S T A T E OF M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * In the matter of the application of ) CONSUMERS ENERGY COMPANY ) for authority to increase its rates for the ) Case No. U-8424 distribution of natural gas and for other relief ) ) QUALIFICATIONS AND DIRECT TESTIMONY OF DANIEL J GOTTSCHALK MICHIGAN PUBLIC SERVICE COMMISSION February 28, 208
QUALIFICATIONS OF DANIEL J GOTTSCHALK CASE NUMBER U-8424 PART I 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 Q. Please state your name and business address. A. My name is Daniel J. Gottschalk. My business address is 709 West Saginaw Highway, Lansing, Michigan 4897. Q. By whom are you employed and in what capacity? A. I am employed by the Michigan Public Service Commission (MPSC or Commission) as a Departmental Analyst in the Rates and Tariff Section of the Regulated Energy Division. Q. Please briefly describe your educational background. A. I received a Bachelor of Arts degree in Marketing from Michigan State University in 202. In 202 and 203, I completed several web design and development courses at Lansing Community College. Q. Have you attended any seminars or other training courses? A. Yes, in September 203 and 204, I attended the Advanced Regulatory Studies Program at the Institute of Public Utilities at Michigan State University. In August of 204, I completed the National Association of Regulatory Utility Commissioners (NARUC) Annual Regulatory Studies Program held at Michigan State University, which included courses on ratemaking, rate case auditing, regulatory policy, and other regulatory issues. In June 204, I completed Part of PTD Technology s Adobe Dreamweaver training course in East Lansing, Michigan. In October 206, I completed NARUC s Eastern Utility Rate School in Clearwater, Florida. Q. What are your current responsibilities at the MPSC?
QUALIFICATIONS OF DANIEL J GOTTSCHALK CASE NUMBER U-8424 PART I 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 A. In my current position at the MPSC, I participate in rate cases, revenue decoupling reconciliation cases, tariff modification cases, and complaint cases under the supervision of the Rates and Tariff Manager. My duties also include serving as a web editor for the Rates and Tariff Section and updating electric and natural gas rate comparison spreadsheets for the MPSC website. I also assist other MPSC Staff (Staff) members with various assignments and case work. Q. What duties have you been responsible for in rate cases? A. I have performed and testified to a variety of tasks in rate cases including electric cost of service, electric and natural gas rate design, low income program design and forecasting, miscellaneous and present revenue projections, decoupling mechanisms, surcharges, and miscellaneous tariff issues. Q. Have you previously participated in utility cases before the MPSC? A. Yes. I have participated in the following previous cases: Case No. Utility Description U-7475 Ontonagon County REA Tariff Modification U-7487 DTE Gas Company Tariff Modification U-7488 Northern States Power Company Gas Rate Case U-7490 Upper Peninsula Power Company Complaint U-7555 Upper Peninsula Power Company RDM Reconciliation U-7667 DTE Electric Company Tariff Modification U-770 Northern States Power Company Electric Rate Case U-7735 Consumers Energy Company Electric Rate Case U-7822 DTE Gas Company RDM Reconciliation 2
QUALIFICATIONS OF DANIEL J GOTTSCHALK CASE NUMBER U-8424 PART I 2 3 4 5 6 7 8 9 0 2 3 U-7880 Michigan Gas Utilities Corporation Gas Rate Case U-7939 Northern States Power Company Special Contract U-7998 DTE Gas Company RDM Reconciliation U-7999 DTE Gas Company Gas Rate Case U-8032 Northern States Power Company Special Contract U-83 Detroit Thermal, LLC Steam Rate Case U-839 Michigan Gas Utilities Corporation Tariff Modification U-840 Northern States Power Company Gas Rate Case U-878 SEMCO Tariff Modification U-8220 Upper Peninsula Power Company SI Reconciliation U-8324 Alpena Power Company Electric Rate Case U-8327 DTE Gas Company SI Reconciliation U-8370 Indiana Michigan Power Company Electric Rate Case 3
DIRECT TESTIMONY OF DANIEL J GOTTSCHALK CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 Q. What is the purpose of your testimony? A. The purpose of my testimony is to provide Staff s recommendations on the following items: ) Projected revenue 2) RIA/LIAC 3) IRM Surcharge 4) XXLT Energy Efficiency Surcharge 4) Tariff changes 5) Rate design Q. Are you sponsoring any exhibits? A. Yes. I am sponsoring the following exhibits: Exhibit S-6 (DJG-), Schedule F-2: Summary of Present and Proposed Revenue by Rate Schedule Exhibit S-6 (DJG-2), Schedule F-2.: Summary of Present and Proposed Rates by Rate Schedule Exhibit S-6 (DJG-3), Schedule F-2.2: Calculation of Rate Design Targets and allocation of RIA credit Exhibit S-6 (DJG-4), Schedule F-3: Present and Proposed Revenue Detail Exhibit S-6 (DJG-5), Schedule F-4: Comparison of Present and Proposed Monthly Bills Schedule Exhibit S-6 (DJG-6): Schedule C-3: Staff Projected Operating Revenue Exhibit S-5 (DJG-7): Calculation of Test Year Discount and Carrying Cost Rates Exhibit S-5. (DJG-8): Development of Rates for Transportation ATL Services 4
DIRECT TESTIMONY OF DANIEL J GOTTSCHALK CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 Exhibit S-5.2 (DJG-9): IRM Surcharge Calculation Exhibit S-5.3 (DJG-0): IRM Revenue Requirement Calculation Exhibit S-5.4 (DJG-): IRM Revenue Requirement Allocation Exhibit S-5.5 (DJG-2): XLT/XXLT Per Unit Rate Comparison Exhibit S-5.6 (DJG-3): Staff Audit Request No. 36 Exhibit S-5.7 (DJG-4): Staff Audit Request No. 078 Q. Please explain Exhibit S-6 (DJG-), Schedule F-2. A. Exhibit S-6 (DJG-), Schedule F-2 summarizes Staff s present and proposed revenue. Page shows total proposed and present revenue by rate schedule, while page 2 does the same for delivery revenue. Each page calculates the revenue and percentage differences between present and proposed revenue for each rate schedule. Q. Please explain Exhibit S-6 (DJG-2), Schedule F-2.. A. This Exhibit summarizes Consumers Energy s (the Company s) present rates and Staff s proposed rates for each rate schedule. Q. Please explain Exhibit S-6 (DJG-3), Schedule F-2.2. A. Page of Exhibit S-6 (DJG-3), Schedule F-2.2 calculates Staff s rate design targets starting with the results of Staff witness David W. Isakson s cost of service study and adjusting for the Residential Income Assistance (RIA) credit and Low Income Assistance Credit (LIAC) in addition to other rate design adjustments. Page 2 allocates the RIA and LIAC discounts across all classes based on each class s contribution to the total cost of service, including Staff s cost of gas presented by Staff witness Nora B. Quilico. 5
DIRECT TESTIMONY OF DANIEL J GOTTSCHALK CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 Q. Please explain Exhibit S-6 (DJG-4), Schedule F-3. A. Exhibit S-6, Schedule F-3 details the present and proposed revenue for each rate schedule for the Company s present rates and Staff s proposed rates. Staff s rates were designed to meet Staff s rate design targets calculated in Exhibit S-6, Schedule F-2.2 and maintain general service and transportation breakeven points. Q. Please explain Exhibit S-6 (DJG-5), Schedule F-4. A. This Exhibit compares present and proposed monthly bills using Staff s rates for various usage levels. For each usage level, it calculates the amount and percentage increases of the bills. Typical bills are shown for the residential class including and excluding income assistance. Bills are calculated for GS-, GS-2, and GS-3. Q. What is Staff s recommendation on how to deal with the large required increases still remaining for several schedules due to previous Company rate cases being settled utilizing percentage increases not reflective of the costs to serve each class? A. In the past, Staff has recommended capping increases at around 0% to avoid rate shock. That has often been enabled by capturing what would have been a decrease for one class to lower the increase for another class below this threshold. In the instant case, however, such a recommendation would unfairly place the burden of rate increases knowingly pushed off in settlements to other customers who have already had their rates increased further and further above cost of service levels by those same increases. Staff recommends keeping the increase to the Extra Large Transportation (XLT) and Extra Extremely Large Transportation (XXLT) at or below 25%, as such an increase reasonably balances the need to 6
DIRECT TESTIMONY OF DANIEL J GOTTSCHALK CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 limit the impact of rate increases to prevent rate shock with the need to limit the impact on other customers of settlements not reflecting the cost to serve. For the other schedules, Staff recommends getting as close as possible to 50% of the way towards what the COSS shows is necessary, while maintaining break-evens and reasonable rate design. To maintain break-evens between schedules and produce reasonable rate design given Staff s as-filed COSS results, Staff recommends the following: ) setting the increase to XLT and XXLT, which are due a 32.39% increase according to Staff s COSS, at 0.03%; 2) setting the increase to Large Transportation (LT) class, which is due a 7.38% increase according to Staff s COSS, at 5.4%; 3) setting the decrease to Small Volume Transportation (ST) class, which is due a 0.95% decrease according to Staff s COSS, at 0%; 4) setting the increase to General Service 3 class (GS-3), which is due a 3.83% increase according to Staff s COSS, at 6.88%; 5) setting the decrease to General Service 2 class (GS-2), which is due a 3.54% decrease according to Staff s COSS, at 0.99%; 6) setting the decrease to General Service class (GS-), which is due a 6.92% decrease according to Staff s COSS, at 5.05%; and 7) setting the decrease to Residential, which is due a.5% decrease according to Staff s COSS, at.0%. These recommendations result in rates for other schedules that are higher than they would be in the absence of the need to subsidize GS-3, LT, and XLT to avoid 7
DIRECT TESTIMONY OF DANIEL J GOTTSCHALK CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 rate shock. The resulting rate design targets are shown on Exhibit S-6, Schedule F2.2. Q. What is Staff s recommendation on the Company s proposed XXLT rate? A. Staff is ambivalent to the creation of the new rate, XXLT. Q. Please explain. A. In Staff s opinion, the Company s proposed XXLT rate design is inappropriate. The Company attempts to justify the creation of a new rate by claiming that the per-unit cost to serve would-be XXLT customers is 6% lower than the per-unit cost to serve would-be XLT customers. However, this result is to be expected when costs related to volumes make up a larger percentage of total costs for a given class. As the non-volumetric costs are spread over a higher amount of volume, with the volumetric costs remaining the same, the overall cost per unit is expected to decrease. The nature of the difference between the Company s cost of services for XLT and XXLT customers is a matter of denominator. Dividing a number by a larger denominator results in a smaller number, not a lower cost of service. Q. How does this show that the Company s proposed XXLT rate design is inappropriate? A. An examination of bills for an average would-be XLT customer compared to those of an average would-be XXLT customer when rates are the same between the two shows that the per-unit rate for would-be XXLT customers is already at least the 6% lower that is justified by the analysis conducted by both Staff and the 8
DIRECT TESTIMONY OF DANIEL J GOTTSCHALK CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 Company based on pure per-unit cost to serve. In fact, as shown on Exhibit S- 5.5 (DJG-2), would-be XXLT customers pay 6% less on a per-unit basis under current rates, 2% less under the Company s proposed rates (modified so that XLT and XXLT rates are the same), and 9% less under Staff s proposed rates. Therefore, would-be XXLT customers are already paying an average per-unit rate that is lower by at least as much as would be justified on a pure COSS basis. Q. How is this result possible? A. This result is made possible by the fact that the volumetric rates for XLT customer are below the volumetric costs. This has traditionally been the case because, in order to maintain the breakeven points between the various schedules, such a result for the higher-usage rate schedules is necessary. Q. How did the Company manage to create a 4 bcf breakeven point between wouldbe XLT customers and would-be XXLT customers? A. The Company, rather than applying the same percentage increase to XXLT customers as it did to XLT customers, artificially locked the percentage increase to XXLT customers at zero. Based on the Company s COSS, as well as Staff s, the percentage increases due to both sets of customers based on the COSS are nearly identical. It was this artificially created cost gap that allowed the Company to successfully design an XXLT rate with a 4 bcf breakeven point. Such an artificial cost gap is inappropriate and unreflective of the cost to serve these customers. Exhibit S-5.5 (DJG-2) and Exhibit A-6 (HLR-4) 9
DIRECT TESTIMONY OF DANIEL J GOTTSCHALK CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 Q. Why, then, is Staff ambivalent to the creation of a new XXLT rate? A. Staff is ambivalent to the creation of a new XXLT rate due to the Company s proposed 4% Authorized Tolerance Level (ATL) for the proposed XXLT rate. In Staff s opinion, this could be affected by either creating a new XXLT rate with the same customer charges and distribution charges as the XLT, but with only the 4% ATL as an option, or adding the 4% ATL option to the current XLT rate. Staff supports the 4% ATL option and finds that either method would be reasonable to put it in place. Q. Please explain Exhibit S-6 (DJG-6), Schedule C-3. A. This Exhibit calculates Staff s projected operating revenue at present rates for the test year ending June 30, 209. The Company s projected numbers are listed in column c, Staff s adjustments to the Company s projections are listed in column d, and Staff s projected sales revenue resulting from those adjustments are calculated in column e. Staff s projected operating revenue in the test year is $,687,208,000. Q. Please explain Staff s adjustments to projected sales revenue in Exhibit S-6 (DJG- 6), Schedule C-3. A. Staff reduced the Company s projected sales revenue by $20,490,000. This adjustment was the result of Staff witness Quilico s recommendation to change the cost of gas used in this case to $3.00/MCF. As a result, Staff s projected sales revenue is $,58,572,000. Q. Did Staff make any adjustments to Other Gas Revenue in Exhibit S-6 (DJG-6), Schedule C-3? 0
DIRECT TESTIMONY OF DANIEL J GOTTSCHALK CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 A. Yes. As explained in Staff witness Kevin S. Krause s testimony, Staff increased the Company s projected Other Gas Revenue by $7,678,000, bringing projected Other Gas Revenue to $97,656,000. Q. Please explain Exhibit S-5 (DJG-7). A. Exhibit S-5 (DJG-7) shows the calculation of the test-year discount and carrying cost rates for the customer attachment program using Staff s debt and equity, cost rates, and pre-tax multiplier sponsored by Staff witness Kirk D. Megginson. Q. Please explain Exhibit S-5. (DJG-8). A. Exhibit S-5. (DJG-8) calculates rates for transportation ATL services. Staff used its transmission, storage, and distribution related costs from its COSS to develop the transportation and storage revenue requirements. Staff used its storage-related cost and the test-year transportation throughput to calculate the storage cost per Mcf of throughput. Q. Please explain Exhibit S-5.2 (DJG-9). A. Exhibit S-5.2 (DJG-9) calculates Staff s proposed IRM surcharge. Column a contains customer count by rate schedule in the test year. Column b details the test year consumption in MMcf by rate schedule. Column d lists Staff s IRM revenue requirement by rate schedule. Column e calculates the monthly percustomer IRM surcharge by rate schedule. This is accomplished by dividing the IRM revenue requirement for each rate by 2 to arrive at a monthly revenue requirement. That number is then divided by the number of customers for each respective rate schedule to arrive at a monthly per customer surcharge for each rate.
DIRECT TESTIMONY OF DANIEL J GOTTSCHALK CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 Q. Please explain Exhibit S-5.3 (DJG-0). A. This Exhibit calculates Staff s total IRM revenue requirement, including distribution and transmission revenue requirement totals. Page, lines -9 contain Staff witness Cynthia L. Creisher s incremental capital investment totals. Lines 0-8 calculate the average capital investment. Lines 9-23 calculate the IRM revenue requirement for distribution, transmission, and the sum of those two to arrive at a total IRM revenue requirement: $0,43,000. Page 2 contains inputs that factor into the IRM revenue requirement calculation on page, lines 9-22. These inputs were modified to reflect Staff s pre-tax rate of return and revenue conversion factor. Q. Please explain Exhibit S-5.4 (DJG-). A. Exhibit S-5.4 (DJG-) allocates Staff s total IRM revenue requirement to each rate schedule using the same allocators as Company witness Luis F. Saenz. This results in a IRM revenue requirement for each rate schedule on line 9. Q. The Company, while using a 3-month average to calculate the IRM revenue requirement as directed by the Commission, does not believe using an average in the calculation of the IRM revenue requirement is the most appropriate method. Does Staff agree? A. No. Staff agrees with the Commission s Order in the Company s last rate case, U- 824, which directed the Company to use a 3-month average when calculating revenue requirement for future IRM applications. Using a 3-month average ensures that the Company does not receive a return on its expenditures until they are made. Using the total capital expenditures for the entire year, instead of an 2
DIRECT TESTIMONY OF DANIEL J GOTTSCHALK CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 24 average while applying the annual return, would give the Company a higher return on the expenditures than what is authorized. This is because an expenditure occurring in the last month of the period would earn a return as if it took place in the first month of the period. Therefore, the 3-month average should continue to be used. Q. Please explain Exhibit S-5.6 (DJG-3): Staff Audit Request No. 36. A. This Exhibit is Staff Audit Request No. 36 regarding the error in the energy efficiency surcharge listed for XXLT in Company Exhibit A-6 (KJM-2), Schedule F-5, on Page 0 of 2. Q. Please explain Exhibit S-5.7 (DJG-4). A. This Exhibit is Staff Audit Request No. 078 pertaining to the criteria the Company plans to use to select participants in its RIA and LIAC programs. Q. The Company is proposing to change the selection of its customers for the LIAC from randomly selected to company selected. Is Staff in favor of this change? A. Staff sees this change as favorable, as this would allow the Company to select customers for the LIAC that are most in need. Staff would like the Company to include the criteria used to select customers for the LIAC on tariff sheet No. D- 8.00. According to the Company s response in Exhibit S-5.7 (DJG-4), the Company will select customers for the LIAC based on the following criteria: Customers with an approved critical care certification where the total household income does not exceed 50% of the Federal Poverty level within the last 2 months, as verified by an authorized State or Federal agency. Customers who have received a Home Heating Credit in the previous 2 months. o Enrollment based on customers with highest arrears balance. 3
DIRECT TESTIMONY OF DANIEL J GOTTSCHALK CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 24 Customers whose total household income does not exceed 50% of the Federal Poverty level and have a past due balance. o Enrollment based on customers with the highest arrears balance. Q. How did Staff allocate the costs of the RIA and LIAC? A. As detailed on the second page of Exhibit S-6 (DJG-3), Schedule F-2.2, the RIA and LIAC discounts were allocated across the classes according to their proportion of Staff s total cost of service with cost of gas. Q. Does Staff agree with the Company s proposed Energy Efficiency Surcharges in Exhibit No. A-6 (KJM-2), Schedule F-5, on Page 0 of 2? A. No. The energy efficiency surcharge for rate XXLT at a usage of over 00,000 Mcf is listed as $X.XXXX/Mcf. This surcharge should be the same as ST, LT, and XLT s surcharge at the same usage level, which is $0.0047/Mcf. When asked about this surcharge in Exhibit S-5.6 (DJG-3), the Company admitted the error, explaining that the energy efficiency surcharge for XXLT customers using over 00,000 Mcf should indeed be the same as other transportation customers at that usage level. The Company added that the surcharge for XXLT customers under 00,000 Mcf should be listed as NA, since the XXLT rate is only available to extremely large transportation customers using at least 4,000,000 Mcf per year. Staff agrees with this addition. Q. The Company defines economic breakeven points as the point at which the total cost to serve a rate class and the total revenue collected from a rate class is equal. Does Staff agree with this definition? A. No. An economic breakeven point is the point of volumetric usage where revenue collected from one rate would equal revenue collected on a different rate. For 4
DIRECT TESTIMONY OF DANIEL J GOTTSCHALK CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 example, if the breakeven point between GS- and GS-2 was,000 Mcf per year, the revenue collected from a customer who used,000 Mcf per year would be the same if they were on either rate GS- or GS-2. Q. Why is it important to maintain economic breakeven points? A. If the economic breakeven points between rate schedules were significantly altered, customers may be enticed to switch to a different rate schedule than they were assumed to be on in the projected test year determinants. If the customer pays more or less for the same usage on a different rate than was assumed in the projected revenue calculations, this could impact the Company s ability to collect its approved revenue requirement. Q. Please describe the language the Company is proposing to add to tariff sheet No. C-34.00, regarding its Customer Attachment Program. A. The Company is proposing to add the following under section C of sheet No. C- 34.00, under Payment of Customer Contribution: In the case of a lump sum default of payment, and after 80 days have passed, the account will automatically be set up as a fixed monthly surcharge payment. Q. Does Staff accept this addition? A. Staff finds this addition reasonable, under the condition that there is a contract in place between the Company and the customer before construction begins and before the customer is billed for the charges. The contract must specify what charges the customer is responsible for and include the payment terms, including the proposed language mentioned above. 5
DIRECT TESTIMONY OF DANIEL J GOTTSCHALK CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 Q. The Company is proposing to raise the residential customer charge to $5 per month. Does Staff agree with this increase? A. No. Staff is proposing to have the residential customer charge remain at the present rate of $.75 per month, as supported by Staff witness Isakson. Q. The Company is recommending the excess peak demand charge for residential A- customers increase by the same percentage as the residential customer charge increase. What is Staff s position on this issue? A. The Staff, while in agreement with the position that the excess peak demand charge should increase by the same percentage as the residential customer charge increase, as it has been done historically, does not support the Company s reasoning behind this conclusion. The Company reasoned that the excess peak demand charge is customer related, and therefore should increase by the same percentage as the residential customer charge. This is not accurate. The excess peak demand charge is demand-related, not customer-related. It is assessed per Mcf of excess peak demand. For these reasons, Staff recommends the excess peak demand charge be moved from the customer charge to the distribution charge in the tariff book. Q. Does Staff take issue with any of the Company s proposed tariff changes? A. Outside of the tariff changes noted in this testimony, Staff does not take issue with the remainder of the tariff changes. Q. Does this conclude your testimony? A. Yes, it does. 6
S T A T E OF M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * In the matter of the application of ) CONSUMERS ENERGY COMPANY ) for authority to increase its rates for the ) Case No. U-8424 distribution of natural gas and for other relief ) ) EXHIBITS OF DANIEL J GOTTSCHALK MICHIGAN PUBLIC SERVICE COMMISSION February 28, 208
Schedule F-2 MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Exhibit No.: S-6 (DJG-) Summary of Present and Proposed Revenue by Rate Schedule Schedule: F-2 Total Revenue Page: of 2 Witness: Gottschalk Date: February 208 ( a ) ( b ) ( c ) ( d ) ( e ) ( f ) Line Present Proposed Difference No. Description Revenue Revenue Revenue Percent Source $000 $000 $000 % Residential Service Single Family Dwelling A $,28,43 $,2,959 $ (6,472) (0.6) Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: of 0 2 Multifamily Dwelling A- 37,24 36,986 (255) (0.7) Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 2 of 0 3 Total Residential Service,65,673,58,945 (6,727) (0.6) Line + Line 2 General Service 4 Small Service GS- 57,046 52,922 (4,24) (2.6) Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 3 of 0 5 Medium Service GS-2 64,742 64,08 (724) (0.4) Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 4 of 0 6 Large Service GS-3 3,05 3,943 838 2.7 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 5 of 0 7 Outdoor Lighting GL 7 5 (2) (23.0) Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 6 of 0 8 Total General Service 352,899 348,888 (4,0) (.) Sum Lines 4 - Line 7 9 Total Gas Sales (),58,572,507,833 (0,739) (0.7) Line 3 + Line 8 Transportation 0 Small Transport ST 24,43 24,43 (0) (0.0) Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 7 of 0 Large Transport LT 7,0 8,362,252 7.3 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 8 of 0 2 Extremely Large Transport XLT 22,346 25,334 2,988 3.4 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 9 of 0 3 Extra Extremely Large Transport XXLT 7,382 7,376 (6) (0.) Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 0 of 0 4 Total Transportation 70,980 75,25 4,235 6.0 Sum Lines 0 - Line 3 5 Total Service (Delivery & Fuel) $,589,552 $,583,048 $ (6,504) (0.4) Line 9 + Line 4 6 Additional Late Payment Charge Revenue (35) WP-DJG- 7 Revenue Increase/(Decrease) Due to Rounding - 8 Total Revenue (Sufficiency)/Deficiency $ (6,539) Sum Lines 5 - Line 7 Notes () Includes aggregate billed transportation accounts.
Schedule F-2 MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Exhibit No.: S-6 (DJG-) Summary of Present and Proposed Revenue by Rate Schedule Schedule: F-2 Delivery Revenue Page: 2 of 2 Witness: Gottschalk Date: February 208 ( a ) ( b ) ( c ) ( d ) ( e ) ( f ) Line Present Proposed Difference No. Description Revenue Revenue Revenue Percent Source $000 $000 $000 % Residential Service Single Family Dwelling A $ 670,46 $ 663,674 $ (6,472) (.0) Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: of 0 2 Multifamily Dwelling A- 9,68 9,362 (255) (.3) Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 2 of 0 3 Total Residential Service 689,764 683,037 (6,727) (.0) Line + Line 2 General Service 4 Small Service GS- 8,954 77,830 (4,24) (5.0) Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 3 of 0 5 Medium Service GS-2 73,605 72,88 (724) (.0) Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 4 of 0 6 Large Service GS-3 2,225 3,063 838 6.9 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 5 of 0 7 Outdoor Lighting GL 7 5 (2) (23.0) Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 6 of 0 8 Total General Service 67,79 63,779 (4,0) (2.4) Sum Lines 4 - Line 7 9 Total Gas Sales () 857,555 846,86 (0,739) (.3) Line 3 + Line 8 Transportation 0 Small Transport ST 24,43 24,43 (0) (0.0) Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 7 of 0 Large Transport LT 7,0 8,362,252 7.3 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 8 of 0 2 Extremely Large Transport XLT 22,346 25,334 2,988 3.4 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 9 of 0 3 Extra Extremely Large Transport XXLT 7,382 7,376 (6) (0.) Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 0 of 0 4 Total Transportation 70,980 75,25 4,235 6.0 Sum Lines 0 - Line 3 5 Total Service (Delivery Only) $ 928,535 $ 922,03 $ (6,504) (0.7) Line 9 + Line 4 6 Additional Late Payment Charge Revenue (35) WP-DJG- 7 Revenue Increase/(Decrease) Due to Rounding - 8 Total Revenue (Sufficiency)/Deficiency $ (6,539) Sum Lines 5 - Line 7 Notes () Includes aggregate billed transportation accounts.
