Founded in 185 by Sidney Davy Miller SHERRI A. WELLMAN TEL (517) 8-95 FAX (517) 7-60 E-MAIL wellmans@millercanfield.com Miller, Canfield, Paddock and Stone, P.L.C. One Michigan Avenue, Suite 900 Lansing, Michigan 89 TEL (517) 87-070 FAX (517) 7-60 www.millercanfield.com MICHIGAN: Ann Arbor Detroit Grand Rapids Kalamazoo Lansing Troy FLORIDA: Tampa ILLINOIS: Chicago NEW YORK: New York OHIO: Cincinnati CANADA: Windsor CHINA: Shanghai MEXICO: Monterrey POLAND: Gdynia Warsaw Wrocław September, 016 Ms. Kavita Kale Executive Secretary Michigan Public Service Commission 7109 W. Saginaw Hwy. Lansing, MI 8917 Re: Northern States Power Company 017 PSCR Plan MPSC Case No. U-1815 Dear Ms. Kale: Enclosed for electronic filing please find the Application, Direct Testimony and Exhibit of Karl J. Hoesly, together with the Appearance of Sherri A. Wellman. A marked-up Notice of Hearing has been e-mailed to RogersD8@michigan.gov. Should you have any questions, please kindly advise. Very truly yours, Miller, Canfield, Paddock and Stone, P.L.C. Enclosures cc: Karl J. Hoesly Mara K. Ascheman SAW/tmb 78050.1\10017-00089 By: Sherri A. Wellman
MICHIGAN DEPARTMENT OF LABOR AND ECONOMIC GROWTH PUBLIC SERVICE COMMISSION ENTRY OF APPEARANCE IN AN ADMINISTRATIVE HEARING This form is issued as provided for by 199 PA, as amended, and by 19 PA 5, 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 (517) 1-6170. Please Note: The commission will provide service of documents in this proceeding to only one person for each party. 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). (Name). (Name) 5. (Name) 6. (Name) 7. (Name) Name Address City State Zip Phone ( ) Email I am not an attorney I am an attorney whose: Michigan Bar # is P- Bar # is: ( state ) Date Signature: EAHR1-10//06
STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the matter of the application of ) NORTHERN STATES POWER COMPANY ) a Wisconsin corporation and wholly owned subsidiary ) of Xcel Energy Inc., for authority to implement a ) Case No. U-1815 power supply cost recovery plan in its electric tariffs ) and establish power supply cost recovery factors for ) the twelve-month period ending December 017. ) APPLICATION NORTHERN STATES POWER COMPANY, a Wisconsin corporation, doing business as Xcel Energy (hereafter NSP-W ), applies for authority from the Michigan Public Service Commission ( Commission ) to implement a Power Supply Cost Recovery (PSCR) Plan in its Michigan retail electric tariffs and establish PSCR Factors for the twelve-month period ending December 017, respectfully representing to the Commission 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 twenty-nine counties in Wisconsin.. NSP-W's retail electric business is subject to the jurisdiction of the Commission pursuant to 1909 PA 106, as amended, MCL 60.551 et seq.; 1919 PA 19, as amended, MCL 60.51 et seq.; and 199 PA, as amended, MCL 60.1 et seq. Pursuant to said statutory
provisions, the Commission has power and jurisdiction to regulate NSP-W's retail electric rates for service rendered in the State of Michigan.. Pursuant to Commission orders issued in Case Nos. U-8591 and U-117, NSP-W is authorized to include a PSCR Factor in its Electric Rates, Regulations and Rate Schedules (MPSC No. 6). 5. In order to implement the PSCR Factor, 198 PA 0 requires a utility to file a PSCR plan and a five-year forecast not less than three months before the beginning of the period covered by such plan. The Commission in Case No. U-8591, pursuant to MCL 60.6j(17)(a), modified the five-year forecast filing requirements by directing NSP-W to file a two-year forecast. 6. The testimony and exhibit accompanying this Application constitute NSP-W s PSCR Plan for the twelve-month period commencing with the billing month of January 017, and ending with the billing month of December 017, and its two-year forecast. 7. Exhibit A-1 (KJH-1) Schedule 1, sets forth NSP-W s proposed PSCR Factor which has been developed in accordance with 198 PA 0. The PSCR Factor in Schedule 1 is based on the base power supply costs and loss factor approved in the Company s last retail rate case, Case No. U-17710, and reflects NSP-W s proposal to roll in estimated $7,710 overrecovery for the 016 PSCR Plan period. Exhibit A-1 (KJH-1) Schedule, sets forth the tariff amendment proposed by NSP-W to incorporate the proposed PSCR Factors in its schedule of rates for electric service. 8. NSP-W requests Commission approval of a PSCR Factor of ($0.000) per kwh to be effective for the 1-month period beginning January 017.
