reveal? 20

A. The diagrams submitted in the EPR request for the Morenci Project show a single 138 kV 21

line emanating from METC’s existing Beecher-Moore Road 138 kV looped transmission 22

line to the new Morenci Substation, which will serve Midwest Energy retail load. There 23


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is no other connection to a 138 kV line. The diagram further identifies this portion of the 1

Morenci Project as “10.5 miles of radial line.” 2

Q. Is there other documentation indicating that this line is radial? 3

A. Yes. First, the EPR request document originally published on MISO’s website described 4

METC’s recommended proposal as a radial line: “METC proposes to build a new single 5

138 kV radial line….” Please see Confidential Exhibit CE-3 (DAL-3). Second, a 6

presentation by MISO at the October 12, 2018 West Technical Study Task Force 7

meeting, attached as Exhibit CE-5 (DAL-5), stated on page 4: “METC proposes to build 8

a new single 10.5 miles of 138kV radial line by tapping Moore Road – Beecher line 9

following the Wolverine’s 10 MW of load interconnection request.” Third, a 10

presentation by MISO to the Planning Advisory Committee on November 29, 2018, 11

attached as Exhibit CE-7 (DAL-7), contained the same statement on page 8: “METC 12

proposes to build a new single 10.5 miles of 138kV radial line by tapping Moore Road – 13

Beecher line following the Wolverine’s 10 MW of load interconnection request.” All of 14

these documents indicate that the 138 kV line included in the Morenci Project is radial. 15

Q. Is there other evidence to support a conclusion that the Morenci Project is radial? 16

A. Yes. METC has recently informed Consumers Energy, myself included, of a policy to no 17

longer allow three-terminal networked lines. Since two terminals already exist on the 18

looped METC transmission line between the Beecher and Moore Road Substations, and 19

because METC did not propose a three-breaker 138 kV ring station for the Morenci 20

Project, METC must not consider the Morenci Project to qualify as a networked 21

third-terminal; this further confirms that the 138 kV line included in the Morenci Project 22

is a radial asset. 23


19 te0719-dal


A. Application of this factor indicates that the Morenci Project is more like distribution than 2

transmission, as it is plainly radial in character. 3

FACTOR NO. 3: Power Flows into Local Distribution Systems; it Rarely, if 4 Ever, Flows Out 5


A. I reviewed the language of METC’s EPR request document as well as power flow model 7

data that was required to be submitted to MISO with that document. 8

Q. What did you determine from your review of the EPR request document? 9

A. Nothing in the EPR request states or implies that the Morenci Project will serve 10

generation or will otherwise be networked. 11

Q. What did the power flow model data show? 12

A. METC submitted model data to MISO’s Model On Demand (“MOD”) system as required 13

by the EPR process.5 MISO’s MOD system shows that this model data was created by 14

METC and has a status of “Accepted” by MISO staff. The data submitted in this file 15

contains the addition of a new 138 kV bus within the Beecher-Moore Road 138 kV line, 16

addition of a new 138 kV bus for the Morenci Substation, and a new 138 kV line between 17

the two buses. The model data does not contain a 138 kV line from the Morenci 18

Substation to any other point on a network. 19

Q. What is the significance of this information? 20

A. As demonstrated in the MISO models, power flows into the Morenci Project towards the 21

new Morenci Substation. With only load – and no generation or additional 138 kV lines 22

5 This model data is available through MISO’s MOD system; access is made available only to parties who sign non-disclosure agreements with MISO. This data is useable only with a power flow software package. Representatives of Joint Applicants METC and Wolverine have access, in addition to Consumers Energy.


20 te0719-dal

connecting to the Morenci Substation – there can be no power flowing out of the Morenci 1

Project back onto METC’s looped transmission system. 2

Q. What was your Factor No. 3 conclusion for the Morenci Project? 3

A. Based on my analysis of this factor, I concluded that the Morenci Project is more like 4

distribution than transmission because power will only flow into the asset; it will not flow 5

out. 6

FACTOR NO. 4: When Power Enters a Local Distribution System, it is Not 7 Reconsigned or Transported on to Some Other Market 8


A. I evaluated whether the Morenci Project would be used to serve load other than retail 10

customers in Midwest Energy’s service territory. Such service is known as “non-retail” 11

service. 12

Q. How is “market” used in the Factor No. 4 analysis? 13

A. As I explained in MPSC Case No. U-17598, in a Seven Factor Test, “market” refers to a 14

utility’s service territory. It does not refer to the MISO Day-Ahead, Real-Time, or 15

