A CMS Energy Company January 18, 2019 Ms. Kavita Kale Executive Secretary Michigan Public Service Commission 7109 West Saginaw Highway Post Office Box 30221 Lansing, MI 48909 General Offices: LEGAL DEPARTMENT One Energy Plaza Jackson, MI 49201 Tel: Fax: (517) 788-0550 (517) 788-2470 CATHERINE M REYNOLDS Senior Vice President and General Counsel *Washington Office: 1730 Rhode Island Ave. N.W. Tel: (202) 778-3340 MELISSA M GLEESPEN Suite 1007 Vice President, Corporate Washington, DC 20036 Fax: (202) 778-3355 Secretary and Chief Compliance Officer Writer s Direct Dial Number: (517) 788-0677 Writer s E-mail Address: theresa.staley@cmsenergy.com SHAUN M JOHNSON Vice President and Deputy General Counsel Bret A Totoraitis Kelly M Hall Eric V Luoma Assistant General Counsel Ashley L Bancroft Robert W Beach Ian F. Burgess Don A D Amato Robert A. Farr Gary A Gensch, Jr. Emerson J. Hilton Gary L Kelterborn Chantez P Knowles Mary Jo Lawrie Jason M Milstone Rhonda M Morris Deborah A Moss* Michael C. Rampe Scott J Sinkwitts Adam C Smith Theresa A G Staley Janae M Thayer Anne M Uitvlugt Aaron L Vorce Attorney RE: Case No. U-18010 In the Matter of the Application of CONSUMERS ENERGY COMPANY for Approval of Amendments to Gas Transportation Contracts Pursuant to 1929 PA 9, as amended. Dear Ms. Kale: Enclosed for electronic filing in the above-captioned case, please find Consumers Energy Company s Petition for Rehearing and Conditional Withdrawal. This is a paperless filing and is therefore being filed only in PDF. I have also enclosed a Proof of Service showing electronic service of this filing and the accompanying workpapers upon the parties. Sincerely, Theresa A.G. Staley cc: Hon. Sharon L. Feldman, Administrative Law Judge Parties per Attachment 1 to the Proof of Service fl0119-1-230
S T A T E O F 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 ) Approval of Amendments to ) Case No. U-18010 Gas Transportation Contracts Pursuant to ) 1929 PA 9, as amended ) ) CONSUMERS ENERGY COMPANY S PETITION FOR REHEARING AND CONDITIONAL WITHDRAWAL Pursuant to Rule 437 of the Michigan Administrative Hearing System s Rules of Practice and Procedure before the Michigan Public Service Commission ( MPSC or the Commission ), Mich Admin Code R 792.10437, Consumers Energy Company ( Consumers Energy or the Company ) files this Petition for Rehearing of the Commission s December 20, 2018 Order ( Rehearing Petition ), which required the Company, within 30 days, to choose to either withdraw its October 22, 2018 Notice of Withdrawal of Application ( Notice of Withdrawal ) (and proceed with the revised application), or have the notice of withdrawal be granted, at which time the matter would be dismissed with prejudice. As discussed in further detail below, this filing also serves as Consumers Energy s conditional withdrawal of its October 22, 2018 Notice of Withdrawal, contingent upon the outcome of the Rehearing Petition. Specifically, Consumers Energy s Rehearing Petition seeks clarification from the Commission regarding the meaning and specific consequences of a dismissal with prejudice. Based on a review of the Commission s December 20, 2018 Order ( December 20, 2018 Order ), Consumers Energy is unable to determine which option to elect because the December 20, 2018 Order does not specify what rights the Company would be waiving if it allowed the withdrawal to continue to a dismissal with prejudice. Thus, Consumers Energy pe0119-1-224 1
requests rehearing due to the potential unintended consequences arising out of the Commission s December 20, 2018 Order as it relates to the future rights the Company may or may not be waiving if the matter is dismissed with prejudice. In support of this Rehearing Petition, Consumers Energy states as follows: I. STANDARDS FOR REHEARING The Commission s standards concerning rehearing petitions are well-known and have been consistently applied for many years. MPSC Rule 437(1) states the standards for filing a petition for rehearing: A petition for rehearing based on a claim of error shall specify all findings of fact and conclusions of law claimed to be erroneous with a brief statement of the basis of the error. A petition for rehearing based on a claim of newly discovered evidence, on facts or circumstances arising subsequent to the close of the record, or on unintended consequences resulting from compliance with the decision or order shall specifically set forth the matters relied