9. Section 6j(8) of 198 PA 0 provides that the Commission may make a finding and enter a temporary order granting approval or partial approval of a PSCR Plan after having afforded parties a reasonable opportunity for a full and complete hearing. NSP-W requests that a final order be issued in these proceedings prior to the effective date of the first PSCR Factor proposed, such first factor to be effective at the beginning of the January 017 billing cycles. Should such a schedule be untenable for the issuance of a final order, NSP-W requests that this Commission enter a temporary order prior to such date. WHEREFORE, Northern States Power Company - Wisconsin prays that this Commission: A. Make and issue its order and notice of hearing, and, after notice and hearing; B. Determine that the decisions underlying NSP-W s Power Supply Cost Recovery Plan and forecast are reasonable and prudent; C. Approve the implementation of NSP-W s Power Supply Cost Recovery Plan and authorize NSP-W to establish the requested Power Supply Cost Recovery Factors for each of the 1-months of January 017 through December 017; D. Enter a temporary order on or before January 1, 017, granting approval or partial approval of NSP-W s PSCR Plan if a final order may be delayed beyond January 1, 017; and
E. Grant NSP-W such other and additional relief as may be lawful and proper. Respectfully submitted, NORTHERN STATES POWER COMPANY, A WISCONSIN CORPORATION Dated: September, 016 By: Its Attorney Sherri A. Wellman (P8989) MILLER CANFIELD,PADDOCK & STONE, P.L.C. One Michigan Avenue, Suite 900 Lansing, MI 89 Attorneys for NORTHERN STATES POWER COMPANY - WISCONSIN 7819.1\10017-00089
STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * * In the matter of the application of ) NORTHERN STATES POWER COMPANY, a Wisconsin corporation, and wholly owned subsidiary of Xcel Energy Inc., for authority to to implement a power supply cost recovery plan in its electric tariffs and establish power supply cost recovery factors for the twelve-month period ending December 017. ) ) ) ) ) ) Case No. U-1815 DIRECT TESTIMONY AND EXHIBIT OF KARL J. HOESLY ON BEHALF OF NORTHERN STATES POWER COMPANY A WISCONSIN CORPORATION September, 016
NORTHERN STATES POWER COMPANY A WISCONSIN CORPORATION AND WHOLLY OWNED SUBSIDIARY OF XCEL ENERGY INC. CASE NO. U-1815 PREPARED DIRECT TESTIMONY OF KARL J. HOESLY September, 016 1 5 6 7 8 9 10 11 1 1 1 15 16 17 18 19 Q. Please state your full name and business address. A. My name is Karl J. Hoesly. My business address is 11 W. Hamilton Avenue, P.O. Box 8, Eau Claire, Wisconsin 570-0008. Q. By whom are you employed and in what capacity? A. I am the Manager of Regulatory Affairs for Northern States Power Company, a Wisconsin corporation ( NSP-W or the Company ) and wholly owned subsidiary of Xcel Energy Inc. ( Xcel Energy ). Q. Would you state briefly the duties of your present position? A. I am responsible for revenue requirements, pricing (rates), and other regulatory administration functions for the retail electric and gas utilities of NSP-W in Wisconsin and Michigan. Q. What is your educational and professional background? A. I have a Bachelor of Arts degree in Business Administration Finance from the University of Wisconsin-Green Bay and have also completed post-graduate courses in management at the University of Wisconsin-Green Bay. Prior to joining NSP-W, I was the Manager of Regulatory Services for Minnesota Energy Resources Corporation ( MERC ), where I was responsible for revenue requirements, pricing, and other regulatory administration functions for the retail gas utility serving Minnesota. I served in this position from June, 006 until February, 007. Prior to transferring to MERC in 006, I was employed by 1
1 5 6 7 8 9 10 11 1 1 1 15 16 Wisconsin Public Service Corporation ( WPS Corp ). I began my career at WPS Corp in 001 in the Budget Department as a Budget Analyst. In 00, I transferred to Financial Analysis as an Analyst. In 00, I was promoted to Regulatory Affairs as a Rate Planner involved in rate-related studies, service and tariff administration, financial analysis, and rate development. In June 006 I was promoted to Manager of Regulatory Services at MERC. Q. Have you previously testified before regulatory commissions? A. Yes, I have either testified before, or submitted testimony to, the Public Service Commission of Wisconsin in Wisconsin retail rate case and fuel cost recovery filings, and the Michigan Public Service Commission ( MPSC or Commission ) in retail rate case and Power Supply Cost Recovery Plan ( PSCR ) and Reconciliation filings. Q. Prior to discussing the 017 PSCR Plan Year in more detail, please provide an overview of NSP-W and its operations. A. NSP-W, a wholly owned subsidiary of Xcel Energy, is headquartered in Eau Claire, Wisconsin, and is a fully integrated investor-owned utility that generates, transmits, distributes, and sells electric energy to approximately 56,000 retail electric customers in more than 0 communities in northwestern Wisconsin and the western tip of the Upper 17 Peninsula of Michigan. In 015, approximately percent of NSP-W s retail electric 18 19 0 1 operating revenues were derived from operations in Michigan. NSP-W owns approximately 80 MW (nameplate capacity) of generation and,00 miles of transmission facilities, and serves a peak load of approximately 1,60 MW (July 01). NSP-W is also engaged in the retail distribution and sale of natural gas to approximately 11,000 customers in Wisconsin and Michigan. The maximum daily send-out (firm and interruptible) for NSP-W is approximately 16,500 MMBtu (January 01).
