S T A T E O F M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * *

Transcription

1 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, ) to consider changes in the rates of all the Michigan ) rate-regulated electric steam and natural gas utilities ) to reflect the effects of the federal Tax Cuts and Jobs ) Act of 2017: NORTHERN STATES POWER ) Case No. U COMPANY (ELECTRIC) files an application for ) determination of Credit B as described in orders ) U and U ) ) ) In the matter, on the Commission s own motion, ) to consider changes in the rates of all the following ) Michigan rate-regulated electric, steam, and natural ) gas utilities to reflect the effects of the federal Tax ) Cuts and Jobs Act of 2017: ALPENA POWER ) COMPANY, CONSUMERS ENERGY COMPANY, ) DETROIT THERMAL, LLC, DTE ELECTRIC ) COMPANY, DTE GAS COMPANY, INDIANA ) MICHIGAN POWER COMPANY, NORTHERN ) STATES POWER COMPANY, ) Case No. U UPPER PENINSULA POWER COMPANY, UPPER ) MICHIGAN ENERGY RESOURCES ) CORPORATION, WISCONSIN ELECTRIC POWER ) COMPANY, PRESQUE ISLE ELECTRIC & GAS ) CO-OP, MICHIGAN GAS UTILITIES ) CORPORATION, and SEMCO ENERGY GAS ) COMPANY. ) ) ) In the matter, on the Commission s own motion, ) to consider changes in the rates of all the Michigan ) rate-regulated electric, steam and natural gas utilities ) to reflect the effects of the federal Tax Cuts and Jobs ) Act of 2017: NORTHERN STATES POWER ) Case No. U COMPANY (ELECTRIC) files an application ) for determination of Credit A as described in ) order U ) )

2 At the August 28, 2018 meeting of the Michigan Public Service Commission in Lansing, Michigan. PRESENT: Hon. Sally A. Talberg, Chairman Hon. Norman J. Saari, Commissioner Hon. Rachael A. Eubanks, Commissioner ORDER APPROVING SETTLEMENT AGREEMENT On February 22, 2018, the Commission issued an order in Case No. U (February 22 order), adopting a three-step approach to address the impacts of the federal corporate tax reduction arising from the Tax Cuts and Jobs Act of 2017 (TCJA). The first step, the Credit A proceeding, is the going-forward tax credit. The February 22 order directed certain utilities, including Northern States Power Company, a Wisconsin corporation (NSP-W), to file a Credit A application no later than March 30, The second step, the Credit B proceeding, is the looking-backward taxcredit addressing the impacts of the TCJA, and the Credit B application must be filed by a utility within 60 days of the order establishing its Credit A. The third step, the Calculation C proceeding, will capture the remaining impacts of the TCJA and must be filed no later than October 1, In its May 30, 2018 order in Case No. U-20108, the Commission approved a revised settlement agreement, in which the parties to that proceeding agreed that the $513,313 TCJA benefits approved in Case No. U include NSP-W s electric base rate revenue requirement reduction associated with Credit A and Calculation C. On June 11, 2018, NSP-W timely filed its Credit B application, with supporting testimony and exhibits, requesting approval of base rate credits for its Michigan electric customers reflective of its Credit B reduced federal tax expense. A prehearing conference was held on July 10, 2018, before Administrative Law Judge Jonathan F. Thoits (ALJ). At the prehearing conference, the ALJ granted intervenor status to the Page 2 U et al.

3 Michigan Department of the Attorney General, and the Association of Businesses Advocating Tariff Equity. The Commission Staff also participated in the proceeding. Subsequently, the parties submitted a settlement agreement resolving all issues in the case. Specifically, the parties agree that the total jurisdictional value of TCJA tax impacts for NSP-W s Michigan electric service from January 1, 2018, to April 30, 2018, is $135,383. The Commission has reviewed the settlement agreement and finds that the public interest is adequately represented by the parties who entered into the settlement agreement. The Commission further finds that the settlement agreement is in the public interest, represents a fair and reasonable resolution of the proceeding, and should be approved. THEREFORE, IT IS ORDERED that: A. The settlement agreement, attached as Exhibit A, is approved. B. The base rate credits for Northern States Power Company set forth in Attachment 2 to the settlement agreement are effective from September 1, 2018 to December 31, C. Within 30 days of this order, Northern States Power Company shall file with the Commission a tariff sheet essentially the same as that set forth in Attachment 2 to the settlement agreement. Page 3 U et al.

