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fl0917-1-229
A CMS Energy Company September 8, 2017 Ms. Kavita Kale Executive Secretary Michigan Public Service Commission 7109 West Saginaw Highway Post Office Box 30221 Lansing, MI 48909 RE: MPSC Case No. U-18392 – In the matter of the application of CONSUMERS
ENERGY COMPANY for Approval of Amendment 2 of the Power Purchase Agreement with T.E.S. Filer City Station Limited Partnership.
Dear Ms. Kale: Included for electronic filing in the above-captioned case, please find the Motion of Consumers Energy Company to Strike Portions of the Rebuttal Testimony of Independent Power Producers Coalition of Michigan Witness Thomas V. Vine. This is a paperless filing and is therefore being filed only in a PDF format. I have enclosed a Proof of Service showing electronic service upon the parties. Sincerely, Anne M. Uitvlugt cc: Hon. Martin D. Snider, Administrative Law Judge Parties to Attachment 1 to Proof of Service.
General Offices: LEGAL DEPARTMENT One Energy Plaza Tel: (517) 788-0550 CATHERINE M REYNOLDS
Senior Vice President and General Counsel
Ashley L Bancroft Robert W Beach Don A D’Amato Robert A. Farr Gary A Gensch, Jr. Gary L Kelterborn Chantez P Knowles Mary Jo Lawrie Jason M Milstone Rhonda M Morris Deborah A Moss* Mirče Michael Nestor James D W Roush Scott J Sinkwitts Adam C Smith Theresa A G Staley Janae M Thayer Bret A Totoraitis 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
SHAUN M JOHNSON Vice President and Deputy General Counsel
H Richard Chambers Kelly M Hall Eric V Luoma Assistant General Counsel
Washington, DC 20036 Fax: (202) 778-3355 Writer’s Direct Dial Number: (517) 788-2112 Writer’s E-mail Address: [email protected]
mo0917-1-229 1
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 ) CONSUMERS ENERGY COMPANY ) for Approval of Amendment 2 of the Power ) Case No. U-18392 Purchase Agreement with T.E.S. Filer City ) Station Limited Partnership ) )
MOTION OF CONSUMERS ENERGY COMPANY TO STRIKE PORTIONS OF THE REBUTTAL TESTIMONY
OF INDEPENDENT POWER PRODUCERS COALITION OF MICHIGAN WITNESS THOMAS V. VINE
Pursuant to Rule 432 of the Michigan Public Service Commission’s (“MPSC” or the
“Commission”) Rules of Practice and Procedure, Mich Admin Code R 792.10432, Consumers
Energy Company (“Consumers Energy” or the “Company”) respectfully submits this Motion to
Strike portions of the rebuttal testimony filed by the Independent Power Producers Coalition of
Michigan (“IPPC”) on September 1, 2017.
Specifically, the Company requests the following portions of the pre-filed rebuttal
testimony of Thomas V. Vine be stricken:
Page 2, line 3 through page 3, line 6:
The Administrative Law Judge (“ALJ”) should strike Mr. Vine’s above-referenced
portion of rebuttal testimony because the discussion contained therein is not relevant, is outside
the scope of this proceeding, and raises issues that the Commission has previously considered.
Evidence presented by a witness must be relevant to the proceeding. Relevant evidence
is “evidence having any tendency to make the existence of any fact that is of consequence to the
determination of the action more probable or less probable than it would be without the
evidence.” MRE 401. Evidence which is not relevant is inadmissible. MRE 402. The
mo0917-1-229 2
above-identified portion of Mr. Vine’s rebuttal testimony does not make the existence of any fact
that is of consequence to the determination of this proceeding more probable or less probable
than it would be without the evidence. Here, Mr. Vine’s rebuttal testimony provides
commentary on actions that he believes should be taken by the Commission in an unrelated
proceeding. This discussion is not relevant to this proceeding.