Ancillary Service Markets. 16

Q. Please explain what you determined by evaluating the Morenci Project under this 17

factor. 18

A. The Morenci Project will provide electric service from the MISO market via the existing 19

METC looped transmission system. Once the power leaves the existing METC looped 20

transmission line and enters the radial Morenci Project, it will be delivered only to 21

Midwest Energy, through a new Wolverine distribution substation, for retail sales to 22

electric customers in Midwest Energy’s service territory. Midwest Energy will not be 23

reconsigning or transporting the power to another market as it is not a wholesale supplier. 24


21 te0719-dal

See Exhibit CE-10 (DAL-10). Under the current configuration of the Morenci Project, in 1

fact, it would not be possible to do so. 2

Q. What is your conclusion regarding the Morenci Project under Factor No. 4? 3

A. Given that power would not be transferred to markets other than Midwest Energy’s retail 4

service territory, application of Factor No. 4 demonstrates that the Morenci Project is 5

more like distribution than transmission. 6

FACTOR NO. 5: Power Entering a Local Distribution System is Consumed 7 in a Comparatively Restricted Geographic Area 8

Q. What did you use to determine whether power entering the Morenci Project would 9

be consumed in a “comparatively restricted geographic area?” 10

A. The EPR request states that “[Midwest Energy] is experiencing load growth from both 11

existing and new customer requests in and around the area of Morenci, MI.” See 12

Confidential Exhibit CE-3 (DAL-3). According to the U.S. Census Bureau, the City of 13

Morenci, Michigan, has an area of 2.1 square miles. Therefore, the area surrounding this 14

relatively small city is a comparatively restricted geographical area. The EPR request 15

states that the purpose of the Morenci Project is to serve this new load growth. 16

Q. What was your Factor No. 5 conclusion for the Morenci Project? 17

A. The Morenci Project is more like distribution than transmission, according to this factor, 18

as it is delivering power that will be consumed in a comparatively restricted geographic 19

area. 20

FACTOR NO. 6: Meters are Based at the Transmission/Local Distribution 21 Interface to Measure Flows into the Local Distribution System 22

Q. Please describe the methodology that you used to evaluate Factor No. 6. 23

A. I considered whether and where billing meters would be installed for the Morenci Project. 24


22 te0719-dal

Q. Please explain whether a billing meter will be required for the Morenci Project. 1

A. The design of the Michigan Joint Zone is such that all non-Consumers Energy loads must 2

be metered in order determine load values to ensure accurate billing. Accordingly, a 3

billing quality meter will be required for the new Morenci Project. 4

Q. Where will this meter be located? 5

A. This meter will be located at the Morenci Substation rather than at the tap pole along the 6

existing looped transmission system. See Pre-Filed Direct Testimony of Joint Applicants 7

witness Marshall, page 10, lines 22 through 26. However, the choice of location would 8

only be for convenience. Because the Morenci Project is a radial asset, as previously 9

discussed, the power entering the Midwest Energy distribution system will be the same as 10

that entering the Morenci Project at the line tap pole, plus losses. Any billing meter 11

located between the METC looped transmission system and the Midwest Energy 12

distribution system will measure the flows, compensated for losses, from the transmission 13

system into the Morenci Project, which are identical to flows into the local distribution 14

system. Regardless of the meter location, therefore, the meter will be measuring the flow 15

of power from the transmission system to the distribution system, based on a 16

transmission-distribution interface at the Morenci Project tap along the existing METC 17

transmission system. Put another way, all flows entering the Morenci Project from 18

METC’s existing looped transmission system, minus losses, are flows that will enter 19

Midwest Energy’s local distribution system; as discussed in the context of other factors, 20

power entering the Morenci Project is not intended to go, and could not go, anywhere 21

else. 22


23 te0719-dal


A. A billing meter will be installed to measure flows into the local distribution system from 2

the transmission system, beginning at the location where the Morenci Project will tap the 3

existing METC transmission system. Regardless of meter location along the Morenci 4

Project, the flows that will be metered are flows that enter the Morenci Project and 5

thereby enter a local distribution system. Therefore, the Morenci Project is more like 6

distribution than transmission under this factor. 7

FACTOR NO. 7: Local Distribution Systems Will be of Reduced Voltage 8 Level 9

Q. Please describe the methodology that you used to evaluate the Morenci Project 10

under Factor No. 7. 11

A. I reviewed the operating voltages of METC’s, Midwest Energy’s, and Consumers 12

Energy’s systems, and the classification of those systems at certain voltages, and 13

compared them to the proposed Morenci Project. 14

Q. Please describe Midwest Energy’s system. 15

A. Midwest Energy owns a primary distribution system in the Morenci area, which operates 16

at a nominal voltage of 12.47 kV. This primary distribution system is the portion of the 17

system that provides service to transformers that supply the secondary system, which 18

operates at 600 V and below. 19

Q. Please describe other relevant systems in the area. 20

A. The predominant transmission voltage in the Michigan Joint Zone is 138 kV; however, 21

138 kV is not exclusively a transmission voltage. Consumers Energy has 209 miles of 22

radial 138 kV lines that are classified as distribution rather than transmission. As 23


