July 3, Northern States Power Company Wisconsin Energy Waste Reduction Biennial Plan MPSC Case No. U-18264

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1 Founded in 185 by Sidney Davy Miller SHERRI A. WELLMAN TEL ( FAX ( Miller, Canfield, Paddock and Stone, P.L.C. One Michigan Avenue, Suite 900 Lansing, Michigan TEL ( FAX ( MICHIGAN: Ann Arbor Detroit Grand Rapids Kalamazoo Lansing Troy FLORIDA: Tampa ILLINOIS: Chicago NEW YORK: New York OHIO: Cincinnati CANADA: Toronto Windsor CHINA: Shanghai MEXICO: Monterrey POLAND: Gdynia Warsaw Wrocław July 3, 017 Ms. Kavita Kale Executive Secretary Michigan Public Service Commission 7109 W. Saginaw Hwy. Lansing, MI Re: Northern States Power Company Wisconsin Energy Waste Reduction Biennial Plan MPSC Case No. U-1864 Dear Ms. Kale: Enclosed for electronic filing are the Application of Northern States Power Company Wisconsin and supporting Direct Testimony and Exhibit of Lori R. Drilling. Also enclosed is the Entry of Appearance in an Administrative Hearing of Sherri A. Wellman. Please be advised that a marked-up Notice of Hearing has been ed Angela McGuire at mcguirea@michigan.gov. If you should have any questions, please kindly advise. Very truly yours, Miller, Canfield, Paddock and Stone, P.L.C. SAW/kld Enclosures cc w/enc: Lori R. Drilling Mara K. Ascheman \ By: Sherri A. Wellman

2 MICHIGAN DEPARTMENT OF LICENSING AND REGULATORY AFFAIRS PUBLIC SERVICE COMMISSION ENTRY OF APPEARANCE IN AN ADMINISTRATIVE HEARING This form is issued as provided for by 1939 PA 3, as amended, and by 1933 PA 54, as amended. The filing of this form, or an acceptable alternative, is necessary to ensure subsequent service of any hearing notices, Commission orders, and related hearing documents. General Instructions: Type or print legibly in ink. For assistance or clarification, please contact the Public Service Commission at ( Please Note: The Commission will provide electronic service of documents to all parties in this proceeding. THIS APPEARANCE TO BE ENTERED IN ASSOCIATION WITH THE ADMINISTRATIVE HEARING: Case / Company Name: Docket No. Please enter my appearance in the above-entitled matter on behalf of: 1. (Name. (Name 3. (Name 4. (Name 5. (Name 6. (Name 7. (Name Name Address City State Zip Phone ( I am not an attorney I am an attorney whose: Michigan Bar # is P- Bar # is: ( state Date Signature: Save Form EAHR1-09/9/016

3 STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * * In the matter, on the Commission s own motion, regarding the regulatory reviews, revisions, determinations, and/or approval necessary for NORTHERN STATES POWER COMPANY WISCONSIN to fully comply with Public Act 95 of 008, as amended by Public Act 34 of 016. Case Nos. U-1864 APPLICATION NORTHERN STATES POWER COMPANY - WISCONSIN, a Wisconsin corporation and wholly owned subsidiary of Xcel Energy Inc., ( NSP-W or the Company requests authority from the Michigan Public Service Commission ( Commission to implement the Company s Energy Waste Reduction ( EWR plan, including continuing alternative compliance payments and charges for recovery of same pursuant to MCL In support thereof, NSP-W respectfully represents as follows: 1. NSP-W is a public service corporation organized under the laws of the State of Wisconsin with principal offices located in Eau Claire, Wisconsin and Ironwood, Michigan. NSP-W is authorized to do business in the State of Michigan.. NSP-W is engaged, in part, in the generation, transmission, distribution and sale of electric energy in two counties in the Upper Peninsula of Michigan, and thirty-four counties in Wisconsin. NSP-W is engaged, in part, in the distribution and sale of natural gas in portions of two counties in the Upper Peninsula of Michigan and portions of ten counties in Wisconsin.

4 3. NSP-W's retail electric and gas business is subject to the jurisdiction of the Commission pursuant to 1909 PA 106, as amended, MCL et seq.; 1919 PA 419, as amended, MCL et seq.; and 1939 PA 3, as amended, MCL et seq. Pursuant to said statutory provisions, the Commission has power and jurisdiction to regulate NSP-W's retail electric and gas rates for service rendered in the State of Michigan. 4. The Michigan Legislature enacted the Michigan clean, renewable, and efficient energy act, 008 PA 95, MCL et seq., effective October 6, 008, as amended by 016 PA 34 (a/k/a the clean renewable energy and energy waste reduction act. 5. MCL provides that a provider may in lieu of establishing its own EWR plan pay a portion of its revenues to an EWR program administrator selected by the Commission. 6. The Company s intention for is to continue to elect the EWR program administrator and to make alternative compliance payments, and consistent therewith, attached hereto as Attachment 1, is NSP-W s Provider Notification of Intent to Elect the Energy Waste Reduction Administrator to Offer Energy Waste Reduction Services. 7. MCL (1 describes the calculation of the amount of annual payments to the EWR program administrator. NSP-W proposes that $90,18 be paid to the EWR program administrator in 018 based upon 016 electric revenues and $94,445 be paid to the EWR program administrator in 018 based upon 016 gas revenues. The amounts to be paid in 019 will be finalized as actual 017 revenues become known. 8. For purposes of estimating EWR surcharges for a two-year period , NSP-W proposes using the same level of revenue and payments to the EWR program administrator for the calculation of its levelized surcharges with the understanding

5 that 019 payments to the EWR program administrator will be based upon actual 017 revenues, and the revenues collected will be subject to reconciliation. 9. This Application is supported by the pre-filed direct testimony of Lori J. Drilling and Exhibit A-1 (LJD-1. Commission: WHEREFORE, Northern States Power Company Wisconsin requests that this A. Find and determine that the Company s proposed payments to the EWR program administrator for 018 satisfy the Company s statutory obligations; B. Authorize the Company, beginning as of January 1, 018, to implement, subject to reconciliation, the EWR surcharge charges set forth in the supporting testimony and exhibit; and proper. C. Grant such other and further relief and authorizations as may be lawful and Respectfully submitted, NORTHERN STATES POWER COMPANY - WISCONSIN Dated: July 3, 017 By: Its Attorney Sherri A. Wellman (P38989 MILLER, CANFIELD, PADDOCK and STONE, PLC One Michigan Avenue, Suite 900 Lansing, MI ( \ Attorney for Northern States Power Company - Wisconsin 3

6 A ttachm ent1 P R O VIDER N O T IFICA T IO N O FIN T EN T T O EL ECT EFFICIEN CY U N IT ED 1 T O O FFER EN ER GY W A S T ER EDU CT IO N S ER VICES FO R 018/ P A 95 asam ended by 016 P A 34 Im plem entationofenergy W aster eductionp lans DAT E: 6/3/017 P R O VIDER N AM E,addressand contactinform ation,includingem ailaddress,foraproviderrepresentative: X celenergy Eau Claire,W I L oridriling lori.j.driling@ xcelenergy.com 1414 W Ham iltona ve ( P O Box 8 T hisisarenew al. T hisisanew election. Electionisforyears(tw oyearm inim um : P rogram Year T otalr etail Volum e014 T otalr etail Volum e015 T otalr etail Volum e016 T arget(1.0% x 3- YearA verage 018 $14,510,888 $90,18 143, , ,399 1,379 P rogram T otalr etails ales P aym ent T otalr etail T otalr etail T otalr etail T arget(1.0% x 3- Year R evenue017 (R evenuex.0% Volum e015 Volum e016 Volum e017 YearA verage 019 $14,510,888 $90,18 134, , ,399 1,351 Gas U tility P rogram Year T otalr etails ales R evenue016 A nnualp aym enttoefficiency U nited T otalr etails ales R evenue016 P aym ent (R evenuex.0% P aym ent (R evenuex.0% T otalr etail Volum e014 A nnualincrem entalenergy S avingst arget-m cf T otalr etail Volum e015 T otalr etail Volum e016 T arget(0.75% x 3- YearA verage 018 $4,7,35 $94,445 1,004, , ,959 6,610 P rogram T otalr etails ales P aym ent T otalr etail T otalr etail T otalr etail T arget(0.75% x 3- Year R evenue017 (R evenuex.0% Volum e015 Volum e016 Volum e017 YearA verage 019 $4,7,35 $94, , , ,959 6,103 Convertfrom therm sassum ing10 T h= 1 M cf T otalretailsalesrevenueand volum esshould havebasisinfiguresreported onm P S C Form P -51 orp -5,FER C Form N o.1/3-q,form EIA-861,orForm EIA-861(S,asapplicabletotheprovider. P aym entand targetfor019 m ay beestim ated by substituting016 datafor017 ifforecastsarenotavailable. P aym entand targetforfutureyearsw ilberecalculated annualy asupdated databecom esavailable. P aym entand targetm ay beadjusted based onself-directcustom erparticipationand w ilbedeterm ined during theew R planreview process P A 95,asam endedby 016P A 34,S ec.91,alow sproviderstheoptionofm eetingenergy w astereductionprogram com pliancerequirem ents by payingapercentageoftotalutility salesrevenues,includingelectricity ornaturalgascom m odity costs,eachyeartoanindependentenergy w aste reductionprogram adm inistratorselectedby them ichiganp ublics ervicecom m ission(m P S C.T heprogram runby theindependentenergy w aste reductionprogram adm inistratoriscaledefficiency U nited.p rovidersm ustm akeatw o-yearcom m itm ent.anoptiontorenew isprovided. Efficiency U nitedw ilprepareasingleew R reportannualy forpurposesrequiredby section97(1ofp A 95,asam ended,thatm ay beusedby al providerselectingthealternativecom pliancepaym entoption. R ateregulatedprovidersthatopttouseefficiency U nitedm ustalsofileafinancial reconciliationw iththem P S C annualy. 1

7 A ttachm ent1 EU P rovidern otificationform cont. R esidential Custom ers Com m ercial Custom ers Industrial Custom ers N um bercustom ers Elected for018 0 N um ber 7,637 1,74 T otalr evenue016 $0 Volum em W h 54,081 5,305 8,73 T otalm W h016 0 R evenueelec. $6,610,773 $5,9,04 $1,977,911 N um ber 5, Volum em cf 419,84 84,483 97,733 R evenuegas $,86,105 $1,53,164 $363,966 S ignatureofp roviderr epresentative June3,017 Date S ignatureofefficiency U nited R epresentative Date S ubm itform to: ChereColem an Attachcopy to: CurrentEW R P lanfiling ccolem an@ m caaa.org ElectioniscontingentuponM P S C approval. Efficiency U nited 173 Com m onsp arkw ay O kem os,m I48864

8 S T A T E O F M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * In the matter, on the Commission s own motion, regarding the regulatory reviews, revisions, determinations, and/or approval Case No. U-1864 necessary for NORTHERN STATES POWER COMPANY to fully comply with Public Act 95 of 008, as amended by Public Act 34 of 916. DIRECT TESTIMONY OF LORI J. DRILLING Q. PLEASE STATE YOUR FULL NAME, POSITION, AND BUSINESS ADDRESS. A. My name is Lori J. Drilling. My business address is 1414 West Hamilton Avenue, Eau Claire, Wisconsin Q. BY WHOM ARE YOU EMPLOYED AND IN WHAT CAPACITY? A. I am employed as the DSM Resource Supervisor for the Customer and Community Services Department of Northern States Power Company, a Wisconsin corporation and wholly owned subsidiary of Xcel Energy Inc. ( NSP-W or the Company. Q. PLEASE DESCRIBE YOUR CURRENT JOB RESPONSIBILITIES. A. I am responsible for managing the development and execution of regulatory projects relating to Demand Side Management ( DSM and the statewide energy efficiency programs for Michigan and Wisconsin. This includes preparing testimony, exhibits, data requests, filings, comments and reports for regulatory purposes. I am also responsible for compliance related to regulatory and legal requirements in regard to DSM in both Michigan and Wisconsin.

9 Q. PLEASE DESCRIBE YOUR BACKGROUND AND EXPERIENCE WITH NSP-W. A. I joined NSP-W in 1986 and held various positions within the Marketing Department until 1998 when I joined the Business Solutions Center. In 011, I accepted a position as the Program Coordinator in Customer and Community Services and assumed my present position as the DSM Resource Supervisor in 016. In my current position, I am responsible for the management of the energy efficiency programs in Michigan and Wisconsin. This includes coordinating the Company s participation in the statewide energy efficiency programs in both states and managing the budgets. It also includes preparing and filing related regulatory reports, applications, testimonies, etc., for both states. Q. HAVE YOU PREVIOUSLY FILED TESTIMONY WITH THE MICHIGAN PUBLIC SERVICE COMMISSION ( MPSC? A. Yes, most recently in Case No. U Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY IN THIS PROCEEDING? A. In compliance with the MPSC s March 8, 017 order in Case No. U-1864, requiring the Company to file an application for an Energy Waste Reduction ( EWR Plan by July 3, 017, I am requesting consideration and review with respect to both gas and electric service the following: 1. The Company will continue to utilize Efficiency United, the Commission-approved EWR program administrator to comply with the requirements of 008 PA 95, as amended by 016 PA 34.

10 The Company is requesting a change to EWR surcharges to collect the mandatory annual EWR funding, which is % of 016 electric and gas revenues for 018 and % of 017 electric and gas revenues for 019. Q. PLEASE IDENTIFY THE EXHIBIT THAT YOU ARE SPONSORING WITH YOUR DIRECT TESTIMONY. A. I am sponsoring the following exhibit, which was prepared by me or under my direction and supervision: Exhibit Exhibit A-1 (LJD-1 Content Calculation of a revised EWR surcharge schedule, to collect the 018/019 EWR funding obligation Q. PLEASE BRIEFLY DESCRIBE EXHIBIT A-1 THAT YOU ARE SPONSORING. A. Using a forecast of 018 revenues for each major rate class and customer type, the 018 EWR funding obligation is calculated at.00% of sales revenue and presented as either a 14 cost per kwh factor or a cost per meter, per month factor. Finally, the collections expected from each major rate class or customer type are summed and netted against the funding obligation to show the anticipated net over/under collection of the EWR surcharge. Q. WHAT WILL BE THE AMOUNT OF THE COMPANY S EWR PAYMENTS FOR 018 and 019? A. EWR payments to the EWR administrator for 018 will be.00% of actual 016 revenues. As shown in Exhibit A-1 (LJD-1, the payments will be $90,18 based on 016 electric revenue and $94,445 based on 016 gas revenue for a total of $384,66. The amounts to be paid in 019 will be finalized as actual 017 revenues become known. 3

11 1 Q. DOES THIS COMPLETE YOUR DIRECT TESTIMONY? A. Yes, it does. 4

12 NORTHERN STATES POWER COMPANY - WISCONSIN (XCEL ENERGY INC. Computation of the Energy Waste Reduction Surcharges Case No.: U-1864 Exhibit: A-1 (LJD-1 Witness: Lori J. Drilling 016 Total Historical Revenues.00% of 016 Revenues / 018 Projected Volumes Proposed 018 Est. Electric Rate Class EWR Obligation 018 Surcharge Recovery Residential - C01, C0 $ 6,610,773 $ 13,15 54,709,081 kwh $ $ 13,15 Small Commercial - C09, C10, C11, C3 $ 1,559,79 $ 31,195 1,16 meter-mo. $.4 $ 31,195 Commercial - C1, C1 $,460,99 $ 49,19 14 meter-mo. $ $ 49,19 Industrial - C13, C0 (sec. $ 1,684,484 $ 33, meter-mo. $ $ 33,690 Industrial - C0 (trans. $ 1,977,911 $ 39,558 meter-mo. $ 1,648.6 $ 39,558 Lighting - C04, C30 $ 17,06 $ 4,341 1,678 lamp per month $ 0. $ 4,341 Total $ 14,510,888 $ 90, Recovery $ 90, EWR Obligation $ 90,18 Electric Over/(Under Recovery $ Total.00% of 016 Projected Proposed 018 Est. Historical Revenues Revenues / 018 Volumes Surcharge Recovery Gas Rate Class EWR Obligation 018 Residential $,86,105 $ 56,5 4,618,65 therm $ $ 56,5 Commercial - 30, (incl. Transportation Svc. $ 1,410,378 $ 8, mo $ 3.50 $ 8,08 Interruptible $ 11,786 $,436 5 mo $ $,436 Industrial $ 363,966 $ 7,79 mo $ $ 7,79 Total $ 4,7,35 $ 94, Recovery $ 94, EO Obligation $ 94,445 Total Electric and Gas $ 19,33,13 $ 384,66 Gas Over/(Under Recovery -