re: mpsc case no. u18392 – in the matter of the

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:

, 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

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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.

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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

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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

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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


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


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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

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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]

[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]

[email protected] [email protected]

re: mpsc case no. u18392 – in the matter of the

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