Schedule F-2. MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Exhibit No.: S-6 (DJG-2) Summary of Present and Proposed Rates by Rate Schedule Schedule: F-2. Page: of 2 Witness: Gottschalk Date: February 208 ( a ) ( b ) ( c ) ( d ) ( e ) Line No. Description Units Present Proposed Source Residential Class Single Family Dwelling A Customer Charge $/Mth.75.75 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: of 0 2 Income Assistance - RIA Program $/Mth (.75) (.75) Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: of 0 3 Income Assistance - LIAC Pilot $/Mth (30.27) (30.27) Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: of 0 4 Distribution Charge $/Mcf 2.9594 2.970 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: of 0 Multifamily Dwelling A- 5 Customer Charge $/Mth.75.75 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 2 of 0 6 Excess Peak Charge $/Mcf 0.075 0.075 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 2 of 0 7 Distribution Charge $/Mcf 2.9594 2.970 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 2 of 0 General Service Small Service GS- 8 Customer Charge - Master $/Mth 4.00 $2.00 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 3 of 0 9 Customer Charge - Contiguous $/Mth 4.00 $6.00 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 3 of 0 0 Distribution Charge $/Mcf 2.4763 2.425 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 3 of 0 Medium Service GS-2 Customer Charge - Master $/Mth 49.00 $42.00 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 4 of 0 2 Customer Charge - Contiguous $/Mth 4.95 45.00 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 4 of 0 3 Distribution Charge $/Mcf 2.057 2.0654 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 4 of 0 Large Service GS-3 4 Customer Charge - Master $/Mth 669.00 $500.00 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 5 of 0 5 Customer Charge - Contiguous $/Mth 53.00 70.00 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 5 of 0 6 Distribution Charge $/Mcf.332.559 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 5 of 0 Outdoor Lighting GL 7 Single Mantle $/Lum. 7.00 6.00 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 6 of 0 8 Multiple Mantle $/Lum. 5.00 0.00 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 6 of 0 Transportation Small Transport ST 9 Customer Charge - Master $/Mth 669.00 $500.00 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 7 of 0 20 Customer Charge - Contiguous $/Mth 53.00 70.00 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 7 of 0 2 Distribution Charge $/Mcf.0070.0638 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 7 of 0 Large Transport LT 22 Customer Charge - Master $/Mth 2,26.7 $,800.00 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 8 of 0 23 Customer Charge - Contiguous $/Mth 53.00 70.00 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 8 of 0 24 Distribution Charge $/Mcf 0.823 0.9078 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 8 of 0 Extremely Large Transport XLT 25 Customer Charge - Master $/Mth 7,49.00 $7,350.00 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 9 of 0 26 Customer Charge - Contiguous $/Mth 53.00 70.00 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 9 of 0 27 Remote Meter Charge $/Mth 70.00 70.00 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 9 of 0 28 Distribution Charge $/Mcf 0.6930 0.7729 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 9 of 0 Extra Extremely Large Transport XXLT 29 Customer Charge - Master $/Mth 7,49.00 $7,350.00 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 0 of 0 30 Remote Meter Charge $/Mth 70.00 70.00 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 0 of 0 3 Distribution Charge $/Mcf 0.6930 0.7729 Exhibit No.: S-6 (DJG-4), Schedule: F-3, Page: 0 of 0
MICHIGAN PUBLIC SERVICE COMMISSION Consumers Energy Company Summary of Present and Proposed Rates by Rate Schedule Schedule F-2. Case No.: U-8424 Exhibit No.: S-6 (DJG-2) Schedule: F-2. Page: 2 of 2 Witness: Gottschalk Date: February 208 ( a ) ( b ) ( c ) ( d ) ( e ) Line No. Description Units Present Proposed Source Authorized Tolerance Level 32 4.0% ATL $/Mcf - (0.2) Exhibit No.: S-5. (DJG-8) 33 6.5% ATL $/Mcf (0.0766) (0.0538) Exhibit No.: S-5. (DJG-8) 34 7.5% ATL $/Mcf (0.0383) (0.0269) Exhibit No.: S-5. (DJG-8) 35 8.5% ATL $/Mcf - - Exhibit No.: S-5. (DJG-8) 36 9.5% ATL $/Mcf 0.0383 0.0269 Exhibit No.: S-5. (DJG-8) 37 0.5% ATL $/Mcf 0.0766 0.0538 Exhibit No.: S-5. (DJG-8) Customer Attachment Program 38 Discount Rate % 7.59 9.60 Exhibit No.: S-5 (DJG-7) 39 Carrying Cost Rate %.02 2.93 Exhibit No.: S-5 (DJG-7) Other Transportation 40 Authorized Gas Use Charge $/Mcf.00.00 CECo Gas Tariff Sheet E-2.00 4 Unauthorized Gas Use Charge $/Mcf 0.00 0.00 CECo Gas Tariff Sheet E-2.00 42 Load Balancing Charge $/MMBtu 0.25 0.25 CECo Gas Tariff Sheet E-2.00 43 EUT Gas In Kind % 2.68 2.34 Column (b): CECo Gas Tariff Sheet E-4.00 Column (c): Exhibit A-54 (MPP-6), Line IRM Monthly Charge 44 Residential $/Customer 0.39 Exhibit No.: S-5.2 (DJG-9) General Service () 45 Small Service GS- $/Customer 0.60 Exhibit No.: S-5.2 (DJG-9) 46 Medium Service GS-2 $/Customer 5.58 Exhibit No.: S-5.2 (DJG-9) 47 Large Service GS-3 $/Customer 32.36 Exhibit No.: S-5.2 (DJG-9) Transportation 48 Small Transport ST $/Customer 6.00 Exhibit No.: S-5.2 (DJG-9) 49 Large Transport LT $/Customer 25.84 Exhibit No.: S-5.2 (DJG-9) 50 Extremely Large Transport XLT $/Customer 86.59 Exhibit No.: S-5.2 (DJG-9) 5 Extra Extremely Large Transport XXLT $/Customer 4,242.32 Exhibit No.: S-5.2 (DJG-9) Notes () Excludes Outdoor Lighting GL
Schedule F-2.2 MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Exhibit No.: S-6 (DJG-3) Calculation of Rate Design Targets Schedule: F-2.2 ($000) Page: of 2 Witness: Gottschalk Date: February 208 ( a ) ( b ) ( c ) ( d ) ( e ) ( f ) ( g ) ( h ) ( i ) ( j ) ( k ) Line No. Description Total Residential GS- () General Service GS-2 GS-3 ST LT Transportation XLT/XXLT XLT XXLT Source Cost of Service Study (COSS) $ 92,996 $ 682,500 $ 75,0 $ 69,79 $ 3,656 $ 23,733 $ 8,232 $ 39,055 $ 29,347 $ 9,708 Exhibit No.: S-6, Schedule F-a, Page, Line 22 2 Adjustment - RIA/LIAC Credit - (3,350),86,28 260 82 40 302 227 75 Exhibit No.: S-6 (DJG-3), Schedule: F-2.2, Page: 2 of 2, Col. ( e ) 3 Adjustment - Rate Stability - 3,864,535,879 (850) 229 (0) (6,647) (4,986) (,660) Line 5 4 Adjusted COSS 92,996 683,05 77,822 72,879 3,065 24,43 8,362 32,70 24,587 8,23 Sum Lines - 3 5 Test Year Present Revenue 928,535 689,764 8,96 73,605 2,225 24,43 7,0 29,728 22,346 7,382 Exhibit No.: S-6 (DJG-4), Schedule: F-3 6 Revenue (Sufficiency)/Deficiency (6,539) (6,749) (4,39) (726) 84 -,252 2,982 2,242 74 Line 4 - Line 5 7 Incremental Late Payments (35) (22) (3) (2) 3 - - - - - WP-DJG- 8 Adjusted Revenue (Sufficiency)/Deficiency (6,504) (6,727) (4,26) (724) 838 -,252 2,982 2,242 74 Line 6 - Line 7 9 Rate Design Targets $ 922,03 $ 683,037 $ 77,835 $ 72,88 $ 3,063 $ 24,43 $ 8,362 $ 32,70 $ 24,587 $ 8,23 Line 5 + Line 8 0 % Increase From Test Year Present Revenue -.0% -5.0% -.0% 6.9% 0.0% 7.3% 0.0% 0.0% 0.0% (Line 9 - Line 5) / Line 5 Calculation of Rate Stability Adjustment Cost of Service Study (COSS), Net $ 679,5 $ 76,287 $ 70,999 $ 3,95 $ 23,95 $ 8,372 $ 39,357 $ 29,574 $ 9,783 Line + Line 2 2 % Increase From Test Year Present Revenue -.5% -6.9% -3.5% 3.8% -.0% 7.4% 32.4% 32.4% 32.5% (Line - Line 5) / Line 5 3 % Rate Increase - Stability Target -5.% -.0% 6.9% 0.0% 7.3% 0.0% 0.0% 0.0% 4 Adjusted Revenue For Stability 77,822 72,879 3,065 24,43 8,362 32,70 24,587 8,23 Line 5 * ( + Line 3) 5 Adjustment - Rate Stability - $ 3,864 $,535 $,879 $ (850) $ 229 $ (0.37) $ (6,647) $ (4,986) $ (,660) Line 4 - Line Notes () Includes Outdoor Lighting GL
Schedule F-2.2 MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Exhibit No.: S-6 (DJG-3) Calculation of Rate Design Targets Schedule: F-2.2 Allocation of Residential Income Assistance (RIA) Credit Page: 2 of 2 ($000) Witness: Gottschalk Date: February 208 ( a ) ( b ) ( c ) ( d ) ( e ) ( f ) ( g ) ( h ) ( i ) ( j ) Line COS with COG RIA Discount LIAC Discount No. Description % of total Allocation Allocation Total Sales Residential A/A 72.98% $ 5,865 $ 3,8 $ 9,046 2 Subtotal Residential 72.98% 5,865 3,8 9,046 3 General Service - Rate GS- 9.56% 769 47,86 4 General Service - Rate GS-2 0.33% 830 450,28 5 General Service - Rate GS-3 2.09% 68 9 260 6 Subtotal General Service 2.99%,767 959 2,726 7 Transportation Service - Rate ST.47% 8 64 82 8 Transportation Service - Rate LT.3% 9 49 40 9 Transportation Service - Rate XLT.83% 47 80 227 0 Transportation Service - Rate XXLT 0.60% 49 26 75 Subtotal Transportation 5.03% 404 29 624 2 Total Sales and Transportation 00.00% $ 8,037 $ 4,359 $ 2,396 Total Residential Rate GS- Rate GS-2 Rate GS-3 Rate ST Rate LT Rate XLT Rate XXLT 3 Revenue Requirement/Total Cost of Service () (2) $,680,669 $,226,488 $ 60,748 $ 73,663 $ 35,202 $ 24,645 $ 9,06 $ 30,74 $ 0,67 4 Cost of Service Percentage 00.00% 72.98% 9.56% 0.33% 2.09%.47%.3%.83% 0.60% Notes () Exhibit S-6, Schedule F-a, Page, Line 9 (2) Includes cost of fuel
MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Schedule F-3 Exhibit No.: S-6 (DJG-4) Present and Proposed Revenue Detail Schedule: F-3 Residential Single Family Dwelling A Page: of 0 Witness: Gottschalk Date: February 208 ( a ) ( b ) ( c ) ( d ) ( e ) ( f ) ( g ) Line Billing Determinants Present Proposed No. Description Quantity Units Rates Revenue Rates Revenue $/unit $000 $/unit $000 Delivery Customer (),635,45 Mthly.75 $ 230,599.75 $ 230,599 2 Distribution Mcf/mth (2) 52,75 MMcf 2.9594 45,943 2.970 445,47 Provisions 3 Income Assistance - RIA (3), (4) 57,000 Mthly (.75) (8,037) (.75) (8,037) 4 Income Assistance - LIAC Pilot (3) 2,000 Mthly (30.27) (4,359) (30.27) (4,359) 5 Total Delivery 670,46 663,674 Fuel 6 GCR Sales (5) 52,7 MMcf 3.000 458,285 3.000 458,285 7 Alternative Fuel Sales (6) 4 MMcf - - - - 8 Total Fuel 52,75 458,285 458,285 9 Total Service (Delivery & Fuel) $,28,43 $,2,959 Notes () WP-HLR-7, Line 28 (2) WP-HLR-9, Line 3 (3) U-824 Order dated July 3, 207 (4) Exhibit A-5 (EJK-2), Schedule E-8, Column (d), Line 4 Less Line 4 above (5) WP-HLR-0, Line 26 (6) WP-HLR-, Line 39
Schedule F-3 MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Exhibit No.: S-6 (DJG-4) Consumers Energy Company Schedule: F-3 Present and Proposed Revenue Detail Page: 2 of 0 Residential Multifamily Dwelling A- Witness: Gottschalk Date: February 208 ( a ) ( b ) ( c ) ( d ) ( e ) ( f ) ( g ) Billing Determinants Present Proposed Line Description Quantity Units Rates Revenue Rates Revenue $/unit $000 $/unit $000 Delivery Customer () 9,258 Mthly.75 $,305.75 $,305 2 Excess Peak Mcf/Mth (2) 6,727 MMcf 0.075 48 0.075 48 3 Distribution Mcf/Mth (3) 6,025 MMcf 2.9594 7,83 2.970 7,576 4 Total Delivery 9,68 9,362 Fuel 5 GCR Sales (4) 5,873 MMcf 3.000 7,624 3.000 7,624 6 Alternative Fuel Sales (5) 53 MMcf - - - - 7 Total Fuel 6,025 7,624 7,624 8 Total Service (Delivery & Fuel) $ 37,24 $ 36,986 Notes () WP-HLR-6, Line 28 (2) ((WP-HLR-9, Line 7 - WP-HLR-6, Line 2 * 45/000)*2) (3) WP-HLR-9, Line 3 (4) WP-HLR-0, Line 26 (5) WP-HLR-, Line 39
MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Schedule F-3 Exhibit No.: S-6 (DJG-4) Present and Proposed Revenue Detail Schedule: F-3 General Small Service GS- Page: 3 of 0 Witness: Gottschalk Date: February 208 ( a ) ( b ) ( c ) ( d ) ( e ) ( f ) ( g ) Line Billing Determinants Present Proposed No. Description Quantity Units Rates Revenue Rates Revenue $/unit $000 $/unit $000 Delivery Customer () 8,358 Mthly 4.00 $ 9,884 2.00 $ 7,044 2 Contiguous Account (2) 9 Mthly 4.00 3 6.00 4 3 Distribution Mcf/Mth (3) 25,064 MMcf 2.4763 62,067 2.425 60,783 4 Total Delivery 8,954 77,830 Fuel 5 GCR Sales (4) 25,022 MMcf 3.000 75,092 3.000 75,092 6 Alternative Fuel Sales (5) 42 MMcf - - - - 7 Total Fuel 25,064 75,092 75,092 8 Total Service (Delivery & Fuel) $ 57,046 $ 52,922 Notes () WP-HLR-7, Line 28 (2) WP-HLR-8, Line 42 (3) WP-HLR-9, Line 3 (4) WP-HLR-0, Line 26 (5) WP-HLR-, Line 39
MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Schedule F-3 Exhibit No.: S-6 (DJG-4) Present and Proposed Revenue Detail Schedule: F-3 General Medium Service GS-2 Page: 4 of 0 Witness: Gottschalk Date: February 208 ( a ) ( b ) ( c ) ( d ) ( e ) ( f ) ( g ) Line Billing Determinants Present Proposed No. Description Quantity Units Rates Revenue Rates Revenue $/unit $000 $/unit $000 Delivery Customer (),847 Mthly 49.00 $ 6,966 42.00 $ 5,97 2 Contiguous Account (2) 29 Mthly 4.95 5 45.00 6 3 Distribution Mcf/Mth (3) 32,388 MMcf 2.057 66,624 2.0654 66,895 4 Total Delivery 73,605 72,88 Fuel 5 GCR Sales (4) 30,369 MMcf 3.000 9,36 3.000 9,36 6 Alternative Fuel Sales (5) 2,09 MMcf - - - - 7 Total Fuel 32,388 9,36 9,36 8 Total Service (Delivery & Fuel) $ 64,742 $ 64,08 Notes () WP-HLR-7, Line 28 (2) WP-HLR-8, Line 42 (3) WP-HLR-9, Line 3 (4) WP-HLR-0, Line 26 (5) WP-HLR-, Line 39
MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Schedule F-3 Exhibit No.: S-6 (DJG-4) Present and Proposed Revenue Detail Schedule: F-3 General Large Service GS-3 Page: 5 of 0 Witness: Gottschalk Date: February 208 ( a ) ( b ) ( c ) ( d ) ( e ) ( f ) ( g ) Line Billing Determinants Present Proposed No. Description Quantity Units Rates Revenue Rates Revenue $/unit $000 $/unit $000 Delivery Customer () 323 Mthly 669.00 $ 2,593 500.00 $,938 2 Contiguous Account (2) 58 Mthly 53.00 37 70.00 49 3 Distribution Mcf/Mth (3) 7,306 MMcf.332 9,595.559,076 4 Total Delivery 2,225 3,063 Fuel 5 GCR Sales (4) 6,29 MMcf 3.000 8,880 3.000 8,880 6 Alternative Fuel Sales (5),05 MMcf - - - - 7 Total Fuel 7,306 8,880 8,880 8 Total Service (Delivery & Fuel) $ 3,05 $ 3,943 Notes () WP-HLR-7, Line 28 (2) WP-HLR-8, Line 42 (3) WP-HLR-9, Line3 (4) WP-HLR-0, Line26 (5) WP-HLR-, Line 39
MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Schedule F-3 Exhibit No.: S-6 (DJG-4) Present and Proposed Revenue Detail Schedule: F-3 General Outdoor Lighting Service GL Page: 6 of 0 Witness: Gottschalk Date: February 208 ( a ) ( b ) ( c ) ( d ) ( e ) ( f ) ( g ) Line Billing Determinants Present Proposed No. Description Quantity Units Rates Revenue Rates Revenue $/unit $000 $/unit $000 Delivery & Fuel Single Mantle 56 Lum. 7.00 $ 4 6.00 $ 3 2 Multiple Mantle 204 Lum. 5.00 3 0.00 2 3 Total Service (Delivery & Fuel) $ 7 $ 5 Notes Single Mantle Monthly Luminaires () Annual Luminaires 4 2.5 cubic feet, or less, per hour 43 56 Multiple Mantle 5 2.5-4.5 cubic feet per hour 7 204 60 720 Single Mantle Multiple Mantle 6 Average number of hours per month 730 730 7 Hourly rated capacity of fixtures in cf 2.5 4.5 8 Monthly consumption in cf,825 3,285 9 Monthly consumption in Mcf.825 3.285 0 Cost of Gas per Mcf in this proceeding $ 3.000 $ 3.000 Monthly Gas Cost per Luminaire $ 5.48 $ 9.86 () 206 Rate GL Sales by Rate Report
MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Schedule F-3 Exhibit No.: S-6 (DJG-4) Test Year Present and Proposed Revenue Detail Schedule: F-3 Small Transport ST Page: 7 of 0 Witness: Gottschalk Date: February 208 ( a ) ( b ) ( c ) ( d ) ( e ) ( f ) ( g ) Line Billing Determinants Present Proposed No. Description Quantity Units Rates Revenue Rates Revenue $/unit $000 $/unit $000 Delivery Customer () 62 Mthly 669.00 $ 4,985 500.00 $ 3,726 2 Contiguous Account (2) 788 Mthly 53.00 50 70.00 662 3 Distribution Mcf/Mth (3) 8,657 MMcf.0070 8,788.0638 9,847 Authorized Tolerance Level (4) 4 6.5% ATL,505 MMcf (0.0766) (5) (0.0538) (8) 5 7.5% ATL 43 MMcf (0.0383) (6) (0.0269) () 6 8.5% ATL 6,739 MMcf - - - - 7 9.5% ATL - MMcf 0.0383-0.0269-8 0.5% ATL - MMcf 0.0766-0.0538-9 Total Delivery $ 24,43 $ 24,43 Notes () WP-HLR-7, Line 28 (2) WP-HLR-8, Line 42 (3) WP-HLR-9, Line 3 (4) WP-HLR-2
MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Schedule F-3 Exhibit No.: S-6 (DJG-4) Present and Proposed Revenue Detail Schedule: F-3 Large Transport LT Page: 8 of 0 Witness: Gottschalk Date: February 208 Line ( a ) ( b ) ( c ) ( d ) ( e ) ( f ) ( g ) Billing Determinants Present Proposed No. Description Quantity Units Rates Revenue Rates Revenue $/unit $000 $/unit $000 Delivery Customer () 93 Mthly 2,26.7 $ 2,474,800.00 $ 2,009 2 Contiguous Account (2) 55 Mthly 53.00 350 70.00 463 3 Distribution Mcf/Mth (3) 7,698 MMcf 0.823 4,535 0.9078 6,066 Authorized Tolerance Level (4) 4 6.5% ATL 3,54 MMcf (0.0766) (242) (0.0538) (70) 5 7.5% ATL 2 MMcf (0.0383) (8) (0.0269) (6) 6 8.5% ATL 4,332 MMcf - - - - 7 9.5% ATL - MMcf 0.0383-0.0269-8 0.5% ATL MMcf 0.0766 0.07 0.0538 0.05 9 Total Delivery $ 7,0 $ 8,362 Notes () WP-HLR-7, Line 28 (2) WP-HLR-8, Line 42 (3) WP-HLR-9, Line 3 (4) WP-HLR-2
MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Schedule F-3 Exhibit No.: S-6 (DJG-4) Present and Proposed Revenue Detail Schedule: F-3 Extremely Large Transport XLT Page: 9 of 0 Witness: Gottschalk Date: February 208 ( a ) ( b ) ( c ) ( d ) ( e ) ( f ) ( g ) Line Billing Determinants Present Proposed No. Description Quantity Units Rates Revenue Rates Revenue $/unit $000 $/unit $000 Delivery Customer () 25 Mthly 7,49.00 $ 2,247 7,350.00 $ 2,205 2 Contiguous Account (2) 0 Mthly 53.00 70 70.00 92 3 Remote Meters (3) 26 Mthly 70.00 2 70.00 2 4 Distribution Mcf/Mth (4) 3,39 MMcf 0.6930 2,704 0.7729 24,207 Authorized Tolerance Level (5) 5 6.5% ATL 2,64 MMcf (0.0766) (,656) (0.0538) (,63) 6 7.5% ATL,082 MMcf (0.0383) (4) (0.0269) (29) 7 8.5% ATL 8,622 MMcf - - - - 8 9.5% ATL - MMcf 0.0383-0.0269-9 0.5% ATL - MMcf 0.0766-0.0538-0 Total Delivery $ 22,346 $ 25,334 Notes () WP-HLR-7, Line 28 (2) WP-HLR-8, Line 42 (3) WP-HLR-5 (4) WP-HLR-9, Line 3 (5) WP-HLR-2
MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Schedule F-3 Exhibit No.: S-6 (DJG-4) Present and Proposed Revenue Detail Schedule: F-3 Extra Extremely Large Transport XXLT Page: 0 of 0 Witness: Gottschalk Date: February 208 ( a ) ( b ) ( c ) ( d ) ( e ) ( f ) ( g ) Line Billing Determinants Present Proposed No. Description Quantity Units Rates Revenue Rates Revenue $/unit $000 $/unit $000 Delivery Customer () 2 Mthly 7,49.00 $ 80 7,350.00 $ 76 2 Remote Meters (2) 2 Mthly 70.00 2 70.00 2 3 Distribution Mcf/Mth (3),043 MMcf 0.6930 7,653 0.7729 8,535 Authorized Tolerance Level (4) 4 4.0% ATL (5),043 MMcf - - (0.2) (,337) 5 6.5% ATL 5,899 MMcf (0.0766) (452) - - 6 7.5% ATL - MMcf (0.0383) - - - 7 8.5% ATL 5,44 MMcf - - - - 8 9.5% ATL - MMcf 0.0383 - - - 9 0.5% ATL - MMcf 0.0766 - - - 0 Total Delivery $ 7,382 $ 7,376 Notes () WP-HLR-7, Line 28 (2) WP-HLR-5 (3) WP-HLR-9, Line 3 (4) WP-HLR-2 (5) Reflects migration from XLT to XXLT. The 4.0% is a newly proposed ATL only for rate XXLT.