24 te0719-dal

discussed previously, the vast majority of these radial 138 kV lines serve distribution 1

substations with secondary voltages below 25 kV. 2

Q. How does the Morenci Project compare to these existing facilities? 3

A. The Morenci Project will have a nominal voltage of 138 kV, and it will serve a 4

distribution substation with a secondary voltage of 12.47 kV. 5

Q. What is your conclusion on Factor No. 7 for the Morenci Project? 6

A. Considering the voltage of the line in isolation could allow either a transmission 7

classification or a distribution classification. While it is true that 138 kV is not a reduced 8

voltage when compared to certain other transmission assets in the Michigan Joint Zone, it 9

is also true that distribution voltages in the Michigan Joint Zone are as high as 138 kV. 10

Application of this factor is inconclusive when voltage is considered in isolation, because 11

the Morenci Project could be either Transmission or Distribution based solely on its 12

operating voltage. However, context is important. Because the Morenci Project is a 13

radial line that will serve a new Wolverine distribution substation with secondary voltage 14

of 12.47 kV, the overall scheme and purpose of the project suggests it is akin to 15

Consumers Energy’s 138 kV lines classified as distribution. 16

SUMMARY OF SEVEN FACTOR TEST ANALYSIS 17

Q. What overall conclusion did you reach after performing an independent Seven 18

Factor Test analysis of the Morenci Project? 19

A. A summary of my conclusions for each of the seven factors described above is provided 20

in Table 1. A “D” indicates that the Morenci Project is more like distribution than 21

transmission when analyzed under the corresponding factor. The use of “T/D,” for 22


25 te0719-dal

Factor No. 7, indicates that the Morenci Project could be viewed as distribution or 1

transmission if analyzed under that factor alone. 2

Table 1: Summary of Seven Factor Test Summary

Factor #1 #2 #3 #4 #5 #6 #7

Morenci Project D D D D D D T/D

Table 1 demonstrates that the Morenci Project is more like distribution than transmission 3

under six of the seven factors. No conclusive determination can be made under the 4

seventh factor if the Morenci Project is evaluated on the basis of nominal voltage alone; 5

however, as discussed, other characteristics of the project suggest that it should be 6

classified as distribution under this factor as well. When balancing all of the factors, as 7

intended by FERC, the proposed Morenci Project is a distribution project rather than a 8

transmission project under the Seven Factor Test. 9

MISO SEVEN FACTOR TEST FRAMEWORK 10

Q. Does MISO have a process to apply the Seven Factor Test? 11

A. Yes. MISO has a Business Practices Manual named Transmission Determination Process 12

for Prospective or Existing Unregulated Transmission Owner’s Facilities, BPM-028-r3, 13

dated September 19, 2018 (“BPM-028”), which discusses the FERC Seven Factor Test.6 14

In February 1, 2005 comments submitted to the MPSC in Case No. U-13862, MISO 15

stated that it is “uniquely qualified” to analyze the classification of assets in its footprint 16

under the Seven Factor Test. 17

6 BPM-028 is available on MISO’s website at: https://cdn.misoenergy.org/BPM%20028%20-%20Transmission%20Determination%20Process49605.zip


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Q. What is the purpose of BPM-028? 1

A. MISO states in the introduction to BPM-028, Section 1, that: 2

This BPM applies only to the situation shown in italics 3 above when a Transmission Owner is not subject to 4 regulation by a regulatory authority, such as FERC or a 5 State Commission, and such Transmission Owner applies 6 to MISO for a determination under the FERC Seven Factor 7 Test for Local Distribution. 8

METC and Consumers Energy are subject to regulation by FERC and/or a state 9

commission, so this BPM would not itself provide a mechanism for MISO to classify the 10