upon. Mich Admin Code R 792.10437(1). The Commission has indicated that an application for rehearing is not merely another opportunity for a party to argue a position or to express disagreement with the Commission s decision. MPSC Case No. U-13917, August 1, 2005 Order, page 4. Additionally, the Commission has stated that [u]nless a party can show the decision to be incorrect or improper because of errors, newly discovered evidence, or unintended consequences of the decision, the Commission will not grant a rehearing. MPSC Case No. U-13716, October 14, 2004 Order, page 2. The Commission reaffirmed the above standards in MPSC Case No. U-16045 as follows: Rule 403 1 provides that a petition for rehearing may be based on claims of error, newly discovered evidence, facts or circumstances arising after the hearing, or unintended consequences resulting 1 MPSC Rule 403 has been replaced by Rule 437 of the Michigan Administrative Hearing System s Administrative Hearing Rules. The language of the rule has remained unchanged. pe0119-1-224 2
from compliance with the order. A petition for rehearing is not merely another opportunity for a party to argue a position or to express disagreement with the Commission s decision. Unless a party can show the decision to be incorrect or improper because of errors, newly discovered evidence, or unintended consequences of the decision, the Commission will not grant a rehearing. MPSC Case No. U-16045, April 26, 2011 Order, page 4 (footnote omitted). Consumers Energy s Rehearing Petition meets the standards for rehearing as it establishes possible unintended consequences arising out of a dismissal with prejudice. II. ARGUMENT A. Clarification Of Facts In reviewing the December 20, 2018 Order, the Commission begins by providing some procedural highlights of this case. Unfortunately, while this case has been characterized as a three-year case, it is important to note that there were two distinct time periods for this case and it has not, in fact, been an ongoing case for three years. The first active time period for this case was the 7-month period from the time of the Company s original filing on December 21, 2015, to the time when both parties filed a Joint Motion for Stay of Proceedings on July 28, 2016. During that time, Midland Cogeneration Limited Partnership ( MCV ) commenced discovery on March 22, 2016, filed a Motion for Partial Summary Disposition (which was denied on June 21, 2016), and filed an appeal of that decision (which requested relief was also denied on July 22, 2016). No testimony was ever filed. A second Joint Motion for Stay of Proceedings was filed on October 10, 2016, and the schedule was formally suspended by agreement of the parties on December 27, 2016. This case then remained inactive for the entirety of 2017 and four months of 2018 while the parties engaged in settlement discussions. When settlement discussions were not successful, the parties resumed this matter on April 30, 2018, when a new scheduling memo was issued and new consensus schedule established which provided for a revised application to pe0119-1-224 3
be filed by the Company on or before July 13, 2018. This revision was necessary as so much time had passed between the original filing and the resumption of the case that the resumption essentially became a new case. Thus, between April 30, 2018, when the new schedule was established and the time the Company sought to withdraw its case on October 22, 2018, less than seven months had elapsed. B. Procedural Concerns For reasons not clear to the Company, MCV was permitted to file a response to the Company s withdrawal, and the MPSC Staff was also permitted to file a response. The Company, however, was given no express opportunity to reply to those responses. Thus, MCV was permitted to make substantive arguments to the Commission, without a corresponding evidentiary or record basis, which were considered by the Commission in its October 20, 2018 Order, but the Company was not given equal due process consideration. In an effort to bring attention to some of its concerns over MCV s response, the Company filed its reply to MCV s response on November 19, 2018. Although the Commission criticized the Company for a lack of justification for its withdrawal, the Commission did not design its request for comment/response to the Company s withdrawal in a manner that sought a basis for the Company s withdrawal or gave the Company an opportunity to present its basis. In fact, the Company was effectively foreclosed from providing any information to the Commission and, correspondingly, its reply to MCV s arguments was expressly not taken into consideration in the rendering of [the Commission s October 20, 2018 Order]. C. Need To Clarify Impact Of Order A dismissal with prejudice operates to bar any refiling of the claim that was dismissed. North v Dept of Mental Health, 427 Mich 659, 661; 397 NW2d 793 (1986). In the Company s pe0119-1-224 4
