ROGER C. BAUER JAMES L. MAZRUM JAMES D. FLORIP WILLIAM S. SMIGELSKI TIMOTHY M. GULDEN JOEL E. BAUER DANIEL J. FLORIP GILLARD, BAUER, MAZRUM, FLORIP, SMIGELSKI, & GULDEN ATTORNEYS AT LAW 109 E. CHISHOLM STREET ALPENA, MICHIGAN 49707 (989) 356-3444 FAX: (989) 354-2821 JOEL W. GILLARD (1944-1997) March 29, 2018 Ms. Kavita Kale Executive Secretary Michigan Public Service Commission 4300 W. Saginaw Highway P.O. Box 30221 Lansing, MI 48909 Via - E-Filing Re: Alpena Power Company Renewable Energy Plan Case No.: U-18230 Dear Ms. Kale: The Renewable Energy Plan Application of Alpena Power Company, together with the written direct testimony of the company s witness, Vicki M. Goodburne and associated exhibits is being electronically filed with the Michigan Public Service Commission. No paper filing is being made. I am forwarding a draft notice of hearing by e-mail to Ms. Angela Sanderson at sandersona2@michigan.gov. Please contact me if you have any questions or need anything else. Thank you for your assistance. Sincerely, GILLARD, BAUER, MAZRUM, FLORIP, SMIGELSKI & GULDEN James D. Florip Attorney for Alpena Power Company JDF/tsm Enclosures
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 approvals necessary for ) Case No. U-18230 ALPENA POWER COMPANY to fully comply with ) Public Acts 286 and 295 of 2008 ) ) APPLICATION Alpena Power Company, hereinafter referred to as Applicant, files this Application for its Renewable Energy Plan Review and its request for approval of Applicant s updated renewable energy plan, in accordance with the Clean, Renewable, and Efficient Energy Act, 2008 PA 295, MCL 460.1001, et seq. ( the Act ), as hereinafter set forth, and respectfully represents to the Commission as follows: 1. Applicant is a private investor-owned Michigan utility corporation with its principal office located in the City of Alpena, Michigan, supplying electric service to its customers (approximately 16,400) within its service area which includes: the City of Alpena; the Townships of Alpena, Green, Long Rapids, Maple Ridge, Ossineke, Sanborn, Wellington and Wilson in the County of Alpena; the Township of Presque Isle in Presque Isle County; the Township of Caledonia in Alcona County; and the Village of Hillman and Township of Hillman in Montmorency County, all in the State of Michigan. 2. Jurisdiction is pursuant to Sections 1, 2, 6, 7 and 8 of the 1909 PA 106, as amended, MCLA 460.551 et seq.; 1909 PA 300, as amended, MCLA 462.2 et seq.; Section 3 and 4 of 1919 PA 419, 1 APPLICATION
as amended, MCLA 460.51 et seq.; Sections 4, 6 and 6a of 1939 PA 3, as amended, MCLA 460.1 et seq.; 1982 PA 304, as amended, MCLA 460.6a, 460.6b, 460.6j, 460.6k, 460.6l and 460.6m; 2008 PA 295, MCLA 460.1001 et seq.; 1969 PA 306, as amended, MCLA 24.201 et seq.; and the Commissioner s Rules of Practice and Procedure, 1979 Administrative Code, R 460.17101 et seq. 3. That Alpena presently serves its electric customers under rates and charges as ordered by the Commission in its Opinion and Order in Case No. U-18324 dated November 21, 2017, Alpena s 2018 PSCR Plan as approved by the Commission s December 20, 2017 order in Case U- 18401, Alpena s 2016 Energy Optimization Reconciliation and Forecast as approved by the Commission s September 15, 2017 order in Case U-18330 and Alpena s Renewable Energy Plan Review as approved by the Commission s August 14, 2015 order in case U-17791. 4. This Application is filed to allow the Commissioner to present a Renewable Energy Plan Review in accordance with the provisions of the Act, and to request the Commission s approval of Applicant s Renewable Energy Plan. Accordingly, Applicant herewith submits its testimony and its exhibits which will present and address the following: (a) Applicant s Renewal Energy Plan is presented herein taking into account the Commission s recommendations in Case No. U-18409, as they make sense for a utility and its customers the size of Alpena. (b) (c) An analysis of the Plan and the continued operation of the Plan. An analysis, considering current information and experience, of the Applicant s Plan s ability to meet the requirements of the Act. 2 APPLICATION