Schedule F-4 MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Exhibit No.: S-6 (DJG-5) Comparison of Present and Proposed Monthly Bills Schedule: F-4 Residential Single Family Dwelling A Page: of 5 (Excluding Income Assistance) Witness: Gottschalk Date: February 208 ( a ) ( b ) ( c ) ( d ) ( e ) ( f ) Line Monthly Present Net Proposed Net Increase Proposed No. Use Monthly Bill Monthly Bill Amount Percent Unit Cost Mcf $ $ $ % $/Mcf 5 $ 4.55 $ 4.34 $ (0.2) (0.5) $ 8.27 2 0 7.35 70.93 (0.42) (0.6) 7.09 3 5 0.6 00.52 (0.64) (0.6) 6.70 4 20 30.96 30. (0.85) (0.6) 6.5 5 25 60.76 59.70 (.06) (0.7) 6.39 6 30 90.56 89.29 (.27) (0.7) 6.3 7 40 250.7 248.47 (.70) (0.7) 6.2 Present Proposed Customer Charge ($/Mth).75.75 Distribution Charge ($/Mcf) 2.9594 2.970 GCR Factor ($/Mcf) 3.000 3.000
Schedule F-4 MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Exhibit No.: S-6 (DJG-5) Comparison of Present and Proposed Monthly Bills Schedule: F-4 Residential Single Family Dwelling A Page: 2 of 5 (Including Income Assistance) Witness: Gottschalk Date: February 208 ( a ) ( b ) ( c ) ( d ) ( e ) ( f ) Line Monthly Present Net Proposed Net Increase Proposed No. Use Monthly Bill Monthly Bill Amount Percent Unit Cost Mcf $ $ $ % $/Mcf 5 $ 29.80 $ 29.59 $ (0.2) (0.7) $ 5.92 2 0 59.60 59.8 (0.42) (0.7) 5.92 3 5 89.4 88.77 (0.64) (0.7) 5.92 4 20 9.2 8.36 (0.85) (0.7) 5.92 5 25 49.0 47.95 (.06) (0.7) 5.92 6 30 78.8 77.54 (.27) (0.7) 5.92 7 40 238.42 236.72 (.70) (0.7) 5.92 Present Proposed Customer Charge ($/Mth).75.75 Income Assistance ($/Mth) (.75) (.75) Distribution Charge ($/Mcf) 2.9594 2.970 GCR Factor ($/Mcf) 3.000 3.000
Schedule F-4 MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Exhibit No.: S-6 (DJG-5) Comparison of Present and Proposed Monthly Bills Schedule: F-4 General Small Service GS- Page: 3 of 5 Witness: Gottschalk Date: February 208 ( a ) ( b ) ( c ) ( d ) ( e ) ( f ) Line Monthly Present Net Proposed Net Increase Proposed No. Use Monthly Bill Monthly Bill Amount Percent Unit Cost Mcf $ $ $ % $/Mcf 2 $ 24.95 $ 22.85 $ (2.0) (8.4) $.43 2 0 $ 68.77 $ 66.26 (2.5) (3.7) 6.63 3 5 $ 96.6 $ 93.39 (2.77) (2.9) 6.23 4 25 $ 50.93 $ 47.65 (3.28) (2.2) 5.9 5 40 $ 233.09 $ 229.04 (4.05) (.7) 5.73 6 50 $ 287.87 $ 283.30 (4.56) (.6) 5.67 7 80 $ 452.8 $ 446.09 (6.0) (.3) 5.58 Present Proposed Customer Charge ($/Mth) 4.00 2.00 Distribution Charge ($/Mcf) 2.4763 2.425 GCR Factor ($/Mcf) 3.000 3.000
Schedule F-4 MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Exhibit No.: S-6 (DJG-5) Comparison of Present and Proposed Monthly Bills Schedule: F-4 General Medium Service GS-2 Page: 4 of 5 Witness: Gottschalk Date: February 208 ( a ) ( b ) ( c ) ( d ) ( e ) ( f ) Line Monthly Present Net Proposed Net Increase Proposed No. Use Monthly Bill Monthly Bill Amount Percent Unit Cost Mcf $ $ $ % $/Mcf 00 $ 554.8 $ 548.64 $ (6.7) (.) $ 5.49 2 200,060.62,055.29 (5.33) (0.5) 5.28 3 500 2,578.05 2,575.22 (2.83) (0.) 5.5 4 600 3,083.86 3,08.87 (.99) (0.) 5.4 5 700 3,589.67 3,588.5 (.6) (0.0) 5.3 6 800 4,095.48 4,095.6 (0.32) (0.0) 5.2 7,000 5,07.0 5,08.44.34 0.0 5. Present Proposed Customer Charge ($/Mth) 49.00 42.00 Distribution Charge ($/Mcf) 2.057 2.0654 GCR Factor ($/Mcf) 3.000 3.000
Schedule F-4 MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Exhibit No.: S-6 (DJG-5) Comparison of Present and Proposed Monthly Bills Schedule: F-4 General Large Service GS-3 Page: 5 of 5 Witness: Gottschalk Date: February 208 ( a ) ( b ) ( c ) ( d ) ( e ) ( f ) Line Monthly Present Net Proposed Net Increase Proposed No. Use Monthly Bill Monthly Bill Amount Percent Unit Cost Mcf $ $ $ % $/Mcf 00 $,00.42 $ 95.69 $ (48.73) (3.5) $ 9.52 2 200,53.84,403.38 (28.46) (8.4) 7.02 3 500 2,826.0 2,758.45 (67.65) (2.4) 5.52 4 600 3,257.52 3,20.4 (47.38) (.5) 5.35 5 700 3,688.94 3,66.83 (27.) (0.7) 5.23 6 800 4,20.36 4,3.52 (6.84) (0.2) 5.4 7,000 4,983.20 5,06.90 33.70 0.7 5.02 Present Proposed Customer Charge ($/Mth) 669.00 500.00 Distribution Charge ($/Mcf).332.559 GCR Factor ($/Mcf) 3.000 3.000
Schedule C-3 MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Exhibit No.: S-6 (DJG-6) Staff Projected Operating Revenue for the Schedule: C-3 Projected 2-Month Period Ending June 30, 209 Page: of Witness: Gottschalk Date: February 208 ( a ) ( b ) ( c ) ( d ) ( e ) Line No. Description Source Company Projected Staff Adjustments Staff Projected Sales Revenue ($000) Sales Revenue Exhibit No.: A-5 (EJK-4) $,539,062 $ (20,490) $,58,572 2 Transportation Revenue Exhibit No.: A-5 (EJK-4) $ 70,980 $ - 70,980 3 Subtotal Line + Line 2,60,042 (20,490),589,552 4 Other Gas Revenue WP-AGV-7 $ 89,978 $ 7,678 97,656 5 Total Projected Operating Revenue Sum Lines 3-4 $,700,020 $ (2,82) $,687,208
MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Exhibit No.: S-5 (DJG-7) Calculation of Test Year Discount and Carrying Cost Rates Page: of for the Customer Attachment Program Witness: Gottschalk Date: February 208 ( a ) ( b ) ( c ) ( d ) ( e ) ( f ) ( g ) Capital Structure % of Line Amount Permanent Cost After Tax Pre Tax Pre Tax No. Description Outstanding Capital Rate WCPC % () Multiplier WCPC % () $ Millions % % % % Long-Term Debt $ 6,029 0.09 4.57% 0.00%.0000 0.00% 2 Preferred Stock 37 0.00 4.50% 0.00%.3475 0.00% 3 Common Equity 6,665,842 99.9 9.60% 9.59%.3475 2.92% 4 Total Permanent Capital $ 6,67,908 00.00 5 Discount Rate (%) (2) 9.60% 6 Carrying Cost Rate (%) (3) 2.93% Notes Source: Staff Witness Megginson () WCPC - Weighted Cost of Permanent Capital (2) Weighted rate of debt, preferred stock, and common equity (3) Weighted rate of debt, preferred stock, common equity, and associated taxes
MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Exhibit No.: S-5. (DJG-8) Development of Rates for Transportation ATL Services Page: of Witness: Gottschalk Date: February 208 ( a ) ( b ) ( c ) ( d ) ( e ) ( f ) Storage Transportation Storage Cost per Annual Revenue Revenue Transportation Mcf of Contract Line Requirement Requirement Throughput Throughput Quantity No. Description ($000) () ($000) (MMcf) (2) (b / c) (MMcf) (3) (a) (b) (c) (d) (e) Transmission Related Cost $ 25,823 2 Storage Related Cost 4,899 $ 4,899 $ 0.893 3 Distribution Related Cost 40,298 4 Total $ 8,020 $ 4,899 $ 78,76 $ 0.893 94,836 Notes Consumers' transportation rates include storage services equal to 8.5% of the customer's ACQ. The cost of this storage is $0.893 per Mcf of throughput, or $0.0223 per Mcf for each.0% of ACQ. $0.0223 x 94,836.25 / 78,76.4 = $0.0269 per Mcf of throughput for each.0% change in a transportation customer's ATL. Proposed Present Per Mcf of U-824 Throughput ATL as a Percent of ACQ Rates Adjustment 5 4.00% $ - $ (0.2) 6 6.50% $ (0.0766) $ (0.0538) 7 7.50% $ (0.0383) $ (0.0269) 8 8.50% $ - $ - 9 9.50% $ 0.0383 $ 0.0269 0 0.50% $ 0.0766 $ 0.0538 () Exhibit No. S-6, Schedule F-a, Page, Columns h - k, Lines 23-25 (2) Exhibit No.: S-6 (DJG-4), Schedule: F-3, Line 3, Col. ( b ) + Exhibit No.: S-6 (DJG-4), Schedule: F-3, Line 3, Col. ( b ) + Exhibit No.: S-6 (DJG-4), Schedule: F-3, Line 4, Col. ( b ) + Exhibit No.: S-6 (DJG-4), Schedule: F-3, Line 3, Col. ( b ) (3) WP-HLR-4
MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Exhibit No.: S-5.2 (DJG-9) Calculation of Proposed Investment Recovery Mechanism Surcharge Page: of Witness: Gottschalk Date: February 208 ( a ) ( b ) ( d ) ( e ) June 2020 June 2020 Line Test Year Test Year IRM Revenue IRM No. Description Customers Consumption Requirement () Surcharge # MMcf $000 $/customer Residential Service,644,709 58,740 $ 7,739 $ 0.39 2 Small Service GS- 8,377 25,064 857 0.60 3 Medium Service GS-2,876 32,388 795 5.58 4 Large Service GS-3 38 7,306 48 32.36 5 Total General Service (2) 30,634 64,758,800 6 Small Transport ST,409 8,657 27 6.00 7 Large Transport LT 644 7,698 200 25.84 8 Extremely Large Transport XLT 35 3,39 302 86.59 9 Extra Extremely Large Transport XXLT 2,043 02 4,242.32 0 Total Transportation 2,90 78,76 874 Total,777,533 302,24 $ 0,43 Notes () Exhibit S-5 (DJG-4), Line 9 (2) Excludes Rate GL
MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Exhibit No.: S-5.3 (DJG-0) Investment Recovery Mechanism Page: of 2 Incremental Annual Revenue Requirement June 30, 2020 Witness: Gottschalk (000) Date: February 208 (a) (b) (c) (d) (e) June June June Line 2020 2020 2020 No. Description Source Distribution Transmission Total SUMMARY 2 Months, June 2020 Capital Investment TED-I - Distribution Staff Witness Creisher - - 2 TED-I - Transmission Staff Witness Creisher - - 3 EIRP - Distribution Staff Witness Creisher 73,805 73,805 4 EIRP - Transmission Staff Witness Creisher 2,40 2,40 5 Vintage Service Replacements Staff Witness Creisher 2,905 2,905 6 Pipeline Integrity - Transmission Staff Witness Creisher 36,04 36,04 7 Pipeline Integrity - Transmission Operated by Distribution Staff Witness Creisher 4,374 4,374 8 Asset Relocation - Decision Analysis Mains & Services Staff Witness Creisher 47,92 47,92 9 Total Incremental Capital Investment Sum Lines -8 47,996 38,424 86,420 2 Months, June 2020 Average Capital Investment 0 TED-I - Distribution /2 of Line - - - TED-I - Transmission /2 of Line 2 - - - 2 EIRP - Distribution /2 of Line 3 36,903-36,903 3 EIRP - Transmission /2 of Line 4 -,205,205 4 Vintage Service Replacements /2 of Line 5 0,953-0,953 5 Pipeline Integrity - Transmission /2 of Line 6-8,007 8,007 6 Pipeline Integrity - Transmission Operated by Distribution /2 of Line 7 2,87-2,87 7 Asset Relocation - Decision Analysis Mains & Services /2 of Line 8 23,956-23,956 8 Total Average Incremental Capital Investment Sum Lines 0-7 73,998 9,22 93,20 REVENUE REQUIREMENT - SUMMARY 9 Return on Investment Line 26 5,227,357 6,584 20 Depreciation Expense Line 29 2,90 480 2,67 2 Property Tax Expense Line 32 920 239,59 22 AFUDC Offset Line 35 - - - 23 Total Revenue Requirement Sum Lines 9-22 8,337 2,076 0,43
MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Exhibit No.: S-5.3 (DJG-0) Investment Recovery Mechanism Page: 2 of 2 Incremental Annual Revenue Requirement June 30, 2020 Witness: Gottschalk (000) Date: February 208 (a) (b) (c) (d) (e) June June June Line 2020 2020 2020 No. Description Source Distribution Transmission Total CALCULATIONS 24 Total Average Incremental Capital Investment Line 8 73,998 9,22 93,20 25 Pre-Tax Rate of Return Line 36 7.06% 7.06% 7.06% 26 Return on Investment Line 24 x Line 25 5,227,357 6,584 27 Total Average Incremental Capital Investment Line 8 73,998 9,22 93,20 28 Depreciation Rate Line 37, Line 38 2.96% 2.50% 29 Depreciation Expense Line 27 x Line 28 2,90 480 2,67 30 Total Average Incremental Capital Investment Line 8 73,998 9,22 93,20 3 Property Tax Rate Line 39.24%.24%.24% 32 Property Tax Expense Line 30 x Line 3 920 239,59 33 AFUDC Not Applicable - - - 34 Revenue Conversion Factor Line 40.3475.3475.3475 35 AFUDC Offset Line 33 x (Line 34) - - - Fixed Charge/Revenue Factors 36 Pre-Tax Rate of Return Staff Witness Megginson 7.06% 37 Depreciation Rate - Distribution WP-JRC-34 2.96% 38 Depreciation Rate - Transmission WP-JRC-5 2.50% 39 Property Tax Rate Exhibit A-72 (BJV-).24% 40 Revenue Conversion Factor Staff Witness Megginson.3475
MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Exhibit No.: S-5.4 (DJG-) Investment Recovery Mechanism Page: of Incremental Revenue Requirement Allocation for the 2 Months ending June 30, 2020 Witness: Gottschalk (thousands of dollars) Date: February 208 Year 2020 (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) Line No. Summary Description Basis Total Residential Rate GS- Rate GS-2 Rate GS-3 Rate ST Rate LT Rate XLT Rate XXLT Transmission To/From Storage 07 $,94 $ 765 $ 9 $ 52 $ 33 $ 32 $ 28 $ 50 $ 6 2 Other Transmission 04 $ 882 508 79 99 2 44 39 69 24 3 Total Transmission Revenue Requirement $ 2,076 $,273 $ 98 $ 252 $ 54 $ 76 $ 66 $ 9 $ 39 4 Distribution Plant - Other 05 $ 69 $ 349 $ 54 $ 69 $ 5 $ 3 $ 29 $ 53 $ 8 5 Mains - High Pressure Capable 05 $ 785 443 69 88 9 40 36 68 23 6 Mains - Non-High Pressure Capable 06 $ 2,340,525 226 282 53 09 62 6 2 7 Services & Meters 08 $ 4,593 4,49 30 04 8 4 6 0 8 Total Distribution Revenue Requirement $ 8,337 $ 6,466 $ 660 $ 543 $ 94 $ 94 $ 33 $ 84 $ 63 9 Total IRM Revenue Requirement $ 0,43 $ 7,739 $ 857 $ 795 $ 48 $ 27 $ 200 $ 302 $ 02 (b) Allocation Factors from Exhibit A-6 (LFS-3), Schedule F-b, page 2.
MICHIGAN PUBLIC SERVICE COMMISSION Consumers Energy Company Present and Proposed Rate Per Unit Comparison - Company vs Staff Extra Extremely Large Transport XXLT vs Extra Large Transport XLT Case No.: U-8424 Exhibit No.: S-5.5 (DJG-2) Page: of Witness: Gottschalk Date: February 208 ( a ) ( b ) ( c ) ( d ) ( e ) ( f ) ( g ) Line Company Company Staff Staff Present Present No. Description Proposed XLT Proposed XXLT Proposed XLT Proposed XXLT XLT XXLT Customers 25 2 25 2 25 2 Distribution MMcf 3,38.79,042.78 3,38.79,042.78 3,38.79,042.78 Total Delivery Rev ($000) 29,076.57 8,083.09 25,334 7,376 22,346 7,382 Delivery Rev/Customer ($000),63.06 4,04.54,03.34 3,688.23 893.82 3,69.2 Per unit rate ($000/MMcf) 0.93 0.73 0.8 0.67 0.7 0.67 Percent Difference -2% -7% -6%
Request #: 36 Page of Case No.: U-8424 Exhibit No.: S-5.6 (DJG-3) Page: of Witness: Gottschalk Date: February 208 MPSC AUDIT REQUEST CASE NO: U-8424 DATE OF REQUEST: 0/0/208 NO. DJG-3 REQUESTED BY: Daniel J. Gottschalk DATE OF RESPONSE: /7/208 RESPONDENT: Karen J. Miles Question:. Please explain why the energy efficiency program surcharge for XXLT customers using over 00,000 Mcf is listed as X.XXXX/Mcf. Should this surcharge be the same as the surcharge charged to other transportation customers at the same usage level? Answer: The energy efficiency program surcharge for XXLT customers using over 00,000 Mcf should have been listed as 0.0047/Mcf on Exhibit No. A-6 (KJM-2), Schedule F-5 on Page 0 of 2. Also, the surcharge for customers using 0-00,000 Mcf should have been listed as NA since the XXLT rate availability is for those very large transportation customers using at least 4,000,000 Mcf per year.
Request #: 078 Page of Case No.: U-8424 Exhibit: S-5.7 (DJG-4) Page: of Witness: Gottschalk Date: February 208 MPSC AUDIT REQUEST CASE NO: U-8424 DATE OF REQUEST: 2/3/207 NO. DJG- REQUESTED BY: Daniel J. Gottschalk DATE OF RESPONSE: 2/20/207 RESPONDENT: Karen J. Miles Question:. The Company is proposing to eliminate the random selection of qualified participants in the LIAC, instead opting to select customers for the program when the need is identified for a qualifying customer (Miles 4). Please explain exactly how the Company will select participants for the LIAC. What specific criteria will be used to select customers? Answer: The Company s Low Income Program Managers propose to make the LIAC customer selection be based on highest need chosen from those with a significant medical condition, customers with lowest income and those with highest past-due balances, based on the following criteria: Customers with an approved critical care certification where the total household income does not exceed 50% of the Federal Poverty level within the last 2 months, as verified by an authorized State or Federal agency. Customers who have received a Home Heating Credit in the previous 2 months. o Enrollment based on customers with highest arrears balance. Customers whose total household income does not exceed 50% of the Federal Poverty level and have a past due balance. o Enrollment based on customers with the highest arrears balance.
