STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION REPLY BRIEF OF THE RESIDENTIAL CUSTOMER GROUP

Transcription

1 STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the matter on the Commission s own motion, to consider changes in the rates of all the Michigan rate-regulated electric, steam, and natural gas utilities to reflect the effects of the federal Tax Cuts and Jobs Act of 2017: DTE GAS COMPANY files an application for determination of Credit B as described in order U / Case No. U REPLY BRIEF OF THE RESIDENTIAL CUSTOMER GROUP The Residential Customer Group (RCG) files this reply brief in accordance with the schedule set by the Administrative Law Judge (ALJ). RCG asserts that the Credit B proposal by DTE Gas, as substantially agreed to by the Staff, is unnecessarily complex, unwieldy, and drawn out timewise, contrary to the MPSC s Orders in U-18494, which clearly intended to provide for a very prompt and simple Credit B refund. RCG proposes a fair, balanced, and prompt and administratively simple Credit B refund proposal, as follows: (1) Refund to existing residential customers (each existing residential customer) the Credit B refund on or by November 1, 2018 based upon the actual consumption that each said residential customer consumed during the period January 1, 2018 through June 30, 2018; 1 1 DTE s computerized data and billing systems should readily be capable of applying the appropriate credit to actual consumption during this 2018 six month period, and particularly because DTE Gas was required to adopt regulatory accounting and to commence booking the refund credit liability as of the Commission s December 27, 2017 Order in U-18494, and also 1

2 (2) That DTE Gas aggregate all amounts within the residential class of customers that are not refunded under step (1) above by aggregating all said amounts, and then providing for an across-the-board average refund to existing residential gas customers of this aggregated balance on or by December 1, This would obviate any need to track down and send refund checks to residential customers who have left DTE s system. RCG also proposes that the interest to be applied to the refunds to the residential class (based upon their actual gas consumption from January 1, 2018 through June 30, 2018) be calculated at the overall rate of return that was included in customer gas rates by DTE Gas during this same period, which was 5.76% overall return as established in MPSC Case U Contrary to the Staff s unexplained and unsupported statement, the application of this overall rate of return that was actually utilized in rates collected from residential customers, does not constitute a punitive interest rate, because it is exactly equivalent to what a residential gas customer paid in their rates during the refund period. A much lower short term interest rate would provide an unearned windfall to DTE Gas at the expense of residential gas customers. While a punitive interest rate could conceivably occur if the refund interest were set at the common equity return of DTE Gas, such cannot be a punitive refund interest rate if it is exactly the same return that CECO charged to ratepayers during the refund period when rates were in effect. RCG also agrees with the Attorney General s evidence and briefing that advocates that the Credit B tax refund should also apply to the IRM surcharges. The surcharges were applied to gas customers assuming the expired federal tax rate of 35% in contrast to the 21% federal tax rate effective January 1, Also, by analogy, the Commission has already ruled against the because DTE Gas has had several months now to retrieve said actual consumption data of each residential customer to effect the proper refund owing to each customer. 2

3 inter-mixing of other issues when determining solely the TCJA tax credits (see Commission Order in CECO Gas Case U dated June 28, 2018). Also, the IRM program also provides for a reconciliation process whereby DTE Gas can recognize IRM adjustments without affecting the straight forward Credit B refund credit to customers. RCG, the Attorney General, and ABATE, have all supported in evidence and briefing the issuance of a prompt method to refund the tax Credit B to gas customers. In contrast, the proposals of DTE Gas as supported by the Staff are far more complex and confusing, and delayed, without necessity or justification. Given that the Commission itself in its U Orders recognized that both Credit A and Credit B involved relatively simple calculations, which could be implemented promptly, it appears that the proposals of DTE Gas and the Staff simply do not comply with the Commission s initiatory orders governing Credit B and Credit B refunds. The unwieldy nature of the proposals by DTE Gas and MPSC Staff to refrain from providing prompt refunds based upon actual consumption of each customer during the refund period, is obvious from the DTE Gas proposal, which would apply the Credit refund over six months in 2019, one year after the actual consumption, and for a period that may be dramatically different weather wise from that actually experienced in 2018 for the same January June six month period, and then would also require a series of unnecessary and complicated post-refund reconciliation procedures to adjust for these differences, with insular participation by only DTE Gas and the Staff, and then followed by DTE Gas s presumptive proposal to transfer any unrefunded residual balance to a charity of DTE s choice, rather than to recognize any un-refunded residual as a downward adjustment in a DTE Gas rate case or GCR proceeding. 3

4 WHEREFORE, RCG requests the Commission to adopt the sensible recommendations of RCG, the Attorney General, and ABATE, to ensure prompt and fair refund credits to DTE Gas s residential customers, as further described in RCG s testimony, initial brief, and this reply brief. RCG requests such further and consistent relief that is lawful and reasonable. Respectfully submitted, Dated: October 11, 2018 Don L. Keskey (P23003) Brian W. Coyer (P40809) Public Law Resource Center PLLC University Office Place 333 Albert Avenue, Suite 425 East Lansing, MI Telephone: (517) donkeskey@publiclawresourcecenter.com bwcoyer@publiclawresourcecenter.com 4

5 STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the matter on the Commission s own motion, to consider changes in the rates of all the Michigan rate-regulated electric, steam, and natural gas utilities to reflect the effects of the federal Tax Cuts and Jobs Act of 2017: DTE GAS COMPANY files an application for determination of Credit B as described in order U / Case No. U PROOF OF SERVICE On October 11, 2018, an electronic copy of the Reply Brief of the Residential Customer Group was served on the following: Name/Party Administrative Law Judge Honorable Sally L. Wallace Detroit Edison Company David S. Maquera Lauren D. Donofrio Association of Businesses Advocating Tariff Equity Michael J. Pattwell Bryan A. Brandenburg MPSC Staff Spencer A. Sattler Emily A. Jefferson Attorney General Bill Schuette Joel B. King Address wallaces2@michigan.gov mpscfilings@dteenergy.com david.maquera@dteenergy.com lauren.donofrio@dteenergy.com mpattwell@clarkhill.com bbrandenburg@clarkhill.com sattlers@michigan.gov jeffersone1@michigan.gov ag-enra-spec-lit@michigan.gov kingj38@michigan.gov The statements above are true to the best of my knowledge, information and belief. PUBLIC LAW RESOURCE CENTER PLLC Dated: October 11, 2018 Carol A. Dane Public Law Resource Center PLLC University Office Place 333 Albert Avenue, Suite 425 East Lansing, MI Telephone: (517) adminasst@publiclawresourcecenter.com