BOEHM, KURTZ & LOWRY ATTORNEYS AT LAW 36 EAST SEVENTH STREET, SUITE 1510 CINCINNATI, OHIO TELEPHONE (513) TELECOPIER (513)

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1 BOEHM, KURTZ & LOWRY ATTORNEYS AT LAW 36 EAST SEVENTH STREET, SUITE 1510 CINCINNATI, OHIO TELEPHONE (513) TELECOPIER (513) VIA ELECTRONIC CASE FILING January 11, 2019 Kavita Kale, Executive Secretary Michigan Public Service Commission 7109 W. Saginaw Highway Lansing, MI Re: Case No. U Dear Ms. Kale: Please find attached the INITIAL BRIEF OF THE KROGER CO. and its PROOF OF SERVICE for filing in the above captioned matter. Please place this document of file. Thank you for your assistance in this matter. Very truly yours, Kurt J. Boehm, Esq. Jody Kyler Cohn, Esq. Michael L. Kurtz, Esq., (Michigan ##P67067) BOEHM, KURTZ & LOWRY MLKkew Enclosure Cc: Administrative Law Judge Sally L. Wallace

2 STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the matter of the Application of DTE ELECTRIC COMPANY for authority to increase its rates, amend its rate schedules and rules governing the distribution and supply of electric energy, and for miscellaneous accounting authority. ) ) ) ) ) ) ) Case No. U INITIAL BRIEF OF THE KROGER CO. On July 6, 2018 DTE Electric Company ( DTE ) filed an Application to increase its rates by approximately $320 million annually. The Kroger Co. ( Kroger ) was granted intervention in this rate case proceeding and filed the Direct and Rebuttal Testimony of its expert witness Justin Bieber. Kroger submits the below Initial Brief addressing revenue requirement and rate design issues in this case. 1. The Commission Should Order DTE To Develop A Cost-Based Primary Monthly Service Charge. DTE is proposing a $275 monthly service charge for all Primary voltage customers, which is equal to the current primary customer service charge. DTE does not dispute that its proposed $275 monthly service charge for Primary voltage customers is not cost-based and thus should be rejected in favor of a cost-based service charge. According to the Company s response to Kroger data requests KCDE-2.2ai and KCDE-2.2bii, 1 the Company did not perform any analysis to determine if its proposed Primary service charge is cost-based. As shown in the transcript excerpt below, DTE again confirmed that the proposed Primary service charges is not cost-based during cross-examination of DTE witness Mr. Lacey. 1 See KRO-1 and KRO-2 respectively. 1

3 Q. I'm asking if the Company performed an analysis to determine a cost-based rate for the primary distribution customer charge in this case? [Mr. Lacey] I did not develop a customer base charge for the primary voltage class. 2 Instead of developing a cost-based service charge for Primary customers, DTE relied on the Commission s 2017 Rate Case Order that approved a $275 charge when formulating its Primary service charge proposed in this case. The Company confirmed this in response to KCDE-2.2bii, in which it stated that it is not proposing to change the existing $275 primary monthly service charge in this case in light of the Commission s April 18, 2018 Order in DTE s 2017 Rate Case, U-18255, 3 which approved the current charge. This point was again confirmed during cross-examination of Mr. Lacey: Q. Would it be correct to say that you relied on the Commission's determination from this prior case [Case No. U-18255] referenced in this DR regarding the primary voltage customer charge? Mr. Lacey] -- yes. 4 In other words, DTE does not dispute that its proposed Primary $275 service charge is not cost-based. Unfortunately, the Primary service charge proposed by DTE is dramatically higher than Primary customer costs. The evidence in the record provided by DTE shows that a cost-based service charge for Primary customers should be closer to $50 per month than DTE s proposed $275 per month. According to Mr. Lacey s analysis of customer-related costs, using the Staff Method, which is the method used to calculate the cost-based rates for Residential and Commercial-Secondary customers, Primary customer-related costs are only $53.52 per month, 5 less than 20% of DTE s proposed $275 Primary customer service charge. The Staff Method was approved in Case No. U for calculating customer-related costs. The Commission s Order in that case approved Staff s method of calculating customer-related costs because unlike DTE s method it only included costs that vary depending on the number of customers in a given class. The Commission stated in Case No. U-18255: The Commission concurs with the other parties claims that DTE Electric s COSS was flawed because it included a multitude of costs that, although customer-related, are not costs that vary with the number of customers on the system. As the Staff and others pointed out, the Commission has determined that the costs to be included in the customer charge are the marginal costs associated with attaching a customer to the system. In addition, as the Staff observed, the NARUC 2 Transcript (December 18, 2018) p. 3237, lines April 18, 2018 Final Order, Case No. U-18255, p Transcript (December 18, 2018) p. 3237, lines P. 3238, lines Case No. U-18255, Exhibit A-13, Schedule F1.3. 2

4 Manual likewise supports using only the marginal costs of customer attachment in developing a customer charge. 6 Although DTE is opposed to using the Staff Method to determine the Primary service charge, DTE has calculated Primary customer-related costs using the Staff Method. DTE witness Mr. Lacey calculated a costbased service charge for Primary customers using the Staff Method in the last rate case. 7 Mr. Lacey s cost calculations, using the Staff Method, are shown in the Table below and are compared to DTE s current and proposed customer charges. Comparison of Customer-Related Cost to DTE Customer Charges Customer-Related Costs* Current Customer Charge DTE Proposed Customer Charge Residential $8.26 $7.50 $9.00 Commercial-Secondary $10.43 $11.25 $15.00 Primary $53.52 $ $ *Customer-Related Costs using the Commission-Approved Staff Method were calculated by DTE in Exhibit A-13 in Case No. U-18255, p. 5 of 5, see KRO-3. As shown above, Residential and Commercial-Secondary service charges are more or less in line with customer-related costs using the Staff Method. However, DTE s current and proposed service charge for Primary customers is over 5 times greater than customer costs using the same Commission-approved method for calculating customer-related costs. As a result, DTE is over-recovering customer-related costs through service charges for Primary customers. The Commission should reject this proposed misalignment of customer costs with the Primary service charge. Proper alignment is important for ensuring equity among customers, because properly aligning charges with costs minimizes cross-subsidies among customers. When the service charge is set significantly above customer-related costs, smaller customers on the rate schedule are over-charged and thereby subsidize the larger customers on the rate schedule. Aligning rate design with underlying cost causation also improves efficiency because it sends proper price signals. 8 6 April 18, 2018 Final Order, Case No. U-18255, pp During cross-examination, Mr. Lacey agreed that his Exhibit A-13 from Case No. U shows customer-related costs, by class, using the Commission-approved Staff Method. Transcript (December 18, 2018) p. 3239, lines p. 3240, line 1. 8 Direct Testimony of Justin Bieber, p