5. The Plan calls for Applicant to purchase the bulk of its required REC s during the Plan s twenty-year life from Consumers Energy, that is through 2024. After 2024 through 2029, Applicant may be required to purchase all or a portion of required REC s from another provider. Applicant is currently purchasing required REC s from Consumers pursuant to a contract with Consumers approved by this Commission on September 15, 2009 in Case No. U-15804. 6. Alpena s Plan proposed herein is a continuation of the previous Plans calling for the purchase of REC s from Consumers. 7. Applicant is seeking approval of its Renewable Energy Plan. In addition, Alpena is seeking authority to recover its costs through a levelized monthly surcharge as shown in Exhibit A-1, as implemented by tariff sheets contained in Exhibit A-3. 8. Additionally, Applicant is seeking authority to roll-over any under or over recovery of the Renewable Energy Plan costs to subsequent plan years. 9. Applicant represents that the requested relief is necessary to allow for continued compliance with Act 295 and recovery of associated costs. WHEREFORE, Applicant requests that this Commission: (a) Accept for filing this Application for review and approval of Applicant s Renewable Energy Plan and associate surcharges. (b) (c) Fix a time and place for hearing of Applicant s request. Make such investigation as it may deem necessary or advisable in the circumstances. (d) Approve the amended Renewable Energy Plan as described in Exhibit A-1. 3 APPLICATION
(e) Approve and continue the electric rate tariff sheets attached hereto as Exhibit A- 3. (f) Grant Applicant authority to roll-in over or under recovery of costs to subsequent plan years. (g) Grant Applicant such other and additional relief as it may deem appropriate. Respectfully submitted, ALPENA POWER COMPANY Dated: March 29, 2018 By: Attorney for Alpena Power Company Mr. James D. Florip (P26861) Gillard, Bauer, Mazrum, Florip, Smigelski & Gulden 109 E. Chisholm Street Alpena, MI 49707 Telephone: (989) 356-3444 * Email: jdflorip@gillardlaw.com 4 APPLICATION
TESTIMONY OF VICKI M. GOODBURNE ON BEHALF OF ALPENA POWER COMPANY Q. State your name and business address. A. Vicki Goodburne, Alpena Power Company, 401 N. Ninth Avenue, Alpena, Michigan 49707. Q. What is your educational background? A. I received a Bachelor of Science Degree in Accounting from Lake Superior State University in 1999. In June 2012, I received a Master of Business Administration Degree in Accounting from Capella University. Q. What is your position with Alpena Power Company? A. I am the Accounting Manager. Q. Please state your past work experience with Alpena Power Company ( Alpena ), including your present duties and responsibilities. A. I was employed by Alpena in June 2001 as the Finance Department Manager. In July 2007 my job title changed to Accounting Manager. My responsibilities include financial reporting, general ledger preparation and assistance in regulatory affairs. Q. Have you previously testified in any proceedings before this Commission? A. Yes. I have testified on behalf of Alpena in all of the PSCR and PSCR reconciliation cases from 2002 through 2008. I also testified in Alpena s 2007 rate case, Case No. U-15250; Alpena s 2010 PSCR plan, Case No.U-16030; Alpena s 2010 PSCR Reconciliation, Case No. U-16030-R; Alpena s 2011 PSCR plan, Case No.U-16420; Alpena s 2011 Energy Optimization Cost Reconciliation, Case No. U-16735; Alpena s 2013 PSCR plan, Case U-17090, Alpena s 2013 PSCR Reconciliation, Case 1 TESTIMONY OF V M GOODBURNE
