October 11, Ms. Kavita Kale Executive Secretary Michigan Public Service Commission 7109 W. Saginaw Highway Lansing, Michigan 48917

Similar documents
October 4, Ms. Kavita Kale Executive Secretary Michigan Public Service Commission 7109 W. Saginaw Highway Lansing, Michigan 48917

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

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

STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION REPLY BRIEF OF THE RESIDENTIAL CUSTOMER GROUP

STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION

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

March 28, Ms. Kavita Kale Executive Secretary Michigan Public Service Commission 7109 W. Saginaw Highway Lansing, Michigan 48917

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

November 1, 2018 VIA ELECTRONIC CASE FILING

STATE OF MICHIGAN DEPARTMENT OF ATTORNEY GENERAL BILL SCHUETTE ATTORNEY GENERAL. November 16, 2018

STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION

Miller, Canfield, Paddock and Stone, P.L.C. One Michigan Avenue, Suite 900 Lansing, Michigan TEL (517) FAX (517)

S T A T E O F M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * QUALIFICATIONS AND DIRECT TESTIMONY OF NICHOLAS M.

Miller, Canfield, Paddock and Stone, P.L.C. One Michigan Avenue, Suite 900 Lansing, Michigan TEL (517) FAX (517)

February 1, Enclosed for electronic filing is Michigan Gas Utilities Corporation s Revised Exhibit A-16 (GWS-1) in the case mentioned above.

Miller, Canfield, Paddock and Stone, P.L.C. One Michigan Avenue, Suite 900 Lansing, Michigan TEL (517) FAX (517)

Miller, Canfield, Paddock and Stone, P.L.C. One Michigan Avenue, Suite 900 Lansing, Michigan TEL (517) FAX (517)

201 North Washington Square Suite 910 Lansing, Michigan June 7, 2017

FISCHER, FRANKLIN & FORD Attorneys and Counsellors GUARDIAN BUILDING, SUITE GRISWOLD STREET DETROIT, MICHIGAN

November 27, Dear Ms. Kale:

January 19, Kavita Kale Executive Secretary Michigan Public Service Commission 7109 West Saginaw Highway 3rd Floor Lansing, MI 48917

STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION. (e-file paperless) related matters. /

2 BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION

Miller, Canfield, Paddock and Stone, P.L.C. One Michigan Avenue, Suite 900 Lansing, Michigan TEL (517) FAX (517)

This is a paperless filing and is therefore being filed only in PDF. I have enclosed a Proof of Service showing electronic service upon the parties.

Miller, Canfield, Paddock and Stone, P.L.C. One Michigan Avenue, Suite 900 Lansing, Michigan TEL (517) FAX (517)

June 8, Enclosed find the Attorney General s Direct Testimony and Exhibits and related Proof of Service. Sincerely,

Miller, Canfield, Paddock and Stone, P.L.C. One Michigan Avenue, Suite 900 Lansing, Michigan TEL (517) FAX (517)

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

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

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

June 27, 2018 VIA ELECTRONIC CASE FILING

Miller, Canfield, Paddock and Stone, P.L.C. One Michigan Avenue, Suite 900 Lansing, Michigan TEL (517) FAX (517)

STATE OF MICHIGAN COURT OF APPEALS

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

GILLARD, BAUER, MAZRUM, FLORIP, SMIGELSKI & GULDEN ATTORNEYS AT LAW 109 E. CHISHOLM STREET ALPENA, MICHIGAN March 29, 2018

STATE OF MICHIGAN DEPARTMENT OF ATTORNEY GENERAL BILL SCHUETTE ATTORNEY GENERAL. August 8, 2016

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

STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION. In the matter of the application of Case No. U CONSUMERS ENERGY COMPANY

January 19, Dear Ms. Kale:

STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION. In the matter of the application of Case No. U UPPER PENINSULA POWER COMPANY

Reply Brief on behalf of the Environmental Law & Policy Center, the Ecology Center, the Union of Concerned Scientists, and Vote Solar.