Morenci Project. However, it does provide insight into the framework by which MISO, 11

as a regulator, applies the FERC Seven Factor Test. 12

Q. Are there elements of MISO’s application of the Seven Factor Test that are relevant 13

to an evaluation of the Morenci Project? 14

A. Yes. MISO discusses radial lines in BPM-028, Section 3.1, in the context of two of the 15

seven factors. First, for Factor 2, the BPM states: “A radial line that serves a single 16

distribution substation serving a single distribution provider’s load would be considered 17

local distribution.” (Emphasis added.) The BPM further states that to be considered 18

transmission a radial facility would have to “…deliver power to two or more wholesale 19

customers (distribution providers) who are not affiliates of each other.” Second, the 20

description for Factor 4 states: “Local distribution systems serve a single wholesale 21

customer.” Additionally, with regards to meters and Factor 6, the BPM states: “Meters 22

at the transmission to local distribution interface are the meters used by the distribution 23

provider to document loads at a distribution substation.” 24


27 te0719-dal

Q. What conclusions do you draw from your review of MISO BPM-028? 1

A. The Morenci Project, which predominately consists of a radial line to serve a single 2

distribution substation delivering power to a single wholesale customer, and which will 3

contain meters to document loads at the distribution substation, would be classified as 4

distribution under MISO’s framework for evaluating assets under the Seven Factor Test 5

as interpreted by MISO in BPM-028. 6

SEVEN FACTOR TEST CONCLUSION 7

Q. What is your overall conclusion regarding the proper classification of the Morenci 8

Project? 9

A. Because the Morenci Project predominately consists of a single radial 138 kV line that 10

will terminate at a distribution substation with a secondary voltage of 12.47 kV, and is 11

designed to serve the load of a single distribution service provider, it is a distribution 12

project, and not a transmission project, under the MPSC’s established framework for 13

applying the Seven Factor Test, as shown in Case Nos. U-11283 and U-17598, and as 14

approved by FERC. The same conclusion is compelled by my independent Seven Factor 15

Test analysis of the Morenci Project. Furthermore, this conclusion is supported by a 16

review of MISO’s framework for applying the Seven Factor Test, as documented in 17

BPM-028. 18


28 te0719-dal

MISO STAKEHOLDER PROCESS 1

Q. When you first reviewed METC’s EPR request for the Morenci Project and 2

determined that it should be classified as distribution rather than transmission, 3

what action did you take? 4

A. I initiated three actions. First, I began researching and analyzing the facilities in the EPR 5

request against the FERC Seven Factor Test. Second, on October 8, 2018, I caused to be 6

submitted two questions via the MISO OASIS portal to determine if METC intended to 7

incorporate any of the facilities into its Attachment O transmission rates. Third, I 8

requested an evaluation of distribution options that Consumers Energy could provide as 9

non-transmission alternatives to the proposed project. 10

Q. What two questions were submitted to METC via OASIS? 11

A. Please see Exhibit CE-8 (DAL-8). The questions were: 12

1. What part or parts of the Morenci Interconnection expedited project review 13 request (MTEP #15464) are included in METC’s newly posted 2019 14 Attachment O rates? 15

2. What part or parts of the Morenci Interconnection expedited project review 16

request (MTEP #15464) are anticipated to be included in METC’s future 17 Attachment O rates? 18

Q. What response did METC provide? 19

A. METC responded on October 22, 2018, and stated that there would be no costs in 2019 20

Attachment O rates, but that “[t]he amount anticipated to be included in METC’s future 21

rates is the MTEP estimate of $20,703,000.” 22

Q. What is the significance of this information? 23

A. In order to include an amount in Attachment O rates, the facilities must be classified as 24

transmission; therefore, METC’s answer established that it viewed this as a transmission 25


29 te0719-dal

facility that would be included in its future transmission rates. METC has confirmed this 1

view in subsequent correspondence dated February 22, 2019. See Exhibit CE-4 2

(DAL-4). METC’s answers also confirmed that construction of the Morenci Project 3

would impact Consumers Energy and its customers, who pay a significant portion of 4

METC’s Attachment O rates. 5

Q. What did you determine from your analysis of the Morenci Project relative to the 6

FERC Seven Factor Test? 7

A. I completed my initial Seven Factor Test analysis on October 11, 2018. My analysis of 8

each factor determined that under the first six of the seven factors, the Morenci Project 9

should be classified as distribution. The seventh factor, regarding voltage, was 10

inconclusive if only line voltage was considered. Consistent with my prior testimony, 11

above, the preponderance of the FERC Seven Factor Test therefore indicated that the 12

proposed Morenci Project should not be classified as transmission but instead should be 13

classified as distribution. 14

Q. What did you do with this initial Seven Factor Test analysis? 15

A. I developed an initial whitepaper, attached as Exhibit CE-11 (DAL-11),7 which I 16

provided to MISO and other stakeholders. I then utilized this analysis to comment at 17

subsequent MISO meetings between October and December of 2018 where the Morenci 18

Project was on the agenda, and to inform other stakeholders. 19

7 Exhibit CE-11 (DAL-11) is a redacted version of my original whitepaper, which included a technical drawing designated by METC as CEII. The same drawing is included in METC’s EPR request, which I am sponsoring as Confidential Exhibit CE-3 (DAL-3).