No. U-17090-R, Alpena s 2015 PSCR plan, Case U-17670, Alpena s 2015 PSCR Reconciliation, Case U-17670-R, Alpena s 2015 Renewable Energy Plan Review, Case U-17791, Alpena s 2016 PSCR plan, Case U-17910 and Alpena s recent general rate case, Case U-18324. Q. Would you briefly describe the business and operations of Alpena? A. Alpena is a private investor-owned Michigan utility Corporation with its office located in the City of Alpena, Michigan, supplying electric service to approximately 16,400 customers in the Northeastern lower peninsula of Michigan. Alpena purchases approximately 99% of its electric power requirements from Consumers Energy Company ( Consumers ) under wholesale rates subject to the jurisdiction of the Federal Energy Regulatory Commission ( FERC ) and approved by the Commission in Case Nos. U-10705 and U-11029, and purchases additional power, when available, from certain large industrial customers under rates established under special contracts. Q. How may total employees does Alpena have? A. Alpena has a total of 33 full-time employees. Q. Are Alpena s present rate schedules on file with this Commission? A. Yes, they are. Alpena presently serves its electric customers under rates and charges as ordered by the Commission in its Opinion and Order in Case No. U-18324 dated November 21, 2017, Alpena s 2018 PSCR Plan as approved by the Commission s December 20, 2017 order in Case U-18401, Alpena s 2016 Energy Optimization Reconciliation and Forecast as approved by the Commission s September 15, 2017 order in Case U-18330 and Alpena s Renewable Energy 2 TESTIMONY OF V M GOODBURNE
Plan Review as approved by the Commission s August 14, 2015 order in case U-17791. Q. What is the purpose of your testimony in this proceeding? A. My Testimony will address the following: (a) An analysis of Alpena s new Renewable Energy Plan in accordance with revised filing requirements as adopted by the Commission in U-18409, commensurate with the needs and options available to an electric utility of Alpena s size. (b) An analysis, reflecting current information and experience, of the Plan s ability to meet the requirements of Act 295, Public Acts 2008 ( the Act ). Q. Please summarize Alpena s Renewable Energy Plan, Exhibit A-1. A. Alpena s Plan included sales forecasts from 2017 through 2029. The electricity used in the calculation is based on the average number of megawatt hours of electricity sold annually during the previous 3 years. The amount of Renewable Energy Credits (RECs) has been updated to include the requirements of 12.5% for 2019 and 2020 and 15% for 2021 through 2029. For 2017 and 2018 the same amount as the 2015 requirement were included. The customer count has also been updated through the end of the plan period in 2029. Q. Does Alpena have a contract in place with Consumers Energy for the purchase of the RECs? A. Yes. Alpena had worked with Consumers Energy to determine the estimated number of RECs covered by Section 35(2) of the Act, and a method in principal for allocating and pricing RECs to be transferred to Alpena. Alpena received a forecast from Consumers for the total amount of 3 TESTIMONY OF V M GOODBURNE