5 DTE witness Mr. Lacey even emphasized the importance of aligning rate design with cost causation in his Direct Testimony when he stated that demand-related costs should be recovered through a demand charge and customer-related through a monthly customer charge. This will properly match cost recovery to cost causation. 9 However, DTE did not adhere to its own stated ratemaking principle when designing its service charge for Primary customers in this case, choosing to simply propose a service charge that was approved by the Commission in the past instead of determining Primary customer-related costs and proposing a service charge that aligned with those costs. All, or nearly all, other components of DTE s proposed revenue requirement, rate allocation and rate design were updated to reflect test-year costs and cost-causation. It is unreasonable and inequitable to not also update the Primary service charge because it will result in a major intra-class subsidy being locked into Primary rates. Although Mr. Lacey argued during cross-examination that the Commission s Order in Case No. U applied to Residential and Secondary-Commercial customers specifically, 10 and did not apply to Primary customers, the Order contains no such limitation. It is clear from the Order that the Staff Method was used to determine Residential and Secondary-Commercial service charges and not the Primary service charge because Staff s recommendation in that case was limited to those two classes. But there is no ratemaking reason to apply a different method to the Primary service charge. Kroger recommends that the Commission order DTE to design its Primary monthly service charge consistent with its directive concerning cost-base service charges in Case No. U in which the Commission stated: as in the past, the Commission rejects DTE Electric s inclusion in fixed monthly costs of items that are unrelated to the marginal cost of customers connecting to the system. 11 This cost-based approach has been applied to Residential and Commercial-Secondary in DTE s three prior rate cases, Case No. U-18255, U-18014, and U regarding which costs should be included in the service charge. Since DTE did not perform a cost-based analysis for the Primary monthly service charge in this case, the Commission could order DTE to use its customer cost analysis from its prior 2017 Rate Case, Case No. U to determine the Primary monthly service charge. 9 Direct Testimony of Thomas W. Lacey, pp Mr. Lacey stated during cross-examination: The residential and the commercial secondary, which are what the Commission was talking about, what the Staff advocated for, are consistent with the order However, the order did not express a view on the primary rate class. Transcript (December 18, 2018) p. 3239, lines p. 3240, lines April 18, 2018 Final Order, Case No. U-18255, p December 11, 2015 Final Order, Case No. U-17767, p

6 As discussed above, DTE s analysis of customer-related costs in Case No. U indicates a Primary monthly service charge of $53.52 per month. Kroger witness Mr. Bieber performed an analysis to determine the rate design and bill impacts based on Kroger s recommendation to move to a cost-based Primary monthly service charge. Utilizing the Primary monthly service charge of $53.52, he determined that the Primary distribution demand charge should be $4.17 per kw of demand, in order to collect the remaining Primary distribution revenue requirement at DTE s proposed revenue requirement. This would be an increase of $0.29 relative to DTE s proposed Primary distribution demand rate. This analysis, as well as a revised rate design and bill comparison, is contained in Exhibit KRO-5 which is attached to this Brief for ease of reference. If the Commission authorizes an increase that is lower than DTE s proposed amount, that reduction should be applied proportionately to all rate design elements. 2. The Commission Should Require That DTE Deduct All Energy Sales From Net Production Costs To Determine The Capacity Revenue Requirement To Be Recovered Through The State Reliability Mechanism ( SRM ) Capacity Charge. Kroger recommends that DTE deduct all energy sales from the net production costs to determine the capacity revenue requirement to be recovered through the SRM capacity charge. This methodology is consistent with Commission precedent and will better align the charges with the underlying cost causation. The SRM was put in place to ensure reliable electric service and sufficient capacity resources for Michigan s customers. The SRM requires all electric providers to demonstrate that they have sufficient capacity resources to serve their customers. 13 A Choice Customer whose Alternative Energy Supplier does not demonstrate sufficient capacity will be assessed an SRM capacity charge by the utility. 14 As required by the 2016 Public Act 341 (PA 341), DTE is proposing the same SRM capacity charge for all similarly situated customers, regardless of whether they are Choice Customers or bundled service customers. 15 Section 6w(3) of PA 341 describes two components of the SRM charge, in subparagraphs (a) and (b): (a) For the applicable term of the capacity charge, include the capacity-related generation costs included in the utility s base rates, surcharges, and power supply cost recovery factors, regardless 13 Direct Testimony of Justin Bieber, p Direct Testimony of Timothy A. Bloch, pp Direct Testimony of Don M. Stanczak, p. 9. 5

7 of whether those costs result from utility ownership of the capacity resources or the purchase or lease of the capacity resource from a third party. (b) For the applicable term of the capacity charge, subtract all non-capacity-related electric generation costs, including, but not limited to, costs previously set for recovery through net stranded cost recovery and securitization and the projected revenues, net of projected fuel costs, from all of the following: (i) All energy market sales. (ii) Off-system energy sales. (iii) Ancillary services sales. (iv) Energy sales under unit-specific bilateral contracts. According to Mr. Lacey, DTE included all production-related costs, except fuel, variable O&M, and certain purchase power costs in the capacity revenue requirement. Mr. Lacey states that the Commission s April 18, 2018 Order in Case U supported this approach, except that it differed in the amounts to be subtracted and the methodology used to calculate the 2018 energy sales net of fuel. 16 DTE proposes to use the Net Method to determine the energy sales revenue net of projected fuel costs. According to DTE witness Derek Arnold, this method considers the energy sales to be the excess generation, or net energy sales, sold into the MISO energy market, after serving the Company s bundled load. 17 DTE also uses the Net Method to calculate the ancillary service sales to be deducted from the production costs. Mr. Arnold calculates the portion of ancillary service sales and fuel-related costs associated with the excess generation by multiplying the total projected ancillary services and fuel-related costs by the ratio of net energy sales to gross generation sales. 18 According to witness Arnold, the projected 2018 off-system sales and sales of unit specific bilateral contracts are zero. 19 DTE s proposed methodology is flawed because it only deducts the excess, or net energy sales after serving its bundled load, from the capacity-related generation costs. As noted above, PA 341 Section 6w(3)(b) states the projected revenues, net of fuel costs, for all energy market sales should be subtracted from the capacity-related 16 Direct Testimony of Thomas W. Lacey, pp Direct Testimony of Justin Bieber, p Direct Testimony of Derek M. Arnold, pp Id, p. 7. 6