Amended Application, Consumers Energy made three specific claims for relief: (i) to increase the demand charge established in the parties Firm Gas Exchange Agreement from $0.121076 per Dth/Day to $0.3023 per Dth/Day and eliminate the commodity charge and to increase the demand charge established in the parties Interruptible Gas Exchange Agreement from $0.118083 per Dth to $0.3023 per Dth; (ii) to increase the retained gas (Gas-in-Kind) requirement from 0.3497% in the Firm Gas Exchange Agreement and 0.15% in the Interruptible Gas Exchange Agreement to 2.68% for both agreements; and (iii) to amend the terms of service in both Agreements to require MCV (rather than Consumers Energy) to maintain gas usage/delivery for its firm and interruptible maximum daily volume quantities at a uniform hourly rate under each contract, and the schedule requirements that MCV provide an hourly and daily schedule of gas needs at least 8 hours prior to the start of each Gas Day and that MCV incur a cost adjustment when it exceeds the uniform hourly rate. These claims were based on the facts and circumstances existing on July 13, 2018 (the date of the Amended Application) and discussed in the Amended Application. Consumers Energy submits that, pursuant to applicable law, it is these specific claims based on the facts and circumstances existing at the time the case was filed and no others that the Company would be barred from refiling in a future Application. For example, if a change in future circumstances warranted consideration of an increase in the rates in the agreements, dismissal with prejudice in this case would not bar the Company from filing a future claim for rate relief based on new facts and circumstances. To the extent that the Commission s December 20, 2018 Order dismissing this case with prejudice meant only to apply prejudice to the specific claims made in the Company s July 13, 2018 Amended Application, as identified in the last paragraph, Consumers Energy is prepared to accept the dismissal with prejudice. pe0119-1-224 5
However, in MCV s November 13, 2018 Response to the Company s Notice of Withdrawal ( Response ), MCV requested that the Commission grant Consumers Energy s withdrawal conditioned on the relief provided being With Prejudice to Consumers Energy Company seeking the specific relief requested in this case again for the duration of the Act 9 contracts. Response, page 6, paragraph (i) (emphasis added). This language seems to imply that MCV was asking the Commission to bar Consumers Energy from seeking the same relief as set forth in the Amended Application even if there were new facts and circumstances in the future supporting a subsequent claim. That is not what the law requires. In some parts of its Response, MCV also characterized the relief sought by Consumers Energy in this case very broadly as seeking to change terms and conditions of the Act 9 Contracts and an increase in the rates and charges under those contracts. Response, page 4. But, again, a dismissal with prejudice should not bar any and all future rate claims for an increase in rates and charges. It should only serve to bar, for example, the specific rate claim made in this case (e.g., increasing the demand charge to $0.3023 per Dth/Day in the Firm Gas Exchange Agreement and to $0.3023 per Dth in the Interruptible Gas Exchange Agreement) based on the facts that supported that change in this case. If the Company were to propose a different rate increase in a future filing based on different facts and circumstances, it would not be appropriate to bar that filing based on the application of prejudice to the dismissal of this case. Additionally, in various places in its Response, MCV characterized the effect of dismissing this case with prejudice as establishing a condition that bars Consumers Energy from renewing its request to modify the terms of the Act 9 Contracts limiting service to MCV in the manner requested in this case. See, e.g., Response, page 5. However, that characterization is also incorrect because Consumers Energy did not propose a modification to the Act 9 contracts pe0119-1-224 6