1 Q. Please provide a brief overview of Xcel Energy s corporate strategy. A. Xcel Energy, a Minnesota corporation, is a holding company engaged primarily in the utility business. Xcel Energy is focused almost exclusively on its core business of 5 6 providing regulated electric and natural gas service to its customers through its four traditional, vertically integrated utilities, Northern States Power Company, a Minnesota corporation, ( NSP-M ); NSP-W; Public Service Company of Colorado; and 7 Southwestern Public Service Co. In 015, Xcel Energy s regulated utility operations 8 9 10 11 1 1 accounted for more than 99 percent of its total revenues. NSP-W s 017 plan year power supply costs set forth in this proceeding reflect ongoing efforts to provide customers with the safe, clean and reliable energy services they want and value at a competitive price, consistent with Xcel Energy s corporate strategy and public policy objectives. Q. What is the purpose of your testimony in this proceeding? A. The purpose of my testimony is to sponsor NSP-W s proposed 017 PSCR Plan and 1 explain the development of the monthly PSCR factors. I will address the Company s 15 16 17 18 19 0 1 power supply arrangement through the Interchange Agreement ( I/A ) and the forecast costs used in developing the monthly PSCR factors. I will also present an estimate to be rolled into the 017 plan year of the over recovery for the 016 PSCR Plan period. Q. What time period do the PSCR factors proposed in this filing apply? A. PSCR factors have been developed for the 1-month period commencing with the January 017 billing month through the December 017 billing month. Q. Are you sponsoring any exhibits in this proceeding? A. Yes, I am sponsoring Exhibit A-1 (KJH-1), consisting of Schedules 1 through 8. Q. Was the exhibit prepared by you or under your supervision?
1 5 6 7 8 9 10 11 1 1 1 15 16 17 18 19 0 1 A. Yes. Q. What is the Company s proposed 017 plan year PSCR factor? A. The proposed PSCR factor, as presented on Schedule 1 of Exhibit A-1 (KJH-1), is ($0.000)/kWh. Q. Is the proposed 017 factor lower than the authorized 016 PSCR factor? A. No. The authorized 016 PSCR factor of ($0.0080) is not lower than the proposed 017 PSCR factor of ($0.000)/kWh. While NSP-W s 017 power supply costs are forecast to be lower than the levels set forth and authorized in the 016 PSCR plan year and the proposed plan year factor also reflects the roll in of an estimated 016 PSCR over-recovery amount, we anticipate lower estimated 017 plan year MWh energy requirements resulting in higher cost per kwh. Therefore, the combination of 017 forecast power supply costs, coupled with the 016 estimated over-recovery and lower energy requirements, results in a proposed higher factor than authorized for the 016 plan year. Q. Please break down the components which comprise the 017 PSCR factor. A. Consistent with the Commission s August 16, 001 order issued in Case No. U-161, the Company s proposed 017 plan year factor reflects the combination of two separate components, (1) the forecast plan year cost and requirements, plus () the roll in of the estimated over recovery, with interest, from the current PSCR period. The proposed 017 PSCR factor of ($0.000)/kWh is comprised of the combination of the 017 plan year factor of $0.00011/kWh, plus the roll in of an estimated 016 overrecovery with interest of ($0.0005)/kWh (see Schedule of Exhibit A-1 (KJH-)).
