STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * *

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1 EXHIBIT A STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * * In the Matter, on the Commission's own motion, ) establishing the method and avoided cost calculation ) for ALPENA POWER COMPANY to fully comply ) Case No. U with the Public Utilities Regulatory Policy Act ) of 1978, 16 USC 2601 et seq. ) SETTLEMENT AGREEMENT Alpena Power Company ("Alpena") by and through its attorney, James D. Florip, of the law firm of Gillard, Bauer, Mazrum, Florip, Smigelski & Gulden; the Environmental Law and Policy Center, Ecology Center, Solar Energy Industries Association, and Vote Solar, ( ELPC ), by and through their attorney, Margrethe K. Kearney; and the Michigan Public Service Commission Staff ("Staff") by and through its attorney, Assistant Attorney General Michael J. Orris; hereby present this Settlement Agreement in resolution of the above matter. A. On June 17, 2016, Alpena filed its application to provide its avoided cost information pursuant to the Michigan Public Service Commission s ( Commission ) reexamination of avoided costs under the Public Utility Regulatory Policies Act of 1978, 16 USC 2601 et. seq. (PURPA). 1 SETTLEMENT AGREEMENT U-18089

2 B. On June 16, 2016, the Commission issued its notice of hearing, as revised June 28, 2016, setting this matter for a prehearing conference on July 21, Pursuant to the Commission s direction, Alpena mailed a copy of the Notice of Hearing to all cities, incorporated villages, townships, and counties in its service area, and upon Citizens Against Rate Excess. C. Assistant Attorney General Michael J. Orris on behalf of Staff, Alpena s attorney Timothy M. Gulden, and ELPC s attorney Margrethe K. Kearney, attended the July 16, 2017 prehearing conference conducted by Administrative Law Judge Suzanne D. Sonneborn. ELPC was granted Intervenor status. At the prehearing conference, ALJ Sonneborn set a case schedule which was amended on February 17, D. Subsequent to the prehearing conference, Alpena, Staff, and ELPC commenced discussions resulting in a Settlement Agreement. E. The parties agree as follows: 1. Until January 1, 2025, Alpena s avoided cost payable to a QF is that cost Alpena pays to Consumers Energy for Supplemental Power under a thirty (30) year all-requirements contract between Alpena and Consumers Energy, dated September 19, 1994 and continuing until the close of day on December 31, 2024 ( All Requirements Rate ). Beginning January 1, 2025, Alpena s avoided cost payable to a QF are those rates for capacity and energy stated in the tariff. If a QF elects a contract rate for energy at a contract length extending beyond 2024, the contract rate shall be the All Requirements Rate through December 31, 2024, and thereafter at the avoided capacity rate and avoided energy contract rate stated in the tariff, 2 SETTLEMENT AGREEMENT U-18089

3 subject to any order of the Commission as a result of a Biennial Review or otherwise. Nothing in this Settlement Agreement should be construed to limit or otherwise affect a QF s right under PURPA and its implementing regulations to provide energy or capacity to any other utility, including but not limited to Alpena s all-requirements supplier(s). 2. Alpena will file an Application with the Commission on a biennial basis, for a review of Alpena s avoided cost data and calculations. In addition, at the biennial review, the Commission will: (1) set the Standard Offer tariff size cap between 1MW and 5MWs based on Alpena s forecasted capacity needs during the succeeding two years and the PURPA 10-year planning horizon; (2) set the Standard Offer term at 5, 10, 15, or 20 years at the QF s option; and (3) provide Standard Offer rates in the tariff based on 5, 10, 15, or 20 year forecasts used in the most recent Consumers Energy Biennial Review. 3. Alpena s Standard Offer size cap will be 1 MW for the first 2 year term prior to the first biennial review. This Standard Offer cap shall not apply to any other utility to which a QF in Alpena s service territory provides capacity or energy. 4. Historical avoided energy costs will be shown on the Standard Offer tariff. Actual capacity rates will be shown separately on Alpena s Standard Offer tariff. The tariff sheets attached hereto as Exhibit 1 reflect an as available rate and a contract rate for a particular term. 5. Line loss savings will be evaluated on case by case basis to adjust the energy rates. 6. Any renewable energy credits ( RECs ) generated by a QF will remain the 3 SETTLEMENT AGREEMENT U-18089

4 property of the QF. 7. Alpena will request ex parte processing when filing QF contracts with the Commission based upon the Standard Offer tariff, unless the Commission or circumstances dictate otherwise. 8. Exhibit 1 shows Alpena s proposed tariff sheets No. D through D-38.00, (Alpena s Cogeneration and Small Power Production Purchase Rate 1 ) and D through D (Alpena s Cogeneration and Small Power Production Purchase Rate 2), for its purchases and sales from and to Qualifying Facilities. Upon the Commission s approving Consumers Energy s 5, 10, 15, and 20 year Contract Rates in Case No. U and Consumers filing its tariff with the Commission, Alpena will file its revised tariff sheets D through D reflecting those same Contract Rates as Consumers subject to the objections of the Commission or the Intervenor in this case. F. It is the opinion of the parties that this Settlement Agreement will promote the public interest; is intended for final disposition of this proceeding; and the parties join in respectfully requesting the Commission to grant prompt approval of the agreement. G. This Settlement Agreement will become binding upon the parties only if the Commission accepts and approves the same without modification. If the Commission does not approve this Settlement Agreement without modification, this Agreement shall be withdrawn and shall not constitute any part of the record in the proceeding or be used for any purpose whatsoever. 4 SETTLEMENT AGREEMENT U-18089

5 H. This Settlement Agreement has been made for the sole and express purpose of reaching a compromise that promotes administrative efficiency and is without prejudice to the rights of the parties to take new or different positions in other proceedings. All offers of settlement and discussions relating to this Settlement Agreement shall be considered privileged under MRE 408. If the Commission approves this Settlement Agreement without modification, the parties shall make no reference to or use of this Settlement Agreement or the order approving it as a reason, authority, rationale, or example for taking any action or position or making any subsequent decision in any other case or proceedings; provided, however, such references or use may be made to enforce the Settlement Agreement and order. I. All parties waive Section 81 of the Administrative Procedures Act of 1969, as amended, MCL Date: June 1, 2017 MICHIGAN PUBLIC SERVICE COMMISSION By: Michael J. Orris (P51232) Its: Attorney Dated: June 1, 2017 ALPENA POWER COMPANY By: James D. Florip (P26861) Its: Attorney 5 SETTLEMENT AGREEMENT U-18089

6 Date: June 1, 2017 ENVIRONMENTAL LAW and POLICY CENTER, ECOLOGY CENTER, SOLAR ENERGY INDUSTRIES ASSOCIATION, VOTE SOLAR By: Margrethe K. Kearney (P80402) Their: Attorney 6 SETTLEMENT AGREEMENT U-18089

7 Case No. U ALPENA POWER COMPANY EXHIBIT 1 TO SETTLEMENT AGREEMENT TARIFF SHEETS EFFECTIVE UPON DATE OF COMMISSION S ORDER APPROVING SETTLEMENT AGREEMENT

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