255 South Old Woodward Avenue 3rd Floor Birmingham, MI Tel. (248) Fax (248)

Transcription

1 255 South Old Woodward Avenue 3rd Floor Birmingham, MI Tel. (248) Fax (248) Robert A. W. Strong Phone: (248) January 18, 2005 VIA ELECTRONIC FILING AND HAND DELIVERY Ms. Mary Jo Kunkle Executive Secretary Michigan Public Service Commission 6545 Mercantile Way Lansing, MI Re: MPSC Case No. U Dear Ms. Kunkle: Enclosed for filing please find the Association of Businesses Advocating Tariff Equity s Answer to Petition For Rehearing along with a Proof of Service. Very truly yours, CLARK HILL PLC Robert A. W. Strong Enclosures cc w/enc: /ag Parties of Record Administrative Law Judge v1 Detroit, Michigan Birmingham, Michigan Lansing, Michigan

2 STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the matter of the application of THE DETROIT EDISON COMPANY to increase rates, amend its rate schedules governing the distribution and supply of electric energy, implement Case No. U Power Supply Cost Recovery plans, factors and reconciliation s in its rate schedules for jurisdictional sales of electricity and for miscellaneous accounting authority and regulatory asset recovery. / ANSWER OF THE ASSOCIATION OF BUSINESSES ADVOCATING TARIFF EQUITY TO PETITIONS FOR REHEARING The Association of Businesses Advocating Tariff Equity ( ABATE ) by its attorneys, Clark Hill PLC, files this Answer to the Petitions for Rehearing pursuant to Rule 403 of the Commission s Rules of Practice and Procedure, 1992 AACS, R I. ARGUMENT A. Standard of Review Rule 403 provides that a Petition for Rehearing may be based on claims of error, newly discovered evidence, facts or circumstances arising after the hearing or unintended consequences resulting from compliance with the Order. A Petition for Rehearing is not merely another opportunity for a party to argue a position or to express disagreement with the Commission s final decision. Unless a party can show the decision to be incorrect or improper because of errors, newly discovered evidence, or unintended consequences of the decision, the Commission should not grant rehearing.

3 B. Answer to Detroit Edison 1. Capital Structure Edison argues that the Commission should have recognized for ratemaking a capital structure consisting of 50% equity and 50% debt. This issue was fully litigated and obviously was closely analyzed by the Commission as reflected in the November 23 Order. Consequently, Edison has not met the standard of review quoted above. In addition, Edison is asking the Commission to change its initial decision because of a press release issued by Standard & Poor s which is not in evidence. According to Section 85 of the Administrative Procedures Act of 1969, as amended: Findings of fact shall be based exclusively on the evidence and on matters officially noticed. (emphasis added) The action taken by Standard & Poor s has no relevance to this case as does reaffirmation of Edison s credit rating by Fitch Ratings. Commission must reject Edison s rehearing request on the equity and debt ratios because Edison is simply rehashing what was litigated fully before the Commission and because Edison s argument is based upon information that is not in the record. 2. Control Premium The issue of whether Edison should be entitled to recover a portion of the control premium paid for the acquisition of MCN in rates was fully litigated in this proceeding. A number of parties sponsored witnesses who addressed this issue and there was testimony both for and against. In fact, ABATE s witness, Mr. Selecky, sponsored clear and convincing testimony that customers were receiving no benefit from the merger because controllable O&M expenses were climbing much faster than the rate of inflation. Therefore, even if one accepts Edison s argument that the Commission must blindly follow the holding in Case No. U-9323, there is clear support on the record that no control premium is warranted. 2

4 3. Inflation Adjustment Edison claims that it needs a further year s inflation adjustment to its O&M expense is justified by the delay in processing of this case and because of the inability to implement rate increases until January 1, 2005, for small commercial customers and January 1, 2006, for residential customers. These reasons do not justify giving Edison the gift of another year of inflation. This proposal was not addressed in any testimony and that would be a violation of ABATE s due process to have this new proposal adopted without the ability to submit testimony and argue against the proposal. It is noted by Edison that the Commission rejected Edison s forecasted 2004 test year in favor of Staff s historical test year with adjustments for years 2003 and Those adjustments are perfectly legitimate and are designed to provide rates that will adequately compensate Edison. An additional adjustment should be rejected for these reasons. 4. LIEEF Funds ABATE agrees with Edison s position that collecting increased rates to support the LIEEF program constitutes a tax on electric customers. ABATE disagrees with the implication that if the funds were only made available for energy assistance to customers in Edison s service territory, it would somehow transform an illegal tax into a legal one. This would make the program more palatable but certainly not legal. The Commission should not make Edison into a tax collector for a program that should be funded by the Legislature and not other utility customers. If the state wants to fund this program, it should do it through the normal budgetary process under the supervision of the Legislature and as approved by the Governor. 3