201 North Washington Square Suite 910 Lansing, Michigan Timothy J. Lundgren Direct: 616 /

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

STATE OF MICHIGAN COURT OF APPEALS

STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION REPLY BRIEF OF THE GREAT LAKES RENEWABLE ENERGY ASSOCIATION

STATE OF MICHIGAN DEPARTMENT OF ATTORNEY GENERAL MIKE COX ATTORNEY GENERAL. November 10, 2010

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

STATE OF MICHIGAN DEPARTMENT OF ATTORNEY GENERAL BILL SCHUETTE ATTORNEY GENERAL. May 24, 2018

STATE OF MICHIGAN COURT OF APPEALS

February 21, Sincerely,

August 3, Ms. Kavita Kale Executive Secretary Michigan Public Service Commission 7109 West Saginaw Highway Lansing, Michigan 48917

STATE OF MICHIGAN MICHIGAN PUBLIC SERVICE COMMISSION ) ) ) ) ) PETITION TO INTERVENE OF THE ENVIRONMENTAL LAW & POLICY CENTER

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

STATE OF MICHIGAN DEPARTMENT OF ATTORNEY GENERAL BILL SCHUETTE ATTORNEY GENERAL. January 4, 2018

v No MPSC MICHIGAN PUBLIC SERVICE COMMISSION LC No and MICHIGAN CABLE TELECOMMUNICATIONS ASSOCIATION,

Consumers Energy Company Credit B Interest Calculation Short Term Interest Rates Six Month Refund For Residential Gas Rates A and A 1

2 BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION. 8 Proceedings held in the above-entitled. 9 matter before Suzanne D. Sonneborn, Administrative

GILLARD, BAUER, MAZRUM, FLORIP, SMIGELSKI & GULDEN ATTORNEYS AT LAW 109 E. CHISHOLM STREET ALPENA, MICHIGAN May 12, 2015

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

STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION

If this opinion indicates that it is FOR PUBLICATION, it is subject to revision until final publication in the Michigan Appeals Reports.

August 15, Ms. Kavita Kale Executive Secretary Michigan Public Service Commission 7109 W. Saginaw Highway Lansing, Michigan 48917

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

153 FERC 61,248 UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION

Miller, Canfield, Paddock and Stone, P.L.C. One Michigan Avenue, Suite 900 Lansing, Michigan TEL (517) FAX (517)

June 19, Ms. Kavita Kale Michigan Public Service Commission 7109 W. Saginaw Hwy. P. O. Box Lansing, MI RE: MPSC Case No.

STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION

STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION. Attorney General s Reply Brief

STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * *

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

STATE OF MICHIGAN COURT OF APPEALS

BEFORE THE PUBLIC UTILITY COMMISSION OF OREGON ) ) ) ) ) UE 335 INTRODUCTION AND SUMMARY

Miller, Canfield, Paddock and Stone, P.L.C. One Michigan Avenue, Suite 900 Lansing, Michigan TEL (517) FAX (517)

STATE OF WISCONSIN TAX APPEALS COMMISSION 06-S-200, 06-S-201, 06-S-202 AND 07-S-45 DAVID C. SWANSON, COMMISSIONER:

S T A T E O F M I C H I G A N C O U R T O F A P P E A L S

Attached for electronic filing in the above-referenced matter is Michigan Consolidated Gas Company s Initial Brief and a Proof of Service.

Miller, Canfield, Paddock and Stone, P.L.C. One Michigan Avenue, Suite 900 Lansing, Michigan TEL (517) FAX (517)

STATE OF MICHIGAN COURT OF APPEALS

BEFORE THE PUBLIC SERVICE COMMISSION OF THE STATE OF DELAWARE

August 29, 2018 VIA ELECTRONIC CASE FILING

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

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

Short Form Instructions

April 12, Ms. Kavita Kale Executive Secretary Michigan Public Service Commission 7109 West Saginaw Highway Lansing, Michigan 48917

STATE OF MICHIGAN DEPARTMENT OF ATTORNEY GENERAL BILL SCHUETTE ATTORNEY GENERAL. June 5, 2017

STATE OF MICHIGAN COURT OF APPEALS

May 24, Attached for electronic filing in the above captioned matter is DTE Gas Company s Initial Brief. Also attached is the Proof of Service.

STATE OF MICHIGAN COURT OF APPEALS

August 1, Dear Ms. Kale:

STATE OF MICHIGAN COURT OF APPEALS

STATE OF MICHIGAN COURT OF APPEALS

IN THE SUPREME COURT OF MISSISSIPPI CONTINENTAL CASUALTY COMPANY. v. No CA ALLSTATE PROPERTY AND CASUALTY INSURANCE COMPANY

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

STATE OF MICHIGAN DEPARTMENT OF ATTORNEY GENERAL BILL SCHUETTE ATTORNEY GENERAL. February 12, 2013

STATE OF MICHIGAN COURT OF APPEALS

STATE OF MICHIGAN COURT OF APPEALS

STATE OF WISCONSIN TAX APPEALS COMMISSION. Petitioner, RULING AND ORDER GRANTING MOTION FOR PARTIAL SUMMARY WISCONSIN DEPARTMENT OF REVENUE

Cliffs Natural Resources Announces New Energy Agreement with WEC Energy Group for its Tilden Mine in Michigan

