STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION

Transcription

1 STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the matter of the application of CONSUMERS ENERGY COMPANY Case No. U for authority to increase its rates for the (e-file paperless) generation and distribution of electricity and for other relief. / THE MICHIGAN PUBLIC SERVICE COMMISSION STAFF S RESPONSE OPPOSING THE RESIDENTIAL CUSTOMER GROUP S MOTION TO REOPEN THE RECORD, FOR REHEARING, AND/OR FOR TAKING JUDICIAL OR OFFICIAL NOTICE I. Introduction After the close of the record in this case, U.S. Congress passed, and the President signed, the Tax Cuts and Jobs Act of 2017, which reduced Consumers federal corporate income tax from 35% to 21% beginning January 1, The Commission responded swiftly. Before the ink was dry on the federal tax change, and before it took effect, the Commission issued an order in Case No. U ensuring that utilities correctly account for the change. See In re the Commission s Own Motion to Consider the Effect of Federal Tax Changes on Utility Rates, MPSC Case No. U-18494, 12/27/2017 Order, p 2 ( To ensure that all utilities account for these changes in a similar manner, beginning January 1, 2018, regulatory accounting treatment is required for all regulated utilities for any impacts of the new law including current and deferred tax impacts. ). In its December 27 th Order, the Commission directed utilities to file, by January 19, 2018, comments in Case No. U regarding the extent of the 1

2 impacts of the new law, and how any resulting benefit should flow back to ratepayers. Id. Specifically, the Commission required utilities named in the Order to compare their revenue requirements before the tax change with their revenue requirements after the tax change, and it asked for these utilities opinion about the best way to flow the benefits of those impacts to ratepayers. Id. The Commission also said that it would likely open separate contested cases to litigate the effects of the federal tax change on utilities rates. Id. After the Commission issued its order in Case No. U-18494, the Residential Customer Group (RCG) moved to reopen the record and to require Consumers to file corrective supplemental evidence to establish the impact of the federal corporate tax rate reduction on their evidentiary presentations in this case, and to revise its requested rate increase accordingly. (RCG s Motion to Reopen the Record, p 7.) In the alternative, RCG asked the ALJ to take official notice of the federal tax change or for a rehearing to enable the tax law rate change to be recognized for purposes of setting customer rates in this proceeding. (Id. at 1, 5, 7.) Staff agrees that the benefits of the federal tax change must flow to ratepayers and applauds the Commission for acting promptly to require utilities to correctly account for the change. The Commission s action relieves any pressing need to address the issue in this docket, and it is a good thing too, because there is not enough time to properly evaluate the impact of the change in this case before the statutory deadline for an order. 2

3 II. In Case No. U-18494, the Commission started down a path to address the federal tax change, and this path should be allowed to run its course. To ensure that ratepayers receive the full benefit of the federal tax change, the Commission required Consumers and other utilities to use regulatory accounting, which includes the use of regulatory assets and liabilities, for all calculated differences resulting from the TCJA and what would have been recorded if the TCJA did not go into effect. 12/27/2017 Order in Case No. U at 2. By acting before the new tax law took effect, the Commission ensured that, as long utilities correctly recalculate their tax liabilities, every dollar will be accounted for and passed on to ratepayers. This will be true whether rates are adjusted next month or next year. There is, therefore, no reason to rush the process. We should take enough time to make sure that utilities recalculate their tax liabilities correctly. One way to ensure that utilities recalculate their tax liabilities correctly is through contested cases that allow Staff and other interested parties to thoroughly vet utilities calculations before rates are revised. In its December 27 Order in Case No. U-18494, the Commission said that this is the approach it will likely take. Id. This is consistent with past practice. Historically, when the Commission has addressed tax changes, it has often done so through stand-alone contested cases. RCG cited a number of these cases, and it attempted to distinguish them by pointing out that there were no rate cases pending when past tax changes took effect. (RCG s Motion, pp 5 6.) But this does not help RCG s case since it is 3

4 impossible to know what the Commission would have done if there had been ongoing cases (particularly rate cases with statutory deadlines). Far from requiring the ALJ and the Commission to address the tax change in the present case, the orders that RCG cite support the approach the Commission is taking. To be clear, Staff is not recommending needless delay in passing the benefits of the federal tax change on to customers; Staff simply wants to ensure that all parties have the chance to rigorously review the utilities calculations. The Commission has initiated a process to do so, and it should be allowed to run its course. III. There is not enough time to address the tax change in this case before the Commission must issue a final order. The Commission is expected, by the end of March, to issue an order in this case, and if Consumers is required to supplement the record, there will not be enough time to properly evaluate and respond to this new evidence before an order is issued. Consumers could conceivably supplement its testimony in this case by the end of the month, given that utilities have until January 19, 2018 to file comments in Case No. U But if Consumers supplements its testimony by the end of the month, this would leave just two months for the other parties to file testimony, for Consumers to file rebuttal, and for the Commission to issue an order. This alone is unrealistic, and it does not even account for the time needed to brief any legal issues arising from the new federal tax law. It also does not account for 4

