November 27, Dear Ms. Kale:

Transcription

1 A CMS Energy Company November 27, 2018 Ms. Kavita Kale Executive Secretary Michigan Public Service Commission 7109 West Saginaw Highway Post Office Box Lansing, MI General Offices: LEGAL DEPARTMENT One Energy Plaza Jackson, MI Tel: Fax: (517) (517) CATHERINE M REYNOLDS Senior Vice President and General Counsel *Washington Office: 1730 Rhode Island Ave. N.W. Tel: (202) MELISSA M GLEESPEN Suite 1007 Vice President, Corporate Washington, DC Fax: (202) Secretary and Chief Compliance Officer Writer s Direct Dial Number: (517) Writer s Address: anne.uitvlugt@cmsenergy.com SHAUN M JOHNSON Vice President and Deputy General Counsel Bret A Totoraitis Kelly M Hall Eric V Luoma Assistant General Counsel Ashley L Bancroft Robert W Beach Don A D Amato Robert A. Farr Gary A Gensch, Jr. Emerson J. Hilton Gary L Kelterborn Chantez P Knowles Mary Jo Lawrie Jason M Milstone Rhonda M Morris Deborah A Moss* Mirče Michael Nestor Michael C. Rampe Scott J Sinkwitts Adam C Smith Theresa A G Staley Janae M Thayer Anne M Uitvlugt Aaron L Vorce Attorney RE: Case No. U In the Matter of the application of Consumers Energy Company for Authority to increase its rates for the distribution of natural gas and for other relief. Dear Ms. Kale: Enclosed for electronic filing in the above captioned case please find Consumers Energy Company s Rate Case Summary. This is a paperless filing and is therefore being filed only in a PDF format. I have also included a Proof of Service showing electronic service upon the parties to Case Nos. U and U Sincerely, Anne M. Uitvlugt cc: Parties per Attachment 1 to Proof of Service fl

2 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 authority to increase its rates for the ) Case No. U distribution of natural gas and for other relief. ) ) CONSUMERS ENERGY COMPANY S RATE CASE SUMMARY In accordance with the Michigan Public Service Commission s ( MPSC or the Commission ) July 31, 2017 Order in Case No. U-18238, Consumers Energy Company ( Consumers Energy or the Company ) submits its required Rate Case Summary. The Company s Rate Case Summary is being provided for informational purposes only, and in filing this summary, Consumers Energy states that modifications may be made to its upcoming rate case filing that could impact the information contained herein. The Company s most recent gas rate case, Case No. U-18424, was primarily driven by the Company s infrastructure investment. In Case No. U-18424, Consumers Energy originally requested that the Commission authorize the Company to adjust its retail natural gas distribution rates to provide additional revenue in the amount of $ million annually. This was based on the utilization of a projected 12-month test year ending June 30, The Company later reduced its request to increase its natural gas rates to provide additional revenue in the amount of $ million, which reflects adjustments to the Company s tax expense and revenue conversion factor to reflect the impact of the Tax Cuts and Jobs Act of 2017 on current taxes. In its August 28, 2018 Order Approving Settlement Agreement in Case No. U-18424, the Commission authorized Consumers Energy to increase its retail natural gas distribution rates by sum

3 $10.6 million annually, with a Return on Equity of 10.0%. Consumers Energy implemented the approved rates on September 1, The Company s upcoming gas rate case filing, Case No. U-20322, is being driven by the Company s continued infrastructure investment. Based on the evidentiary support provided in its upcoming filing, Consumer Energy requests that the Commission authorize the Company to adjust its retail natural gas distribution rates to provide additional revenue in the amount of approximately $229 million annually based on a projected 12-month test year ending September 30, The Company is requesting a Return on Equity of 10.75%, and uses inflation factors of 2.5% for 2018, 1.8% for 2019, and an inflation factor of 2.3% for 2020, as forecast by IHS Global Insight. Additionally, the Company is proposing enhancing its classification of costs and revising certain cost allocation methodologies in order to improve its cost of service study. The expansion of cost classification provides valuable information to the Company regarding the nature of costs, which helps guide rate design. Regarding the allocation of costs, the Company is proposing to use a customer allocator for the customer-related portion of the Company s distribution main. The Company is not proposing any significant changes to its rate design. sum

4 For the projected test year, the Company s average overall rate increase is approximately 14%. The Company s proposed rate increase/decrease by rate class and rate schedule is as follows: MICHIGAN PUBLIC SERVICE COMMISSION Consumers Energy Company Proposed Rate Increase/(Decrease) By Rate Class U Total Line Increase/ No. Description (Decrease) % Residential Service 1 Single Family Dwelling A Multifamily Dwelling A-1 (2.8) 3 Total Residential Service 16.7 General Service 4 Small Service GS Medium Service GS Large Service GS Outdoor Lighting GL (4.7) 8 Total General Service Total Gas Sales (1) 15.1 Transportation 10 Small Transport ST (6.4) 11 Large Transport LT Extremely Large Transport XLT Extra Extremely Large Transport XXLT (48.3) 14 Total Transportation (0.3) 15 Total Service (Delivery & Fuel) 14.4 Notes (1) Includes aggregate billed transportation accounts. sum