4 The Commission reserves jurisdiction and may issue further orders as necessary. Any party desiring to appeal this order must do so in the appropriate court within 30 days after issuance and notice of this order, pursuant to MCL To comply with the Michigan Rules of Court s requirement to notify the Commission of an appeal, appellants shall send required notices to both the Commission s Executive Secretary and to the Commission s Legal Counsel. Electronic notifications should be sent to the Executive Secretary at mpscedockets@michigan.gov and to the Michigan Department of the Attorney General - Public Service Division at pungp1@michigan.gov. In lieu of electronic submissions, paper copies of such notifications may be sent to the Executive Secretary and the Attorney General - Public Service Division at 7109 W. Saginaw Hwy., Lansing, MI MICHIGAN PUBLIC SERVICE COMMISSION Sally A. Talberg, Chairman Norman J. Saari, Commissioner By its action of August 28, Rachael A. Eubanks, Commissioner Kavita Kale, Executive Secretary Page 4 U et al.

5 EXHIBIT A STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION ***** In the matter of the Commission s own ) motion, to consider changes in the rates ) of all the Michigan rate-regulated ) Case No. U electric steam and natural gas utilities ) to reflect the effects of the federal Tax ) Cuts and Jobs Act of 2017: ) NORTHERN STATES POWER COMPANY (Electric) ) files an application for determination of Credit B ) as described in orders U and U ) SETTLEMENT AGREEMENT As provided in 78 of the Administrative Procedures Act of 1969 ( APA ), as amended, MCL , and Rule 431 of the Rules of Practice and Procedure Before the Commission, Mich Admin Code, R , Northern States Power Company, a Wisconsin corporation ( NSP- W or the Company ) and the Michigan Public Service Commission ( MPSC or the Commission ) Staff ( Staff ), the Association of Businesses Advocating Tariff Equity ( ABATE ), and Attorney General Bill Schuette ( Attorney General ) hereby agree as follows: 1. On February 22, 2018, the Commission issued an order in Case No. U ( February 22 Order ), directing Michigan utilities, including NSP-W, to file applications and supporting direct cases to address the impacts of federal corporate tax reduction arising from the Tax Cuts and Jobs Act of 2017 ( TCJA ). The TCJA impacts from January 1, 2018 until April 30, 2018 are hereafter referred to as Credit B. 2. On March 22, 2018, NSP-W filed with the Commission, in the electronic docket for MPSC Case No. U-18462, a Settlement Agreement resolving all issues in NSP-W s electric

6 general rate case. Among other things, paragraph 9.a of the Settlement Agreement in Case No. U stated that NSP-W s electric rates will be increased to recover additional annual revenue of $300,000, which adjustment reflects $513,313 of TCJA benefits described as addressing Credit A and Calculation C in the February 22 Order. NSP-W further agreed to address any necessary true-ups to the TCJA impact in the Credit A and Calculation C proceedings mandated by the February 22 Order. The Settlement Agreement in MPSC Case No. U was signed by NSP-W, Staff, and the Attorney General. The only other party in Case No. U-18462, ABATE, filed a statement of non-objection to the Settlement Agreement. 3. On March 26, 2018, NSP-W filed with the Commission in Case No. U its Application and Direct Testimony representing that the Settlement Agreement in Case No. U addressed the forward-looking Credit A TCJA impacts on its electric rates in accordance with the February 22 Order. NSP-W further represented that the tariff sheets filed with the Settlement Agreement in Case No. U reflected changes to the Company s base rates for electric service that incorporated the Credit A tax reduction benefit, and therefore, no further adjustment to base rates for Credit A was necessary. 4. On April 12, 2018, the Commission issued its Order Approving Settlement Agreement in Case No. U-18462, approving the Settlement Agreement as described in paragraph 2 herein; establishing new electric rates for NSP-W s service territory to take effect May 1, 2018; and directing NSP-W to file its Application and direct case addressing Credit B by June 11, On May 30, 2018, the Commission issued its Order Approving Settlement Agreement in Case No. U finding that no further adjustment to electric base rates for 2