30 te0719-dal

Q. Did you provide the stakeholder group with information about any distribution 1

alternatives? 2

A. Yes. On October 17, 2018, I emailed MISO and stakeholders describing two alternative 3

distribution projects that Consumers Energy could construct. See Exhibit CE-2 (DAL-2). 4

Stakeholders receiving the email included the MPSC, METC, Wolverine, and DTE 5

Electric Company (“DTE”). I provided two non-transmission alternatives that, like the 6

Morenci Project, would have the capability of serving Midwest Energy’s stated 10 MW 7

load growth on the same timeline as the Morenci Project; however, these alternatives 8

would cost between $6.5 and $8 million, much less than METC’s proposal. Further, I 9

restated my position that the proposed Morenci Project should be classified as 10

distribution and not transmission, based on my Seven Factor Test analysis. 11

Q. Did you receive any responses to your October 17, 2018 email? 12

A. Yes, I received three responses. First, I received a brief response from MISO stating that 13

MISO received my email and that MISO was studying the request. Second, I received a 14

brief response from the MPSC thanking me for the update. Third, on October 19, 2018, I 15

received a response from Wolverine requesting additional information about the two 16

distribution alternatives. See Exhibit CE-2 (DAL-2). 17

Q. Did you reply to Wolverine’s email? 18

A. Yes. I responded on October 25, 2018, responding to each of the questions Wolverine 19

had regarding Consumers Energy’s distribution alternatives. The responses clarified the 20

technical details of the alternatives. I also included a diagram of each alternative. 21


31 te0719-dal

Q. Were other stakeholders included on your October 25, 2018 emails? 1

A. Yes. In addition to Wolverine, I copied representatives of MISO, MPSC, DTE, and 2

Midwest Energy. 3

Q. Did you receive any responses to the October 25, 2018 emails? 4

A. No, I never received a response. 5

Q. Did you attend the MISO Board meeting? 6

A. I attended the MISO Board meeting on December 6, 2018, via conference call. 7

Q. Did the MISO Board approve the Morenci Project? 8

A. Yes. The MISO Board voted to approve the full MTEP18 report, including the Morenci 9

Project. It was acknowledged that there was a significant dispute regarding the 10

classification of the Morenci Project. However, MISO stated on several occasions that it 11

was not approving any particular classification of the Morenci Project under the Seven 12

Factor Test, and that the project’s classification should be determined by a different 13

regulator. See, for example, Exhibit CE-12 (DAL-12) and MISO’s May 3, 2019 answer 14

to Consumers Energy’s complaint in FERC Docket No. EL19-59. 15

IMPACTS TO CONSUMERS ENERGY 16

Q. Given that the MISO Board has approved the Morenci Project as part of the 17

MTEP18 report, how will the costs be recovered? 18

A. Approval of the MISO Board means that METC is authorized, and in fact required, to 19

construct the Morenci Project; therefore, METC will seek to recover the capital cost to 20

construct this project in its Attachment O transmission rates. This fact was confirmed by 21

METC’s response to Consumers Energy’s informal Attachment O inquiry regarding the 22

Morenci Project. As stated previously, METC’s October 22, 2018 response stated that 23


32 te0719-dal

“The amount anticipated to be included in METC’s future rates is the MTEP estimate of 1

$20,703,000.” See Exhibit CE-8 (DAL-8). METC’s costs will thus be allocated 2

according to the Michigan Joint Zone Revenue Allocation Agreement between METC, 3

Consumers Energy, Wolverine, and Michigan Public Power Agency.8 4

Q. How are costs included in the Michigan Joint Zone allocated? 5

A. Attachment O transmission rates for entities within the Michigan Joint Zone are allocated 6

to the users of the pricing zone according to the Michigan Joint Zone Settlement 7

Agreement, attached as Exhibit CE-13 (DAL-13), and the Michigan Joint Zone Revenue 8

Allocation Agreement. Consumers Energy is the largest user of the Michigan Joint Zone. 9

In 2018, Consumers Energy’s retail customers paid approximately 80% of all Attachment 10

O transmission rates allocated to the Michigan Joint Zone. Consumers Energy’s retail 11

open access customers pay approximately 10%, Wolverine pays approximately 6%, and 12

other users pay the remaining approximately 4% of all Attachment O transmission rates 13

allocated to the Michigan Joint Zone. See Exhibit CE-14 (DAL-14). 14

Q. Does the Morenci Project provide benefits to Consumers Energy customers? 15

A. No. The Morenci Project is being constructed solely to meet the load of Midwest 16

Energy. Consumers Energy retail customers will derive no benefit from the Morenci 17