More importantly, the above-identified portion of Mr. Vine’s rebuttal testimony is
outside the scope of this proceeding. This proceeding is not about the Company’s current
avoided costs or any obligations that the Company has to Qualified Facilities (“QFs”) now or in
the future. This proceeding does not involve QFs who are requesting new contracts. In fact, the
outcome of this proceeding will not have an impact on such issues. In this proceeding, the
Company is requesting Commission approval of the T.E.S Filer City Station Limited Partnership
(“Filer City”) Power Purchase Agreement (“PPA”), as amended by Amendment No. 2. This
amendment was the result of a negotiation between the parties, which will reduce costs that
customers would have incurred under the original contract terms.
There is no basis to suggest that the rates or terms of the Filer City PPA will affect any
other QF. 18 CFR 292.301 of the Federal Energy Regulatory Commission’s regulations
implementing the Public Utilities Regulatory Policy Act of 1978 specifically allows an electric
utility and QF to agree to a rate for any purchase, or terms and conditions relating to any
purchase, which differ from the utility’s avoided costs. That is precisely what is occurring in this
proceeding. The Company and Filer City have negotiated, and mutually agreed to, Amendment
No. 2 of their PPA, which alters the original rates and terms. Those amended rates and terms
have no impact on any PPA other than the Filer City PPA.
mo0917-1-229 3
Like many of the members of IPPC, the Filer City PPA was originally based on the
Company’s avoided costs at the time the PPA was executed. This PPA would not terminate until
June 16, 2025. Under Amendment No. 2, the Filer City Plant will reduce the price charged for
energy and capacity sold under the original terms of the PPA, and after its conversion, the Filer
City Plant will sell its additional electric capacity and energy to the Company, at a lower rate
than the rate specified under the original terms of the PPA. These rates and terms, as provided
for in Amendment No. 2, are entirely dependent on the circumstances surrounding the original
terms of the Filer City PPA (i.e., original rate and contract expiration) and the benefits that can
be provided to customers by amending those original terms. There is no correlation between the
rates and terms of the Filer City PPA, as amended by Amendment No. 2, and the Company’s
current avoided costs or obligations to other QFs. Likewise, there is no basis for IPPC to claim
that its members are entitled to receive the terms and rates provided for in the Filer City PPA, as
amended by Amendment No. 2, or that such rates and terms discriminate against its members.
Since the Filer City PPA was originally based on the Company’s avoided costs at the time the
PPA was executed, the terms and rates of the Filer City PPA, as amended by Amendment No. 2,
are relative to those prior avoided costs and not the Company’s current avoided costs. The
Company is under no obligation to offer such rates and terms to any QF that requests a new
contract. It is the Company’s avoided costs, as determined in MPSC Case No. U-18090, that
should be used to determine the payments for any new QF purchase obligations going forward
(i.e., expired QF contracts with renewed offers to sell and new QF offers to sell without prior
contracts), not the rates and terms of the Filer City PPA at issue in this case.
IPPC witness Vine’s proposed rebuttal testimony is attempting to broaden the limited
nature of this proceeding. In fact, the proposed testimony appears to be used as an additional
mo0917-1-229 4
avenue to litigate the Company’s avoided costs. This action is entirely inappropriate as the
Commission is presently reviewing the Company’s avoided costs in MPSC Case No. U-18090.
Any discussion about the Company’s avoided costs – including the appropriate avoided cost
methodology to be adopted and the proper inputs to be inserted into that methodology should be
addressed in that proceeding.
Moreover, the relief requested in IPPC witness Vine’s proposed rebuttal testimony has
previously been addressed by the Commission. In MPSC Case No. U-18090, the Commission is
currently undertaking a lengthy process reviewing the Company’s avoided costs and, in that
proceeding, the Commission has established its avoided cost methodology. In the MPSC Case
No. U-18090 May 31, 2017 Order, on page 17, the Commission adopted the MPSC Staff’s
hybrid proxy unit methodology for the determination of the Company’s avoided costs. Under
this methodology, a natural gas combustion turbine unit is the proxy for determining capacity
costs, and a natural gas combined cycle unit is the proxy for determining avoided energy costs.