S T A T E OF M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * In the matter of the application of ) CONSUMERS ENERGY COMPANY ) for authority to increase its rates for the ) Case No. U-8424 distribution of natural gas and for other relief ) ) QUALIFICATIONS AND DIRECT TESTIMONY OF DAVID W ISAKSON MICHIGAN PUBLIC SERVICE COMMISSION February 28, 208
QUALIFICATIONS OF DAVID W ISAKSON CASE NUMBER U-8424 PART I 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 Q. Please state your name, address, and current position. A. My name is David W. Isakson. My business address is 709 West Saginaw Hwy, Lansing, Michigan 4897. I am currently employed by the Michigan Public Service Commission (MPSC or Commission) in the Rates and Tariff Section of the Regulated Energy Division as a Departmental Analyst. Q. Would you briefly describe your educational background? A. I received a B.S. in economics from Central Michigan University in August 2008. In 20, I completed an M.A. in economics at Central Michigan University. Q. Have you attended any seminars or other training courses? A. Yes. In August 202, I completed the National Association of Regulatory Utility Commissioners (NARUC) Annual Regulatory Studies Program held at Michigan State University. In October 202, I attended the Association of Edison Illuminating Companies Advanced Load Research Seminar in Columbus, Ohio. Q. What are your responsibilities in your current position? A. I participate in rate, Time Interest Earned Ratio (TIER), tariff amendment, and special contract cases under the supervision of the Rates and Tariff manager. My duties also involve performing research in special topics such as rate benchmarking, load research, demand response, and the economics of public utility regulation. Q. Have you previously presented testimony or participated in utility cases before the MPSC? A. Yes, I have participated in the following cases:
QUALIFICATIONS OF DAVID W ISAKSON CASE NUMBER U-8424 PART I 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 MPSC Case Company Description U-6427-R Ontonagon County REA TIER Rate Design, Auditing U-6855 Consumers Energy Company SI Rate Reconciliation U-763 Indiana Michigan Power Company Tariff Review U-788 Indiana Michigan Power Company Tariff Review U-7204 DTE Electric Company Tariff Review U-720 Consumers Energy Company Tariff Review U-724 DTE Gas Company UETM Reconciliation U-7440 Consumers Energy Company SI Rate Reconciliation U-7437 DTE Electric Company PLD Transition Plan U-70-R Thumb Electric Cooperative TIER Rate Design, Auditing U-7643 Consumers Energy Company Gas Rate Design U-7767 DTE Electric Company Electric Rate Design U-776 DTE Electric Company PLD Trans. Reconciliation U-7999 DTE Gas Company Gas Cost of Service Study U-8005 DTE Electric Company PLD Trans. Reconciliation U-804 DTE Electric Company Electric Rate Design, RDM U-824 Consumers Energy Company Gas Cost of Service Study U-8322 Consumers Energy Company Electric Rate Design 2
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 Q. What is the purpose of your testimony? A. The purpose of my testimony is to present MPSC Staff s (Staff) gas cost of service studies (COSS), to adjust other gas in kind volumes, and to discuss storage cost allocation, design peak day, and uncollectible expense allocation. Q. Are you sponsoring any exhibits? A. Yes. I am sponsoring the following exhibits: Staff Exhibit S-6, Schedule F-, Staff Test Year Gas Cost-of-Service Study- Version Staff Exhibit S-6, Schedule F-a, Staff Test Year Gas Cost-of-Service Study- Version 2 Staff Exhibit S-6, Schedule F-., Staff Test-year Transportation Cost of Service Analysis Staff Exhibit S-9, Staff Calculation of Allowance for Gas Use and Losses Staff Exhibit S-20, MPSC Audit Response #82 Q. How did Staff perform its COSS? A. Staff s COSS functionalizes, classifies, and allocates Consumers Energy s (the Company s) costs as projected by Staff to customers based on a set of schedules developed for such a purpose. Staff s COSS begins with a review of the Company s filed COSS provided by Company witness Luis Saenz in Exhibits A- 6, F- and A-6, F-a. Historic allocators were audited, input data was traced to original exhibits, and calculations for the functionalization, classification, and allocation were confirmed. Next, allocation schedule workpapers were verified in the same manner as the COSS. The COSS was then updated with adjustments 3
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 provided by other Staff to capital expenditures, operations and maintenance (O&M) and other expenses, rate of return, cost of gas, and present revenue. Finally, cost allocation methods and the calculation of customer charges were performed as supported by Staff s positions in the case. Q. Why did the Company include two separate cost of service studies in its application? A. Two separate studies were included by the Company witness to show that the proposed Rate XXLT has a different cost to serve than the existing XLT rate. Company Exhibit A-6, Schedule F- contains the COSS without proposed Rate XXLT and Exhibit A-6, Schedule F-a contains the COSS with the proposed rate. Q. Please describe the proposed Rate XXLT. A. Rate XXLT, or Extra Extremely Large Transportation Service Rate Schedule, is designed to appeal to transportation customers with usage above 4 Bcf annually. Company witness Saenz found that the cost to serve customers on the proposed Rate XXLT was 6% lower than customers on rate XLT when comparing cost per Mcf of throughput. Staff witness Daniel Gottschalk discusses the analysis of proposed Rate XXLT further. Additionally, the authorized tolerance limit (ATL) for the proposed Rate XXLT is set to 4%, as opposed to 8.5% for Rate XLT customers. As explained by Company witness Saenz, the reduction in storage capacity need for XXLT, and thus the transportation class as a whole, should then be reduced. Staff agrees with the Company s method of adjusting storage capacity allocation as a result of the new 4% ATL for proposed Rate XXLT. 4
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 Q. Does Staff have any adjustments to the Company s projected test-year COSS as presented in Exhibit S-6, F-a? A. Yes, Staff proposes customer charges based on the MPSC s previously approved method, excluding appliance service plan expenses. Staff does not oppose several elements of the Company s COSS for the purposes of this case, provided that those elements remain unchanged in future proceedings absent new evidence beyond mere changes in the severity of costs. The lack of Staff s opposition does not necessarily indicate Staff s support for any individual issue, the nuances of which are discussed later in my testimony. Q. How did the Company calculate customer charges? A. The Company calculated customer charges based on the method previously approved in the Company s previous gas rate case, In re Consumers Energy, MPSC Case No. U-824, July 3, 207 Order, p 5, which only includes expenses associated with the attachment of customers to the Company s system, but with one exception. The Company also included expenses related to the appliance service plan in the amount of $34,535,970, as shown in the Company s answer to Staff audit request #82, provided here as Exhibit S-20. Q. How did Staff calculate customer charges differently than the Company? A. The appliance service plan expenses, which are not directly related to the attachment of customers to the Company s system, were removed from Staff Exhibit S-6, Schedule F-a, page 6, line 8. Removing the appliance service plan expenses, along with all the other Staff adjustments to the Company s revenue 5
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 24 25 26 27 28 29 requirement, results in a cost of service based customer charge of $0.48 for residential customers. Staff s position on the customer-related costs appropriate to include in the customer charge is based on the Commission s guidance from Orders issued in MPSC Case Nos. U-477 and U-433: Specific distribution plant such as meters and service drops used exclusively for a given customer shall be treated as customer related. All other distribution plant shall be treated as demand related. [MPSC Case No. U-477, Order, Attachment A, Part One, Page Two, May 0, 976.] The maximum allowable service charge would be limited to those costs associated directly with supplying service to a customer. Only costs associated with metering, the service lateral, and customer billing are includable since these are costs that are directly incurred as a result of a customer s connection to the gas system. [MPSC Case No. U-433, Order, p. 30, January 8, 974.] Though costs other than those listed in the Orders may be considered fixed, they do not vary with the number of customers and are not incurred directly as a result of any given customer s connection to the system. However, several of Staff s significant adjustments are to distribution meter costs, which greatly affect the outcome of the residential customer charge calculation. Also, Staff does not typically recommend downward adjustments to customer charges, as the longterm trajectory is upward due to increasing costs, and upward and downward fluctuations in the customer charges would introduce undesirable rate variability. Because the calculated customer charge is largely dependent on decisions by the Commission on other issues in this case and lowering of the customer charge is 6
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 atypical, Staff recommends retaining the current residential customer charge of $.75. Q. Did Staff make an adjustment to Other Gas in Kind (GIK) volumes? A. Yes. On Staff Exhibit S-9, column (b), line 20 the historic 5-year average of other GIK volumes is used, as opposed to the Company s projection found in Company Exhibit A-54 (MPP-6). The result is a downward adjustment to other GIK volume of,906 Mcf, and the following revenue impact: Company Staff Adjustment LAUF Gas $9,63,99 $9,67,753 $3,762 Net Company Use $5,452,862 $5,454,996 $2,34 Total LAUF & CU $5,066,853 $5,072,749 $5,896 The adjustment is small in the current case because the Company s test-year projection for other GIK is very near the historic 5-year average. However, the use of a historic 5-year average was approved in the Company s previous rate case (July 3, 207 Order in MPSC Case No. U-824, p 64). The approved method should continue to be used, despite the size of its difference from the Company s projections. While the adjustment is small in the instant case, it is possible that in future cases the amount will be significant. The Commission should continue to remain consistent in its approval of the method. Q. What other elements of the Company s COSS merit discussion, but are not necessarily opposed or supported by Staff in the instant case? A. The use of the 50% storage capacity 50% peak month allocation method for storage costs, the use of design peak day in developing allocation schedules, and allocating uncollectible expenses on net write-offs. Staff does not oppose the 7
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 Company s proposed methods of addressing these topics in the instant case, but when evaluated with new evidence in future cases may result in Staff s support of alternative recommendations. Storage Allocation Q. Why should the 50-50 storage allocator, as proposed by the Company, continue to be used? A. The natural gas storage system is still used in the same way that it has been in the past when the Commission ruled in favor of using Staff s proposed storage allocator (July 3, 207 Order in MPSC Case No.. U-824, p 3). Namely, the storage system is used for the purposes of storing gas from season to season, supporting flowing volumes of gas on peak days, and for system balancing. While transportation customers have limits on their use of the storage system, the Company still uses storage to support the flow of gas on the peak day and for system balancing. Basing 50% of the storage allocator on peak month throughput assumes peak month throughput as a proxy for both the peak delivery and system balancing uses of the storage system. It is likely that the parts of the system used for peak delivery are also used to support system balancing, because both uses of the system require high degrees of deliverability from gas storage. Q. Please discuss the history of the Commission s approval of Staff s current storage cost allocation methodology. A. The Commission s use of the current methodology dates back to the October 28, 993 Order in In re Michigan Consolidated Gas Company, MPSC Case No. U- 050, a Michigan Consolidated (MichCon) gas case. Previous to this Order, 8
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 24 25 26 27 28 29 30 MichCon s storage costs were allocated between sales and transportation customers on the basis of peak day consumption, which was an estimate of peak day storage withdrawals. New data on storage utilization across classes and new proposed limitations on transportation users storage utilization led to multiple proposals from different parties for a new storage cost allocation methodology. The approach that was approved was a combination of two proposed methodologies: one based on deliverability (peak day usage), and the other based on capacity (amount of storage set aside for each class). The weighting between the two was, in essence, arbitrary, but it recognized that the storage system has multiple uses that should be part of the allocation. The allocation initially proposed by MichCon resulted in much lower costs being allocated to transportation customers. Regarding this allocation, the Commission stated: was based on the assumption that, on a design peak day, transportation customers would utilize no more than /30 of their monthly load-balancing capacity. However, Mich Con s proposed injection and withdrawal limitations do not restrict transportation customers use of load-balancing on a daily basis. Rather, they establish monthly restrictions. As correctly noted by Mr. Miller, this means that transportation customers would be free to take as much of their gas out of storage on any day as they desire. (4 Tr. 2923.) Because MichCon s abandoned 5.8% allocation factor was based on an erroneous assumption, and thus greatly understates the amount of storage costs that should be assigned to transportation customers, its rejection by the ALJ was proper. [In re Michigan Consolidated Gas Company, MPSC Case No. U-050, 0/28/993 Order, pp 9-92.] In the March, 996 Order in In re Consumers Energy, MPSC Case No. U- 0755, a Consumers Gas rate case, the Commission referenced the above decision when approving a Staff proposal to share storage costs between sales and 9
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 24 25 26 27 28 29 30 3 32 33 34 35 36 37 38 39 transportation customers. This case predates Michigan Gas Storage becoming a part of Consumers Gas: The ALJ agreed with the Staff regarding the need to allocate Michigan Gas Storage costs to sales and transportation alike. In reaching this decision, he concluded, among other things, that () transportation customers rely on storage capacity provided on a pooled basis by both Consumers and Michigan Gas Storage s facilities for purpose of load balancing and (2) these customers have the benefit of using the no-notice service that Consumers receives from Michigan Gas Storage whenever they use more or less than their daily pipeline nominations.; PFD, p 8. [T]here are no limits on the daily withdrawals that these [transportation] customers can make from storage. 2 Tr. 4070. As noted on pages 9 and 92 of the Commission s October 28, 993 order in Cases Nos. U-049 and U-050, transportation customers are thus free to take as much gas out of storage on any one day as they desire, even if they exceed /30 of their monthly load balancing capacity. In light of this benefit, the Commission finds that the Staff s approach to allocating these transmission, storage, and gas inventory working capital costs to both sales and transportation customers should be adopted, as recommended by the ALJ. [MPSC Case No. U-0755, 3//996 Order, pp 56-58.] This Order does not specifically reference the 50% weighting, but testimony from the Company and Staff in MPSC Case No. U-3000 reference its previous approval, as well as how the Company s storage system was actually used, which reinforces this weighting scheme: The Commission s Order in Case No. U-0755 approved a 50% peak month/50% storage capacity allocation for all storage-related costs. Rather than allocating all costs on the 50/50 method, I separated the total storage plant into peak storage plant and seasonal storage plant [Belknap Direct, U-3000, p 7.] Consumers has proposed to separate total storage plant between seasonal and peak based on the way the storage fields are utilized on Consumers system. The seasonal and peak components were then allocated to customer classes in the same manner as in the previous rate case. This change results in 48.6% of storage costs allocated on a peak basis, and 5.4% allocated on a capacity basis. 0
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 24 25 26 In the last rate case, storage costs were allocated on a 50% peak, 50% capacity basis; since Consumers proposed change does not significantly impact the allocation of storage costs, Staff is not proposing to change from the 50% peak, 50% capacity allocation approved by the Commission in Case No. U-0755. [MPSC Case No. U-3000, Aldrich Direct, pp 7-8.] While it is unclear if the data utilized by the Company in U-3000 is based on a study, it does show that the current storage allocator is supported by the way the Company has testified the storage system is actually used. Q. For what other reasons is it important to maintain the current split allocator? A. One function of the storage system not directly taken into account in any proposed storage allocation is its system balancing function. Given that the parts of the storage system used for peak supply are likely also used for system balancing, as both are related to high deliverability of a field, the peak portion of the current storage allocator is the only way this balancing is taken into account. The Commission has made clear in the past, as referenced in the Orders quoted above, that this was a significant reason to use the current allocator. While it is unclear if the peak portion is genuinely representative of the combined cost of performing both peak and balancing uses, its elimination would ensure that the allocator fails to recognize what was last testified to as approximately 50% of the Company s storage system use. Q. Under what circumstances might Staff support a major change to the storage allocator? A. In order to deviate from the currently approved method, the Company should perform and enter into evidence a study of how the storage system is used, as split
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 between the three major functions. This study would have to include daily metering data for transportation customers in order to take into account their use of balancing and peak. Alternatively, the Company could begin to require daily balancing of its transportation customers. In its application, the Company provided a study of the costs and benefits of moving to daily balancing, and found that such a shift in metering would cost more than the benefits it would provide to transportation customers. Therefore, Staff does not recommend daily balancing for transportation customers at this time. Design Peak Day Q. Please describe historical peak and design peak. A. Historical peak may be determined from data provided in the Company s annual report, and represents the amount of gas the Company distributes under actual peak conditions. Design peak, as used by the Company, is determined in the Company s previous gas cost recovery cases and is developed using statistical analysis with specific assumptions about weather and other system conditions. Q. Does Staff always support relying on historical peak day instead of projected peak day? A. No. For example, Staff does not always oppose the use of projected peak day in gas rate cases for DTE Gas Company, Michigan s second largest gas utility. Staff s support of projected peak day is mainly due to the close proximity in historic and projected peak volumes in those cases. Q. Does Staff oppose the Company s use of design peak day to develop certain allocation schedules in the instant case? 2
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 A. No, not for the purposes of the instant case. The Company uses design peak day instead of a historical peak to calculate average and peak allocators and the aforementioned storage allocator. In previous Company rate cases, Staff supported the use of a historical peak day rather than the Company s design peak because of the vast difference between the two a difference still evident in the instant case. Unlike DTE Gas, the Company s design peak is significantly larger than any of its historic peak days in the last 5 years. For example, the highest daily deliveries of the past 5 years occurred on February 7, 2007 with deliveries of 2,669,000 Mcf, as found on page 58 of the Company s 2007 P-522 annual report. However, the Company s design peak day deliveries as used in the instant case is 3,486,000 Mcf: a difference of over 30% or nearly Bcf. It is difficult to ascertain why the Company s statistical model results deviate so greatly from its reported peak deliveries. In previous cases, Staff argued that allocations dependent on peak delivery should be set on how the Company s distribution system is used, rather than how it is designed. However, it remains unclear as to why the Company s system is designed to meet such a high peak, given its history of peak deliveries. Despite its auditing efforts, Staff cannot reconcile the difference between the Company s historic and design peak days and recommends that the Commission require the Company to explain in greater detail the discrepancy between the two. In absence of such an explanation, and recognizing the Commission s previous approval of relying on the Company s design peak day, Staff does not oppose its use in the instant case (July 3, 207 Order in MPSC Case No. U-824, p 09). 3
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 24 25 26 27 Uncollectible Expense Allocation Q. How does the Company propose to allocate uncollectible expense? A. The Company proposes to allocate uncollectible expense based on the average customer allocator. Q. Is another method of uncollectible expense allocation more appropriate based on cost-causation? A. Yes. One reasonable way is to record uncollectible expense for each individual rate, so those costs can be directly assigned to the rate schedules producing such costs. In addition, Staff has often argued that uncollectible expense should be allocated based on total cost of service. Both of these methods are supported by the National Association of Regulatory Utility Commissioners (NARUC) guidelines in the Electric Utility Cost Allocation Manual. On page 03 of the NARUC Manual regarding customer account expenses it states: These accounts are generally classified as customer-related. The exception may be Account 904, Uncollectible Accounts, which may be directly assigned to customer classes. Some analysts prefer to regard uncollectible accounts as a general cost of performing business by the utility, and would classify and allocate these costs based upon an overall allocation scheme, such as class revenue responsibility. A third allocation method is to allocate uncollectible expense on net write-offs. In the Company s previous rate case, the Commission directed the Company, to begin to recording collections by class so that net write-offs by class can be calculated. (July 3, 207 Order in MPSC Case No. U-824, p ). Unfortunately, according to Staff s audit and the Company s required filing documents there was not enough time between the Commission s Order and the 4