8 generation costs in order to determine the SRM capacity charge. However, DTE is proposing to only deduct the net energy sales. 20 In Case No. U-18248, the Commission ordered DTE to utilize the methodology proposed by Energy Michigan, to deduct the gross energy and ancillary service sales, net of fuel, because it was logical and consistent with the plain reading of the law. Further, the Commission determined that the energy sales in the market, less fuel costs, represent in some fashion the energy value of the generation portfolio. It serves as a proxy for determining how to separate out the energy costs from the overall production costs to arrive at a capacity-only cost. The fact that the utility is buying some or all of its energy in the same wholesale market to serve its own customers is immaterial. 21 As Mr. Lacey indicates in his testimony, 22 the Commission approved this methodology again in Case No. U DTE does not provide any explanation or indicate a change in circumstances that would justify a departure from this approved methodology. DTE s production fleet provides capacity, but it also enables DTE to make energy sales in the MISO market. The energy and the associated revenues are separate and discrete from the capacity value of the production resources. It is reasonable that all of the energy revenues that DTE receives from its production fleet should properly be counted as an offset to determine its capacity-related costs. Otherwise, the capacity-related costs will be overstated. 24 Further, DTE s capacity-related costs for its production fleet are fixed. The amount of energy that DTE purchases in the MISO market to serve its bundled load relative to the gross energy sales it makes from its production fleet has no impact on its capacity-related generation costs. Therefore, the production capacity-related revenue requirement should not vary based on the proportion of net energy sales relative to gross energy sales. 25 As Kroger witness Mr. Bieber explained on pages of his Direct Testimony, the inherent flaw in DTE s proposed methodology which would inappropriately vary the capacity revenue requirement for DTE s fixed 20 Direct Testimony of Justin Bieber, p November 21, 2017 Final Order in Case No. U-18248, p Direct Testimony of Thomas W. Lacy, p April 18, 2018 Final Order in Case No. U-18255, p Direct Testimony of Justin Bieber, p Direct Testimony of Justin Bieber, p

9 production costs and overstate the capacity-related costs used to derive the SRM capacity charge is demonstrated through a simple example. Assume we have a utility with a fixed production fleet and fixed capacity-related production costs that participates in a wholesale market. The net production costs are $1,000, the gross energy market sales (net of fuel) are $200, the fuel and fuel related costs are $300, and the variable O&M costs are $50. In Scenario 1, assume that the utility s net energy sales are equal to 20% of its gross energy sales. Under DTE s proposed methodology, the deduction for net energy market sales would be $40, since only 20% of the utility s $200 gross energy sales would be considered excess energy sold into the wholesale market to other market participants. Using DTE s methodology, we would determine the capacity revenue requirement by subtracting the net energy sales (net of fuel), fuel, and variable O&M from the total net production costs. The resulting capacity revenue requirement would be $610. The remaining net production costs would constitute the non-capacity production revenue requirement of $ In Scenario 2, assume that the utility s bundled customer load is equal to its gross energy sales from its production fleet, so there are zero net energy sales. Using DTE s proposed methodology for calculating the capacity revenue requirement, the deduction for net energy market sales would be zero, since there would be zero excess, or net energy market sales beyond what is required to serve the utility s bundled load. The resulting capacity revenue requirement would be $650 and the non-capacity revenue requirement would be $ In Scenario 2, the utility s claimed capacity revenue requirement has increased, but its capacity-related production costs have not. Further, the deduction for energy sales is zero, despite the fact that the utility s production fleet allows it to earn energy revenues that are separate from the capacity benefits. The claimed noncapacity revenue requirement has decreased because the energy sales revenues that are not deducted from the capacity-related generation costs are effectively offsetting the non-capacity revenue requirement Direct Testimony of Justin Bieber, pp Direct Testimony of Justin Bieber, pp Direct Testimony of Justin Bieber, pp

10 The Table below, from Mr. Bieber s Direct Testimony, illustrates these two scenarios in columns 1 and 2. The third column represents the proper gross energy sales deduction methodology (approved in U and U ), which deducts the gross energy sales from the net production costs. 29 Table JDB-1 Gross Sales Scenario 1 Scenario 2 Capacity Cost Determination Methodology Net Production Costs Revenue Requirement 1,000 1,000 1,000 Energy Market Sales (Net of Fuel) (40) 0 (200) Fuel (300) (300) (300) Variable O&M (50) (50) (50) Capacity Revenue Requirement Non-Capacity Revenue Requirement As explained above, it is important for rate design to be aligned with the underlying costs to send proper price signals and minimize subsidies between customers. In this circumstance, the net production costs are allocated to either the capacity revenue requirement or the non-capacity revenue requirement. If the capacity revenue requirement is overstated, then the non-capacity revenue requirement will be understated by a corresponding amount. 30 DTE s bundled customers pay both capacity and non-capacity charges. If the capacity charge is overstated, then the non-capacity charge will be understated by a corresponding amount and the impacts would be offsetting. This does not align rate design with cost causation, but it can be revenue neutral for bundled customers. However, Choice Customers only pay the SRM capacity charge. If the capacity charge is overstated, and the non-capacity charge is understated, DTE will over-recover capacity costs from Choice Customers that only pay the capacity charge. Choice Customers will not benefit from a corresponding decrease in the non-capacity charge and will effectively subsidize the bundled customers by paying an overstated capacity revenue requirement. 31 Consistent with the Commission s prior orders in Case Nos. U and U-18255, Kroger recommends that the Commission order DTE to deduct the gross energy sales (net of fuel) from the total production costs to 29 See Direct Testimony of Justin Bieber, p Direct Testimony of Justin Bieber, p Direct Testimony of Justin Bieber, pp