7 Credit A was necessary and directing NSP-W to file its Credit B Application before July 27, On June 11, 2018, NSP-W filed with the Commission in this docket its Application, along with the Direct Testimony and Exhibits of its witness Julie A. McRea. In its Application and direct case, NSP-W represented that the total jurisdictional TCJA impact from January 1, 2018 through April 30, 2018 for its Michigan electric service (i.e. Credit B) is $131,570. Based upon the cost of service study from Case No. U-17710, the general electric rate case that established the rates that were in effect during the January 1, 2018 through April 30, 2018 time period, NSP-W proposed volumetric credits for each rate class to allocate this revenue reduction to the Company s Michigan electric customers. 7. On June 15, 2018, the Commission s Executive Secretary issued a Notice of Hearing and a correspondence directing NSP-W to mail the Notice of Hearing to all cities, incorporated villages, townships, and counties in its Michigan electric service area, and to all intervenors in Case No. U On July 10, 2018, Administrative Law Judge Johnathan F. Thoits presided over the prehearing conference in this proceeding, at which Staff appeared. ABATE and the Attorney General were granted intervention. 9. ABATE filed direct testimony on July 23, Subsequently, the parties discussed the issues in this case and have negotiated the terms of this Settlement Agreement, and agree as follows: a. NSP-W s direct case as modified by Attachment 1 and Attachment 2 to this Settlement Agreement is reasonable and prudent and fully reflects the Credit B TCJA benefits as identified by the Commission in the February 22 Order. Specifically, the parties agree that as shown in Attachment 1 the total jurisdictional value of TCJA tax impacts for NSP-W s Michigan electric service from January 1, 2018 to April 30, 2018 (i.e. Credit B) is 3

8 $135,383, and the volumetric credits reflected on the tariff sheets attached hereto as Attachment 2 are a reasonable allocation of Credit B on a costof-service basis to NSP-W s customers, which were developed for this Settlement Agreement. b. The parties agree that the Commission should approve the credits reflected in the tariff sheets attached hereto as Attachment 2, effective as of September 1, 2018 through December 31, It is the opinion of the parties that this Settlement Agreement will promote the public interest, will aid the expeditious conclusion of this case, and will minimize the time and expense which would otherwise have to be devoted to this matter by the parties. This Settlement Agreement is not severable, and all provisions of the same are dependent upon all other provisions contained herein. 12. This Settlement Agreement has been made for the sole and express purpose of settling this case. All offers of settlement and discussions relating hereto are, and shall be considered, privileged under MRE 408 and shall not be used in any manner, or be admissible for any other purpose in connection with this proceeding or any other proceeding hereof. 13. Neither the parties to the settlement nor the Commission shall use this Settlement Agreement or the order approving it as precedent in any case or proceeding, except as necessary to carry out its terms. 14. This Settlement Agreement is intended to be a final disposition of this proceeding, and the parties join in respectfully requesting that the Commission grant prompt approval. The parties agree not to appeal, challenge or contest the Commission s Order accepting and approving this Settlement Agreement without modification. If the Commission does not accept the Settlement Agreement without modification, the Agreement shall be withdrawn and shall not constitute any part of the record in this proceeding or be used for any other purpose whatsoever. 4

9 15. Because this Settlement Agreement is uncontested, and because the Commission s February 22, 2018 Order in Case No. U established a schedule whereby the Commission would read the record in this proceeding thus dispensing with the Proposal for Decision, it is on this basis that the parties agree that the issuance of a Proposal for Decision pursuant to Section 81 of the Administrative Procedures Act of 1969 ( APA ), MCL , is unnecessary. Notwithstanding, and alternatively, the parties agree to waive the provisions of Section 81 of the APA in connection with this Settlement Agreement. NORTHERN STATES POWER COMPANY Paul Collins Digitally signed by: Paul Collins DN: CN = Paul Collins = collinsp@millercanfield.com C = US Date: :58:17-04'00' Dated: July 27, 2018 By: One of its Attorneys Sherri A. Wellman (P38989) Paul M. Collins (P69719) Miller, Canfield, Paddock and Stone, P.L.C. One Michigan Avenue, Suite 900 Lansing, MI (517) Dated July 27, 2018 By: ASSOCIATION OF BUSINESSES ADVOCATING TARIFF EQUITY Bryan A. Branden burg Digitally signed by: Bryan A. Brandenburg DN: CN = Bryan A. Brandenburg = bbrandenburg@clarkhill.com C = US O = Clark Hill PLC Date: :08:37-05'00' Its Attorney Bryan A. Brandenburg (P77216) Clark Hill, P.L.C. 212 E. Cesar E. Chavez Avenue Lansing, MI (517)

10 Dated: July 27, 2018 By: ATTORNEY GENERAL BILL SCHUETTE Michael Moody :54:38-04'00' His Attorney Michael Moody (P51985) Assistant Attorney General Michigan Department of Attorney General Environment, Natural Resources & Agriculture Div. 525 W. Ottawa Street P.O. Box Lansing MI (517) MICHIGAN PUBLIC SERVICE COMMISSION STAFF Dated: July 27, 2018 By: Its Attorney Heather M.S. Durian (P67587) Michigan Public Service Commission 7109 W. Saginaw Highway, 3 rd Floor Lansing, MI (517)

11 ATTORNEY GENERAL BILL SCHUETTE Dated: July 27, 2018 By: His Attorney Michael Moody (P51985) Assistant Attorney General Michigan Department of Attorney General Environment, Natural Resources & Agriculture Div. 525 W. Ottawa Street P.O. Box Lansing MI (517) MICHIGAN PUBLIC SERVICE COMMISSION STAFF Heather M.S. Durian Digitally signed by Heather M.S. Durian DN: cn=heather M.S. Durian, o, ou=attorney General Public Service Division, c=us Dated: July 27, 2018 By: Date: :54:17-04'00' Its Attorney Heather M.S. Durian (P67587) Michigan Public Service Commission 7109 W. Saginaw Highway, 3 rd Floor Lansing, MI (517)

