The following is attached for paperless electronic filing: Sincerely, Tracy Jane Andrews

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1 September 20, 2017 Ms. Kavita Kale Michigan Public Service Commission 7109 W. Saginaw Hwy. P. O. Box Lansing, MI Via E-Service RE: MPSC Case No. U Dear Ms. Kale: The following is attached for paperless electronic filing: CORRECTED Exhibit MEC-9 (2015 Loss Study Report, Revised May, 2017) [TO INCLUDE REDLINING] (of the Direct Testimony of D. Jester on behalf of Michigan Environmental Council, Natural Resources Defense Council and Sierra Club) Proof of Service Sincerely, Tracy Jane Andrews cc: Parties to Case No. U ALJ Sharon L. Feldman James Clift, Michigan Environmental Council Kristin Henry, Sierra Club Elena Saxonhouse, Sierra Club Michael Soules, Earthjustice Ariana Gonzalez, Natural Resources Defense Council Laura Goldberg, Natural Resources Defense Council Douglas Jester

2 Page 1 of Loss Study Report Revised May, 2017 Jul. 1, 2016 Introduction The purpose of this study is to allocate system energy and demand losses among the various components of the electric system by calculating a percentage Loss Factor for each system component. This information will be used to update loss calculations used in electric rate design. Customer and Service Infrastructure - HVD calculated Loss Factors for the 345, 138 and 46 kv systems and the low side of the 138 and 46 kv industrial systems. The Loss Factor for the system was calculated with input from Customer and Service Infrastructure LVD. Finally, the Loss Factor for the system (including secondary transformers) was calculated from the amount of system loss remaining after all other system component losses were allocated. Definitions 1. System Component Losses: Generated and purchased ( input or delivery ) Power or Energy (including imports) minus consumed or distributed ( output ) Power or Energy. Note: The total generated and purchased energy megawatt-hours (MWh) for 2015 and the total MWh delivered (sold) at each component during 2015 were provided by the Accounting Dept. and Rates Dept., respectively. The overall electric system loss percentage is derived from the generated and purchased energy data rather than from system models. 2. Loss Factor (%): COMPONENT OUTPUT POWER/ENERGY 1 COMPONENT INPUT POWER/ENERGY 100% COMPONENT POWER/ENERGY LOSS COMPONENT INPUT POWER/ENERGY 100% 3. Efficiency Factor: [100% - Loss Factor (%)] or [1 Loss Factor p.u.] 4. Energy Loss Factor: Total System Component MWh Loss divided by Total System Component MWh Input 5. Demand Loss Factor: Average of Monthly Peak System Component MW Losses divided by Monthly Peak System Component MW Inputs. Note: Average based on twelve monthly peak hours as identified in FERC Form 1, Page 401b 6. Cumulative Loss Factor (Energy or Demand): One minus the product of one minus the per-unit Loss Factor for that system component and one minus the per-unit loss factor for each of the upstream system components. Or, one minus the product of the per-unit efficiency factors for the system component and all upstream system components. Note: Cumulative loss factors are used to estimate the generation requirements necessary to serve a particular amount of load at any system component

3 Page 2 of 8 Energy Losses - Method 1. Loadflow model cases were created for each of the 8760 hours in Software developed by the Models and Dynamics group extracted data for losses and deliveries at various points of the electric Transmission and High Voltage Distribution (HVD) systems from each case (i.e. each hour). 2. The loss and delivery data were plotted to check for and correct any anomalous data points. Loss percentages for each Transmission or HVD system component were then calculated as Component MWh Loss Component MWh Delivery 3. For, average load and loss data from approximately 400 representative circuits at nine different system gross load levels for all-switched-capacitorson and all-switched-capacitors-off scenarios were provided by Customer and Service Infrastructure - LVD Substation Planning. A line loss percentage was calculated from load and loss figures interpolated between the caps-on and caps-off data, based on load level. The line loss, along with primary distribution transformer losses calculated in the hourly loadflow cases, comprise the total losses for. 4. For, sales (output) data per system component were provided by Rates Dept. Generation requirements (input) per system component were estimated based on cumulative loss percentages previously calculated for each system component. Total system generation requirements were estimated based on an overall system loss percentage derived from Generation and Purchased Power data provided by Accounting Dept. The difference between the total system estimated generation requirements and the sum of the estimated generation requirements for each system component (except for ) gives the estimated generation requirement for Distribution Secondary. The difference between Secondary Distribution estimated generation requirements and Secondary Distribution sales gives a cumulative loss percentage for Secondary Distribution, from which the Secondary Distribution loss percentage was derived. Demand Losses - Method 1. The loss and delivery data from the loadflow cases for the 12 monthly peak hours, as identified in FERC Form 1, were selected and the loss percentages for each Transmission or HVD system component were calculated as the average of ratios of losses to deliveries: MW Loss pk MW Delivery pk 2. For Primary Distribution, demand line loss percentages for each of the 12 monthly peak hours were calculated similarly as for energy loss. Demand loss percentages were calculated as the average of the loss to delivery ratios as with the Transmission and HVD system components. 3. For Secondary Distribution, the ratios of monthly peak gross MW sendouts to the hourly average MW sendout were used to estimate an average monthly peak MW delivery per system component. Similar to Secondary Distribution energy loss calculations, an average of monthly peak generation was then estimated from the system component cumulative demand loss percentages. Secondary Distribution average peak generation and, subsequently, cumulative demand loss percentage were estimated, similarly as with energy losses. From that, the Secondary Distribution demand loss percentage was derived