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 filing of the instant case for the Company to collect the amount of data sufficient to develop a net write-offs allocation schedule. Q. Why would Staff propose to allocate the uncollectible expense on total cost of service plus cost of gas? A. Allocation of uncollectible expense on total cost of service is appropriate because expenses related to uncollectible accounts are a general cost of doing business for gas distribution and transportation companies, including Consumers Energy. Like for any other utility, there will inevitably be a certain portion of customers who do not pay their bills, otherwise there would be no uncollectible expense. Some customers will not pay their gas bill, but the number of similarly served customers has no effect on any particular customer s willingness or ability to pay their bill. The reasons for which a customer s account becomes uncollectible have only to do with that customer s unique circumstance, not those of its neighbor. A customer on Residential Rate A that pays her bill in full has no more impact on an uncollectible account than a customer on Rate XLT that pays its bill in full. Uncollectible expense should be shared by all customers consistent with how their overall costs are recovered by the Company: by total cost of service plus cost of gas. Q. What does Staff recommend? A. Due to the lack of data and the Commission s previous approval of using the average customer allocator until a better measure is found, Staff does not oppose the Company s proposed uncollectible expense allocation method in the interim 5
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-8424 PART II 2 3 4 until net write-offs or direct assignment are possible, for the purposes of the instant case. Q. Does this conclude your testimony? A. Yes. 6
S T A T E OF M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * In the matter of the application of ) CONSUMERS ENERGY COMPANY ) for authority to increase its rates for the ) Case No. U-8424 distribution of natural gas and for other relief ) ) EXHIBITS OF DAVID W ISAKSON MICHIGAN PUBLIC SERVICE COMMISSION February 28, 208
MICHIGAN PUBLIC SERVICE COMMISSION Schedule F- Case No.: U-8424 Consumers Energy Company Exhibit No.: S-6 Staff Test Year Gas Cost-of-Service Study - Version Schedule: F- Projected 2 Month Period Ending June 30, 209 Page: of 6 ($000) Witness: D. W. Isakson Date: February 28, 208 (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) Line. Alloc No. Summary Description Basis Total Residential Rate GS- Rate GS-2 Rate GS-3 Rate ST Rate LT Rate XLT Service Revenue $,589,552 $,65,673 $ 57,053 $ 64,742 $ 3,05 $ 24,43 $ 7,0 $ 29,728 2 Other Revenue 97,656 68,069 0,554 2,806 2,665 9 783,868 3 Total Revenue $,687,208 $,233,742 $ 67,606 $ 77,548 $ 33,770 $ 25,054 $ 7,893 $ 3,596 4 Expenses: 5 Cost of Gas Sold (COGS) $ 66,07 $ 475,909 $ 75,092 $ 9,36 $ 8,880 $ - $ - $ - 6 O & M Expense 304,20 238,284 24,259 8,953 3,549 5,898 4,362 8,895 7 Depreciation & Amortization Expense 247,647 80,27 2,098 20,883 4,025 6,409 4,849 0,67 8 Lost and Unaccounted for (LAUF) Gas 9,68 6,924,093,326 275 - - - 9 Taxes 67,754 2,367 5,203 4,886 2,608 4,48 3,255 5,955 0 Company Use 5,455 3,927 620 752 56 - - - Total Expenses $,395,693 $,026,629 $ 37,365 $ 47,937 $ 29,492 $ 6,788 $ 2,466 $ 25,06 2 Net Operating Income $ 29,56 $ 207,3 $ 30,242 $ 29,6 $ 4,278 $ 8,266 $ 5,426 $ 6,580 3 Test Year AFUDC 207 8,260 5,355 770 927 94 266 224 525 4 Adjusted Net Operating Income $ 299,776 $ 22,468 $ 3,02 $ 30,538 $ 4,472 $ 8,53 $ 5,650 $ 7,05 5 Total Rate Base $ 5,22,380 $ 3,659,448 $ 457,507 $ 487,5 $ 97,548 $ 44,937 $ 4,53 $ 25,275 6 Return on Rate Base @ 5.69% 296,539 208,9 26,028 27,735 5,550 8,246 6,494 4,295 7 Income Deficiency/(Sufficiency) (3,236) (4,277) (4,984) (2,803),078 (286) 844 7,9 8 Revenue Deficiency/(Sufficiency) (4,360) (5,763) (6,75) (3,776),452 (385),38 9,689 9 Rev Requirement/Total Cost of Service $,682,848 $,227,979 $ 60,89 $ 73,77 $ 35,222 $ 24,669 $ 9,030 $ 4,285 20 Less: Cost of Gas Sold (Test Yr) 66,07 475,909 75,092 9,36 8,880 - - - 2 Less: Miscellaneous Revenue (TY) 97,656 68,069 0,554 2,806 2,665 9 783,868 22 Proposed Rate Design Revenue $ 924,75 $ 684,00 $ 75,245 $ 69,829 $ 3,677 $ 23,758 $ 8,248 $ 39,47 23 Transmission Related Cost $ 69,65 $ 02,846 $ 5,997 $ 20,398 $ 4,44 $ 6,462 $ 5,68 $ 3,880 24 Storage Related Cost 37,797 87,542 3,752 7,544 3,887 3,748 3,222 8,02 25 Distribution Related Cost 66,762 493,63 45,496 3,887 5,376 3,548 9,407 7,435 26 Total $ 924,75 $ 684,00 $ 75,245 $ 69,829 $ 3,677 $ 23,758 $ 8,248 $ 39,47 27 Mcf Thruput 302,25,970 58,739,927 25,065,889 32,387,576 7,306,464 8,657,038 7,697,506 42,36,569 28 Customer Count,777,539,644,709 8,383,876 38,409 644 37 7.74 6.42 5.37 4.82.32.08 0.97
MICHIGAN PUBLIC SERVICE COMMISSION Schedule F- Case No.: U-8424 Consumers Energy Company Exhibit No.: S-6 Staff Test Year Gas Cost-of-Service Study - Version Schedule: F- Projected 2 Month Period Ending June 30, 209 Page: 2 of 6 ($000) Witness: D. W. Isakson Date: February 28, 208 Line. (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) No. Allocation Factors Alloc Total Residential Rate GS- Rate GS-2 Rate GS-3 Rate ST Rate LT Rate XLT Total Thruput (Mcf) 0 00.00% 52.53% 8.29% 0.72% 2.42% 6.7% 5.86% 4.02% 2 GCR Sales (Incl GL-) 02 00.00% 72.00%.36% 3.79% 2.86% 0.00% 0.00% 0.00% 3 Transportation Gas 03 00.00% 0.00% 0.00% 0.00% 0.00% 23.70% 22.48% 53.82% 4 Average & Peak - Transmission 04 00.00% 57.56% 8.90%.28% 2.35% 5.00% 4.38% 0.53% 5 Average & Peak - High Pressure Distribution 05 00.00% 56.44% 8.79%.6% 2.36% 5.05% 4.63%.56% 6 Average & Peak - Non High Pressure Distribution 06 00.00% 65.5% 9.66% 2.05% 2.28% 4.67% 2.66% 3.52% 7 50% Storage Capacity / 50% Peak Month 07 00.00% 63.98% 9.98% 2.75% 2.75% 2.69% 2.30% 5.55% 8 Weighted Customer 08 00.00% 90.33% 6.75% 2.27% 0.7% 0.30% 0.3% 0.03% 9 Average Customers 09 00.00% 92.53% 6.66% 0.67% 0.02% 0.08% 0.04% 0.0% 0 Weighted Cust / Average Cust 0 00.00% 92.2% 6.64% 0.67% 0.02% 0.30% 0.3% 0.03% Service Revenue Including COGS 00.00% 73.33% 9.88% 0.36%.96%.52%.08%.87% 2 Service Revenue Excluding COGS 2 00.00% 74.29% 8.83% 7.93%.32% 2.60%.84% 3.20% 3 Total Revenue 20 00.00% 73.2% 9.93% 0.52% 2.00%.48%.06%.87% 4 Production Plant 202 00.00% 72.00%.36% 3.79% 2.86% 0.00% 0.00% 0.00% 5 Total Transmission Plant 204 00.00% 6.26% 9.52% 2.2% 2.58% 3.67% 3.8% 7.67% 6 Total Distribution Plant 205 00.00% 77.56% 7.9% 6.5%.3% 2.33%.60% 2.95% 7 Total Plant In Service excl GC&I 206 00.00% 72.7% 8.54% 8.57%.66% 2.67% 2.04% 4.34% 8 Total CWIP 207 00.00% 64.83% 9.32%.22% 2.35% 3.22% 2.7% 6.36% 9 Total Rate Base 208 00.00% 70.2% 8.78% 9.35%.87% 2.78% 2.9% 4.82% 20 Total O&M excl Admin & General 209 00.00% 77.40% 8.06% 6.59%.24% 2.06%.53% 3.% 2 Total O&M Expense 24 00.00% 77.40% 8.06% 6.59%.24% 2.06%.53% 3.% 22 Pretax Net Operating Income 25 00.00% 7.32% 0.27% 0.0%.46% 2.80%.85% 2.29% 23 Total Depreciation & Amortization Expense 26 00.00% 72.77% 8.52% 8.43%.63% 2.59%.96% 4.%
MICHIGAN PUBLIC SERVICE COMMISSION Schedule F- Case No.: U-8424 Consumers Energy Company Exhibit No.: S-6 Staff Test Year Gas Cost-of-Service Study - Version Schedule: F- Projected 2 Month Period Ending June 30, 209 Page: 3 of 6 ($000) Witness: D. W. Isakson Date: February 28, 208 Line. (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) No. Allocation Factors Alloc Total Residential Rate GS- Rate GS-2 Rate GS-3 Rate ST Rate LT Rate XLT Production Plant 02 $ 8,909 $ 6,44 $,02 $,228 $ 254 $ - $ - $ - 2 Storage Plant 07 $ 85,432 $ 544,783 $ 84,975 $ 08,53 $ 23,398 $ 22,862 $ 9,63 $ 47,270 3 Transmission To/From Storage 07 $ 869,70 $ 556,33 $ 86,746 $ 0,792 $ 23,885 $ 23,338 $ 20,02 $ 48,255 4 Other Transmission 04 64,930 369,52 57,43 72,380 5,080 32,2 28,085 67,599 5 Total Transmission Plant $,5,00 $ 925,654 $ 43,889 $ 83,73 $ 38,965 $ 55,459 $ 48,07 $ 5,854 6 Distribution Plant - Other 05 $ 323,28 $ 82,473 $ 28,47 $ 36,082 $ 7,626 $ 6,334 $ 4,96 $ 37,387 7 Mains - High Pressure Capable 05 40,369 23,630 36,072 45,802 9,68 20,734 8,99 47,459 8 Mains - Non-High Pressure Capable 06,223,248 796,977 8,38 47,399 27,95 57,66 32,579 43,074 9 Services & Meters 08 2,400,735 2,68,692 62,43 54,54 4,4 7,30 3,235 700 0 Total Distribution Plant $ 4,357,632 $ 3,379,772 $ 344,770 $ 283,824 $ 49,336 $ 0,544 $ 69,765 $ 28,620 Total Plant In Service excl Gen, Com, & Int $ 6,729,073 $ 4,856,623 $ 574,647 $ 576,756 $,953 $ 79,866 $ 37,485 $ 29,744 2 Gen, Com, & Int Plant and PHFFU 206 $ 778,380 $ 56,786 $ 66,472 $ 66,76 $ 2,950 $ 20,806 $ 5,903 $ 33,747 3 Total Test Year Plant in Service $ 7,507,453 $ 5,48,409 $ 64,9 $ 643,472 $ 24,903 $ 200,67 $ 53,388 $ 325,49 4 Storage 07 $ 43,46 $ 27,606 $ 4,306 $ 5,500 $,86 $,59 $ 994 $ 2,395 5 Transmission 204 3,40 80,492 2,52 5,928 3,388 4,823 4,83 0,074 6 Distribution 205 3,994 0,854,07 9 58 326 224 43 7 General, Common & Intangible and PHFFU 206 44,499 32,7 3,800 3,84 740,89 909,929 8 Total CWIP $ 233,039 $ 5,069 $ 2,725 $ 26,53 $ 5,473 $ 7,497 $ 6,30 $ 4,82 9 Production 202 $ (8,860) $ (6,378) $ (,007) $ (,22) $ (253) $ - $ - $ - 20 Storage 07 (208,74) (33,562) (20,833) (26,608) (5,736) (5,605) (4,808) (,589) 2 Transmission 204 (36,086) (93,625) (30,098) (38,35) (8,5) (,60) (0,063) (24,234) 22 Distribution 205 (2,268,286) (,759,279) (79,464) (47,739) (25,68) (52,857) (36,35) (66,95) 23 General, Common & Intangible and PHFFU 206 (406,359) (293,285) (34,702) (34,829) (6,76) (0,862) (8,303) (7,68) 24 Total Accumulated Depreciation $ (3,208,332) $ (2,386,28) $ (266,04) $ (248,74) $ (46,58) $ (80,925) $ (59,489) $ (20,392) 25 Cash & Cash Equivalents 209 0,45 78,290 8,53 6,670,256 2,083,543 3,50 26 Accounts Receivable 99,874 73,24 9,868 0,35,954,57,075,868 27 Materials and Supplies 209 30,236 23,404 2,437,994 375 623 46 942 28 Gas Stored Underground 07 378,657 242,28 37,79 48,267 0,406 0,67 8,722 2,022 29 End User Gas Storage Credit 03 (0,793) - - - - (2,558) (2,427) (5,808) 30 Real & Personal Property Taxes 206 78,27 56,388 6,672 6,696,300 2,088,596 3,387 3 Other Assets 206 - - - - - - - - 32 Deferred Debits 206 445,77 32,730 38,068 38,208 7,46,95 9,08 9,327 33 Total Assets $,23,07 $ 795,333 $ 02,989 $ 2,85 $ 22,708 $ 25,836 $ 20,078 $ 43,888 34 Accounts Payable 02 39,3 00,298 5,827 9,207 3,979 - - - 35 Dividends Declared 25,22 7,980,50,30 65 36 20 26 36 Accrued Interest 206 7,020 2,284,453,459 283 455 348 738 37 Accrued Taxes - Federal 25 7,776 5,534 797 783 4 29 45 8 38 Accrued Taxes - State 25 0,88 7,252,045,026 50 287 9 237 39 Accrued Taxes - R&PP Tax & Other 206 42,958 3,004 3,668 3,682 75,48 878,862 40 Other Liabilities 206 3,790 9,952,78,82 229 369 282 598 4 Deferred Credits 206 28,624 57,789 8,670 8,739 3,637 5,844 4,467 9,479 42 Total Liabilities $ 460,878 $ 332,095 $ 43,788 $ 47,208 $ 9,273 $ 8,638 $ 6,520 $ 3,357 43 Total Working Capital $ 662,39 $ 463,238 $ 59,20 $ 64,977 $ 3,435 $ 7,98 $ 3,559 $ 30,53 44 Test Year Unamortized MGP Expense - Net 206 $ 2,596 $ 5,587 $,844 $,85 $ 359 $ 577 $ 44 $ 936 45 Test Year Retainers & Customer Advances-Net 205 (3,55) (2,727) (278) (229) (40) (82) (56) (04) 46 Adjustments to Rate Base $ 8,08 $ 2,860 $,566 $,622 $ 39 $ 495 $ 385 $ 833 47 Total Test Year Rate Base $ 5,22,380 $ 3,659,448 $ 457,507 $ 487,5 $ 97,548 $ 44,937 $ 4,53 $ 25,275
MICHIGAN PUBLIC SERVICE COMMISSION Schedule F- Case No.: U-8424 Consumers Energy Company Exhibit No.: S-6 Staff Test Year Gas Cost-of-Service Study - Version Schedule: F- Projected 2 Month Period Ending June 30, 209 Page: 4 of 6 ($000) Witness: D. W. Isakson Date: February 28, 208 Line. (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) No. Allocation Factors Alloc Total Residential Rate GS- Rate GS-2 Rate GS-3 Rate ST Rate LT Rate XLT Production 202 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 2 Storage 07 28,670 8,344 2,86 3,655 788 770 660,592 3 Transmission 204 2,838 3,377 2,079 2,647 563 80 695,674 4 Distribution 205 20,60 93,538 9,542 7,855,365 2,80,93 3,560 5 Customer Accounting 0 45,452 4,90 3,07 303 0 38 6 3 6 Customer Service & Information 09,07 94 68 7 0 0 0 7 Customer Assistance 09 2,004,854 33 3 0 2 0 8 Total Test Year O&M Expense excl Admin & General $ 29,58 $ 69,965 $ 7,700 $ 4,479 $ 2,727 $ 4,522 $ 3,349 $ 6,839 9 Administrative & General Expense 209 $ 63,395 $ 49,070 $ 5,0 $ 4,80 $ 787 $,306 $ 967 $,974 0 Test Year Uncollectible Expense 09 $ 8,528 $ 7,43 $,234 $ 24 $ 4 $ 5 $ 7 $ Sales Expense 209 $ - $ - $ - $ - $ - $ - $ - $ - 2 Production 202 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 3 Storage 07 69 08 7 22 5 5 4 9 4 Transmission 204 89 6 8 23 5 7 6 5 5 Distribution 205,40,094 2 92 6 33 23 42 6 Customer Accounting (Billing) 0 434 400 29 3 0 0 7 Customer Service 09 35 33 2 0 0 0 0 0 8 Sales Expense 209 0 0 0 0 0 0 0 0 9 Administrative & General 209 459 355 37 30 6 9 7 4 20 Total Test Year Pension & Benefits Expense $ 2,697 $ 2,06 $ 25 $ 70 $ 3 $ 55 $ 40 $ 80 2 Production 202 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 22 Storage 07 80 52 80 02 22 22 8 44 23 Transmission 204 896 549 85 09 23 33 29 69 24 Distribution 205 6,670 5,73 528 434 76 55 07 97 25 Customer Accounting (Billing) 0 2,052,892 36 4 0 6 3 26 Customer Service 09 68 55 0 0 0 0 27 Sales Expense 209 0 0 0 0 0 0 0 0 28 Administrative & General 209 2,70,679 75 43 27 45 33 68 29 Total Payroll Taxes $ 2,757 $ 9,962 $,05 $ 803 $ 48 $ 26 $ 90 $ 378 30 Production 202 $ 4,668 $ 3,36 $ 530 $ 644 $ 33 $ 0 $ 0 $ 0 3 Storage 07 20,082 2,849 2,004 2,560 552 539 463,5 32 Transmission 204 36,694 22,478 3,494 4,448 946,347,68 2,83 33 Distribution 205 32,550 02,806 0,487 8,633,50 3,089 2,22 3,92 34 Gen, Com, & Int 206 53,653 38,724 4,582 4,599 893,434,096 2,326 35 Test Year Total Depreciation & Amort Expense $ 247,647 $ 80,27 $ 2,098 $ 20,883 $ 4,025 $ 6,409 $ 4,849 $ 0,67 36 Test Year Lost and Unaccounted for (LAUF) Gas 02 $ 9,68 $ 6,924 $,093 $,326 $ 275 $ - $ - $ - 37 Test Year Company Use 02 $ 5,455 $ 3,927 $ 620 $ 752 $ 56 $ - $ - $ - 38 Test Year Property Taxes 206 $ 96,046 $ 69,320 $ 8,202 $ 8,232 $,598 $ 2,567 $,962 $ 4,64 39 Test Year FIT & City Income Tax 25 37,88 26,470 3,84 3,747 548,048 696 866 40 Test Year MBT 25 7,576 2,50,803,77 259 495 329 409 4 Test Year Miscellaneous Taxes 2 4,87 3,05 370 333 55 0 78 36 42 Total Test Year Other Taxes $ 54,997 $,405 $ 4,88 $ 4,082 $ 2,460 $ 4,220 $ 3,065 $ 5,576 43 Total Test Year Expenses Excluding COGS & Company Use $ 729,220 $ 546,792 $ 6,653 $ 56,048 $ 0,456 $ 6,788 $ 2,466 $ 25,06 44 Test Year Cost of Gas Sold (COGS) $ 66,07 $ 475,909 $ 75,092 $ 9,36 $ 8,880 $ - $ - $ -
MICHIGAN PUBLIC SERVICE COMMISSION Schedule F- Case No.: U-8424 Consumers Energy Company Exhibit No.: S-6 Staff Test Year Gas Cost-of-Service Study - Version Schedule: F- Projected 2 Month Period Ending June 30, 209 Page: 5 of 6 ($000) Witness: D. W. Isakson Date: February 28, 208 Line. (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) No. Allocation Factors Alloc Total Residential Rate GS- Rate GS-2 Rate GS-3 Rate ST Rate LT Rate XLT Test Year Service Revenue Including Cost of Gas Sold $,589,552 $,65,673 $ 57,053 $ 64,742 $ 3,05 $ 24,43 $ 7,0 $ 29,728 Other Revenues 2 Forfeited Discounts (Late Payment Charge) $ 5,45 $ 3,997 $ 539 $ 565 $ 07 $ 83 $ 59 $ 02 3 Misc Service Rev (ASP) 02 68,629 49,40 7,797 9,462,960 - - - 4 Rev from Transmission of Gas of Others 204 2,38 3,059 2,030 2,584 550 782 679,634 5 Rent from Gas Property 204 743 455 7 90 9 27 24 57 6 Joint Commodities Mrkt Agrmt Rev 02 - - - - - - - - 7 GCR related charges to Transport Customers 02,052 758 20 45 30 - - - 8 Gas Merchant-Buy/sell Contracts 07 - - - - - - - - 9 Rev from Storage Agrmts (GM, MCV & others) 07 2,564,64 256 327 70 69 59 42 0 Administrative Customer Acctg charges for GCC 0,539,49 02 0 0 5 2 0 Miscellaneous (3,640) (2,669) (360) (377) (7) (55) (39) (68) 2 Total Other Test Year Revenues $ 97,656 $ 68,069 $ 0,554 $ 2,806 $ 2,665 $ 9 $ 783 $,868 3 Total Test Year Revenues $,687,208 $,233,742 $ 67,606 $ 77,548 $ 33,770 $ 25,054 $ 7,893 $ 3,596
MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company ExhibitNo.: S-6 Staff Test Year Gas Cost-of-Service Study - Version Schedule: F- Projected 2 Month Period Ending June 30, 209 Page: 6 of 6 (thousands of dollars) Schedule F- (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) Line Customer Costs by Class Alloc No. Using MPSC Approved Methodology Basis Total Residential Rate GS- Rate GS-2 Rate GS-3 Rate ST Rate LT Rate XLT Witness: D. W. Isakson Date: February 28, 208 Customer-Related Plant (Services & Meters) () $ 2,400,735 $ 2,68,692 $ 62,43 $ 54,54 $ 4,4 $ 7,30 $ 3,235 $ 700 2 Plant Cost Rate (2) 7.06% 7.06% 7.06% 7.06% 7.06% 7.06% 7.06% 7.06% 3 Annual Plant Cost $ 69,574 $ 53,84 $,453 $ 3,852 $ 29 $ 56 $ 228 $ 49 Expenses: 4 Customer Related Distribution Expense (3) 08 $ 27,779 $ 25,093.70 $,876 $ 63 $ 48 $ 85 $ 37 $ 8 5 Customer Related Service Expense (3) 0 9,52 8,779 632 63 2 29 3 3 6 Customer Acctg Expense () 45,452 4,90 3,07 303 0 38 6 3 7 Cust Service and Info & Cust Assistance Exp () 3,022 2,796 20 20 2 0 8 Appliance Service Plan Expense (4) 02 (34,536) (24,864.48) (3,923.52) (4,76.54) (986.42) - - - 9 Total Expenses $ 5,237 $ 53,74 $,802 $ (3,744) $ (926) $ 254 $ 3 $ 24 0 Annual Plant Cost $ 69,574 $ 53,84 $,453 $ 3,852 $ 29 $ 56 $ 228 $ 49 Expenses 5,237 53,74,802 (3,744) (926) 254 3 24 2 Total Cost $ 220,8 $ 206,898 $ 3,255 $ 08 $ (636) $ 77 $ 34 $ 74 3 Number of Customers (),777,539,644,709 8,383,876 38,409 644 37 4 Annual Cost $ 24.22 $ 25.80 $.97 $ 9. $ (,668.93) $ 547.02 $ 529.65 $ 538.48 5 Monthly Cost $ 0.35 $ 0.48 $ 9.33 $ 0.76 $ (39.08) $ 45.58 $ 44.4 $ 44.87 Source: () Exhibit S-6, Schedule F-, page 3, line 9 and page 4, lines 5-7. (2) Pretax Cost of Capital from Exhibit S-4, Schedule D-. (3) MPSC Form P-522, page 324. (4) Exhibit S-20, Staff Audit Request #82
MICHIGAN PUBLIC SERVICE COMMISSION Consumers Energy Company Schedule F-a Case No.: U-8424 Exhibit No.: S-6 Staff Test Year Gas Cost-of-Service Study - Version 2 Schedule: F-a Projected 2 Month Period Ending June 30, 209 Page: of 6 ($000) Witness: D. W. Isakson Date: February 28, 208 Line. (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) No. Revenues Alloc Total Residential Rate GS- Rate GS-2 Rate GS-3 Rate ST Rate LT Rate XLT Rate XXLT Service Revenue $,589,552 $,65,673 $ 57,053 $ 64,742 $ 3,05 $ 24,43 $ 7,0 $ 22,346 $ 7,382 2 Other Revenue 97,656 68,078 0,555 2,808 2,666 92 784,394 459 3 Total Revenue $,687,208 $,233,75 $ 67,608 $ 77,549 $ 33,77 $ 25,055 $ 7,894 $ 23,740 $ 7,84 4 Expenses: 5 Cost of Gas Sold (COGS) $ 66,07 $ 475,909 $ 75,092 $ 9,36 $ 8,880 $ - $ - $ - $ - 6 O & M Expense 302,585 237,065 24,34 8,853 3,53 5,869 4,342 6,606 2,86 7 Depreciation & Amortization Expense 247,289 79,992 2,072 20,860 4,020 6,403 4,846 7,575 2,522 8 Lost and Unaccounted for (LAUF) Gas 9,68 6,924,093,326 275 - - - - 9 Taxes 68,245 2,737 5,249 4,927 2,65 4,494 3,264 4,478,482 0 Company Use 5,455 3,927 620 752 56 - - - - Total Expenses $,394,20 $,025,554 $ 37,260 $ 47,854 $ 29,476 $ 6,766 $ 2,45 $ 8,659 $ 6,90 2 Net Operating Income $ 292,998 $ 208,97 $ 30,348 $ 29,695 $ 4,295 $ 8,289 $ 5,443 $ 5,08 $,65 3 Test Year AFUDC 207 8,260 5,357 770 928 94 266 224 392 29 4 Adjusted Net Operating Income $ 30,258 $ 23,554 $ 3,9 $ 30,623 $ 4,489 $ 8,555 $ 5,667 $ 5,472 $,779 5 Total Rate Base $ 5,20,07 $ 3,658,965 $ 457,504 $ 487,565 $ 97,566 $ 45,026 $ 4,249 $ 87,524 $ 6,68 6 Return on Rate Base @ 5.69% 296,405 208,64 26,028 27,738 5,55 8,25 6,500 0,668 3,506 7 Income Deficiency/(Sufficiency) (4,853) (5,39) (5,09) (2,884),062 (304) 833 5,96,726 8 Revenue Deficiency/(Sufficiency) (6,539) (7,264) (6,860) (3,886),43 (40),22 7,00 2,326 9 Rev Requirement/Total Cost of Service $,680,669 $,226,488 $ 60,748 $ 73,663 $ 35,202 $ 24,645 $ 9,06 $ 30,74 $ 0,67 20 Less: Cost of Gas Sold (Test Yr) 66,07 475,909 75,092 9,36 8,880 - - - - 2 Less: Miscellaneous Revenue (TY) 97,656 68,078 0,555 2,808 2,666 92 784,394 459 22 Proposed Rate Design Revenue $ 92,996 $ 682,500 $ 75,0 $ 69,79 $ 3,656 $ 23,733 $ 8,232 $ 29,347 $ 9,708 23 Transmission Related Cost $ 69,355 $ 02,757 $ 5,983 $ 20,38 $ 4,40 $ 6,46 $ 5,68 $ 0,330 $ 3,44 24 Storage Related Cost 37,563 87,499 3,745 7,536 3,885 3,755 3,229 6,050,865 25 Distribution Related Cost 65,078 492,244 45,373 3,802 5,36 3,57 9,385 2,967 4,429 26 Total $ 92,996 $ 682,500 $ 75,0 $ 69,79 $ 3,656 $ 23,733 $ 8,232 $ 29,347 $ 9,708 27 Mcf Thruput 302,25,970 58,739,927 25,065,889 32,387,576 7,306,464 8,657,038 7,697,506 3,38,792,042,777 28 Customer Count,777,539,644,709 8,383,876 38,409 644 35 2
Consumers Energy Company MICHIGAN PUBLIC SERVICE COMMISSION Staff Test Year Gas Cost-of-Service Study - Version 2 Projected 2 Month Period Ending June 30, 209 ($000) Schedule F-a Case No.: U-8424 Exhibit No.: S-6 Schedule: F-a Page: 2 of 6 Witness: D. W. Isakson Date: February 28, 208 Line. (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) No. Revenues Alloc Total Residential Rate GS- Rate GS-2 Rate GS-3 Rate ST Rate LT Rate XLT Rate XXLT Total Thruput (Mcf) 0 00.00% 52.53% 8.29% 0.72% 2.42% 6.7% 5.86% 0.36% 3.65% 2 GCR Sales (Incl GL-) 02 00.00% 72.00%.36% 3.79% 2.86% 0.00% 0.00% 0.00% 0.00% 3 Transportation Gas 03 00.00% 0.00% 0.00% 0.00% 0.00% 23.70% 22.48% 39.79% 4.03% 4 Average & Peak - Transmission 04 00.00% 57.56% 8.90%.28% 2.35% 5.00% 4.38% 7.84% 2.69% 5 Average & Peak - High Pressure Distribution 05 00.00% 56.44% 8.79%.6% 2.36% 5.05% 4.63% 8.6% 2.95% 6 Average & Peak - Non High Pressure Distribution 06 00.00% 65.5% 9.66% 2.05% 2.28% 4.67% 2.66% 2.62% 0.90% 7 50% Storage Capacity / 50% Peak Month 07 00.00% 64.05% 9.99% 2.76% 2.75% 2.69% 2.3% 4.5%.30% 8 Weighted Customer 08 00.00% 90.33% 6.75% 2.27% 0.7% 0.30% 0.3% 0.03% 0.00% 9 Average Customers 09 00.00% 92.53% 6.66% 0.67% 0.02% 0.08% 0.04% 0.0% 0.00% 0 Weighted Cust / Average Cust 0 00.00% 92.2% 6.64% 0.67% 0.02% 0.30% 0.3% 0.03% 0.00% Service Revenue Including COGS 00.00% 73.33% 9.88% 0.36%.96%.52%.08%.4% 0.46% 2 Service Revenue Excluding COGS 2 00.00% 74.29% 8.83% 7.93%.32% 2.60%.84% 2.4% 0.80% 3 Total Revenue 20 00.00% 73.2% 9.93% 0.52% 2.00%.48%.06%.4% 0.46% 4 Production Plant 202 00.00% 72.00%.36% 3.79% 2.86% 0.00% 0.00% 0.00% 0.00% 5 Total Transmission Plant 204 00.00% 6.29% 9.53% 2.3% 2.58% 3.67% 3.9% 5.72%.89% 6 Total Distribution Plant 205 00.00% 77.56% 7.9% 6.5%.3% 2.33%.60% 2.20% 0.75% 7 Total Plant In Service excl GC&I 206 00.00% 72.9% 8.54% 8.57%.66% 2.67% 2.04% 3.24%.07% 8 Total CWIP 207 00.00% 64.86% 9.33%.23% 2.35% 3.22% 2.7% 4.74%.56% 9 Total Rate Base 208 00.00% 70.23% 8.78% 9.36%.87% 2.78% 2.9% 3.60%.8% 20 Total O&M excl Admin & General 209 00.00% 77.42% 8.06% 6.60%.24% 2.06%.53% 2.33% 0.77% 2 Total O&M Expense 24 00.00% 77.42% 8.06% 6.60%.24% 2.06%.53% 2.33% 0.77% 22 Pretax Net Operating Income 25 00.00% 7.33% 0.26% 9.99%.46% 2.80%.85%.76% 0.57% 23 Total Depreciation & Amortization Expense 26 00.00% 72.79% 8.52% 8.44%.63% 2.59%.96% 3.06%.02%