1 5 Power Supply Arrangement Q. Please provide an overview of the Company s power supply agreement? A. NSP-W s total source of electric power supply is incorporated into the Federal Energy Regulatory Commission ( FERC ) approved I/A. Under the I/A, NSP-W and NSP-M, coordinate in the development and operation of their generation and transmission 6 facilities as an integrated system ( NSP System or NSP or System ). The I/A is 7 8 9 10 11 1 1 1 15 16 17 18 19 0 1 designed to establish the charges for each company to the other for the sales of power and energy between the companies and for transmission service provided to each, by the other. Each company then shares in system generation and transmission costs by billing each other on an actual basis. Q. How are costs billed between the companies? A. The I/A provides for the identification of three major cost components. They are fixed charges (return, depreciation, property taxes, income taxes, and insurance), fixed costs (capacity purchases, capacity sales, and the fixed portion of operation and maintenance expenses), and variable costs (fuel, energy purchases, energy sales to non-associated utilities, and variable operation and maintenance expenses). The fixed charges and fixed costs are billed between the companies on the basis of the annual average ratio of each company's respective 6 monthly coincidental peak demands of the two companies after adjusting each company's ratio for transmission losses. The variable costs are billed on the basis of the monthly ratio of the energy requirements of each of the companies, to their total energy requirements after adjusting each company's ratio for transmission losses. 5
1 5 6 7 8 9 10 Q. Please describe the procedure used by the companies in arriving at production costs to be included in the I/A. A. Each company identifies its plant-related items for the power production area. Fixed charges are then calculated for each company. Operating and maintenance expenses for the power production area are extracted from the budget and split between fixed and variable. Fuel and purchased power costs are calculated for each of the companies. In very general terms, the program used for the energy dispatch on a budget basis is developed in the following manner: unit fuel costs for each plant are developed, outage schedules are determined, purchased energy availability and its cost are determined, and the energy requirements of each company are provided through the sales budgeting 11 process as adjusted for losses. A program simulates system dispatch satisfying load 1 requirements by using the lowest cost available source of power. The result of this 1 1 15 16 17 18 19 0 1 process provides fuel costs for each company (NSP-W and NSP-M) and purchases for the budget year. These costs, along with the fixed charges and operation and maintenance expenses, are then input into the I/A calculation to determine the billings to the other company. Q. Please describe NSP-W s generating facilities. A. NSP-W currently has nineteen separate hydro generating facilities, a coal/wood/gas-fired generating facility (Bay Front), a wood and refuse derived fuel ( RDF ) fired generating facility (French Island), and two gas/oil-fired turbine facilities (Wheaton & Flambeau). With the coordination of all generation, the hydro facilities are operated to take full advantage of those resources particularly for peaking whenever possible. Bay Front and French Island are both renewable facilities; Bay Front utilizes wood resources and French 6
1 Island uses refuse derived fuel and wood residues. French Island also has an oil fired combustion turbine primarily used for peaking purposes. The Wheaton facility consists of six combustion turbine units. Four of the Wheaton units have been converted to dual fuel capability with the addition of natural gas as the second fuel. The two remaining 5 units continue to use oil as their only fuel. The dual fuel units offer flexibility in 6 7 8 9 10 managing the cost of generation from this facility. The gas/oil plants will still be used primarily as peaking facilities for the NSP system. Q. Please briefly discuss the availability of short-term purchases and interruptible service to NSP-W. A. As a party to the I/A, NSP-W does not have available to it short-term power or 11 interruptible service as an independent party. The entire NSP system is economically 1 dispatched as a single system. Both NSP-M and NSP-W are members of the 1 1 15 16 17 18 19 0 Midcontinent Independent System Operator ( MISO ), where NSP provides