Miller, Canfield, Paddock and Stone, P.L.C. One Michigan Avenue, Suite 900 Lansing, Michigan TEL (517) FAX (517)

Transcription:

DTE Gas Company One Energy Plaza, 1635 WCB Detroit, MI 48226-1279 Lauren D. Donofrio (313) 235-4017 lauren.donofrio@dteenergy.com October 11, 2018 Ms. Kavita Kale Executive Secretary Michigan Public Service Commission 7109 W. Saginaw Highway Lansing, Michigan 48917 RE: In the matter on the Commission s own motion, to consider changes in the rates of all the Michigan rate-regulated electric, steam, and natural gas utilities to reflect the effects on the federal Tax Cuts and Jobs Act of 2017: DTE Gas Company files an application for determination of Credit B as described in orders U-18494 and U-20106 MPSC Case No: U-20189 Dear Ms. Kale: Attached for electronic filing in the above captioned matter is DTE Gas Company s Reply Brief. Also attached is the Proof of Service. Very truly yours, LDD/lah Attachments Lauren D. Donofrio cc: Service List

STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the matter on the Commission s own ) motion, to consider changes in the rates ) of all the Michigan rate-regulated ) electric, steam, and natural gas utilities ) to reflect the effects of the federal Tax ) Cuts and Jobs Act of 2017: ) ALPENA POWER COMPANY, CONSUMERS ) ENERGY COMPANY, DETROIT THERMAL, LLC ) DTE ELECTRIC COMPANY, DTE GAS COMPANY, ) INDIANA MICHIGAN POWER COMPANY, ) Case No. U-18494 NORTHERN STATES POWER COMPANY- ) WISCONSIN, UPPER PENINSULA POWER ) COMPANY, UPPER MICHIGAN ENERGY ) RESOURCES CORPORATION, ) WISCONSIN ELECTRIC POWER COMPANY ) PRESQUE ISLE ELECTRIC & GAS CO-OP, ) MICHIGAN GAS UTILITIES CORPORATION, and ) SEMCO ENERGY GAS COMPANY. ) In the matter on the Commission s own ) motion, to consider changes in the rates ) of all the Michigan rate-regulated ) electric, steam, and natural gas utilities ) to reflect the effects of the federal Tax ) Case No. U-20106 Cuts and Jobs Act of 2017: ) DTE GAS COMPANY files an ) application for determination of Credit A as ) described in order U-18494 ) In the matter on the Commission s own ) motion, to consider changes in the rates ) of all the Michigan rate-regulated ) electric, steam, and natural gas utilities ) to reflect the effects of the federal Tax ) Case No. U-20189 Cuts and Jobs Act of 2017: ) DTE GAS COMPANY files an ) application for determination of Credit B as ) described in order U-18494 ) DTE GAS COMPANY S REPLY BRIEF October 11, 2018

I. INTRODUCTION On October 4, 2018, DTE Gas Company (DTE Gas or Company), the Michigan Public Service Commission Staff (Staff), the Michigan Attorney General (AG), Association of Businesses Advocating Tariff Equity (ABATE), and Residential Customer Group (RCG) filed their respective initial briefs in this proceeding. DTE Gas and Staff are aligned in every aspect of the Credit B Refund as initially proposed by DTE Gas subject to Staff s modifications. However, the AG, ABATE, and RCG take issue with certain aspects of DTE Gas s modified Credit B Refund. First, the AG, ABATE, and RCG object to the length of DTE Gas s proposed time period for the Credit B Refund as recommended by Staff. Second, the AG and RCG object to the exclusion of Infrastructure Renewal Mechanism (IRM) revenue from the Credit B Refund. Third, RCG recommends applying an interest rate that reflects DTE Gas s 5.76% overall rate of return. Finally, RCG recommends applying the Credit B refund amounts to each customers actual gas consumption billed for the period of January 1, 2018 through June 30, 2018. For reasons discussed below, there is no merit to the intervenors positions. Therefore, the Michigan Public Service Commission (MPSC or Commission) should reject the intervenors objections or recommendations and approve DTE Gas s proposed Credit B Refund as modified by Staff. II. DISCUSSION As one of the intervenors pointed out (AG Initial Brief, pp. 4-5), the preponderance of the evidence standard is used for the burden of proof in administrative proceedings. 1 DTE Gas agrees. 1 Bunce, 239 Mich App at 218; Blue Cross & Blue Shield of Michigan v Governor, 422 Mich App 1, 89; 367 NW2d 1 (1985); Aquilina v General Motors Corp, 403 Mich 206, 210-211; 267 NW2d 923 (1978). 2