Consumers Energy Company MICHIGAN PUBLIC SERVICE COMMISSION Staff Test Year Gas Cost-of-Service Study - Version 2 Projected 2 Month Period Ending June 30, 209 ($000) Schedule F-a Case No.: U-8424 Exhibit No.: S-6 Schedule: F-a Page: 3 of 6 Witness: D. W. Isakson Date: February 28, 208 Line. (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) No. Revenues Alloc Total Residential Rate GS- Rate GS-2 Rate GS-3 Rate ST Rate LT Rate XLT Rate XXLT Production Plant 02 $ 8,909 $ 6,44 $,02 $,228 $ 254 $ - $ - $ - $ - 2 Storage Plant 07 $ 85,432 $ 545,30 $ 85,057 $ 08,637 $ 23,422 $ 22,925 $ 9,673 $ 35,359 $,058 3 Transmission To/From Storage 07 $ 869,70 $ 556,66 $ 86,829 $ 0,900 $ 23,909 $ 23,403 $ 20,083 $ 36,095 $,289 4 Other Transmission 04 64,930 369,52 57,43 72,380 5,080 32,2 28,085 50,328 7,27 5 Total Transmission Plant $,5,00 $ 926,83 $ 43,973 $ 83,280 $ 38,989 $ 55,524 $ 48,68 $ 86,423 $ 28,560 6 Distribution Plant - Other 05 $ 323,28 $ 82,473 $ 28,47 $ 36,082 $ 7,626 $ 6,334 $ 4,96 $ 27,835 $ 9,552 7 Mains - High Pressure Capable 05 40,369 23,630 36,072 45,802 9,68 20,734 8,99 35,334 2,26 8 Mains - Non-High Pressure Capable 06,223,248 796,977 8,38 47,399 27,95 57,66 32,579 32,067,007 9 Services & Meters 08 2,400,735 2,68,683 62,42 54,54 4,4 7,30 3,235 689 2 0 Total Distribution Plant $ 4,357,632 $ 3,379,763 $ 344,770 $ 283,824 $ 49,336 $ 0,544 $ 69,765 $ 95,925 $ 32,706 Total Plant In Service excl Gen, Com, & Int $ 6,729,073 $ 4,857,66 $ 574,8 $ 576,969 $ 2,00 $ 79,994 $ 37,606 $ 27,707 $ 72,325 2 Gen, Com, & Int Plant and PHFFU 206 $ 775,322 $ 559,698 $ 66,230 $ 66,478 $ 2,905 $ 20,739 $ 5,855 $ 25,084 $ 8,333 3 Total Test Year Plant in Service $ 7,504,394 $ 5,47,359 $ 64,04 $ 643,447 $ 24,906 $ 200,733 $ 53,46 $ 242,79 $ 80,658 4 Storage 07 $ 43,46 $ 27,633 $ 4,30 $ 5,505 $,87 $,62 $ 997 $,792 $ 560 5 Transmission 204 3,40 80,538 2,59 5,937 3,390 4,828 4,89 7,55 2,483 6 Distribution 205 3,994 0,854,07 9 58 326 224 308 05 7 General, Common & Intangible and PHFFU 206 44,499 32,24 3,80 3,85 74,90 90,440 478 8 Total CWIP $ 233,039 $ 5,48 $ 2,738 $ 26,70 $ 5,476 $ 7,506 $ 6,39 $,055 $ 3,627 9 Production 202 $ (8,860) $ (6,378) $ (,007) $ (,22) $ (253) $ - $ - $ - $ - 20 Storage 07 (208,74) (33,689) (20,853) (26,634) (5,742) (5,620) (4,823) (8,669) (2,7) 2 Transmission 204 (36,086) (93,735) (30,6) (38,338) (8,56) (,64) (0,076) (8,078) (5,974) 22 Distribution 205 (2,268,286) (,759,274) (79,464) (47,739) (25,68) (52,857) (36,35) (49,932) (7,025) 23 General, Common & Intangible and PHFFU 206 (405,664) (292,846) (34,653) (34,783) (6,752) (0,85) (8,296) (3,25) (4,360) 24 Total Accumulated Depreciation $ (3,207,637) $ (2,385,922) $ (266,09) $ (248,75) $ (46,584) $ (80,943) $ (59,509) $ (89,803) $ (30,070) 25 Cash & Cash Equivalents 209 0,45 78,302 8,55 6,672,257 2,085,544 2,353 779 26 Accounts Receivable 99,874 73,24 9,868 0,35,954,57,075,404 464 27 Materials and Supplies 209 30,236 23,407 2,438,994 376 623 462 703 233 28 Gas Stored Underground 07 378,657 242,52 37,827 48,34 0,46 0,96 8,749 5,725 4,98 29 End User Gas Storage Credit 03 (0,793) - - - - (2,558) (2,427) (4,294) (,54) 30 Real & Personal Property Taxes 206 78,27 56,400 6,674 6,699,300 2,090,598 2,528 840 3 Other Assets 206 - - - - - - - - - 32 Deferred Debits 206 445,77 32,799 38,079 38,222 7,420,924 9,6 4,422 4,79 33 Total Assets $,23,07 $ 795,659 $ 03,04 $ 2,252 $ 22,723 $ 25,876 $ 20,6 $ 32,84 $ 0,50 34 Accounts Payable 02 39,3 00,298 5,827 9,207 3,979 - - - - 35 Dividends Declared 25,22 7,98,48,27 65 35 209 200 65 36 Accrued Interest 206 7,020 2,287,454,459 283 455 348 55 83 37 Accrued Taxes - Federal 25 7,776 5,535 796 782 4 29 45 39 45 38 Accrued Taxes - State 25 0,88 7,253,043,024 50 286 90 82 59 39 Accrued Taxes - R&PP Tax & Other 206 42,958 3,0 3,670 3,683 75,49 878,390 462 40 Other Liabilities 206 3,790 9,955,78,82 230 369 282 446 48 4 Deferred Credits 206 28,624 57,823 8,675 8,745 3,639 5,848 4,47 7,073 2,350 42 Total Liabilities $ 460,878 $ 332,43 $ 43,79 $ 47,2 $ 9,275 $ 8,64 $ 6,524 $ 9,98 $ 3,33 43 Total Working Capital $ 662,39 $ 463,56 $ 59,249 $ 65,04 $ 3,448 $ 7,234 $ 3,592 $ 22,860 $ 7,98 44 Test Year Unamortized MGP Expense - Net 206 $ 2,596 $ 5,590 $,845 $,852 $ 359 $ 578 $ 442 $ 699 $ 232 45 Test Year Retainers & Customer Advances-Net 205 (3,55) (2,727) (278) (229) (40) (82) (56) (77) (26) 46 Adjustments to Rate Base $ 8,08 $ 2,863 $,567 $,623 $ 320 $ 496 $ 385 $ 62 $ 206 47 Total Test Year Rate Base $ 5,20,07 $ 3,658,965 $ 457,504 $ 487,565 $ 97,566 $ 45,026 $ 4,249 $ 87,524 $ 6,68
MICHIGAN PUBLIC SERVICE COMMISSION Consumers Energy Company Staff Test Year Gas Cost-of-Service Study - Version 2 Projected 2 Month Period Ending June 30, 209 ($000) Schedule F-a Case No.: U-8424 Exhibit No.: S-6 Schedule: F-a Page: 4 of 6 Witness: D. W. Isakson Date: February 28, 208 Line. (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) No. Revenues Alloc Total Residential Rate GS- Rate GS-2 Rate GS-3 Rate ST Rate LT Rate XLT Rate XXLT Production 202 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 2 Storage 07 28,459 8,227 2,843 3,63 783 766 658,82 370 3 Transmission 204 2,677 3,286 2,065 2,629 559 796 69,240 40 4 Distribution 205 9,73 92,849 9,472 7,797,355 2,790,97 2,635 899 5 Customer Accounting 0 45,7 4,60 2,994 300 0 37 6 3 0 6 Customer Service & Information 09,00 934 67 7 0 0 0 0 7 Customer Assistance 09,989,84 32 3 0 2 0 0 8 Total Test Year O&M Expense excl Admin & General $ 27,966 $ 68,738 $ 7,574 $ 4,378 $ 2,708 $ 4,492 $ 3,327 $ 5,070 $,678 9 Administrative & General Expense 209 $ 63,395 $ 49,077 $ 5, $ 4,82 $ 788 $,307 $ 968 $,475 $ 488 0 Test Year Uncollectible Expense 09 $ 8,528 $ 7,43 $,234 $ 24 $ 4 $ 5 $ 7 $ $ 0 Sales Expense 209 $ - $ - $ - $ - $ - $ - $ - $ - $ - 2 Production 202 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 3 Storage 07 69 08 7 22 5 5 4 7 2 4 Transmission 204 89 6 8 23 5 7 6 4 5 Distribution 205,40,094 2 92 6 33 23 3 6 Customer Accounting (Billing) 0 434 400 29 3 0 0 0 7 Customer Service 09 35 33 2 0 0 0 0 0 0 8 Sales Expense 209 0 0 0 0 0 0 0 0 0 9 Administrative & General 209 459 355 37 30 6 9 7 4 20 Total Test Year Pension & Benefits Expense $ 2,697 $ 2,06 $ 25 $ 70 $ 3 $ 55 $ 40 $ 60 $ 20 2 Production 202 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 22 Storage 07 80 53 80 02 22 22 9 33 0 23 Transmission 204 896 549 85 09 23 33 29 5 7 24 Distribution 205 6,670 5,73 528 434 76 55 07 47 50 25 Customer Accounting (Billing) 0 2,052,892 36 4 0 6 3 0 26 Customer Service 09 68 55 0 0 0 0 0 27 Sales Expense 209 0 0 0 0 0 0 0 0 0 28 Administrative & General 209 2,70,680 75 43 27 45 33 50 7 29 Total Payroll Taxes $ 2,757 $ 9,963 $,05 $ 803 $ 48 $ 26 $ 90 $ 282 $ 94 30 Production 202 $ 4,668 $ 3,36 $ 530 $ 644 $ 33 $ 0 $ 0 $ 0 $ 0 3 Storage 07 20,082 2,86 2,006 2,562 552 54 464 834 26 32 Transmission 204 36,694 22,49 3,496 4,45 947,348,70 2,099 694 33 Distribution 205 32,550 02,806 0,487 8,633,50 3,089 2,22 2,98 995 34 Gen, Com, & Int 206 53,295 38,474 4,553 4,570 887,426,090,724 573 35 Test Year Total Depreciation & Amort Expense $ 247,289 $ 79,992 $ 2,072 $ 20,860 $ 4,020 $ 6,403 $ 4,846 $ 7,575 $ 2,522 36 Test Year Lost and Unaccounted for (LAUF) Gas 02 $ 9,68 $ 6,924 $,093 $,326 $ 275 $ - $ - $ - $ - 37 Test Year Company Use 02 $ 5,455 $ 3,927 $ 620 $ 752 $ 56 $ - $ - $ - $ - 38 Test Year Property Taxes 206 $ 96,008 $ 69,307 $ 8,20 $ 8,232 $,598 $ 2,568 $,963 $ 3,06 $,032 39 Test Year FIT & City Income Tax 25 37,597 26,764 3,850 3,780 553,057 702 67 29 40 Test Year MBT 25 7,697 2,598,82,779 260 498 330 36 03 4 Test Year Miscellaneous Taxes 2 4,87 3,05 370 333 55 0 78 02 34 42 Total Test Year Other Taxes $ 55,488 $,774 $ 4,234 $ 4,24 $ 2,466 $ 4,233 $ 3,074 $ 4,96 $,388 43 Total Test Year Expenses Excluding COGS & Company Use $ 727,738 $ 545,78 $ 6,548 $ 55,966 $ 0,440 $ 6,766 $ 2,45 $ 8,659 $ 6,90 44 Test Year Cost of Gas Sold (COGS) $ 66,07 $ 475,909 $ 75,092 $ 9,36 $ 8,880 $ - $ - $ - $ -
MICHIGAN PUBLIC SERVICE COMMISSION Consumers Energy Company Staff Test Year Gas Cost-of-Service Study - Version 2 Projected 2 Month Period Ending June 30, 209 ($000) Schedule F-a Case No.: U-8424 Exhibit No.: S-6 Schedule: F-a Page: 5 of 6 Witness: D. W. Isakson Date: February 28, 208 Line. (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) No. Revenues Alloc Total Residential Rate GS- Rate GS-2 Rate GS-3 Rate ST Rate LT Rate XLT Rate XXLT Test Year Service Revenue Including Cost of Gas Sold $,589,552 $,65,673 $ 57,053 $ 64,742 $ 3,05 $ 24,43 $ 7,0 $ 22,346 $ 7,382 Other Revenues 2 Forfeited Discounts (Late Payment Charge) $ 5,45 $ 3,997 $ 539 $ 565 $ 07 $ 83 $ 59 $ 77 $ 25 3 Misc Service Rev (ASP) 02 68,629 49,40 7,797 9,462,960 - - - - 4 Rev from Transmission of Gas of Others 204 2,38 3,066 2,03 2,586 550 783 680,29 403 5 Rent from Gas Property 204 743 455 7 90 9 27 24 42 4 6 Joint Commodities Mrkt Agrmt Rev 02 - - - - - - - - - 7 GCR related charges to Transport Customers 02,052 758 20 45 30 - - - - 8 Gas Merchant-Buy/sell Contracts 07 - - - - - - - - - 9 Rev from Storage Agrmts (GM, MCV & others) 07 2,564,642 256 327 7 69 59 06 33 0 Administrative Customer Acctg charges for GCC 0,539,49 02 0 0 5 2 0 0 Miscellaneous (3,640) (2,669) (360) (377) (7) (55) (39) (5) (7) 2 Total Other Test Year Revenues $ 97,656 $ 68,078 $ 0,555 $ 2,808 $ 2,666 $ 92 $ 784 $,394 $ 459 3 Total Test Year Revenues $,687,208 $,233,75 $ 67,608 $ 77,549 $ 33,77 $ 25,055 $ 7,894 $ 23,740 $ 7,84
MICHIGAN PUBLIC SERVICE COMMISSION Schedule F-a Case No.: U-8424 Consumers Energy Company Exhibit No.: S-6 Staff Test Year Gas Cost-of-Service Study - Version 2 Schedule: F-a Projected 2 Month Period Ending June 30, 209 Page: 6 of 6 ($000) Witness: D. W. Isakson Date: February 28, 208 (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) Line Customer Costs by Class Alloc No. Using MPSC Approved Methodology Basis Total Residential Rate GS- Rate GS-2 Rate GS-3 Rate ST Rate LT Rate XLT Rate XXLT Customer-Related Plant (Services & Meters) () $ 2,400,735 $ 2,68,683 $ 62,42 $ 54,54 $ 4,4 $ 7,30 $ 3,235 $ 689 $ 2 2 Pretax Cost of Capital (2) 7.06% 7.06% 7.06% 7.06% 7.06% 7.06% 7.06% 7.06% 7.06% 3 Annual Plant Cost $ 69,574 $ 53,83 $,453 $ 3,852 $ 29 $ 56 $ 228 $ 49 $ Expenses: 4 Customer Related Distribution Expense (3) 08 $ 27,779 $ 25,094 $,876 $ 63 $ 48 $ 85 $ 37 $ 8 $ 0 5 Customer Related Service Expense (3) 0 9,52 8,779 632 63 2 29 3 3 0 6 Customer Acctg Expense () 45,7 4,60 2,994 300 0 37 6 3 0 7 Cust Service and Info & Cust Assistance Exp () 2,999 2,775 200 20 2 0 0 8 Appliance Service Plan Expense (4) 02 (34,536) (24,864.48) (3,923.52) (4,76.54) (986.42) - - - 9 Total Expenses $ 50,88 $ 53,385 $,779 $ (3,747) $ (927) $ 253 $ 2 $ 24 $ 0 Annual Plant Cost $ 69,574 $ 53,83 $,453 $ 3,852 $ 29 $ 56 $ 228 $ 49 $ Expenses 50,88 53,385,779 (3,747) (927) 253 2 24 2 Total Cost $ 220,454 $ 206,568 $ 3,23 $ 06 $ (636) $ 770 $ 34 $ 73 $ 2 3 Number of Customers (),777,539,644,709 8,383,876 38,409 644 35 2 4 Annual Cost $ 24.02 $ 25.60 $.77 $ 8.9 $ (,669.3) $ 546.28 $ 528.93 $ 537.50 $,08.5 5 Monthly Cost $ 0.34 $ 0.47 $ 9.3 $ 0.74 $ (39.09) $ 45.52 $ 44.08 $ 44.79 $ 92.35 Source: () Exhibit S-6, Schedule F-a, page 3, line 9 and page 4, lines 5-7. (2) Exhibit S-4, Schedule D-. (3) MPSC Form P-522, page 324. (4) Exhibit S-20, Staff Audit Request #82 Note: The allocations in this study are consistent with Case No. U-5986. - Uncollectible Expense is allocated using Allocator 209. - 50% Storage Capacity / 50% Peak Month Sales for Allocator 07. - Historic Peak Day - Allocators 04, 05, 06.
MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Exhibit No.: S-6 Staff Test-year Transportation Cost of Service Analysis Schedule: F-. Page: of ($000) Witness: D. W. Isakson Date: February 28, 208 Line (a) (b) ( c) (d) ( e) No. COSS Version ST LT XLT - Proposed Rate Design Revenue $ 24,658 $ 9,022 $ 4,267 2 Mcf Thruput (2) 8,657,038 $ 7,697,506 $ 42,36,569 3 Cost per Mcf $.326 $.0749 $ 0.9742 4 Percent Change -8.67% -9.37% 5 COSS Version 2 ST LT XLT XXLT 6 Proposed Rate Design Revenue $ 24,680 $ 9,043 $ 30,786 $ 0,82 7 Mcf Thruput (2) 8,657,038 7,697,506 3,38,792,042,777 8 Cost per Mcf $.3228 $.076 $ 0.9830 $ 0.9220 9 Percent Change -8.66% -8.65% -6.20% () Staff Exhibit S-6, Schedule F-, Page, Line 9 (2) Staff Exhibit S-6, Schedule F-, Page, Line 27 (3) Staff Exhibit S-6, Schedule F-a, Page, Line 9
MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U-8424 Consumers Energy Company Exhibit No.: S-9 Staff Calculation of Allowance for Gas Use and Losses Page: of For the Test Year 2 Months Ended June 30, 209 Witness: D. W. Isakson Date: February 28, 208 (a) (b) (c) (d) (e) (f) (g) (h) (i) Company Use LAUF and Net Total Transportation Net Of Company Use Transportation LAUF and LAUF and Line Gas-In-Kind Gas-In-Kind Adjustment Offset Company Use Gas Company Use No. Description Mcf Mcf Mcf Mcf Mcf Rates Gas Expenses Source Calculation of Allowance for Use & Losses 2 Total Sendout/Throughput 302,26,000 Exhibit A-5 (EJK-7), Schedule E-3, line 3, column (i) 3 Five-Year Average LAUF Percentage.49% Exhibit A-53 (MPP-5), line 6, column (g) 4 Lost and Unaccounted for Gas Volume 4,508,270 Line 2 x line 3 5 Lost and Unaccounted for Gas Volume 4,508,270 From line 4 6 Fuel Gas Volume 2,557,000 WP-DSP-2, line 25, column "Total" 7 Total LAUF & Fuel Gas Volume 7,065,270 Line 5 + line 6 8 9 Total Sendout/Throughput 302,26,000 Line 2 0 Allowance for Use and Losses % 2.34% Line 7 divided by line 9 2 3 Calculation of Consumers Energy LAUF & Co. Use 4 Lost and Unaccounted for Gas Volume 4,508,270 -,399,752 3,08,57 $ 3.094 * $ 9,67,753 WP-DSP-4, line 34, column "Total" for gas rate 5 Company Use Gas Volume 2,557,000 WP-DSP-2, line 25, column "Total" 6 0 7 Transportation Volume 78,76,000 Exhibit A-5 (EJK-7), Schedule E-3, line 39, columns (h), (i), (j), and (k). 8 Allowance for Use and Losses Percentage 2.34% From line 9 Transportation Gas-in-Kind Volume,840,239 Line 7 x line 8 20 Other Gas-in-Kind Volume 353,424 WP-DSP-5 2 Net Company Use Gas Volume 2,557,000 2,557,000-793,9,763,089 $ 3.094 * $ 5,454,996 WP-DSP-4, line 34, column "Total" for gas rate 22 23 Total LAUF and Company Use Gas Adj 7,065,270 $ 5,072,749 Line 4 + line 2 24 Company Filed Total LAUF and CU Adj $ 5,066,853 25 Total Staff Adjustment $ 5,896 * 2 month Average of Cost of Gas Sold
Case No.: U-8424 Exhibit No.: S-20 Page: of Witness: D. W. Isakson Date: February 28, 208 Request #: 082 Page of MPSC AUDIT REQUEST CASE NO: U-8424 DATE OF REQUEST: 2/8/207 NO. DWI-3 REQUESTED BY: David W. Isakson DATE OF RESPONSE: 2/8/7 RESPONDENT: Josnelly Aponte Question: 4. Please identify any expenses associated with the Company s appliance service plan included in Company Exhibit A-6 (LFS-) Schedule F-, Page 6, lines 4-5. Answer: 4. Exhibit A-6 (LFS-) Schedule F-, Page 6, line 4, includes $34,535,970 of expenses related to the Company s appliance service plan.
S T A T E OF M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * In the matter of the application of ) CONSUMERS ENERGY COMPANY ) for authority to increase its rates for the ) Case No. U-8424 distribution of natural gas and for other relief ) ) QUALIFICATIONS AND DIRECT TESTIMONY OF KEVIN S KRAUSE MICHIGAN PUBLIC SERVICE COMMISSION February 28, 208
QUALIFICATIONS OF KEVIN S KRAUSE CASE NUMBER U-8424 PART I 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 Q. Please state your name and business address. A. My name is Kevin S. Krause, and my business address is 709 W. Saginaw Highway, Lansing, MI 4897. Q. By whom are you employed and in what capacity? A. I am employed by the Michigan Public Service Commission (Commission or MPSC) as an Auditor within the Regulated Energy Division, Rates and Tariff Section. Q. How long have you been employed by the MPSC and what are your duties? A. I have been employed by the MPSC since February of 2009. I was assigned to the Revenue Requirements Section to analyze and make recommendations regarding Rate Base, Net Operating Income, and Depreciation issues in general rate cases and depreciation rate cases. In August of 202, I was transferred to the Renewable Energy Section. In November of 206, I was transferred to the Rates and Tariff Section. Q. Please describe your educational background. A. I graduated from the University of Michigan in 990 with a Bachelor of Science degree in Nuclear Engineering. I received a Master s degree in Nuclear Engineering from the same school in 99. I also received a Master s in Business Administration from Michigan State University in 999. I have taken classes as part of the Certified Public Accountant preparation program at Lansing Community College. I also attended the Institute of Public Utilities - Regulatory Studies Program at Michigan State University. In the fall of 200, I completed
QUALIFICATIONS OF KEVIN S KRAUSE CASE NUMBER U-8424 PART I 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 the Depreciation Basics Training conducted by the Society of Depreciation Professionals (SDP). Q. Please describe your professional background. A. From 992 to 997, I worked as a Nuclear Engineer for B & W Fuel Company in Lynchburg, Virginia. My duties there included performing fuel cycle analysis and related calculations. In 998, I was a procurement intern with Public Service Electric and Gas Company of Newark, New Jersey. From 2002 to 200, I was an adjunct professor of Mathematics at Lansing Community College. Q. Have you previously presented testimony or helped develop Staff s position in cases before the MPSC? A. Yes, I have filed or developed Staff s position in the following cases: U-5768: Detroit Edison Electric - AFUDC and other U-5935: Alpena Power - Operations and Maintenance (O&M) Expense U-5985: Michigan Consolidated Gas Case - Revenue Deficiency U-5986: Consumers Energy Gas Case - Rate Base U-680: Indiana Michigan Electric Case - Rate Base U-666: Upper Peninsula Power Company O&M Expense U-669: SEMCO Energy Gas Company O&M Expense U-647: Upper Peninsula Power Company Electric Case - Revenue Deficiency U-6475: Northern States Power Company Electric Case - Revenue Deficiency U-6794: Consumers Energy Electric Case - Rate Base U-680: Indiana Michigan Electric Case - Rate Base U-6855: Consumers Energy Gas Case - Rate Base 2
QUALIFICATIONS OF KEVIN S KRAUSE CASE NUMBER U-8424 PART I 2 3 4 5 6 7 8 9 0 2 3 4 5 U-7026: Indiana Michigan Certificate of Necessity Accounting U-7303: Indiana Michigan Renewable Energy Plan U-732: Consumers Energy 202 Renewable Reconciliation U-7323: Indiana Michigan 202 Renewable Reconciliation U-7429: Consumers Energy Certificate of Necessity Accounting U-763: Consumers Energy 203 Renewable Reconciliation U-7632: DTE Electric 203 Renewable Reconciliation - Rebuttal U-7633: Indiana Michigan 203 Renewable Reconciliation U-7767: DTE Electric Rate Case Certain Nuclear Expenses U-7803: Consumers Energy 204 Renewable Reconciliation U-804: DTE Electric Rate Case Renewable Expenses U-8090: Consumers Energy Avoided Cost U-809: DTE Electric Avoided Cost U-8322: Consumers Energy Standby Rates Rebuttal U-8255: DTE Electric Standby Rates - Rebuttal 3
DIRECT TESTIMONY OF KEVIN S KRAUSE CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 Q. What is the purpose of your testimony? A. The purpose of my testimony is to testify to Other Gas Revenue including the treatment of Value Added Services. Q. Are you sponsoring any Exhibits in this case? A. No. Q. What is Staff s projected Other Gas Revenue? A. Staff s projected Other Gas Revenue for the year ended June 30, 209 is $97,656,000. This is $7,678,000 more than the Company s filed Other Gas Revenue of $89,978,000, as shown on Company Exhibit A-3 (JRC-3). Q. Why is Staff s projection of Other Gas Revenue for the year ended June 30, 209 different from the Company? A. The Company removes Asset Management Agreement (AMA) Revenue from Other Gas Revenue because it is collected in a GCR proceeding. When asked to tie the AMA Revenue in this case to the applicable GCR filings, the Company responded by saying there was an error in the filing. The Company provided an updated value for AMA Revenue and Staff finds the updated value to be reasonable. The correction results in an increase of $7,678,000 to projected Other Gas Revenue. I provided this adjustment to Staff witness Daniel Gottschalk for inclusion on line 4 of Exhibit S-5 (DJG-8), Schedule C-3. Q. Did you review the revenues and expenses related to Value Added Services? A. Yes. I have reviewed the historical information related to Value Added Services (including the Appliance Service Plan) and found it to be a reasonable projection for the purposes of this case. 4
DIRECT TESTIMONY OF KEVIN S KRAUSE CASE NUMBER U-8424 PART II 2 Q. Does this complete your testimony? A. Yes. 5
S T A T E OF M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * In the matter of the application of ) CONSUMERS ENERGY COMPANY ) for authority to increase its rates for the ) Case No. U-8424 distribution of natural gas and for other relief ) ) QUALIFICATIONS AND DIRECT TESTIMONY OF JAMES E. LA PAN MICHIGAN PUBLIC SERVICE COMMISSION February 28, 208
QUALIFICATIONS OF JAMES E. LA PAN CASE NUMBER U-8424 PART I 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 Q. Would you please state your name and business address? A. My name is James E. LaPan. My business address is 709 W. Saginaw Highway, Lansing, MI 4897. Q. Who are you currently employed by and in what position? A. I am employed by the Michigan Public Service Commission (MPSC or Commission) as a Public Utility Engineer in the Regulated Energy Division. Q. What are your responsibilities in your current position? A. I am the lead engineer in all depreciation rate cases and thus, the responsibilities in my current position consist of conducting Staff s technical analysis of every natural gas and electric utility depreciation rate case filing which includes, but is not limited to, remaining book value of current assets, life and net salvage analysis and terminal costs associated with decommissioning retired plant. I also perform compliance and prudency reviews of utility environmental response and remediation costs associated with their historic Manufactured Gas Plant (MGP) site remediation, as presented in their gas rate case filings. Furthermore, I perform engineering studies of utility plants by conducting on-site review and examination via walk-throughs and interviews with Company personnel of each facility as needed. In addition, I conduct technical reviews of facility operations, environmental compliance, asset retirement obligation, system and site integrity, and plant demolition costs. I also deliver technical presentations regarding specialized topics of interest. Q. Would you please describe your educational background and work experience?