RECs that will be allocated to us over the life of the contract. Q. How does Alpena s Plan recover the cost related to the Plan? A. As of December 31, 2017 Alpena, has an over-recovered balance of $589,208. Therefore, Alpena has reduced its surcharge to zero since July of 2015 to help reduce the over-recovery. Q. Are there any proposed changes to the Renewable Energy Surcharge tariff in Exhibit A-3? A. No. In this update, Alpena has no change to reference sheet D-4.90 for the Renewable Energy Surcharge. Q. What arrangements has Alpena made to acquire the RECs called for in its Plan and necessary to meet the Renewable Energy Portfolio Standards as promulgated by the Act? A. Alpena and Consumers Energy have executed a Renewable Energy Credit Sale Agreement ( the Contract ) wherein Consumers Energy will provide Alpena with the bulk of its required RECs through 2024, when Alpena s PPA with Consumers terminates. Q. Please further describe the REC Contract with Consumers. A. The Contract was dated August 4, 2009 and was approved by the Commission by its Opinion and Order of September 15, 2009 in Case No. U-15804 (as modified by the Commission s Errata of October 27, 2009). The Contract provides for the delivery of RECs to Alpena, with a delivery period commencing January 1, 2009, utilizing the mechanism established by the Commission pursuant to Section 41(4) of the Act. Q. What has Alpena done to facilitate the delivery of RECs from Consumers Energy pursuant to the Contract? 4 TESTIMONY OF V M GOODBURNE
A. Alpena has an account with the Michigan Renewable Energy Certification System ( MIRECS ). This account with MIRECS allows the transfer of RECs from Consumers Energy to Alpena. Once Alpena accepts the RECs from Consumers, they are transferred into a compliance account where they are held until they are submitted to the Commission for their annual report filing. Q. Could you explain Exhibit A-2? A. Exhibit A-2 is Alpena s Renewable Energy Credit Summary by technology mix. Alpena purchases 100% of their RECs from Consumers Energy through 2024. Q. Can you provide an analysis of Alpena s Renewable Energy Plan s ability to meet the portfolio standard requirements of the Act? A. Yes. First, I think it is important to note that Alpena does not own any facilities that produce electric power. Alpena purchases approximately 99% of its electric power requirements from Consumers Energy Company ( Consumers ) under wholesale rates subject to the jurisdiction of the Federal Energy Regulatory Commission ( FERC ) and approved by the Commission in Case Nos. U-10705 and U-11029, and purchases additional power, when available, from certain large industrial customers under rates established under special contracts. Alpena does not intend to construct any facilities that would produce and qualify for renewable energy credits. Second, Alpena s Renewable Energy Plan calls for it to obtain its required RECs from Consumers Energy via the aforementioned Renewable Energy Credit Sale Agreement. The RECs contract supplies a stable source of RECs enabling Alpena to meet its Renewable Energy Portfolio Standards through the end of Alpena s wholesale purchase agreement with Consumers Energy 5 TESTIMONY OF V M GOODBURNE
which terminates on December 31, 2024. According to Alpena s Plan, it will have to obtain RECs from another provider beginning in 2025 or 2026. Third, Alpena s Renewable Energy Plan represents the most economical way for Alpena to comply with the Renewable Energy Portfolio Standards of the Act, given its size, its relative inability to construct power producing facilities which would qualify for Renewable Energy Credit certification, and the provisions of Section 35(2) of the Act which allows for transfer of ownership of RECs to Alpena from Consumers Energy pursuant to agreement. Alpena will be paying only the incremental cost to Consumers related to the construction of the RPS facilities, which will be commensurate with charges