11 determine the SRM capacity charge. This previously approved methodology is consistent with the plain reading of the law, and will align the capacity charge with the underlying capacity costs. Kroger witness Mr. Bieber performed an analysis to determine the impacts of Kroger s recommendation to deduct the gross energy sales from the total production costs to determine the SRM capacity charge. Mr. Bieber calculated the gross energy sales (net of fuel) by dividing DTE s proposed net energy sales revenue (net of fuel) by the ratio of net energy sales volumes to the gross energy sales volumes. This is the same ratio that DTE proposes to use to multiply by the total ancillary services revenue to determine the net ancillary services revenues. 32 He deducted the gross energy sales (net of fuel), including the gross ancillary services sales, from the net production costs to determine the proper capacity revenue requirement. Mr. Bieber then utilized DTE s proposed UCOS to determine the revised capacity and non-capacity revenue targets for Rate D11. This analysis, as well as a revised rate design and bill comparison for Rate D11, are shown in Exhibit KRO-6 which is attached to this Brief for ease of reference. If the Commission authorizes an increase that is less than the amount proposed by DTE, that reduction should be applied proportionately to all of the rate design elements. 3. The Amortization Of The Excess ADIT Must Be Allocated Properly To Bundled Customers And Choice Customers. ABATE witness Mr. Gorman proposes a regulatory plan that would accelerate the amortization of the unprotected excess accelerated deferred income taxes ( ADIT ) in order to offset the impact of certain generation costs that he considers to be extraordinary. Although Kroger supports Mr. Gorman s proposal to accelerate the amortization of excess ADIT the amortization of the excess ADIT, a benefit resulting from the Tax Cuts and Jobs Act ( TCJA ), must be allocated properly to bundled customers and Choice Customers. According to Mr. Gorman, the costs that DTE has proposed for the accelerated depreciation of certain coal plants and the carrying costs on the Blue Water Energy Center ( BWEC ) power plant that is under development constitute extraordinary costs. Mr. Gorman also explains that DTE has proposed to begin amortizing the excess ADIT, resulting from the TCJA reduction of the federal income tax rate from 35% to 21%. A portion of the excess ADIT is not subject to IRS normalization rules and the Commission has discretion regarding the timeline over 32 Direct Testimony of Derek M. Arnold, pp

12 which the unprotected portion of the excess ADIT is amortized. Mr. Gorman proposes to accelerate the amortization of unprotected excess ADIT to offset the extraordinary coal plant depreciation and BWEC plant carrying costs proposed by DTE in this proceeding. According to Mr. Gorman, this plan will mitigate the rate impact on customers in this proceeding, without having a detrimental impact on DTE s cash flows, credit standing or access to external capital, while providing DTE full cost recovery of these obsolete coal unit costs. 33 While Kroger generally supports the proposal to accelerate the amortization of the unprotected excess ADIT to offset the significant rate impacts proposed by DTE in this case, ABATE s proposed allocation of the excess ADIT is not reasonable. Mr. Gorman s regulatory plan would apply all of the unprotected excess ADIT to offset certain generation costs which he considers to be extraordinary. This proposed offset to generation costs would only benefit bundled customers who pay for these generation costs. Choice Customers have also contributed to a portion of the excess ADIT and should receive a reasonable allocation of the unprotected excess ADIT balance. However, under Mr. Gorman s proposal, Choice Customers would not be allocated any of the benefit from the unprotected excess ADIT. 34 All classes of customers have contributed to the excess ADIT balance, including bundled customers and Choice Customers. Bundled customers have paid for the costs of generation assets and therefore have funded the excess ADIT balance that is associated with generation assets. However, bundled customers and Choice Customers both have paid the costs for distribution assets and therefore both groups of customers have funded the excess ADIT balance associated with those distribution assets. 35 The amortization of the excess ADIT should be allocated to customers consistent with the allocation of costs for the underlying assets which gave rise to the excess ADIT. In other words, excess ADIT resulting from the accelerated depreciation and regulatory tax expense for generation assets should be allocated consistent with the allocation of generation costs. Excess ADIT resulting from the accelerated depreciation and regulatory tax expense for distribution assets should be allocated consistent with the allocation of distribution costs. This allocation 33 Direct Testimony of Michael P. Gorman, pp Rebuttal Testimony of Justin Bieber, p Rebuttal Testimony of Justin Bieber, p

13 methodology will allocate the excess ADIT back to the classes of customers in a reasonably consistent manner to which it was funded. 36 To the extent that the Commission approves Mr. Gorman s proposed plan to accelerate the amortization of the unprotected excess ADIT, Kroger recommends that the amortization of the excess ADIT liability be applied as an offset to the total deferred federal income tax expense. This method would be consistent with DTE s proposed accounting treatment in this case to return the excess ADIT to customers by reducing the federal tax expense. 37 This approach would help mitigate the extraordinary coal depreciation and BWEC carrying costs proposed by DTE as well as mitigate the other significant rate increases that DTE has proposed that will impact all of its customers. Further, it would ensure that the benefits from the amortization of the excess ADIT are properly allocated and flow through to both bundled customers and Choice Customers The Company s IRM Proposal Should Be Rejected As Single-Issue Ratemaking. DTE is proposing an IRM to recover the incremental revenue requirement for certain distribution, fossil and nuclear generation capital expenditures through According to DTE witness Don M. Stanczak, the Company believes that with the proper IRM in place, DTE may be able to defer filing for a rate increase until Mr. Stanczak asserts that deferring the need to file a rate case will reduce the workload at the Commission and reduce costs for other parties that participate in rate cases. Further, Mr. Stanczak asserts that the IRM should allow for more orderly and potentially smaller rate increases compared to a rate case, and that the IRM will support critical infrastructure improvements. 39 The proposed incremental revenue requirement to be recovered through the IRM is $137.4 million in In 2021, the proposed incremental revenue requirement is $268.9 million, an increase of $131.5 million over the proposed 2020 amount. And in 2022, the proposed incremental revenue requirement is $417.6 million, an increase of $148.7 million over the proposed 2021 amount Rebuttal Testimony of Justin Bieber, p Direct Testimony of Susan L. Wisniewski, p. 17, lines Rebuttal Testimony of Justin Bieber, pp Direct Testimony of Don M. Stanczak, p Exhibit A-30, Schedule T-10, p

14 Kroger recommends that the Commission reject the Company s IRM proposal because it amounts to singleissue ratemaking and reduces the Company s incentive to manage its costs effectively. Single-issue ratemaking occurs when utility rates are adjusted in response to a change in a single cost or revenue item considered in isolation. It ignores the multitude of other factors that otherwise influence rates, some of which could, if properly considered, move rates in the opposite direction from the single-issue change. 41 Setting rates based on a single cost or revenue item runs contrary to the basic principles of traditional utility regulation. When regulatory commissions determine the appropriateness of a rate or charge that a utility seeks to impose on its customers, the standard practice is to review and consider all relevant factors, rather than just a single factor. To consider some costs in isolation might cause a commission to allow a utility to increase rates to recover higher costs in one area without recognizing counterbalancing savings in another area. Alternatively, a single revenue item considered in isolation might cause a decrease in rates without recognizing counterbalancing cost increases in other areas. For these reasons, single-issue ratemaking, absent a compelling public interest, is generally not sound regulatory practice. 42 DTE s proposed IRM reconciliation and Staff review process does not alleviate concerns about single-issue ratemaking. Single-issue cost trackers reduce the Company s incentive to manage costs effectively. When costs are considered in the context of a general rate case, there is an incentive between rate cases to reduce costs as much as possible to offset counterbalancing cost overruns in other areas or otherwise improve the Company s earned rate of return. Under the proposed IRM, as long as the Company s IRM spending is less than the maximum approved IRM amount, then those dollars will be subject to recovery at the approved ROE. This reduces the Company s incentive to be more efficient than the minimum level of what is required to control its spending within a specified range. Further, DTE s proposal to meet with Staff and provide a summary report, including program metrics, does not appear to provide a comparable prudency review to a general rate case. 43 The potential deferral of a future rate case does not represent a compelling public interest that justifies adoption of the IRM especially since, as Mr. 41 Direct Testimony of Justin Bieber, p Direct Testimony of Justine Bieber, pp Direct Testimony of Justin Bieber, pp

15 Stanczak describes, there are a multitude of factors and events that could cause DTE not to defer a future rate case filing until As Kroger witness Justin Bieber testified, there are some generally accepted criteria that can be used to determine the appropriateness of cost tracking and rider mechanisms. Generally, an appropriate single-issue cost tracker should meet all three of these criteria: The anticipated costs or revenues are subject to significant volatility from year to year; 2. The anticipated costs or revenues are not reasonably controllable by management; and 3. The anticipated costs or revenues are substantial enough to have a material impact on the utility s revenue requirement and financial health between rate cases. DTE s proposed IRM fails to meet two of these criteria. DTE provides significant details in its direct filing regarding the proposed capital costs to be recovered through the IRM, which also include $605.0 million of capital investments that are planned to occur in the last 6 months of the test period. 46 Given the level of detail that DTE has provided regarding planned capital investments proposed to be recovered through the IRM, the anticipated costs do not appear to be subject to significant volatility from year to year. Further, it is reasonable to expect that these anticipated costs are reasonably controllable by DTE management. 47 In addition to not meeting two of the three criteria described above, DTE s proposed IRM appears to have other fundamental flaws. First, DTE has proposed to reconcile the revenues that it receives through the IRM against the expected amount of revenues. If customer usage is lower than expected, due to weather, or other factors, then DTE would impose a surcharge to make up those revenues. This would reduce DTE s risk relative to cost recovery through base rates. According to DTE witness Michael Vilbert, DTE s proposal to reconcile the IRM revenues due to volumetric consumption different from forecasts would function like a decoupling mechanism on the IRM subset of the Company s operations. 48 This component of the proposed IRM would cause an unreasonable shift of additional risk from the Company to its customers Direct Testimony of Justin Bieber, p Direct Testimony of Justin Bieber, p Exhibit A-30, T5, Exhibit A-30, T6, and Exhibit A-30, T7. $ M Distribution Operations M Generation + $ M New 1,100 MW CC = $ M. 47 Direct Testimony of Justin Bieber, pp Direct Testimony of Michael J. Vilbert, p Direct Testimony of Justin Bieber, p

16 In addition to recovering certain capital costs incurred after the end of the test year through the IRM, DTE has also proposed to include over $600 million of capital spend that is expected to occur during the last 6 months of the test period for recovery through the IRM. The Company does not provide justification for this shift of cost recovery from base rates to the proposed IRM. If the IRM is ultimately approved, this would constitute an unnecessary expansion of cost recovery through the mechanism. It also conceals the magnitude of DTE s requested rate increase by the shifting proposed recovery of costs that occur in the test period from base rates to the proposed tracking mechanism. 50 Further, DTE s proposed IRM appears to provide cost recovery for capital dollars spent on assets before they are used and useful. For example, DTE is proposing to earn a return on its cumulative capital investment of $359.2 million in 2020 and $466.5 million in 2021 for its proposed Blue Water Energy Center 1,100 MW combined cycle gas turbine. 51 The facility is not expected to be in service until For the foregoing reasons, Kroger recommends that the Commission reject the proposed IRM. DTE has proposed the IRM as a mechanism to recover the costs of infrastructure necessary to safely and reliably serve its customers. Investing in and maintaining infrastructure for safety and reliability are fundamental responsibilities for a utility company. In carrying out this responsibility, utilities are entitled to an opportunity to recover their prudently-incurred costs. Rather than relying on expanded cost recovery under a new tracking mechanism, any incremental costs should be considered in the context of a general rate case. 53 The proposed recovery of DTE s specified capital costs to be collected through this mechanism amounts to single-issue ratemaking and the proposed mechanism does not meet the generally accepted prerequisites for that kind of regulatory treatment. 5. Inflation Should Be Removed From DTE s Projected Test Year Non-Labor Operations And Maintenance (O&M) Expense. The Company used its labor and non-labor rates to derive a composite inflation factor that is applied to DTE s test year O&M expenses. DTE witness Theresa Uzenski explains that the Company utilized an inflation 50 Direct Testimony of Justin Bieber, pp Exhibit A-30, Schedule T7, p Direct Testimony of Justin Bieber, p Direct Testimony of Justin Bieber, p

17 rate of 3% for internal labor and contractor labor. DTE utilized an inflation rate for non-labor costs based on the consumer price index (CPI)-Urban. Ms. Uzenski used the labor and non-labor rates to calculate a composite rate of inflation for 2018, 2019, and The Commission should reject the application of a generic inflation factor to non-labor O&M expense. As Kroger witness Mr. Bieber discussed in his Direct Testimony, from a ratemaking perspective there are two serious problems with DTE s inclusion of inflation in its forecasted test period revenue requirement. First, at a broad policy level, regulatory pricing formulations should not reinforce inflation. This occurs when projections of inflation are built into formulas that are used to set administratively-determined prices, such as utility rates. Such pricing mechanisms help to make inflation a self-fulfilling prophecy. As a matter of public policy, this is a serious concern. It is one thing to adjust for inflation after the fact; it is another to help guarantee it. For this reason, regulators should use extreme caution before approving prices that contribute to inflation before it occurs. 55 A related, but distinct, problem involves the building of this cost cushion into the Company s test period costs. Allowing this type of systemic uplift in rates goes well beyond the basic rationale advanced by advocates for using a projected test period, which is to ameliorate the effect of regulatory lag on the recovery of investment in new plant. The primary justification for utilizing a projected test period is to allow a utility with expanding rate base the ability to avoid regulatory lag; that is, the use of a projected test period is intended to provide a utility a better opportunity to recover its investment cost than might occur with an historical test period. 56 Mr. Bieber explained that by including inflation in its non-labor O&M expenses, DTE is attempting to go well beyond simply aligning the test period with its projected test year investment to mitigate regulatory lag; the Company is also attempting to gain an additional benefit by inflating its baseline costs by applying an inflation factor. DTE should not be rewarded for the use of a forecasted test period with a windfall mark-up of its baseline costs. The Commission should not allow the utilization of a forward-looking test period to also become a vehicle for utility recovery of such pseudo costs Direct Testimony of Theresa M. Uzenski, p Direct Testimony of Justin Bieber, pp Direct Testimony of Justin Bieber, p Direct Testimony of Justin Bieber, pp

18 The best evidence of what it costs DTE for non-labor O&M is the Company s actual costs recorded in the historical period, adjusted for certain known and measurable changes. The cost increases represented by DTE s inflation assumption may or may not come to fruition. In any case, DTE should be expected to strive to improve its O&M efficiency on a continuous basis, and thereby lessen the net impact of inflation on its O&M costs. 58 It is not reasonable to simply gross up the Company s historical period costs by an inflation factor and pass these costs on to customers. 59 As Mr. Bieber argued, projected inflation should only be considered in ratemaking in limited circumstances. For example, the United States experienced major inflation during the late 1970s. In that type of severe increasingcost environment, some consideration for O&M inflation in a forecasted test period would probably be necessary. However, we are very far from such a cost environment. Inflation in the United States has been at very low levels for several years. The prospects for core inflation, which excludes the relatively volatile pricing components of energy and food, remain subdued. Federal sources project core inflation to remain around 2% for the foreseeable future. 60 For the foregoing reasons, Kroger recommends removing general inflation from DTE s projected test year non-labor O&M expense. 6. The Commission Should Direct The Company To Take Reasonable Remedial Actions To Address Its Known Service Quality Problems. According to DTE witness Marco Bruzzano, the Company s primary focus is on the System Average Interruption Duration Index (SAIDI). SAIDI measures the average time that customers are without power in a year because it measures both the frequency and the duration of the interruptions. DTE measures an all-weather SAIDI, 58 DTE does not project that it can achieve any O&M efficiencies that could partially offset the cost increases from inflation. According to DTE s data response to ABATE, ABDE-9.91, DTE Electric s budget does not assume any efficiencies for 2019 or See Direct Testimony of Justin Bieber, p. 35. See also Transcript (December 18, 2018) p. 3361, lines Direct Testimony of Justin Bieber, p According to the published Minutes of the Federal Open Market Committee for September 25-26, 2018 the Fed s central tendency forecast for Core personal consumption expenditures (PCE) inflation is 1.9% to 2.0% for 2019 and 2.0% to 2.1% for The Congressional Budget Office April 2018 forecast for core PCE inflation is 2.0% in 2019 and 2.2% in 2020.The Budget and Economic Outlook: 2018 to 2028, Table D-1, CBO s Economic Projections, by Calendar Year, inflation forecast for Core PCE price index. 17

19 which includes all outages, and SAIDI excluding major event days (MEDs), which excludes days with outages that exceed a size threshold in order to isolate the impact of severe weather events. 61 According to Mr. Bruzzano, DTE s SAIDI excluding MEDs has been in the fourth (worst) quartile of the industry for the past several years. 62 DTE s relatively low SAIDI measurement is consistent with Kroger s experience with regard to service issues at its stores and one of its major facilities, the Kroger Michigan Dairy in the DTE service territory. Kroger has experienced a history of outages that have caused significant disruption to its operations. Kroger incurs substantial costs when it is required to dispatch generators for store outages. Additionally, at the Kroger Michigan Dairy, in the time period from August 10, 2017 through August 9, 2018, the facility experienced a total of 120 significant power quality and power reliability events. 63 Many of these instantaneous events at the dairy can shutdown most of the processes at the facility that run with variable frequency AC drives (VFDs). 64 It is frustrating for customers such as Kroger to be contending with significant proposed rate increases in the face of sub-par service quality that negatively impacts its operations. Kroger recommends that in approving any rate increase, the Commission direct DTE to take reasonable remedial actions to address its known service quality problems at facilities such as Kroger s stores and the Kroger Michigan Dairy. Respectfully submitted, Kurt J. Boehm, Esq. Jody Kyler Cohn, Esq. Michael L. Kurtz, Esq., (Michigan #P67067) BOEHM, KURTZ & LOWRY 36 East Seventh Street, Suite 1510 Cincinnati, Ohio Ph: Fax: KBoehm@BKLlawfirm.com JKylerCohn@BKLlawfirm.com mkurtz@bkllawfirm.com January 11, 2019 COUNSEL FOR THE KROGER CO. 61 Direct Testimony of Marco A. Bruzzano, p Id. 63 See Direct Testimony of Justin Bieber, Exhibit KRO Direct Testimony of Justin Bieber, p

20 I I n I III z I

21 Kroger Exhibit KRO-5 Case No. U Witness: Page 1 of 4 Jusfin Bieber Kroger Recommended Primary Voltage Distribution Charge At DTEs Proposed Revenue Requirement (a) (b) (c) (ii) te) (1) (g) fh) Exh A-I 6. Sch F-I.2 (a) + (b) (c) - (U) - fe) (I) (g) Line 28 Present Proposed Primary Base Target Service Target Voltage Line Delivery Revenue Base Charge Substation Distribution Distribution Distribution No. Revenue Def/(Sul) Revenue Revenue Credit Demand Rev Demand Charge (5000) (5000) ($000) ($000) ($000) ($000) kw $/kw I Primary Voltage 2 Rate 3 DII 92, ,248 4 D6.2 10,761 2,647,327 5 D8 6, ,377 6 Dl ,131 7 R1.l/Rl.2 4,173 1,089,391 8 R ,062 9 RIO 1, ,900 ID Primary Voltage Total 118,028 3, ,246 2, ,229 28,609,