QUALIFICATIONS OF JAMES E. LA PAN CASE NUMBER U-8424 PART I 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 A. I earned a Bachelor of Science in Biosystems Engineering from Michigan State University (MSU) in August 2006. I transferred to MSU from the honors program at Delta College. While attending Delta College, I was employed at the Delphi Corporation as an engineering apprentice. During my apprenticeship at Delphi, I worked with engineering professionals to address various technical issues, including state and federal regulatory and compliance issues related to onsite electric generation, hazardous material handling, and wastewater treatment. I was also directly involved in the activities surrounding the decommissioning and demolition of Delphi s Chassis Plant, Plant 2. In addition, I was involved in the development of several programs and operational procedures that dealt with the capture and reuse of spent materials; in particular, waste sludge from Delphi s wastewater treatment facility. After transferring to MSU, I was employed by the Michigan Department of Transportation (MDOT), Statewide Planning Section. While at MDOT, I provided technical support for the implementation and assignment of federal grant money under the Congestion Mitigation and Air Quality Control (CMAQ) program for project proposals submitted to our division. My assistance with the development of modeling and forecasting programs was used to aid in the qualification, quantification, and prioritization of those proposals. Q. Are you a member of any professional organizations? A. Yes, I am a member of the Society of Depreciation Professionals. Q. Have you completed any additional courses of study or attended any professional seminars? 2
QUALIFICATIONS OF JAMES E. LA PAN CASE NUMBER U-8424 PART I 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 A. Yes, I have attended the Depreciation Basic, Life and Net Salvage Analysis, Analyzing the Life of Real-World Property, and Preparing and Defending a Depreciation Study training seminars offered by the Society of Depreciation Professionals in September 202, September 203, September 204, and September 205, respectively. I also successfully completed several other onsite and offsite training activities. Recently, this included attending the Electric Utility Consultants, Inc. (EUCI) annual conference on Plant Retirement and Remediation: Mitigating Risk, Cost and Liability of Deactivated Assets and the Institute of Public Utilities (IPU) advanced regulatory studies program. I participate in annual training seminars provided by the National Association of Regulatory Utility Commissioners (NARUC), and I successfully completed NARUC s two week training program for regulatory professionals held each year on the campus of Michigan State University. Q. Have you prepared testimony for any other proceedings? A. Yes, I have prepared testimony for the following proceedings: Case Number Company Subject/Type U-5506 Consumers Energy Company Rate Case U-5702 SEMCO Energy Gas Company GCR Plan Case U-5985 Michigan Consolidated Gas Company Rate Case U-5896 Consumers Energy Gas Company Rate Case U-625 SEMCO Energy Gas Company Capacity Improvement U-67 Detroit Edison Depreciation Case U-648 Consumers Energy Company Rate Case 3
QUALIFICATIONS OF JAMES E. LA PAN CASE NUMBER U-8424 PART I 2 3 4 5 6 7 8 9 0 U-6054 Consumers Energy Company Depreciation Case U-6055 Consumers Energy & Detroit Edison Depreciation Case U-680 Indiana Michigan Power Company Rate Case U-6855 Consumers Energy Company Rate Case U-6938 Consumers Energy Company Depreciation Case U-6999 Michigan Consolidated Gas Company Rate Case U-699 DTE Electric Company Depreciation Case U-7643 Consumers Energy Company Rate Case U-7882 Consumers Energy Company Gas Rate Case U-824 Consumers Energy Company Gas Rate Case 4
DIRECT TESTIMONY OF JAMES E. LA PAN CASE NUMBER U-8424 PART II 2 3 4 5 6 7 Q. What is the purpose of your testimony in this case? A. The purpose of my testimony in this case is to present the Michigan Public Service Commission Staff s (Staff) recommendation on the recovery of the remediation activity expenditures at Consumers Energy Company s (Consumers or the Company) 23 Manufactured Gas Plant (MGP) sites. Q. Are you supporting any exhibits in this case? A. Yes. I am supporting the following exhibit: 8 Staff Exhibit S-8.0 Manufactured Gas Plant Costs 9 0 2 3 4 5 6 7 8 9 20 2 22 Q. Was this exhibit prepared by you or under your direction? A. Yes. This exhibit was prepared by me or under my direction. Q. What is the amount of known expenditures for remediation activities at the Company s historic MGP sites that it is requesting recovery of in this case? A. Company witness Heather Prentice states on page 4 of her pre-filed direct testimony, line 9 and line 0, that the level of environmental expenditures for the period January 206 through December 208 totals approximately $52.3 million. Q. What amount of the Company s $52.3 million request does Staff recommend recovery of? A. Staff recommends to the Commission that the Company be allowed to recover $5,402,58. Q. Please explain Exhibit S-8.0. A. Exhibit S-8.0 lists each of the Company s 23 former manufactured gas plant sites as well as the environmental response costs, separated by phase, that Staff is 5
DIRECT TESTIMONY OF JAMES E. LA PAN CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 recommending recovery of for the period od January 206 through December 206. Q. Will you please describe the Company s Exhibit A-66 (HMP-2)? A. Company Exhibit A-66 (HMP-2) lists each of the Company s 23 MGP sites that they are the owner/operator of and the known and/or incurred expenditures totaling $5,402,58 for the remediation activities at its former MGP sites. It also lists the estimated and unknown expenses totaling approximately $46.9 million that the Company is requesting recovery of for future remediation activities that have not yet been performed. Q. Did Staff review and audit both the actual expenses incurred in the period from January 206 through December 206, as well as the Company s estimated expenses for 207 and 208, as they are presented in the Company s filing in this case? A. No. Staff only reviewed the actual expenses for the period from January 206 through December 206. Staff cannot evaluate the reasonableness of remedial activities nor the prudence of cost associated costs that have not yet occurred. Q. What is Staff s recommendation regarding reasonableness and prudency of the MGP remediation expenses the Company incurred between the filing of its last case, Case No. U-824, and the filing of this case? A. For the period of January 206 through December 206, Staff recommends recovery of $5,402,58 as reasonably and prudently incurred remedial activity expenditures experienced at the Company s 23 former MGP sites. 6
DIRECT TESTIMONY OF JAMES E. LA PAN CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 Q. Does Staff recommend including the Company s estimated 207 and 208 MGP environmental expenditures in this case? A. No. Staff does not recommend recovery of the $46.9 million estimates. Q. Will you please explain why Staff is not recommending recovery, in this case, of the Company s 207 and 208 estimates for MGP remediation response activities that have not yet been performed? A. Staff does not support recovery of future estimates, including estimates for remedial activities not yet executed by the Company and then reviewed by the Commission, because it is contrary to previous Commission rulings on MGP issues. Specifically, it is contrary to the Commission s March, 996 order in Case No. U-0755 where it rejected Consumers proposal that it recover anticipated future MGP site remediation expenditures. Q. Does this complete your testimony in this case? A. Yes, it does. 7
S T A T E OF M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * In the matter of the application of ) CONSUMERS ENERGY COMPANY ) for authority to increase its rates for the ) Case No. U-8424 distribution of natural gas and for other relief ) ) EXHIBIT OF JAMES E. LA PAN MICHIGAN PUBLIC SERVICE COMMISSION February 28, 208
MICHIGAN PUBLIC SERVICE COMMISSION Case No.: U 8424 Exhibit No.: S 8.0 Manufactured Gas Plant Environmental Remediation January 206 to December 206 by Site Page: of Witness: LaPan Date: February, 208 (a) (b) (c) (e) (f) (g) (h) (i) (j) (k) (l) (m) (n) (o) (p) (q) (r) Line SITE Remedial Investigation (RI) Feasibility Study (FS) Remedial Action (RA) Pre No Further Action (NFA) Post No Further Action (NFA) TOTAL No. 206 206 206 206 206 Alma $9,479 $0 $63,525 $0 $0 $73,004 2 Alpena $0 $0 $575,90 $0 $0 $575,90 3 Bay City $0 $0 $93,953 $0 $0 $93,953 4 Charlotte $0 $0 $49,97 $0 $0 $49,97 5 Flint Court $0 $0 $39,245 $4,640 $0 $80,885 6 Flint East $0 $3,632 $2,533,88 $0 $0 $2,520,85 7 Grand Ledge $536 $0 $3,86 $,824 $3,539 $9,759 8 Hastings $0 $0 $32,96 $0 $0 $32,96 9 Ionia $0 $0 $0 $0 $3,055 $3,055 0 Jackson $8,476 $0 $589,576 $0 $0 $598,05 Kalamazoo $6,388 $0 $6,055 $,486 $0 $8,8 2 Lansing $68 $0 $64,579 $0 $0 $65,96 3 Manistee $0 $3,20 $637,875 $0 $0 $669,076 4 Marshall $0 $0 $60,90 $46,58 $0 $07,068 5 Mt. Clemens $3,772 $0 $74,447 $0 $0 $78,29 6 Owosso $0 $0 $3,2 $0 $0 $3,2 7 Plymouth $0 $0 $29,568 $0 $0 $29,568 8 Pontiac $23,536 $28,464 $43,089 $0 $0 $95,089 9 Royal Oak $0 $0 $7,252 $5,68 $0 $2,420 20 Saginaw $0 $0 $7,633 $0 $0 $7,633 2 St. Johns $438 $0 $2,44 $0 $0 $2,582 22 SS Marie $0 $0 $0 $26,973 $0 $26,973 23 Zilwaukee $0 $0 $8,343 $380 $0 $8,723 TOTAL $53,24 $46,033 $5,62,662 $23,629 $6,594 $5,402,58 TOTAL RI TOTAL FS TOTAL RA TOTAL PRE NFA TOTAL POST NFA $53,24 $46,033 $5,62,662 $23,629 $6,594 206 Total = $5,402,58 January December 206
S T A T E OF M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * In the matter of the application of ) CONSUMERS ENERGY COMPANY ) for authority to increase its rates for the ) Case No. U-8424 distribution of natural gas and for other relief ) ) QUALIFICATIONS AND DIRECT TESTIMONY OF NORA B. QUILICO MICHIGAN PUBLIC SERVICE COMMISSION February 28, 208
QUALIFICATIONS OF NORA B. QUILICO CASE NUMBER U-8424 PART I 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 Q. Please state your name and business address. A. My name is Nora B. Quilico, and my business address is 709 West Saginaw Highway, Lansing, Michigan 4897. Q. Ms. Quilico, where are you currently employed and in what position? A. I am employed by the Michigan Public Service Commission (MPSC or Commission) as a Public Utilities Engineer. Q. What are your responsibilities in your current position? A. I perform technical analysis in the Gas Cost Recovery (GCR) plan and reconciliation proceedings. This analysis leads to the development of MPSC Staff s (Staff s) positions and recommendations. I am responsible for monitoring the natural gas market and closely tracking any price movement. I also keep myself up to date on current natural gas supply issues that may have an effect on the price of natural gas. Q. Would you outline your educational background and work experience? A. I earned a Bachelor of Science degree in Mechanical Engineering, with honors, from Michigan State University, in December 2003. I was awarded the Mechanical Engineering Department Scholarship during my tenure at Michigan State. Prior to my employment at the MPSC, I worked for the Saginaw County Mosquito Abatement Commission, where I was responsible for surveying and drafting sites where future construction projects were being planned. Since being hired at the MPSC, I have successfully completed the Gas Technology Institute s
QUALIFICATIONS OF NORA B. QUILICO CASE NUMBER U-8424 PART I 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 Gas Distribution Operation Course and attended the two week National Association of Regulatory Utility Commissioners (NARUC) session sponsored by the Institute of Public Utilities at Michigan State University. In April 2006, I attended a seminar in Chicago sponsored by New Energy entitled How to Manage Your Gas Supply Portfolio in an Uncertain Gas Market. The seminar focused on hedging strategies and ways to reduce volatility when buying natural gas. Q. Have you previously presented testimony to this Commission? A. Yes, I have filed testimony in several GCR plan cases recommending appropriate GCR factors and GCR contingent factors. I have also filed testimony in reconciliation cases supporting adjustments to the cost of gas and filed testimony in gas rate cases regarding the average cost of gas, cost of gas stored underground, appropriate sales levels, and operation and maintenance and capital expenditures. These cases include: U-4400, Aquila s 2005-2006 Plan Case U-440, MichCon s 2005-2006 Plan Case U-4402, SEMCO s 2005-2006 Plan Case U-4403, Consumers Energy s 2005-2006 Plan Case U-4400-R, Aquila s 2005-2006 Reconciliation Case U-476, Consumers Energy s 2006-2007 Plan Case U-477, MichCon s 2006-2007 Plan Case U-478, SEMCO s 2006-2007 Plan Case U-4800/U-5042, MichCon s Decrement and 2007-2008 Plan Case 2
QUALIFICATIONS OF NORA B. QUILICO CASE NUMBER U-8424 PART I 2 3 4 5 6 7 8 9 0 2 U-533/U-5342, Presque Isle Gas & Electric Co-op s Rate Case U-645-R, Michigan Gas Utilities Corp. 200-20 Reconciliation Case U-646-R, MichCon s 200-20 Reconciliation Case U-648-R, Michigan Gas Utilities Corp. 20-202 Reconciliation Case U-6855, Consumers Energy s 20 General Rate Case U-6999, MichCon s 202 General Rate Case U-7643, Consumers Energy s 204 General Rate Case U-733-R, Consumers Energy s 203-204 Reconciliation Case U-7334, Consumers Energy s 204-205 Plan Case U-7693, Consumers Energy s 205-206 Plan Case U-7900, Commission s own motion to consider revision of Consumers Energy s gas customer choice and end use transportation programs and tariff 3
DIRECT TESTIMONY OF NORA B. QUILICO CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 Q. What is the purpose of your testimony in this proceeding? A. The purpose of this testimony is to support Staff s projected July 208-June 209 test-year cost of gas, Staff s 3-month average cost of gas in underground storage, and the projected sales levels Staff considers reasonable for Consumers Energy (the Company or Consumers). Q. Are you sponsoring any exhibits? A. Yes. I am sponsoring the following exhibits: Exhibit S-3. Consumers Energy audit response #3-Updated Average Cost of Gas Exhibit S-3.2 Consumers Energy audit response #32-Updated 3-Month Average Cost of Gas in Storage Q. Were these exhibits prepared by you or under your supervision? A. No, these were Company responses to Staff audit requests received on January 5th, 208. Q. What did Consumers Energy use as the projected test year average cost of gas sold in Case No. U-8424? A. The Company used $3.094/Mcf as its average cost of gas in its rate case application filed on October 3, 207. The Company arrived at this figure by utilizing market data from the first five days in June 207. Consumers testimony in support of this figure can be found on page 3 of Company witness Deborah S. Pelmear s direct testimony. The calculation of this figure was demonstrated on Ms. Pelmear s workpapers WP-DSP- through WP-DSP-4. The Company s total 4
DIRECT TESTIMONY OF NORA B. QUILICO CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 forecasted cost of gas for the projected test year was $695,308,526, and the total forecasted volumes sold were 224,699,228 Mcf. Q. How was the Company s projected test year average cost of gas calculated? A. As stated earlier, the Company utilized natural gas prices based on the average of Chicago Mercantile Exchange (CME) settlement prices for the first five trading days in June 207 and applied these prices to its supply portfolio as of that date. The Company s calculation considers any fixed price contracts, index priced gas, gas not under contract yet, transportation, storage utilization, and Gas Customer Choice (GCC) impacts among other variables. Q. Is Staff supporting the Company s originally filed figure as its average cost of gas? A. No, Staff is not supporting the Company s $3.094/Mcf average cost of gas as filed. The current market price of gas and the national supply/demand situation warrant revision of the Company s originally filed average cost of gas figure. In addition, in the Company s 208-209 GCR plan case, MPSC Case No. U-84, the Company supports a lower average cost of gas than the figure it put forth in this case. Therefore, Staff chose to update the Company s figure. Q. What is the updated average cost of gas that Staff supports? A. Staff supports an updated July 208-June 209 average cost of gas of $3.00/Mcf, which is a reduction of 9.3 cents from the Company s filed amount. This updated figure was obtained in the Company s audit response #3 (see Exhibit S-3.) and validated by Staff. The updated average cost of gas figure assumes CME (NYMEX) market data from the first five trading days in January 208. It is the 5
DIRECT TESTIMONY OF NORA B. QUILICO CASE NUMBER U-8424 PART II 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 20 2 22 23 result of dividing $685,347,000, the updated cost of gas sold, by 228,398,524 Mcf, the updated gas sold volume. Q. Is Staff testifying to any other figure in this case which necessitates updating with more current January 208 market price data and updated volumetric data? A. Yes, the projected 3-month average cost of gas in underground storage was updated as well. Q. What is the 3-month average cost of gas, taking into account the updated market price data and volumetric data received from the Company, that Staff supports? A. Staff supports an updated combined (GCR/GCC) 3-month average cost of gas in storage of $363,042,80, with a corresponding 3-month average storage volume of 23,858,28 Mcf (or $2.93/Mcf). These figures were received in the Company s audit response #32, see Staff Exhibit S-3.2. The total 3-month average is a reduction of $4,82,327 from the originally filed figure of $367,864,28 and an increase of,557,879 Mcf from the original volume of 22,300,42 Mcf (or $3.008/Mcf) supported by Company witness Pelmear on page 3 of her direct testimony and Exhibit A-64 (DSP-). Q. Why did Staff feel it was necessary to update the storage figures in addition to the average cost of gas? A. When Staff puts forth the figures it supports, it values basing its amounts on assumptions and time snapshots that do not conflict with each other. To be consistent, Staff felt it was necessary to use the same price data and the same updated volumetric data when considering both the average cost of gas and the 3-month average cost of gas in storage. 6
DIRECT TESTIMONY OF NORA B. QUILICO CASE NUMBER U-8424 PART II 2 Q. Does this conclude your testimony at this time? A. Yes, it does. 7
S T A T E OF M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * In the matter of the application of ) CONSUMERS ENERGY COMPANY ) for authority to increase its rates for the ) Case No. U-8424 distribution of natural gas and for other relief ) ) EXHIBITS OF NORA B. QUILICO MICHIGAN PUBLIC SERVICE COMMISSION February 28, 208
GAS MANAGEMENT SERVICES CONSUMERS ENERGY JANUARY 208 FORECAST ESTIMATED REQUIREMENTS AND SUPPLIES, IN MMCF ALL VOLUMES AT 4.65 DRY Case No.: U-8424 Date: February 28, 208 Witness: Nora Quilico Exhibit: S-3. Page: of 5 No. NBQ-5-, Response 3 WP-DSP- Line Booked Booked Booked Booked Booked Booked F'cast F'cast F'cast F'cast F'cast F'cast No. Jul-7 Aug-7 Sep-7 Oct-7 Nov-7 Dec-7 Jan-8 Feb-8 Mar-8 Apr-8 May-8 Jun-8 Total FIXED PRICE CONTRACTS U.S. FIXED 0 0 0 0 0 0 0 0 0 0 0 0 0 2 CANADIAN FIXED 0 0 0 0 0 0 0 0 0 0 0 0 0 3 CITY GATE FIXED 0 24 0 0 0 0 0 0 0 0 0 0 24 4 TOTAL FIXED PRICE DELIVERIES 0 24 0 0 0 0 0 0 0 0 0 0 24 INDEX PRICE CONTRACTS 5 U.S. INDEX 8,09 8,33 7,885 7,423 5,607 5,955 5,973,079,95 2,505 2,589 2,505 58,958 6 CANADIAN INDEX 0 0 0 0 0 0 0 0 0 0 0 0 0 7 City Gate Contracts 2,760 2,45 8,325 4,069 7,884 7,287 0 0 4,344 4,488 4,344 65,97 8 GCC & Misc. Purchases 0 0 0 0 0 0 0 0 0 0 0 0 0 9 TOTAL CITY GATE INDEX 2,760 2,45 8,325 4,069 7,884 7,287 0 0 4,344 4,488 4,344 65,97 0 TOTAL INDEX PRICE DELIVERIES 20,868 20,548 6,20,492 5,608 3,839 3,260,079,95 6,849 7,077 6,849 24,874 NOT UNDER CONTRACT U.S. Additional Requirements 0 0 0 0 0 0 0 4,36 4,778 5,458 5,640 5,458 25,650 2 Canadian Additional Requirements 0 0 0 0 0 0 0 0 0 0 0 0 0 3 City Gate Additional Requirements 0 0 0 0 0 0 0 6,59 3,779 0,93 7,930 7,674 35,735 4 TOTAL NOT UNDER CONTRACT 0 0 0 0 0 0 0 0,475 8,557 5,65 3,570 3,32 6,385 5 TOTAL PURCHASES 20,868 20,572 6,20,492 5,608 3,839 3,260,554 9,752 22,500 20,647 9,98 86,283 6 IMBALANCE GAS -743 284-266 -339 344 258 0 0 0 0 0 0-463 7 TOTAL GCR Purch & Prod 20,25 20,856 5,944,53 5,952 4,097 3,260,554 9,752 22,500 20,647 9,98 85,820 8 Gas Customer Choice (GCC) 4,042 4,039 3,884 3,326 3,464 4,048 3,955 3,80 3,499 4,09 3,835 3,684 45,064 9 GCC Storage Return 0 0 0 0 0 0 0 0 0-3,5 0 0-3,5 20 TOTAL GCR & GCC Purch & Prod 24,67 24,894 9,828 4,479 9,46 8,46 7,25 4,734 3,25 23,098 24,482 23,665 227,374 2 NET STORAGE GCR -7,456-7,687 -,959 -,936 6,70 20,572 2,954 8,34 3,3-9,486-4,444-6,707,006 22 NET STORAGE GCC -3,092-3,208-2,890-2,205-545,32 3,796 4,236 2,939 3,988 -,424-2,397 58 23 NET STOR FROM/TO(-) -20,548-20,895-4,850-4,4 6,66 2,893 25,750 22,370 6,250-5,498-5,867-9,04,525 24 TOTAL SUPPLY 3,69 4,000 4,979 0,338 25,58 40,038 42,965 37,04 29,50 7,600 8,64 4,56 228,899 25 PROD & TRANS USES 69 206 207 35 02 273 38 236 77 98 93 32 2,347 26 FUEL CREDITS -92-6 -66-68 -227-255 -300-276 -260-89 -88-67 -2,405 27 NET SYSTEM USES 76 9 4-33 -25 8 8-40 -83 9 5-35 -58 28 GAS SOLD VOLUME 3,543 3,909 4,938 0,37 25,706 40,020 42,947 37,44 29,584 7,59 8,609 4,596 228,957 29 SALES - GCC 950 83 994,2 2,99 5,369 7,750 7,46 6,438 4,586 2,4,287 42,072 30 SALES - GCR 2,593 3,078 3,944 9,250 22,787 34,65 35,97 29,728 23,46 3,005 6,98 3,309 86,885 3 SYSTEM LOSS / (GAIN) 2 24-905 66 76 92 752 65 58 308 5 8,934 32 CALENDAR SALES 3,52 3,885 5,843 0,305 25,530 39,928 42,95 36,493 29,066 7,283 8,458 4,55 227,022 Line STORAGE INVENTORY, Booked Booked Booked Booked Booked Booked F'cast F'cast F'cast F'cast F'cast F'cast No. END OF MONTH Jul-7 Aug-7 Sep-7 Oct-7 Nov-7 Dec-7 Jan-8 Feb-8 Mar-8 Apr-8 May-8 Jun-8 Total GCR 33 From Storage 30 5 32 3,324 6,964 20,78 2,954 8,34 3,3 0 0 0 94,545 34 To Storage -7,486-7,703 -,99-5,259-253 -20 0 0 0-9,486-4,444-6,707-93,539 35 Net Stor From / (To) -7,456-7,687 -,959 -,936 6,70 20,572 2,954 8,34 3,3-9,486-4,444-6,707,006 36 Storage Inv Adjustment (From) / To 0 0-4 0 0 0 0 0 0 0 0 0-4 37 EOM Inventory 29,598 47,285 59,240 6,75 44,465 23,844 0,889 83,755 70,444 79,93 94,374,08 GCC 38 From Storage 0 0 0 0 0,32 3,796 4,236 2,939 477 0 0 2,770 39 Storage Adjustment 0 0 0 0 0 0 0 0 0 0 0 0 0 40 To Storage -3,092-3,208-2,890-2,205-545 0 0 0 0 3,5 -,424-2,397-2,25 4 Net Stor From / (To) -3,092-3,208-2,890-2,205-545,32 3,796 4,236 2,939 3,988 -,424-2,397 58 42 EOM Inventory 6,954 0,62 3,053 5,258 5,803 4,482 0,686 6,450 3,5-477 946 3,344 Combined 43 From Storage 30 5 32 3,324 6,964 22,02 25,750 22,370 6,250 477 0 0 07,35 44 To Storage -20,578-20,90-4,88-7,465-798 -20 0 0 0-5,976-5,867-9,04-05,790 45 Net Stor From / (To) -20,548-20,895-4,850-4,4 6,66 2,893 25,750 22,370 6,250-5,498-5,867-9,04,525 46 EOM Inventory 36,552 57,447 72,292 76,433 60,268 38,325 2,575 90,205 73,955 79,453 95,320 4,425