12 Case No. U Exhibit A-9 (JAM-9) Revised Witness Julie A. McRea Northern States Power Company-Wisconsin Page 1 of 1 Electric Utility-Michigan Jurisdiction Tax Cut Jobs Act Calculation of Refund factor from 2017 rates Attachment 1 to Settlement Agreement in Case No. U Table rates adjusted for TCJA 2015 Authorized Modified CCOSS Results Modified 2015 test year revenue results Decrease Sales Revenue indicated Rate / kwh Modified Revenue (Check) Amount (Exhibit A-6, Schedule F-3) Line 20 of Exhibit A-8 Pg2 for Res, Non-Dem, Med Demand and Lighting. Line 21 for Large Demand (C) / (A) Amount (Exhibit A-6, Schedule F-3) Decrease (E) - (B) (A) (B) (C) (D) (E) (F) (G) Amount (Exhibit A-6, Schedule F-3) Decrease % (F) / (B) Residential schedules - MR-1, MR-2) Lighting (Rate Schedules - MOL-1, MSL-1) Medium Demand General service (Rate schedules - MCI-1, MPC-2) Large Demand General service (Rate schedules MI-1, MPC-1 [secondary] ) Large Demand General service (Rate schedules, MPC-1 [transmission] ) Total (Rate Non-Demand General Service (Rate schedules - MSC-1 MST-2, MPA-1, Interdepartmental) 55,593,000 $7,051,920 -$168,343 -$ $6,885,141 -$166, % 14,342,000 $1,785,753 -$41,958 -$ $1,744,237 -$41, % 1,132,000 $229,926 -$9,650 -$ $220,304 -$9, % 23,787,000 $2,725,783 -$60,978 -$ $2,664,888 -$60, % 17,021,000 $1,788,367 -$39,018 -$ $1,749,218 -$39, % 27,734,000 $2,095,017 -$36,121 -$ $2,058,963 -$36, % 139,609,000 $15,676,766 -$356,068 $15,322,752 -$354, % Windsource ===> -$744 -$744 Table 2 Calculation of Refund factor for 2018 rates Actual Sales Jan-Apr Rate Case TCJA "factor" rate Sales * Rate = Over-recovery Estimated Sales Sept - Dec 2018 TCJA Credit B "Refund" Rate Estimated Credit Difference from as filed Column (D) above (H) * (I) From Case U (J) / (K) (K) * (L) Residential schedules - MR-1, MR-2) (C01,C02) (Rate Non-Demand General Service (Rate schedules - MSC-1 MST-2, MPA-1, Interdepartmental) (C09, C10, C11, C32, interdepartmental Lighting (Rate Schedules - MOL-1, MSL-1) (C04, C30, C32, C33) Medium Demand General service (Rate schedules - MCI-1, MPC-2) (C12, C21) Large Demand General service (Rate schedules MI-1, MPC-1 [secondary] ) (C13, C20) Large Demand General service (Rate schedules, MPC-1 [transmission] ( ) (H) (I) (J) (K) (L) (M) (N) 22,981,520 -$ $68,945 18,487,295 -$ $68,403 $0 5,494,371 -$ $15,934 4,662,207 -$ $15,852 $0 254,835 -$ $2, ,864 -$ $2,152 $0 8,489,334 -$ $21,762 7,611,587 -$ $22,074 $0 5,386,563 -$ $12,389 5,544,250 -$ $12,197 $554 10,913,226 -$ $14,187 9,644,536 -$ $14,467 $3,858 Total 53,519,849 -$135,383 46,302,739 -$135,145 $4, % 99.82% Expected Sales Sep-Dec 2018 are the sales included in NSPW's most recent 2018 test year case U

13 Attachment 2 to Settlement Agreement in Case No. U M. P. S. C. No. 2 Electric 2 nd revised Sheet No. D-3.3 NORTHERN STATES POWER COMPANY, Cancels 1 st revised Sheet No. D-3.3 a Wisconsin corporation (Tax Cut and Jobs Act Credit Implementation) TAX CUTS AND JOBS ACT ( TCJA ) CREDITS A) On December 22, 2017, the Tax Cuts and Jobs Act of 2017, Pub. L. No , 131 Stat (TCJA) was signed into law. The TCJA contains provisions reducing the corporate tax rate and revising the federal tax structure. These new federal requirements affect the current tax expense and deferred tax accounting methods used by corporations, including utilities. B) On May 1, 2018, new electric rates incorporating the new tax rates went into effect. The following credits are designed to return that portion of the TCJA credit from January 2018 through April C) The approved Tax Cuts and Jobs Act credits are shown below. The credits are effective for service September 1, 2018 through December 31, Rate Class Rate Schedule / Code Credit per kwh Residential Small C& I Medium Demand- Billed General Service Large Demand- Billed General Service (Secondary and Primary voltage) Large Demand- Billed General Service (Transmission voltage) Lighting MR-1, MR-2, MOP-1 / C01, C02, C31 MSC-1, MST-1, MPA-1, MOP-1 / C09, C10, C11, C32, C31 $ $ MCI-1, MPC-2 / C12, C21 $ MI-1, MPC-1 / C13, C20 $ MI-1, MPC-1 / C13, C20 $ MOL-1, MSL-1, MSL-2 / C04, C30, C32, C33 $ (Continued on Sheet No. D-4.0) Issued, 2018 by Effective: September 1, 2018 M.E. Stoering Issued Under Authority of the President Michigan Public Service Commission Eau Claire, Wisconsin dated in Case No. U-20185