4 Page 3 of 8 Losses Applied to MWh Deliveries 1. The cumulative Loss Factors (Energy and Demand, in per-unit) were used to estimate the generation at each system component necessary to provide the given delivery to that system component, per the following formula: Generation Delivery 1 Loss Factor p.u. 2. The difference between the total power generated and purchased (for the entire system) and the sum of the generation requirements for all system components, except Distribution Secondary, yielded the cumulative losses for. The Loss Factor for was then found by rearranging the definition for cumulative losses, as follows: Loss Factor.., Cum. Loss Factor..,.. 1 Cum. Loss Factor..,

5 Page 4 of SYSTEM LOSS STUDY -- DEMAND LOSSES AND DELIVERIES (AVERAGE OF 12 MONTHLY PEAKS) Combined Method (Each Component Includes Transformation to that Component) Generation MW Low Side Delivery MW XF Loss MW Loss = % ( 2.30% ) Ties MW Loss = % ( 138 kv Distribution XFs 2.96% ) MW XF Loss = Gen/Ties MW Loss = % ( 3.92% ) % ( 4.95% ) MW Loss = % ( 6.54% ) MW Loss = 46 kv Distribution XFs MW XF Loss = MW Loss = % ( 10.49% ) General Notes - Each separate component is color coded, arrows indicate point of delivery - Loss %'s in parentheses are the Cumulative Loss %'s. - Loss %'s are calculated as (MW Loss/MW Delivery)*100% - Cumulative Loss %'s are calculated as one minus the product of Notes for and Secondary MW Delivery is high side sum of 138/DST and 46/DST XFs MW Loss includes 138 & 46 /DST XF AND primary line loss Cumulative Loss % is adjusted based on the weighted average amount of load served from 138 kv and 46 kv First, [(3407.7)*(3.92%) + (1378.2)*(2.30%)]/( ) = 3.45% Then, (1 ( )*( ))*100 = 6.54% cumulative demand loss % estimated using the average monthly peak deliveries. Refer to page 5. one minus the Loss Factor(pu) for that component and all higher components. - Loss % for Lines (2.64%) provided by C&SI LVD - Generation Transformers were combined with the 345 & 138 kv system because all customers are connected at lower voltages (components)

6 Page 5 of SYSTEM LOSS STUDY CUMULATIVE DEMAND LOSS PERCENTAGES APPLIED TO MWh DELIVERIES Combined Method (Each Component Includes Transformation to that Component) Electrical System Voltage Level 138 kv System V1: >120kV Estimated Average % Monthly Average Cumulative % MWh Deliveries Hourly MW Demand Peak MW Delivery Delivery Demand Loss Generation Losses (Total) , % % Generation Transformers, 345 &138 kv Systems Combined 4,354, % 394, % V2: 25kV 120kV 3,498, % V3: <25kV, Primary Distribution 8,034, % V4: Secondary Distribution 20,564, % TOTAL 37,630, % % Cum(%) = [1 (1 138IND%)*(1 138Sys_cum%)]*100% % Cum(%) = [1 (1 46Sys%)*(1 138Sys_cum%)]*100% % Cum(%) = [1 (1 46IND%)*(1 46Sys_cum%)]*100% % Cum(%) = [1 (1 DSTprimary%)*(1 46&138AVG_cum%)]*100% (2) % Cum(%) = [(MWh Gen MWh Del)/MWh Gen]*100% (3) 6221 NOTE: 1. The cumulative loss for any level is equal to one minus the product of on minus the loss % for that level and one minus the cumulative loss % one level higher 2. The Cumulative Loss Percentages for the and Secondary were adjusted to account for load served from 138 kv distribution subs. This adjustment was based on a weighted average cumulative loss % from the total MWh delivered to either 46kV/Dist. or 138/Dist. The adjusted Distribution Sub Transformer Cumulative Loss Percentage was 46&138AVG_cum% = 3.45% 3. The Cumulative Loss % was calculated from the MWh Gen and MWh Del remaining. Then the Energy Loss % was calculated in reverse from the cumulative. 4. All cumulative loss %s are calculated assuming the 345 kv and 138 kv Systems are combined along with the Generation Transformers (GSUs) 5. MWh Delivery figures include ROA amounts