Preponderance of the evidence is generally defined as the burden of proof in which the trier of fact must find for the party that, on the whole, has the stronger evidence, however slight the edge may be. 2 Thus, although the Company bears the burden of proof in this proceeding for demonstrating that its proposal is reasonable and prudent, the applicable standard of proof for purposes of determining whether such proposal is reasonable and prudent is the preponderance of the evidence standard, which is a much lower standard than, for example, the beyond a reasonable doubt standard that is only applicable to criminal proceedings. 3 In summary, DTE Gas s proposed Credit B Refund, as modified by Staff, does not need to be perfect, but only reasonable and prudent as measured by the lightest of evidentiary standards. A. DTE GAS S PROPOSED SIX-MONTH TIME PERIOD FOR REFUNDING THE CREDIT B AMOUNT IS REASONABLE AND PRUDENT BY A PREPONDERANCE OF THE EVIDENCE As stated in its initial brief (DTE Gas Initial Brief, p. 3), DTE Gas has proposed a sixmonth timeframe from January 2019 through June 2019 for the refund of Credit B (2T 30). Furthermore, this six-month timeframe mirrors the six-month timeframe of January 2018 through June 2018 when DTE Gas customers earned the credit (2T 38). Staff fully supports this timeframe. (Staff Initial Brief, p. 5) However, the intervenors object on the basis that the Credit B refund should occur over a shorter time period. Specifically, the AG proposes a two-month timeframe (AG Initial Brief, pp. 5-15); ABATE supports either a one or two-month timeframe (ABATE Initial Brief, pp. 3-6); and RCG supports a prompt refund timeframe without providing any meaningful explanation or argument to explain the meaning of prompt refund. (RCG Initial 2 See Black s Law Dictionary 1301 (9th ed. 2009). 3 Thangavelu v Dep t of Licensing & Regulation, 149 Mich App 546, 554-555; 386 NW2d 584 (1986). 3

Brief, pp. 12-15) For reasons discussed below, neither the AG s, ABATE s, nor RCG s recommendations contain any merit. At the outset, both the AG and ABATE assert that timeframes shorter than six months should be approved for DTE Gas s Credit B refund because the Commission approved settlements that return Credit B refunds to ratepayers over a period of 3-5 months, starting in October 2018. (AG Initial Brief, p. 8; ABATE Initial Brief, p. 5) However, a review of each Commissionapproved settlement agreement shows that such agreements universally contain the following provision: Neither the parties to the settlement nor the Commission shall use this Settlement Agreement or the order approving it as precedent in any case or proceeding, except as necessary to carry out its terms. 4 (Emphasis added.) By the express language of the above provision in each of these settlement agreements, the Commission is barred from relying upon such settlement agreements as precedents for supporting a timeframe shorter than the six-month timeframe proposed by DTE Gas and supported by Staff. In fact, by citing these settlement agreements as binding precedents on this case, both the AG and ABATE have breached these settlement agreements. For this reason alone, the AG s and ABATE s objections to DTE Gas s proposed sixmonth time frame for the refund of the Credit B amount should be rejected. Moreover, assuming arguendo that these settlement agreements could provide precedent, none of them support the AG s or ABATE s proposed refund periods, which are shorter than the shortest Credit B refund time period in any of the settlement agreements. Moreover, these settlement agreements involved different utilities and payment over a different span of months. The six-month timeframe is 4 See In re Mich Gas Utilities Corp, MPSC Case No. U-20181, Order dated Sept. 28, 2018, Dkt. No. 13, Ex. A, 9; See also In re Northern States Power Co, MPSC Case No. U-20186, Order dated Sept. 28, 2018, Dkt. No. 70, Ex. A, 9; In re SEMCO Energy Gas Co, MPSC Case No. U-20182, Order dated Sept. 28, 2018, Dkt. No. 20, Ex. A, 9; In re Upper Mich Energy Resources Corp, MPSC Case No. U-20183, Order dated Sept. 28, 2018, Dkt. No. 12, Ex. A, 9; In re Alpena Power Co, MPSC Case No. U-20268, Order dated Sept. 28, 2018, Dkt. No. 23, Ex. A, 9. 4