22 Kroger Exhibit KRO-5 Case No. U Witness: Justin Bieber Page 2 of 4 Kroger Recommended Rate Design Rate Dli - Revised Monthly Customer Charge At DTE s Proposed Revenue Requirement Line (a) (b) Cc) (U) (a) (I) Description Bitting Determinants Present Proposed Full Service Power Supply I!.lniIi E.glg E9ionll Y6flI!9 Capacity ($000) ($000) I PowerSupplyDemaisd 23, kw , ,222 2 Vohace Level Discount 3 Subb axssmisnion 3,169,834 kw (0.58) (1,839) (1.97) (6,229) 4 Transmission 6,337,749 kw (0.87) (5,514) (0.95) (6,042) 2tinth 6cgy 7 On-Peak 3,273,946 MWh Off-Peak 9464,102 MWh Total Energy 12,738,048 MWh 0 0 I0 II Voltauc Level Discount 12 SubUansmission 1,864,174 MWh Transmission 4, MWh Total Capacity 12,738,048 MWb 274, ,951 I5 16 Non-Capacity 17 PowcrsupplyDemand , Voltase Level AdiusUnent kw 5,14 121, ,012 I9 Subtransmission 3,169,834 kw (0.25) (792) (0.11) (357) 20 Transmission 6,337,749 kw (0.38) (2,408) , On-Peak 3,273,946 MWh , , Off-Peak 9,464, VolIae Level Discount MWh I6, , Subtranomission 1,864,174 MWh ( ) (2,125) ( ) (1,609) 26 Transmission 4j63921 MWh ( ) (8,078) ( ) ( Power Supply Subtotal 12,738,048 MWh 841, , PSCR 12,738,048 MWh REPS Cust Total Full Service Power Supply 12,738,048 MWh 6.60w 841, , Full Service Distribution I Qiinoiiy UniI Service Charge - PV 1,993 Cust , , Service Charge - SV, TV 131 Cust Distribution Charci Primasy 7,406,928 6,709,953 kw MWh , , ,864,174 MWh 41 Subtransmission 4,269,529 k W 1,46 6, , Transmission 7,323,875 kw 44 4,163,921 MWh , , Substation Credit 46 Demand 3,724,493 kw (0.30) (1,117) (0.30) (1,117) 47 Energy MWh (0.0004) f96 (0.0004) (96) 48 Distribution System 12,738,048 MWh ,160 Q.66 84, Nuclear Decosmuissioning 12,738,048 MWh , ,745 SI Energy Waste Reduction Meters , ,0 7, LIEAF 2,507 Meters Distribution Surcharges 12,738,048 MWh , , Total Full Service DisWbution 12,738,048 MWb , w 101, Total Full Service DII 12,738,048 MWh , ,043 ggog 6.9l

23 95 Kroger Exhibit KRO-5 Case No. U Witness: Justin Bieber Page 3 of 4 Kroger Recommended Rate Design Rate Dli - Revised Monthly Customer Charge At UTE s Proposed Revenue Requirement Lme (b) (c) (ii) (c) (9 Description BillIn# Determinants Present Proposed 57 Choke Distribution I Qtinililx L(Od 58 Cipaclty (5000) (Sf00) 59 Power Supply Demand Ii kw Vpltaitc Level Discount 61 Subtransmission 0 kw (0.58) 0 (1.97) 0 62 Transmission 0 kv (0.87) 0 (0.95) On-Peak 0 MVh OfT-Peak 0 MWh Totsi Energy (I MWh Voltaite Level Discount 70 Subtransmission 0 MWh Transmission C) MtVh Total Capacity 0 MV1i Service Charge- PV 5.17 Cuis , Service Charge - SV, TV 11 Cast Distribution Charges Primary kw MWh , ,943 SI 0(4.539 MWb 80 Subtransmission kw , , Transmission ktv 83 7L2.X43 MWb , , Substation Credit 85 Demand I,4o0.40 kv (0.30) (441) (0.30) (441) 86 Energy MWh ) (21 (0.0004) (21 87 Distribution System 3,384,929 MWh 23,788 24, Nuclear Decoinmissionmg 3,384,929 MW , , Energy Waste Reduction 056 Meters , , LIEAF 656 Meters DisibutionSurcharges 3, MtVh 4,524 4, Told Choice DII I MWb 28,313 28,814 gygy () l t ITotal Dli 97 lncreas&decreasc (5) I 16,122,977 MWb , t 1,010,857 40,942]

24 Kroger Exhibit KRO-5 Case No. U Witness: Justin Bieber Page 4 of 4 Kroger Recommendation Bill Impacts Primary Rate Dli - Revised Monthly Customer Charge At DTE s Proposed Revenue Requirement Rates and Surchares Current Kroger Proposed Power Supply Capacity Demand $ $ Non-Capacity Demand S 5.14 S Energy On-peak S S Off-peak $ S Distribution Service Charge S 275 S Demand $ 3.77 S 4.17 Surcharges NDS S $ Energy Waste Reduction S 245 S 245 Kroger Current Net Proposed Increase Proposed Unit Demand Hours Use Percent Monthly Bill Net Monthly Bill Amount Increase Percent Cost % $ 2,117 $ 2,080 $ (38) -1.78% % $ 2,303 S 2,230 $ (74) -3.20% 11.l % $ 2,477 $ 2,367 S (110) -4.43% /a S 2,660 $ 2,515 S (146) -5.48% % S 2,752 $ 2,588 S (164) -5.95% % $ 3,714 $ 3,861 $ o % $ 4,087 S 4,161 $ % too % S 4,434 $ 4,436 S % % $ 4, ,731 S (70) -1.46% It % S 4,984 $ 4,878 $ (106).2.13% % $ 16,492 $ 18,109 $ 1, % % $ 18,353 $ 19,610 S 1, % , S 20,089 $ 20,985 S % % $ 21,925 S 22,460 S % % S 22,842 S 23, % % $ 32,465 $ 35,920 $ 3, % I % S 36,186 S 38,921 $ 2, % % $ 39,658 $ 41, , % % $ 43,329 $ 44,622 S 1, % % $ 45,165 $ 46,097 S % % $ 160,243 $ 178,406 $ 18, % % $ 178,850 $ 193,409 $ 14,559 8,14% % $ 196,208 $ 207,161 S 10, % % $ 214,565 S 221,914 S 7, % % $ 223,744 $ 229,290 S 5, % 7.060