7 Page 6 of SYSTEM LOSS STUDY -- ENERGY LOSSES AND DELIVERIES (TOTAL YEARLY MWh) Combined Method (Each Component Includes Transformation to that Component) Generation MWh Low Side Delivery = MWh XF Loss = % ( 2.04% ) Ties % ( 138 kv Distribution XFs 2.72% ) MWh XF Loss = Gen/Ties % ( 3.41% ) % ( 5.68% ) % ( 4.49% ) kv Distribution XFs MWh XF Loss = % ( 9.78% ) 4.40 General Notes - Each separate component is color coded, arrows indicate point of delivery - Loss %'s in parentheses are the Cumulative Loss %'s. - Loss %'s are calculated as (MWh Loss/MWh Delivery)*100% - Cumulative Loss %'s are calculated as one minus the product of 9.79 Notes for MWh Delivery is high side sum of 138/DST and 46/DST XFs MWh Loss includes 138 & 46 /DST XF AND primary line loss Cumulative Loss % is adjusted based on the weighted average amount of load served from 138 kv and 46 kv First, [( )*3.41%+( )*2.04%]/( )=3.01% Then, [1 ( )*( )]=5.68% one minus the Loss Factor(pu) for that component and all higher components. - Loss % for Lines (2.15%) provided by C&SI LVD - Generation Transformers were combined with the 345 & 138 kv system because all customers are connected at lower voltages (components)

8 Page 7 of SYSTEM LOSS STUDY CUMULATIVE ENERGY LOSS PERCENTAGES APPLIED TO MWh DELIVERIES Combined Method (Each Component Includes Transformation to that Component) Electrical System Voltage Level MWh Deliveries (Total) Cumulative % Energy Loss Generation % Energy Loss Notes Generation Transformers, 345 &138 kv Systems 2.04% Combined 800, , % 4,354, % 4,476, , % 407, % Cum(%) = [1 (1 46Sys%)*(1 138Sys_cum%)]*100% V2: 25kV 120kV 3,498, % 3,663, % Cum(%) = [1 (1 46IND%)*(1 46Sys_cum%)]*100% V3: <25kV, Primary Distribution 8,034, % 138 kv System V1: >120kV 8,517, % Cum(%) = [1 (1 138IND%)*(1 138Sys_cum%)]*100% % Cum(%) = [1 (1 DSTprimary%)*(1 46&138AVG_cum%)]*100% 8,514,360 V4: Secondary Distribution 20,564, % 22,793, % Cum(%) = [(MWh Gen MWh Del)/MWh Gen]*100% 22,797,251 TOTAL 37,630, % 40,659,470 NOTE: 1. The cumulative loss for any level is equal to one minus the product of on minus the loss % for that level and one minus the cumulative loss % one level higher 2. The Cumulative Loss Percentages for the and Secondary were adjusted to account for load served from 138 kv distribution subs. This adjustment was based on a weighted average cumulative loss % from the total MWh delivered to either 46kV/Dist. or 138/Dist. The adjusted Distribution Sub Transformer Cumulative Loss Percentage was 46&138AVG_cum% = 3.01% 3. The Cumulative Loss % was calculated from the MWh Gen and MWh Del remaining. Then the Energy Loss % was calculated in reverse from the cumulative. 4. All cumulative loss %s are calculated assuming the 345 kv and 138 kv Systems are combined along with the Generation Transformers (GSUs) 5. MWh Delivery figures include ROA amounts