necessary given the inclusion of the most volatile winter billing months in the period. Earlier settlements with other parties may have provided refunds during the summer or fall, for example, when usage is less volatile. Thus, even if it were proper to use prior settlements as precedent, they would nevertheless be distinguishable. Next, the AG relies upon Webster s Dictionary to take issue with Company witness Ms. Schmidt s interpretation of the word practicable. (AG Initial Brief, p. 9) However, the AG s reliance upon Webster s Dictionary in this instance is misplaced since any legal practitioner knows that a legal dictionary always trumps a non-legal dictionary in regard to the same word. In this instance, Black s Law Dictionary defines the word practicable as reasonably capable of being accomplished; feasible. 5 Moreover, Black s Law Dictionary further defines the word reasonable as [f]air, proper, or moderate under the circumstances. 6 In fact, Ms. Schmidt provided evidence regarding the circumstances that would render a six-month timeframe for the Credit B refund as reasonable or practicable (2T 38-39). Such evidence has already been summarized in DTE Gas s initial brief (DTE Gas s Initial Brief, p 3), so the Company will not belabor this point other than to address particular arguments primarily asserted by the AG. For instance, the AG argues that Ms. Schmidt reliance upon Staff s comments discouraging large annual fluctuations is misplaced because the AG s proposed two-month time frame is not annual. (AG Initial Brief, p. 10). Obviously, the AG s proposed time frame is not annual. However, on an annualized basis, the AG s proposed time frame causes greater fluctuation than DTE Gas s proposed six-month time frame. 5 See Black s Law Dictionary 1291 (9 th ed 2009). 6 See Black s Law Dictionary 1379 (9 th ed 2009). 5

Next, the AG contends that customers are just fine receiving money back over two months versus six months. (AG Initial Brief, p. 11) However, such contention is speculative in the absence of any testimony or affidavit from any customer. As the Commission knows, it cannot base its order upon speculation, 7 but only upon the evidentiary record. 8 Also, the AG belittles Ms. Schmidt s testimony that a shorter time period would result in cash volatility for investors. (AG Initial Brief, pp. 11-12.) Naturally, the AG cannot be expected to appreciate the investors concerns because the AG is not responsible for running a business that has fiduciary obligations, in part, to its investors as a matter of law. Nonetheless, Ms. Schmidt provided evidence how DTE Gas s rating was recently downgraded by Moody s Investors Service (2T 38; Exhibit A-8). Accordingly, the AG s dismissal of DTE Gas s concerns about cash volatility for investors is misinformed. In addition, the AG addresses Ms. Schmidt s four-part answer in support of the six-month time frame, but by this point the AG s arguments start to become redundant. Nevertheless, for completeness, the AG asserts that: 1. The Company s concerns about variations in weather could somehow be remedied by returning money to the customer who actually overpaid pursuant to RCG witness Mr. Peloquin s testimony. (AG Initial Brief, p. 13.) However, when one actually reviews the cited portion of Mr. Peloquin s testimony (2T 81), it is obvious that his testimony provides no basis whatsoever for the AG s point. 7 Ludington Service Corp v Comm r of Insurance, 444 Mich 481, 483, 494-97, 500-501, 507; 511 NW2d 661 (1994), amended 444 Mich 1240 (1994) (unanimously reversing agency decision that exceeded the limits of the agency s statutory authority, and that was based on speculation instead of the required competent, material and substantial evidence); In re Complaint of Pelland, 254 Mich App 675, 685-86; 658 NW2d 849 (2003); Battiste v Dep t of Social Services, 154 Mich App 486, 492; 398 NW2d 447 (1986) (holding that agency s decision was not supported by evidence that a reasonable person would consider adequate). 8 See MCL 24.285. 6

2. Next, the AG suggests that a shorter time frame than six months is achievable. (AG Initial Brief, p. 13.) However, the standard is not achievability, but whether a time frame is reasonable and prudent, and DTE Gas s proposed six-month time frame is based upon Ms. Schmidt s testimony and exhibits for reasons discussed above and in the Company s initial brief. 3. The AG further asserts that it is unsure why the Credit B amount should be refunded during the same six months (January through June) that the Credit B was incurred. However, Ms. Schmidt testified that weather variability has had a material impact on past refunds (2T 39). Although no one has a crystal ball in regard to weather, it is reasonable and prudent to assume that the variation in weather is more likely to be similar during the same six months than any other proposed time period, which is why DTE Gas proposed matching the six-month time frame for the Credit B refund with the same six months that the Credit B amount was incurred (2T 38). 4. The AG also asserts that DTE Gas s concern regarding large remainders is exaggerated due to the proposed process for eliminating under-refund or over-refund balances. (AG Initial Brief, p. 14.) However, Ms. Schmidt provided a real past historical example of how difficult it can be to eliminate remainder balances (2T 39). 5. Finally, the AG dismisses DTE Gas s concern regarding the administrative process for implementing the Credit B refund. Specifically, the AG contends that Ms. Schmidt provided no evidence. (AG Initial Brief, p. 14.) However, the AG overlooks the fact that Ms. Schmidt s sworn testimony regarding this subject constitutes competent material evidence (2T 41). The AG asserts that implementing the Credit B is an easy process. (AG Initial Brief, p. 15.) However, the AG does not have to implement the 7

Credit B refund; the Company does. And, the AG s witness does not have experience in actually implementing refunds, whereas Ms. Schmidt does. Therefore, the AG s assertions regarding this subject are misinformed. Finally, RCG generally supports the AG s and ABATE s arguments, which have been rebutted above. Therefore, DTE Gas s reply to the AG s and ABATE s arguments operate as a reply to RCG. However, RCG raises two additional points that merit additional discussion. First, RCG mischaracterizes DTE Gas s proposal to eliminate remainders as a reconciliation process. (RCG Initial Brief, p. 11.) However, such proposal is not a reconciliation process. Therefore, RCG s objection is misplaced. Second, RCG objects to DTE Gas s proposal that any minimal residual unrefunded amounts be donated to a charity of DTE Gas s choice. (RCG Initial Brief, p. 11.) However, RCG overlooks the fact that the goal is to eliminate remainders. Therefore, RCG s objection is also misplaced. Moreover, RCG provides no legal authority to support its proposal that any remainder in this case should be addressed in a future rate case (which overlooks the fact that a rate case may not be filed anytime soon) or GCR reconciliation case (RCG Initial Brief, p. 11), thereby requiring rejection in the absence of such authority. 9 In summary, none of the intervenors provide any credible evidence or arguments to show that DTE Gas has not met its burden of proof that a six-month time is a reasonable and prudent period for the refund of Credit B. Therefore, the Commission should reject the intervenors recommendations for a shorter time frame and approve DTE Gas s six-month timeframe. B. DTE GAS S EXCLUSION OF THE IRM FROM THE CREDIT B REFUND IS REASONABLE AND PRUDENT BY A PREPONDERANCE OF THE EVIDENCE The AG concedes that it cannot comprehend the Company s position for not applying the Credit B to the IRM. (AG Initial Brief, pp. 16-17.) However, Ms. Schmidt clearly explained that 9 Wilson v Taylor, 457 Mich 232, 243; 577 NW2d 100 (1998). 8

DTE Gas s IRM in place in January through June 2018 was developed using a revenue requirement for 2017 IRM spending. Credit A was calculated using the actual revenue requirement for 2018. It is appropriate to use this revenue requirement and related rates to determine the Credit B refunds. In its Case No. U-18999, DTE Gas proposed that new IRM surcharges would be implemented in January of each year rather than July, as they are currently done. Had implementation timing as proposed in Case No. U-18999 been in place for 2018, then Credit B would, appropriately, have resulted in refund amounts related to IRM revenues (2T 42-43). But, this did not occur. Ms. Schmidt also explained that as Exhibit A-2 shows, the surcharges in place from January 2018 through June 2018, for example $0.35 per residential customer, were less than the Credit A IRM surcharge, for example $1.10 per residential customer. Therefore, there are no IRM amounts required to be refunded due to the TCJA (2T 43). Finally, Ms. Schmidt further explained that the Credit A surcharge is higher because the IRM surcharges in effect from January 2018 through June 2018 reflect only 2017 IRM costs, not 2017 and 2018 IRM costs. The TCJA tax changes did not take effect until January 1, 2018. And, these January through June 2018 IRM actual surcharges (i.e. the amount DTE charged customers) were lower than the revenue requirement for the 2018 IRM investment due to the design of the IRM surcharge implementation in Case No. U-17999. The Credit A IRM surcharge for 2018 was calculated including 2017 and 2018 costs. It would be appropriate to provide a Credit B IRM refund if the Credit A IRM rate was less than the actual IRM surcharge for that time, which it is not. In other words, DTE charged customers less during January through July 2018 than the IRM rate that went into effect via the Credit A proceeding. It would be inappropriate to provide a credit related to the IRM when the surcharge at the time did not recover the costs of the IRM for that same period because the result would be a negative. The purpose of Credit B is to refund the 9

difference between what customers were actually charged and what they would have been charged if the Credit A rates had been in place since January 1. Since the Credit A IRM surcharge is higher than what customers were actually charged, no refund is owed. For example: Credit A IRM Surcharge: $1.10 Less Existing rates: $0.35 Total Credit: ($0.75) This number is still negative. The surcharge DTE Gas charged to customers would have had to have been higher than the Credit A IRM surcharge in order for DTE Gas to owe a Credit B refund (2T 43-44). RCG raises a new argument for the first time in briefs against DTE Gas s exclusion of the IRM from the Credit B refund. Specifically, RCG asserts that the Commission s June 28, 2018 order (U-20103 Order) in Consumer Energy s Credit A case provides legal authority against DTE Gas s above proposal. (RCG Initial Brief, pp. 4-5.) It is telling that RCG does not provide a pinpoint citation or quotation from the Commission s U-20103 Order to support its assertion. In fact, a review of the Commission s U-20103 Order shows that it provides no such legal authority applicable to DTE Gas s exclusion of the IRM from the Credit B refund. To the contrary, the Commission s U-20103 Order simply rejected RCG s attempt to address the alleged subsidization of certain customer classes vis-à-vis other customer classes. 10 Therefore, RCG s reliance upon the U-20103 Order is misplaced, thereby requiring rejection of RCG s objection to DTE Gas s exclusion of the IRM from the Credit B refund. Based on the foregoing, the AG and RCG have failed to show that DTE Gas has not carried its burden of proof that it is reasonable and prudent to omit the IRM from the Credit B refund. Accordingly, the Commission should reject the intervenors objections and approve the Company s Credit B refund without the IRM. 10 See In re Consumer Energy Co, MPSC Case No. U-20103, Order dated June 28, 2018, Dkt. No. xx, pp. 6-7. 10