5 5. PSCR/Mitigation In this Section, Edison is arguing that the Commission has no power to regulate under the existing statutes and that Edison can dictate a certain result. Nothing could be further from the truth. Edison, in 1983, exercised its management prerogative and asked the Commission for authority to implement a power supply cost recovery plan in its rate schedules and that request was granted in an Opinion and Order, Case No. U-7550, dated December 20, The Commission certainly has the power to order that the PSCR clause be implemented by Edison pursuant to Act 304 after the temporary suspension of MCL 460.6j as discussed in Attorney General v PSC, 249 Mich App, 424, (2002). The Commission clearly has the ratemaking authority to approve or reject the mitigation proposal. See MCL a(10). In its Opinion and Order, the Commission found that it was unlikely that Edison would have any future stranded costs so a rational ratemaking policy would require the Commission to reject mitigation. II. RELIEF WHEREFORE, ABATE respectfully requests that the Commission reject all of Edison s requests for rehearing. Respectfully submitted, CLARK HILL PLC Dated: January 18, 2005 By: Robert A.W. Strong (P27724) Attorneys for the Association of Businesses Advocating Tariff Equity 255 South Old Woodward Ave., Third Floor Birmingham, Michigan (248) rstrong@clarkhill.com v1 0000/

6 STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the matter of the application of THE DETROIT EDISON COMPANY to increase rates, amend its rate schedules governing the distribution and supply of electric energy, implement MPSC Case No. U Power Supply Cost Recovery plans, factors and reconciliations in its rate schedules for jurisdictional sales of electricity and for miscellaneous accounting authority and regulatory asset recovery. / PROOF OF SERVICE To: Parties of Record Robert A.W. Strong, being first duly sworn, deposes and says that on the 18th day of January he caused to be served via U.S. Mail and by electronic mail a copy of the Association of Businesses Advocating Tariff Equity s Answer to Petition for Rehearing along with this Proof of Service upon those individuals listed on the attached service list. Subscribed and sworn to before me this 18th day of January, 2005 Robert A.W. Strong Audrey L. Gilliatt, Notary Public Oakland County, MI, acting in Oakland County, MI My Commission expires: 07/06/ v1

7 PROOF OF SERVICE LIST U Administrative Law Judge Daniel E. Nickerson, Jr. Administrative Law Judge Michigan Public Service Commission 6545 Mercantile Way P.O. Box Lansing, MI (517) (phone) (517) (fax) Michigan Attorney General Donald E. Erickson Assistant Attorney General Michigan Department of Attorney General 515 West Ottawa Street, Floor 6 P.O. Box Lansing, MI (517) (phone) (517) (fax) ericksond@michigan.gov Mr. John Hutts GDS Associates, Inc Parkway Place, Suite 800 Marietta, GA (770) phone (770) fax john.hutts@gdsassociates.com Residential RatePayers Consortium David L. Shaltz Shaltz & Royal 3303 W. Saginaw Street, Suite C1 Lansing, MI (517) (phone) (517) (fax) dshaltz@voyager.net Scott Norwood GDS Associates, Inc. 919 Congress Avenue, Suite 800 Austin, TX (512) (phone) (512) (fax) scott.norwood@gdsassociates.com Michigan Public Service Commission Staff David A. Voges Kristin M. Smith Assistant Attorneys General Public Service Division 6545 Mercantile Way, Suite 15 Lansing, MI (517) (phone) (517) (fax) vogesd@michigan.gov smithkm@michigan.gov Energy Conversion, LLC; North American Wind Energy, LLC; Mackinaw Power, LLC Robert C. Evans 4121 Okemos Road, Suite 17 Okemos, MI (517) (phone) (517) (fax) rce2@comcast.net Richard F. Vander Veen 414 E. Main Street, Suite B Lowell, MI (616) phone rfv3@mackinawpower.com v1 2

8 Local 223, Utility Workers Union of America, AFL-CIO, Mr. Pietro Zebri, Mr. Douglas Moore Samuel C. McKnight David R. Radtke Klimist, McKnight, Sale, McClow & Canzano 400 Galleria Officentre, Suite 117 Southfield, MI Kevin Higgins Energy Strategies 39 Market Street, Suite 200 Salt Lake City, UT (801) phone (801) fax The Detroit Edison Company (248) phone Bruce R. Maters (248) fax Jon P. Christinidis Richard P. Middleton Michael J. Solocinski 2000 Second Avenue, 688 WCB Energy Michigan Detroit, MI Eric J. Schneidewind (313) (phone) Varnum, Riddering, Schmidt & Howlett, LLP (313) (fax) 201 N. Washington Square Suite 810 Lansing, MI (517) (phone) (517) (fax) William K. Fahey Stephen J. Rhodes Foster, Swift, Collins & Smiht PC Richard A. Polich 313 S. Washington Square Energy Options & Solutions Lansing, MI Pratt Ridge Ct. (517) (phone) Ann Arbor, MI (517) fax MEC/PIRGIM Donald L. Keskey National Energy Marketers Association; Clark Hill PLC Constellation NewEnergy, Inc. 212 E. Grand River Avenue John M. Dempsey Lansing, MI Jennifer L. Frye (517) phone Dickinson Wright PLLC ( fax 215 S. Washington Square, Suite 200 Lansing, MI (734) phone The Kroger Company (517) phone Michael Kurtz (734) fax Boehmn, Kurtz & Lowry (517) fax 36 East Seventh Street, Suite 2110 Cincinnati, OH (513) (phone) (513) (fax) v1 3

9 Craig G. Goodman Stacey L. Rantala National Energy Marketers Association 3333 K. Street, N.W. Suite425 Washington, D.C Nordic Marketing LLC Joni M. Fixel Nordic Marketing, L.L.C Hogback Road, Suite 4 Ann Arbor, MI jfixel@baardpower.com MidAmerican Energy Company Christopher J. Townsend Piper Rudnick LLP 203 N. LaSalle Street Chicago, IL Christopher.townsend@piperrudnick.com v1 4