14 P R O O F O F S E R V I C E STATE OF MICHIGAN ) Case No. U et al County of Ingham ) Lisa Felice being duly sworn, deposes and says that on August 28, 2018 A.D. she electronically notified the attached list of this Commission Order via transmission, to the persons as shown on the attached service list (Listserv Distribution List). Subscribed and sworn to before me this 28th day of August 2018 Lisa Felice Angela P. Sanderson Notary Public, Shiawassee County, Michigan As acting in Eaton County My Commission Expires: May 21, 2024

15 Service List for Case: U Name Bryan A. Brandenburg Daniel Sonneveldt Heather M.S. Durian Jonathan Thoits Michael E. Moody Michael J. Pattwell Northern States Power Company 1 of 2 Northern States Power Company 2 of 2 Paul M. Collins Sherri A. Wellman Address bbrandenburg@clarkhill.com sonneveldtd@michigan.gov durianh@michigan.gov thoitsj@michigan.gov moodym2@michigan.gov mpattwell@clarkhill.com karl.j.hoesly@xcelenergy.com deborah.e.erwin@xcelenergy.com collinsp@millercanfield.com wellmans@millercanfield.com

16 Service List for Case: U Name Heather M.S. Durian Lauren VanSteel Michael E. Moody Northern States Power Company 1 of 2 Northern States Power Company 2 of 2 Paul M. Collins Sherri A. Wellman Address durianh@michigan.gov vansteell@michigan.gov moodym2@michigan.gov karl.j.hoesly@xcelenergy.com deborah.e.erwin@xcelenergy.com collinsp@millercanfield.com wellmans@millercanfield.com

17 GEMOTION DISTRIBUTION SERVICE LIST ITC Energy Michigan Energy Michigan Mid American Xcel Energy Cloverland Cloverland Village of Baraga Linda Brauker Village of Clinton Tri-County Electric Co-Op Tri-County Electric Co-Op Tri-County Electric Co-Op Citizens Gas Fuel Company Consumers Energy Company SEMCO Energy Gas Company Superior Energy Company Upper Peninsula Power Company WEC Energy Group Upper Peninsula Power Company Midwest Energy Coop Midwest Energy Coop Alger Delta Cooperative Cherryland Electric Cooperative Great Lakes Energy Cooperative Great Lakes Energy Cooperative Great Lake Energy Cooperative Stephson Utilities Department Ontonagon County Rural Elec Presque Isle Electric & Gas Cooperative, INC Thumb Electric Bishop Energy AEP Energy CMS Energy Just Energy Solutions Constellation Energy Constellation Energy Constellation New Energy DTE Energy First Energy MidAmerican Energy My Choice Energy Calpine Energy Solutions Santana Energy Updated

18 GEMOTION DISTRIBUTION SERVICE LIST Spartan Renewable Energy, Inc. (Wolverine Power Marketing Corp) Xcel Energy City of Escanaba City of Crystal Falls Lisa Felice Michigan Gas & Electric City of Gladstone Integrys Group Lisa Gustafson Tim Hoffman Interstate Gas Supply Inc Thomas Krichel Bay City Electric Light & Power Lansing Board of Water and Light Lansing Board of Water and Light Marquette Board of Light & Power Premier Energy Marketing LLC City of Marshall Doug Motley Marc Pauley City of Portland Alpena Power Liberty Power Wabash Valley Power Wolverine Power Lowell S. Integrys Energy Service, Inc WPSES Realgy Energy Services Volunteer Energy Services First Energy Solutions Hillsdale Board of Public Utilities Michigan Gas Utilities/Upper Penn Power/Wisconsin Michigan Gas Utilities/Qwest Zeeland Board of Public Works Direct Energy Direct Energy Direct Energy Direct Energy Realgy Corp. Jim Weeks Indiana Michigan Power Company Santana Energy MEGA ITC Holdings Updated

19 GEMOTION DISTRIBUTION SERVICE LIST Dickinson Wright Xcel Energy Xcel Energy Matthew Peck Updated