IPPC’s proposed testimony in this case challenges the Commission’s recent decision approving
the hybrid proxy unit methodology. See pre-filed rebuttal testimony of Thomas V. Vine, page 2
(“the Filer Plant is a better proxy for costs of IPPC-member plants than the hypothetical hybrid
gas plant used in U-18090”). In MPSC Case No. U-18090, IPPC has had every opportunity to
advocate for what it believes to be the appropriate methodology to determine the Company’s
avoided costs. These arguments should not extend to this proceeding as these issues are outside
the scope of this proceeding and are already being considered by the Commission.
Further, in MPSC Case No. U-18090, IPPC has previously raised arguments regarding
the use of specific terms from Amendment No. 2 to the Filer City PPA to determine Consumers
Energy’s avoided costs. While the Company disputes that Amendment No. 2 to the Filer City
mo0917-1-229 5
PPA is relevant to an avoided cost determination, that was the proceeding where this argument
should be raised. Moreover, the Commission has previously addressed assertions regarding the
appropriateness of using the proposed Amendment No. 2 to the Filer City PPA as cost inputs in
determining avoided costs. See MPSC Case No. U-18090, July 31, 2017 Opinion and Order,
page 27. It is inappropriate to permit these arguments again in an unrelated case.
WHEREFORE, for the reasons stated above, the Administrative Law Judge should strike
the identified portions of the rebuttal testimony of Independent Power Producers Coalition of
Michigan witness Thomas V. Vine. Consumers Energy Company’s requested relief is further
illustrated in Attachment A to this Motion to Strike.
Consumers Energy reserves its right to make further objections at the evidentiary hearing
in this matter concerning this or any other testimony or exhibits to the extent permitted by law,
Commission order, or regulation.
Respectfully submitted,
CONSUMERS ENERGY COMPANY Date: September 8, 2017 By:
Anne M. Uitvlugt (P71641) Robert W. Beach (P73112) Attorneys for Consumers Energy Company One Energy Plaza Jackson, Michigan 49201 (517) 788-2112
Attachment A
STATE OF MICHIGAN
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION *****
In the matter of the application of ) Case No. U-18392 CONSUMERS ENERGY COMPANY ) for Approval of Amendment 2 of the Power )Purchase Agreement with T.E.S. Filer City ) Station Limited Partnership ) _____________________________________ )
REBUTTAL TESTIMONY OF
THOMAS V. VINE ON BEHALF OF
THE INDEPENDENT POWER PRODUCERS COALITION OF MICHIGAN
Attachment APage 1 of 4
THOMAS V. VINE REBUTTAL TESTIMONY
1
Q. Please state your name and your business address. 1
A. My name is Thomas V. Vine and my business address is 6751 W. Gerwoude Drive, 2
McBain, Michigan. 3
4
Q. Did you file Direct Testimony in this proceeding? 5
A. No, I did not. 6
7
Q. On whose behalf are you submitting your Rebuttal Testimony in this proceeding? 8
A. My testimony is on behalf of the Independent Power Producers Coalition of Michigan 9
("IPPC"). 10
11
Q. What is the purpose of your Rebuttal Testimony? 12
A. The purpose of my testimony is to rebut portions of the Direct Testimony of Commission 13
Staff ("Staff") witness Julie K. Baldwin. 14
15
Q. Are you sponsoring any exhibits? 16
A. No. 17
18
Q. Have your reviewed the Direct Testimony of Julie Baldwin and her conclusion that 19
the Commission's approval of Consumers Energy Company's ("Consumers") 20
proposed Amendment 2 for the T.E.S. Filer City Station Plant ("Filer Plant") would 21
be discriminatory with respect to other Qualified Facilities ("QF") in the state? 22
Attachment A Page 2 of 4
THOMAS V. VINE REBUTTAL TESTIMONY
2
A. Yes I have. I agree with her conclusion that Commission approval of what Consumers 1
has asked for is discriminatory. IPPC has made that very point in the docket she 2
references, U-18090. However, IPPC disagrees with the remedy that Ms. Baldwin 3
proposes.4
5
Q. What is the remedy that Ms. Baldwin proposes? 6
A. Ms. Baldwin proposes that the Commission should deny the application that Consumers 7