GAS MANAGEMENT SERVICES CONSUMERS ENERGY JANUARY 208 FORECAST ESTIMATED REQUIREMENTS AND SUPPLIES, IN MMCF ALL VOLUMES AT 4.65 DRY Case No.: U-8424 Date: February 28, 208 Witness: Nora Quilico Exhibit: S-3. Page: 2 of 5 No. NBQ-5-, Response 3 WP-DSP-2 Line No. FIXED PRICE CONTRACTS U.S. FIXED 2 CANADIAN FIXED 3 CITY GATE FIXED 4 TOTAL FIXED PRICE DELIVERIES INDEX PRICE CONTRACTS 5 U.S. INDEX 6 CANADIAN INDEX 7 City Gate Contracts 8 GCC & Misc. Purchases 9 TOTAL CITY GATE INDEX 0 TOTAL INDEX PRICE DELIVERIES NOT UNDER CONTRACT U.S. Additional Requirements 2 Canadian Additional Requirements 3 City Gate Additional Requirements 4 TOTAL NOT UNDER CONTRACT 5 TOTAL PURCHASES 6 IMBALANCE GAS 7 TOTAL GCR Purch & Prod 8 Gas Customer Choice (GCC) 9 GCC Storage Return 20 TOTAL GCR & GCC Purch & Prod 2 NET STORAGE GCR 22 NET STORAGE GCC 23 NET STOR FROM/TO(-) 24 TOTAL SUPPLY 25 PROD & TRANS USES 26 FUEL CREDITS 27 NET SYSTEM USES 28 GAS SOLD VOLUME 29 SALES - GCC 30 SALES - GCR 3 SYSTEM LOSS / (GAIN) 32 CALENDAR SALES F'cast F'cast F'cast F'cast F'cast F'cast F'cast F'cast F'cast F'cast F'cast F'cast Jul-8 Aug-8 Sep-8 Oct-8 Nov-8 Dec-8 Jan-9 Feb-9 Mar-9 Apr-9 May-9 Jun-9 Total 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2,589 2,589 2,505 2,589 0 0 0 0 0 2,505 2,589 2,505 7,872 0 0 0 0 0 0 0 0 0 0 0 0 0 4,488 4,488 2,896 2,992 0 0 0 0 0 3,85 3,292 3,85 24,527 0 0 0 0 0 0 0 0 0 0 0 0 0 4,488 4,488 2,896 2,992 0 0 0 0 0 3,85 3,292 3,85 24,527 7,077 7,077 5,40 5,58 0 0 0 0 0 5,69 5,880 5,69 42,399 5,640 5,640 5,458 5,640 5,792 5,985 5,985 5,405 5,985 5,458 5,640 5,458 68,084 0 0 0 0 0 0 0 0 0 0 0 0 0 7,930 7,930 9,22 2,729 3,399 3,905 4,635 2,784 3,736,64 0,283 9,95 78,046 3,570 3,570 4,580 8,369 9,90 9,889 0,620 8,90 9,72 7,099 5,923 5,409 46,29 20,647 20,647 9,98 3,950 9,90 9,889 0,620 8,90 9,72 22,790 2,803 2,00 88,528 0 0 0 0 0 0 0 0 0 0 0 0 0 20,647 20,647 9,98 3,950 9,90 9,889 0,620 8,90 9,72 22,790 2,803 2,00 88,528 3,782 3,754 3,606 3,70 3,200 3,28 3,259 2,92 3,2 3,769 3,55 3,375 4,374 0 0 0 0 0 0 0 0 0-3,059 0 0-3,059 24,429 24,40 23,587 7,65 2,390 3,70 3,879,0 2,932 23,499 25,39 24,475 226,843-6,958-7,75-4,548 -,20,047 2,07 25,355 22,242 3,975-9,465-5,368-7,672,33-2,966-3,030-2,837-2,45-424,797 3,774 3,800 2,622 3,475 -,304-2,9 265-9,924-20,205-7,385-3,66 0,623 22,903 29,29 26,043 6,597-5,989-6,67-9,863,596 4,505 4,96 6,202 3,990 23,03 36,074 43,007 37,53 29,529 7,50 8,647 4,62 228,439 20 227 270 257 23 259 38 236 77 97 93 33 2,59-76 -8-80 -20-229 -250-273 -254-254 -9-87 -64-2,55 25 46 90 47-06 9 45-8 -77 6 6-3 40 4,480 4,50 6,2 3,943 23,9 36,065 42,962 37,7 29,607 7,504 8,64 4,644 228,399 86 724 769,250 2,776 5,078 7,033 6,72 5,833 4,85 2,2,84 38,580 3,664 3,426 5,343 2,693 20,343 30,987 35,930 30,450 23,774 3,39 6,430 3,459 89,89 78 73 07 244 405 632 75 650 58 306 5 8 3,997 4,40 4,077 6,005 3,698 22,74 35,433 42,2 36,52 29,089 7,98 8,490 4,562 224,402 Line STORAGE INVENTORY, No. END OF MONTH GCR 33 From Storage 34 To Storage 35 Net Stor From / (To) 36 Storage Inv Adjustment (From) / To 37 EOM Inventory F'cast F'cast F'cast F'cast F'cast F'cast F'cast F'cast F'cast F'cast F'cast F'cast Jul-8 Aug-8 Sep-8 Oct-8 Nov-8 Dec-8 Jan-9 Feb-9 Mar-9 Apr-9 May-9 Jun-9 Total 0 0 0 0,047 2,07 25,355 22,242 3,975 0 0 0 93,726-6,958-7,75-4,548 -,20 0 0 0 0 0-9,465-5,368-7,672-92,395-6,958-7,75-4,548 -,20,047 2,07 25,355 22,242 3,975-9,465-5,368-7,672,33 0 0 0 0 0 0 0 0 0 0 0 0 0 28,039 45,23 59,762 60,972 49,925 28,88 03,464 8,22 67,246 76,7 92,078 09,750 GCC 38 From Storage 39 Storage Adjustment 40 To Storage 4 Net Stor From / (To) 42 EOM Inventory Combined 43 From Storage 44 To Storage 45 Net Stor From / (To) 46 EOM Inventory 0 0 0 0 0,797 3,774 3,800 2,622 46 0 0 2,409 0 0 0 0 0 0 0 0 0 0 0 0 0-2,966-3,030-2,837-2,45-424 0 0 0 0 3,059 -,304-2,9-2,44-2,966-3,030-2,837-2,45-424,797 3,774 3,800 2,622 3,475 -,304-2,9 265 6,30 9,340 2,77 4,628 5,052 3,255 9,48 5,68 3,059-46 888 3,078 0 0 0 0,047 22,903 29,29 26,043 6,597 46 0 0 06,35-9,924-20,205-7,385-3,66-424 0 0 0 0-6,405-6,67-9,863-04,539-9,924-20,205-7,385-3,66 0,623 22,903 29,29 26,043 6,597-5,989-6,67-9,863,596 34,349 54,554 7,939 75,600 64,977 42,074 2,945 86,902 70,305 76,294 92,966 2,829
GAS MANAGEMENT SERVICES CONSUMERS ENERGY JANUARY 208 FORECAST COST OF GAS BUDGET INCOME STATEMENT - $000 Case No.: U-8424 Date: February 28, 208 Witness: Nora Quilico Exhibit: S-3. Page: 3 of 5 No. NBQ-5-, Response 3 WP-DSP-3 Line Booked Booked Booked Booked Booked Booked F'cast F'cast F'cast F'cast F'cast F'cast No. Jul-7 Aug-7 Sep-7 Oct-7 Nov-7 Dec-7 Jan-8 Feb-8 Mar-8 Apr-8 May-8 Jun-8 Total FIXED PRICE DELIVERIES U.S. FIXED 0 0 0 0 0 0 0 0 0 0 0 0 0 2 CANADIAN FIXED 0 0 0 0 0 0 0 0 0 0 0 0 0 3 CITY GATE FIXED 0 72 0 0 0 0 0 0 0 0 0 0 72 4 TOTAL FIXED PRICE DELIVERIES 0 72 0 0 0 0 0 0 0 0 0 0 72 INDEX PRICE DELIVERIES 5 U.S. INDEX 26,370 25,2 24,770 25,380 6,056 9,568 7,636 3,354 3,607 7,03 7,33 7,84 83,552 6 CANADIAN INDEX 0 0 0 0 0 0 0 0 0 0 0 0 0 7 City Gate Contracts 40,062 37,64 25,59 9,822-25,246 2,027 0 0,826 2,98,966 94,920 8 GCC & Misc. Purchases 0 0 0 0 0 0 0 0 0 0 0 0 0 9 TOTAL CITY GATE INDEX 40,062 37,64 25,59 9,822-25,246 2,027 0 0,826 2,98,966 94,920 0 TOTAL INDEX PRICE DELIVERIES 66,432 62,825 49,929 35,202 6,056 44,84 38,663 3,354 3,607 8,929 9,52 9,50 378,472 NOT UNDER CONTRACT U.S. Additional Requirements 0 0 0 0 0 0 0 3,652 4,26 5,384 5,084 5,02 73,267 2 Canadian Additional Requirements 0 0 0 0 0 0 0 0 0 0 0 0 0 3 City Gate Additional Requirements 0 0 0 0 0 0 0 9,94,345 27,79 20,872 9,903 99,032 4 TOTAL NOT UNDER CONTRACT 0 0 0 0 0 0 0 32,846 25,47 43,03 35,956 34,923 72,299 5 TOTAL PURCHASES 66,432 62,897 49,929 35,202 6,056 44,84 38,663 36,200 29,078 62,032 55,467 54,073 550,843 6 Unused Reservation Charges - 3 - -83 9-0 0 0 0 0 0-63 7 TOTAL COST OF PURCHASES 66,43 62,900 49,928 35,9 6,075 44,83 38,663 36,200 29,078 62,032 55,467 54,073 550,780 8 IMBALANCE GAS -2,363 82-764 -,043,035 949 0 0 0 0 0 0 -,374 9 TOTAL GCR Purch & Prod 64,068 63,72 49,64 34,076 7,0 45,762 38,663 36,200 29,078 62,032 55,467 54,073 549,406 20 AVG GCR Purch & Prod $ 3.84 $ 3.055 $ 3.084 $ 3.055 $ 2.875 $ 3.246 $ 2.96 $ 3.33 $ 2.982 $ 2.757 $ 2.686 $ 2.706 $ 2.957 2 Gas Customer Choice 8,579 8,466 7,745 5,273 5,865 8,508 7,754 4,278 5,707 5,390 4,364 3,800 95,730 22 Avg for GCC $ 4.596 $ 4.572 $ 4.568 $ 4.592 $ 4.580 $ 4.572 $ 4.490 $ 4.490 $ 4.490 $ 3.746 $ 3.746 $ 3.746 $ 4.343 23 GCC Storage Return $ - $ - $ - $ - $ - $ - $ - $ - $ - $ (6,55) $ - $ - $ (6,55) 24 TOTAL GCR & GCC PROD & PURCH 82,647 82,77 66,909 49,350 32,975 64,27 56,47 50,478 44,785 6,268 69,832 67,873 728,982 25 AVG GCR & GCC PURCH & PROD $ 3.420 $ 3.30 $ 3.374 $ 3.408 $ 3.502 $ 3.542 $ 3.277 $ 3.426 $ 3.380 $ 2.653 $ 2.852 $ 2.868 $ 3.206 26 NET STORAGE GCR -55,573-54,03-36,875-5,72 52,02 64,030 68,368 56,47 4,450-26,54-38,802-45,23 20,06 27 NET STORAGE GCC -4,23-4,666-3,205-0,27-2,495 6,078 7,466 9,490 3,526 7,943-5,333-8,98 5,485 28 NET STOR FROM/TO(-) -69,785-68,698-50,080-5,840 49,606 70,09 85,834 75,962 54,976-8,2-44,35-54,94 25,545 29 TOTAL SUPPLY 2,862 3,480 6,830 33,50 82,582 34,379 42,25 26,440 99,76 53,057 25,697 3,680 754,527 30 NET SYSTEM USES 244 277 27-02 -38 59 5-25 -249 24 4-95 -55 3 SALES - GCC 4,366 3,799 4,54 5,46 3,370 24,587 35,220 33,768 29,233 7,79 9,032 4,89 85,060 32 SALES - GCR 8,252 9,403 2,62 28,466 69,593 09,734 06,979 92,796 70,776 35,855 6,65 8,956 569,622 33 COST of GAS SOLD 2,68 3,202 6,703 33,6 82,962 34,32 42,200 26,564 00,00 53,033 25,683 3,775 754,682 34 AVERAGE COST OF GAS SOLD $ 3.562 $ 3.378 $ 3.383 $ 3.24 $ 3.227 $ 3.356 $ 3.3 $ 3.407 $ 3.38 $ 3.05 $ 2.983 $ 2.997 $ 3.296 Line STORAGE INVENTORY, Booked Booked Booked Booked Booked Booked F'cast F'cast F'cast F'cast F'cast F'cast 0 No. END OF MONTH Jul-7 Aug-7 Sep-7 Oct-7 Nov-7 Dec-7 Jan-8 Feb-8 Mar-8 Apr-8 May-8 Jun-8 Total GCR 35 From Storage 94 48 98 0,358 52,830 64,7 68,368 56,47 4,450 0 0 0 294,429 36 To Storage -55,667-54,080-36,974-6,070-729 -68 0 0 0-26,54-38,802-45,23-274,368 37 Net Stor From / (To) -55,573-54,03-36,875-5,72 52,02 64,030 68,368 56,47 4,450-26,54-38,802-45,23 20,06 38 Storage Inv Adjustment (From) / To 0 0-4 0 0-55 0 0 0 0 0 0-69 39 EOM Inventory 405,340 459,37 496,233 50,945 449,843 385,658 37,290 260,88 29,368 245,522 284,324 329,537 40 EOM Inventory Average $ 3.28 $ 3.9 $ 3.6 $ 3.4 $ 3.4 $ 3.4 $ 3.4 $ 3.4 $ 3.4 $ 3.072 $ 3.03 $ 2.967 GCC 4 From Storage 0 0 0 0 0 6,078 7,466 9,490 3,526,789 0 0 58,350 42 Storage Adjustment 0 0 0 0 0 0 0 0 0 0 0 0 43 To Storage -4,23-4,666-3,205-0,27-2,495 0 0 0 0 6,55-5,333-8,98-52,865 44 Net Stor From / (To) -4,23-4,666-3,205-0,27-2,495 6,078 7,466 9,490 3,526 7,943-5,333-8,98 5,485 45 EOM Inventory 32,222 46,888 60,093 70,220 72,76 66,637 49,7 29,680 6,55 -,789 3,544 2,525 46 EOM Inventory Average $ 4.633 $ 4.64 $ 4.604 $ 4.602 $ 4.60 $ 4.60 $ 4.60 $ 4.60 $ 4.60 $ 3.746 $ 3.746 $ 3.746 Combined 47 From Storage 94 48 98 0,358 52,830 70,789 85,834 75,962 54,976,789 0 0 352,779 48 To Storage -69,879-68,746-50,78-26,97-3,224-68 0 0 0-0,000-44,35-54,94-327,233 49 Net Stor From / (To) -69,785-68,698-50,080-5,840 49,606 70,09 85,834 75,962 54,976-8,2-44,35-54,94 25,545 50 EOM Inventory 437,562 506,260 556,326 572,66 522,559 452,295 366,46 290,499 235,523 243,734 287,869 342,063 5 EOM Inventory Average $ 3.204 $ 3.25 $ 3.229 $ 3.243 $ 3.26 $ 3.270 $ 3.255 $ 3.220 $ 3.85 $ 3.068 $ 3.020 $ 2.989
GAS MANAGEMENT SERVICES CONSUMERS ENERGY JANUARY 208 FORECAST COST OF GAS BUDGET INCOME STATEMENT - $000 Case No.: U-8424 Date: February 28, 208 Witness: Nora Quilico Exhibit: S-3. Page: 4 of 5 No. NBQ-5-, Response 3 WP-DSP-4 Line No. FIXED PRICE DELIVERIES U.S. FIXED 2 CANADIAN FIXED 3 CITY GATE FIXED 4 TOTAL FIXED PRICE DELIVERIES INDEX PRICE DELIVERIES 5 U.S. INDEX 6 CANADIAN INDEX 7 City Gate Contracts 8 GCC & Misc. Purchases 9 TOTAL CITY GATE INDEX 0 TOTAL INDEX PRICE DELIVERIES NOT UNDER CONTRACT U.S. Additional Requirements 2 Canadian Additional Requirements 3 City Gate Additional Requirements 4 TOTAL NOT UNDER CONTRACT 5 TOTAL PURCHASES 6 Unused Reservation Charges 7 TOTAL COST OF PURCHASES 8 IMBALANCE GAS 9 TOTAL GCR Purch & Prod 20 AVG GCR Purch & Prod 2 Gas Customer Choice 22 Avg for GCC 23 GCC Storage Return 24 TOTAL GCR & GCC PROD & PURCH 25 AVG GCR & GCC PURCH & PROD 26 NET STORAGE GCR 27 NET STORAGE GCC 28 NET STOR FROM/TO(-) 29 TOTAL SUPPLY 30 NET SYSTEM USES 3 SALES - GCC 32 SALES - GCR 33 COST of GAS SOLD 34 AVERAGE COST OF GAS SOLD F'cast F'cast F'cast F'cast F'cast F'cast F'cast F'cast F'cast F'cast F'cast F'cast Jul-8 Aug-8 Sep-8 Oct-8 Nov-8 Dec-8 Jan-9 Feb-9 Mar-9 Apr-9 May-9 Jun-9 Total 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 7,502 7,5 7,236 7,529 0 0 0 0 0 6,993 7,3 6,986 50,888 0 0 0 0 0 0 0 0 0 0 0 0 0 2,52 2,538 7,894 8,23 0 0 0 0 0 8,244 8,47 8,236 66,079 0 0 0 0 0 0 0 0 0 0 0 0 0 2,52 2,538 7,894 8,23 0 0 0 0 0 8,244 8,47 8,236 66,079 20,023 20,049 5,30 5,759 0 0 0 0 0 5,237 5,548 5,223 6,968 5,362 5,540 4,67 5,045 6,79 8,536 9,46 7,256 7,730 3,35 4,027 3,702 9,390 0 0 0 0 0 0 0 0 0 0 0 0 0 20,468 20,790 23,73 7,49 9,466,538 4,08 8,574,067 30,047 25,3 23,806 205,848 35,830 36,329 38,402 22,94 26,257 30,073 33,497 25,830 28,796 43,363 39,59 37,508 397,238 55,852 56,378 53,532 37,953 26,257 30,073 33,497 25,830 28,796 58,600 54,707 52,73 54,206 0 0 0 0 0 0 0 0 0 0 0 0 0 55,852 56,378 53,532 37,953 26,257 30,073 33,497 25,830 28,796 58,600 54,707 52,73 54,206 0 0 0 0 0 0 0 0 0 0 0 0 0 55,852 56,378 53,532 37,953 26,257 30,073 33,497 25,830 28,796 58,600 54,707 52,73 54,206 $ 2.705 $ 2.73 $ 2.679 $ 2.72 $ 2.857 $ 3.04 $ 3.54 $ 3.54 $ 2.962 $ 2.57 $ 2.509 $ 2.499 $ 2.727 4,67 4,063 3,508 3,865,985 2,290 2,207 0,94 2,029 3,279 2,387,892 52,63 $ 3.746 $ 3.746 $ 3.746 $ 3.746 $ 3.746 $ 3.746 $ 3.746 $ 3.746 $ 3.746 $ 3.524 $ 3.524 $ 3.524 $ 3.689 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ (,459) $ - $ - $ (,459) 70,09 70,44 67,039 5,88 38,242 42,364 45,704 36,77 40,826 60,49 67,094 64,623 655,359 $ 2.866 $ 2.887 $ 2.842 $ 2.936 $ 3.087 $ 3.27 $ 3.293 $ 3.30 $ 3.57 $ 2.57 $ 2.650 $ 2.640 $ 2.889-45,873-46,896-38,977-3,292 3,882 60,96 73,76 64,93 40,334-24,336-38,558-44,64 28,402 -, -,35-0,627-9,82 -,587 6,730 4,36 4,236 9,82 2,926-4,595-7,79,678-56,984-58,248-49,603-2,474 30,295 67,645 87,32 78,429 50,55 -,4-43,53-5,883 30,079 3,035 2,93 7,436 39,344 68,537 0,009 33,06 5,200 90,980 49,009 23,94 2,740 685,439 68 26 24 29-304 26 4-58 -229 5 5-78 92 3,056 2,7 2,88 4,683 0,398 9,020 26,343 25,77 2,850 4,746 7,792 4,73 42,83 9,92 9,356 4,35 34,532 58,442 90,963 06,53 90,08 69,359 34,248 6,33 8,645 542,56 2,968 2,067 7,96 39,25 68,840 09,983 32,874 5,258 9,209 48,993 23,926 2,88 685,347 $ 2.895 $ 2.908 $ 2.83 $ 2.83 $ 2.978 $ 3.050 $ 3.093 $ 3.0 $ 3.08 $ 2.799 $ 2.769 $ 2.760 $ 3.00 Line STORAGE INVENTORY, No. END OF MONTH GCR 35 From Storage 36 To Storage 37 Net Stor From / (To) 38 Storage Inv Adjustment (From) / To 39 EOM Inventory 40 EOM Inventory Average GCC 4 From Storage 42 Storage Adjustment 43 To Storage 44 Net Stor From / (To) 45 EOM Inventory 46 EOM Inventory Average Combined 47 From Storage 48 To Storage 49 Net Stor From / (To) 50 EOM Inventory 5 EOM Inventory Average F'cast F'cast F'cast F'cast F'cast F'cast F'cast F'cast F'cast F'cast F'cast F'cast Jul-8 Aug-8 Sep-8 Oct-8 Nov-8 Dec-8 Jan-9 Feb-9 Mar-9 Apr-9 May-9 Jun-9 Total 0 0 0 0 3,882 60,96 73,76 64,93 40,334 0 0 0 270,499-45,873-46,896-38,977-3,292 0 0 0 0 0-24,336-38,558-44,64-242,098-45,873-46,896-38,977-3,292 3,882 60,96 73,76 64,93 40,334-24,336-38,558-44,64 28,402 0 0 0 0 0 0 0 0 0 0 0 0 0 375,40 422,307 46,283 464,576 432,694 37,779 298,603 234,4 94,077 28,43 256,972 30,36 $ 2.932 $ 2.908 $ 2.887 $ 2.886 $ 2.886 $ 2.886 $ 2.886 $ 2.886 $ 2.886 $ 2.847 $ 2.79 $ 2.744 0 0 0 0 0 6,730 4,36 4,236 9,82,466 0 0 46,390 0 0 0 0 0 0 0 0 0 0 0 0 -, -,35-0,627-9,82 -,587 0 0 0 0,459-4,595-7,79-44,72 -, -,35-0,627-9,82 -,587 6,730 4,36 4,236 9,82 2,926-4,595-7,79,678 23,636 34,987 45,64 54,796 56,383 49,653 35,56 2,280,459 -,466 3,28 0,847 $ 3.746 $ 3.746 $ 3.746 $ 3.746 $ 3.746 $ 3.746 $ 3.746 $ 3.746 $ 3.746 $ 3.524 $ 3.524 $ 3.524 0 0 0 0 3,882 67,645 87,32 78,429 50,55,466 0 0 36,889-56,984-58,248-49,603-2,474 -,587 0 0 0 0-2,877-43,53-5,883-286,80-56,984-58,248-49,603-2,474 30,295 67,645 87,32 78,429 50,55 -,4-43,53-5,883 30,079 399,047 457,295 506,898 59,372 489,077 42,432 334,20 255,69 205,536 26,947 260,00 3,984 $ 2.970 $ 2.959 $ 2.948 $ 2.958 $ 2.965 $ 2.966 $ 2.958 $ 2.942 $ 2.923 $ 2.844 $ 2.798 $ 2.765
BUDGET 208 - JANUARY 208 FORECAST Establishment of NYMEX Pricing and Basis for Ceiling Adjustments Settlement Settlement Settlement Settlement Settlement Line Contract Price Price Price Price Price $/MMBtu No. Month 2-Jan-8 3-Jan-8 4-Jan-8 5-Jan-8 8-Jan-8 Average Case No.: U-8424 Date: February 28, 208 Witness: Nora Quilico Exhibit: S-3. Page: 5 of 5 No. NBQ-5-, Response 3 WP-DSP-6 July-7 $3.067 close 2 August-7 $2.969 close 3 September-7 $2.96 close 4 October-7 $2.974 close 5 November-7 $2.752 close 6 December-7 $3.074 close 7 January-8 $2.738 close 8 February-8 $3.056 $3.008 $2.880 $2.795 $2.835 $2.95 9 March-8 $2.973 $2.93 $2.83 $2.745 $2.772 $2.847 0 April-8 $2.793 $2.777 $2.696 $2.650 $2.676 $2.78 May-8 $2.777 $2.764 $2.692 $2.655 $2.680 $2.74 2 June-8 $2.806 $2.794 $2.730 $2.697 $2.720 $2.749 3 Average $2.88 $2.855 $2.762 $2.708 $2.737 $2.873 4 July-8 $2.834 $2.823 $2.765 $2.735 $2.758 $2.783 5 August-8 $2.837 $2.826 $2.769 $2.740 $2.76 $2.787 6 September-8 $2.820 $2.809 $2.752 $2.723 $2.742 $2.769 7 October-8 $2.844 $2.832 $2.776 $2.747 $2.766 $2.793 8 November-8 $2.897 $2.885 $2.83 $2.806 $2.825 $2.849 9 December-8 $3.026 $3.02 $2.959 $2.934 $2.952 $2.977 20 January-9 $3.06 $3.094 $3.043 $3.06 $3.034 $3.059 2 February-9 $3.08 $3.070 $3.02 $2.994 $3.04 $3.036 22 March-9 $3.06 $3.004 $2.956 $2.927 $2.947 $2.970 23 April-9 $2.695 $2.680 $2.653 $2.642 $2.663 $2.667 24 May-9 $2.664 $2.649 $2.625 $2.64 $2.63 $2.637 25 June-9 $2.69 $2.676 $2.654 $2.642 $2.658 $2.664 26 Average $2.876 $2.863 $2.87 $2.793 $2.83 $2.832
Case No.: U-8424 Date: February 28, 208 Witness: Nora Quilico Exhibit: S-3.2 Page: of No. NBQ-5-2, Response 32 STORAGE FIELDS Case No: U-8424 MONTH END SUMMARY Exhibit: A- (DSP-) VOLUMES @ 4.65 PSIA DRY Schedule: Witness: DSPelmear Line GCR GCC COMBINED No. MONTH VOL - MMCF $000 $ / MCF VOL - MMCF $000 $ / MCF VOL - MMCF $000 $ / MCF Jun-6 Booked 3,064 338,525 2.994 4,303 7,328 4.027 7,367 355,852 3.032 2 Jul-6 Booked 28,69 385,836 2.998 8,000 32,876 4.0 36,690 48,72 3.063 3 Aug-6 Booked 44,496 430,292 2.978,77 48,862 4.5 56,266 479,54 3.066 4 Sep-6 Booked 57,099 467,524 2.976 5,428 64,585 4.86 72,527 532,09 3.084 5 Oct-6 Booked 57,378 468,544 2.977 8,793 79,374 4.224 76,7 547,98 3.0 6 Nov-6 Booked 44,003 428,783 2.978 9,807 83,882 4.235 63,80 52,665 3.30 7 Dec-6 Booked 5,398 343,642 2.978 7,705 74,98 4.235 33,02 48,624 3.45 8 Jan-7 Booked 96,448 287,265 2.978 2,339 52,256 4.235 08,787 339,520 3.2 9 Feb-7 Booked 82,386 245,450 2.979 7,967 33,739 4.235 90,353 279,88 3.090 0 Mar-7 Booked 65, 93,98 2.979 5,3 2,652 4.235 70,223 25,633 3.07 Apr-7 Booked 79,449 24,49 3.039-200 -848 4.234 79,249 240,57 3.036 2 May-7 Booked 93,085 285,785 3.070,290 6,048 4.688 94,376 29,833 3.092 3 Jun-7 Booked 2,42 349,767 3.9 3,862 8,009 4.663 6,004 367,777 3.70 4 5 3 Month Avg 4,59 343,60 3.000 9,706 40,980 4.222 24,225 384,58 3.096 6 7 Jun-7 Booked 2,42 349,767 3.9 3,862 8,009 4.663 6,004 367,777 3.70 8 Jul-7 Booked 29,598 405,340 3.28 6,954 32,222 4.633 36,552 437,562 3.204 9 Aug-7 Booked 47,285 459,37 3.9 0,62 46,888 4.64 57,447 506,259 3.25 20 Sep-7 Booked 59,240 496,233 3.6 3,053 60,093 4.604 72,292 556,325 3.229 2 Oct-7 Booked 6,75 50,945 3.4 5,258 70,220 4.602 76,433 572,65 3.243 22 Nov-7 Booked 44,465 449,843 3.4 5,803 72,76 4.60 60,268 522,559 3.26 23 Dec-7 Booked 23,844 385,658 3.4 4,482 66,637 4.60 38,325 452,295 3.270 24 Jan-8 F'cast 0,889 37,290 3.4 0,686 49,7 4.60 2,575 366,46 3.255 25 Feb-8 F'cast 83,755 260,88 3.4 6,450 29,680 4.60 90,205 290,499 3.220 26 Mar-8 F'cast 70,444 29,368 3.4 3,5 6,55 4.60 73,955 235,523 3.85 27 Apr-8 F'cast 79,93 245,522 3.072-477 -,789 3.746 79,453 243,734 3.068 28 May-8 F'cast 94,374 284,324 3.03 946 3,544 3.746 95,320 287,869 3.020 29 Jun-8 F'cast,08 329,537 2.967 3,344 2,525 3.746 4,425 342,062 2.989 30 3 3 Month Avg 6,863 36,924 3.097 8,003 36,62 4.576 24,866 398,545 3.92 32 33 Jun-8 F'cast,08 329,537 2.967 3,344 2,525 3.746 4,425 342,062 2.989 34 Jul-8 F'cast 28,039 375,40 2.932 6,30 23,636 3.746 34,349 399,046 2.970 35 Aug-8 F'cast 45,23 422,307 2.908 9,340 34,987 3.746 54,554 457,294 2.959 36 Sep-8 F'cast 59,762 46,283 2.887 2,77 45,64 3.746 7,939 506,897 2.948 37 Oct-8 F'cast 60,972 464,576 2.886 4,628 54,796 3.746 75,600 59,372 2.958 38 Nov-8 F'cast 49,925 432,694 2.886 5,052 56,383 3.746 64,977 489,077 2.965 39 Dec-8 F'cast 28,88 37,779 2.886 3,255 49,653 3.746 42,074 42,43 2.966 40 Jan-9 F'cast 03,464 298,603 2.886 9,48 35,56 3.746 2,945 334,20 2.958 4 Feb-9 F'cast 8,22 234,4 2.886 5,68 2,280 3.746 86,902 255,69 2.942 42 Mar-9 F'cast 67,246 94,077 2.886 3,059,459 3.746 70,305 205,536 2.923 43 Apr-9 F'cast 76,7 28,43 2.847-46 -,466 3.524 76,294 26,947 2.844 44 May-9 F'cast 92,078 256,972 2.79 888 3,28 3.524 92,966 260,00 2.798 45 Jun-9 F'cast 09,750 30,36 2.744 3,078 0,847 3.524 2,829 3,983 2.765 46 47 3 Month Avg 6,483 335,477 2.880 7,375 27,566 3.738 23,858 363,043 2.93
STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * * In the matter of the application of ) CONSUMERS ENERGY COMPANY ) for authority to increase its rates for the ) Case No. U-8424 distribution of natural gas and for other relief ) ) PROOF OF SERVICE Linda G. Brauker, being duly sworn, deposes and says that on February 28, 208, A.D., she emailed a copy of the attached MPSC Testimony and Exhibits to the persons as shown on the attached list. Linda G. Brauker Subscribed and sworn to before me this 28 th day of February, 208. Lacie Lea Latimore Notary Public State of Michigan County of Eaton My Commission Expires July 3, 202