MISO with offers for its generating units, and MISO chooses to dispatch based on those offers. As a result, NSP continues to provide an integrated mix of generation and purchased power that minimizes costs for the entire NSP system. Also, NSP-M administers all purchase power contracts and does all of the dispatching, purchasing and selling of power for the system. As a result, NSP-W receives its share of any available system purchases or sales through the I/A. Therefore, energy requirements are satisfied through economic dispatch of all available system sources of capacity and energy, at the average cost of the entire 1 system. Through this process, NSP-W shares in the most economic energy supply available, either from NSP s own resources or from the wholesale market. Q. Do MISO charges and credits flow through the I/A? 7
1 5 6 7 8 9 10 11 1 1 1 15 16 17 18 19 0 1 A. Yes, the I/A continues to be an effective mechanism to share all NSP system power supply costs, including MISO charges and credits. Q. How is the administration of the I/A carried out? A. A Coordinating Committee consisting of representatives from NSP-W and NSP-M administer the agreement. This committee meets as needed to discuss pertinent matters concerning the I/A. No action can be taken by either one of the companies without prior approval of the Committee. Q. What is the term of the current agreement? A. The I/A operates from year to year and can only be terminated by mutual agreement of each company, or through a five year written notice by one company to the other. Q. Has the MPSC previously reviewed and approved the I/A as NSP-W s total source of electric power supply? A. Yes. The MPSC has consistently approved the I/A as the Company s total source of electric power supply in rate cases and PSCR cases dating back to the early 1980s. The costs associated with the I/A were most recently reviewed in the Company s 015 PSCR reconciliation in Case No. U-1767-R. Q. In your opinion does the I/A minimize NSP-W s cost of fuel? A. Yes, the I/A minimizes NSP-W s cost of fuel. As stated previously, the Company s energy requirements are satisfied through the economic dispatch of all available system sources of capacity and energy, at the average cost of the entire NSP system. Through this process, NSP-W indirectly avails itself of the cheapest sources available, and provides the Company access to low cost resources which otherwise may not be available to it. 8
1 5 6 7 8 9 10 11 1 1 1 017 PSCR Plan Year Costs Q. Will the I/A be NSP-W s total source of electric power supply for the 017 plan year? A. Yes. Q. How do NSP-W s forecast 017 power supply costs compare to the forecast approved by the MPSC in the Company s 016 plan year filing? A. Through the I/A power supply agreement, NSP-W s 017 forecast power supply costs are forecast to decrease approximately $. million, (-1.1%), compared to levels forecast for the 016 plan year. For the 017 plan year, NSP-W s approximate share of total NSP System power supply costs is forecast to be approximately 15.7% for fixed power supply costs and 15.9% for variable power supply costs. Q. What is the primary cost driver impacting NSP-W s 017 power supply costs? A. NSP-W s 017 plan year power supply costs are lower primarily due to decreases in Fuel Costs arising from the I/A. However, costs per kwh are higher due to a decrease in NSP-W 15 MWh energy requirements compared to the 016 plan year. NSP-W s 016 actual energy 16 requirements have decreased 5.7%. The decreasing energy requirements, including 17 18 19 0 1 reductions in the sand mining industry, more than offset the decreasing production costs, which results in the proposed higher factor than that authorized for the 016 plan year. Q. Please explain how NSP-W s 017 energy requirements are derived. A. Energy requirements are developed by adding estimated company use, and lost and unaccounted-for energy, to the electric sales budget. Q. Please describe the electric sales budget. 9