5 the time and resources that will be dedicated to preparing Exceptions to the Proposal for Decision and Replies to Exceptions. As for RCG s alternative requests to take official notice of the tax change or for a rehearing, both would short-circuit the reasoned discussion and debate that should take place in a contested case. Each of these requests suffers from individual flaws as well. Concerning the request for a rehearing, RCG cites Rule 136 in Part 1 of the Administrative Hearing Rules, which says that a rehearing may be granted [w]here for justifiable reasons the record of testimony made at the hearing is found to be inadequate for purposes of judicial review. Mich Admin Code, R But MPSC cases are specifically exempted from most of Part 1 of the Administrative Hearing Rules, including Rule 136. Mich Admin Code, R (3). 1 Rule 437 is the Rule that applies, and it permits petitions for rehearing only after a decision or order of the commission is issued. Mich Admin Code, R As for RCG s request to take official notice of the tax change, this ALJ and the Commission have said that it is inappropriate to take judicial notice of facts after the close of the record in a rate case with a statutory deadline. In Case No. U-17767, after the close of the record, Staff asked this ALJ to take official notice of a 1 Rule 101 of the Administrative Hearing Rules says, The rules in this part do not govern part 4 proceedings before the Michigan public service commission, except R (2), (3), (4), (5), (6), and (7), provisions for disqualification and recusal of administrative law judges. Mich Admin Code, R (3). 5

6 press release about a rating report and a report from another state regulatory commission. This ALJ denied the request, finding that the time limit on rate cases contained in MCL 460.6a limits the ability to consider late-filed evidence and noting that each of Staff s documents contain[ed] material that the some of the parties believe they should have had the opportunity to address. (MPSC Case No. U-17767, PFD, p 22.) The Commission agreed, holding that because of the unforgiving time limits under MCL 460.6a, official notice requests, especially those that may generate controversy regarding the materiality or weight of the evidence proffered, can rarely, if ever, be entertained after the close of the record. In re DTE Electric Co, MPSC Case No. U-17767, 12/11/2015 Order, p 136. The same reasoning applies here. When Consumers recalculates its tax liability, whether it is in this case or another case, it may generate controversy, and parties will certainly want an opportunity to respond. It would be wrong to take official notice of the effect of the tax change without giving parties the chance to offer input. It is better to take time and ensure that ratepayers receive the full benefit of the tax change than to rush to judgment and risk giving ratepayers less than the full amount they are entitled to receive. IV. Conclusion The ALJ should deny RCG s motion to reopen the record to evaluate the new federal corporate tax rate s impact on Consumers and its customers. The Commission already started a process to address the tax change, and there is not 6

7 enough time in this case to adequately address the issue. The ALJ should likewise deny RCG s motion for alternative relief for similar reasons. Respectfully submitted, MICHIGAN PUBLIC SERVICE COMMISSION STAFF DATED: January 17, /Response Opp Motion to Reopen Spencer A. Sattler (P70524) Amit T. Singh (P75492) Meredith R. Beidler (P78256) Monica M. Stephens (P73782) Assistant Attorneys General Public Service Division 7109 W. Saginaw Hwy., 3rd Floor Lansing, MI Telephone: (517)

