Dykema Gossett PLLC Capitol View 201 Townsend Street, Suite 900 Lansing, MI 48933 WWW.DYKEMA.COM Tel: (517) 374-9100 Fax: (517) 374-9191 Richard J. Aaron Direct Dial: (517) 374-9198 Direct Fax: (855) 230-2517 Email: [email protected]California | Illinois | Michigan | Minnesota | Texas | Washington, D.C. August 1, 2019 Barbara Kunkel Acting Executive Secretary Michigan Public Service Commission 7109 W Saginaw Highway Lansing, MI 48917 Re: Case No. U-20497 Dear Ms. Kunkel: Attached for filing in Case No. U-20497, please find the Joint Applicants’ PUBLIC version of Rebuttal Testimony and Exhibits. The confidential version will be hand delivered to the MPSC. Thank you. Sincerely, DYKEMA GOSSETT, PLLC Richard J. Aaron 100397.000999 4811-5663-6824.15
Transcript
Dykema Gossett PLLC Capitol View 201 Townsend Street, Suite 900 Lansing, MI 48933
WWW.DYKEMA.COM
Tel: (517) 374-9100
Fax: (517) 374-9191
Richard J. AaronDirect Dial: (517) 374-9198 Direct Fax: (855) 230-2517 Email: [email protected]
Cal i f orn ia | I l l ino is | Michigan | Minnesota | Texas | W ashington, D.C.
August 1, 2019
Barbara Kunkel Acting Executive Secretary Michigan Public Service Commission 7109 W Saginaw Highway Lansing, MI 48917
Re: Case No. U-20497
Dear Ms. Kunkel:
Attached for filing in Case No. U-20497, please find the Joint Applicants’ PUBLIC version of Rebuttal Testimony and Exhibits. The confidential version will be hand delivered to the MPSC.
Thank you.
Sincerely,
DYKEMA GOSSETT, PLLC
Richard J. Aaron
100397.000999 4811-5663-6824.15
STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
In the matter of the Application of ) MICHIGAN ELECTRIC TRANSMISSION ) COMPANY, LLC, WOLVERINE POWER ) SUPPLY COOPERATIVE, INC. and MIDWEST ) ENERGY & COMMUNICATIONS ) for an administrative determination regarding ) Case No. U-20497 the proper classification of certain facilities ) and to submit findings to the Federal Energy ) Regulatory Commission. ) ___________________________________________
PRE-FILED REBUTTAL TESTIMONY
OF
THOMAS E. KING JR
August 1, 2019
1
I. INTRODUCTION 1
Q. Please state your name and address for the record. 2
A. My name is Thomas E. King Jr. My business address is 10125 West Watergate Road, 3
Cadillac, Michigan 49601. 4
Q BY WHOM ARE YOU EMPLOYED AND IN WHAT CAPACITY? 5
A. I am the Director of Regulation and Policy for Wolverine Power Supply Cooperative, 6
Inc. (“Wolverine”); one of the Joint Applicants in this case. 7
Q. PLEASE SUMMARIZE YOUR EDUCATIONAL BACKGROUND. 8
A. I graduated cum laude with a Bachelor’s of Science degree in Electrical Engineering in 9
2008 from Michigan Technological University. In 2012, I earned my Professional 10
Engineer license for the State of Michigan. 11
Q. PLEASE SUMMARIZE YOUR BUSINESS EXPERIENCE. 12
A. From May 2008 until May 2013, I was employed by Wolverine as an Electrical 13
Engineer. My responsibilities as Electrical Engineer involved all facets of Wolverine’s 14
transmission planning activities. These activities included: providing power flow 15
analysis support for Wolverine’s Energy Control Center (“ECC”), performing the 16
power flow analysis for Wolverine’s planning studies, maintaining compliance with 17
North American Electric Reliability Corporation (“NERC”) standards, representing 18
Wolverine for ReliabilityFirst Corporation (“RF”) and Midcontinent Independent 19
System Operator, Inc. (“MISO”) studies, representing Wolverine at various RF and 20
MISO committees, and providing support to Wolverine’s Accounting Department for 21
updating the Included Transmission and Excluded Transmission asset records for the 22
Michigan Joint Zone (“MJZ”) and the annual MISO Attachment O preparation. In May 23
2
2013, I was promoted to my current position as Director of Regulation and Policy. In 1
this position, I am responsible for coordinating Wolverine’s regulatory affairs at the 2
federal level with the Federal Energy Regulatory Commission (“FERC”) and at the 3
state level with the Michigan Public Service Commission (“MPSC” or “Commission”). 4
I am also responsible for coordinating and advancing Wolverine’s policy positions at 5
MISO and elsewhere.6
Q. PLEASE EXPLAIN IN MORE DETAIL YOUR RESPONSIBILITIES IN YOUR 7
ROLE AS ELECTRICAL ENGINEER. 8
A. In my role as Electrical Engineer, I provided support to Wolverine’s ECC by 9
performing power flow analyses that would begin with the construction of power 10
models to mimic the expected conditions of the system. Once the models were built, I 11
would perform contingency analyses to determine the impact to Wolverine’s 12
transmission system for various contingency situations. Recommendations would then 13
be provided to Wolverine’s ECC based on the results of the analysis. Wolverine’s 14
planning studies followed the power flow analyses and took the planning process a step 15
further by incorporating additional variables such as, but not limited to, load growth 16
and changing generation profiles. These studies followed Wolverine’s internal 17
planning criteria and the planning criteria required by NERC’s reliability standards. I 18
was responsible for Wolverine’s compliance with NERC reliability standards related 19
to the Transmission Operator (“TOP”), Transmission Owner (“TO”), and Transmission 20
Planner (“TP”) functions. My participation in the RF and MISO studies involved 21
submitting model build data so that RF and MISO could perform independent annual 22
short-term seasonal assessments and long-term seasonal assessments, including 23
3
MISO’s Transmission Expansion Plan (commonly known as “the MTEP”) study. Next, 1
I would review the results of these studies and provide feedback to RF and MISO. I 2
represented Wolverine on RF’s Reliability Committee and MISO’s Planning Advisory 3
Committee, Planning Subcommittee, and Transmission Owner Committee. On an 4
annual basis, I would review and provide updates of Wolverine’s Included 5
Transmission and Excluded Transmission asset classification for purposes of cost 6
allocation in the MJZ and for preparation of Wolverine’s MISO Attachment O. 7
Q. Have you previously testified concerning classification assets as transmission? 8
A. Yes. I submitted testimony in Case No. U-17742 and was involved extensively in the 9
settlement arising in Case No. U-17598, in which Consumers Energy’s proposed 10
classification methodology was adopted. As explained in the purpose for my 11
testimony, Joint Applicants have applied in this present case the classification 12
methodology developed from the above two cases, while Staff (as evidenced by their 13
response to Joint Applicants’ First Discovery Request) and Consumers Energy have 14
not. 15
Q. What is the purpose of your testimony? 16
A. In my testimony, I rebut the prefiled direct testimony of the Michigan Public Service 17
Commission Staff (“Staff”) witness Zachary Heidemann and Consumers Energy 18
Company (“Consumers Energy”) witness Donald Lynd, as they purport to apply the 19
Seven Factor Test for determining whether the Morenci Project is a transmission 20
facility. More specifically, I demonstrate that Staff’s and Consumers Energy’s 21
witnesses fail to properly apply the FERC Order 888 Seven Factor Test consistent with 22
the methodologies and criteria developed originally for Consumers Energy in Case No. 23
4
U-11283, but which also have evolved over time beginning with the Commission’s 1
Revised Administrative Determination in Case No. U-13862 from which the Michigan 2
Joint Zone (“MJZ”) was created and further refined into today’s methodology during 3
the reclassification of assets by Consumers Energy and Wolverine in Case Nos. U-4
17598 and U-17742. In fact, it was Consumers Energy, in Case No. U-17598, who 5
indicated that industry changes have warranted the reclassification of their assets 6
because application of the Seven Factor Test is different than it was in Case No. U-7
11283. In addition, Staff’s and Consumers Energy’s witnesses fail to apply the 8
comparability requirement dictated by FERC when it approved the MJZ. FERC 9
requires consistent approaches for comparable existing and future facilities located in 10
the MJZ. I analyzed each of the seven factors, consistent with prior classifications, 11
involved in such a determination, and conclude, in contrast to Staff and Consumers 12
Energy, that the Morenci Project is properly classified as transmission. 13
Q. How is your rebuttal testimony organized? 14
A. My rebuttal testimony is organized to address Staff’s and Consumers Energy’s 15
testimony for each of the factors under the Seven Factor Test, including Factor One 16
(the proximity to retail customers), Factor Two (the radial character of the Morenci 17
Project), Factor Three (power flow), Factor Four (transport to other markets), Factor 18
Five (consumption in a geographically restricted area), Factor Six (locations of meters), 19
and Factor Seven (reduced voltage) of the Seven Factor Test. Although Joint 20
Applicants believe this case should be limited to the Seven Factor Test issues, Staff and 21
Consumers Energy have reached beyond the test and submitted testimony related, in 22
part, to whether the Morenci Project: (i) is a prudent investment relative to Midwest 23
5
Energy and Communications’ (“MEC’s”) load; and (ii) whether the Morenci Project 1
cost impact on Consumers Energy jurisdictional retail customers is an efficient or 2
appropriate cost for Consumers Energy to incur. 3
After reviewing Staff and Consumers Energy witnesses’ testimony and discovery 4
responses, I am even more convinced than I was previously that the Morenci Project is 5
properly classified as transmission under the Seven Factor Test. Furthermore, Staff 6
and Consumers Energy have not demonstrated that the Morenci Project is not 7
transmission. The Staff Witnesses and Mr. Lynd disregard the current methodology for 8
classification of the Morenci Project in the MJZ (including the fact that classification 9
of all facilities, new construction or pre-existing, shall consistently be treated using the 10
exact same methodology), apply engineering criteria either incorrectly or inconsistent 11
with past practice, and apply criteria that is not germane to classification (e.g. cost 12
allocation). 13
APPLICABLE STANDARDS 14
Q. What factors should be considered to differentiate transmission from local 15
distribution assets? 16
A. In Order No. 888, FERC held that it has exclusive jurisdiction over interstate 17
transmission of electric energy. To determine whether facilities should be classified as 18
transmission (subject to the jurisdiction of the FERC) or local distribution (subject to 19
state jurisdiction), FERC created a “Seven Factor Test” to differentiate transmission 20
from local distribution assets. Order No. 888 at 401-402. The seven factors are: (1) 21
local distribution facilities are normally in close proximity to retail customers; (2) local 22
distribution facilities are primarily radial in character; (3) power flows into local 23
6
distribution systems; it rarely, if ever, flows out; (4) when power enters a local 1
distribution system, it is not reconsigned or transported on to some other market; (5) 2
power entering a local distribution system is consumed in a comparatively restricted 3
geographical area; (6) meters are based at the transmission/local distribution interface 4
to measure flows into the local distribution system; and (7) local distribution systems 5
will be of reduced voltage. In addition to these seven factors, FERC stated that it would 6
also consider other factors as appropriate. 7
Q. Are there any other FERC requirements that would apply to this classification? 8
A. Yes. Under Order 888, when a public utility is engaged in wholesale transmission, 9
FERC has jurisdiction. FERC’s order indicates that a facility is transmission when its 10
primary function is to only transmit wholesale sales. The primary function of the 11
Morenci Project is to transmit bulk power (wholesale) to Wolverine (which Wolverine 12
resells at wholesale to MEC and which MEC then resells at retail to its customers). 13
MEC is a wholesale customer of Wolverine and the Morenci Project is transmission. 14
Also, FERC has also required that facility classifications, specifically in the Michigan 15
Joint Zone (“MJZ”), must be made on a comparable basis for all customers. Midwest 16
Independent Transmission System Operator, Inc., 106 FERC ¶ 61,219 at P53 (2004). 17
These are key requirements that both Staff and Consumers Energy witnesses fail to 18
take into account. 19
Q. Does the Morenci Project satisfy the Seven Factor Test for transmission? 20
A. Yes. The Morenci Project satisfies the Seven Factor Test for transmission and is 21
appropriately classified as transmission. As discussed below, the Morenci Project is 22
7
transmission under the functional/technical/regulatory tests relied upon by this 1
Commission in previous Seven Factor Test cases. 2
FERC has noted that Commission decisions should consistently apply the Seven Factor 3
Test to ensure comparable treatment for existing and future facilities between METC, 4
Consumers, Wolverine and Michigan Public Power Agency (“MPPA”) in the MJZ 5
(“MJZ Parties”). Consistent with the prior classifications for the MJZ Parties, the 6
Morenci Project must be classified as transmission. 7
Q. Do the Witnesses for Staff and Consumers treat the Morenci Project on a basis 8
comparable with previously classified transmission projects in the MJZ? 9
A. No. In his direct testimony, Witness Lynd specifies that he compares the Morenci 10
Project with Consumers 138kV radials that are classified as distribution. The 11
comparison of the Morenci Project to Consumers Energy’s own distribution facilities 12
is not meaningful because it is not called for under the Seven Factor Test. The 13
comparability test requires the Commission to compare the Morenci Project to other 14
transmission facilities. Witness Lynd is aware of comparable transmission facilities 15
from his work with Consumers Energy in Case No. U-17742, which classified 16
Wolverine lines operating at 69kV that were connected to 12.47kV networked systems 17
as transmission; and Case No. U-17598, which classified Consumers Energy’s 138kV 18
connected to 46kV lines as transmission. Those lines are no different (other than the 19
voltage level) than the Morenci Project. It is these facilities that are to be used to 20
determine whether the Morenci Project is a comparable facility. 21
8
ANALYSIS 1
FACTOR ONE: LOCAL DISTRIBUTION FACILITIES ARE NORMALLY IN CLOSE 2
PROXIMITY TO RETAIL CUSTOMERS3
Q. What criteria has been established in the Michigan Joint Zone for analyzing 4
Factor One? 5
A. In the most recent classification proceedings (Case No. U-17598 and Case No. U-6
17742) for the Michigan Joint Zone, the parties here, including Consumers, utilized a 7
geographic proximity test and an electrical proximity test. 8
During discovery, the Joint Applicants provided Exhibit JA-1 to Staff and Consumers 9
Energy to further support our direct testimony in this case. Exhibit JA-1 graphically 10
demonstrates that four (4) customers are located within a one mile radius of the 11
substation (the criteria developed for Michigan Joint Zone classifications). MEC’s 12
remaining customers (approximately 820) in the Morenci/Seneca area are located well 13
beyond the one mile radius. The Morenci Project will serve the four customers within 14
the one mile radius as well as a portion of the remaining 820 customers located beyond 15
the one mile radius. 16
In addition, the Joint Applicants testimony in this case provided an electrical proximity 17
test proving that the Morenci Project is electrically remote from the distribution system. 18
As such, the Joint Applicants have properly performed the geographic proximity test 19
and an electrical proximity test relying on the same criteria the Commission approved 20
when evaluating Factor One of the Seven Factor Test for the MJZ Parties previous 21
classifications and reclassifications. 22
9
Q. Staff witness Heidmann concludes that having a small number of customers 1
located near a substation is not incompatible with Morenci being distribution, is 2
this reflective a correct application of Factor One? 3
A. No. Witness Heidemann’s geographic proximity analysis is not a proper application 4
of the Factor One test for the Morenci Project. Although Witness Heidmann claims to 5
use the one mile radius criteria for Factor One originally established in Case No. U-6
11283, and consistently applied in classifications before the Commission, he 7
incorrectly analyzes aspects of MEC’s service territory to support the conclusion that 8
Factor One for the Morenci Project results in a distribution classification. His 9
testimony argues that the low percentage of MEC customers located within one mile 10
of the Morenci Project is consistent with MEC’s other substations because MEC is a 11
“rural electric and communication co-operative that serves a non-contiguous 12
geographic area.” This type of analysis goes well beyond the simple one-mile radius 13
criteria that has been used for over twenty years. His simple and inconsistent (or newly 14
created) analysis suggests that because MEC’s distribution system is rural in nature, 15
with MEC’s distribution customers being widely disbursed, the small number of 16
customers for the Morenci Project for Factor One is not meaningful for proximity 17
purposes. Rural electric cooperatives, and even Consumers Energy, have widely-varied 18
service areas and retail customer densities. In fact, the existence of the varied densities 19
is the reason a one mile radius was established as the defining criteria under Factor 20
One. The Commission must reject the Staff approach in this case or the existence of 21
the long-established one-mile radius becomes useless. 22
Q. Did the Staff witness apply an electrical proximity test?23
10
A. No. And Staff’s Witness did not provide any justification for not performing an 1
electrical proximity test. 2
Q. Why is the electrical proximity test important? 3
A. In Case No. U-17598, Consumers Energy’s Witness Lynd properly explained that “[a]n 4
electrical proximity analysis more fully takes into the account the locations of the 5
customers by comparing the impedance of the lines serving them. The impedance is 6
driven by the technical characteristics such as distance, transformer size, and number 7
and size of conductors.” In his direct testimony, Joint Applicants Witness Charles 8
Marshall provided the results of the electrical proximity analysis for the Morenci 9
Project, which identified that the Morenci Project is electrically comparable to 10
Consumers Energy’s transmission assets from Case No. U-17598. 11
Q. Did Consumers Energy Witness Lynd properly apply the Factor One Test to the 12
Morenci Project?13
A. No. Witness Lynd provides no discussion of the one-mile radius test for Factor One 14
and instead concludes that the Morenci Project is in close proximity to the MEC 15
customers to be served by applying a completely new set of criteria using a county-16
wide radius. MEC has six substations, five existing plus the proposed Morenci Project, 17
located in its Lenawee County footprint that, in total, serve almost 4,400 customers. As 18
stated above, only four (4) customers within the entire footprint are served within one 19
mile of the Morenci Project. Consumers’ proposed approach must be rejected because, 20
as in Staff’s case, this is an improper analysis for proximity. Like Staff’s witness, 21
witness Lynd also does not attempt an electrical proximity test that Consumers Energy 22
used to analyze its own facilities as transmission in Case No. U-17598. 23
11
FACTOR TWO: LOCAL DISTRIBUTION FACILITIES ARE PRIMARILY RADIAL IN 1
CHARACTER2
Q. Is the Morenci Project considered transmission under its proposed configuration? 3
A. Yes. Under current one-line diagram configurations, the Morenci Project is 4
transmission because the underlying distribution/sub transmission network can be 5
looped from other ties to the transmission or high-voltage distribution network. Exhibit 6
JA-1 provided to Staff and Consumers Energy during discovery depicts how MEC’s 7
12.47kV system is connected together. 8
Q. Can a facility that is characterized as radial be determined to be transmission? 9
A. Yes. Consumers Energy successfully argued for its Group B assets in Case No. U-10
17598 that where there is network connectivity or looped assets served by the facility, 11
the facility is not considered radial, but is transmission. A facility that is characterized 12
as radial can be properly determined to be transmission when, on balance, the asset has 13
more functional characteristics of a transmission asset than a distribution asset. In Case 14
No. U-17598, Consumers Energy also created an exception when they noted that a 15
138kV line, connected to the Vernon Substation, that is normally operated radially, did 16
not have “transmission characteristics under two of the seven factors, … [but] an asset 17
like the line connected to the Vernon Substation should be considered transmission if, 18
when balancing all of the factors, it appears more like transmission than distribution.” 19
Therefore, even if the Morenci Project were to be characterized as radial, the other five 20
12
factors are still met, and the Commission has classified similar facilities as 1
transmission. 2
Q. Did either the Staff witness or Consumers Energy witness properly analyze the 3
Factor Two test for the Morenci Project? 4
A. No. First, Witness Heidemann determined that MEC’s distribution network is not 5
looped because the diagram provided by Joint Applicants during discovery “is difficult 6
to determine…where certain elements connect.” Therefore, he simply concludes that 7
the Morenci Project is radial and must be distribution. Likewise, Witness Lynd does 8
the same without even reviewing the MEC’s system diagram. Therefore, neither 9
considers the looped nature of MEC’s distribution system and its impact on power 10
flows, which Consumers did not object to (and the Commission approved) in Case No. 11
U-17742. 12
Second, both witnesses fail to consider the comparability requirement for assets located 13
within the Michigan Joint Zone. Witness Heidemann, in response to Joint Applicant’s 14
First Discovery to Staff, even goes so far to ignore the 69/12.47kV comparable 15
transmission facilities in Case No. U-17742 by claiming that Exhibit A-1 in Witness 16
King’s testimony for the Case No. U-17742 says that a 69kV radial line should be 17
excluded. Witness Heidemann fails to recognize that Exhibit A-1 was provided merely 18
for informational purposes of describing how Wolverine’s facilities were classified in 19
Case No. U-13862, prior to the change in methodology for Case No. U-17742. Had 20
either witness correctly performed the comparability test or reviewed the proper and 21
updated methodology, they would have reached the conclusion that the Morenci 22
Project, while characterized as radial, is transmission. 23
13
FACTOR THREE: POWER FLOWS INTO LOCAL DISTRIBUTION SYSTEMS, AND 1
RARELY, IF EVER, FLOWS OUT 2
Q. Did the Staff witness or Consumers Energy witness correctly apply the power flow 3
factor for the Morenci Project? 4
A. Staff’s witness alleges that without additional evidence, the Joint Applicants’ purported 5
claim that a bi-directional power flow would occur is unsupported. However, the Joint 6
Applicant’s direct testimony never claimed there would be a bi-directional power flow. 7
The testimony was “Although the looped distribution systems are not modeled in the 8
PSS®E software, I expect that the Morenci Project will see a change in flows due to 9
the looped configuration of MEC’s distribution system.” These change in flows are to 10
be expected for this type of transmission facility. Consumers Energy recognized this 11
trait in Case No. U-17598 when they identified that “60 out of 65 assets in Group B do 12
not experience power flowing both in and out.” And similar to the 12.47kV looped 13
criteria approved in Case No. U-17742, the power flow change is due to MEC’s looped 14
distribution system having access to multiple higher voltage sources. This is because 15
under certain system and load conditions, the Morenci Project can be used to support, 16
or be supported by, other transmission assets to serve MEC’s distribution network. So, 17
while it cannot be quantified, electrical characteristic theory confirms that the 18
configuration will result in a change of flow – much like Consumers Energy’s argument 19
related to its Vernon Substation facilities in Case No. U-17598. In the face of his 20
previous testimony, it appears that witness Lynd did not consider the power flow 21
evidence. 22
14
Q. How should the Morenci Project be classified based on the power flow? 1
A. Based on these expected changes in flow due to MEC’s looped distribution system 2
having access to multiple higher voltage sources, the Morenci Project is transmission. 3
FACTOR FOUR: WHEN POWER ENTERS A LOCAL DISTRIBUTION SYSTEM, IT IS NOT 4
RECONSIGNED OR TRANSPORTED ONTO SOME OTHER MARKET5
Q. Does the Morenci Project transport or reconsign power onto another market? 6
A. Yes. The Morenci Project solely transports wholesale power and reconsigns 100 7
percent of the wholesale power that flows across it from Wolverine to MEC. MEC 8
then resells the wholesale electricity at retail to end-use customers. Therefore, the 9
Morenci Project is properly classified as transmission. 10
Q. Does Staff witness Heidemann correctly apply the Factor Four?11
A. No. In his direct testimony, Witness Heidemann appears to rationalize a result, because 12
his conclusion is devoid of any factual analysis. Then, in response to Joint Applicants 13
First Discovery Request to Staff, Witness Heidemann concurs that wholesale power 14
flows match my description above, but then claims all of the flows are located within 15
the MISO market and therefore not resconsigned. If the entire MISO market were 16
chosen as the criteria for Factor Four, flows from the far ends of MISO (Louisiana to 17
Manitoba and from the Dakotas to Michigan and everywhere in between) would never 18
be reconsigned, even those to retail choice customers. This would mean that every line 19
and substation in MISO would be classified as distribution under Factor Four. His 20
reasoning is flawed and his analysis simply fails to account that reconsignment can and 21
does occur between entities. In addition, Consumers Energy’s witness, in his direct 22
testimony in this case, even states that the analysis for Factor Four refers to “market” 23
15
as the utility’s service territory. In the case of the Morenci Project, METC, as the owner, 1
is the utility. 2
Q. Does Consumers Energy’s witness Lynd correctly apply the Factor Four? 3
A. No. Like the Staff witness, witness Lynd’s analysis attempts to disregard the fact that 4
MEC is a wholesale customer of Wolverine. Once this indisputable fact is accounted 5
for, the application of Factor Four supports the Morenci Project being classified as 6
transmission. 7
FACTOR FIVE: POWER ENTERING A LOCAL DISTRIBUTION SYSTEM IS 8
CONSUMED IN A COMPARATIVELY RESTRICTED GEOGRAPHIC AREA 9
Q. How did the Joint Applicants determine what geographic area to apply to Factor 10
No. 5? 11
A. Consistent with Commission precedent and utilizing Consumers Energy’s 12
methodology when its assets were determined to be transmission in MPSC Case Nos. 13
U-11283 and U-17598, a one-mile radius was used to determine the “geographic area” 14
by comparing the number of customers located inside and outside the one-mile radius 15
served by the Morenci Project. 16
Q. Staff witness claims that the Joint Applicants failed to provide evidence to show 17
that given MEC’s looped distribution system, the Morenci Project will be able to 18
serve end use customers beyond the one mile radius. Do you agree? 19
A. I strongly disagree. The Joint Applicants’ discovery response, as shown again in 20
Exhibit JA-1 clearly depict and describe the number of customers that will be served 21
beyond the one mile radius. Failing to utilize this proof from discovery is not 22
scientifically defensible. Witness Heidemann’s response to the Joint Applicant’s First 23
16
Discovery Request to Staff is evidence that his analysis was limited by the table shown 1
in Exhibit S-2.4 of his Direct Testimony. First, Witness Heidemann purports that the 2
Morenci Project is only serving the load identified in the table. However, this table only 3
identifies the load growth of the existing and potential customers located in the Morenci 4
Industrial Park and does not identify the existing loads of KAMCO nor any of the other 5
MEC’s customers that will be transferred from the Seneca substation to the Morenci 6
Project. Second, Witness Heidemann creates a new criteria by comparing the 7
percentage of load inside and outside the one-mile radius when analyzing Factor Five, 8
whereas all previous classification analyses, including that of Consumers Energy in 9
Case Nos. U-11283 and U-17598, compared the number of customers inside and 10
outside the one-mile radius. Third, Witness Heidemann claims in his response to the 11
Joint Applicant’s First Discovery Request to Staff, that power is directly consumed 12
from the Morenci Project (and, therefore, Staff argues, that the Morenci Project is 13
distribution) because 12.47kV is MEC’s only distribution voltage. Although I agree 14
that there are instances where dedicated substations on the electric grid are used to 15
directly serve an individual customer or a limited number of customers at higher 16
distribution voltages, it is not the case for the Morenci Project. The Morenci project 17
will provide service to over 50 customers under normal conditions and has the potential 18
to serve more under certain system reconfiguration conditions. Much like Consumers 19
Energy’s 46kV system, MEC’s 12.47kV system is used to transport power over longer 20
distances and, in certain conditions, connect load to other substations. That power is 21
further reduced in voltage so that MEC’s customers can actually use it in their homes 22
17
or businesses. None of this points to a distribution classification, but, instead, demands 1
transmission treatment. 2
Q. Does witness Lynd fairly apply Factor 5? 3
A. No. Witness Lynd simply, and in complete disregard of Joint Applicants’ discovery 4
responses, concludes that Morenci is a small community therefore is a geographically 5
restricted area to be served. Not only does witness Lynd ignore the discovery responses, 6
he also ignores the criteria used for his own company’s transmission classifications. 7
Again, as shown in Exhibit JA-1, the Morenci Project will benefit a much larger area 8
than the immediate load growth customers. 9
Q. Is the geographic area in which the power from the Morenci Project is consumed 10
consistent with it being transmission? 11
A. Yes. 12
FACTOR SIX: METERS ARE BASED AT THE TRANSMISSION/LOCAL DISTRIBUTION 13
INTERFACE TO MEASURE FLOW INTO THE LOCAL DISTRIBUTION SYSTEM14
Q. Where are the meters located on the Morenci Project? 15
A. For the Morenci Project, the meter will be located at the Wolverine substation between 16
the transmission system and the MEC distribution system, where the high side of the 17
substation is transmission and the low side of the substation is distribution. The meter 18
defines the boundary separating transmission from distribution and the boundary 19
between wholesale provider (Wolverine) and wholesale customer (MEC). 20
Q. How are these meters and locations used? 21
18
A. These meters are used to document the wholesale transmission charges to the bulk 1
power substations. These locations are used to define the metering boundary and are 2
the only location to measure the flow of power into the local distribution system. 3
Q. Do either the Staff witness or the Consumers Energy witness correctly recognize 4
that the Morenci Project satisfies Factor No. 6 for transmission? 5
A. No. Staff’s witness never takes a position. He states that the location of the meter in 6
the substation would classify the Morenci Project as transmission; however, he also 7
suggests it could be located at the tap location and suggests that the meter location was 8
selected for billing purposes. While accurate meter reading for billing purposes should 9
be important to all stakeholders, the Staff witness appears to simply adopt an arbitrary 10
opinion, to support a specific outcome, which is exactly what he appears to allege 11
against the Joint Applicants. Unfortunately, Staff witness’ testimony fails to recognize 12
that (as evidenced by Joint Applicants’ response to Staff’s Second Discovery request) 13
meter location furthers the interface between MISO and METC and facilitates the 14
wholesale and retail transactions. The Morenci Project is located entirely within the 15
metered bulk electric power boundary of MISO. The metering is at the wholesale load 16
because this service is requested by Wolverine for MEC. The facility provides the 17
service requested by the customer, not vice versa. 18
Quite simply, the meter location was not chosen primarily “for billing purposes,” but 19
because, at the meter point MISO Transmission Service ends (meaning, the metered 20
point essentially constitutes MISO balancing area boundary). The meter in question 21
does not simply track energy inflows and outflows; it also provides a data collection 22
point for all of the load, generation, and facilities under operational control of MISO.23
19
Consumers Energy’s witness also concludes that the meter location is for billing 1
purposes and the classification becomes distribution. This approach is directly at odds 2
with the approach Consumers Energy applied for their meter locations when 3
Consumers Energy obtained reclassification of their Group B Assets in Case No. U-4
17598. In Case No. U-17598, Consumers Energy chose, and all parties agreed, their 5
meter location to be at the bulk power stations connecting the 138kV to Consumers 6
Energy’s 46kV system. If Consumers Energy’s proposed methodology in this case was 7
used in their reclassification case, Consumers Energy could have been forced to use the 8
meters located at the 138kV taps/substations for their Group B Assets. In that case, 9
neither the parties nor the Commission required such arbitrary and unsupportable 10
gaming of meter location to support an unsupportable distribution classification. In his 11
response to Joint Applicant’s First Discovery Request to Staff, Witness Heidemann 12
event states that “Staff would take an unfavorable view” of this form of gaming. 13
Consumers Energy’s attempts to reject methodologies that benefited them and, 14
admittedly the transmission grid, must be rejected here. 15
Q. Is the meter location consistent with the Morenci Project being transmission? 16
A. Yes. Comparability and consistent treatment support the Morenci Project being 17
classified comparably to Consumers Energy’s reclassified assets in Case No. U-17598 18
and Wolverine’s assets reclassified in Case No. U-17742. Under Factor No. 6, the bulk 19
electric power substations are the transmission and the local distribution interface. The 20
location of the meter in this case assures MISO operational control. Therefore, the 21
Morenci Project is transmission. 22
20
FACTOR SEVEN: LOCAL DISTRIBUTION SYSTEMS WILL BE OF REDUCED VOLTAGE 1
Q. Do either the Staff or Consumers Energy witnesses correctly evaluate Factor 2
Seven. 3
A. No. Both simply observe that because there are distribution systems operating at 138 4
kV, and the Morenci Project will be operated at 138kV, it can be deemed distribution, 5
which goes beyond the application of Factor Seven as applied in prior reclassifications 6
before the Commission. Most important, Wolverine’s 69kV line to 12.47kV looped 7
systems were classified as transmission in Case No. U-17742, which are comparable 8
to the Morenci Project. Hence, both witness’ conclusion that the Morenci Project is 9
distribution are wrong. 10
Q. Will the local distribution system reduced voltage be consistent with the Morenci 11
Project being transmission? 12
A. Yes. 13
Q. How should the Morenci Project be classified based on the Commission’s previous 14
cases and classification of existing transmission facilities? 15
A. Comparability and consistent decision-making require that the Morenci Project be 16
classified in a similar manner to facilities that the Commission has approved as 17
transmission for other Michigan utilities and entities in the past, as described below: 18
a. Consumers Energy classified facilities as transmission utilizing similar 19
facts in Case No. U-17598. 20
b. The following are also similarly situated and classified as transmission: 21
(a) METC’s looped 138kV and 345kV assets as determined by Case No. 22
U-11283; (b) MPPA’s looped 69kV and 138kV assets as determined in 23
21
Case No. U-13862; (c) ITCTransmission’s looped 120kV, 345kV, and 1
120kV radials to Detroit Edison’s 40kV and 13kV systems as 2
determined in Case No. U-11337; (d) Wolverine’s looped 138kV and 3
69kV, including those lines that serve 25kV and 12.47kV looped 4
distribution networks in Case No. U-17742; and (e) ATC’s transmission 5
assets (formerly owned by Northern States Power Company, Cloverland 6
Electric Cooperative, Edison Sault Electric Company, Wisconsin Public 7
Service Corporation, and Wisconsin Electric Power Company) are all 8
facilities (looped and radials) above 50kV as determined in Case Nos. 9
U-12744, U-12896, U-12690, U-12706, and U-12691. 10
c. The Commission even approved facilities as transmission that 11
applicants admit do not meet all factors of the Seven Factor Test. In 12
Case No. U-17598, Consumers Energy argued that the Vernon 13
Substation should be considered as transmission even though it met only 14
five of the seven factors, based on the testimony of Donald Lynd (“On 15
balance, this asset has more functional characteristics of a transmission 16
asset than a distribution asset . . . Though the line connected to Vernon 17
Substation does not have transmission characteristics under two of the 18
seven factors . . . an asset like [that] should be considered transmission 19
if, when balancing all of the factors, it appears more like transmission 20
than distribution.”). Regardless, comparability requires similar 21
treatment of similar facts. 22
22
Q. What other factors support the Morenci Project being determined as a 1
transmission facility? 2
A. As Consumers Energy argued, and the Commission accepted, in Case No. U-17598, 3
“[t]he Seven Factor Test is a balancing analysis that weighs each factor and other 4
relevant factors in determining whether a particular asset should be classified as 5
transmission or distribution.” The Morenci Project will not provide local distribution 6
service. It will be used to provide wholesale transmission service, which was defined 7
by the Commission as “the bulk transport of high-voltage, typically over longer 8
distances between generating plants and distribution systems.” See MPSC Glossary of 9
Terms, available at https://www.michigan.gov/mpsc/0,4639,7-159-16377_17111-10
42898--,00.html. Here, Wolverine is the source of generation, the wholesale supplier, 11
and MEC is the wholesale customer and distribution system owner. The Morenci 12
Project will provide the bulk transport and reconsignment of power across high-voltage 13
lines, over long distances prior to arriving on MEC’s distribution network. 14
Q. Do the witnesses for Staff and Consumers Energy address other factors that are 15
germane to the classification test? 16
A. No. Staff and Consumers Energy address factors that are not germane to the 17
classification test. Staff witnesses dispute the design of the Morenci Project (including 18
the capacity and line length), its cost allocation, and the reliability need for transmission 19
service rather than continue with distribution service – none of which are relevant to 20
classification under Order 888. Consumers Energy’s witness argues his company’s 21
push back on the project through the MISO transmission expansion planning process, 22
the cost allocation resulting from a transmission classification, and their offer for 23
23
project alternatives – which are also found nowhere in Order 888. All of these interests 1
are important to the project approval process through MISO, but have no bearing on 2
(or importance to) the classification analysis. 3
Q. For purposes of classification of facilities as transmission, does it matter that the 4
Morenci project is new build while other cases involve the reclassification of 5
existing assets? 6
A. No. First, the comparability requirement makes no such distinction. Second, and most 7
importantly, is that the Third Amended and Restated Settlement Agreement for the 8
Michigan Joint Zone, in Article IV, defines that transmission facilities of METC, 9
Wolverine, MPPA, and Consumers Energy shall consist of the facilities agreed to under 10
the settlement agreement AND any transmission facilities “constructed or acquired” 11
thereafter. 12
Q. Does this conclude your pre-filed rebuttal testimony? 13
A. Yes. 14
4812-7707-9966.515
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EXHIBIT JA-1
CONFIDENTIAL –
SUBJECT TO PROTECTIVE ORDER ISSUED July 23, 2019 in Case No. U-20497
100397.000999 4843-4280-1822.1
STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
In the matter of the Application of ) MICHIGAN ELECTRIC TRANSMISSION ) COMPANY, LLC, WOLVERINE POWER ) SUPPLY COOPERATIVE, INC. and MIDWEST ) ENERGY & COMMUNICATIONS ) for an administrative determination regarding ) Case No. U-20497 the proper classification of certain facilities ) and to submit findings to the Federal Energy ) Regulatory Commission. ) ___________________________________________
PRE-FILED REBUTTAL TESTIMONY
OF
TERRY RUBENTHALER
August 1, 2019
1
I. INTRODUCTION 1
Q. Please state your name and address for the record. 2
A. My name is Terry Rubenthaler. My business address is 60590 Decatur Rd. 3
Cassopolis, Michigan 49031. 4
Q BY WHOM ARE YOU EMPLOYED AND IN WHAT CAPACITY? 5
A. I am the Chief Technology Officer of Midwest Energy and Communications (“MEC”); 6
one of the Joint Applicants in this case. 7
Q. PLEASE SUMMARIZE YOUR BACKGROUND. 8
A. I received a Bachelor of Science in Electrical Engineering from the University of 9
Nebraska in 1990. I worked for Dawson County Public Power District from 1990 to 10
1995 as an Electrical Engineer. In 1995, I was hired by the former Fruit Belt Electric 11
Cooperative, a predecessor corporation which transitioned to Midwest through a 12
Commission approved merger with the former Southeastern Michigan Rural Electric 13
Cooperative, Inc., as an Electrical Engineer. In 1998, I assumed the position of 14
Engineering Manager. In 2000, I was promoted to Vice President of Engineering. I am 15
a registered Professional Engineer for the State of Michigan and have been since 1996. 16
I am responsible for system integrity and studies, data and voice communication, 17
metering applications, and power supply. 18
Q. HAVE YOU BEEN INVOLVED IN MAKING ARRANGEMENTS FOR 19
SUPPLY TO SERVE NEW MEC LOAD IN MORENCI? 20
A. Yes. I have taken the lead role for MEC. In that regard, I have been part of the team 21
with Wolverine attempting to provide lowest reasonable cost power for new load in the 22
Morenci area. 23
2
Q. HAVE YOU PREVIOUSLY TESTIFIED? 1
A. Yes. I have testified a number of times before the Michigan Public Service 2
Commission on a wide range of matters. 3
Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY? 4
A. In my testimony, I rebut the prefiled direct testimony of the Michigan Public Service 5
Commission Staff (“Staff”) and Consumers Energy Company (“Consumers Energy”), 6
as they purport to suggest alternatives to the Morenci Project. I also explain how MEC 7
accommodates Distributed Energy Resources as those resources look to access the 8
marketplace. 9
Q. STAFF WITNESSES SUGGEST THAT THE MORENCI PROJECT COULD 10
BE A TRANSMISSION LINE IF THE COSTS OF THE PROJECT ARE 11
DIRECTLY ASSIGNED TO MEC. IS THAT A VIABLE PROPOSAL FOR 12
MEC? 13
A. No. The Morenci Project may cost $20 million. MEC does not have the balance sheet 14
to absorb such costs to supply the new load in Morenci. If that were MEC’s only 15
option, MEC would not be able to serve the new load. 16
Q. CONSUMERS ENERGY’S WITNESS TESTIFIES THAT THERE ARE 17
ALTERNATIVES TO THE MORENCI PROJECT. ARE THE 18
ALTERNATIVES VIABLE FOR MEC? 19
A. No. MEC and Wolverine first reached out to Consumers Energy to determine if the 20
existing 46kV system of Consumers Energy could provide for the new load. 21
Consumers Energy indicated that it could not without system upgrades. In fact, 22
Consumers Energy indicated that their current system could only serve four (4) 23
3
megawatts of additional load from anyone - Consumers Energy or MEC. Later, during 1
the MISO Transmission Expansion Process, Consumers Energy offered two 2
alternatives with costs between $6.5 million and $8 million – a 138kV option exactly 3
like METC’s project and a 46kV distribution option. If Consumers Energy’s proposals 4
were the only option for MEC, it could not afford to serve the new load. 5
Q. DO YOU HAVE OTHER CONCERNS WITH REGARD TO CONSUMERS 6
ENERGY’S ACTIVITIES? 7
A. Yes. During the course of discovery, we learned that despite Consumers Energy’s 8
representations that it could only serve a limited amount of new load in the Morenci 9
area without system upgrades, Consumers Energy is now serving, or will be soon, large 10
industrial customers near the locations of MEC’s new load, which coincidentally 11
happens to match the amount of limited excess capacity Consumers told 12
Wolverine/MEC that it had. This poses two concerns: 1) Consumers is putting our 13
member-consumers’ and all other customers’ reliability at risk on its existing system, 14
and 2) Consumers is delaying the Morenci Project to obtain new customers. Related 15
to this second concern: 16
1) Consumers has filled the remaining capacity of its 46kV by poaching two customers 17
from MEC after MEC already had two other customers construct their facilities. If 18
METC’s Morenci Project is not constructed, Consumers 46kV system will exceed its 19
capabilities and risk reliability to all of Consumers and MEC customers that currently 20
use its system in the area. 21
2) We asked discovery questions to gain some clarity as to the timing and how 22
Consumers Energy might be able to serve this new customer. Rather than shed light 23
4
on the matter, Consumers Energy objected to answering the questions which deepens 1
my concern because it leads me to believe the information sought was not helpful to 2
Consumers Energy. If true, which Consumers Energy’s silence on the issue does not 3
rebut, MEC is left with the un-rebutted concern that Consumers Energy is using its 4
position as a wholesale supplier to MEC to advantage its service to its distribution load. 5
Q. DOES MEC PLAN TO HAVE DERS IN MORENCI?6
A. At present there are no proposals for a DER in the Morenci area but MEC does have 7
such load elsewhere on its system. MEC has both interconnection standards and net 8
metering and buy all/sell all tariffs. See Exhibit JA – XX. MEC is open to having 9
DERs in the Morenci area. The DERs on MECs system now have access to the MISO 10
market should they elect that option. If Consumers Energy were to be the only 11
wholesale supplier in Morenci, any DER on that distribution system would not have 12
direct access to MISO. On the other hand, if the Morenci Project goes forward, any 13
new DER in the Morenci area would have access to the MISO market. 14
Q. DOES THIS CONCLUDE YOUR PRE-FILED REBUTTAL TESTIMONY? 15
A. Yes. 16
4820-3854-3006.217
Exhibit JA-2Page 1 of 4
Exhibit JA-2Page 2 of 4
Exhibit JA-2Page 3 of 4
Exhibit JA-2Page 4 of 4
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STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
In the matter of the Application of ) MICHIGAN ELECTRIC TRANSMISSION ) COMPANY, LLC, WOLVERINE POWER ) SUPPLY COOPERATIVE, INC and MIDWEST ) ENERGY & COMMUNICATIONS ) for an administrative determination regarding ) Case No. U-20497 the proper classification of certain facilities ) and to submit findings to the Federal Energy ) Regulatory Commission. ) ___________________________________________
PROOF OF SERVICE
Rebecca L. Grenawalt, an employee of Dykema Gossett PLLC, being first duly sworn,
deposes and says that on the 1st day of August, 2019, she served the CONFIDENTIAL version of
Joint Applicants’ Rebuttal Testimony and Exhibits on:
MPSC: Benjamin J. Holwerda Amit Singh [email protected]@michigan.gov