1 5 6 7 8 9 10 11 1 1 1 15 16 17 18 19 A. The sales budget is derived using statistical and econometric modeling techniques. The sales budgets for the residential, small commercial and industrial, and large commercial and industrial customer classes are created using econometric models incorporating variables such as number of customers, total employment, gross metro product, and weather. Trend analysis was used for the other sectors, including Street Lighting, Other Sales to Public Authorities, Inter-Departmental sales, and Municipals. Q. What PSCR factor does NSP-W propose to implement in the 017 plan year? A. NSP-W is proposing a 017 PSCR factor of ($0.000) per kwh using the power supply base of $0.0509 per kwh, and loss factor of 10.01 percent approved in Case No. U-17710. NSP-W proposes to apply this factor to electric sales effective with January 017 s first billing period. Q. Please discuss your computation of the PSCR factors for the 017 PSCR Plan. A. Schedule 1 of Exhibit A-1 sets forth the computation of the PSCR factors for the 017 projected 1-month period. Column A shows the month in which the factor would be applied; Column B sets forth NSP-W s 017 plan year net power supply costs; Column C presents NSP-W s plan year MWh requirements; and Column D shows the power supply cost in cost per kwh for each month, and for the year. The total annual power supply cost of $99,75,687 is divided by NSP-W s total annual requirements of 7,77,0 MWhs resulting in a 1-month average cost per kwh for the 0 plan year of $0.0519/kWh. Application of the authorized 10.01 percent transmission 1 and distribution loss adjustment factor to the difference between the plan year average cost of $0.0519/kWh, and the authorized PSCR base factor of $0.0509/kWh, results in 10
1 a PSCR factor of $0.00011/kWh (prior to the roll in of the Company s estimated over recovery of 016 power supply costs). Based on the most recent available information, NSP-W estimates current year power supply costs and revenues will result in a 016 over-recovery of $7,710, (including 5 interest). Applying this over recovery to forecast 017 Michigan retail electric sales 6 results in the roll in of a 016 over-recovery amount of ($0.0005)/kWh. Adding the 7 8 9 10 11 1 1 1 15 16 17 18 19 0 1 ($0.0005)/kWh over-recovery from the proposed PSCR factor prior to roll in of $0.00011/kWh, results in a proposed 017 PSCR plan year factor of ($0.000)/kWh. Q. Please explain Schedule of Exhibit A-1 (KJH-1). A. Schedule of Exhibit A-1 (KJH-1) presents NSP-W s proposed tariff sheet setting the proposed PSCR Factors for the period January 017 through December 017. Q. Please describe Exhibit A-1 (KJH-1) Schedule. A. Exhibit A-1 (KJH-1) Schedule sets forth the development of the Net Power Supply Cost used in calculating the monthly PSCR factors. Column (A) shows the 017 forecast fuel cost for NSP-W owned generating units. Columns (B) and (C) list the production portion of the I/A billings between NSP-M and NSP-W for each month of 017. Column (D) then shows the net cost by month that is used in calculating the monthly factors. Q. Please explain Exhibit A-1 (KJH-1) Schedules and 5. A. Exhibit A-1 (KJH-1) Schedule reflects NSP-W s monthly sales, company use and losses, and net requirements used in the 017 PSCR calculation. Exhibit A-1 (KJH-1) Schedule 5 shows MWh energy requirements and costs by NSP-W generating fuel type, and net purchases in the form of I/A billings. Q. Please describe Exhibit A-1 (KJH-1) Schedule 6. 11
1 A. Exhibit A-1 (KJH-1), Schedule 6 sets forth by month NSP-W s estimated 016 power supply cost over recovery. January through June 016. Actual power supply costs and revenues are shown for Preliminary actual costs and revenues are shown for July 5 016, along with estimates for the balance of the year. As shown on Schedule 6, for year to date July 016, NSP-W is experiencing a $1,07 rolling over-recovery of power 6 supply costs. Forecast power supply costs and revenues for the August through 7 8 9 10 11 1 1 1 15 16 17 18 19 0 1 December time frame indicate an estimated PSCR rolling over-recovery amount of $5,917 (excluding interest) by year end 016. As a result, based on current available actual and forecast information, it is probable that the Company s reconciliation of 016 power supply costs and revenues, filed in March 017, will indicate that 016 PSCR revenues will be slightly higher than 016 power supply costs. Q. Please discuss Schedule 7 of Exhibit A-1 (KJH-). A. Schedule 7 sets forth the monthly calculation of estimated annual interest on the forecast 016 over-recovery of $5,917 presented on Schedule 6. Consistent with the Commission s August 16, 001 order issued in Case No. U-161, the Company s 017 plan year includes the roll in of the estimated 016 over recovery, plus interest. January through December average monthly balances indicate an over-recovered position, with monthly interest calculated using the current authorized NSP-W s return on equity rate. Total interest for the 016 calendar year is $19,79. Combining the estimated 016 rolling over-recovery of $5,917 shown on Schedule 6, with the annual interest of $19,79 shown on Schedule 7, results in a net estimated 016 over-recovery plus interest, of $7,710. The $7,710 over-recovery is rolled into the 017 plan year as shown on Exhibit A-1 (KJH-1) Schedule 1. 1