at issue in this case that would limit service to MCV. Both Act 9 contracts at issue in this case already include a limitation on the volume of gas MCV is entitled to receive from Consumers Energy. The Firm Gas Exchange Agreement limits gas deliveries to 210,000 Dth/day and the Interruptible Gas Exchange Agreement limits gas deliveries to a cumulative total of 350,000 Dth/day (i.e., 140,000 Dth/day net of the 210,000 in the Firm Gas Exchange Agreement), and both Act 9 contracts include the following limiting language: The gas to be exchanged hereunder shall be received and redelivered, as nearly as practicable, at uniform hourly and daily rates of flow, but it is recognized that, due to operating conditions, the quantities of gas received and redelivered may not be in balance on any one particular day. See Article III, paragraph 5, of both Act 9 contracts. MCV itself concurs that the contractual hourly rate-of-flow limits are in the Act 9 contracts and, further, that the control of flow provision found in the operational section of the Act 9 contracts is applicable to Consumers Energy thus, giving Consumers Energy the responsibility (and the right) to control the flow of gas to a uniform hourly rate under the Act 9 contracts. See prefiled testimony of MCV witness Richard G. Smead submitted to the Commission s e-docket in this case on September 10, 2018, page 25. However, while the Company has, for years, made oral and written requests that MCV maintain the uniform hourly flow of gas provided in the Act 9 contracts in an effort to assert and enforce that right, MCV has consistently resisted, and even overtly disregarded, every effort Consumers Energy has made to enforce this articulated pre-existing limit in the Act 9 contracts and Consumers Energy s right to control those limits. 2 Thus, at every turn, MCV has denied the Company its authority, under the Act 9 contracts, to control the hourly flow of gas. Because MCV was consistently denying the Company the right to enforce the uniform hourly flow of gas 2 Mr. Smead s testimony is the first time that MCV has acknowledged that the operational section of the Act 9 contracts applies to Consumers Energy. That acknowledgement essentially comes with an admission that Consumers Energy has the responsibility to control the flow of gas to a uniform hourly rate. pe0119-1-224 7
limitation in the Act 9 contracts, the Company, in its Amended Application, sought to shift the contractual obligation from Consumers Energy to MCV itself in yet one more effort to enforce the uniform hourly flow provision of the Act 9 contracts. Hence, contrary to the characterization in MCV s Response, it is clear that the establishment of new limits on MCV s gas service under the Act 9 contracts was not one of the claims raised by Consumers Energy in this case and is not one of the claims that should be subject to prejudice in any subsequent proceeding. In its December 20, 2018 Order, the Commission did not address or discuss with specificity what claims it was treating as subject to prejudice in future filings. Absent the statements discussed above that were included in MCV s Response, the Company believes it would be clear that the Commission s application of prejudice to the Company s withdrawal in this case would be appropriately limited to the three specific claims raised in the Company s Amended Application. But, MCV s broad and inaccurate re-characterization of the claims raised by the Company s Amended Application, which were not addressed in the Commission s December 20, 2018 Order, now creates significant uncertainty about what the Company would be accepting if it chose to proceed with a dismissal with prejudice in this case. To the extent that the Commission intended to adopt MCV s broad and inaccurate re-characterization of the claims subject to prejudice in this case, Consumers Energy hereby withdraws its October 22, 2018 Notice of Withdrawal in this case. However, to the extent that the Commission intended to limit its application of prejudice to only the three specific issues included in the Company s Amended Application and identified above, Consumers Energy agrees to accept the Commission s dismissal with prejudice. Absent Commission clarification regarding the nature of the claims to be treated with prejudice hereafter, Consumers Energy is unable to determine what it is ultimately being asked to agree to. pe0119-1-224 8