25 Kroger Exhibit KRO-6 Case No. U Witness: Justin Bieber Page 1 of 5 Line 16 Kroger Recommended Gross Energy At UTE s Sales Revenue Proposed Revenue Requirement Energy Sales Revenue 1 Projected 2018 Net Energy Sales Revenue ($1,000) 2 Projected 2018 Net Energy Sales Volume (GWh) 3 Projected 2018 Gross Energy Sales Volume (GWh) 4 Ratio Net Energy Sales to Gross Energy Sales 88,814 2,389 41, Exhibit A-29, Schedule S3, line 12 Exhibit A-29, Schedule S3, line 11 Exhibit A-29, Schedule S3, line 25 Line 2/ Line 3 5 Gross Energy Sales 6 Projected 2018 Gross Off-System Sales ($1,000) 7 Projected 2018 Unit Specific Bilateral Energy Sales ($1,000) 8 Projected 2018 Gross Regulation, Spinning, and Supplemental Ancillary Services Sales ($1,000) 9 Projected 2018 Schedule 2 Reactive Ancillary Services Revenue 10 Total Projected 201$ Gross Energy Sales Revenue 1,550,137 Line 1 / Line 4 Exhibit A-29, Schedule S3, line 13 Exhibit A-29, Schedule S3, line 14 1,763 Exhibit A-29, ScheduleS3, line 1S/Line4 13,143 Exhibit A-29, Schedule S3, line 16 / Line 4 1,565,043 Fuel and Fuel Related Cost it Fuel ($1,000) 12 Emission Allowances ($1,000) 13 Chemicals ($1,000) 14 Total Projected 201$ Fuel & Fuel-Related Expense 15 Schedule 17 Administrative Service Cost for Energy Sales 836,475 2$ 21,418 $57, Exhibit A-29, Schedule S3, line 21 Exhibit A-29, Schedule S3, line 22 Exhibit A-29, Schedule S3, line Projected 2018 Gross Energy Sates Revenue Net of Fuel Related Costs ($1,000) 706,947 LineS - Line 14 -

26 Kroger Exhibit KRO-6 Case No. U Witness: Page 2 of 5 Justin Bieber Kroger Recommended Capacity Revenue Requirement At DTE s Proposed Revenue Requirement Capacity Costs Determination Net Production Costs Rev. Req. (Exh A-16 Sch F 1.1 Line 27) $ 3,292,426 Proj 2018 Gross Energy Sales Rev Net of Fuel (Per Kroger Adjustment) (706,947) Less Fuel (Exh A-16 Sch F1.l Line 4) (1,086,201) 4 Less MISO Energy in PP (Exh A-13 Sch C4 Lines 20-21) (47,395) Less Other Energy in PP (WPAY6PF1 Sch 11.5 Line Less Variable O&M (Exh A-16 5db F1.5 Page 5 Line Kroger Proposed Capacity Revenue Requirement 14) 8) $ (156,542) (11,920) 1,283,421

27 Kroger Exhibit KRO-6 Case No. U Witness: Justin Bieber Page 3 of 5 Kroger Recommended Rate Design Rate Dli - Revised Capacity Revenue Requirement At DTE s Proposed Revenue Requirement Line I 3 4 S l0 II l4 IS TI ) SI (a) Description (b) Bililne Determinants Full ServIce Power Supply I Q89i iniu Capacity Power Supply Demand 23,705,447 kw Voltace Level Discount Subtrazssmission 3,169,834 ktv Transmission 6,337,749 ktv Enerc On-Peak 3,273,946 MW), Off-Peak MW), Total Energy 12,738,048 MVh Vpitac Level Discount Subtransmission 1,864,174 MW), Transmission ) MW), Total Capacity l % MW), Non-Capacity Power Supply Demand 23,705,447 kv Voltage Level Ad1ustment Subtran.smttsion 3,11,0.834 kv Transmission 6, ) kw Encrc On-Peak 3,273,946 MW), Off-Peak 9,464,102 MW), Voltage Level Discpunt Subtransmission i,s 4.t74 M\V), Transmission 4.ft,3.Q2l MW), Power Supply Subtotal 12,738,048 MW), PSCR 12,738,048 MW), REPS 2,125 Cast. Total Full Service Power Supply ,048 MVh ull ServIce DIstributIon I Qsionni3 1.)nIs Service Charge - PV t.9)7 Cust. Service Charge - SV, TV 131 Cast DisOibutign Charges Pnmmy 7.4)16,925 kv 6, MWh Subtransmiusion 1.269,52) kw 1,864,174 MWh Transmission 7.323,835 kv 4,163,921 MW), Substation Credit Demand 3, kw Energy MW), Dtstrtbution System 12,738,048 MWIt Nuclear Decommiastoning 12,738,048 MWh Energy Waste Reduction 2,507 Meters LIEAF 2,507 Meters Otstrsbution Surcharges 12,738,048 MWh Total Full Service Dtab,bution 12,738,048 MWh Total Full ServIce Dli I 12,738,048 MW), (c) Present (d) ($000) (0.58) (1,839) (0.87) (5,5)4) , ,846 (0.25) (792) (0.38) (2,408) , )6,574 (0.00(14) (2,125) ( ) (8.078) 841, , , , ,346 (0.30) (1,117) (0.0004) (96) , , , , , ,603 (e) (0 Pronosed Eoe (5000) (1.29) (4.100) (0.63) (3,976) , ,012 (0.11) (357) , , ,889 ( ) (2,255) ( ) (8,564t 880, t 880.4Z , , , ,911 (0.30) (1,117) ) (96) , , ,370 0, l J

28 Kroger Exhibit KRO-6 Case No. U Witness: Justin Bieber Page 4 of 5 Kroger Recommended Rate Design Rate Dli - Revised Capacity Revenue Requirement At DTE s Proposed Revenue Requirement Line (a) (b) (c) (d) (c) (I) DescrIptIon BIllIng DetermInants Present Proposed 57 Choice DIstributIon I Qiinfl (.10(50 Revenue 58 CapacIty ($000) ($000) 59 Power Supply Demand (5 ktv ( Voltage Level Discount 61 Subtransmission II kw (0.58) 0 ((.29) 0 62 Transmission 0 kw (0.87) 0 (0.63) On-Peak 0 MWh Off-Peak 0 MWh Total Energy ii MWh Vpltage Level Discount 70 Subtransmission 0 MWh Transmission 0 MWh Tots) Capacity 0 MWh Service Charge - PV 537 Cust ( Service Charge - SV, TV I-I Cost Distribution Charges 78 Primary 5.025,320 kw , , ,057,49% MWb 80 Subtransmission 1.41)1.837 kw , , )4,589 MOVb 82 Transmission ( ktv , , (2.643 MWh 84 Substation Credit 85 Demand 1, kw (0.30) (44)) (0.30) (441) 86 Energy MWh (0.0004) (21 (0.0004) (2) 87 Distribution System 3,384,929 MWh , , Nuclear Decomtntrsionthg 3,384,929 MVh , , Energy \Vas(e Reduction tisg Meters , , LIEAF 656 Meters Distribution Surcharges 3,384,929 MtVh 0.l3 4,524 0,l3 4, Total ChoIce Dli I 3,384,929 MWh ,313 0,85 28, ITotal DII I 16,122,977 MtVh I I 6.02t 969,9(5 6.27w 1,011, hicreaseidecrease (5) 41,120