1 5 6 7 8 9 Q. Please describe Exhibit No. A-1 (KJH-1) Schedule 8. A. As required by MPSC Order dated December 17, 1986, in Case No. U-8591, this exhibit provides the required two-year power supply forecast. As shown on Schedule 8, NSP-W s total 018 power supply costs are forecast to increase as compared to 017 plan year levels. The projected increase is primarily due to higher fuel costs. NSP-W s 018 power supply costs are forecast to rise approximately 1.% compared to 017 plan year levels on a cost per mega watt hour basis. NSP-W s forecast load growth, in relation to NSP-M s, indicates that NSP-W s I/A demand ratio is forecast to change from 15.7% to 15.8% in 018 which increases slightly NSP-W s share of total NSP System fixed 10 power supply costs. Similarly, NSP-W s forecast I/A energy requirement ratio is 11 1 1 1 15 16 17 18 estimated to be slightly higher in 018, versus 017, which increases NSP-W s share of NSP System variable power supply costs Q. Do the amounts of projected power supply costs include any items of cost that the Commission could reasonably anticipate disallowing under Section 6(j)(1)? A. No, they do not. Q. Does this complete your direct testimony at this time? A. Yes, it does. 755771.1\10017-00089 1
Case No. U-1815 Exhibit A-1 (KJH-1) Schedule 1 Witness: Karl J. Hoesly Northern States Power Company, a Wisconsin Corporation 017 Power Supply Cost Recovery Plan Year Proposed Power Supply Cost Recovery Factor January through December 017 (A) (B) (C) (D) NSP-W NSP-W Net Power Mwh Cost per Month Supply Cost Requirements Kwh January $,77,978 656,5 $0.0519 February $,89,55 588,050 $0.0555 March $,6,668 61,689 $0.055 April $,190,756 558,85 $0.05766 May $,7,900 58,0 $0.05715 June $,59,76 617,66 $0.050 July $5,9,51 681,5 $0.05188 August $,890,659 667,1 $0.050 September $,85,15 58, $0.05568 October $1,687,716 58,015 $0.055 November $,6,895 586,88 $0.059 December $,5,159 69,81 $0.0510 Total $99,75,687 7,77,0 $0.0519 $0 0 Less Authorized Base $0.0509 Subtotal $0.00010 Plus loss factor @ 10.01% $0.00001 $0.00011 Estimated 016 Over-Recovery of $7,710 / 10,86,000 MI 017 kwh Sales 017 PSCR Factor ($0.0005) ($0.000)
Case No. U-1815 Exhibit A-1 (KJH-1) Schedule Witness: Karl J. Hoesly M. P. S. C. NO. 1 Electric XXth Revised Sheet No. 18 NORTHERN STATES POWER COMPANY XXth Revised Sheet No. 18 (To implement PSCR factors for 017) POWER SUPPLY COST RECOVERY FACTORS Northern States Power Company - Wisconsin s Power Supply Cost Recovery (PSCR) Monthly Factor for the 017 Plan Year is as follows: UMaximum U UAuthorizedU U017 PlanU U016 U U017PSCRU UYearU UOver-recoveryU UFactorU UYearU UMonthU U(per kwh)u U(per kwh)u U(per kwh)u 017 January $0.00011 + ($0.0005) = ($0.000) 017 February $0.00011 ($0.0005) = ($0.000) 017 March $0.00011 ($0.0005) = ($0.000) 017 April $0.00011 ($0.0005) = ($0.000) 017 May $0.00011 ($0.0005) = ($0.000) 017 June $0.00011 ($0.0005) = ($0.000) 017 July $0.00011 ($0.0005) = ($0.000) 017 August $0.00011 ($0.0005) = ($0.000) 017 September $0.00011 ($0.0005) = ($0.000) 017 October $0.00011 ($0.0005) = ($0.000) 017 November $0.00011 ($0.0005) = ($0.000) 017 December $0.00011 ($0.0005) = ($0.000) Issued M.E. Stoering President Eau Claire, Wisconsin Effective: for bills rendered for the 017 plan year. Issued Under Authority of 198 PA 0, Section 6j (9) and the Michigan Public Service Commission Dated Case No. U-1815
Case No. U-1815 Exhibit A-1 (KJH-1) Schedule Witness: Karl J. Hoesly Northern States Power Company, a Wisconsin Corporation 017 Power Supply Cost Recovery Plan Year Power Supply Costs January through December 017 (A) (B) (C) (D) NSP-W Interchange Interchange NSP-W Net Fuel Billing To Billing From Power Supply Month Expense NSP-M NSP-M Costs January $1,096,190 ($5,76,111) $8,117,899 $,77,978 February $950,50 ($5,69,) $6,808,8 $,89,55 March $787,90 ($5,0,696) $9,097,61 $,6,668 April $767,1 ($5,67,05) $6,690,98 $,190,756 May $1,091,100 ($5,617,6) $7,86,06 $,7,900 June $1,107,56 ($5,7,0) $8,16,7 $,59,76 July $1,8,897 ($5,896,5) $9,85,098 $5,9,51 August $1,108,851 ($6,16,087) $9,95,895 $,890,659 September $1,160,07 ($5,715,016) $7,00,11 $,85,15 October $1,16,17 ($5,708,166) $6,,709 $1,687,716 November $1,01,68 ($5,7,81) $6,758,1 $,6,895 December $1,11,951 ($,56,66) $6,78,57 $,5,159 Total $1,91,09 ($66,55,805) $5,58,08 $99,75,687