C. DTE GAS HAS MET ITS BURDEN OF PROOF THAT ITS SHORT-TERM INTEREST RATE IS MORE APPROPRIATE THAN RCG S PROPOSED 5.76% OVERALL RATE OF RETURN RCG recommends that the Credit B refund be subject to the 5.76% overall rate of return that was in effect for January 1, 2018 through June 30, 2018 instead of DTE Gas s short term borrowing rate. (RCG Initial Brief, pp. 2-3.) However, no other party in this proceeding supports RCG s recommendation. In fact, Staff explicitly rejects RCG s recommendation (2T 54-55). Ms. Schmidt pointed out that RCG witness Mr. Peloquin provided no facts or rationale why the overall rate of return should be adopted instead of DTE Gas s short-term borrowing rate (2T 44). In contrast, Ms. Schmidt explained that the short-term interest rate, as measured by DTE Gas s actual commercial paper (CP), should be used to calculate Credit B interest amounts for two main reasons. First, in its February 2 comments, MPSC Staff, on page 4, recommends that the short-term interest rate be applied to any unrefunded Credit B amounts. DTE Gas made its proposal with the understanding that this recommendation was accepted by the Commission when it adopted the Staff s proposal in its February 22, 2018 order. Second, the impact of these revenues would be absorbed by DTE Gas s short-term commercial-paper borrowings. They would either increase the need for short-term debt or reduce that need. This interest rate is consistent with what is used to calculate self-implementation, RDM, and non-penalty GCR amounts. It is generally used to calculate interest on amounts DTE Gas has nominal ability to control (2T 45). RCG asserts that Staff s comments in Case No. U-18494 carry no precedential value under the Michigan Administrative Procedures Act, MCL 24.201, et seq ( APA ). (RCG Initial Brief, p. 3.) However, on this point, RCG provides no specific legal authority to support such assertion and instead invites the Commission to search the entire APA to sustain RCG s position. Such invitation must be rejected since it is well-settled law in Michigan that a party s statement without 11

authority is insufficient to bring an issue before a court. 11 It is not sufficient for a party to simply announce a position or assert an error and then leave it up to the court to discover and rationalize the basis for its claims, or unravel and elaborate for him his arguments, and then search for authority either to sustain or reject his position. 12 In any rate, even if Staff s comments in Case No. U-18494 carry no precedential value, they still nevertheless inform the Commission. Moreover, RCG never addresses Ms. Schmidt s second point discussed above. Thus, DTE Gas has shown by a preponderance of the evidence that the Company s short-term interest rate is the appropriate rate of interest to apply to the Credit B refunds. Accordingly, RCG s recommendation and objections should be rejected. D. RCG S HISTORICAL REFUND PROPOSAL SHOULD BE REJECTED IN THE ABSENCE OF ANY EVIDENCE OR LEGAL AUTHORITY TO SUPPORT SUCH PROPOSAL Finally, RCG proposes that historical refunding is more appropriate than the prospective refunding proposed by DTE Gas. (RCG Initial Brief, pp. 3-4.) However, as Ms. Schmidt pointed out, the Commission rejected this proposal on page 13 of its February 22, 2018 order in Case No. U-18494 ( February 22 Order ). RCG cites no evidence or legal authority to support its proposal or address why the Commission should revisit its February 22 Order. Therefore, the Commission should reject RCG s proposal pursuant to the Michigan Supreme Court s Wilson decision, supra. 13 III. CONCLUSION Based on the Company s evidence, exhibits, initial brief, and this reply brief, DTE Gas s proposed total refund amounts by rate schedule, refund period, and rates based on the proposed 11 Wilson v Taylor, 457 Mich 232, 243; 577 NW2d 100 (1998). 12 Id, citing, Mitcham v Detroit, 355 Mich 182, 203; 94 NW2d 388 (1959). 13 Wilson v Taylor, 457 Mich 232, 243; 577 NW2d 100 (1998). 12

refund period for Credit B, as modified by Staff and reflected in the attached revised tariff sheet (Attachment 1), should be approved as reasonable and prudent compared to any other alternative presented in the evidentiary record. Legal Department DTE GAS COMPANY Dated: October 11, 2018 BY: Attorney for Applicant Lauren DuVal Donofrio (P66026) David S. Maquera (P66228) One Energy Plaza, 1635 WCB Detroit, Michigan 48226 (313) 235-3724 13