9 Page 8 of SYSTEM LOSS STUDY ENERGY AND DEMAND LOSS PERCENTAGES 4 Year Summary ENERGY LOSS % % 0.66% 1.34% 1.09% 2.37% 4.70% % 0.78% 1.34% 1.12% 2.37% 4.03% yr Avg 2.38% 2.04% 2.28% 0.69% 0.69% 0.71% 1.35% 1.39% 1.36% 1.11% 1.12% 1.11% 2.64% % % 4.12% % % ENERGY LOSS CUMULATIVE % % 3.00% 3.56% 4.61% 5.55% 10.00% % 3.11% 3.54% 4.63% 5.53% 9.35% DEMAND LOSS % % 0.66% 1.62% 1.06% 2.87% 6.12% % 0.76% 1.67% 1.06% 2.98% 4.47% % 0.69% 1.65% 1.06% 3.27% 5.98% 3.75 DEMAND LOSS CUMULATIVE % % 2.95% 3.78% 4.79% 6.19% 11.93% % 3.29% 4.06% 5.07% 6.56% 10.73% yr Avg 2.30% 2.45% 0.68% 0.70% 1.67% 1.65% 1.07% 1.06% 3.20% 3.08% 4.22% % yr Avg 2.38% 2.04% 2.28% 3.05% 2.72% 2.97% 3.70% 3.41% 3.55% 4.77% 4.49% 4.63% 5.94% % % 9.82% % 9.74% % 3.29% 4.23% 5.25% 7.00% 12.56% yr Avg 2.30% 2.45% 2.96% 3.12% 3.92% 4.00% 4.95% 5.02% 6.54% 6.57% 10.49% 11.43% General Notes Annual Loss %'s are calculated as [MW(h) Loss/MW(h) Delivery]*100% Annual Cumulative Loss %'s are calculated as one minus the product of one minus the Loss % (pu) for that component and all higher components 4 yr Average Loss %'s and Cumulative Loss %'s are the averages of the annual loss percentages

10 STATE OF MICHIGAN MICHIGAN PUBLIC SERVICE COMMISSION In the matter of the application of CONSUMERS ENERGY COMPANY for authority to increase its rates for the generation and distribution of electricity and for other relief. Case N o. U ALJ Sharon L. Feldman PROOF OF SERVICE On the date below, an electronic copy of the CORRECTED Exhibit MEC-9 (2015 Loss Study Report Revised May, 2017) (to the Direct Testimony of D. Jester on behalf of Michigan Environmental Council, Natural Resources Defense Council, and Sierra Club) was served on the following: Name/Party Administrative Law Judge Sharon L. Feldman Counsel for Consumers Energy Company. Bret A. Tortoraitis Robert W. Beach Gary A. Gensch Jr. Kelly M. Hall H. Richard Chambers Anne M. Uitvlugt Theresa A.G. Staley Counsel for MPSC Staff Meredith R. Beidler Spencer A. Sattler Amit T. Singh Monica M. Stephens Lori Mayabb Counsel for Attorney General John A. Janiszewski Celeste R. Gill Counsel for MI Cable Telecommunications Assoc. David E.S. Marvin Michael S. Ashton Counsel for Kroger Kurt J. Boehm Jody Kyler Cohn Counsel for Hemlock Semiconductor Operations, LLC Jennifer Utter Heston Environmental Law & Policy Center Margrethe Kearney Address feldmans@michigan.gov mpscfilings@cmsenergy.com bret.totoraitis@cmsenergy.com Robert.beach@cmsenergy.com Gary.genschjr@cmsenergy.com Kelly.hall@cmsenergy.com rick.chambers@cmsenergy.com anne.uitvlugt@cmsenergy.com Theresa.staley@cmsenergy.com beidlerm@michigan.gov sattlers@michigan.gov singha9@michigan.gov stephensm11@michigan.gov MayabbL@michigan.gov ag-enra-spec-lit@michigan.gov Janiszewskij2@michigan.gov Gillc1@michigan.gov dmarvin@fraserlawfirm.com mashton@fraserlawfirm.com kboehm@bkllawfirm.com jkylercohn@bkllawfirm.com jheston@fraserlawfirm.com mkearney@elpc.org

11 Counsel for Constellation NewEnergy, Inc. Jennifer Utter Heston Midland Cogeneration Ventures, LP Jason Hanselman Richard Aaron John R. Liskey Counsel for ABATE and Gerdau Macsteel, Inc. Michael J. Pattwell Sean P. Gallagher Stephen A. Campbell Counsel for Wal-Mart and Sam s, Inc. Melissa M. Horne Counsel for Energy Michigan, Inc. Toni L. Newell Counsel for Residential Customer Group Brian E. Coyer Don L. Keskey Counsel for Michigan State Utility Workers Council, Utility Workers Union of America, AFL-CIO John A. Canzano Patrick J. Rorai Midwest Cogeneration Association John Liskey Patricia F. Sharkey Michigan Cable Telecommunications Association Michael S. Ashton The statements above are true to the best of my knowledge, information and belief. OLSON, BZDOK & HOWARD, P.C. Counsel for MEC-NRDC-SC Date: September 20, 2017 By: Marcia Randazzo, Legal Assistant Kimberly Flynn, Legal Assistant Karla Gerds, Legal Assistant 420 E. Front St. Traverse City, MI Phone: 231/ and 2