Project despite the likelihood of paying approximately 80% of the projected $20,703,000 18

cost. 19

8 The Joint Zone Revenue Allocation Agreement is incorporated into the MISO tariff and available on MISO’s website at: https://cdn.misoenergy.org/Rate%20Schedule%2011%20-%20MI%20Joint%20Zone%20Revenue%20Allocation%20Agreement47078.pdf


33 te0719-dal

Q. What facilities can be included in the Attachment O transmission rates of Michigan 1

Joint Zone members and allocated according to the Michigan Joint Zone Revenue 2

Allocation Agreement? 3

A. The Michigan Joint Zone Settlement Agreement specifies this for each member. With 4

respect to METC, Section 4.1 states that “The Transmission Facilities of METC shall 5

consist of all of METC’s FERC-jurisdictional assets as of the Effective Date and any 6

FERC-jurisdictional transmission facilities constructed or acquired thereafter by METC.” 7

Therefore METC can only allocate the costs of its assets to other Michigan Joint Zone 8

members if those assets are FERC-jurisdictional – i.e., if they are classified as 9

transmission – under the Seven Factor Test. Likewise, Section 4.2 says the “[t]he 10

Transmission Facilities of Wolverine shall consist of those facilities deemed to be 11

transmission facilities by the [MPSC] . . . and any FERC-jurisdictional transmission 12

facilities constructed or acquired by Wolverine thereafter that meet the Seven Factor 13

Test.” While not necessarily in and of itself an approval of any particular accounting or 14

rate recovery mechanism, classification of the Morenci Project as transmission is 15

effectively a green light for METC to include the project in its Attachment O rates and 16

allocate the project costs to other Michigan Joint Zone members. Indeed, METC has 17

already said that it plans to include the full project costs in its Attachment O rates. If the 18

Morenci Project was instead classified as distribution under the Seven Factor Test, as it 19

should be, the project costs would not be allocated to other Michigan Joint Zone 20

members. 21


34 te0719-dal

Q. Can METC construct and operate local distribution facilities? 1

A. No. METC is not authorized by the MPSC to own and operate local distribution 2

facilities. Because the Morenci Project is a local distribution project under the Seven 3

Factor Test, it must be constructed and owned, if at all, by an entity other than METC. 4

Midwest Energy, Wolverine, and Consumers are all authorized to construct such local 5

distribution projects. 6

Q. If the Morenci Project or a similar local distribution project was constructed by an 7

entity authorized to do so, how would the project costs be allocated? 8

A. If Wolverine constructed the project, costs would presumably either be passed along to 9

Midwest Energy or allocated among Wolverine’s members, or some combination of the 10

two. If Midwest Energy constructed the project, it would bear responsibility for the 11

costs. If Consumers Energy constructed the project, costs would be passed along to 12

Midwest Energy and/or Wolverine, unless some or all of the project also benefited 13

Consumers Energy’s customers. In any case, Consumers Energy customers would only 14

pay for some or all of the project costs if the Company were to construct the project and 15

some or all of the project benefited its customers. That is in contrast to METC’s 16

construction of a transmission project approved by MISO in the MTEP process, the costs 17

of which are required to be carried in large part by Consumers Energy customers whether 18

they benefit from the project or not. 19

Q. Does METC now have an obligation to complete the Morenci Project? 20

A. Yes. Attachment FF of the MISO Tariff, Section V, states that “…for each project 21

included in the recommended MTEP Appendix A and prior to approval by the 22

Transmission Provider Board, the plan shall designate one or more Transmission Owners 23


35 te0719-dal

to construct, own, operate, maintain, repair, restore, and finance the recommended 1

project….” In MTEP18, Appendix A, MISO identified METC as the sole Transmission 2

Owner for the Morenci Project, Project #15464. Further, Section 2.6.2 of BPM-020 3

states: “Finally, Transmission Owner(s) are responsible for the good faith implementation 4

including land acquisition, regulatory permitting and construction of Transmission 5

Provider Board-certified expansion projects.” This obligation is confirmed by Joint 6

Applicants witness Marshall on page 4, lines 28 through 29 of his pre-filed direct 7

testimony. 8

Q. Is this obligation of METC to complete the Morenci Project absolute? 9

A. No. In its May 3, 2019 answer to Consumers Energy’s complaint in FERC Docket No. 10

EL19-59, MISO expressed its position that it would be consistent with Order No. 888 and 11

the Seven Factor Test framework for the MPSC to determine the classification of the 12

Morenci Project; that FERC should follow Order No. 888 in this regard; and that MISO 13

would implement FERC’s decision. Specifically, MISO stated that if the MPSC 14

determines the Morenci Project is a distribution facility, “then MISO will make necessary 15

revisions based on” that determination. Therefore, if the MPSC determines that the 16