5 The key drivers associated with the Company s revenue requirement are: Key Drivers: Revenue Requirements Revenue Requirement Impact Drivers ($ Millions) a. Infrastructure Investment & Related Costs $136 b. Cost of Capital $29 c. Operating Expenses $81 d. Sales/Revenue ($28) e. Manufactured Gas Plant/Working Capital $11 f. Total Revenue Requirement Impact $229 The revenue requirement associated with rate base is as follows: Key Drivers: Rate Base 1 (000) Drivers Rate Base Impact (rate base 13-month average) Revenue Requirement Impact (Return on, Return of, and Property Tax) a. Last Rate Base Order N/A N/A b. Utility Plant N/A N/A c. Depreciation Reserve N/A N/A d. Working Capital N/A N/A e. MGP N/A N/A f. Requested Rate Base N/A N/A g Increase from Last Rate Base Order N/A N/A The Company s upcoming gas rate case filing is requesting approval of a Gas Revenue Decoupling Mechanism and an Investment Recovery Mechanism. Both of these ratemaking mechanisms were approved by the Commission in Consumers Energy s gas rate case, Case No. U-18124, and were included in the Settlement Agreement approved by the Commission, in Case No. U In addition to the requests described above, Consumers Energy will be seeking Commission approval of certain accounting requests. Accounting approval is needed for use of 1 The Company is unable to complete the Key Driver: Rate Base breakdown from the last rate case, Case No. U-18424, due to the fact that the Company s last rate case proceeding resulted in a Settlement Agreement. sum

6 regulatory assets or regulatory liabilities for the Company s requested Gas Revenue Decoupling Mechanism. Additional accounting approval is being requested to allow the inventory costs associated with retired or retiring gas compression plants to be charged to cost of removal for the remaining book value of the inventory. If approved, Consumers Energy requests that this accounting authority would apply to other gas compression plant retirements in the future. Consumers Energy intends to file its upcoming gas rate case on November 30, 2018, which will allow for new rates to be effective September 30, Respectfully submitted, CONSUMERS ENERGY COMPANY Dated: November 27, 2018 By: Anne M. Uitvlugt (P71641) Bret A. Totoraitis (P72654) Robert W. Beach (P73112) Gary A. Gensch, Jr. (P66912) Theresa A. G. Staley (P56998) Michael C. Rampe (P58189) One Energy Plaza Jackson, Michigan Attorneys for Consumers Energy Company (517) sum

7 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 authority to increase its rates for the ) Case No. U distribution of natural gas and for other relief ) ) STATE OF MICHIGAN ) ) SS COUNTY OF JACKSON ) PROOF OF SERVICE Samantha J. O Rourke, being first duly sworn, deposes and says that she is employed in the Legal Department of Consumers Energy Company; that on November 27, 2018, she served an electronic copy of Consumers Energy Company s Rate Case Summary upon the persons listed in Attachment 1 hereto, at the addresses listed therein. Samantha J. O Rourke Subscribed and sworn to before me this 27 th day of November, Melissa K. Harris, Notary Public State of Michigan, County of Jackson My Commission Expires: 06/11/20 Acting in the County of Jackson

8 ATTACHMENT 1 TO CASE NO. U (Parties to Case Nos. U and U-18424) Counsel for the Michigan Public Service Commission Staff Daniel E. Sonneveldt, Esq. Amit T. Singh, Esq. Monica M. Stephens, Esq. Assistant Attorneys General Public Service Division 7109 West Saginaw Highway Post Office Box Lansing, MI sonneveldtd@michigan.gov singha9@michigan.gov stephensm11@michigan.gov Michigan Public Service Commission Staff Gary Kitts Mike Byrne Bill Stosik Brian Ballinger Paul Proudfoot Bob Nichols Michigan Public Service Commission 7109 West Saginaw Highway Post Office Box Lansing, MI kittsg@michigan.gov byrnem@michigan.gov stosikb@michigan.gov ballingerb2@michigan.gov proudfootp@michigan.gov nicholsb1@michigan.gov Counsel for Attorney General, Bill Schuette Joel B. King, Esq. Celeste M. Gill, Esq. Assistant Attorneys General Special Litigation Unit 6 th Floor Williams Building Post Office Box Lansing, MI kingj38@michigan.gov gillc@michigan.gov AG-ENRA-Spec-Lit@michigan.gov Counsel for the Association of Businesses Advocating Tariff Equity ( ABATE ) Bryan A. Brandenburg, Esq. Michael J. Pattwell, Esq. Clark Hill PLC 212 East Grand River Avenue Lansing, MI bbrandenburg@clarkhill.com mpattwell@clarkhill.com Counsel for Retail Energy Supply Association ( RESA ) Jennifer Utter Heston, Esq. Fraser Trebilcock Davis & Dunlap, P.C. 124 West Allegan, Suite 1000 Lansing, MI jheston@fraserlawfirm.com Counsel for the Lansing Board of Water & Light Jason T. Hanselman, Esq. Richard J. Aaron, Esq. Kyle M. Asher, Esq. Dykema Gossett, PLLC 201 Townsend Street, Suite 900 Lansing, MI jhanselman@dykema.com raaron@dykema.com kasher@dykema.com Counsel for Midland Cogeneration Venture Limited Partnership Jason T. Hanselman, Esq. Dykema Gossett PLLC 201 Townsend Street, Suite 900 Lansing, MI jhanselman@dykema.com sl Page 1 of 2

9 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 ATTACHMENT 1 TO CASE NO. U (Parties to Case Nos. U and U-18424) sl Page 2 of 2