Consumers Energy jurisdictional customers will pay, and which is subject to the review of the Commission. Q. What is your analysis of the Alpena Plan s ability to meet the requirements of the Act? A. In 2012 Alpena started receiving RECs from Consumers through the MIRECs system. Alpena has also started making payments to Consumers for the RECs. Alpena continues their reporting requirements regarding the actions taken to comply with the renewable energy standards as required by Section 51 of the Act. Alpena has been collecting the Renewable Energy Surcharge as called for in the Plan. Q. Does this complete your testimony? A. Yes. 6 TESTIMONY OF V M GOODBURNE
ALPENA POWER COMPANY CASE NO. U-18230 EXHIBIT A-1 Renewable Energy Plan Summary
Alpena Power Company Renewable Energy Plan Summary Case No.: Goodburne Row No. 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 1 Sales and Requirement Calculation 2 Method: Weather Normalized or 3 Year Average 3 If Selected Weather Normalized 4 Current Year Sales to Retail Customer 5 Current Year Weather Normalization Factor 6 Current Year Weather Normalized Sales 7 If Selected 3 Year Average 8 Current Year Retail Sales to Customers 350,941 358,831 358,114 357,397 356,683 355,969 355,257 354,547 353,838 353,130 352,424 351,719 351,015 350,313 9 3 Year Average of Retail Sal 341,690 348,342 351,039 355,962 358,114 357,398 356,683 355,970 355,258 354,547 353,838 353,130 352,424 351,719 RPS Required Energy Credits (For 2017 and 2018 enter the same amount as 2015 requirement in MIRECS, for 2019 and 2020 enter 12.5% of row 6 or 9, for 2021 10 enter 15% of row 6 or 9) 33,993 33,993 44,495 44,764 53,610 53,503 53,396 53,289 53,182 53,076 52,970 52,864 52,758 11 Energy Credits 12 Energy Credit Beginning Balance Energy Credits Obtained 0 0 0 0 0 0 0 0 0 0 0 0 0 Through 13 Generation/BOT/PPA 0 0 0 0 0 0 0 0 0 0 0 0 0 14 15 Energy Credits Obtained Through REC Purchases 33,993 33,993 44,495 44,764 53,610 53,503 53,396 53,289 53,182 53,076 52,970 52,864 52,758 16 Plus: Energy Credits Obtained (Row 13+14+15) 33,993 33,993 44,495 44,764 53,610 53,503 53,396 53,289 53,182 53,076 52,970 52,864 52,758 17 Less: Energy Credits Sold 0 0 0 0 0 0 0 0 0 0 0 0 0 18 Available Energy Credits (Row 12+16-17) 33,993 33,993 44,495 44,764 53,610 53,503 53,396 53,289 53,182 53,076 52,970 52,864 52,758 19 Compliance Requirement (Row 10) 33,993 33,993 44,495 44,764 53,610 53,503 53,396 53,289 53,182 53,076 52,970 52,864 52,758 20 Less: Energy Credits Expired 21 Energy Credit Ending Balance (Row 18-19-20) 0 0 0 0 0 0 0 0 0 0 0 0 0 22 Revenue Requirment 23 Build/BOT $Thous $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - 24 PPA $Thous - - - - - - - - - - - - - 25 REC Purchases (Sales) $Thous 14.5 15.0 15.0 15.0 15.0 15.0 15.0 15.0 146.3 146.0 145.7 145.4 145.1 26 Cost of Administration of Renewable Energy Plan $Thous 27 Less: Revenue obtained from RE Sales (non retail) $Thous 28 Total Revenue Requirements $Thous 14.5 15.0 15.0 15.0 15.0 15.0 15.0 15.0 146.3 146.0 145.7 145.4 145.1 29 Meter (or Customer) Forecast 30 Residential 13,708 13,780 13,800 13,815 13,820 13,825 13,828 13,830 13,828 13,831 13,835 13,837 13,975 31 Secondary 3,974 3,974 3,974 3,974 3,974 3,974 3,974 3,974 3,974 3,974 3,974 3,974 3,974 32 Primary 9 9 9 9 9 9 9 9 9 9 9 9 9 33 Total 17,691 17,763 17,783 17,798 17,803 17,808 17,811 17,813 17,811 17,814 17,818 17,820 17,958 34 Cost Recovery 35 Planned Surcharge Rate 36 Residential $/month $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - 37 Secondary (Weighted Average) $/month - - - - - - - - - - - - - 38 Primary (Weighted Average) $/month - - - - - - - - - - - - - 39 40 Planned Surcharge 41 Residential $/month - - - - - - - - - - - - - 