Case No. U-1815 Exhibit A-1 (KJH-1) Schedule Witness: Karl J. Hoesly Northern States Power Company, a Wisconsin Corporation 017 Power Supply Cost Recovery Plan Year Sales, Losses, and Requirements January through December 017 NSP-W NSP-W NSP-W Company Mwh Month Sales Use & Loss Requirements January 60,060 5,7 656,5 February 5,00 5,010 588,050 March 580,5 1,6 61,689 April 51,85, 558,85 May 5,601 9,79 58,0 June 56,15 5,1 617,66 July 615,981 65, 681,5 August 618,585 8,557 667,1 September 5,01 0,1 58, October 58,90,55 58,015 November 56,87 0,595 586,88 December 598,97 50,875 69,81 Total 6,791,51 585,50 7,77,0
Case No. U-1815 Exhibit A-1 (KJH-1) Schedule 5 Witness: Karl J. Hoesly Northern States Power Company, a Wisconsin Corporation 017 Power Supply Cost Recovery Plan Year 017 Power Supply Costs NSP-W Generation and Interchange Agreement NSP-W Generation Mwh By Fuel Type Requirements Cost Cost/Mwh Coal Generation 0 $0 - Wood Generation 18,508 $9,5,6 $5.9 RDF Generation 66,171 $,60,919 $9.91 Gas Generation 9,608 $50,078 $5.6 Oil Generation 906 $5,166 $70.60 Hydro 795,700 $0 $0.00 Wisconsin Generation 1,05,89 1,91,09 $1.6 Interchange Agreement NSPW to NSPM ($66,55,805) NSPM to NSPW $5,58,08 Net Interchange 6,,10 $86,80,78 $61.18 Total NSPW 7,77,0 $99,75,687 $5.19
Northern States Power Company, a Wisconsin Corporation 017 Power Supply Cost Recovery Plan Year Case No. U-1815 Exhibit A-1 (KJH-1) Schedule 6 Witness: Karl J. Hoesly Current 016 Plan Year Over (Under) Recoveries Actual Actual Actual Actual Actual Actual Preliminary Forecast Forecast Forecast Forecast Forecast 016 Jan-016 February March April May June July August September October November December Year to Date A Sales Subject 1,01,550 1,89,588 1,618,961 10,89,678 10,79,11 10,00,16 10,985,0 11,80,000 10,589,000 10,770,000 11,57,000 1,,000 19,7,65 to PSCR (kwh) B Base including losses $0.05950 $0.05950 $0.05950 $0.05950 $0.05950 $0.05950 $0.05950 $0.05950 $0.05950 $0.05950 $0.05950 $0.05950 C PSCR factor ($0.0080) ($0.0080) ** ($0.0080) ($0.0080) ($0.0080) ($0.0080) ($0.0080) ($0.0080) ($0.0080) ($0.0080) ($0.0080) D Total PSCR Revenue $77,89 $708,501 $696,019 $598,078 $57,19 $57,99 $605,559 $61,799 $58,708 $59,685 $65,1 $79,56 $7,691,86 (A*B)+(A*C) E Applicable Power Costs $797,66 $75,15 $751,989 $587,16 $588,766 $556,991 $55,950 $605,69 $6,008 $65,08 $707,787 $750,65 $7,99,97 F Monthly Over (Under) Recovery (D-E) ($,85) ($,81) ($55,970) $10,95 ($16,67) $16,08 $51,609 $16,160 ($9,00) ($59,99) ($7,7) ($1,197) ($8,87) G 015 Over Recovery (a) $0,0 * H Rolling Over (Under) $79,569 $,755 $178,785 $189,77 $17,110 $189,18 $1,07 $57,186 $07,886 $18,87 $76,11 $5,917 Recovery (F+G) * Including Interest. As ordered 9-8-016 Case No. U-1767-R ** PSCR factor change effective -1-016 as ordered in Case U-1791 Estimated 016 Over-Recovery at Yr End Close March 016 Revenues Sales Base PSCR Total Current Month Billed Sales 1,70,961 $0.05950 ($0.0080) $756,787.51 Less Previous Month Unbilled Sales (9,59,000) $0.05950 ($0.0080) ($59,819.06) Plus Current Month Unbilled Sales * 8,509,000 $0.05950 ($0.0080) $69,050.1 Sales Subject to PSCR (kwh) 1,618,961 $696,018.57 Base PSCR $750,878.6 ($5,860.05) $0.00
Case No. U-1815 Exhibit A-1 (KJH-1) Schedule 7 Witness: Karl J. Hoesly Northern States Power Company, a Wisconsin Corporation 017 Power Supply Cost Recovery Plan Year Estimated PSCR Reconciliation: January 016 - December 016 Computation of Interest Monthly Rolling Ending 016 Beginning Over (Under) Monthly Average Interest Interest Month Balance Recovery Balance Balance Rate Amount January $0,0 (a) ($,85) $79,569 $91,87 0.00857808 $,500 February $79,569 ($,81) $,755 $57,16 0.0077795 $1,99 March $,755 ($55,970) $178,785 $06,770 0.00857808 $1,77 April $178,785 $10,95 $189,77 $18,61 0.008017 $1,50 May $189,77 ($16,67) $17,110 $181, 0.00857808 $1,556 June $17,110 $16,08 $189,18 $181,6 0.008017 $1,505 July $189,18 $51,609 $1,07 $15, 0.00857808 $1,86 August $1,07 $16,160 $57,186 $9,106 0.00857808 $,17 September $57,186 ($9,00) $07,886 $,56 0.008017 $1,90 October $07,886 ($59,99) $18,87 $178,187 0.00857808 $1,58 November $18,87 ($7,7) $76,11 $11,01 0.008017 $9 December $76,11 ($1,197) $5,917 $65,516 0.00857808 $56 ($8,87) (b) $19,79 (c) Total Over-Recovery + Interest Through 1-1-16 $7,710 (a) + (b) + (c)
Case No. U-1815 Exhibit A-1 (KJH-1) Schedule 8 Witness: Karl J. Hoesly Northern States Power Company, a Wisconsin Corporation 017 Power Supply Cost Recovery Plan Year Two Year Forecast Cost of Power NSP-W NSP-W Net Power Mwh Year Supply Cost Requirements $/Mwh 017 $99,75,687 7,77,0 $5.19 018 $05,05,6 7,0,70 $5.51