ATTACHMENT 1

Case No.: U-20189 Exhibit: A-6 Revised Witness: J.C. Schmidt Page: 1 of 1 M.P.S.C. No. 1 Gas Revised Sheet No. D-2.00 DTE Gas Company Cancels Revised Sheet No. D-2.00 (Revised pursuant to Case No. U-20189) D2. SURCHARGES Rate Schedule Credit B Credit No. $/Mcf A Residential ($0.2210) 2A Residential Multiple Family Dwelling Class I ($0.2630) 2A Residential Multiple Family Dwelling Class II ($0.2630) GS-1 Non-Residential General Service ($0.2196) GS-2 Large Volume ($0.1505) <100,000 Mcf >100,000 Mcf S School ($0.1737) ST Small Volume Transportation ($0.1079) LT Large Volume Transportation ($0.0719) XLT Extra Large Volume Transportation ($0.0559) XXLT Double Extra Large Volume Transportation ($0.0232) The Credit B Credit is implemented on a bills rendered basis and is effective for a six billing month period commencing with the first billing cycle of the January 2019 billing month and ending with the final billing cycle of the June 2019 billing month. This is only the proposed incremental language for the Credit B Credit. This language would be added to the current Sheet D-2 in effect at the time the credit was approved. Because the credit(s) currently in effect may change between the time this sheet is proposed and its approval, only the language and rates at issue in this case are included. DTE Gas proposes this incremental language tariff to avoid confusion at the time of final tariff issuance. Issued, 201 Effective for bills rendered on and after the first billing cycle of D. M. Stanczak, 201_ billing month Vice President Regulatory Affairs Issued under authority of the Detroit, Michigan Michigan Public Service Commission Dated, 201_ In Case No. U-20189

STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the matter on the Commission s own ) motion, to consider changes in the rates ) of all the Michigan rate-regulated ) electric, steam, and natural gas utilities ) to reflect the effects of the federal Tax ) Case No. U-20189 Cuts and Jobs Act of 2017: ) DTE GAS COMPANY files an application ) for determination of Credit B as described ) in order U-18494 and 20106 ) STATE OF MICHIGAN ) ) ss. COUNTY OF WAYNE ) PROOF OF SERVICE ESTELLA BRANSON, being duly sworn, deposes and says that on the 11 th day of October, 2018, she served a copy of DTE Gas Company s Reply Brief, via electronic mail upon the persons listed on the attached service list. Subscribed and sworn to before me this 11 th day of October, 2018. ESTELLA BRANSON Lorri A. Hanner, Notary Public Wayne County, Michigan My Commission Expires: 4-20-2020 Acting in Wayne County 1

SERVICE LIST MPSC CASE NO. U-20189 ADMINISTRATIVE LAW JUDGE Honorable Sally L. Wallace Michigan Public Service Commission 7109 West Saginaw Highway Lansing, MI 48917 wallaces2@michigan.gov ABATE Bryan B. Brandenburg Michael J. Pattwell Clark Hill, PLC 212 East Cesar E. Chavez Avenue Lansing, MI 48906 bbrandenburg@clarkhill.com mpattwell@clarkhill.com MPSC STAFF ATTORNEYS Spencer A. Sattler Emily A. Jefferson 7109 West Saginaw Hwy, 3 rd Floor Lansing, MI 48917 sattlers@michigan.gov jeffersone1@michigan.gov RESIDENTIAL CUSTOMER GROUP Don L. Keskey Brian W. Coyer donkeskey@publiclawresourcecenter.com bwcoyer@publiclawresourcecenter.com Amanda M. Alderson BRUBAKER & ASSOCIATES, INC. 16690 Swingley Ridge Road, Suite 140 Chesterfield, MO 63017 aalderson@consultbai.com ATTORNEY GENERAL (ENRA) Joel B. King Assistant Attorney General G. Mennen Williams Bldg. 525 W. Ottawa Street, 6 th Floor P.O. Box 30755 Lansing, MI 48909 Kingj38@michigan.gov ag-enra-spec-lit@michigan.gov Sebastian Coppola, President Corporate Analytics 5928 Southgate Rd. Rochester, MI 48306 sebcoppola@corplytics.com