42 Secondary $/month - - - - - - - - - - - - - 43 Primary $/month - - - - - - - - - - - - - 44 Total $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - 45 46 Regulatory Account Balance 48 Forecast 0 0 0 0 0 0 0 0 0 0 0 0 0 49 Carrying Charges (Short-term interest) 15.4 20.6 20.8 21.0 21.2 21.5 21.7 21.9 22.2 17.8 13.3 8.7 3.9 50 Adjustments 53.2 (15.0) (15.0) (15.0) (15.0) (15.0) (15.0) (15.0) (146.3) (146.0) (145.7) (145.4) (145.1) 51 Total Year End Regulatory Balance $ 520.6 $ 589.2 $ 594.8 $ 600.7 $ 606.7 $ 612.9 $ 619.4 $ 626.0 $ 633.0 $ 508.9 $ 380.7 $ 248.4 $ 111.7 $ (29.5) Exhibit: Page: Witness: U-18230 A-1 1 of 1
ALPENA POWER COMPANY CASE NO. U-18230 EXHIBIT A-2 Renewable Energy Credit Summary
Alpena Power Company Renewable Energy Credit Summary Case No.: Exhibit: Page: Witness: U-18230 A-2 1 of 1 Goodburne 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Technology Mix RECs % RECs % RECs % RECs % RECs % RECs % RECs % RECs % RECs % RECs % RECs % RECs % RECs % Wind 15,950 46.92% 17,989 52.92% 25,505 57.32% 28,416 63.48% 36,551 68.18% 37,211 69.55% 37,553 70.33% 37,436 70.25% 36,579 68.78% 36,665 69.08% 36,719 69.32% 38,004 71.89% 39,020 73.96% Solar 88 0.26% 85 0.25% 133 0.30% 107 0.24% 102 0.19% 91 0.17% 80 0.15% 938 1.76% 1,750 3.29% 1,757 3.31% 1,748 3.30% 1,797 3.40% 1,820 3.45% Biomass 143 0.42% 296 0.87% 414 0.93% 331 0.74% 322 0.60% 326 0.61% 331 0.62% 330 0.62% 319 0.60% 318 0.60% 286 0.54% 259 0.49% 269 0.51% Wood/Wood Waste 5,446 16.02% 4,429 13.03% 3,293 7.40% 2,610 5.83% 2,482 4.63% 2,536 4.74% 2,707 5.07% 2,691 5.05% 2,627 4.94% 2,633 4.96% 2,670 5.04% 1,411 2.67% 892 1.69% Solid Waste 870 2.56% 819 2.41% 1,152 2.59% 922 2.06% 890 1.66% 11 0.02% 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% Landfill Gas 2,685 7.90% 2,570 7.56% 3,604 8.10% 2,892 6.46% 2,766 5.16% 2,809 5.25% 2,883 5.40% 2,867 5.38% 2,835 5.33% 2,643 4.98% 2,574 4.86% 2,474 4.68% 1,910 3.62% Hydro 5,119 15.06% 4,691 13.80% 6,474 14.55% 5,117 11.43% 4,921 9.18% 5,008 9.36% 5,110 9.57% 5,068 9.51% 4,951 9.31% 4,963 9.35% 4,969 9.38% 5,144 9.73% 5,276 10.00% Incentive 3,692 10.86% 3,114 9.16% 3,920 8.81% 4,369 9.76% 5,575 10.40% 5,511 10.30% 4,731 8.86% 3,959 7.43% 4,122 7.75% 4,097 7.72% 4,005 7.56% 3,774 7.14% 3,572 6.77% Total 33,993 33,993 44,495 44,764 53,610 53,503 53,396 53,289 53,182 53,076 52,970 52,864 52,758
ALPENA POWER COMPANY CASE NO. U-18230 EXHIBIT A-3 Renewable Energy Tariff
M.P.S.C. No. 9 Alpena Power Company (To revise surcharges) Revised Sheet No. D-4.90 -Revised Sheet D-4.90 SURCHARGES (continued from Sheet No. D-4.01) Rate Schedule Renewable Energy Surcharge Effective July 2015 Bill Month Energy Optimization Surcharge Effective January 2018 Bill Month Residential $0.00/meter/month $0.00263/kWh General Service $0.00/meter/month $2.64/meter/month Standard Power $0.00/meter/month $43.17/meter/month Large Power (less than 13,200 volts) $0.00/meter/month $304.83/meter/month Large Power (13,200 volts or higher) $0.00/meter/month $304.83/meter/month Large Industrial (13,200 volts or lower) $0.00/meter/month $1,141.33/meter/month Large Industrial (higher than 13,200 volts) $0.00/meter/month $908.83/meter/month Large Industrial (>13,200 volts-self Direct) $0.00/meter/month $207.17/meter/month Outdoor Protective Lighting (100 watt) $0.00/meter/month $0.23/light/month Outdoor Protective Lighting (250 watt) $0.00/meter/month $0.38/light/month Street & Highway Lighting $0.00/meter/month $0.19/light/month Special Power Contracts(Self Direct) $0.00/meter/month $459.50/meter/month Issued, 2018 by Effective for services rendered on Gary D. Graham, President and after Alpena, MI 49707 Issued under authority of the Michigan Public Service Commission Dated