Without clarification regarding what results from a dismissal with prejudice, there is a significant risk that the Commission s December 20, 2018 Order could result in consequences that were wholly unintended by the Commission. Even if the Commission possessed a clear intent at the time it issued its Order to apply prejudice strictly to the claims actually contained in the Company s Amended Application consistent with the law, MCV s Response could create confusion for future Administrative Law Judges or for future courts, tribunals, or other practitioners called upon to determine whether subsequent claims in new or different cases are barred by the Commission s December 20, 2018 Order. These unintended consequences can only be rectified by a further Commission Order clarifying specifically what claims will be subject to prejudice in future proceedings. III. CONCLUSION AND REQUEST FOR RELIEF Therefore, Consumers Energy Company respectfully requests the Michigan Public Service Commission to grant rehearing of the December 20, 2018 Order and clarify its Order to avoid the potential unintended consequences that will result from it. Specifically, the Company requests that the Commission specify the claims it intends to preclude in future proceedings from such a dismissal with prejudice, and grant the Company any other relief the Commission deems appropriate. Furthermore, this filing operates as the Company s conditional withdrawal of its October 22, 2018 Notice of Withdrawal; thus, if the Commission grants rehearing and expressly limits its application of prejudice to only the three specific issues included in the Company s Amended Application and identified above, then the Company accepts the dismissal with prejudice. If, however, the Commission denies rehearing in this proceeding or if the Commission grants rehearing and adopts MCV s characterization of the claims to be subject to prejudice as a result of the Commission s December 20, 2018 Order, then the Company pe0119-1-224 9
withdraws its October 22, 2018 Notice of Withdrawal and requests a prehearing be established for purposes of establishing a new schedule in this case. Respectfully submitted, CONSUMERS ENERGY COMPANY Dated: January 18, 2019 By: Theresa A.G. Staley (P56998) Robert W. Beach (P73112) One Energy Plaza Jackson, Michigan 49201 Attorney for Consumers Energy Company (517) 788-0677 pe0119-1-224 10
S T A T E O F 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 ) Approval of Amendments to ) Case No. U-18010 Gas Transportation Contracts Pursuant to ) 1929 PA 9, as amended ) ) STATE OF MICHIGAN ) ) SS COUNTY OF JACKSON ) PROOF OF SERVICE Melissa K. Harris, being first duly sworn, deposes and says that she is employed in the Legal Department of Consumers Energy Company; that on January 18, 2019, she served an electronic copy of Consumers Energy Company s Petition for Rehearing and Conditional Withdrawal upon the persons listed in Attachment 1 hereto, at the e-mail addresses listed therein. She further states that she also served a hard copy of the same document upon the Hon. Sharon L. Feldman at the address listed in Attachment 1 hereto by depositing the same in the United States mail in the City of Jackson, Michigan, with first-class postage thereon fully paid. Melissa K. Harris Subscribed and sworn to before me this 18 th day of January, 2019. Crystal L. Chacon, Notary Public State of Michigan, County of Ingham My Commission Expires: 05/25/24 Acting in the County of Jackson ps0119-1-232
Administrative Law Judge Hon. Sharon L. Feldman Administrative Law Judge 7109 West Saginaw Highway Post Office Box 30221 Lansing, MI 48909 E-Mail: feldmans@michigan.gov Counsel for the Michigan Public Service Commission Staff Amit T. Singh, Esq. Assistant Attorney General Public Service Division 7109 West Saginaw Highway Post Office Box 30221 Lansing, MI 48909 E-Mail: singha9@michigan.gov Counsel for Midland Cogeneration Venture Limited Partnership ( MCV ) Richard J. Aaron, Esq. Jason T. Hanselman, Esq. Dykema Gossett, PLLC 201 Townsend Street, Suite 900 Lansing, MI 48933 E-Mail: raaron@dykema.com jhanselman@dykema.com Charles E. Dunn, Esq. Midland Cogeneration Venture LP 100 East Progress Place Midland, MI 48460 E-Mail: cedunn@midcogen.com ATTACHMENT 1 TO CASE NO. U-18010 sl0817-1-210