has filed for its affiliate’s Filer Plant because of the discriminatory impact granting it 8
would have if the Commission approved for other existing QFs the avoided cost rate that 9
was filed by either Consumers or Staff in U-18090. However, IPPC believes that there is 10
another logical solution other than denial, which is for the Commission to grant the same 11
rate given to the Filer Plant to existing QFs that, like the Filer Plant, are established 12
generators in the state. 13
14
Q. Please explain why the payments to the Filer Plant under the proposed PPA 15
amendment would be reasonable as payment to other QFs. 16
A. Like the Filer Plant, the QF plants of IPPC members are existing generating plants with a 17
long history of reliable operations. For this reason, the Filer Plant is a better proxy for 18
costs of IPPC-member plants than the hypothetical hybrid gas plant used in U-18090. 19
Furthermore, since Consumers has proposed to add capacity to the Filer Plant, the costs 20
captured in the proposed PPA amendment in this proceeding are also now the next build 21
for Consumers to add capacity. Thus, if Consumers believes that the proposed payments 22
are reasonable for such a plant, then these payments provide a “real world” example of 23
Attachment APage 3 of 4
THOMAS V. VINE REBUTTAL TESTIMONY
3
what the utility’s avoided costs are (in this instance, the cost of obtaining similar power 1
under a PPA), as opposed to the hypothetical proxy being used in U-18090. In short, 2
IPPC believes that the Filer Plant represents a real world proposed project with costs that 3
the utility will be held accountable to, and so provides a better proxy for the IPPC plants 4
than does a hypothetical utility-owned gas plant, as is being proposed in the avoided cost 5
docket.6
7
Q. Does this conclude your testimony? 8
A. Yes it does. 9
10
11
12164423_4.docx 12
Attachment APage 4 of 4
ps0917-1-241
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 ) CONSUMERS ENERGY COMPANY ) for Approval of Amendment 2 of the Power ) Case No. U-18392 Purchase Agreement with T.E.S. Filer City ) Station Limited Partnership ) )
PROOF OF SERVICE
STATE OF MICHIGAN ) ) SS COUNTY OF JACKSON ) Melissa K. Harris, being first duly sworn, deposes and says that she is employed in the Legal Department of Consumers Energy Company; that on September 8, 2017, she served an electronic copy of Motion of Consumers Energy Company to Strike Portions of the Rebuttal Testimony of Independent Power Producers Coalition of Michigan Witness Thomas V. Vine 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. Martin D. Snider 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. __________________________________________ Melissa K. Harris Subscribed and sworn to before me this 8th day of September, 2017. _________________________________________ Tara L. Hilliard, Notary Public State of Michigan, County of Jackson My Commission Expires: 09/12/20 Acting in the County of Jackson
ATTACHMENT 1 TO CASE NO. U-18392
Page 1 of 1 sl0617-1-241
Administrative Law Judge
Hon. Martin D. Snider Administrative Law Judge 7109 West Saginaw Highway Post Office Box 30221 Lansing, MI 48909 E-Mail: [email protected]
Counsel for the Michigan Public Service Commission Staff
Meredith R. Beidler, Esq. Monica M. Stephens, Esq. Assistant Attorneys General 7109 West Saginaw Highway Post Office Box 30221 Lansing, MI 48909 E-Mail: [email protected]
Counsel for the Residential Customer Group
Don L. Keskey, Esq. Brian W. Coyer, Esq. Public Law Resource Center PLLC 333 Albert Avenue, Suite 425 East Lansing, MI 48823 E-Mail: [email protected] bwcoyer@ publiclawresourcecenter.com
Counsel for Independent Power Producers Coalition of Michigan
Timothy J. Lundgren, Esq. Laura A. Chappelle, Esq. Toni L. Newell, Esq. Varnum LLP 201 North Washington Square, Suite 910 Lansing, MI 48933 E-Mail: [email protected]
[email protected] [email protected]
Counsel for Attorney General, Bill Schuette
Michael E. Moody, Esq. Joel King, Esq. Assistant Attorney General Michigan Dept. of Attorney General, Special Litigation Unit 6th Floor Williams Building Post Office Box 30755 Lansing, MI 48909 E-Mail: [email protected]