Morenci Project should be classified as distribution and FERC defers to that 17

determination, as it typically does, MISO would be required to withdraw the project from 18

MTEP18 because MISO cannot explicitly approve the construction of distribution 19

facilities as part of the MTEP process. In accordance with this MISO action, METC 20

would no longer be authorized (or obligated) to construct the project and a distribution 21

alternative would have to be constructed by one or more of several entities qualified to do 22

so, including Midwest Energy or Wolverine. 23


36 te0719-dal

DISTRIBUTION ALTERNATIVES 1

Q. The Morenci Project EPR request identified a load to be served of 10 MW. Are 2

transmission facilities required to serve 10 MW of load? 3

A. No. Distribution facilities, supplied from the transmission system, routinely serve loads 4

of 10 MW or more. 5

Q. Can a load serving entity still receive transmission and wholesale service if it is 6

connected to a distribution facility? 7

A. Yes. Wholesale distribution service is available to provide wholesale service across 8

distribution facilities, thereby bringing transmission service to distribution facilities even 9

where they are not directly connected. 10

Q. Does Midwest Energy receive transmission and wholesale service today? 11

A. Yes. Midwest Energy has access to wholesale distribution service via Wolverine, who in 12

turn utilizes the Consumers Energy 46 kV distribution system to provide this service to 13

Midwest Energy and bring transmission service to Midwest Energy’s distribution system 14

from METC’s existing, looped transmission system. As noted previously, Consumers 15

Energy has a wholesale distribution service agreement with Wolverine on file with MISO 16

pursuant to Schedule 11 of the MISO Tariff. That agreement is utilized to provide 17

Midwest Energy with access to transmission, and to wholesale service, over Consumers 18

Energy’s distribution facilities. 19

Q. Is wholesale distribution service subject to FERC jurisdiction? 20

A. Yes; however, it is not part of FERC Order 888. Again, the nature of transactions made 21

across a facility – i.e., wholesale or retail – is not relevant to the classification of a project 22

as distribution or transmission under the Seven Factor Test. Consumers Energy currently 23


37 te0719-dal

provides wholesale distribution service to Midwest Energy across the Company’s 1

distribution facilities, and this wholesale distribution service provides Midwest Energy 2

with access to the METC transmission system. While METC or Wolverine would be free 3

to provide transmission service to Midwest Energy across a properly-classified 4

transmission facility, it is not appropriate to classify a distribution facility as transmission 5

merely because it connects a load serving entity to existing transmission facilities or 6

because it will be used for wholesale sales. 7

Q. Prior to METC’s proposal to construct the Morenci Project, did you receive any 8

inquiry regarding whether its existing distribution system could meet Midwest 9

Energy’s projected load growth? 10

A. Yes. In March 20192018, Wolverine requested that Consumers evaluate the capacity of 11

the Company’s existing 46 kV distribution system in the vicinity of the Seneca substation 12

near Morenci. Please see Exhibits CE-16 (DAL-16) and CE-17 (DAL-17) to my direct 13

testimony. My staff informed Wolverine that the existing 46 kV system could 14

accommodate up to 4 MW of additional load, and that Consumers Energy could perform 15

additional investigation of the issue if desired. Wolverine did not request additional 16

investigation. It should be noted that Midwest Energy never contacted Consumers 17

Energy about this issue – our communication was solely with Wolverine. 18

Q. Is the Morenci Project designed to provide wholesale distribution service? 19

A. No. METC and Midwest Energy both characterize the Morenci Project as a transmission 20

asset designed to be used for providing transmission service directly to the new 21

Wolverine distribution substation. See Exhibits CE-4 (DAL-4) and CE-15 (DAL-15). 22


38 te0719-dal

Note again, also, that METC is not authorized to own and operate distribution facilities, 1

and it does not have a wholesale distribution service agreement on file with MISO. 2

Q. You stated that you provided distribution alternatives to MISO and MISO 3

stakeholders, please describe these alternatives in detail. 4

A. Consumers Energy analyzed the addition of 10 MW at a new Wolverine distribution 5

substation to serve Midwest Energy along with its expected load additions. Two 6

alternatives to the proposed Morenci Project were identified to serve this load. 7

The first alternative (“Alternative One”) would construct a new 46 kV distribution 8

line from the existing Consumers Energy Morenci Substation to Wolverine’s new 9

Morenci Substation. Upgrades to Consumers Energy’s existing 46 kV distribution 10

system would include adding a 46 kV line exit at an existing 138/46 kV bulk power 11

substation and building a new 46 kV distribution line from that bulk power substation to 12

a point just south of the existing distribution substation north of Morenci, Michigan, 13

which presently serves Midwest Energy. Acquisition of new land rights would be 14

required. The estimated cost of this alternative is $6.5 million. 15

The second alternative (“Alternative Two”) would construct a dedicated 138 kV 16

distribution line from a new tap on the Beecher-Moore Road 138 kV Line to Wolverine’s 17

new Morenci Substation. The 138 kV tap pole and switches in the existing 138 kV line 18

would be provided by METC. Acquisition of new land rights would also be required for 19

this alternative. This alternative is very similar to the Morenci Project. The estimated 20

cost of this alternative is $8.0 million. 21

Both Alternative One and Alternative Two have an estimated construction time of 22

24 months, which is equal to the lead time stated by METC for the Morenci Project. 23


39 te0719-dal

CONCLUSION 1

Q. Do you agree with Joint Applicants’ conclusion that the Morenci Project should be 2

classified as Transmission? 3

A. No. My direct testimony demonstrates that the Morenci Project should be classified as 4

distribution, consistent with Seven Factor Test framework established and applied by the 5

MPSC in Case Nos. U-11283 and U-17598, and subsequently approved by FERC. 6

Q. Are there alternatives to serve the Midwest Energy load growth if the Morenci 7

Project cannot be classified as transmission? 8

A. Yes. METC need not be the exclusive provider of facilities to serve Midwest Energy’s 9

load growth in the Morenci Area. Consumers Energy need not be the exclusive provider, 10

either. While Consumers Energy could construct additional distribution facilities to serve 11

Midwest Energy’s load growth, so too could Wolverine or Midwest Energy. As 12

described in my testimony, there are multiple distribution alternatives that could be used 13

to serve Midwest Energy that do not preclude Midwest Energy’s access to transmission 14

service, by utilizing wholesale distribution service tariffs. And, again, METC or 15

Wolverine could construct a properly-classified transmission asset to serve Midwest 16

Energy. What they cannot do is construct a distribution project and improperly classify 17

that facility as transmission in a manner that is at odds with FERC’s Seven Factor Test 18

and this Commission’s prior application of that test to assets in the Michigan Joint Zone. 19

Q. Does this complete your direct testimony? 20

A. Yes. 21

ps0719-1-235

S T A T E O F M I C H I G A N

BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION

In the matter of the Application of ) MICHIGAN ELECTRIC TRANSMISSION COMPANY, ) LLC, WOLVERINE POWER SUPPLY COOPERATIVE, ) INC and MIDWEST ENERGY & COMMUNICATION ) for an administrative determination regarding the proper ) Case No. U-20497 classification of certain facilities and to submit ) findings to the Federal Energy Regulatory Commission. ) )

PROOF OF SERVICE STATE OF MICHIGAN ) ) SS COUNTY OF JACKSON ) Crystal L. Chacon, being first duly sworn, deposes and says that she is employed in the Legal Department of Consumers Energy Company; that on July 22, 2019, she served an electronic copy of Consumers Energy Company’s Corrected Direct Testimony of Company witness Donald A. Lynd upon the persons listed in Attachment 1 hereto, at the e-mail addresses listed therein. She further states that she also served a hard copy of the same document to the Hon. Dennis W. Mack, Administrative Law Judge, at the address listed in Attachment 1 by depositing the same in the United States mail in the City of Jackson, Michigan, with first-class postage thereon fully paid. __________________________________________ Crystal L. Chacon Subscribed and sworn to before me this 22nd day of July, 2019. _________________________________________ Jennifer Joy Yocum, Notary Public State of Michigan, County of Jackson My Commission Expires: 12/17/24 Acting in the County of Jackson

ATTACHMENT 1 TO CASE NO. U-20497

sl0519-1-235 Page 1 of 1

Administrative Law Judge Hon. Dennis W. Mack Administrative Law Judge 7109 West Saginaw Highway Post Office Box 30221 Lansing, MI 48909 [email protected] Counsel for the Michigan Public Service Commission Staff Amit T. Singh, Esq. Benjamin J. Holwerda, Esq. Assistant Attorneys General Public Service Division 7109 West Saginaw Highway Post Office Box 30221 Lansing, MI 48909 [email protected] [email protected] Counsel for Michigan Transmission Company LLC, Wolverine Power Supply Cooperative, Inc., and Midwest Energy and Communications Richard J. Aaron, Esq. Courtney F. Kissel, Esq. Dykema Gossett PLLC Capitol View 201 Townsend Street, Suite 900 Lansing, MI 48933 [email protected] [email protected] Counsel for DTE Electric Company Jon P. Christinidis, Esq. One Energy Plaza, 1635 WCB Detroit, MI 48226-1279 [email protected]

Documents

Jackson, MI 49201 Fax: (517) 768-3644 Tel: (202) 778-3340