8 STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the matter of the application of CONSUMERS ENERGY COMPANY Case No. U for authority to increase its rates for the (e-file paperless) generation and distribution of electricity and for other relief. / STATE OF MICHIGAN ) ) ss COUNTY OF EATON ) PROOF OF SERVICE TINA L. BIBBS, being first duly sworn, deposes and says that on January 17, 2018, she served a true copy of Michigan Public Service Commission Staff s Response Opposing the Residential Customer Group s Motion to Reopen the Record, for Rehearing, and/or for Taking Judicial or Official Notice upon the following parties via only: Consumers Energy Company Bret A. Totoraitis Anne M. Uitvlugt Gary A. Gensch, Jr. H. Richard Chambers Kelly M. Hall Robert W. Beach Theresa A.G. Staley Consumers Energy Company One Energy Plaza Jackson, MI bret.totoraitis@cmsenergy.com anne.uitvlugt@cmsenergy.com gary.genschjr@cmsenergy.com rick.chambers@cmsenergy.com kelly.hall@cmsenergy.com robert.beach@cmsenergy.com theresa.staley@cmsenergy.com mpsc.filings@cmsenergy.com Michigan Environmental Council; Sierra Club; Natural Resources Defense Council Christopher M. Bzdok Tracy Jane Andrews Olson, Bzdok & Howard 420 E. Front St. Traverse City, MI chris@envlaw.com tjandrews@envlaw.com Kimberly Flynn, Legal Assistant Karla Gerds, Legal Assistant kimberly@envlaw.com karla@envlaw.com Flora Champenois Gabrielle Winick fchampenois@earthjustice.org gwinick@earthjustice.org 1

9 Michigan Cable Telecommunications Ass n David E.S. Marvin Michael S. Ashton Fraser Trebilcock Davis & Dunlap 124 W. Allegan St., Ste Lansing, MI dmarvin@fraserlawfirm.com mashton@fraserlawfirm.com Attorney General, Special Litigation Unit John A. Janiszewski Joel B. King Assistant Attorneys General Environment, Natural Resources and Agriculture Div. G. Mennen Williams Bldg., 6 th Floor 525 W. Ottawa St.; P.O. Box Lansing, MI janiszewskij2@michigan.gov kingj38@michigan.gov ag-enra-spec-lit@michigan.gov Wal-Mart Stores East, LP; Sam s East, Inc. Melissa M. Horne Higgins, Cavanagh & Cooney, PC 10 Dorrance St., 4 th Floor Providence, RI mhorne@hcc-law.com Sierra Club Michael Soules 1625 Massachusetts Ave N.W. Ste. 702 Washington, DC msoules@earthjustice.org Shannon Fisk 1617 John F. Kennedy Blvd., Ste Philadelphia, PA sfisk@nrdc.org The Kroger Co. Kurt J. Boehm Jody Kyler Cohn Boehm, Kurtz & Lowry 36 E. Seventh St., Ste Cincinnati, OH kboehm@bkllawfirm.com jkylercohn@bkllawfirm.com Hemlock Semiconductor Operations LLC; Constellation NewEnergy, Inc. Jennifer Utter Heston Fraser Trebilcock Davis & Dunlap, PC 124 W. Allegan St., Ste Lansing, MI jheston@fraserlawfirm.com 2

10 Michigan State Utility Workers Council, Utility Workers Union of America, AFL-CIO John R. Canzano Patrick J. Rorai 423 N. Main St., Ste. 200 Royal Oak, MI Environmental Law & Policy Center Margrethe K. Kearney Environmental Law & Policy Center 1514 Wealthy St. SE, Suite 256 Grand Rapids, MI Bradley Klein Environmental Law & Policy Center 35 E. Wacker Dr., Suite 1600 Chicago, IL Kristin Field Midland Cogeneration Venture Limited Partnership Richard J. Aaron Jason Hanselman Dykema Gossett Capitol View 201 Townsend St., Ste. 900 Lansing, MI Association of Businesses Advocating Tariff Equity; Gerdau Macsteel, Inc. Michael J. Pattwell Sean P. Gallagher Bryan A. Brandenburg Clark Hill PLC 212 E. Grand River Ave. Lansing, MI Energy Michigan, Inc. Laura A. Chappelle Timothy J. Lundgren Varnum Law The Victor Center 201 N. Washington Sq., Ste. 910 Lansing, MI Toni L. Newell Varnum Law 333 Bridge St., N.W. Grand Rapids, MI Residential Customer Group Don L. Keskey Brian W. Coyer Public Law Resource Center PLLC University Office Place 333 Albert Ave., Ste. 425 East Lansing, MI

11 Midwest Cogeneration Ass n John R. Liskey Attorney at Law PLLC 921 N. Washington Ave. Lansing, MI john@liskeypllc.com Patricia F. Sharkey Environmental Law Counsel, PC 180 N. LaSalle St., Suite 3700 Chicago, IL psharkey@e-lawcounsel.com Administrative Law Judge Hon. Sharon L. Feldman Administrative Law Judge Michigan Public Service Comm W. Saginaw Hwy., 3 rd Floor Lansing, MI feldmans@michigan.gov TINA L. BIBBS Subscribed and sworn to before me this 17th day of January, Corinna C. Swafford, Notary Public State of Michigan, County of Ionia Acting in the County of Eaton My Commission Expires: