S T A T E OF M I C H I G A N
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
* * * *
In the matter of the Application of ) DTE ELECTRIC COMPANY for ) approval of its Integrated Resource Plan ) Case No. U-20471 pursuant to MCL 460.6t, and for other relief ) )
QUALIFICATIONS AND DIRECT TESTIMONY OF
PAUL PROUDFOOT
MICHIGAN PUBLIC SERVICE COMMISSION
August 21, 2019
QUALIFICATIONS OF PAUL PROUDFOOT CASE NUMBER U-20471 PART I
1 Q. Would you please state your name and business address for the record?
2 A. My name is Paul A. Proudfoot. My business address is 7109 West Saginaw Hwy,
3 Lansing, Michigan, 48917.
4 Q. By whom are you employed and what is your position?
5 A. I am employed by the Michigan Public Service Commission (MPSC or
6 Commission) as Director of the Energy Resources Division. The Energy
7 Resources Division is responsible for implementation of Michigan 2016 Public
8 Act 342 which requires electric and gas providers to meet renewable energy and
9 energy waste reduction standards and sets additional goals for providers. The
10 division is also responsible for electric reliability and planning, alternative energy
11 supplier licensing, electric generation certificate of need applications pursuant to
12 Michigan 2016 Public Act 341, and the certificate of public convenience and
13 necessity applications for transmission projects pursuant to Michigan 1995 Public
14 Act 30.
15 Q. Would you please state your educational background?
16 A. I hold a Bachelor of Science Degree from the Michigan State University School
17 of Packaging, which is within the College of Agriculture. As a student in the
18 School of Packaging, I studied the technical areas required to design and
19 manufacture packaging systems including material characteristics, physical
20 design, and material testing. The management tract in which I was enrolled also
21 included general business curriculum courses in accounting, economics, and
22 marketing. I was interested in data processing and took my electives in that area.
1
QUALIFICATIONS OF PAUL PROUDFOOT CASE NUMBER U-20471 PART I
1 During my senior year, I worked for the School of Packaging as a Programming
2 Consultant and Lab Instructor.
3 Q. Would you please state your professional experience?
4 A. After graduation, I started at the MPSC as a Data Systems Analyst with the Utility
5 Systems Audit Section. The function of the Utility Systems Audit Section was to
6 provide the Commission Staff (Staff) with assistance and expertise in the areas of
7 data processing, statistical analysis, and special studies. During the four-year
8 period, I concentrated my efforts in the area of computerized statistical analysis.
9 To assist in that, I attended seminars and short courses on the subject.
10 Then I transferred to the Operations Development Division. The
11 Operations Development Division’s primary purpose was to provide technical
12 research and planning capabilities within the Commission Staff. I held the
13 position of Quantitative Methods Specialist within the Operational Support
14 Section. My job function was to assist and direct the Staff in the application of
15 quantitative problem-solving techniques requiring utilization of computer
16 resources. I also performed or directed various special studies and projects which
17 required my quantitative analytical expertise.
18 In 1985, I transferred to the Communications Division of the MPSC
19 in the Engineering and Tariff Section where my duties included the review of
20 tariff filings including the filing of direct testimony in support of the Staff’s
21 position, quality of service analysis, and provision of support to management and
22 other Staff in the review of utility filings.
2
QUALIFICATIONS OF PAUL PROUDFOOT CASE NUMBER U-20471 PART I
1 In June 1986, I was given a special assignment in the Michigan
2 Electricity Operations Study (MEOS). MEOS was a joint public/private sector
3 project, created by Governor Blanchard, to plan for the electric needs of the State
4 of Michigan into the next century. I reported to the project manager and served as
5 technical consultant to the project in the computer utilization and computer
6 modeling areas. When the project was completed in September 1987, I returned to
7 the Commission as Supervisor of the Forecasting Section within the Strategic
8 Planning Division. I was responsible for supervising the forecasting activity
9 within the MPSC.
10 In February 1989, I assumed a position as Supervisor of the Planning
11 Section where I was responsible for review of electric utility planning efforts.
12 This function included the development of an integrated resource planning
13 process.
14 In May 1996, I was appointed to the position of Supervisor of the Gas
15 Safety Section. In this position I completed the pipeline inspector courses offered
16 by the Transportation Safety Institute.
17 In 2003, the responsibilities of the gas and electric were merged within
18 the Commission. I was assigned additional areas of responsibility including
19 electric safety and electric reliability, emergency and outage event reporting, and
20 advising the Commission on actions to be taken. Serving in this function, I was
21 the lead investigator regarding technical issues surrounding the August 14, 2003
22 blackout and a chief author of the Commission’s report on the emergency.
23 During this period, I also assisted in the management of the Capacity Need Forum
3
QUALIFICATIONS OF PAUL PROUDFOOT CASE NUMBER U-20471 PART I
1 (CNF), which included managing the capacity expansion modeling portion of the
2 project. The CNF was an industry-wide collaborative process created by
3 Commission order to assess the projected need for electrical generating capacity
4 in Michigan.
5 From 2007 to 2008, I was Supervisor of the Electric Operations
6 Section within the Operations and Wholesale Markets Division. In this position I
7 was responsible for electric reliability issues, electric energy planning, electric
8 distribution performance, pole attachment issues, Rule 411 disputes, electric
9 metering issues, and electric engineering support regarding wholesale market
10 issues. During this period, I also assisted in the management of the 21st
11 Century Energy Plan as a key adviser and chairman of the workgroup. The
12 workgroup was responsible for managing the capacity expansion modeling and
13 reviewing proposed changes to the structure of the electric industry in Michigan.
14 The 21st Century Energy Plan project was created by Executive Directive No.
15 2006-2. It called for the development of a comprehensive plan for meeting the
16 State’s electric power needs and asked for recommendations to ensure the State
17 maintained both reliability and capacity to meet its growing electric needs while
18 keeping electric costs competitive.
19 Then, I served as Director of the Operations and Wholesale Markets
20 Division from 2008 to 2009. The Operations and Wholesale Markets Division is
21 responsible for electric reliability issues, electric energy planning, electric
22 distribution performance, pole attachment issues, Rule 411 disputes, electric
23 metering issues, wholesale market issues, natural gas pipeline safety, natural gas
4
QUALIFICATIONS OF PAUL PROUDFOOT CASE NUMBER U-20471 PART I
1 production issues, and natural gas pipeline and electric transmission certification
2 issues. I assumed the responsibilities as the Director of Electric Reliability
3 Division at the end of 2008 and served in both capacities until early 2009.
4 Q. Have you previously testified before this Commission?
5 A. Yes, I have testified before this Commission on a number of occasions: U-5141
6 was an application by Michigan Consolidated Gas Company for permission to
7 implement an energy conservation program, U-5510 was a similar case involving
8 the Consumers Power Company, U-6633 was the initial cost recovering hearing
9 for Detroit Edison’s RCS Program, U-7660 was a Detroit Edison rate case in
10 which I testified as to the amount of revenue deferral for Fermi II, and U-8128
11 where I testified as to private line tariffs for Michigan Bell. I have also testified
12 in several cases involving the settlement of pole attachment issues. I have
13 testified in the following cases relative to IRP and planning: U-9346 was a
14 Consumers Power general rate case, U-9507 was an application by Consumers
15 Power to seek approval for the Palisades Generating Company contract, U-9586
16 was the Consumers Power bidding framework case, U-9798 was the Detroit
17 Edison bidding framework case, U-10059/U-10061 was a case regarding the need
18 for a new transmission line, U-10143/U-10176 was the retail wheeling case, U-
19 10335 was a Consumers Power general rate case, U-10102 was a Detroit Edison
20 general rate case, U-10554 was a Consumers Power DSM reconciliation, U-10671
21 was a Detroit Edison DSM reconciliation, U-10710 was a Consumers Power
22 PSCR, U-10685 was a Consumers Power general rate hearing, and U-10840 was a
23 Detroit Edison capacity planning case. While working in the gas safety area, I
5
QUALIFICATIONS OF PAUL PROUDFOOT CASE NUMBER U-20471 PART I
1 testified in support of rulemaking activities regarding the Michigan Gas Safety
2 Standards most notable case U-11750 which implemented additional standards for
3 natural gas pipeline operations transporting natural gas with high levels of
4 Hydrogen Sulfide. As Director of the Electric Reliability Division. I testified in
5 U-16200, International Transmission Company’s application in request for an
6 expedited siting certificate for the construction of the Thumb Loop, U-18419
7 regarding DTE Electric Company’s application for certificates of necessity for the
8 construction of a natural gas electric generation facility, U-20165 regarding
9 Consumers Energy’s integrated resource plan application, and U-20350 regarding
10 Upper Peninsula Power Company’s integrated resource plan application.
6
DIRECT TESTIMONY OF PAUL PROUDFOOT CASE NUMBER U-20471 PART II
1 Q. What is the purpose of your testimony?
2 A. The purpose of my testimony is to provide an overview of the MPSC Staff’s
3 (Staff) testimony and Staff’s primary recommendations to the Commission on
4 DTE Electric Company’s (DTE or Company) Integrated Resource Plan (IRP) and
5 Proposed Course of Action (PCA) filed in this case pursuant to PA 341 of 2016,
6 section 6t.
7 Q. Are you sponsoring any exhibits?
8 A. Yes. I am sponsoring one exhibit:
9 Exhibit S-1.0 Discovery Response STDE-13.3 – Modeling Flow Chart
10 Q. Was the exhibit prepared by you or under your direction?
11 A. Yes, it was prepared under my direction.
12 Q. Please provide an overview of the areas covered in Staff witness testimony in this
13 case.
14 A. Staff witness Nicolas Luciani sponsors testimony related to IRP filing
15 requirements and fuel forecasts. Staff witness Sarah Mullkoff sponsors
16 testimony related to stakeholder engagement, reporting, and recommendations for
17 competitive bidding procedures. Staff witness Olumide Makinde sponsors
18 testimony related to energy and demand forecast assumptions. Staff witness Anna
19 Schiller sponsors testimony related to assumptions for existing and new fossil
20 generation units. Staff witness Roger Doherty sponsors testimony related to the
21 modeling assumptions including the Company’s starting point renewable
22 resources, the Michigan Integrated Resource Planning Parameters (MIRPP)
23 required sensitivities and scenarios, the Company’s flexible PCA pathways
7
DIRECT TESTIMONY OF PAUL PROUDFOOT CASE NUMBER U-20471 PART II
1 approach, and risk analysis. Staff witness April Stow sponsors testimony related
2 to the Voluntary Green Pricing (VGP) programs. Staff witness David Walker
3 sponsors testimony related to energy waste reduction (EWR) plans. Staff witness
4 David Isakson sponsors testimony related to Demand Response (DR). Staff
5 witness Zachary Heidemann sponsors testimony related to the Company’s
6 transmission analysis. Staff witness Cody S. Matthews sponsors testimony
7 related to storage as a potential resource and discusses starting point renewables
8 and PURPA. Staff witness Tayler Becker sponsors testimony on Conservation
9 Voltage Reduction (CVR) and Volt/VAR Optimization (VVO) and distribution
10 upgrades.
11 Q. Please describe the Staff testimony you are providing in this case.
12 A. My testimony summarizes the major components of the Company’s IRP,
13 addresses additional requirements pursuant to the Company’s Certificate of
14 Necessity Case No. U-18419 and Renewable Energy Plan Case No. U-18232, and
15 Staff’s primary recommendations regarding the Company’s IRP and PCA. In
16 addition, I discuss Staff’s recommendations to the Company and the Commission
17 for engaging in a competitive bidding process for future generating assets to
18 ensure that the Company is considering the most reasonable and prudent means of
19 meeting its future capacity and energy needs.
20 Q. Please outline Staff’s overall recommendation to the Commission on DTE’s IRP
21 and PCA.
22 A. Staff recommends that the Commission find the Company’s IRP meets the
23 provisions of PA 341 of 2016 section 6t(8), but recommends that the Commission
8
DIRECT TESTIMONY OF PAUL PROUDFOOT CASE NUMBER U-20471 PART II
1 still allow for scrutiny of specific aspects of these IRP related cost approvals, such
2 as operations and maintenance related costs, in other focused proceedings.
3 Proceedings that review each of these asks in more detail and in context with
4 other related asks, such as in a Demand Response Reconciliation, Renewable
5 Energy Plan or Renewable Cost Reconciliations, and Base Rate Cases. With that
6 said, the Company has divided its PCA into a near-term PCA covering years
7 2020-2024 and a flexible PCA covering years 2025-2035. The near-term PCA
8 (2020-2024) includes the following:
9 * 11 MW of solar plus storage pilot projects as discussed by Staff witness
10 Matthews;
11 * 693 MW of wind as discussed by Staff witness Matthews;
12 * VGP renewables between 465 and 715 depending on subscription levels as
13 discussed by Staff witness Stow;
14 * Accelerated retirement of Trenton Channel Power Plant in 2022;
15 * Accelerated retirement of St. Clair Power Plant Unit 7 in 2022;
16 * Accelerated retirement of St. Clair Unit 1 in 2019;
17 * River Rouge Unit 3 will run on recycled industrial gases and natural gas in
18 place of coal from 2020-2022 as discussed by Staff witness Schiller;
19 * Increase EWR programs to achieve annual savings to 1.65% in 2020 and 1.75%
20 in 2021 as discussed by Staff witness Walker;
21 * Increased DR programs to 859 MW by 2024 as discussed by Staff witness
22 Isakson; and
23 * Pilot a CVR/VVO program by 2020 as discussed by Staff witness Becker.
9
DIRECT TESTIMONY OF PAUL PROUDFOOT CASE NUMBER U-20471 PART II
1 Q. Can you please summarize the flexible PCA covering years 2025-2035?
2 A. Yes, the flexible PCA includes the following requests:
3 * Build renewable resources to support the clean energy and carbon reduction
4 goals, adding up to 525 MW of solar from 2025-2030 and an additional 2000
5 MW of solar by 2040.
6 * The Company expects a 1.75% EWR reduction level beginning in 2021
7 through 2040.
8 * The Company expects 859 MW of DR by 2024 and it will maintain that level
9 through 2040.
10 * Install up to 675 MW of VGP between 2025 and 2030.
11 * Reevaluation of Belle River Units 1 and 2 retirements in the next IRP.
12 * Reevaluation of Monroe Power Plant retirement (currently scheduled in 2040)
13 in the next IRP.
14 * CVR/VVO to be analyzed in subsequent IRPs (50 MW by 2030 included in
15 two of the four flexible pathways).
16 * Additional generation resources will be analyzed in the next IRP, including a
17 414 1x1 combined cycle gas unit in two of the four flexible pathways.
18 Q. Did the Company have any additional requirements outside of the Statutory
19 requirements or Michigan Integrated Resource Planning Parameters?
20 A. Yes, pursuant to the Commission’s April 27, 2018 Order in U-18419 (the
21 Company’s Certificate of Necessity Case), the Company was directed to:
10 DIRECT TESTIMONY OF PAUL PROUDFOOT CASE NUMBER U-20471 PART II
1 * Include an additional scenario evaluating a specific portfolio ramping up over
2 the years preceding 2029 that could replace the capacity and energy lost due to
3 the retirement of the Belle River Power Plant;
4 * Provide an updated rate impact analysis related to Blue Water Energy Center
5 (BWEC);
6 * Collaborate with MISO and ITC on reliability planning for coal retirements;
7 * Assume renewal of PURPA contracts;
8 * Include a better evaluation of storage options; and
9 * Include a straightforward analysis of the rate impact of retiring Tier 2 plants
10 and adding BWEC.
11 Q. Did the Company meet these requirements?
12 A. Yes.
13 Cost Pre-Approvals
14 Q. Please state the cost pre-approvals that are being requested in the instant case.
15 A. The Company has requested the following cost pre-approvals pursuant to PA 341
16 Section 6(t)(11):
17 - $103 million of EWR capital costs from 2020 through 2022.
18 - $24 million of projected DR capital costs from the period of May 1, 2020
19 through December 31, 2022.
20 - $0.7 million in capital costs associated with CVR/VVO pilot programs from
21 2019 through 2020.
22 Q. Does Staff have any reservations regarding the cost pre-approvals for EWR?
11 DIRECT TESTIMONY OF PAUL PROUDFOOT CASE NUMBER U-20471 PART II
1 A. As discussed in Staff witness Walker’s testimony, Staff does not take issue with
2 the $103 million EWR spending, but, as mentioned above, Staff requests that the
3 Commission allow Staff to review and make recommendations related to EWR
4 programs and in context with annual EWR plans.
5 Q. Does Staff have any reservations regarding the cost pre-approvals for DR related
6 capital costs?
7 A. Yes. As outlined in Staff witness Isakson’s testimony, Staff recommends
8 disallowing the capital request for “other DR pilots” from 2020-2022, excluding
9 the Bring Your Own Device and EPRI pilot costs. This results in a reduction of
10 approximately $2.0 million in each of the years from 2020-2022. Additionally,
11 Staff requests that the Commission allow Staff to review and make
12 recommendations related to DR programs, based upon the most recent program
13 information and costs in context with rate case filings. This scrutiny in rate cases
14 would allow for the approval of DR operation and maintenance (O&M) costs that
15 are not approved in an IRP proceeding.
16 Q. Does Staff have any reservations regarding the cost pre-approvals for CVR/VVO
17 pilot program related costs?
18 A. As discussed in Staff witness Becker’s testimony, Staff does not take issue with
19 the Company’s CVR/VVO pilot program spending.
20 Q. Does Staff have any other recommendations for pre-approval of costs?
21 A. Staff recommends that the Commission provide explicit cost approval for only the
22 first three years of the current plan. A recommendation for IRP approval should
12 DIRECT TESTIMONY OF PAUL PROUDFOOT CASE NUMBER U-20471 PART II
1 not provide the Company with assurance of cost recovery in future rates for
2 expenditures outside of the cost pre-approvals.
3 IRP Scope
4 Q. Please outline what the Staff considers a reasonable scope for an IRP.
5 A. Staff considers all the provisions included in PA 341 Section 6(t), the IRP filing
6 requirements approved by the Commission in Case No. U-15896, and the
7 Michigan Integrated Resource Planning Parameters approved by the Commission
8 in Case No. U-18418 to define a reasonable scope for an IRP. More specifically,
9 PA 341 Section 6(t)(3) requires each electric utility to file an integrated resource
10 plan,
11 “that provides a 5-year, 10-year, and 15-year projection of the 12 utility’s load obligations and a plan to meet those obligations, to 13 meet the utility’s requirements to provide generation reliability, 14 including meeting the planning reserve margin and local clearing 15 requirements determined by the Commission or the appropriate 16 independent system operator, and to meet all applicable state and 17 federal reliability and environmental regulations over the ensuing 18 term of the plan.” 19 20 A reasonable scope for utility-filed IRPs in Michigan includes a forward-looking
21 plan spanning at least the next fifteen years that includes existing and proposed
22 new resources to meet the utility’s expected customer load, reliability
23 requirements, and environmental regulations on a going-forward basis.
24 Section 6t(5) lists the elements that an IRP must include. Generally speaking, an
25 IRP must identify the utility’s capacity and energy needs and all of the
26 resources—supply- and demand-side, utility-owned, and purchased resources—
27 that the utility plans to use to meet its current and projected customer load and
13 DIRECT TESTIMONY OF PAUL PROUDFOOT CASE NUMBER U-20471 PART II
1 planning reserve margin needs. The IRP must also include data about the utility’s
2 existing generation fleet and analyze the cost and viability of all reasonable
3 options available to meet projected energy and capacity needs.
4 Q. Does Staff opine that the Company has met the scope of an IRP as listed above?
5 A. Staff believes that overall, the Company has developed an IRP that meets these
6 requirements and that the Commission should approve the IRP subject to the
7 recommended changes listed in Staff’s testimony.
8 Staff’s Recommendations
9 Q. Please outline Staff’s primary recommendations to the Commission related to its
10 IRP.
11 A. As outlined further in Staff’s testimony, Staff has the following
12 recommendations:
13 * The Company should work with Staff to develop a competitive resource
14 procurement strategy for generating assets used to meet future capacity and
15 energy needs and carbon goals in a manner that best balances the interests of
16 the Company, rate-payers, and other interested parties. This strategy should be
17 developed in a manner that places value on reliability, safety, diversity, and
18 resiliency. Staff suggests that the Commission open a docket to solicit
19 comments on best practices related to competitive resource procurement
20 strategies. This is also described by Staff witness Mullkoff.
21 * While Staff recognizes that the future is not defined, the Company should
22 identify a preferred future PCA within its flexible PCAs. Currently, the
23 Company identifies a five-year PCA with four alternative futures beyond the
14 DIRECT TESTIMONY OF PAUL PROUDFOOT CASE NUMBER U-20471 PART II
1 five-years. It is reasonable for the Company to conduct its analysis in this
2 manner, but it should identify the Company’s preferred future between the four
3 options based on what is known at this point in time. This is further discussed
4 in Staff witness Doherty’s testimony.
5 * Regardless of the Company’s internal carbon goals, the Company should allow
6 for optimized runs that do not force in low or non-carbon options for
7 comparative purposes as discussed in Staff witness Doherty’s testimony.
8 * The Company over-complicated its modeling efforts by using multiple
9 modeling software and inputs/outputs that went between the models. This
10 made it difficult to recreate by outside parties, which also provided for a
11 greater opportunity for error. This is evident by my Exhibit S-1.0 showing the
12 multiple models utilized and the flow of information between these models
13 and data pools. This created a series of inputs that were modified (in some
14 cases, several times) in each step of the modelling process, resulting in a
15 complicated and difficult validation process. Staff recommends simplifying
16 the modeling process in future iterations of the Company’s IRP. This is
17 further discussed by Staff witness Doherty.
18 * Future IRPs should coordinate as closely to the Company’s Five-Year
19 Distribution Planning filings as possible in an effort to holistically analyze the
20 Company’s entire electric system and potential distribution sited energy and
21 capacity resource additions. This recommendation aligns with the State
15
DIRECT TESTIMONY OF PAUL PROUDFOOT CASE NUMBER U-20471 PART II
1 Energy Assessment Initial Report1 submitted by Staff on July 1, 2019. This is
2 discussed in more detail by Staff witness Becker.
3 * Cost pre-approvals pursuant to 6t(11) should ultimately be subject to the
4 specific proceeding in which the cost approval requests take place as discussed
5 above.
6 * Based on several of the recommendations above, Staff recommends that the
7 Company file its next IRP no later than 36 months from the date of a
8 Commission Order in the instant case to incorporate Staff’s suggestions.
9 Additionally, this would align relatively well with the third iterations of the
10 Five-year distribution plans if these plans continue on a biannual filing
11 schedule.
12 * Finally, Staff recommends that the Commission clarify that approval of this
13 IRP does not exclude any components from scrutiny in future IRP proceedings.
14 Competitive Resource Procurement Strategy
15 Q. In its IRP, does the Company discuss how it intends to contract for resources to
16 meet its energy and capacity needs modeled in its IRP?
1 https://www.michigan.gov/documents/mpsc/Sea_Initial_Report_with_Appendices_070119_659452_7.pdf Section 8.1.2, page 180-181. “…the Commission recommends utilities better align electric distribution plans with integrated resource plans to develop a cohesive, holistic plan and optimize investments considering cost, reliability, resiliency, and risk. As part of this effort, Staff, utilities, and other stakeholders should identify refinements to IRP modeling parameters related to forecasts of distributed energy resources (e.g., electric vehicles, on-site solar) and reliability needs with increased adoption of intermittent resources. A framework should also be developed to evaluate non-wires alternatives such as targeted energy waste reduction and demand response in IRPs and distribution plans.” 16
DIRECT TESTIMONY OF PAUL PROUDFOOT CASE NUMBER U-20471 PART II
1 A. No. As discussed in Staff witness Mulkoff’s testimony, presumably the Company
2 intends to own all future resources and does not define any strategy to ensure that
3 these Company-owned resources are the most reasonable and prudent.
4 Q. PA 341 Section 6(t)(6) requires the Company to issue a Request For Proposal
5 (RFP) to provide any new supply-side generation capacity needed to meet
6 capacity and energy requirements during the first 3 years of the planning period.
7 Does Staff have any suggestions related to this requirement?
8 A. Yes. Staff suggests that the Commission open a docket to solicit comments on
9 best practices related to resource procurement strategies using Attachment D of
10 the Commission’s December 4, 2008 Order in Case No. U-15800 (as shown in
11 Staff witness Mullkoff’s Exhibit S-3.1), as the starting point for these comments.
12 Ultimately, Staff envisions a process evolving from this comment docket for all
13 future Company-owned resource acquisitions and Power Purchase Agreements
14 (PPA) solicitation similar to the processes used to meet the Company’s
15 Renewable Portfolio Standards under PA 295 of 2008 in which Staff would work
16 with the Company to develop each RFP and review the process used to award
17 contracts.
18 Q. Are utilities required to seek pre-approval of long-term PPAs for capacity under
19 PA 341?
20 A. No. The previous provisions for preapproval of long-term contracts for capacity
21 that were included in MCL 460.6j were removed in PA 341. The law became
22 effective in April of 2017. MCL 460.6t provides a process for utilities to request
23 approval of costs associated with long-term contracts, but it does not require
17
DIRECT TESTIMONY OF PAUL PROUDFOOT CASE NUMBER U-20471 PART II
1 utilities to utilize those provisions to necessarily obtain preapproval. Additionally,
2 MCL 460.6t(10) allows utilities to move forward with investments without
3 preapproval.
4 Q. Does Staff recommend that utilities file PPAs; Engineering, Procurement, and
5 Construction (EPC) contracts; and generation asset purchase contracts for
6 Company-owned generation for approval with the Commission?
7 A. Yes. Staff recommends that PPAs, EPC contracts, and generation asset purchase
8 contracts be filed in the Company’s most recent IRP docket for review by Staff
9 and the Commission in a similar manner to the PA 295 of 2008 requirements
10 described above. If the contract costs are equal to or less than the price proposed
11 in the IRP, the contract can be reviewed ex parte. Ultimate cost recovery would
12 be addressed in the relevant case.
13 Renewable Energy Procurement
14 Q. The July 18, 2019 Order in Case No. U-182322 partially approved the Company’s
15 Renewable Energy Plan (REP), but stated that renewables generation assets that
16 do not qualify for 100% tax credit will be addressed in the IRP proceeding. How
17 does Staff propose these renewables are being addressed in this IRP?
18 A. As stated above, Staff requests that the Commission open a docket that will solicit
19 comments on a competitive resource procurement strategy. If implemented, this
20 will allow the renewable energy generating assets to be procured in the most
21 reasonable and prudent method.
2 https://mi-psc.force.com/sfc/servlet.shepherd/version/download/068t0000005H6tzAAC. 18
DIRECT TESTIMONY OF PAUL PROUDFOOT CASE NUMBER U-20471 PART II
1 Q. Does Staff have any other recommendations related to procurement of renewable
2 energy resources going forward?
3 A. Yes, Staff opines that the Company should utilize a 50/50 split between
4 Company-owned renewable resources and third-party PPAs. This structure
5 worked well under the Public Act 295 of 2008 resource procurement strategy
6 resulting in cost reductions in each subsequent year. As outlined in the
7 Commission’s Annual Report on the Implementation of P.A. 295 Renewable
8 Energy Standard and the Cost-Effectiveness of the Energy Standards,3 the 50/50
9 requirement played a role in the declining cost of both Company-owned and PPA
10 wind assets.
Weighted Average Cost Comparison Commission Approval Company Owned Power Purchase 2016 $55.58 N/A 2015 $50.00 $45.00 2014 N/A N/A 2013 $55.95 $50.04 2012 $52.50 $49.25 2011 $67.16 $60.90 2010 $104.00 $97.33 2009 N/A $115.00 11 Total $69.73 $73.58
12 Additionally, the Commission found this to be a reasonable and prudent means of
13 procuring energy and capacity in Consumers Energy Company’s IRP.4 This is
14 further described by Staff witness Matthews.
15 Q. Does this complete your testimony?
16 A. Yes, it does.
3 https://www.michigan.gov/documents/mpsc/MPSC_PA295_Renewable_Energy_Report_Feb_2017_552081_7.pdf filed February 15, 2017, Page 18. 4 https://mi-psc.force.com/sfc/servlet.shepherd/version/download/068t0000005HSSrAAO, Page 79. 19
S T A T E OF M I C H I G A N
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
* * * *
In the matter of the Application of ) DTE ELECTRIC COMPANY for ) approval of its Integrated Resource Plan ) Case No. U-20471 pursuant to MCL 460.6t, and for other relief ) )
EXHIBIT OF
PAUL A. PROUDFOOT
MICHIGAN PUBLIC SERVICE COMMISSION
August 21, 2019 Michigan Public Service Commission Case No: U‐20147 Discovery Response STDE‐13.3 Exhibit: S‐1.0 Modeling Flow Chart Witness: Paul Proudfoot Date: August 2019 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 ) DTE ELECTRIC COMPANY for ) approval of its Integrated Resource Plan ) Case No. U-20471 pursuant to MCL 460.6t, and for other relief ) )
QUALIFICATIONS AND DIRECT TESTIMONY OF
NICOLAS G. LUCIANI
MICHIGAN PUBLIC SERVICE COMMISSION
August 21, 2019 QUALIFICATIONS OF NICOLAS G. LUCIANI CASE NUMBER U-20471 PART I 1 Q. Please state your name and business address.
2 A. My name is Nicolas G. Luciani and my business address is 7109 W. Saginaw Hwy.,
3 Lansing, Michigan 48917.
4 Q. By whom are you employed and in what capacity?
5 A. I am employed in the Energy Resources Division of the Michigan Public Service
6 Commission (MPSC or Commission). I am a Public Utilities Engineer in the Generation
7 and Certificate of Need section, which is responsible for assisting in the implementation of
8 Public Act 341 of 2016 and evaluating applications for transmission siting pursuant to
9 Public Act 30 of 1995.
10 Q. Please describe your educational background.
11 A. I earned a Bachelor of Engineering degree in Aerospace Engineering and a Master of
12 Science degree in Nuclear Engineering in 2016 and 2018, respectively, from Polytechnic
13 University of Milan. Since joining the Commission, I have attended multiple training
14 seminars, including Electric Generation Expansion Analysis System modeling software
15 training in June 2019 and the Institute of Public Utilities fundamentals course in August
16 2019.
17 Q. Please provide an outline of your professional experience.
18 A. In October 2017, I was hired as a graduate assistant at the University of Rochester. I worked
19 at the Laboratory for Laser Energetics and was responsible for simulating inertial
20 confinement fusion experiments with the goal of explaining discrepancies between
21 experimental results and modeling. In this context I became familiar with the Fortran,
22 MATHEMATICA, and Python programming languages.
1 QUALIFICATIONS OF NICOLAS G. LUCIANI CASE NUMBER U-20471 PART I 1 In October 2018, I accepted a position working at Multi Packaging Solutions as a
2 Data Analyst. I was responsible for interacting with stakeholders to understand business
3 needs in order to provide customized data-driven reports through advanced data analysis.
4 In January 2019, I accepted a Public Utilities Engineer position in the Generation
5 and Certificate of Need section of the MPSC. In this position, I am part of a cross-
6 functional group responsible for evaluating regulated utilities’ integrated resource plans
7 (IRP). In addition, I am responsible for evaluating certain generation capital costs filed in
8 utility rate case applications.
9 Q. Have you previously filed testimony before the Commission?
10 A. No.
11 Q. Have you provided technical analyses on other cases filed before the Commission?
12 A. Yes. I contributed to the following cases:
13 - U-20464, Statewide Energy Assessment
14 - U-20350, Upper Peninsula Power Company’s IRP
15 - U-18091, DTE Electric’s Avoided Cost Calculation (Remand)
2 DIRECT TESTIMONY OF NICOLAS G. LUCIANI CASE NUMBER U-20471 PART II 1 Q. What is the purpose of your testimony?
2 A. The purpose of my testimony is to outline MPSC Staff’s (Staff) evaluation of DTE
3 Electric’s (DTE or Company) IRP with regards to Integrated Resource Plan Filing
4 Requirements (IRP Filing Requirements or Filing Requirements) approved by the
5 Commission on December 20, 2017 in MPSC Case No. U-15896. I will also discuss the
6 fuel forecasts of DTE’s proposed course of action (PCA) as well as the required scenarios
7 and sensitivities.
8 Q. What guidance did Staff use in its evaluation?
9 A. Staff relied on the Filing Requirements approved by the Commission in its December 20,
10 2017 order in Case No. U-15896 and the Michigan Integrated Resource Planning
11 Parameters (MIRPP) approved by the Commission in its November 21, 2017 order in Case
12 No. U-18418.
13 Q. Are you sponsoring any exhibits?
14 A. Yes. I am sponsoring the following exhibit:
15 Exhibit S-2.0: Filing Requirements Checklist
16 Q. Were the exhibits prepared by you or under your direction?
17 A. Yes.
18 I. IRP Filing Requirements
19 Q. What materials did Staff use in its review of UPPCO’s IRP Filing Requirements?
20 A. Staff used the following materials:
21 IRP Filing Requirements, Exhibit A-1 of the December 20, 2017 Order in MPSC Case No.
22 U-15896 approving the IRP Filing Requirements.
3 DIRECT TESTIMONY OF NICOLAS G. LUCIANI CASE NUMBER U-20471 PART II 1 DTE Electric’s IRP application, testimony, exhibits, with an emphasis on Exhibit A-1, and
2 workpapers in MPSC Case No. U-20471.
3 2016 Public Act 341, MCL 460.6t.
4 Q. Please describe the process utilized by Staff to review the Company’s IRP filing with
5 respect to the filing requirements.
6 A. A cross-functional team of Staff members reviewed the Company’s application with
7 regards to the Filing Requirements. In Exhibit A-1, the Company provided the location in
8 its IRP filing and the accompanying files it believed satisfied each Filing Requirement.
9 Staff reviewed this material to verify the information provided by the Company and
10 supplemented it when necessary through discovery requests to the Company. The results
11 of this analysis are compiled and presented in Exhibit S-2.0.
12 Q. Please explain Exhibit S-2.0.
13 A. Exhibit S-2.0 is similar to Company Exhibit A-1 in that it contains a checklist of all of the
14 Filing Requirements from MPSC Case No. U-15896. It includes the files and locations the
15 Company referred to in Exhibit A-1 with additional comments, files, and locations
16 provided by Staff. These additions reflect information that was missing or unclear in the
17 Company’s original filing.
18 Q. Which filing requirements required additional attention?
19 A. The following Filing Requirements1 necessitated a more detailed review by Staff to verify:
20 1. Confidential Information
21 2. Existing Supply-Side (Generation) Resources, sections b), e)
22 3. Peak Demand and Energy Forecast, section b) v
1 Exhibit A-1 of the December 20, 2017 Order in MPSC Case No. U-15896 approving the IRP Filing Requirements.
4 DIRECT TESTIMONY OF NICOLAS G. LUCIANI CASE NUMBER U-20471 PART II 1 4. Modeling Results, section b)
2 5. Proposed Course of Action, section a)
3 6. Environmental, section b)
4 7. Environmental, sections d) i through v
5 Q. Please explain why items 1, 2, 3, 4, 6, and 7 listed above required additional analyses.
6 A. When analyzing these sections, Staff was either unable to locate files listed in Exhibit A-
7 1, or unable to find sufficient information to satisfy the filing requirements.
8 Q. Does Staff believe there are any outstanding issues with these filing requirements?
9 A. No. After further discussion with the Company, all missing information was located or
10 provided for these requirements.
11 Q. Please explain why item 5 required additional analysis, and if the issues were resolved.
12 A. For item 5, in Exhibit A-1 the Company referenced testimony not applicable to the
13 corresponding Filing Requirement. After analyzing the IRP documentation, Staff located
14 the correct testimony reference and updated this reference with the correct information into
15 Exhibit S-2.0.
16 Q. Does Staff have any recommendations for the Company’s future IRPs, with regards to the
17 IRP Filing Requirements?
18 A. Yes. Staff has recommendations about the following sections:
19 1. Executive Summary, section b)
20 2. Introduction, sections a) i, a) ii, a) iii, d) iv
21 Q. What are Staff’s recommendations regarding the Executive Summary section?
22 A. While all the information in the Executive Summary section listed in the IRP Filing
23 Requirements was found within the report, some of the information required by the Filing
5 DIRECT TESTIMONY OF NICOLAS G. LUCIANI CASE NUMBER U-20471 PART II 1 Requirement was missing from the section itself. The Executive Summary of the report
2 did not contain information about existing demand-side programs or existing demand-side
3 rates, as required by section I) (b). Though Staff was able to locate these requirements
4 elsewhere in the report, Staff recommends that in its next IRP, DTE include all
5 requirements from the Executive Summary section within the section itself, as required by
6 the IRP Filing Requirements. “An IRP shall include an executive summary . . . The
7 executive summary shall summarize the contents of the IRP document and shall include .
8 . . existing demand-side programs, existing demand-side rates.”
9 Q. What recommendations does Staff have with regards to the Introduction section?
10 A. Like the Executive Summary section, all the information required by the Introduction
11 Filing Requirements was found within the report, but not all of it was mentioned within the
12 Introduction to the Company’s IRP report. For the next DTE Electric IRP, Staff
13 recommends that the Company address filing requirement IV) Introduction, sections a) i,
14 a) ii, a) iii, d) iv within the IRP report introduction, as required by the IRP filing
15 requirements.2
16 II. Fuel Forecast 17 18 Q. What sources did Staff use to analyze the Company’s fuel forecasting?
19 A. Staff used the following:
20 MCL 460.6t
21 Michigan Integrated Resource Plan Parameters (MIRPP)
2 Filing requirements in Case No. U-15896. In re, on the Commission’s own motion, to implement the provisions of MCL 460.6s(10) and (11), 12/20/2017 Order, MPSC Case No. U-15896, Exhibit A, Integrated Resource Plan Filing Requirements, pages 11-12. https://mi-psc.force.com/s/filing/a00t0000005pjSgAAI/ u158960013, accessed May 23, 2019. Herein referred to as “IRP Filing Requirements.”
6 DIRECT TESTIMONY OF NICOLAS G. LUCIANI CASE NUMBER U-20471 PART II 1 IRP Filing Requirements, Exhibit A-1 of the December 20, 2017 Order in MPSC 2 Case No. U-15896 approving the IRP Filing Requirements 3 DTE Electric’s IRP application, testimony, exhibits, with an emphasis on Exhibits
4 A-1 and A-43 in MPSC Case No. U-20471
5 Workpapers received by the MPSC from the Company
6 Q. Did the Company include the projected cost of different types of fuel used for electric
7 generation, as required by MCL 460.6t(1)(f)(v)?
8 A. Yes, the Company included price forecast for natural gas, coal, and oil. Due to the overly
9 burdensome modeling process selected by DTE, as discussed by Staff witness Roger
10 Doherty, it was not possible for Staff to verify that the prices provided by the Company
11 were the ones input into the Strategist model. For details on the Company’s modeling
12 process, please also refer to Staff Exhibit S-1.0.
13 Q. Did the Company include the projected fuel costs under various reasonable scenarios for
14 proposed generation facilities contained in its IRP, per MCL 460.6t(5)(b)?
15 A. The Company included projected fuel costs for scenarios and sensitivities required by the
16 MIRPP as approved in the November 21, 2017 Order in MPSC Case No. U-18418.
17 Q. Did the Company meet all the IRP Filing Requirements related to fuel forecasting?
18 A. Yes, the Company met Filing Requirements XIII) b) through i).
19 Q. Did the Company provide price forecasts that included transportation costs?
20 A. The Company provided delivered price forecasts for coal, oil, and natural gas in Company
21 Exhibit A-4, Appendices G, H, and I, respectively. These were obtained by adding
22 commodity costs for coal, natural gas, and oil to transportation and delivery costs to each
23 generation facility. 3 The Company also provided the underlying commodity forecasts in
3 The pre-filed Direct Testimony of Ryan C. Pratt, pp. 10, 13, and 14.
7 DIRECT TESTIMONY OF NICOLAS G. LUCIANI CASE NUMBER U-20471 PART II 1 workpapers. Staff was able to reconstruct these prices from the underlying commodity
2 forecasts for coal and natural gas; the oil forecast provided in Exhibit A-4, Appendix H
3 was obtained by applying multipliers corresponding to #2 Oil, #6 Oil (0.7%), and #6 Oil
4 (2.2%) to the forecasted cost of crude. It is not clear if these multipliers included the cost
5 of transportation, but the prices obtained this way were referred to as “Delivered Prices.”
6 Q. How was the commodity price for natural gas in the Business As Usual (BAU), Emerging
7 Technology, and Environmental Policy obtained?
8 A. The forecast was based on the forecasted prices at the applicable natural gas hub locations,
9 such as MichCon CityGate and Dawn. For 2018 and 2019, the prices were determined by
10 using the Chicago Mercantile Exchange (CME)/New York Mercantile Exchange
11 (NYMEX) near-term futures prices.4 Between 2020 and 2022, the 2019 CME/NYMEX
12 prices were blended with the 2023 Energy Information Administration’s Annual Energy
13 Outlook (AEO) natural gas forecast, with the following weights: for 2020 3:1, for 2021
14 2:2, and 1:3 for 2022. Starting in 2023, the unmodified AEO natural gas forecast was used.
15 Q. How was the commodity price for coal obtained?
16 A. For 2018 to 2020, the coal commodity prices were developed using existing contract prices
17 and forecasted forward market prices; the latter were obtained from Coaldesk, LLC,5 an
18 over-the-counter coal broker. For 2021 and 2022, the forecasted coal cost was obtained by
19 applying an inflation index factor to the forward-market coal prices. Starting in 2023, the
20 PACE Global (PACE) forecast was used. The petroleum coke price forecast was
21 developed utilizing existing contract prices and forecasted forward-market prices through
4Id, at pp. 10 and 11. 5 Discovery STDE-13.5.
8 DIRECT TESTIMONY OF NICOLAS G. LUCIANI CASE NUMBER U-20471 PART II 1 2023, then a 2.5% escalation rate was applied each year on the forwards price for 2024
2 through 2040.6 This forecast was utilized across all scenarios and sensitivities.
3 Q. How was the commodity price for oil obtained?
4 A. The forecasted price of fuel oil was determined by using the NYMEX futures prices. For
5 the first two years of the forecast, fuel oil supply pricing was market index based with a
6 constant markup applied by the supplier. Beyond that, through 2040, the PACE forecast
7 was used.7 This forecast was utilized across all scenarios and sensitivities.
8 Q. Does Staff have any further comments on the commodity forecasts provided by the
9 Company?
10 A. Yes. DTE did not use the unaltered AEO natural gas price forecast for the scenarios
11 required by the MIRPP, as explained above. To support the process utilized by the
12 Company, Exhibits A-41 and A-42 provide historical predictions. Between 2009 and 2017,
13 the predictions provided by CME/NYMEX are, on average, more accurate than those
14 provided by the AEO natural gas forecast. Staff finds the use of a combination of
15 CME/NYMEX futures and AEO forecasts for the near-term future acceptable for the
16 purposes of this IRP, but encourages the Company to use the forecast specified by the
17 MIRPP in the next IRP, because of its availability to the public and intervening parties.
18 Staff finds this level of transparency critical to the IRP process.
19 Q. Was Staff able to reconstruct the commodity price forecasts?
20 A. Not entirely. Staff was unable to reconstruct oil and coal prices. For these fuels, DTE opted
21 for a long-term forecast provided by PACE, which relied on data that isn’t publicly
6 Id, at p. 13. 7 Id, at p. 14.
9 DIRECT TESTIMONY OF NICOLAS G. LUCIANI CASE NUMBER U-20471 PART II 1 available. The Company provided some insight into the development of these forecasts
2 and a direct comparison with the corresponding AEO forecasts in discovery requests from
3 Staff.8
4 Q. While not possible to reconstruct, does Staff find DTE’s forecasts for oil and coal
5 acceptable?
6 A. Staff finds the methodologies and forecasts reasonable, but would like to point out that
7 these forecasts are consistently lower than their AEO counterparts over the long term (after
8 2024). However, these prices don’t influence the development of new resources selected
9 in the near-term or any of the long-term PCA paths because new resources don’t use either
10 type of fuel. Therefore, Staff finds these forecasts acceptable for the purpose of this IRP.
11 Q. How were the transportation and delivery costs for natural gas obtained?
12 A. Depending on the plant and location, transportation costs were based on either existing
13 agreements or general tariff rates.9
14 Q. How were the transportation and delivery costs for coal obtained?
15 A. The near-term transportation rates come from existing contract prices. After the expiration
16 of those, the rates were computed by applying adjustments to existing contract rates using
17 either contractually prescribed rate increases or rate increases based upon contractually
18 defined cost indices. In the latter case, historical data was utilized to project future rate
19 adjustments.10
20 Q. How were the transportation and delivery costs for oil obtained?
8 Discovery STDE-17.2, STDE-17.3a 9 The pre-filed Direct Testimony of Pratt, p. 12. 10 The pre-filed Direct Testimony of Pratt, p. 13.
10 DIRECT TESTIMONY OF NICOLAS G. LUCIANI CASE NUMBER U-20471 PART II 1 A. This information was not provided in the Company’s initial filing. Staff kindly requests
2 that DTE provide them in their next IRP filing.
3 Q. Does Staff find the methodologies used by the Company to develop transportation and
4 delivery costs reasonable?
5 A. Yes, apart from oil transportation and delivery costs that Staff is not privy to.
6 Q. Did the Company include a fuel cost sensitivity under each scenario where the natural gas
7 price reaches at least 200% of the BAU natural gas price projection by the end of the study
8 period as required by the MIRPP?
9 A. Yes.
10 Q. Did the Company model other natural gas price scenarios beyond those required in the
11 MIRPP?
12 A. Yes. In its “reference” scenario, the Company utilized an alternative natural gas forecast
13 provided by PACE. PACE has provided natural gas forecasts to DTE starting in 2014, and
14 for the forecasts provided between 2014 and 2017, these forecasts have been overall more
15 accurate than the corresponding AEO forecasts, as shown in Exhibit A-43.
16 Q. Does Staff have any further comments?
17 A. Yes. The modeling process followed by the Company was overly complex, and this
18 affected many areas of the review of the IRP by Staff, including fuel forecasting. The
19 analysis of the fuel forecasts proved to be overly burdensome to Staff. While Staff
20 appreciates DTE providing a sizeable amount of the underlying data, the myriad of
21 workpapers provided often lacked appropriate labeling or utilized inconsistent
22 nomenclature across different workpapers, making validation of this data difficult.
23 Q. Does Staff have any recommendations?
11 DIRECT TESTIMONY OF NICOLAS G. LUCIANI CASE NUMBER U-20471 PART II 1 A. Yes. Staff recommends the Company do the following in its future IRPs:
2 a) Simplify and streamline the modeling process, as described by Staff witness
3 Doherty.
4 b) When providing worksheets, keep nomenclature consistent across different
5 worksheets, and ensure appropriate labeling is provided.
6 c) When the AEO forecast is not used, include a direct comparison with AEO data
7 and clear rationale to support the Company’s decision.
8 Q. Does this conclude your testimony?
9 A. Yes, it does.
12 S T A T E OF M I C H I G A N
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
* * * *
In the matter of the Application of ) DTE ELECTRIC COMPANY for ) approval of its Integrated Resource Plan ) Case No. U-20471 pursuant to MCL 460.6t, and for other relief ) )
EXHIBIT OF
NICOLAS G. LUCIANI
MICHIGAN PUBLIC SERVICE COMMISSION
August 21, 2019 Michigan Public Service Commission Case U-20471 DTE Electric Company Exhibit No. S-2.0 IRP Filing Requirements Witness Nicolas G. Luciani 1 of 21 "X" = Requirement in filing Integrated Resource Plan Filing Requirements "O" = Requirement in discovery response (MPSC Case No. U‐15896, 12/20/2017 Order, Exhibit A) " " = Requirement not found
Line Testimony Reference Exhibit Reference Workpaper Reference No. Requirement Met? Witness (Section, Page Number) (Exhibit Number, Page Number) (Workpaper Number, Page Number) 1 Filing Schedule: Staff comment: not applicable, the schedule for the first Integrated Resource Plans subsequent to PA 341 6(t) was set forth in U ‐ 18496.
2 A utility shall coordinate with the Commission Staff (Staff) in advance of filing its X application to avoid resource challenges with IRP applications being filed at the same time as IRP applications filed by other utilities. 3 Filing Announcement: To facilitate the scheduling and preparation of IRP proceedings, a utility, who intends to file an IRP on a date other than its scheduled filing date, shall file a filing announcement, in a new docket, at least 30 calendar days prior to the 4 a) Statement of intent to file an IRP X Staff comment: not applicable, DTE filed on the date scheduled in U ‐ 18496. 5 b) Estimated date of filing X c) Information related to any stakeholder engagement meetings that have already 6 X taken place or are scheduled to take place d) Information related to any Certificate of Necessity application that would be 7 X filed with the utility’s IRP 8 Pre‐Filing Request for Proposals: Each electric utility whose rates are regulated by the Commission shall issue a Staff comment: not applicable, the Company did not issue an RFP as it is not seeking any new resources in the first three years that weren't approved in request for proposals (RFP) to provide any new supply‐side capacity resources previous cases. needed to serve the utility’s reasonably projected electric load, applicable 9 planning reserve margin, and local clearing requirement for its customers in this X state, as well as customers located in other states but served by the utility, during the initial three‐year planning period to be considered in each IRP to be filed, as outlined in MCL 460.6t. 10 Stakeholder Engagement and Public Outreach Process: Documentation demonstrating the public outreach process undertaken by the utility shall be included with the IRP filing. Documentation may include:
WP SGP‐1 Technical Workshop Documents; WP SGP‐2 First Public Open House Exhibtit A3: 4.7 Stakeholder Documents; WP SGP‐3 Second Public Open 11 a) Workshop dates and times, including times outside of the workday X Pfeuffer Pfeuffer: Part III Q 48 Involvement in the IRP House Documents; WP SGP‐4 Third Public Open House Documents, WP SGP‐5 IRP Email Documents
WP SGP‐1 Technical Workshop Documents; WP SGP‐2 First Public Open House Exhibit A3: 4.7 Stakeholder Documents; WP SGP‐3 Second Public Open 12 b) Evidence that notice of the workshops was provided to the public X Pfeuffer Pfeuffer III: Q 48 involvement in the IRP. House Documents; WP SGP‐4 Third Public Open House Documents, WP SGP‐5 IRP Email Documents
WP SGP‐1 Technical Workshop Documents; WP SGP‐2 First Public Open House Documents; WP SGP‐3 Second Public Open 13 c) Meeting minutes X Pfeuffer no None House Documents; WP SGP‐4 Third Public Open House Documents, WP SGP‐5 IRP Email Documents Michigan Public Service Commission Case U-20471 DTE Electric Company Exhibit No. S-2.0 IRP Filing Requirements Witness Nicolas G. Luciani 2 of 21 "X" = Requirement in filing Integrated Resource Plan Filing Requirements "O" = Requirement in discovery response (MPSC Case No. U‐15896, 12/20/2017 Order, Exhibit A) " " = Requirement not found
Line Testimony Reference Exhibit Reference Workpaper Reference No. Requirement Met? Witness (Section, Page Number) (Exhibit Number, Page Number) (Workpaper Number, Page Number)
WP SGP‐1 Technical Workshop Documents; WP SGP‐2 First Public Open House Documents; WP SGP‐3 Second Public Open 14 d) Meeting or workshop attendance lists X Pfeuffer no None House Documents; WP SGP‐4 Third Public Open House Documents, WP SGP‐5 IRP Email Documents
WP SGP‐1 Technical Workshop Documents; WP SGP‐2 First Public Open House e) Participant comments on the last approved IRP and/or inputs into the proposed Documents; WP SGP‐3 Second Public Open 15 X Pfeuffer no None IRP application House Documents; WP SGP‐4 Third Public Open House Documents, WP SGP‐5 IRP Email Documents
WP SGP‐1 Technical Workshop Documents; WP SGP‐2 First Public Open House Documents; WP SGP‐3 Second Public Open 16 f) Discussion indicating if or how the public outreach process influenced the IRP X Pfeuffer no None House Documents; WP SGP‐4 Third Public Open House Documents, WP SGP‐5 IRP Email Documents
17 Risk Assessment: The utility’s IRP filing shall include a thorough risk analysis of the preferred plan and the optimal plans for each of the scenarios specified in the Michigan Exhibit A3, Section 5.3: Risk Assessment 18 Integrated Resource Planning Parameters (MIRPP), as well as all additional X Mikulan Mikulan: Q164‐Q175 Methodology; 15.7: Risk assessment of WP LKM 456 and LKM 457 scenarios and sensitivities filed with the IRP application. The plans should be each scenario feasible and differ in generation mix from the preferred plan and MIRPP plans. The IRP shall include a discussion of the methodology used for risk analysis Exhibit A3, Section 5.3: Risk Assessment 19 including the utility’s justification for the chosen methodology over other X Mikulan Mikulan: Q166‐Q167 Methodology, 15.7: Risk assessment of N/A alternatives. each scenario Michigan Public Service Commission Case U-20471 DTE Electric Company Exhibit No. S-2.0 IRP Filing Requirements Witness Nicolas G. Luciani 3 of 21 "X" = Requirement in filing Integrated Resource Plan Filing Requirements "O" = Requirement in discovery response (MPSC Case No. U‐15896, 12/20/2017 Order, Exhibit A) " " = Requirement not found
Line Testimony Reference Exhibit Reference Workpaper Reference No. Requirement Met? Witness (Section, Page Number) (Exhibit Number, Page Number) (Workpaper Number, Page Number) 20 Confidential Information: Transparency and the use of data that can be shared with the Commission, the Staff, and intervenors is encouraged. Proprietary, confidential, and other nonpublic materials used in the development of the forecasts, scenarios, or other aspects of the IRP shall be presented in such a way that the proprietary and 21 O Mikulan / Pratt confidential nature of the materials is preserved. The use of publicly available data and materials is encouraged in lieu of proprietary and confidential materials, and claims that information is proprietary or confidential should be justified by the utility. 22 Approval of Costs: For the Commission to specify the costs to be approved for the construction of or significant investment in supply or demand‐side facilities, or contractual agreements, excluding short‐term market capacity purchases to meet state I) For specific supply‐side resources of less than 225 MW, that are planned to go Staff comment: not applicable. Nothing going into service in next 3 years. 23 into service within three years following the approval of the IRP, the following X evidence (covering the lifespan of the project) shall be provided: a) A description of the plant size, type, and summary of engineering/design 24 X specifications. The description shall also include the following: i. Description of fuel use, both primary and back‐up, and provisions for 25 X transporting and storing fuel 26 X 27 iii. Annual depreciation on the capital investment X 28 b) Projected annual return and income taxes on capital investment X c) The O&M costs over the life of the facility described as costs which are variable, 29 in current dollars per kWh, with expenses for fuel and non‐fuel items indicated X separately; and costs which are fixed, in current dollars per kilowatt 30 d) Projected property taxes X 31 e) The rates of escalation of cost, including: X 32 i. Capital costs X 33 ii. O&M costs which are variable and related to fuel X 34 iii. O&M costs which are variable and unrelated to fuel X 35 iv. O&M costs which are fixed X f) The total annual average cost per kWh at projected loads in current dollars for 36 X each year of the plan for the proposed facility g) Equivalent availability factors, including both scheduled and forced outage 37 X rates 38 h) Capacity factors for each year in the planning period X i) Operation cycle (i.e., baseload, intermediate, or peaking), identifying expected 39 hours per year of operation, number of starts per year, and cycling conditions for X each year in the planning period 40 j) Heat rates (efficiency) for various levels of operation X k) Unit lifetime, both for accounting book purposes and engineering design 41 X purposes, with explanations of differences l) Lead time, separately identifying the estimated time required for engineering, 42 permitting and licensing, design, construction and pre‐commercial operation date X testing m) Potential socioeconomic impacts, such as employment, for the local region of the proposed supply‐side resource, construction of or significant investment in an 43 X electric generation facility, or the purchase of an existing electric generation facility Michigan Public Service Commission Case U-20471 DTE Electric Company Exhibit No. S-2.0 IRP Filing Requirements Witness Nicolas G. Luciani 4 of 21 "X" = Requirement in filing Integrated Resource Plan Filing Requirements "O" = Requirement in discovery response (MPSC Case No. U‐15896, 12/20/2017 Order, Exhibit A) " " = Requirement not found
Line Testimony Reference Exhibit Reference Workpaper Reference No. Requirement Met? Witness (Section, Page Number) (Exhibit Number, Page Number) (Workpaper Number, Page Number) II) Renewable Resources: The utility shall file data consistent with its renewable Staff comment: not applicable. The Company is not requesting cost recovery of renewable resources in the first 3 years. energy plan. (For incremental renewable energy beyond the 15% requirement in 2021 and any renewable energy to be constructed or purchased after the 45 X conclusion of the 20‐year renewable planning period ending in 2029, the utility shall file as set forth below.) Revenue requirement and incremental costs of compliance shall be calculated to include the following: a) Capital, operating and maintenance costs for renewable energy systems 46 X (including property taxes and insurance for renewable energy systems) 47 b) Financing costs X c) Costs that are not otherwise recoverable in base rates including interconnection 48 X and substation costs 49 d) Ancillary service costs X e) Cost of purchased renewable energy credits (RECs) other than those purchased 50 X for non‐compliance 51 f) Cost of contracts X g) Expenses incurred as a result of governmental action including changes in tax or 52 X other laws h) Subtract revenues (i.e., transfer price, environmental attributes, interest on 53 X regulatory liability, etc.) through 2029 i) Recovery to include the authorized rate of return on equity, which will remain 54 fixed at the rate of return and debt to equity ratio that was in effect in base rates X when the renewable plan was approved (only through 2029) j) Provide the following information in relation to renewable resource cost 55 X recovery: i. Forecast through the end of the renewable plan period of the non‐volumetric 56 X surcharge ii. Forecast through the end of the renewable plan period of the regulatory 57 X liability balance Staff comment: not applicable. The Company is not requesting cost recovery of demand response and energy waste reduction in the first 3 years. III) Demand Response and Energy Waste Reduction: The utility shall provide the following information in relation to demand response programs, energy waste 59 X reduction programs, and distributed generation programs cost approval and recovery. For each individual program or group of programs, provide:
60 a) Total annual cost including: X i. Annual O&M cost for each individual portfolio of energy waste reduction, 61 X demand response, and distributed generation programs ii. Annual capital cost for each individual portfolio of energy waste reduction, 62 X demand response, and distributed generation programs iii. Expected cost‐sharing or financial incentive granted to the utility by the 63 X Commission b) Total demand reduction potential (MW), including the amount of load 64 reduction and the expected hours of interruption per day, month, and year for X each program, if applicable 65 c) Maximum single event demand reduction X d) Total resource capacity (MW) and type (load modifying resource, emergency 66 X demand response, etc.) reported to the applicable RTO/ISO 67 e) Total energy reduction achieved (MWh) X f) Description of program, including customer enrollment, technology used, and 68 X marketing plan 69 Waivers and Process for Smaller and Multistate Utilities: Michigan Public Service Commission Case U-20471 DTE Electric Company Exhibit No. S-2.0 IRP Filing Requirements Witness Nicolas G. Luciani 5 of 21 "X" = Requirement in filing Integrated Resource Plan Filing Requirements "O" = Requirement in discovery response (MPSC Case No. U‐15896, 12/20/2017 Order, Exhibit A) " " = Requirement not found
Line Testimony Reference Exhibit Reference Workpaper Reference No. Requirement Met? Witness (Section, Page Number) (Exhibit Number, Page Number) (Workpaper Number, Page Number) An electric utility with fewer than 1,000,000 customers in this state may request a Staff comment: not applicable, no waiver requested. waiver to any portion of these IRP filing requirements. Any request for a waiver shall include a discussion and justification outlining why the waiver is warranted 70 and in the best interest of its customers. Discussion and justification for the X requested waiver shall include a description of the utility’s current and forecasted energy and capacity needs, and its plan for meeting those needs over the upcoming ten years. An electric utility with fewer than 1,000,000 customers in this state may request 71 X approval from the Commission to file an IRP jointly with other smaller utilities.
A non‐multistate Michigan electric utility serving fewer than 1,000,000 customers may elect to file an IRP, based on its specific circumstances, that deviates from these requirements, but that is subject to the Staff’s ability to request 72 X supplemental information. The filing shall include an explanation of why the deviations are reasonable under its circumstances. The Commission shall review any such filings under the traditional “just and reasonable” standard.
73 IRP Report and Documentation: The utility’s IRP filing shall demonstrate compliance with MCL 460.6t and include the following items: a) Letter of transmittal expressing commitment to the approved preferred resource plan and resource acquisition strategy and signed by an officer of the 74 utility having the authority to commit the utility to the resource acquisition X strategy, acknowledging that the utility reserves the right to make changes to its resource acquisition strategies as appropriate due to changing circumstances Dimitry Attachment A to application
b) Technical volume(s) that fully describe and document the utility’s analysis and 75 X decisions in selecting its preferred resource plan and resource acquisition strategy Mikulan ‐ Full testimony Exhibit A3, A4 c) The data and information requested in the Commission’s IRP filing 76 X requirements included herein Mikulan ‐ Full testimony Exhibit A3, A4 77 d) Any other information deemed relevant by the utility X Mikulan ‐ Full testimony Exhibit A3, A4 78 I) Executive Summary: Pfeuffer: Part II: Q19‐Q22: / Exhibit A3: Section 1 Executive 79 a) An overview of the planning period examined in the IRP analysis and application X Mikulan / IRP report Mikulan: Section I: Q25 Summary Paul: Characteristics of Dispatchable b) A brief introduction describing the utility, its existing facilities, existing Generation Resources: Q11‐ purchase power arrangements, existing demand‐side programs, existing demand‐ 80 X Q25; side rates, and the goal to be achieved by its proposed course of action and Farrell: Section I: Q14‐Q21; Exhibit A3: Section 1 Executive implementation strategy Mikulan: Section X: Q177‐ Summary Mikulan / Farrell / Paul Q183 A10‐A12: Unit Descriptions 81 II) Table of Contents: Shall be provided. 82 III) Table of Figures: Shall be provided. 83 IV) Introduction: The introduction shall include the following: 84 a) General description of the utility’s existing energy system, including: X
i. Net present value of utility revenue requirements, with and without any Exhibit A3: Section 17 Rate Impact and 85 X financial performance incentives for demand‐side resources Financial Information Holmes Holmes: Q10‐Q16 Exhibit A45: Rate Impact Michigan Public Service Commission Case U-20471 DTE Electric Company Exhibit No. S-2.0 IRP Filing Requirements Witness Nicolas G. Luciani 6 of 21 "X" = Requirement in filing Integrated Resource Plan Filing Requirements "O" = Requirement in discovery response (MPSC Case No. U‐15896, 12/20/2017 Order, Exhibit A) " " = Requirement not found
Line Testimony Reference Exhibit Reference Workpaper Reference No. Requirement Met? Witness (Section, Page Number) (Exhibit Number, Page Number) (Workpaper Number, Page Number) Exhibit A3: Section 15.1 Strategist® Optimization modeling results, Section 15.6 Additional Sensitivity Results Across all Scenarios Section 17: Rate Impact and 86 ii. Revenue requirement of existing generation and power purchase agreements X Financial Information; Exhibit A4: Appendix P, Appendix R; Exhibit A8: Proposed PCA revenue requirement; Mikulan: Section VIII: Q114‐ Exhibit A45: Rate Impact Holmes Q156; Holmes: Q9‐Q16 WP KAH‐2; WP KAH‐3 A3: Section 4.2 Existing Resource Portfolio, Section 7.7 Power Purchase Agreements, Section 87 iii. Summary of existing generation and power purchase agreements by fuel type X 14.9 Long‐term Power Purchase Paul: Characteristics of Agreements; Dispatchable A10‐A12: Unit Descriptions; Generation Resources: Q11‐ Exhibit A‐44 Existing Capacity Paul / Mikulan Q25 Resources Burgdorf: Company’s Existing Capacity Exhibit A3: Section 4.2 Existing 88 iv. Utility’s existing capacity resource mix X Resources Including Power Resource Purchase Portfolio Burgdorf / Mikulan Agreements, Q26 ‐ Q28 A44: Existing Capacity Resources Exhibit A3: Section 4.1 Company Overview, 89 v. Utility’s service territory and breakdown of customer class composition X Section 10.2 Customer Classes; A31: Leuker: Part I: Q13‐14; Part II: Major Mikulan / Leuker Q15‐Q18 Customer Classes 2014‐2018 Exhibit A3: Section 1 Executive Summary; 90 vi. Description of planning period analyzed X Pfeuffer: Part II: Q19‐Q22; Section 4.3 Capacity Outlook. Section Mikulan: Section I: Q25, Q54‐ 16 Mikulan 69 Proposed Course of Action Exhibit A3: 4.3 Capacity Outlook; A‐6 Starting Point (2018) Projected Pfeuffer: Part III: Q37‐Q39; Capacity 91 b) Statement of power need X Mikulan: Section II: Q25, Q28‐ Position; Q35; Section A‐7 PCA (2019) Projected Capacity Mikulan IV: Q60; Section X Q182 Position Exhibit A3: Section 4.4 Assumptions Across c) Identify and explain the basis for the forecasted price of energy, capacity, and Mikulan: Section IV: Q52‐ Scenarios & Sensitivities, Section 13.2 fuels, and of peak demand and energy requirements, for each year of the analysis Q57; Section V: Natural Gas, Section 13.3 Coal, Section 92 X used in each scenario and sensitivity evaluated by the utility as part of the IRP Q69 13.4 process Leuker: Part II, III & IV Q15‐ Oil; Exhibit A‐34 pg. 1; Exhibit A‐35 pg. Q45 1‐3; Mikulan / Leuker / Pratt Pratt: Part 2: Q21‐Q31 Exhibit A‐41‐A‐43 Michigan Public Service Commission Case U-20471 DTE Electric Company Exhibit No. S-2.0 IRP Filing Requirements Witness Nicolas G. Luciani 7 of 21 "X" = Requirement in filing Integrated Resource Plan Filing Requirements "O" = Requirement in discovery response (MPSC Case No. U‐15896, 12/20/2017 Order, Exhibit A) " " = Requirement not found
Line Testimony Reference Exhibit Reference Workpaper Reference No. Requirement Met? Witness (Section, Page Number) (Exhibit Number, Page Number) (Workpaper Number, Page Number) 93 d) Market and regulatory environment influencing resource planning decisions X 94 i. RTO market and state regulation structure if a multistate utility X Staff comment: not applicable. Burgdorf: Overview of the MISO Zone 7 95 ii. Potential changes to RTO capacity market X Forecasted Capacity Positions for PY 19/20, Exhibit A3: Section 4.5 Regulatory Burgdorf / Mikulan 20/21 and 21/22: Q22‐25 Environment & Market Dynamics Exhibit A3: Section 4.5 Regulatory 96 iii. Electric customer choice X Mikulan Leuker: Part II: Q18 Environment & Market Dynamics Exhibit A3: Section 4.5 Regulatory Environment & Market Dynamics, 97 iv. Transmission expansion X Hunnell: ITC Transmission Section Mikulan Evaluation: Q16 12.3 ITC's Transmission Evaluation Exhibit A3: 4.5 Regulatory Environment & 98 v. Environmental X Market Dynamics, Section 18.3 Mikulan Marietta: Q11‐17 Environmental Compliance Exhibit A3: Section 4.5 Regulatory Environment & Market Dynamics, Section 9.1 Existing Renewable Energy 99 vi. Renewable portfolio standards X Standards; Exhibit A‐18 Summary of Renewable Mikulan Schroder: Part II: Q18‐Q27 Resources Exhibit A3: 4.5 Regulatory Environment 100 vii. Other X & Mikulan Market Dynamics Exhibit A3: Section 4.6 IRP Planning 101 e) IRP planning process X Mikulan Mikulan: Section I: Q12‐Q25 Process
WP SGP‐1 Technical Workshop Documents; WP SGP‐2 First Public Open House 102 f) Stakeholder report X Documents; WP SGP‐3 Second Public Open House Documents; WP SGP‐4 Third Public Pfeuffer Part III: Q48‐Q49; Exhibit A3: Section 4.7 Stakeholder Open House Documents, WP SGP‐5 IRP Mikulan Mikulan: Section I: Q26‐Q27 Involvement in the IRP Email Documents 103 V) Analytical Approach: Mikulan Section II Q28‐Q29; Exhibit A3, Section 5.2 Modeling 104 a) Describe the modeling process, including the duration of the study X Mikulan Section VII Q85‐Q110 process b) Describe and provide a justification for the risk analysis approach adopted from 105 X the Risk Assessment Methodology section
Exhibit A3: Section 5.3 Risk Assessment Methodology, Section 15.7 Risk assessment of each scenario, Section i. The utility shall describe and document its quantification of the risk that affects 106 X 15.8 Stochastic Risk Assessment, the evaluation of the various preferred resource plan options Section 15.9 Change Analysis Results, Section 15.10 Evaluation of Planning Mikulan: Section XI: Q164, Principles, Section 15.11 Review of Key Mikulan Q166‐Q176 IRP Inputs Michigan Public Service Commission Case U-20471 DTE Electric Company Exhibit No. S-2.0 IRP Filing Requirements Witness Nicolas G. Luciani 8 of 21 "X" = Requirement in filing Integrated Resource Plan Filing Requirements "O" = Requirement in discovery response (MPSC Case No. U‐15896, 12/20/2017 Order, Exhibit A) " " = Requirement not found
Line Testimony Reference Exhibit Reference Workpaper Reference No. Requirement Met? Witness (Section, Page Number) (Exhibit Number, Page Number) (Workpaper Number, Page Number)
Exhibit A3: Section 5.3 Risk Assessment Methodology, Section 15.7 Risk assessment of each scenario, Section ii. The utility shall provide a tabulation of the key quantitative results of that 15.8 Stochastic Risk Assessment, 107 analysis and a discussion of how those findings affected its decision on a resource X Section 15.9 Change Analysis Results, plan Section 15.10 Evaluation of Planning Principles, Section 15.11 Review of Key Mikulan: Section XI: Q164, IRP Inputs; A‐47 DTE Renewable Mikulan Q166‐Q176 Integration Whitepaper
c) The utility shall describe and document the identification of risk variables Exhibit A3: Section 5.3 Risk Assessment and/or combinations of risk variables selected, their ranges, probabilities, ranking, Methodology, Section 15.7 Risk and/or weighting that defines the risk quantification which the various preferred assessment of each scenario, Section 108 resource plan options were judged; describe how these risk variables were judged X 15.8 Stochastic Risk Assessment, to be appropriate and explain how these were determined; and describe the Section 15.9 Change Analysis Results, modeling tools and data sources employed during the capacity expansion, and Section 15.10 Evaluation of Planning other modeling processes Mikulan: Section XI: Q164, Principles, Section 15.11 Review of Key Mikulan Q166‐Q176 IRP Inputs WP LKM 456‐457 109 VI) Integrated Resource Plan Scenarios and Sensitivities: Exhibit A3: Section 6 IRP Scenario & 110 a) Include a detailed description of all scenarios and sensitivities X Sensitivities, Section 15 Modeling Mikulan Mikulan: Section IV: Q49‐Q60 Results Mikulan: Section I: Q26; b) In addition to the utility’s own scenarios and assumptions, the inclusion of the Section IV: Q49‐Q60; Section 111 established modeling scenarios and assumptions in the MIRPP approved by the X VI: Q83; Section VIII: Q125, Exhibit A3: Section 6 IRP Scenario & Commission in Case No. U‐18418, or as revised by subsequent Commission orders Q135, Q142, Q149, Q151‐ Sensitivities, Section 15 Modeling related to IRP modeling parameters and requirements Mikulan Q152 Results 112 VII) Existing Supply‐Side (Generation) Resources: Detailed account of projected energy and capacity purchased or produced by the utility’s owned and contracted resources, including cogeneration resources. Include data regarding the utility’s current 113 a) Overview; X Mikulan Exhibit A3: Section 7.1 Overview Paul: Characteristics of Exhibit A3: Section 7.2 Fossil‐Fueled 114 b) Fossil‐fueled generating units O Paul Dispatchable Generation Generating; Exhibit A‐10 Unit Resources: Q12‐Q17, Q19 Description Paul: Characteristics of Exhibit A3: Section 7.3 Nuclear 115 c) Nuclear generating units X Paul Dispatchable Generation Generating Units; Exhibit A‐10 Unit Resources: Q20 Descriptions Paul: Characteristics of Exhibit A3: Section 7.4 Hydroelectic 116 d) Hydroelectric generating units X Mikulan Dispatchable Generation Generating Units; Exhibit A‐11 Unit Resources: Q21‐Q22 Description Exhibit A3: Section 7.5 Renewable 117 e) Renewable generating units O Schroeder Schroeder: Part II: Q18‐Q19, Generating Units; Exhibit A‐18 Q22‐Q23, Q26, Q28 Summary of Renewable Resources Mikulan: Section VII: Q100; Chang: Summary of the Potential Impact of Exhibit A3: Section 7.6 Energy Storage 118 f) Energy storage facilities X Integrating Renewables into Facilities Lower Michigan’s Electricity Grid: Q9‐Q13 Michigan Public Service Commission Case U-20471 DTE Electric Company Exhibit No. S-2.0 IRP Filing Requirements Witness Nicolas G. Luciani 9 of 21 "X" = Requirement in filing Integrated Resource Plan Filing Requirements "O" = Requirement in discovery response (MPSC Case No. U‐15896, 12/20/2017 Order, Exhibit A) " " = Requirement not found
Line Testimony Reference Exhibit Reference Workpaper Reference No. Requirement Met? Witness (Section, Page Number) (Exhibit Number, Page Number) (Workpaper Number, Page Number) Burgdorf: Company’s Existing Exhibit A3: Section 7.7 Power Purchase g) Power purchase agreements: energy and capacity purchased or produced by Capacity Resources Including Agreements; 119 X Burgdorf the utility from a contracted resource, including any cogeneration resource Power Purchase Agreements, Exhibit A‐44 Existing Capacity Q26 ‐ Q28 Resources Exhibit A3: Section 7.8 Regional Burgdorf: Company’s Existing Transmission Operator; Unit Capacity h) RTO capacity credits and modeling of existing units (such as capacity factor, Capacity Resources Including 120 X Burgdorf Credits; heat rate, outage rate, in‐service and retirement dates, operating costs, etc.) Power Purchase Agreements, Exhibit A‐44 Existing Capacity Q26 ‐ Q28 Resources Burgdorf: Company’s Existing Exhibit A3: Section 7.9 Spot market Capacity Resources Including purchases and off‐system sales; 121 i) Spot market purchases and off‐system sales X Burgdorf / Mikulan Power Purchase Agreements, Exhibit A‐44 Existing Capacity Q26 ‐ Q28; Resources Mikulan: Section II: Q34 122 VIII) Demand‐Side Resources: Historical and projected load management and demand response programs for the utility in terms of MW and MISO ZRCs and the projected costs for those programs. a) Provide data on projected enrolled capacity and demand response events for 123 X each program. The following items are to be included:
A3: Sec 8 Demand Side Resources; i. Description of current demand response and load management programs for Exhibit A‐6 Starting Position (2018) 124 the IRP study horizon, including the amount of load reductions and the expected X Projected Capacity Position; Exhibit A‐7 hours of interruption per day, month, and year for each program PCA (2019) Projected capacity position, Farrell: Sec 1 Q 14‐21; Part III Exhibit A‐22: DR Exhisting dispatchable Farrell Q 31‐47 program for IRP modeling Farrell: Part III Q 46‐47, Exhibit A3: Sec 8 Demand‐side ii. Describe the utility’s method for determining whether to purchase energy 125 X Mikulan: Sec VIII: Q 151, Zhou Resources; exhibit A‐27 BM CVR rather than relying on demand response Mikulan/ Farrell Part I Q20 Report_final Exhibit A3: 8 Demand Side Resources; Exhibit A‐6 Starting Point (2018) iii. A description of any other programs the utility is considering that could Projected Capacity position; Exhibit A‐7 126 potentially expand demand response resources, including expected load X PCA (2019) Projected Capacity position; reductions and operating parameters Exhibit A‐22: Demand Response Farrell: Sec II: Q 24‐ 30, Part Existing Dispatchable Program for IRP Farrell III, Q 31‐38 modeling 127 IX) Renewables and Renewable Portfolio Standards Goals: Projected energy purchased or produced by the utility from a renewable energy resource.
Exhibit A3: Section 9.1 Existing Renewable Energy Standards, Section a) Describe how the electric provider will meet existing renewable energy 9.2 IRP Starting Point: Renewable standards. If the level of renewable energy purchased or produced is projected to 128 X Schroeder Schroeder: Part II: Q18‐Q24 Energy, Section 9.4 Proposed Course of drop over the planning periods, the utility must demonstrate why the reduction is Action: Renewable Energy in the best interest of ratepayers Exhibit A‐18 Summary of Renewable Resources
b) Specify whether the number of MWh of electricity used in the calculation of the renewable energy credit portfolio will be the previous 12‐month period of Exhibit A3: Section 9.1 Existing 129 weather‐normalized retail sales or based on the average number of MWh of X Schroeder Schroeder: Part I: Q14‐Q17 Renewable Standards electricity sold by the electric provider annually during the previous three years to retail customers in this state Michigan Public Service Commission Case U-20471 DTE Electric Company Exhibit No. S-2.0 IRP Filing Requirements Witness Nicolas G. Luciani 10 of 21 "X" = Requirement in filing Integrated Resource Plan Filing Requirements "O" = Requirement in discovery response (MPSC Case No. U‐15896, 12/20/2017 Order, Exhibit A) " " = Requirement not found
Line Testimony Reference Exhibit Reference Workpaper Reference No. Requirement Met? Witness (Section, Page Number) (Exhibit Number, Page Number) (Workpaper Number, Page Number) c) Include the expected incremental cost of compliance with existing renewable Exhibit A3: Section 9.1 Existing 130 X Schroeder energy standards for the required compliance period Renewable Standards
Exhibit A3: Section 9.1 Existing Renewable Energy Standards, Section d) A description of how the electric provider’s plan is consistent with the 9.2 IRP Starting Point: Renewable 131 renewable energy goals required by the Michigan Legislature (e.g. 35% combined X Bilyeu / Schroeder Schroeder: Part II: Q25 Energy, Section 9.4 Proposed Course of WP TLS‐2, Page 1 of 1 renewable energy and energy waste reduction goal by 2025) Action: Renewable Energy Exhibit A‐18 Summary of Renewable Resources
Exhibit A3: Section 9.3 Voluntary Green Schroeder: Part II: Q28‐Q29, Pricing Programs, Section 9.2 IRP e) Describe the options for customer‐initiated renewable energy that will be Q32‐Q35 Starting Point: Renewable Energy, 132 offered by the electric provider and forecast sales of customer‐initiated renewable X Leuker / Schroeder Leuker: Part II: Forecast Section 9.4 Proposed Course of Action: WP MBL‐12 DG Curves pg. 1‐4 energy Development and Renewable Energy; Assumptions: Q21 Exhibit A‐18 Summary of Renewable Resources Exhibit A3: Section 9.3 Voluntary Green f) Describe how the electric provider will meet the demand for customer‐initiated Pricing Programs; 133 X Schroeder Schroeder: Part II: Q32‐Q35 renewable energy. Exhibit A‐18 Summary of Renewable Resources
135 X Included below Included below Included below Included below The following non‐exhaustive list suggests several elements that may be included: a) Sales forecast through 2021 for compliance with the renewable energy Leuker: Exhibit A‐34 pg.1, Column f, 136 standard, through 2025 toward meeting the 35% goal, and through the study X Leuker Lines 28‐32 period 137 b) Detailed resource plan: X Included below Included below Included below Included below Exhibit A3: Section 9.1 Existing 138 i. Describe the utility’s planned renewable energy credit portfolio X Schroeder Renewable Standards Schroeder: Part I: Q15; Part Exhibit A3: Section 9.1 Existing 139 ii. Forecast RECs obtained via Michigan incentive RECs X II: Q36 Renewable Standards iii. Forecast expected compliance levels by year to meet the renewable portfolio Exhibit A3: Section 9.1 Existing 140 X Schroeder Schroeder: Part II: Q25 targets Renewable Standards Schroeder: Part II: Q26, Q33; iv. Identify key assumptions used in developing these forecasts and the proposed Exhibit A3: Section 9 Future Renewable 141 X Schroeder Part III: Q42‐Q45; Part IV: WP 460 (Modeling RE) resource portfolio Planning Q46‐Q51 142 v. Identify risks which may drive performance to vary. X Schroeder Schroeder: Part II: Q40‐Q41 Exhibit A3: Section 9.3 143 X) Peak Demand and Energy Forecasts: A long‐term forecast of the utility’s sales and peak demand under various reasonable scenarios. Include details regarding the utility’s plan to eliminate energy waste, including the total amount of energy waste Exhibit A3: Section 10.3 Demand Side Management & Emerging Technologies, Leuker: Part II Q22‐Q27, Part Section 10.5 IRP Starting Point: Sales & 144 X Leuker / Bilyeu / Farrell / Pfeuffer III: Q37 Demand Forecast; a) A forecast of the utility’s peak demand and details regarding the amount of Leuker: Exhibit A34 pg.1, Column f, peak demand reduction the utility expects to achieve, and the actions the utility Lines 26‐47 proposes to take in order to achieve that peak demand reduction; 145 b) Subsections: X (See below) (See below) Michigan Public Service Commission Case U-20471 DTE Electric Company Exhibit No. S-2.0 IRP Filing Requirements Witness Nicolas G. Luciani 11 of 21 "X" = Requirement in filing Integrated Resource Plan Filing Requirements "O" = Requirement in discovery response (MPSC Case No. U‐15896, 12/20/2017 Order, Exhibit A) " " = Requirement not found
Line Testimony Reference Exhibit Reference Workpaper Reference No. Requirement Met? Witness (Section, Page Number) (Exhibit Number, Page Number) (Workpaper Number, Page Number) Leuker: Part II: Forecast Exhibit A3, Section 10.2 Customer 146 i. Key variables used to develop forecast; X Leuker Development and Classes, Section 10.3 Demand Side WP MBL‐1 Starting Point Summary pg. 8 Assumptions: Q15‐27 Management & Emerging Technologies
147 ii. Long‐term forecasting methodology; X Leuker Leuker: Part II: Q15‐27 Exhibit A3: Section 10.1 Overview Exhibit A3, Section 10 Forecast Leuker: Part IV: Electric Load 148 iii. Forecasting uncertainty and risks; X Leuker Sensitivities; Forecast Sensitivities, Q38‐46 Leuker: Exhibit A‐35 pg. 1‐3 Leuker: Part III: Historical and Exhibit A3: Section 10.4 Prior Year Load iv. Historical growth in electric sales for the previous five years, including a record Forecast Electric Sales, Forecasts, Section 10.5 IRP Starting 149 X Leuker of its previous load forecasts (can be supplied in workpapers); Demand, and System Output, Point: Sales & Demand Forecast; Q28‐29 Leuker: Exhibit A‐36 pg. 1; Lines 1‐15 Leuker: Part IV: Electric Load Exhibit A3: Section 10.6 Forecast 150 v. Business as usual deliveries and demand forecast; X Leuker Forecast Sensitivities: Q38‐ Sensitivities, Table 10.5.3 Q40 Leuker: Exhibit A34 pg.1, Lines 26‐47 vi. Alternative forecast scenarios and sensitivities in accordance with the Leuker: Part IV: Electric Load Exhibit A3: Section 10.6 Forecast 151 Commission’s final order in Case No. U‐18418, or subsequent Commission orders X Leuker Forecast Sensitivities: Q38‐ Sensitivities relating to IRP modeling parameters and requirements. Q40 Leuker: Exhibit A‐35 pg. 1 152 XI) Capacity and Reliability Requirements: Burgdorf: Overview of the Resource Adequacy Exhibit A3: Section 11.2 Resource Requirements and Capacity Adeqacy Construct Market: Q12‐15; Company's Exhibit A‐6 Starting Point (2018) 153 The utility shall indicate how it complies, and will comply, with all applicable state, X Burgdorf Existing Capacity Rescources Projected Capacity Position; federal, ISO, RTO capacity and reliability regulations, laws, rules and Including PPA's: Q27; Exhibit A‐7 PCA (2019) Projected requirements, (such as planning reserve margins, system reliability and ancillary Overview of Current MISO Capacity Position; A‐47 DTE Renewable service requirements) including the projected costs/revenues of complying with Market‐Compensated Integration Whitepaper those regulations, laws, and rules. Ancillary Services, Q29‐31 Exhibit A3: Section 11.2 Resource Adeqacy Construct Paul: Characteristics of Exhibit A‐6 Starting Point (2018) Dispatchable Generation Projected Capacity Position; 154 X Mikulan, Paul, Schroeder Resources: Q11‐Q25; Exhibit A‐7 PCA (2019) Projected Schroeder: Part II: Q18‐Q19, Capacity Position The utility shall include data regarding the utility’s current generation portfolio, Q22‐Q23, Q26, Q28 Exhibits A‐10‐A12 Unit Descriptions; including the age, capacity factor, licensing status, and remaining estimated time Exhibit A‐18 Summary of Renewable of operation for each facility in the portfolio. Resources 155 XII) Transmission Analysis: In accordance with MCL 460.6t(5)(h), the utility shall include an analysis of potential new or upgraded electric transmission options for the utility. The utility’s analysis shall include the following information: Exhibit A3: Section 12.3 ITC's Transmission Evaluation; Mikulan: Section III: Q46‐Q47; a) The utility shall assess the need to construct new, or modify existing Exhibit A38.2 ITC Confirmation of PCA 156 X Mikulan / Hunnell Hunnell: ITC Transmission Evaluation, transmission facilities to interconnect any new generation and shall reflect the Consensus; Q16 estimated costs of those transmission facilities in the analyses of the resource A‐39 ITC’s transmission evaluation for DTE’s options IRP Michigan Public Service Commission Case U-20471 DTE Electric Company Exhibit No. S-2.0 IRP Filing Requirements Witness Nicolas G. Luciani 12 of 21 "X" = Requirement in filing Integrated Resource Plan Filing Requirements "O" = Requirement in discovery response (MPSC Case No. U‐15896, 12/20/2017 Order, Exhibit A) " " = Requirement not found
Line Testimony Reference Exhibit Reference Workpaper Reference No. Requirement Met? Witness (Section, Page Number) (Exhibit Number, Page Number) (Workpaper Number, Page Number) Exhbit A3: Section 12.2 Collaboration with ITC Exhibit A‐38.1 Notes of Meetings between Hunnell: Collaboration with ITC, Q10; ITC and DTE Electric; 157 X Hunnell ITC Transmission Evaluation, Q16 Exhibit A38.2 ITC Confirmation of PCA b) A detailed description of the utility’s efforts to engage local transmission Consensus owners in the utility’s IRP process in an effort to inform the IRP process and A‐39 ITCs Transmission Evaluation for DTE assumptions, including a summary of meetings that have taken place IRP Exhibit A3: Section 11.2 Resource Adequacy Burgdorf: Overview of the Effective Construct, Section 12.3 ITC's Transmission 158 X Burgdorf Capacity Import Limit (ECIL) for MISO c) Current transmission system import and export limits as most recently Evaluation; A‐47 DTE Renewable Zone 7; Q16‐Q17 documented by the RTO and any local area constraints or congestion concerns Integration Whitepaper A‐38.2: ITC Confirmation of PCA Consensus Hunnell: ITC Evaluation: Q12‐Q19; A‐39: ITC’s transmission evaluation for d) Any information provided by the transmission owner(s) indicating the Capacity Import and Export Limits: Q20 ‐ 159 X Hunnell DTE’s IRP anticipated effects of fleet changes proposed in the IRP on the transmission Q31; Other Transmission System A‐40 MISO’s Attachment Y Study Report for system, including both generation retirements and new generation, subject to Impacts of Unit Retirements: Q32‐Q35 Trenton Channel 9 confidentiality provisions
e) Any information provided by the transmission owner(s), including cost and Exhibit A3: 12.2 Collaboration with ITC, timing, indicating potential transmission options that could impact the utility’s IRP Section 12.3 ITC's Transmission Evaluation; by: (1) increasing import or export capability; (2) facilitating power purchase Hunnell: ITC Evaluation: Q12‐Q19; Exhibit A38.2 ITC Confirmation of PCA 160 agreements or sales of energy and capacity both within or outside the planning X Hunnell Capacity Import and Export Limits: Q20 ‐ Consensus zone or from neighboring RTOs; (3) transmission upgrades resulting in increasing Q31 A‐39 ITCs Transmission Evaluation for DTE system efficiency and reducing line loss allowing for greater energy delivery and IRP reduced capacity need; and (4) advanced transmission and distribution network technologies affecting supply‐side resources or demand‐side resources. 161 XIII) Fuel: The utility shall include the following: 162 a) Overview X Pratt Pratt: Part 1: Q11‐Q19 Exhibit A3: Section 13.1 Overview Pratt: Part 2: Q21‐Q26; Mikulan Section V: 163 b) Natural gas price forecasts under the various scenarios X Mikulan / Pratt Exhibit A3: Section 13.2 Natural Gas MODELING ASSUMPTIONS, p. 43‐44 Pratt: Part 2: Q31‐Q32; Mikulan Section V: 164 c) Oil price forecasts under the various scenarios X Mikulan / Pratt Exhibit A3: Section 13.4 Oil MODELING ASSUMPTIONS, p. 43‐44 Pratt: Part 2: Q27‐Q29; Mikulan Section V: 165 d) Coal price forecasts under the various scenarios X Mikulan / Pratt Exhibit A3: Section 13.3 Coal MODELING ASSUMPTIONS, p. 43‐44
166 e) Delivered natural gas prices to existing and new utility‐owned generating plants X Pratt Pratt: Part 2: Q21‐Q26 Exhibit A4: Appendix I
167 f) Delivered oil prices to existing and new utility‐owned generating plants X Pratt Pratt: Part 2: Q31‐Q32 Exhibit A4: Appendix H 168 g) Delivered coal prices to existing and new utility‐owned generating plants X Pratt Pratt: Part 2: Q27‐Q29 Exhibit A4: Appendix G 169 h) Projected annual fuel costs under the various scenarios X Mikulan / Pratt No No WP LKM 621‐636 i) The projected long‐term firm gas transportation contracts or natural gas storage 170 the utility will hold to provide an adequate supply of natural gas to any new and X Pratt Pratt: Part 1: Q15‐Q16 Exhibit A3: Section 13.2 Natural Gas WP‐RCP‐1 existing generation facility. 171 XIV) Resource Screen: Describe the utility’s options of resources, including combinations of resources, to serve future electric load such as utilizing existing and planned generation resources, build a new facility, purchasing capacity from the market on a Michigan Public Service Commission Case U-20471 DTE Electric Company Exhibit No. S-2.0 IRP Filing Requirements Witness Nicolas G. Luciani 13 of 21 "X" = Requirement in filing Integrated Resource Plan Filing Requirements "O" = Requirement in discovery response (MPSC Case No. U‐15896, 12/20/2017 Order, Exhibit A) " " = Requirement not found
Line Testimony Reference Exhibit Reference Workpaper Reference No. Requirement Met? Witness (Section, Page Number) (Exhibit Number, Page Number) (Workpaper Number, Page Number) Exhibit A3, Section 14.2 Existing and WP LKM‐672 2019 IRP Inputs ‐ All Plants 172 a) Existing and planned generation X Mikulan Planned Resources Base Case (SP Cap & O&M) 173 b) New build: X Exhibit A3, Section 14.3 Technical 174 i. New generation technology and operating assumptions X Mikulan pp 24‐26, 64‐73, Feasibility Screening, Exhibit A18 Mikulan / Schroeder Schroeder pp 7‐18, 21‐22 Summary of Renewable Resources Exhibit A3, Section 14.3 Technical Feasibility Screening, Section 14.4 Levelized Cost of Energy Screening, 175 ii. New generation development costs X Section 14.5 Market Valuation Mikulan pp 24‐25, Schroder Screening, Exhibit A‐19 Wind and Solar Mikulan / Schroeder pp 19‐23 Installed Cost Projections WP LKM‐448 LCOE Exhibit A‐3: Section 14.6 Energy Storage Technologies, Exhibit A‐4: 176 iii. New energy integration of storage technology and operating assumptions X Appendix C Lithium‐Ion Battery Installed Costs, Exhibit A‐47: DTE Mikulan / Chang Mikulan pp 64‐73, 104 Renewable Integration Whitepaper Exhibit A‐3: Section 14.6 Energy Storage Technologies, Exhibit A‐4: 177 iv. New energy storage development costs X Appendix C Lithium‐Ion Battery WP LKM ‐ 449 Master Tech and Finance Mikulan Mikulan p 104 Installed Costs Inputs Michigan Public Service Commission Case U-20471 DTE Electric Company Exhibit No. S-2.0 IRP Filing Requirements Witness Nicolas G. Luciani 14 of 21 "X" = Requirement in filing Integrated Resource Plan Filing Requirements "O" = Requirement in discovery response (MPSC Case No. U‐15896, 12/20/2017 Order, Exhibit A) " " = Requirement not found
Line Testimony Reference Exhibit Reference Workpaper Reference No. Requirement Met? Witness (Section, Page Number) (Exhibit Number, Page Number) (Workpaper Number, Page Number) 178 c) Distributed generation: X Exhibit A‐3: Section 14.6 Distributed 179 i. Solar photovoltaic (including solar plus storage) X Mikulan Mikulan pp 50, 51, 104 Generation Resources 180 ii. Biogas X Mikulan Mikulan p 66 WP LKM ‐ 448 LCOE Exhibit A‐3: Section 14.3 technical Feasibility Screening, Section 14.4 181 iii. Energy storage X Levelized Cost of Energy Screening, Section 14.7 Distributed Generation WP LKM ‐ 448 LCOE, WP LKM ‐ 670 Lithium Mikulan Mikulan p 69‐74 Resources Ion Inputs Exhibit A‐3: Section 14.3 technical Feasibility Screening, Section 14.4 182 iv. Other distributed generation X Levelized Cost of Energy Screening, Section 14.7 Distributed Generation Mikulan Mikulan p 50 Resources WP LKM ‐ 448 LCOE 183 d) Market capacity purchases: X Exhibit A‐3: Section 4.3 Capacity Outlook, Section 4.5 Regulatory Environment & Market Dynamics, 184 i. Regional market supply outlook X Section 11.2 Resource Adequacy Construct, Section 14.8 Market Capacity Purchases; A‐47 DTE Burgdorf Burgdorf pp 8‐14 Renewable Integration Whitepaper WP SDB‐2 Zone 7 Resource Forecast Exhibit A‐3: Section 4.3 Capacity Outlook, Section 4.5 Regulatory Environment & Market Dynamics, 185 ii. Availability of market capacity X Section 14.8 Market Capacity Purchases; A‐47 DTE Renewable Burgdorf Burgdorf pp 8‐14 Integration Whitepaper WP‐SDB‐1 ECIL Calculation
Exhibit A‐3: Section 4.3 Capacity 186 iii. Market capacity price assumptions X Outlook, Section 4.5 Regulatory Mikulan pp 27‐29, Burgdorf Environment & Market Dynamics, WP LKM‐674 Cost of New Entry PY 2019‐ Mikulan / Burgdorf pp Section 14.8 Market Capacity Purchases 2020 Exhibit A‐3: Section 14.9 Long‐term 187 e) Long‐term power purchase agreements X Power Purchase Agreements; Exhibit A‐ Burgdorf Burgdorf pp 14‐16 44 Existing Capacity Resources 188 f) Transmission resources: X Exhibit A‐3: Section 12.1 Transmission 189 i. Overview X Hunnell N/A Overview
Exhibit A‐3: Section 12.3 ITC's 190 ii. Existing import and export capability X Transmission Evaluations, Exhibit A‐47 Hunnell Hunnell p 8 DTE Renewable Integration Whitepaper Exhibit A‐3: Section 12.2 Collaboration with ITC, Section 12.3 ITC's 191 iii. Transmission network upgrade assumptions for the IRP X Transmission Evaluation; Exhibit A‐39: ITC's Transmission Evaluation for DTE Hunnell Hunnell pp 4‐11 IRP Burgdorf pp 8‐9, Hunnell pp 8‐ 192 iv. Import and export impact on resource strategy X Burgdorf / Hunnell 11 N/A Michigan Public Service Commission Case U-20471 DTE Electric Company Exhibit No. S-2.0 IRP Filing Requirements Witness Nicolas G. Luciani 15 of 21 "X" = Requirement in filing Integrated Resource Plan Filing Requirements "O" = Requirement in discovery response (MPSC Case No. U‐15896, 12/20/2017 Order, Exhibit A) " " = Requirement not found
Line Testimony Reference Exhibit Reference Workpaper Reference No. Requirement Met? Witness (Section, Page Number) (Exhibit Number, Page Number) (Workpaper Number, Page Number) 193 XV) Modeling Results: An analysis of the capital costs, energy production, energy production costs, fuel costs, energy served, capacity factor, emissions (levels and costs), and viability of all reasonable options available to meet projected energy and Mikulan: Section I: Q12‐Q27: a) Description of IRP portfolio design strategy (portfolio optimized for least cost, Section VII: 194 value maximization, reliability, risk minimization, environmental specification etc., X Q90‐110 Exhibit A3: Section 15.1 Strategist® or a particular combination) Mikulan / Pfeuffer Pfeuffer: Part II: Q19‐22 Optimization modeling results
Exhibit A3: 15.1 Strategist® Optimization modeling results, Section 15.2 Reference b) Scenario and sensitivity results, including annual revenue requirements, Scenario Results, Section 15.3 Business present value of annual revenue requirements and net present value of revenue as 195 X requirements, and portfolio capacity including additions and retirements. Include Usual Scenario Results, Section 15.4 monthly and annual energy pricing, and resource capacity and load factors Emerging Technology Scenario Results, Section 15.5 Environmental Policy Scenario All but monthly and annual energy pricing: Results, Section 15.6 Additional WP LKM 501‐647; monthly and annual Mikulan: Section VIII: Q111‐ Sensitivity energy pricing: WP LKM 42, 86, 211, 260, Mikulan Q157 Results Across all Scenarios 310, 317, 346, 379, 408 Exhibit A3: Section 15.1 Strategist® Optimization modeling results, Section 15.2 196 c) Business as usual/reference case portfolios options to be selected from X Reference Scenario Results, Section Mikulan: Section VIII: Q135‐ 15.3 Mikulan 141 Business as Usual Scenario Results
Exhibit A3: 15.1 Strategist® Optimization modeling results, Section 15.2 Reference Scenario Results, Section 15.3 Business as 197 d) Analysis of IRP results X Usual Scenario Results, Section 15.4 Emerging Technology Scenario Results, Section 15.5 Environmental Policy Scenario Results, Section 15.6 Additional Mikulan: Section VIII: Q111‐ Sensitivity Mikulan Q163 Results Across all Scenarios Exhibit A3: 15.7 Risk assessment of 198 e) Risk assessment of each scenario. X Mikulan: Section IX: Q166‐ each Mikulan Q175 scenario Michigan Public Service Commission Case U-20471 DTE Electric Company Exhibit No. S-2.0 IRP Filing Requirements Witness Nicolas G. Luciani 16 of 21 "X" = Requirement in filing Integrated Resource Plan Filing Requirements "O" = Requirement in discovery response (MPSC Case No. U‐15896, 12/20/2017 Order, Exhibit A) " " = Requirement not found
Line Testimony Reference Exhibit Reference Workpaper Reference No. Requirement Met? Witness (Section, Page Number) (Exhibit Number, Page Number) (Workpaper Number, Page Number) 199 XVI) Proposed Course of Action: Include a detailed description of: Exhibit A3: Section 16 Proposed Course a) The type of generation technology proposed for a generation facility contained of Actions; Exhibit A‐5 DTE Electric 200 in the plan and the proposed capacity of the generation facility, including X starting point and proposed course of projected fuel costs under various reasonable scenarios Mikulan Mikulan: Section X: Q182 action details WP LKM 501‐647
Exhibit A3: Section 16 Proposed Course of Action; b) Plans for meeting current and future capacity needs with the cost estimates for Exhibit A‐5 DTE Electric starting point all proposed construction and major investments, including any transmission or Mikulan: Section X: Q178‐ and proposed course of action details; 201 X Mikulan distribution infrastructure that would be required to support the proposed Q182 Exhibit A‐7 PCA (2019) Projected construction or investment, and power purchase agreements Capacity Position; A‐39 ITC’s transmission evaluation for DTE’s IRP c) The projected long‐term firm gas transportation contracts or natural gas 202 storage the utility will hold to provide an adequate supply of natural gas to any X Pratt Pratt: Part 2: Q15‐Q16 Exhibit A3: Section 13.2 Natural Gas WP‐RCP‐5 & WP‐RCP‐10‐23 new generation facility d) How the utility will meet local, state, and federal laws, rules, and regulations 203 X Pratt Pratt: Part 2: Q15‐Q16 Exhibit A3: Section 13.2 Natural Gas WP‐RCP‐5 & WP‐RCP‐10‐23 under the proposed course of action The utility shall describe the process used to select the preferred resource plan, including the planning principles used by the utility to judge the appropriate 205 tradeoffs between competing planning objectives and between expected X Included below Included below Included below performance and risk. The utility shall describe how its preferred resource plan satisfies the following: Pfeuffer: Part II: Q19; Exhibit A3: Section 16 Proposed Course of 206 a) Strike an appropriate balance between the various planning objectives specified X Mikulan / Pfeuffer Mikulan / Pfeuffer Mikulan: Section X: Q183 Action Exhibit A3: Section 8.6 Proposed Course of Action: Demand Response, Section 8.13 Mikulan: Section IV: Q54, Section VIII, b) Utilize renewable and demand‐side resources to comply with existing laws and Proposed Course of Action: EWR Forecast, Mikulan / Bilyeu / Farrell / Q156; 207 goals and, in the judgment of the utility, are consistent with the public interest X Mikulan / Bilyeu / Farrell / Schroeder Section Schroeder Pfeuffer: Part III: Q39, Q42, Q43; and achieve state energy policies 9.4 Proposed Course of Action: Renewable Schroeder: Part II: Q18, Q26, Q27 Energy, Section 16 Proposed Course of Action c) In the judgment of the utility, the preferred plan, in conjunction with the Pfeuffer: Part III: Q37‐Q38: Exhibit A3: Section 16 Proposed Course of 208 deployment of demand response measures, has sufficient resources to serve load X Mikulan / Pfeuffer Mikulan / Pfeuffer Mikulan: Section X: Q182 Action forecasted for the implementation period 209 X The utility shall develop an implementation plan that specifies the major tasks, schedules, and milestones necessary to implement the preferred resource plan 210 X Pfeuffer Pfeuffer Pfeuffer: Part II: Q23 Exhibit A‐2.2 Implementation Plans over the implementation period. The utility shall describe and document its implementation plan, which shall contain: a) A schedule to report the status of an approved plan in accordance with MCL 211 X Pfeuffer Pfeuffer Pfeuffer: Part II: Q24 460.6t(14) Pfeuffer: Part II: Q23; Exhibit A‐2.2 Implementation Plans; b) A schedule and description of actions to implement ongoing and planned Farrell: Section I: Q14‐Q21; Section II 212 X Pfeuffer / Farrell / Zhou Pfeuffer / Farrell / Zhou Exhibit A28‐A29 IRP Study Input on demand‐side programs and demand‐side rates Q24‐Q30, Part III: Q31‐Q38; CVR/VVO Program Zhou: Q21‐Q22 Exhibit A‐2.2 Implementation Plans c) A schedule and description of relevant supply‐side resource research, 213 X Pfeuffer Pfeuffer Pfeuffer: Part II: Q23 Exhibit A3: Section 16 Proposed Course of engineering, retirement, acquisition, and construction Action Michigan Public Service Commission Case U-20471 DTE Electric Company Exhibit No. S-2.0 IRP Filing Requirements Witness Nicolas G. Luciani 17 of 21 "X" = Requirement in filing Integrated Resource Plan Filing Requirements "O" = Requirement in discovery response (MPSC Case No. U‐15896, 12/20/2017 Order, Exhibit A) " " = Requirement not found
Line Testimony Reference Exhibit Reference Workpaper Reference No. Requirement Met? Witness (Section, Page Number) (Exhibit Number, Page Number) (Workpaper Number, Page Number) Exhibit A3: Section 15.1 Strategist® d) A net present value revenue requirement comparison of its proposal and Optimization modeling results through reasonable alternatives over the planning period utilized in the analysis. It shall Section 15.6 Additional Sensitivity Results also include the calculation and comparison of the net present value revenue Mikulan: Section VIII: Q118‐Q152, 214 X Mikulan Mikulan across all Scenario, Section 16.4 Proposed requirement of the utility’s proposed plan and alternative resource plans Section X: Q178‐Q181 Course of Action Modeling Results; including the alternative resource plans resulting from the Commission‐approved Exhibit A‐8 Proposed PCA revenue modeling scenarios. requirement In addition, the utility shall provide support for its chosen discount rate and Exhibit A3: Section 15.1 Strategist® 215 discuss how the results of its analysis would change with different discount rate X Mikulan Mikulan Mikulan: Section VIII: Q152 Optimization modeling results assumptions Michigan Public Service Commission Case U-20471 DTE Electric Company Exhibit No. S-2.0 IRP Filing Requirements Witness Nicolas G. Luciani 18 of 21 "X" = Requirement in filing Integrated Resource Plan Filing Requirements "O" = Requirement in discovery response (MPSC Case No. U‐15896, 12/20/2017 Order, Exhibit A) " " = Requirement not found
Line Testimony Reference Exhibit Reference Workpaper Reference No. Requirement Met? Witness (Section, Page Number) (Exhibit Number, Page Number) (Workpaper Number, Page Number) 216 XVII) Rate Impact and Financial Information: Projected year‐on‐year impact of the proposed course of action (and other feasible options) for the periods covered by the plan, covering the following accounts: Exhibit A3: Section 15.1 Strategist® Optimization modeling results through Section 15.6 Additional Sensitivity Results across all Scenarios, Section Mikulan: Section VIII: Q118‐ 16.4 Proposed Course of Action WP LKM 995‐996 217 a) Revenue requirement X Mikulan / Holmes Q152, Section X: Q178‐Q181 Modeling Results; WP KAH‐1 Rate of Return Holmes: Q9‐Q16 Exhibit A‐8 Proposed PCA revenue requirement; Exhibit A‐9 Blue Water Energy Center 10‐year revenue requirement impact; Exhibit A‐45 Rate Impact Exhibit A3: Section 17 Rate Impact and 218 b) Rate base X Mikulan / Holmes No WP LKM 448 Financial Information Exhibit A3: Section 17 Rate Impact and 219 c) Plant‐in‐service capital accounts X Mikulan / Holmes No WP LKM 448 Financial Information Exhibit A3: Section 17 Rate Impact and 220 d) Non‐fuel, fixed operations and maintenance accounts X Mikulan / Holmes No WP LKM 448 Financial Information Exhibit A3: Section 17 Rate Impact and 221 e) Non‐fuel, variable operations and maintenance accounts X Mikulan / Holmes No WP LKM 448 Financial Information Exhibit A3: Section 17 Rate Impact and 222 f) Fuel accounts X Mikulan / Holmes No WP LKM 448 Financial Information Exhibit A3: Section 17 Rate Impact and 223 g) Emissions cost X Mikulan / Holmes No WP LKM 448 Financial Information Exhibit A3: Section 17 Rate Impact and 224 h) Effluent additive costs X Mikulan / Holmes No WP LKM 621‐636 ‐ Chemical Cost tab Financial Information Exhibit A3: Section 17 Rate Impact and 225 i) Projected change in generation plant‐in‐service X Mikulan / Holmes No Financial Information The utility shall describe the financial assumptions and models used in the plan. 227 The plan shall include, at a minimum, the following financial information, together X Included in below Included below Included below with supporting documentation and justification: Exhibit A3: Section 17.2 Financial Assumptions Exhibit A4: Appendix J ‐ Strategist 228 a) The general rate of inflation; X Mikulan / Leuker No Modeling Overview: Capital Expenditure and Recovery (CER) General Capabilities and Construction Period Calculations Exhibit A3: Section 17.2 Financial Assumptions Exhibit A4: Appendix J ‐ Strategist 229 b) The allowance for funds used during construction rates used in the plan; X Stanczak No Modeling Overview: Capital Expenditure and Recovery (CER) General Capabilities and Construction Period Calculations c) The cost of capital rates used in the plan (debt, equity, and weighted) and the Exhibit A3: Section 17.2 Financial 230 X Stanczak No assumed capital structure; Assumptions Exhibit A3: Section 17.2 Financial 231 d) The discount rates used in the calculations to determine present worth; X Stanczak No Assumptions Michigan Public Service Commission Case U-20471 DTE Electric Company Exhibit No. S-2.0 IRP Filing Requirements Witness Nicolas G. Luciani 19 of 21 "X" = Requirement in filing Integrated Resource Plan Filing Requirements "O" = Requirement in discovery response (MPSC Case No. U‐15896, 12/20/2017 Order, Exhibit A) " " = Requirement not found
Line Testimony Reference Exhibit Reference Workpaper Reference No. Requirement Met? Witness (Section, Page Number) (Exhibit Number, Page Number) (Workpaper Number, Page Number) Exhibit A3: Section 17.2 Financial Assumptions Exhibit A4: Appendix J ‐ Strategist 232 e) The tax rates used in the plan; X Mikulan / Holmes Holmes: Q11 Modeling Overview: Capital WP LKM 439 Expenditure and Recovery (CER) General Capabilities through Service Life Calculations Exhibit A3: Section 15.1 Strategist® Optimization modeling results through Section 15.6 Additional Sensitivity Mikulan: Section VIII: Q118‐ Results across all Scenario, Section 16.4 233 f) Net present value of revenue requirements for the plan; X Mikulan WP LKM 621‐624 Q152, Section X: Q178‐Q181 Proposed Course of Action Modeling Results; Exhibit A‐8 Proposed PCA revenue requirement Exhibit A3: Section 15.1 Strategist® Optimization modeling results through Section 15.6 Additional Sensitivity Mikulan: Section VIII: Q118‐ 234 g) Nominal revenue requirements by year; and X Mikulan Results across all Scenario, Section 16.4 WP LKM 501‐647 Q152, Section X: Q178‐Q181 Proposed Course of Action Modeling Results; Exhibit A‐8 Proposed PCA revenue requirement 235 h) Average system rates per kWh by year. X Holmes No No WP KAH‐6 236 XVIII) Environmental: Describe how the utility’s proposed IRP will comply with all applicable local, state, and federal environmental regulations, laws, and rules: a) Include a list of all environmental regulations that are applicable to the utility 237 X Marietta Marietta: Q11‐17, Q21 fleet. Identify which regulations apply to which resources b) Include all capital costs for compliance with new and reasonably expected 238 X Marietta environmental regulations for existing fleet assets in the utility IRP WP BJM‐3 Michigan Public Service Commission Case U-20471 DTE Electric Company Exhibit No. S-2.0 IRP Filing Requirements Witness Nicolas G. Luciani 20 of 21 "X" = Requirement in filing Integrated Resource Plan Filing Requirements "O" = Requirement in discovery response (MPSC Case No. U‐15896, 12/20/2017 Order, Exhibit A) " " = Requirement not found
Line Testimony Reference Exhibit Reference Workpaper Reference No. Requirement Met? Witness (Section, Page Number) (Exhibit Number, Page Number) (Workpaper Number, Page Number) c) Provide an annual projection of the following emissions for the study period WP BJM‐1 239 X Marietta Marietta: Q20‐Q21 differentiating between existing and new resources within the proposed IRP: WP LKM 700‐800, 950‐980 WP BJM‐1 240 i. Tons of sulfur oxides X Marietta Marietta: Q20‐Q21 WP LKM 700‐800, 950‐980 WP BJM‐1 241 ii. Tons of oxides of nitrogen X Marietta Marietta: Q20‐Q21 WP LKM 700‐800, 950‐980 WP BJM‐1 242 iii. Tons of carbon dioxide X Marietta Marietta: Q20‐Q21 WP LKM 700‐800, 950‐980 WP BJM‐1 243 iv. Tons of particulate matter X Marietta Marietta: Q20‐Q21 WP LKM 700‐800, 950‐980 WP BJM‐1 244 v. Pounds of mercury X Marietta Marietta: Q20‐Q21 WP LKM 700‐800, 950‐980 d) Provide the total projected emissions of the items listed below through the WP BJM‐1 245 study period for the utility’s proposed plan, as well as the scenarios identified in X Marietta Marietta: Q20‐Q21 WP LKM 700‐800, 950‐980 the MIRPP as approved in Case No. U‐18418, or modified by Commission order: WP BJM‐1 246 i. Tons of sulfur oxides X Marietta Marietta: Q20‐Q21 WP LKM 700‐800, 950‐980 WP BJM‐1 247 ii. Tons of oxides of nitrogen X Marietta Marietta: Q20‐Q21 WP LKM 700‐800, 950‐980 WP BJM‐1 248 iii. Tons of carbon dioxide X Marietta Marietta: Q20‐Q21 WP LKM 700‐800, 950‐980 WP BJM‐1 249 iv. Tons of particulate matter X Marietta Marietta: Q20‐Q21 WP LKM 700‐800, 950‐980 WP BJM‐1 250 v. Pounds of mercury X Marietta Marietta: Q20‐Q21 WP LKM 700‐800, 950‐980 251 XIX) Exhibits and Workpapers: The filing shall include exhibits and workpapers as outlined below, subject to any license or other confidentiality restrictions that are unable to be resolved by issuance of a protective order. a) Any workpapers used in developing the application, supporting testimony, and 252 IRP. Such workpapers shall, when possible, be provided in electronic format with X All All All Exhibits All Workpapers formulas intact; b) Any modeling input and output files used in developing the application, supporting testimony, and IRP. Such modeling input and output files shall, when possible, be provided in electronic format with formulas intact. The utility shall Mikulan: Section V: Q64‐Q65, 253 also identify each modeling program used, and provide information for how X Mikulan Exhibit A3, various; Exhibit A4, various WP LKM 19‐22, 460 Q85‐Q88 interested parties can obtain access to such modeling program. Modeling inputs and outputs in the model‐dependent binary format should be made available to parties that obtain a license; Exhibit A3: Section 14 Resource c) Cost data and estimates that were used in the resource screening process to Screening; evaluate each electric resource that was considered either individually or in Exhibit A4; 254 X All WP LKM 448, 449, 462 combination with other resources, including renewable alternatives, such as solar, A‐16 O&M and Capital Forecasts; wind, or solar plus battery storage; Exhibit A‐19 Wind and Solar Installed Cost Projections d) A description, including estimated costs of each alternative proposal received Staff comment: not applicable. No alternative proposals received. 255 X by the utility; Michigan Public Service Commission Case U-20471 DTE Electric Company Exhibit No. S-2.0 IRP Filing Requirements Witness Nicolas G. Luciani 21 of 21 "X" = Requirement in filing Integrated Resource Plan Filing Requirements "O" = Requirement in discovery response (MPSC Case No. U‐15896, 12/20/2017 Order, Exhibit A) " " = Requirement not found
Line Testimony Reference Exhibit Reference Workpaper Reference No. Requirement Met? Witness (Section, Page Number) (Exhibit Number, Page Number) (Workpaper Number, Page Number) Exhibit A3: 4.3 Capacity Outlook; 4.4 Assumptions Across Scenarios & e) A discussion of any differences between its short‐term fuel price forecasts and Capacity ‐ Mikulan: Section Sensitivities; 6.1 Scenarios; 15.4 256 capacity price curve in the IRP filing, and the short‐term fuel price forecasts and X Mikulan / Pratt V: Q65; Emerging Technology Scenario Results; capacity price curve in its last power supply cost recovery proceeding; Fuel ‐ Pratt: Part 2: Q32 15.5 Environmental Policy Scenario Results; Exhibit A4: Appendix F f) Identification and justification of the forecasted price of energy, capacity, and fuels, and of peak demand and energy requirements used in the IRP. The utility Capacity ‐ Mikulan: Section shall identify its base case forecasts and a range of sensitivities for each such V: Q65; 257 factor, and explain how those sensitivities were identified. If the base case X Mikulan Exhibit A3, various; Exhibit A4, various Fuel ‐ Pratt: PART 2: Q20‐25; forecast(s) differs from recent previous forecasts submitted by the utility to the PART 3: Q33 Commission in other cases, the utility shall provide an explanation for such differences; g) Present an environmental compliance strategy which demonstrates how the utility will comply with all applicable federal and state environmental regulations, Exhibit A3: 4.5 Regulatory Environment 258 laws and rules. Included with this information, the utility shall analyze the cost of X Mikulan / Marietta Marietta: Q12‐16 & Market Dynamics; Section 18 compliance on its existing generation fleet going forward, including existing Environmental projects being undertaken on the utilities generation fleet; h) Estimated annual emissions of carbon dioxide and greenhouse gases, Marietta: Q18‐Q20; Exhibit A3: 16.5 CO2 Reduction Across 259 particulates, sulfur dioxides, oxides of nitrogen, and mercury per year and over X Mikulan / Marietta Mikulan: Section VIII: Q158, the Potential PCA Pathways; Section WP LKM 700‐800; 950‐980 the life of the facilities included in their IRP; Q161 18.4 Emission Projections i) A comparison of total projected carbon emissions under each scenario and sensitivity analyzed, including quantifying the carbon emissions projected in each 260 X Mikulan / Marietta Marietta: Q20 WP LKM 467 sensitivity as a percentage of the carbon emissions presented in the business as usual case; Exhibit A3: 7.2 Fossil‐Fueled Generating j) The assumed retirement dates of the facilities included in the IRP, with 261 X Mikulan / Pfeuffer Pfeuffer: Part III: Q38‐40 Units; 15.4 Emerging Technology justification provided for the assumed retirement dates; Scenario Results k) An analysis that contains an individualized cost estimate for electric resources Exhibit A3: 14. Resource Screening; that were considered, including renewable alternatives, such as solar, wind, or Mikulan: Section VII: Q90‐ 262 X Mikulan / Schroeder Table 15.1.3 ‐ Nine least‐ cost plans WP LKM 462; 449; 448 solar plus battery storage, and such cost estimates for all alternative proposals, 91; Section VIII: Q119 across four scenarios solicited or unsolicited, received by the utility; WP LKM 42, 86, 211, 260, 310, 317, 346, Exhibit A3: 5.2 Modeling process; 10 379, 408. 263 l) Electricity market forecasts utilized; and X Mikulan Mikulan: Section V: Q61‐69 Peak Demand & Energy Forecasts; 13 WP LKM 53, 87, 210, 258, 309, 316, 345, Fuel 380, 409 264 m) Other documents and data underlying the IRP analysis. X
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 ) DTE ELECTRIC COMPANY for ) approval of its Integrated Resource Plan ) Case No. U-20471 pursuant to MCL 460.6t, and for other relief ) )
QUALIFICATIONS AND DIRECT TESTIMONY OF
SARAH A. MULLKOFF
MICHIGAN PUBLIC SERVICE COMMISSION
August 21, 2019 QUALIFICATIONS OF SARAH A. MULLKOFF CASE NUMBER U-20471 PART I
1 Q. Please state your full name and business address for the record.
2 A. My name is Sarah A. Mullkoff, and my business address is 7109 W. Saginaw Highway,
3 Lansing, MI, 48917.
4 Q. By whom are you employed and in what capacity?
5 A. I am employed in the Energy Resources Division of the Michigan Public Service
6 Commission (MPSC or Commission). I am a departmental analyst in the Generation and
7 Certificate of Need (GCON) Section, which is responsible for assisting in the
8 implementation of PA 341 and PA 342 and evaluating applications for transmission siting
9 pursuant to Public Act 30 of 1995.
10 Q. What is your educational background?
11 A. I earned a Bachelor of Arts in International Relations with a Specialization in Science,
12 Technology, Environment, and Public Policy from the James Madison College at Michigan
13 State University (MSU) in 2009. Recently, I earned a Master’s of Energy Regulation and
14 Law degree from the Vermont Law School in 2019.
15 In addition, I have attended training programs sponsored by the National
16 Association of Regulatory Utility Commissioners (NARUC) and Michigan State
17 University, including the Annual Regulatory Studies Program (August 2017 and 2019),
18 Grid School (April 2018), and select sessions of IPU’s Advanced Studies Program.
19 (October 2018).
20 Q. What are your professional experiences?
21 A. In 2008, I began working as a Student Assistant in the State Energy Office, within the
22 Department of Labor and Economic Growth. I maintained energy data, created
23 presentations and materials, maintained the website, and performed other tasks as assigned.
1
QUALIFICATIONS OF SARAH A. MULLKOFF CASE NUMBER U-20471 PART I
1 Upon graduation from MSU, from 2009-2016 I held jobs with a few Michigan-
2 based environmental non-profit organizations, including Michigan Clean Water Action,
3 the National Wildlife Federation, and the Michigan Environmental Council. At each of
4 these, my work included development and implementation of energy efficiency and
5 renewable energy policies and programs, as well as coalition management.
6 In 2017, I accepted a position as a Departmental Analyst in the Michigan Energy
7 Office at the Michigan Agency for Energy (MAE). My primary responsibility was grant
8 management for the community energy management program, which assisted Michigan
9 cities with tools and resources for reducing energy consumption. In addition, I served as
10 project lead for developing a pilot program that combined weatherization with community
11 solar to assist economically disadvantaged households to become energy self-sufficient.
12 In February of 2018, I accepted a position as a Departmental Analyst role in the
13 Generation and Certificate of Need Section of the MPSC. Part of my responsibilities in this
14 role entails participating in a cross-functional group responsible for evaluating the
15 regulated utilities integrated resource plans (IRP), including DTE Electric Company’s
16 (DTE or the Company) IRP. I also serve as the case coordinator for Integrated Resource
17 Plan cases, handling internal project management of discovery and audit logs, maintaining
18 the project schedule, and coordinating various staff work groups addressing each topic in
19 the IRP.
20 Q. Have you previously presented testimony before the Commission?
21 A. Yes, I have. I have provided testimony in Consumers Energy IRP Case No. U-20165 and
22 UPPCO’s IRP Case No. U-20350. In addition, I have supported the development and
23 review of testimony in Demand Response Reconciliation Cases.
2 DIRECT TESTIMONY OF SARAH A. MULLKOFF CASE NUMBER U-20471 PART II
1 Q. What is the purpose of your testimony?
2 A. First, I present the MPSC Staff’s (Staff) position regarding the guidance set forth in the
3 Integrated Resource Plan (IRP) Filing Requirements1 and whether the Company satisfied
4 the stakeholder engagement outreach requirement set forth in the Michigan Integrated
5 Resource Planning Parameters (MIRPP).2 Second, I discuss how the Company complied
6 with the Michigan Workforce Requirements. Third, I present the Staff’s recommendation
7 for the Company’s annual reporting requirement pursuant to MCL 460.6t(14). Last, I
8 present Staff’s support for using competitive bidding for resource procurement.
9 Q. Are you sponsoring any exhibits in this proceeding?
10 A. Yes, I am sponsoring the following exhibits:
11 Exhibit Description
12 S-3.0 A template which provides a format for the Company to file
13 projected, actual, and variance in costs for all generation and
14 projected megawatts (MW) by resource for projects included in the
15 initial three years of the IRP.
16 S-3.1 “Attachment D” from case No. U-15800, provides previous
17 approved guidance for competitive resource procurement.
18 Q. Was the exhibit prepared by you or under your direction?
19 A. Exhibit S-3.0 was prepared by me with staff support. Exhibit S-3.1 was the outcome of the
20 final order in Case No. U-15800.
1 Integrated Resource Plan Filing Requirements Pursuant to Public Act 341 of 2016, Section 6t, Commission Order in Case No. U-15896, Exhibit A, December 20, 2017. 2 Michigan Integrated Resource Planning Parameters Pursuant to Public Act 341 of 2016, Section 6t, Commission Order in Case No. U-18418, November 21, 2018.
3
DIRECT TESTIMONY OF SARAH A. MULLKOFF CASE NUMBER U-20471 PART II
1 Public Outreach and Stakeholder Engagement
2 Q. Has the Commission established recommendations for Company-led stakeholder
3 engagement and public outreach?
4 A. Yes. The IRP filing requirements approved in Case No. U-15986 provide guidance for
5 stakeholder engagement and public outreach.3 Documentation demonstrating the public
6 outreach process undertaken may include but is not required to include: workshop dates
7 and times, evidence that the notice of workshops was provided to the public, meeting
8 minutes, meeting or workshop attendance lists, participant comments on the last
9 approved IRP and/or inputs into the proposed IRP application, and discussion indicating
10 if or how the public outreach process influenced the IRP.4
11 Q. Did the Company conduct stakeholder engagement workshops?
12 A. Yes. The Company’s outreach consisted of three public open houses and four technical
13 workshops. The below table summarizes these outreach efforts. 5
14 Table 1 IRP Open House and Technical Workshops Summary
Date Meeting Type Location Attendees DTE Huron Renewable 11-Jun-18 Technical Workshop Energy Center, Bad Axe MI 14 Wayne County Community College Downriver Campus, 26-Jul-18 IRP Public Open House Tayler MI 19 Schoolcraft Community 16-Aug-18 IRP Public Open House College, Livonia MI 46 Blue Water Energy Center Marine City High School, 25-Sep-18 Community Open House Detroit MI 195 DTE Headquarters, Detroit 27-Sep-18 Technical Workshop MI 21
3 Case No. U-15896, December 20, 107 Order. 4 Id. 5 Direct testimony of Sharon P. Peuffer in Case No. U-20471. 4
DIRECT TESTIMONY OF SARAH A. MULLKOFF CASE NUMBER U-20471 PART II
Wayne County Community 23-Oct-18 IRP Public Open House Downriver District, Detroit mi 67 12-Nov-18 Technical Workshop WebEx/Conference Call 44 DTE Headquarters, Detroit MI and WebEx/Conference 31-Jan-19 Technical Workshop Call 46 1
2 Q. Please describe the format the Company used to conduct its stakeholder engagement.
3 A. The Company described two primary methods used to conduct stakeholder engagement.
4 The Company hosted four technical workshops that included information about the IRP
5 timeline and process, a review of the IRP model, and explained how to analyze the scenarios
6 and sensitivities within the modeling results. The Company conducted workshops in a way
7 that allowed participants to ask questions, primarily via comment card, then the Company
8 had experts on various topics answer the questions live during the forums.
9 The second type of public engagement involved three public open houses held at three
10 different locations in the Company’s service territory. Each of the open houses were set up
11 the same way, where Company experts staffed eight booths and participants could learn more
12 about various aspects of the IRP and other relevant company plans through informal discussion
13 with Company staff. During the public forums, participants were able to leave feedback on
14 comments cards or talk to subject matter experts one-on-one.
15 Q. Did the Company give public notice of the workshops?
16 A. Yes. The open houses were publicized through Company press releases, emailing its
17 members, and through social media. Following the Open Houses, Stakeholder
5 DIRECT TESTIMONY OF SARAH A. MULLKOFF CASE NUMBER U-20471 PART II
1 Engagement Workshops 1-4, materials were posted onto the IRP blog page listed as
2 https://empoweringmichigan.com/irpinformation-2/.6
3 Q. Did the Company provide meeting or workshop attendance lists and meeting minutes?
4 A. Yes, The Company included a report detailing its stakeholder outreach efforts as part of
5 the IRP Report, Exhibit A-3.7 The sign-in sheets, comments, and presentations are
6 included in this exhibit.
7 Q. Did the Company consider additional stakeholder inputs into the proposed application?
8 A. Yes. The Company requested and made opportunities for stakeholders to contribute
9 additional modeling sensitivities they wanted the Company to analyze as part of its IRP.
10 As a result, six stakeholders submitted four sensitivities, which were specific to which
11 scenario they wanted to see analyzed. The Company adequately explained how these
12 inputs were incorporated into and affected their modeling process.
13 Q. Does Staff have suggestions for improving how the Company’s stakeholder engagement
14 process?
15 A. Yes. Staff appreciates the Company’s effort to include updated IRP information on its
16 website. On its page, www.empoweringmichigan.com/irpinformation/, the Company
17 included valuable information including background on its IRP process, materials from
18 each of its four workshops, and other related Company information. However, the
19 webpage did not include a link to the 2019 IRP or a Summary of the 2019 IRP, nor did it
20 list the four Open House engagement opportunities on its page
21 http://empoweringmichigan.com/IRP. Searching “Integrated Resource Plan” did yield
6 Webpage “Empowering Michigan” https://empoweringmichigan.com/irpinformation-2/. 7 Direct testimony and exhibits of Sharon P. Pfeuffer, Exhibit A-3. 6 DIRECT TESTIMONY OF SARAH A. MULLKOFF CASE NUMBER U-20471 PART II
1 results of promoting the October 24th, 2018 Open House, but the page was not
2 comprehensive in that it did not list the other Open Houses.
3 The website included an email address which comments could be sent to. As
4 evidenced in Company Workpaper “IRP Email Documents,”8 each of the comments
5 received by email were individually replied to. This process could become more
6 transparent by publishing each question and response received from public stakeholder
7 inputs and making it available on its website. For example, Indiana Michigan Power’s
8 Integrated Resource Plan webpage,9 has made it possible for stakeholders to view all
9 public questions, comments, and responses developed throughout the process. To that
10 end, Staff recommends the Company develop webpage improvements which allow
11 customers to view questions and answers exchanged between the Company, as well as
12 information on all available open houses and technical workshops, to allow for ongoing
13 stakeholder engagement and increased transparency, and update the page throughout the
14 IRP process.
15 Michigan Workforce Requirement
16 Q. MCL 460.6t Subsection (8)(b) requires that “to the extent practicable, the construction or
17 investment in a new or existing capacity resource in this state is completed using a
18 workforce composed of residents of this state.” Does the Company demonstrate
19 compliance with this IRP requirement?
20 A. Yes. Company witness Sharon Pfeuffer confirmed that the Company will utilize
21 Michigan workers in implementation of the PCA. The Company estimated that they have
8 Company Workpapers in Case No. U-20471. WP SGP-5 IRP Email Documents. 9 https://www.indianamichiganpower.com/info/projects/IntegratedResourcePlan/. 7 DIRECT TESTIMONY OF SARAH A. MULLKOFF CASE NUMBER U-20471 PART II
1 spent more than $9.2 billion creating 24,000 jobs with Michigan-based suppliers since
2 2010.
3 Q. Does Staff have any recommendations for future IRP filings regarding the Company’s
4 compliance with MCL 460.6t(8)(b)?
5 Yes. Due to the limited number of resources, the Company is seeking cost approval for
6 within the next three-year period. Staff has minimal concerns regarding the Company’s
7 ability to comply with MCL 460.6t(8)(b). However, Staff recommends the Company
8 directly address how it will facilitate the use of Michigan’s workforce as it continues to
9 implement the PCA in future IRP filings.
10 Reporting Requirements
11 Q. What reporting requirements are included in PA 341 for utility-filed IRPs?
12 A. Subsection (14) requires that, “[a]n electric utility shall annually, or more frequently if
13 required by the commission, file reports to the commission regarding the status of any
14 projects included in the initial 3-year period of an integrated resource plan approved
15 under subsection (7).”
16 Q. Has the Company detailed how it plans to comply with the IRP reporting requirements
17 pursuant to MCL 460.6(t)(14)?10
18 A. No, the Company does not address reporting requirements in its filed IRP.
19 Q. Does Staff have any recommendations for the Company regarding annual reporting
20 requirements?
10 MCL 460.6t(14). 8 DIRECT TESTIMONY OF SARAH A. MULLKOFF CASE NUMBER U-20471 PART II
1 A. Yes. Staff recommends that the Company file annually in this docket, or more frequently
2 if required by the Commission, reports to the Commission regarding the status of any
3 project (resource addition) for which an integrated resource plan has been approved. The
4 annual update should include at a minimum, the status of the approved resources additions
5 with any cost, schedule, or size updates including any deviations from the original
6 projections in the 3-year period for which IRP costs are approved.
7 Q. Has Staff proposed guidelines for how the report should be filed?
8 A. Yes. Exhibit S-3.0 provides a spreadsheet for reporting the estimated and actual Capital
9 and Operation and Maintenance (O & M) costs and capacity additions in megawatts (MW)
10 by resource addition for the full three-year outlook. Staff recommends the Company fill
11 out the reporting template along with a supplemental narrative report to be filed annually
12 in this docket. Staff expects the Company will provide a detailed narrative that explains
13 any adjustments in status and changes in scope, timing, size, or expected costs.
14 Furthermore, the Company should explain any changes from the approved plan, including
15 enough detail to convey the logic and decision-making process the Company used to
16 support any deviations. Staff’s recommendation is consistent with the Commission Order
17 in Case No. U-18419.11
18 Staff seeks to maintain an open and transparent dialog with the Company
19 throughout the duration of the three-year period of resource additions. Staff also
20 recommends the Company provide immediate communication to Staff and the
11 Commission Order in Case No. U-18419, April 27, 2018, p 137. 9 DIRECT TESTIMONY OF SARAH A. MULLKOFF CASE NUMBER U-20471 PART II
1 Commission if there is a significant change or anticipated change to the expected cost,
2 timing, or size of any resource additions in its IRP.
3 Competitive Bidding for Resource Procurement
4 Q. How has the Company described its plan, if any, for competitive procurement of
5 resources?
6 A. The Company has not detailed plans for its procurement of non-utility owned assets. In
7 discussion of its near term and flexible IRP, the Company anticipates building substantial
8 levels of renewable energy, all of which is presumed to be Company owned. The
9 Company has not yet demonstrated that its ownership model is proven to be the most cost-
10 effective for ratepayers.
11 Q. Has the Commission issued any rulings which require companies to utilize competitive
12 bidding practices?
13 A. No. Currently, there are no established rules or regulations that require companies to
14 competitively procure non-utility owned assets.
15 Q. Are there current statutory requirements that require competitive bidding for the
16 solicitation of new resources?
17 A. There are currently no statutory requirements in place that mandate utilities to
18 competitively solicit resources; however, historic statutes have provided guidance for
19 competitive solicitation.
20 1. PA 295 Section 3312
12 MCL 460. Act 295 of 2008. §33. 10 DIRECT TESTIMONY OF SARAH A. MULLKOFF CASE NUMBER U-20471 PART II
1 Section 33 includes a provision related to competitive bidding and unsolicited contracts for
2 electric providers who served more than one million electric customers., which includes
3 DTE Electric. Pursuant to Sec 33, at least 50% of renewable energy credits shall be from
4 renewable energy contracts that do not require the transfer of ownership of the applicable
5 renewable energy system to the electric power provider or from contracts for the purchase
6 of RECs without the associated renewable energy. In response to the Company-issued RFPs
7 for renewable energy, Commission Staff audits each renewable energy contract to ensure its
8 compliance with competitive bidding guidance. The audits ensure that the Company’s
9 process provided access and procedures as outlined in the Commission’s December 4, 2008
10 Order in MPSC Case No. U. 15800 , which is included as my exhibit S-3.1. (Attachment D)
11 2. PA 342 Sec 28 (4)13
12 Section 28 discusses that for any electric provider whose rates are regulated by the
13 Commission, the electric provider shall submit a contract entered for the purpose of
14 subsections (3) to the Commission for review and approval. If the Commission approves a
15 contract, it shall be considered consistent with the electric provider’s renewable energy plan.
16 The Commission shall not approve a contract based on an unsolicited proposal unless the
17 Commission determines that the unsolicited proposal provides opportunities that may not
18 otherwise be available or commercially practical through a competitive bid process.
19 Q. Have recent related cases provided guidance as to how the Company should conduct
20 competitive resource procurement?
21 A. Yes. First, during its approval of DTE’s Certificate of Need (CON) in Case No. U-18419,
13 MLC 460. PA 342 of 2016 § 28(4). 11 DIRECT TESTIMONY OF SARAH A. MULLKOFF CASE NUMBER U-20471 PART II
1 the Commission stated that it “expects competitive bidding to be of increasing importance
2 for the selection of resources, and the approved amounts under the pre-approved
3 provisions of CONs and IRPs [and has] directed staff to research approaches and best
4 practices for RFP and competitive bidding in other jurisdictions.”14
5 Accordingly, the Commission directed Staff to research approaches and best
6 practices for RFP and competitive bidding in other jurisdictions. Staff conducted a
7 thorough assessment of 50-state analysis resulting in a comprehensive survey of the
8 country’s competitive bidding practices. Staff concluded that the Commission adopt the
9 following as guidance for competitive bidding framework:
10 1. The RFP parameters included in the 2008 Guidelines for Competitive Request for
11 Proposal for Renewable and Advanced Cleaner Energy, in Case No, U-15800;
12 2. Timely Issuance of RFP through Public Notice: The issuance of an RFP will be made through
13 public notice to ensure parties interested in responding have an opportunity to learn of it;
14 3. Selection of a Short List of Bidders: The Utility will communicate a list of bidders who
15 submitted a Notice of Intent to Bid with the Commission. After the initial evaluation and
16 elimination process, the company will provide a short-list to the Commission with the most
17 appropriate resource options for approval, and if appropriate, allow the final list of bidders to
18 commence negotiations;
19 4. Terms of Contract Provided in an RFP: In accordance with the language in Public Act 341,
20 the utility shall provide the terms of the contract in their RFP. The utility may accomplish
21 this by developing standard form contracts along with credit terms and instruments to be
22 included in the RFP;
14 Commission Order in Case No. U-18419, April 27, 2018, p 106. 12 DIRECT TESTIMONY OF SARAH A. MULLKOFF CASE NUMBER U-20471 PART II
1 5. Contingency Plans: The Request for Proposal shall include contingency plans in the event of
2 a supplier default or failure of the procurement process to fully meet the expected load
3 requirement due to insufficient supplier participation, Commission rejection of results, or any
4 other cause.
5 Second, the Commission addressed this in their recent Order approving the Settlement
6 Agreement and Attachment A, in Case No. U-20165. The Settlement Agreement in Case
7 No. U-20165 required Consumers Energy to use the guidelines developed under Case No.
8 U-15800 as a baseline for competitive solicitation. The Commission required the Company
9 to use those proceedings until the Commission adopts competitive bidding guidelines or
10 procedures as part of a future proceeding. 15 The Commission has supported engaging in
11 a process that overall benefits the public and helps ensure a transparent process This
12 includes incorporating recommendations such as using an independent evaluator, issuing a
13 timely RFP through a public notice, and requiring the terms of the contract be included in
14 the RFP. Interested stakeholders should be able to provide input on the bidding criteria and
15 process. In its final order in Case No. U-20165, the Commission noted that it expects that
16 technologies will evolve, such as considering the combination of solar combined with
17 battery storage, in future competitive bidding processes. In addition to the aforementioned
18 guidance, parties mutually agreed on the following guidelines intended to shape the
19 competitive bidding process for Consumers Energy Company’s (“Consumers Energy”)
20 Integrated Resource Plan (“IRP”). These guidelines are not intended to be a comprehensive
21 methodology.
15 Commission Order in Case No. U-20165, June 14, 2019, p 86. 13 DIRECT TESTIMONY OF SARAH A. MULLKOFF CASE NUMBER U-20471 PART II
1 Attachment A includes the following guidelines:
2 To the extent applicable, Consumers Energy shall use the RFP parameters included in the 2008
3 Guidelines for Competitive Request for Proposal for Renewable and Advanced Cleaner Energy,
4 as adopted in Attachment D of the Commission’s December 4, 2008 Temporary Order in Case
5 No, U-15800.
6 Timely Issuance of RFP through Public Notice: The issuance of an RFP will be made through
7 public notice to ensure parties interested in responding have an opportunity to learn of it.
8 Terms of Contract Provided in the RFP: In accordance with MCL 460.6t(6), Consumers Energy
9 shall provide the terms of the contract in their RFP. Consumers Energy may accomplish this by
10 developing standard form contracts along with credit terms and instruments to be included in the
11 RFP.
12 Independent Evaluator (“IE”): In the implementation of the Company’s Proposed Course of
13 Action, the Company will authorize an IE during the competitive solicitation of Power Purchase
14 Agreements and the generating facilities that the Company may ultimately own, in the manner
15 proposed by Company witness Keith G. Troyer at 8 TR 1285-1289 and Exhibit A-107 (KGT-4).
16 Third, the Commission also discussed this during its partial approval of DTE’s
17 Renewable Energy Plan (REP) Case No. U-18322. In the Order issued on July 18, 2019,
18 the Commission discussed that the Company had not proven that the proposed Company-
19 owned wind projects to be cost-effective, compared to alternative sources of renewable
20 generation and ownership models.16 During its comments at the July 18, 2019 Commission
21 meeting, there were concerns expressed regarding inviting build-transfer ownership that
16 Commission Order in Case No. U-18322, July 18, 2019. 14 DIRECT TESTIMONY OF SARAH A. MULLKOFF CASE NUMBER U-20471 PART II
1 may result in higher costs and emphasized a preference for more impartial and open
2 solicitation process.17
3 Q. Are utilities required to seek preapproval of long-term PPAs for capacity under PA 341?
4 A. No. The previous provisions for preapproval of long-term contracts for capacity that were
5 included under 6j were removed in PA 341 that became effective in April of 2017.
6 Section 6t provides a process for utilities to request approval of costs with long-term
7 contracts, but it does not require utilities to utilize those provisions necessarily to obtain
8 preapproval. Section 6t(10) allows utilities to move forward with investments without
9 preapproval.18
10 Q Does staff have recommendations on how the Company regards competitive procurement
11 strategy in future solicitation of resources?
12 A. Yes. Staff recommends that utilities file PPA and contracts for Company-owned
13 generation for approval with the Commission even if they are the result of an approved
14 competitive bidding process. Staff also recommends that the Company be directed to
15 follow the “Guidelines for competitive Request for Proposal for Renewable and
16 Advanced Cleaner Energy,” as approved by the Commission in Attachment D of the
17 Commission’s December 4, 2008 Order in Case No. U-15800. In addition, Staff
18 recommended that the Commission, on its own motion, initiate a proceeding to solicit
19 comments on identified best practices related to RFP processes and competitive bidding
20 prior to any order amending the IRP filing requirement.
17 Minutes of the Regular Commission Meeting of the MPSC Held on July 18, 2019. 18 MCL 460 6(t). 15 DIRECT TESTIMONY OF SARAH A. MULLKOFF CASE NUMBER U-20471 PART II
1 Q. Does this conclude your testimony?
2 A. Yes.
16 S T A T E OF M I C H I G A N
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
* * * *
In the matter of the Application of ) DTE ELECTRIC COMPANY for ) approval of its Integrated Resource Plan ) Case No. U-20471 pursuant to MCL 460.6t, and for other relief ) )
EXHIBITS OF
SARAH A. MULLKOFF
MICHIGAN PUBLIC SERVICE COMMISSION
August 21, 2019 Michigan Public Service Commission Case: U-20471 DTE Electric Integrated Resource Plan Witness: S.A. Mullkoff DTE IRP 3-Year Reporting Template Exhibit: S-3.0 Page 1 of 1
IRP Resource Addition of Capital and O & M ($000) (a) (b) (c ) (d) (e ) (f) (g) (h) (i) (j) Projected/Approved Projected/Approved Projected/Approved in IRP Actual Variance in IRP Actual Variance in IRP Actual Variance 1st Year 1st Year 2nd Year 2nd Year Line No. 1st Year (Calendar Yr) (Calendar Yr) (Calendar Yr) 2nd Yr (Calendar Yr) (Calendar Yr) (Calendar Yr) 3rd Year (Calendar Yr) 3rd Year (Calendar Yr) 3rd Year (Calendar Yr) 1 Resource Capital 2EWR 3 Demand Response 4Wind 5Solar 6 CVR/VVO 7 Solar + Battery Pilot 8 Total
9Resource O & M 10 EWR 11 Demand Response 12 Wind 13 Solar 14 CVR/VVO 15 Solar + Battery Pilot 16 Total *Insert actual project amounts that correspond with projected amounts as availab
IRP Resource Addition Capacity (MW) (a) (b) (c ) (d) (e ) (f) (g) (h) (i) (j) Projected/Approved Projected/Approved Projected/Approved in IRP Actual Variance in IRP Actual Variance in IRP Actual Variance 1st Year 1st Year 2nd Year 2nd Year Line No. 1st Year (Calendar Yr) (Calendar Yr) (Calendar Yr) 2nd Yr (Calendar Yr) (Calendar Yr) (Calendar Yr) 3rd Year (Calendar Yr) 3rd Year (Calendar Yr) 3rd Year (Calendar Yr) 1 Resource Capital 2EWR 3 Demand Response 4Wind 5Solar 6 CVR/VVO 7 Solar + Battery Pilot 8 Total
*Insert actual project amounts that correspond with projected amounts as available. Michigan Public Service Commission Case: U-20471 DTE Electric Integrated Resource Plan Witness: S.A. Mullkoff DTE IRP 3-Year Reporting Template Exhibit S-3.1 Page1 of 5
+ Michigan Public Service Commission Case: U-20471 DTE Electric Integrated Resource Plan Witness: S.A. Mullkoff DTE IRP 3-Year Reporting Template Exhibit S-3.1 Page2 of 5 Michigan Public Service Commission Case: U-20471 DTE Electric Integrated Resource Plan Witness: S.A. Mullkoff DTE IRP 3-Year Reporting Template Exhibit S-3.1 Page3 of 5 Michigan Public Service Commission Case: U-20471 DTE Electric Integrated Resource Plan Witness: S.A. Mullkoff DTE IRP 3-Year Reporting Template Exhibit S-3.1 Page4 of 5 Michigan Public Service Commission Case: U-20471 DTE Electric Integrated Resource Plan Witness: S.A. Mullkoff DTE IRP 3-Year Reporting Template Exhibit S-3.1 Page5 of 5
S T A T E OF M I C H I G A N
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
* * * *
In the matter of the Application of ) DTE ELECTRIC COMPANY for ) approval of its Integrated Resource Plan ) Case No. U-20471 pursuant to MCL 460.6t, and for other relief ) )
QUALIFICATIONS AND DIRECT TESTIMONY OF
OLUMIDE O. MAKINDE
MICHIGAN PUBLIC SERVICE COMMISSION
August 21, 2019 QUALIFICATIONS OF OLUMIDE O. MAKINDE CASE NUMBER U-20471 PART I
1 Q. Please state your name and business address.
2 A. My name is Olumide O. Makinde. My business address is 7109 West Saginaw
3 Highway, Lansing, MI 48917.
4 Q. By whom are you employed and in what capacity?
5 A. I am employed by the Michigan Public Service Commission (MPSC or
6 Commission) in the Resource Adequacy and Retail Choice Section of the Energy
7 Resources Division.
8 Q. Would you briefly describe your academic background?
9 A. I received a Bachelor of Arts in Economics from Michigan State University
10 (MSU) in 2011, and a Master of Arts in Applied Economics, concentrating in
11 Econometrics and Economic Development, at Western Michigan University in
12 2015. While employed with the Commission, for continuing education, I
13 completed the annual National Association of Regulatory Utility Commissioners
14 (NARUC) Regulatory Studies program, Institute of Public Utilities Advanced
15 Regulatory Studies Program, and the Institute of Public Utilities Grid School in
16 August 2015, October 2016, and March 2017, respectively, all at MSU. In
17 addition, I attended Resource and Portfolio Planning and Long-Term Forecasting
18 in MS Excel conferences sponsored by Electric Utility Consultants, Inc. (EUCI)
19 (August 2017 and 2018 respectively). I also attended Electric Generation and
20 Expansion Analysis System (EGEAS) modeling training sessions conducted by
21 the Midcontinent Independent System Operator (MISO) (2016, 2017, 2018),
22 Energy Exemplar`s Aurora® (power market forecasting and analysis software)
1
QUALIFICATIONS OF OLUMIDE O. MAKINDE CASE NUMBER U-20471 PART I
1 training in February 2018, and the EUCI Integrated Resources Planning (IRP)
2 Summit in March of 2019.
3 Q. Would you please outline your professional experience?
4 A. In February 2014, I accepted a position as a Departmental Analyst at the MPSC in
5 the Rates and Tariffs Section, where my responsibilities included the following:
6 preparing monthly bill comparisons for regulated gas and electric utilities and
7 cooperatives for posting to the MPSC website, assisting other MPSC Staff (Staff)
8 with various assignments and case work, preparing case schedules and related
9 materials for the benefit of Staff, researching various proposals before the
10 Commission involving rates and tariffs, and examining tariff sheets submitted by
11 regulated utilities and cooperatives for compliance with Commission orders. I
12 also conducted statistical and economic analyses on past and present financial,
13 load, and rate data. In addition, I researched, studied, and conducted analyses on
14 production/cost functions and models in relation to utilities that are under the
15 Commission’s regulatory authority.
16 Q. What are your current responsibilities at the Commission?
17 A. My work focuses on generation resource adequacy, load forecasting, and
18 Integrated Resource Planning (IRP), including long-term capacity expansion,
19 zonal and nodal, modeling, and analysis. In 2017, I assisted with the development
20 and drafting of the IRP filing requirements, in accordance with 2016 Public Act
21 341, MCL 460.6t. Additionally, since joining the Commission Staff, I have been
22 active in various resource adequacy and generation planning activities.
2
QUALIFICATIONS OF OLUMIDE O. MAKINDE CASE NUMBER U-20471 PART I
1 Q. Have you previously participated and/or testified in any other cases before this
2 Commission?
3 A. Yes, I have worked on the following cases:
4 U-17316-R, Thumb Electric Co-Op, TIER Rates
5 U-17825, Consumers Energy Company (Electric), Residual Balance Refund
6 and I have testified in the following:
7 U-17880, Michigan Gas Utilities Corp, Special Charges
8 U-17999, DTE Gas Company, Miscellaneous Revenue
9 U-18124, Consumers Energy Company, Rate Design
10 U-18419, DTE Electric Company, Certificate of Necessity
11 U-20165, Consumers Energy Company, IRP Case
12 U-20350, UPPCO, IRP Case
3
DIRECT TESTIMONY OF OLUMIDE O. MAKINDE CASE NUMBER U-20471 PART II
1 Q. What is the purpose of your testimony?
2 A. The purpose of my testimony is to present Staff’s position on the DTE Electric
3 Company’s (DTE or Company) IRP filing pursuant to MCL 460.6t for the
4 following topics:
5 I. Peak load and energy sales forecasts.
6 II. Market energy and capacity price forecasts and the associated modeling
7 conducted by the PACE Global in Aurora®.
8 III. Risk assessments conducted by the Company.
9 Q. Are you sponsoring any exhibits?
10 A. Yes, I am sponsoring the following exhibits:
11 Exhibit S-4.0: Discovery Response STDE-6.1a
12 Q. Were these exhibits prepared by you?
13 A. Exhibit S-4.0 was provided by the Company as Discovery Response STDE-6.1a.
14 I. Peak load and energy sales forecasts.
15 Q. Did the Company supply projected load growth expectations under various
16 reasonable scenarios?
17 A. Yes, Company witness Markus B. Leuker supplied the long-term peak load and
18 energy sales forecasts in Company Exhibit A-34 for the business as usual (BAU)
19 scenarios and Company Exhibit A-35 for the High load, return of 50% choice,
20 High electric vehicles (EV), 24% EV sales, choice increase to 25%, and choice
21 returns to full service sensitivities.
22 Q. Please describe the growth rates pertaining to energy sales presented by the
23 Company (BAU scenario/Exhibit A-34) over the forecast period (2019 to 2040).
4
DIRECT TESTIMONY OF OLUMIDE O. MAKINDE CASE NUMBER U-20471 PART II
1 A. The Company is projecting a compound annual growth rate (CAGR) of -0.06%,
2 -0.07%, and 0.0% for its service area, bundled load and electric choice load
3 respectively.
4 Q. Please describe the growth rates pertaining to peak demand presented by the
5 Company (BAU scenario/Exhibit A-34) over the forecast period (2019 to 2040).
6 A. The Company is projecting a compound annual growth rate (CAGR) of -0.27%,
7 -0.29%, and 0.0% for the peak demand in its service area, bundled load and
8 Choice load respectively.
9 Q. Are the CAGRs consistent with other load growth projections in the region?
10 A. It is impossible to find an apple-to-apples comparison of the Company`s forecasts
11 to other load growth projections as each utility has a unique service territory and
12 load profile. However, the Company`s CAGR is consistent with the general trend
13 of stagnant to decreasing growth in demand and energy sales that is present in the
14 industry.
15 Q. How did Staff determine the above-mentioned growth rates to be consistent?
16 A. Staff compared the Annual Growth Rate (AGR) and CAGR of the Company`s
17 forecasted energy sales to those forecasted by the Energy Information
18 Administration, (EIA) in the 2018 Annual Energy Outlook.
19 Q. Are the Company`s forecasts for the other load sensitivities consistent with the
20 load sensitivities from the EIA?
21 A. Staff did not compare the Company`s other load sensitivities to those from the
22 EIA, as the other load sensitivities are based on the BAU forecast and the EIA
5
DIRECT TESTIMONY OF OLUMIDE O. MAKINDE CASE NUMBER U-20471 PART II
1 load sensitivities do not fully align with the Michigan Integrated Resources
2 Planning Parameters (MIRRP) and Company`s sensitivity assumptions.1
3 Q. Are the short-term energy sales and peak load forecasts consistent with the
4 Company`s most recent Power Supply Cost Recovery (PSCR) plan cases?
5 A. Yes, the Company`s short-term portion (2018 to 2023) of the forecasts are
6 consistent with those in their 2019 PSCR plan case (U-20221).
7 Q. What methods did the Company use to derive their long-term forecasts?
8 A. The Company utilized various forecasting methodologies for the different
9 customer classes. An end-use model was used for the residential class. Regression
10 models were used for the Commercial and Industrial classes. Company witness
11 Leuker discusses the methodology in pages 8 to 11 of his direct testimony.
12 Q. Are the methods used to derive the long-term forecasts appropriate?
13 A. Yes, Staff analyzed the regression models and examined the inputs and outputs of
14 the end-use model and found them to be appropriate.
15 Q. Does Staff have any recommendations regarding the Company`s forecast
16 accuracy and reporting thereof?
17 A. Staff recommends the Company conduct and report the mean absolute percentage
18 error (MAPE) evaluation on the monthly energy sales and peak loads. This will
19 allow the Company`s forecasters to fine tune their models to ensure results are
20 within an acceptable range for all months (for all time periods when combined
21 with further recommendations), not just the annual peak day.
1 Commission Order in Case No. U-15896 12/20/2017 Order, Exhibit A. 6
DIRECT TESTIMONY OF OLUMIDE O. MAKINDE CASE NUMBER U-20471 PART II
1 Q. How did the Company account for weather trends in it forecasts?
2 A. The Company did not apply any future weather forecasts during the forecasting
3 process. However, it did apply 30-year historical temperature data to its peak-day
4 forecast, as Company witness Leuker`s explained on page 13 of his testimony.
5 Q. How was the 30-year temperature data applied to the Company`s load and energy
6 sales forecasts?
7 A. The historical peak and energy sales data used in the forecasting methods were
8 normalized using the 30-years of historical temperature data. Therefore, the
9 monthly peak load and energy sales forecasts has the 30-year historical
10 temperature trends (normalized) embedded.
11 Q. Is this an appropriate way for accounting for weather/temperature?
12 A. The normalization of historical peak load and energy sales data, using historical
13 temperature, is appropriate. It also negates the reliance on third party
14 weather/temperature forecasts and, given the long-term nature of the IRP, would
15 eliminate that from being a point of contention. However, the use of averaged 30-
16 years historical temperature data does not seem to be the best method.
17 Q. Why would the use of averaged 30-years historical temperature data not be the
18 best method?
19 A. The averaging of monthly data for a 30-year period will dilute recent trends in
20 weather. The temperature data used for the normalization was an average of the
21 daily average temperature (mean of the high and low of the day) over the 30-year
22 period. More recent historical trends show an increase in the occurrence of
23 extreme weather events.
7
DIRECT TESTIMONY OF OLUMIDE O. MAKINDE CASE NUMBER U-20471 PART II
1 Q. What does Staff recommend the Company do to remedy the issue?
2 A. Staff recommends the Company use a shorter historical period or a weighted
3 historical 30-year average and incorporate humidity, precipitation, and wind
4 speeds and directions to normalize historical energy sales and peak demand.
5 Q. Does Staff have any other recommendations regarding the Company`s long-term
6 forecasting methodology?
7 A. Staff recommends that the Company conduct future peak load and energy sales
8 forecasts on an hourly basis at a minimum as discussed by Institute of Electrical
9 and Electronics Engineers (IEEE):
10 “The classical approach to long term load forecasting is often limited to 11 the use of load and weather information occurring with monthly or annual 12 frequency. This low resolution, infrequent data can sometimes lead to 13 inaccurate forecasts. Load forecasters often have a hard time explaining 14 the errors based on the limited information available through the low- 15 resolution data. The increasing usage of smart grid and advanced metering 16 infrastructure (AMI) technologies provides the utility load forecasters with 17 high resolution, layered information to improve the load forecasting 18 process.”2
19 Q. Will this be overly burdensome for the Company?
20 A. No, Staff is aware that the Company is in the process of doing this already,
21 leveraging Advanced Metering Infrastructure (AMI) data from its Smart meter
22 roll out. Staff commends the Company for applying portions of that data into
23 portions of the long-term forecast and load shapes.
24 Using a more granular time interval can result in more accurate
25 forecasts, by producing forecasts with higher accuracy for the shoulder months. A
2 IEEE Transactions on Smart Grid, Vol 5, No.1, January 2014,” Long Term Probabilistic Load Forecasting and Normalization With Hourly Information,” Tao Hong, Jason Wilson, Member, IEEE, and Jingrui Xie. 8
DIRECT TESTIMONY OF OLUMIDE O. MAKINDE CASE NUMBER U-20471 PART II
1 more granular time interval also has the ability to account for load and energy use
2 trends within weeks, days, and potentially hours. Accuracy from the use of more
3 granular time intervals will also better account for weather variations within the
4 month.
5 Q. How did the Company`s forecasts account for Electric Vehicles (EV), Distributed
6 Generation (DG), Demand Response (DR), and Energy Waste Reduction (EWR)?
7 A. Company witness Leuker stated in his direct testimony that “Individual outlooks
8 for Electric Vehicles (EV), Distributed Generation (DG) and Energy Waste
9 Reduction (EWR) were developed and applied to the Residential, Commercial
10 and Industrial class forecast models.”3 The Company however did not account for
11 any possible impact from DR Programs.
12 Q. Does Staff have any recommendations on how the impacts of DR can be
13 incorporated into forecasting models?
14 A. Staff is of the opinion that, given the proliferation of demand side programs
15 across the Midcontinent Independent System Operator (MISO) footprint as a
16 capacity resource, it would be imprudent to assume that there would be no change
17 to the Company`s load shape/profile (particularly in the future). The DR
18 programs are only set to net against load on a single company peak that occurs on
19 the same hour, day, and month throughout the study period. Given that the
20 programs modeled in the Strategist® model will be receiving zonal resource
3 Pre-Filed Direct Testimony and Exhibits of Markus B. Leuker, p 11. 9
DIRECT TESTIMONY OF OLUMIDE O. MAKINDE CASE NUMBER U-20471 PART II
1 credits (ZRCs), the possibility of dispatch within the MISO footprint and, more
2 specifically, Local Resource Zone (LRZ) 7 coincident peaks is highly possible.
3 Q. Does Staff have any recommendations on how DR programs should be accounted
4 for?
5 A. Staff recommends that the Company further leverage AMI data and study the
6 hourly use trends of customers on DR tariffs, from the time of inception of those
7 tariffs and track the periods and magnitude of load shifting. These shifts should
8 then be applied to the forecasting models in the Company`s next IRP filing.
9 II. Market energy and capacity price forecasts (used as inputs into the other models)
10 and the associated modeling conducted by the PACE Global (PACE) in
11 Aurora®.
12 Q. What did Staff use to analyze the modeling of the market capacity and energy
13 price forecasts used in the IRP?
14 A. Staff was provided the necessary Aurora® files from the Company. Staff
15 currently has an Aurora® license from Energy Exemplar and was able to view the
16 inputs, the setup of the model, and run the model.
17 Q. How did the Company derive the market capacity prices used in its IRP?
18 A. Company witness Laura K. Mikulan states, “These levels were $0/MW, the
19 PACE forecast for the appropriate scenario/sensitivity, 50% of Cost of New Entry
20 (CONE), or 100% of CONE. If the Company was long, then capacity prices of
21 zero were assumed.”4
4 Pre-filed Direct Testimony and Exhibits of Laura K. Mikulan, p 28. 10
DIRECT TESTIMONY OF OLUMIDE O. MAKINDE CASE NUMBER U-20471 PART II
1 Q. Are the capacity prices reasonable?
2 A. Yes.
3 Q. How did the Company derive the market energy prices used in its IRP?
4 A. The market energy prices used in the IRP were developed by PACE using the
5 Aurora® model to forecast LRZ-7 (MISO Michigan Hub) prices. The Company
6 used a methodology that started with forwards, which then used a transition
7 period to smoothly shift to the PACE forecast. Company Witness Mikulan stated,
8 “We start with market prices obtained from forwards for the same years (2018-
9 2019) as described in the fuel prices. A three-year transition was used in years
10 2020-2022 to smoothly shift to the fundamental energy price forecast in 2023.
11 Then, for years 2023 to 2040, the Company used the fundamental forecast from
12 PACE Global.”5 The Company provided different energy market price forecasts
13 for each scenario.
14 Q. Were the PACE load assumptions (monthly and annual peak load and energy
15 sales and 8760 load shapes) used to derive these prices the same as those
16 developed by the Company?
17 A. The load assumptions were not the same as those developed by the Company. In
18 discovery response STDE 6.1a (Staff Exhibit S-4.0) the Company stated, “For
19 Aurora®, PACE developed their own load shapes. The load forecast witness (Leuker)
20 agreed upon the short and long term CAGRs of PACE’s annual sales forecast. The
21 Reference scenario includes up-to-date load forecasts developed by the Independent
22 System Operators (ISOs) and the North American Electric Reliability Corporation
5 Id at, p 46 11
DIRECT TESTIMONY OF OLUMIDE O. MAKINDE CASE NUMBER U-20471 PART II
1 (NERC) as of March 2018. In the case of MISO, PACE developed a load forecast
2 based on the gross demand projections from the State Utility Forecasting Group
3 (SUFG) at Purdue University.”6
4 Q. Does this make the energy price input used in the development of the IRP invalid?
5 A. Not necessarily. The Strategist® model has a significantly different system
6 topology to that of the Aurora® model. The Aurora® model ran the whole eastern
7 interconnect, whereas the Strategist® model ran the Company`s bundled load
8 system with proxy connections to the MISO system—see Company Exhibit A-4,
9 page 148.
10 Q. What are Staff recommendations regarding the load assumptions in PACE`s
11 Aurora® model?
12 A. Staff would recommend that the Company utilize the same set of load
13 assumptions in all the models utilized. Alternatively, the Company may want to
14 use a modeling software that is capable of production cost modeling and long-
15 term capacity expansion.
16 Q. Were any modifications made to the energy price forecasts before they were input
17 into the Strategist® or PROMOD® models?
18 A. The Company blended the short-term energy price for the high load sensitivities
19 by applying a stretch to those prices before they were used as inputs into the
20 Strategist® and PROMOD® models. The stretch is based on a regression of
6 Exhibit S-4.0. 12
DIRECT TESTIMONY OF OLUMIDE O. MAKINDE CASE NUMBER U-20471 PART II
1 historical Locational Marginal Price (LMP) and energy to serve load for the
2 MISO coded DECO.NEC market node.
3 Q. Is this an appropriate methodology to use?
4 A. The best method would have been to supply PACE with the load shapes for the
5 International Tranmission Company (ITC) and Michigan Electric Tranmission
6 Company (METC) (sourced from the Consumers Energy IRP filing)
7 Transmission Pricing Zones (TPZ) to be used for the energy price forecasts model
8 runs. Alternatively, adding in the historical data from the Consumers Energy hub
9 in the regression analysis would enhance the energy price forecast model runs.
10 The manner in which it was done would seem to infer that it is only the
11 Company`s load and generation resources that drive energy prices in LRZ 7,
12 which is not the case.
13 Q. Would this invalidate the price forecasts?
14 A. No, the historical difference between the Michigan, DTE, and CE hubs is
15 generally insignificant. However, Staff would prefer to see ITC and METC load
16 shapes included.
17 III. Risk assessments conducted by the Company.
18 Q. Are there current statutory requirements that require risk assessment?
19 A. No, PA 341 of 2016 section 6(t) does not require risk assessment.
20 Q. Has the Commission issued any rulings which require companies to submit risk
21 assessment(s) with IRP filings?
13
DIRECT TESTIMONY OF OLUMIDE O. MAKINDE CASE NUMBER U-20471 PART II
1 A. Yes. On page 4 of Attachment A of the U-15896 Order it states, “The Utility’s
2 IRP filing shall include a thorough risk analysis of the preferred plan and optimal
3 plans for each of the scenarios specified in the MIRPP.”7
4 Q. Has the Commission issued any rulings which require companies to submit
5 stochastic risk assessment(s) with IRP filings?
6 A. No. At this time, there are no established rules or regulations that require
7 companies to file stochastic risk analysis with IRP filings, though stochastic risk
8 assessment is one of the acceptable forms of risk analysis.
9 Q. Have recent related cases addressed guidance as to how the Company should
10 conduct stochastic risk analysis?
11 A. Yes. During its approval of DTE’s Certificate of Need (CON) of the Bluewater
12 Energy Center in Case No. U-18419, the Commission stated that “Accordingly, in
13 preparation of the upcoming IRPs, the Commission intends to explore with the
14 Staff to further examine risk assessment methodologies and best practices from
15 other jurisdictions.” Furthermore, the Commission ordered, “The Commission
16 Staff shall evaluate and make recommendations for best practices for requests for
17 proposals, competitive bidding, and risk assessment to be included in the
18 integrated resource plan filing requirements and integrated resource plan
19 guidelines.”8
7 Commission Order in Case No. U-15896 12/20/2017 Order, Exhibit A. 8 Commission Order in Case No. U-18419 04/27/2018 Order, p 127. 14
DIRECT TESTIMONY OF OLUMIDE O. MAKINDE CASE NUMBER U-20471 PART II
1 Staff conducted thorough research of IRP filings throughout the country that
2 included risk assessment. This resulted in a draft Risk Assessment Report. In that
3 report, Staff concluded,
4 “The Commission Staff recommends that the utility analyze the 5 following, at a minimum, in its risk assessment; load (demand and energy) 6 forecasts, construction costs, capital costs, operations and maintenance 7 costs, future environmental regulations, fuel and purchase power price 8 variability, and resource modularity. The inclusion of these metrics 9 provides a broad set of data to mitigate risk with respect to future changes. 10 The analysis of these metrics also helps the utility determine the best 11 contingency plan if a future deems it necessary. This approach allows for 12 the redirection of a preferred plan before the “point of no return” in which 13 customers would be responsible for the revenue requirement of a plan that 14 is not the most cost effective.”
15 Staff provided the following risk assessment methods for the Commission to
16 adopt such as:
17 1. Deterministic (e.g. scenario analysis, global sensitivity analysis): In
18 deterministic models, the output of the model is fully determined by the parameter
19 values and the initial conditions. No randomness is involved in the development
20 of future states. Deterministic analysis allows for an evaluation of a proposed
21 resource plan as compared to other optimized or nearly optimized plans under a
22 predetermined set of futures.
23 2. Stochastic (e.g. stochastic optimization, agent-based stochastic optimization,
24 Monte-Carlo simulation): Stochastic models possess some inherent randomness.
25 Randomness is present and variable states are not described by unique values, but
26 rather by user defined probability distributions. The same set of parameter values
27 and initial conditions will lead to a variety of different outputs. Stochastic analysis
28 allows for an analysis of risk of the proposed plan in undefined futures within a
15
DIRECT TESTIMONY OF OLUMIDE O. MAKINDE CASE NUMBER U-20471 PART II
1 set of variables and a range of distributions chosen at random. Stochastic analysis
2 provides a measure of risk under numerous randomly selected parameters.
3 Q. Did the Company perform a risk assessment and did the Company`s risk
4 assessment align with any of the recommendations?
5 A. Yes. The Company conducted a risk assessment, as part of its IRP filing, and
6 performed five separate risk analyses: stochastic risk analysis, change analysis,
7 application of the planning principles, evaluation of key inputs, and using
8 scenario and global sensitivity analysis. My testimony will focus on the stochastic
9 risk analysis. Staff witness Roger A. Doherty’s testimony addresses the other risk
10 analyses.
11 Q. What portfolios did the Company evaluate in the stochastic risk analysis?
12 A. The Company evaluated 13 portfolios. These are listed in Figure 6 on page 128
13 of Company witness Mikulan`s testimony.
14 Q. Do the evaluated portfolios contain the various Proposed Course of Action (PCA)
15 pathways?
16 A. No, the Company did not explicitly include any of the PCA pathways in the
17 stochastic risk analysis. However, portfolios 12 and 13 are very similar to PCA A
18 and B respectively. Company witness Mikulan stated, “The Four IRP pathways
19 were closest to portfolios, 8, 12, and 13….”9
20 Q. What are the implications of not explicitly including the PCA portfolio(s) in the
21 stochastic risk assessment?
9 Pre-filed Direct Testimony and Exhibits of Laura K. Mikulan, p 13. 16
DIRECT TESTIMONY OF OLUMIDE O. MAKINDE CASE NUMBER U-20471 PART II
1 A. Not explicitly including the PCA portfolio(s) in the stochastic risk analysis
2 precludes the Company from assessing the impact of the of key market drivers on
3 the chosen portfolio(s).
4 Stochastic risk assessment measures the possible impact selected
5 uncertainties can have on a PCA when exposed to probable distributed variations
6 in the specified key market drivers when build plans cannot be reversed.
7 Understanding the risks and the associated impacts helps to determine if the build
8 plan is truly the best plan, when coupled with the selected uncertainties,
9 associated probabilities, and their interplay. This understanding gives decision
10 makers the ability to alter plans by reducing and/or eliminating exposure to the
11 risk variables in the future.
12 Q. What recommendations does Staff have with regards to the portfolios being
13 assessed?
14 A. Staff recommends that the Company incorporate its PCA into the stochastic risk
15 assessment in future IRP filings.
16 Q. Does this conclude your testimony?
17 A. Yes.
17
S T A T E OF M I C H I G A N
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
* * * *
In the matter of the Application of ) DTE ELECTRIC COMPANY for ) approval of its Integrated Resource Plan ) Case No. U-20471 pursuant to MCL 460.6t, and for other relief ) )
EXHIBIT OF
OLUMIDE O. MAKINDE
MICHIGAN PUBLIC SERVICE COMMISSION
August 21, 2019 Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: O. O. Makinde Discovery Response STDE-6.1a Exhibit S-4.0
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-6.1a Respondent: L. K. Mikulan Page: 1 of 1
Question: Modeling:
Regarding load inputs to models:
a. Please explain how the load shapes/values that went into the Aurora®, PROMOD®, and Strategist® models were developed.
Answer: The load shapes/values are a direct output from HELM from the Load Forecasting group. These are then supplied to the IRP group via ‘Loadshapes for’ workpapers, please refer to STDE-6.2b for a list of these workpapers. After that, they are converted to a PROMOD friendly format, as discussed in STDE-6.2c. They are then input into PROMOD and translated into Strategist as described in STDE-6.2a.
For Aurora, PACE developed their own load shapes. The Load forecast witness (Leuker) agreed upon the short and long term CAGRs of PACE’s annual sales forecast. The Reference scenario includes up-to-date load forecasts developed by ISOs and NERC as of March 2018. In the case of MISO, PACE developed a load forecast based on the gross demand projections from the State Utility Forecasting Group (SUFG) at Purdue University.
Attachments: None
S T A T E OF M I C H I G A N
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
* * * *
In the matter of the Application of ) DTE ELECTRIC COMPANY for ) approval of its Integrated Resource Plan ) Case No. U-20471 pursuant to MCL 460.6t, and for other relief ) )
QUALIFICATIONS AND DIRECT TESTIMONY OF
ANNA N. N. SCHILLER
MICHIGAN PUBLIC SERVICE COMMISSION
August 21, 2019 QUALIFICATIONS OF ANNA N. N. SCHILLER CASE NUMBER U-20471 PART I
1 Q. Please state your full name and business address for the record.
2 A. My full name is Anna Noelle Nelson Schiller. My business address is the
3 Michigan Public Service Commission’s work site at 7109 West Saginaw
4 Highway, Lansing, Michigan 48917.
5 Q. By whom are you employed and in what capacity?
6 A. I am employed by the Michigan Public Service Commission (MPSC or
7 Commission) in the Energy Resources Division. I am a Public Utilities Engineer
8 in the Resource Adequacy and Retail Choice Section.
9 Q. Please describe your educational background.
10 A. I earned a Bachelor of Science in Biosystems Engineering from Michigan State
11 University (MSU) in 2018. I successfully completed the Fundamentals of
12 Engineering examination in May of 2018. Since joining the Commission, I have
13 attended training programs sponsored by Electric Utility Consultants, Inc. in
14 November 2018, the Organization of Midcontinent Independent System Operator
15 (MISO) States in January 2019, and the MSU Institute of Public Utilities in May
16 2019.
17 Q. Please describe your professional work experience.
18 A. In January of 2015, I began working as an Engineering Assistant under the
19 Infrastructure Planning and Facilities Power and Water department at MSU. As an
20 Engineering Assistant, I worked both part- and full-time to assist in the oversight
21 analysis of both power and water engineering at the T.B Simon Power Plant.
22 In June 2018, I accepted a position as a Public Utilities Engineer in the
23 Resource Adequacy and Retail Choice Section of the MPSC. At the Commission,
1
QUALIFICATIONS OF ANNA N. N. SCHILLER CASE NUMBER U-20471 PART I
1 I am part of a cross-functional group responsible for assessing the reasonableness
2 and feasibility of utility capacity demonstration filings as well as evaluating
3 regulated utilities’ integrated resource plans (IRP), including DTE Electric
4 Company’s (DTE or the Company) IRP as filed in this case before the
5 Commission, Case No. U-20471.
6 Q. Have you worked on other cases filed before the Commission?
7 A. Yes, I have reviewed the capacity demonstration filings in Case No. U-20154 and
8 provided input for MPSC Staff’s (Staff) report in that docket. I worked with other
9 Staff members in the review of Consumers Energy’s IRP in Case No. U-20165,
10 Alpena Power Company’s IRP in Case No. U-20300, Upper Peninsula Power
11 Company’s IRP in Case No. U-20350, and Upper Michigan Energy Resources’
12 IRP in Case No. U-20470. I assisted in the stakeholder engagement process
13 pursuant to the Commission’s Order in Case No. U-20348.1 Additionally, I am a
14 member of the Staff work group that is supporting the Commission’s statewide
15 review of the supply, engineering, and deliverability of electricity and
16 contingency planning of the electric system, pursuant to the Commission’s Order
17 in Case No. U-20464.2
18 Q. Have you previously filed testimony before the Commission?
19 A. Yes. I filed testimony in Case No. U-20350; Upper Peninsula Power Company’s
20 IRP application.
1 In the matter, on the Commission's own motion, to address outstanding issues regarding demand response aggregation for alternative electric supplier load, 11/21/2018 Order, MPSC Case No. U-20348. 2 In the matter, on the Commission’s own motion, to issue a report on the state’s supply, engineering, and deliverability of natural gas, electricity, and propane, and contingency planning, as requested by the Governor, 2/7/2019 Order, MPSC Case No. U-20464. 2
DIRECT TESTIMONY OF ANNA N. N. SCHILLER CASE NUMBER U-20471 PART II
1 Q. What is the purpose of your testimony?
2 A. The purpose of my testimony is to present the MPSC Staff’s evaluation of the
3 Company’s IRP modeling assumptions with respect to operating parameters and
4 cost assumptions for new and existing fossil generation units.
5 Q. Please provide an overview of the content addressed in your testimony.
6 A. My testimony addresses the following topics in the order identified below:
7 Operating Parameters for Existing and New Units
8 Cost Assumptions for Existing and New Units
9 River Rouge 3 Conversion to Industrial Gases
10 Q. What specific materials assisted Staff in its review of DTE’s application with
11 respect to existing and potential new units?
12 A. Staff used MCL 460.6t(5) subsections (i) and (k), as well as sections VII and XIV
13 of the IRP Filing Requirements as approved in the December 20, 2017 Order in
14 Case No. U-15896.
15 Q. Are you sponsoring any exhibits in this proceeding?
16 A. Yes. I am sponsoring the following:
17 Exhibit S-5.0: Company Discovery Responses to Staff Request
18 Q. Was this exhibit prepared by you or under your direction?
19 A. Yes.
3
DIRECT TESTIMONY OF ANNA N. N. SCHILLER CASE NUMBER U-20471 PART II
1 Operating Parameters for Existing and New Units
2 Q. Did the Company’s filing address the requirements of MCL 460.6t(5)(i) and
3 section VII of the IRP Filing Requirements regarding operating parameters for
4 existing and new units?
5 A. Yes. MCL 460.6t(5)(i) and section VII of the IRP Filing Requirements require
6 data regarding the Company’s current generation profile, including the age,
7 capacity factor, licensing status, and remaining estimated time of operation for
8 each facility in the profile. The Company provided the age, capacity factor, and
9 licensing status for its facilities in Company Exhibits A-3, A-10, A-11, A-12, A-
10 18, and A-44. Remaining estimated time of operation was not initially provided
11 for fossil-fueled peaking units3 or the renewable units.4
12 Q. Does Staff have concerns regarding the estimated time of operation for Company-
13 owned fossil-fueled peaking units?
14 A. Yes. Staff submitted a discovery request to DTE to obtain the estimated
15 remaining operation times for its fossil-fueled peaking units. The Company stated
16 in response that “[t]he Company has not made a decision to retire any peaking
17 units at this time.”5 DTE assumes that all peaking units will operate until at least
18 2040. Of the peaking units listed in Company Exhibit A-12, 75% are already
19 between 48- to 53-years old. Appendix B in Revised Exhibit A-4 lists that
20 combustion turbines similar to those in Exhibit A-12 (albeit newer) have a listed
3 Direct Testimony and Exhibits of Matthew T. Paul, Exhibit A-12. 4 Direct Testimony and Exhibits of Laura K. Mikulan, Exhibit A-3, pp. 58-61;Direct Testimony and Exhibits of Teri L. Schroeder, Exhibit A-18. 5 Exhibit S-5.0, p. 4. 4
DIRECT TESTIMONY OF ANNA N. N. SCHILLER CASE NUMBER U-20471 PART II
1 useful life of 30 years. Operating these units past their intended useful life, some
2 to an extent of 70 years by the end of the study period, may increase the operation
3 and maintenance costs beyond what is projected by DTE in this IRP. DTE has not
4 evaluated possible increases in operation and maintenance costs for these units.6
5 Q. Does Staff have concerns regarding the estimated time of operation for Company-
6 owned renewable units?
7 A. No. In response to discovery, DTE states that “[a]ll renewable units were assumed
8 to operate through the study period of 2040.”7 The National Renewable Energy
9 Lab (NREL) estimates that the useful life for a wind unit to be 20 years.8 The
10 oldest DTE renewable facility, a wind facility, had a 2010 commercial operation
11 date. Staff believes that DTE is reasonable in assuming that, with proper care,
12 DTE’s renewable units could operate past 2040 considering the limited
13 information available to NREL in compiling useful life statistics for new
14 technologies. Additionally, Staff’s analysis of DTE’s renewable resources are
15 discussed in the testimony of Staff witness Cody Matthews.
16 Q. How did Staff evaluate the reasonableness of the Company’s assumed capacity
17 factors for potential fossil generation?
18 A. Staff compared the capacity factors given by DTE in their “Master Tech and
19 Finance Inputs” to the public sources listed in that same document.9 The
6 Exhibit S-5.0, p. 16. 7 Exhibit S-5.0, p. 5. 8 National Renewable Energy Laboratory, Distributed Generation Energy Technology Cost & Performance Data; Useful Life, NREL 2019, https://www.nrel.gov/analysis/tech-footprint.html. 9 Revised Direct Testimony and Exhibits of Laura K. Mikulan, Exhibit A-4, p. 4.
5
DIRECT TESTIMONY OF ANNA N. N. SCHILLER CASE NUMBER U-20471 PART II
1 Company used the U.S. Energy Information Agency (EIA) Annual Energy
2 Outlook 2018 Table 8.2, the Electric Power Research Institute (EPRI) Integrated
3 Generation Technology Options 2017, and the U.S. Environmental Protection
4 Agency’s (EPA) Catalogue of Combined Heat and Power (CHP) Technologies as
5 the primary information sources, provided to Staff in workpapers and available
6 publicly online.
7 Q. How did Staff evaluate the reasonableness of the Company’s assumed capacity
8 factors for existing fossil generation?
9 A. In addition to the exhibits listed above, DTE provided workpapers detailing the
10 output capacity factors and generation for each planned course of action (PCA) in
11 both the reference (REF) and business-as-usual (BAU) scenarios from Strategist.
12 Additional data for other sensitivities were provided by DTE upon Staff inquiry.10
13 As a team, Staff compared the provided generation by year and by plant to the
14 plant’s nameplate capacity, consistent with DTE’s capacity factor calculations.
15 Capacity factors for all modeled fossil-fuel units were found to be consistent
16 between Staff’s analysis and the analysis by the Company. Capacity factors in
17 both cases were closely comparable to public data published by the EIA as part of
18 their Electric Power Monthly report, specifically Table 6.7.A ‘Capacity Factors
19 for Utility Scale Generators Primarily Using Fossil Fuels.’11
20 Q. How did Staff evaluate the reasonableness of the Company’s assumed heat rates
21 for potential and existing fossil generation?
10 Exhibit S-5.0, pp. 6-12. 11 Electric Power Monthly, Table 6.7.A. Capacity Factors for Utility Scale Generators Primarily Using Fossil Fuels, EIA 2019, https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_6_07_a. 6
DIRECT TESTIMONY OF ANNA N. N. SCHILLER CASE NUMBER U-20471 PART II
1 A. Staff compared the heat rates given by DTE in their “Master Tech and Finance
2 Inputs” to the public sources listed in that same document. 12 The Company used
3 the EIA Annual Energy Outlook 2018 Table 8.2, the EPRI Integrated Generation
4 Technology Options 2017, and the EPA Catalogue of CHP Technologies as the
5 primary information sources, provided to Staff in workpapers and available
6 publicly online. Staff reviewed this data and was able to match the heat rates with
7 each source. Staff finds the heat rates used for the selection of proposed units to
8 be reasonable.
9 Q. What recommendations does Staff have regarding operating parameters for new
10 and existing units?
11 A. In future IRPs, Staff recommends that the Commission direct the Company to
12 address all IRP Filing Requirements in its initial application, including those that
13 are not expected to change such as the remaining estimated time of operation of
14 the Company’s generation portfolio. Additionally, Staff recommends that the
15 Commission direct the Company in its next IRP to evaluate the impact of
16 increased operations and maintenance as the fossil-fueled units listed in Company
17 Exhibit A-12 age.
12 Revised Direct Testimony and Exhibits of Laura K. Mikulan, Exhibit A-4, p. 4. 7
DIRECT TESTIMONY OF ANNA N. N. SCHILLER CASE NUMBER U-20471 PART II
1 Cost Assumptions for Existing and New Units
2 Q. Did the Company’s filing address the requirements of MCL 460.6t(5)(k) and
3 section XIV of the IRP Filing Requirements regarding the cost assumptions and
4 resource screen for potential new units?
5 A. Yes. DTE conducted a resource screen in the form of a levelized cost of
6 electricity (LCOE) analysis, summarized in Exhibit A-1 as the following:
7 The LCOE was calculated by forecasting the annual costs to operate 8 a technology over its useful life, dividing it by that technology’s 9 forecasted generation, and then levelizing the result. The levelizing 10 function takes a varying stream of numbers over a period and 11 simplifies them to one value, typically represented in $/MWh.
12 The LCOE model was provided to Staff in the Company’s workpapers.
13 Q. Did the Company provide the sources utilized for the cost assumptions for new
14 fossil generation resource options?
15 A. Yes, the Company provided the source of each generation resource option in
16 Exhibit A-4. The Company utilized three sources for its cost assumptions for new
17 fossil generation resources: EIA Annual Energy Outlook 2018 Table 8.2, the
18 EPRI Integrated Generation Technology Options 2017, and the EPA Catalogue of
19 CHP Technologies. The sources were provided by the Company to Staff in
20 workpapers and are available publicly. The Company adjusted the values to
21 reflect 2018 dollars. Staff believes the above sources are reasonable assumptions
22 to use in the LCOE study.
23 Q. How did Staff verify the new fossil generation resource cost assumptions with
24 publicly available data?
8
DIRECT TESTIMONY OF ANNA N. N. SCHILLER CASE NUMBER U-20471 PART II
1 A. Staff compared the cost assumptions for new fossil generation resources provided
2 in Exhibit A-4 to the above listed sources of public data. All costs in Exhibit A-4
3 are listed in 2018 dollars and otherwise match the source data provided.
4 Q. How did the Company satisfy the requirements of MCL 460.6t(5)(k) with regard
5 to cost assumptions for existing fossil generation resources?
6 A. The Company provided several exhibits and workpapers analyzing the cost for
7 operations, maintenance, and investment in their existing fleet. Company witness
8 Matthew T. Paul provides Exhibits A-13 through A-16 as an analysis of the
9 retiring plants in the IRP, listed as Belle River, St. Clair, River Rouge, and
10 Trenton Channel. State-wide resources, required by MCL 460.6t(5)(k), are
11 modeled using the PACE forecast market prices.13 The modeled market prices are
12 further discussed by Staff witness Roger Doherty.
13 Q. How did Staff analyze the reasonableness of these cost assumptions?
14 A. Staff compared the cost assumptions provided for existing fossil generation
15 resources in Company Exhibits A-13 to A-16 to projected costs provided in the
16 Company’s two most recent rate cases filed before the Commission: Case No. U-
17 20162 and Case No. U-20561.
18 Q. What was the result of Staff’s analysis of the cost assumptions for existing fossil
19 generation resources?
13 Revised Direct Testimony and Exhibits of Laura K. Mikulan, Exhibit A-4, pp. 31-34. 9
DIRECT TESTIMONY OF ANNA N. N. SCHILLER CASE NUMBER U-20471 PART II
1 A. The cost assumptions listed in the resources checked by Staff are reasonable for
2 the purposes of this IRP and the technology costs for thermal units are on track
3 with mid-range industry expectations.
4 Q. Does Staff have any additional comments regarding the cost assumptions used by
5 DTE in this IRP?
6 A. Yes. DTE provided an enormous amount of data, which the Staff examined to the
7 best of its ability, focusing on the main IRP assumptions documents. However,
8 due to the volume of the workpapers provided and the complexities of the
9 Company’s modeling, other sources may have been missed or inconsistencies
10 inadvertently overlooked. The Staff has made the best effort to affirm that the cost
11 assumptions for new and existing fossil generators are accurate in DTE’s IRP.
12 River Rouge 3 Conversion to Industrial Gases
13 Q. Please provide an overview of the Company’s decisions regarding the River
14 Rouge 3 (RR3) facility.
15 A. RR3 is currently run using coal as a primary fuel source, with natural gas and
16 recycled industrial gases as a supplemental fuel source. The Company plans to
17 retire the use of coal in River Rouge unit 3 in 2020. The Company intends to
18 continue operation of the unit until 2022 with recycled industrial gases, namely
19 blast furnace gas, coke oven gas, and natural gas as its only fuel source.14 As
20 stated on page 108 of Mikulan Exhibit A-3, natural gas for the River Rouge unit is
21 procured though the MichCon CityGate from third party gas marketers. The
14 Revised Direct Testimony and Exhibits of Laura K. Mikulan, p. 59. 10
DIRECT TESTIMONY OF ANNA N. N. SCHILLER CASE NUMBER U-20471 PART II
1 industrial gas is procured from EES Coke Battery, L. L. C., a DTE subsidiary,
2 which will provide future industrial gas needs.15
3 Q. Does Staff have any concerns regarding the fuel supply for the converted RR3
4 unit?
5 A. Yes. DTE expects that fuel supply delivery will continue under the current
6 contract between EES Coke Battery, L. L. C. and the Company for the remaining
7 life of the unit.16 However, should the fuel supply contract be insufficient due to
8 the larger dependence of the unit on industrial gas supply, Staff would
9 recommend that the Commission direct the Company to notify Staff before filing
10 its next Power Supply Cost Recovery (PSCR) case, or any other proceeding in
11 which contract review will take place, to allow Staff to further review this
12 contract due to its affiliate nature.
13 Q. What cost approval is DTE seeking for the RR3 conversion project in this IRP?
14 A. None; DTE is not seeking cost approval for the RR3 conversion in this case. DTE
15 did not include an estimated cost of the conversion in its application. The net
16 present value analysis provided to support this conversion did include a $2 million
17 capital investment in 202217 for “routine capitalized maintenance […] to maintain
18 safe and environmentally compliant operations.”18 However, it was not
19 established by the Company that this investment is inclusive of all costs necessary
15 Exhibit S-5.0, p. 3. 16 Exhibit S-5.0, p. 15. 17 Prefiled Direct Testimony and Exhibits of Matthew T. Paul, Exhibit A-17.2. 18 Exhibit S-5.0, p. 13. 11
DIRECT TESTIMONY OF ANNA N. N. SCHILLER CASE NUMBER U-20471 PART II
1 to complete this conversion. DTE intends to file detailed project information in its
2 next rate case filing.19
3 Q. What additional concerns does Staff have with the RR3 conversion?
4 A. As previously stated, the Company states that the conversion of RR3 has
5 additional capital costs to comply with environmental regulations but does not
6 specify the amount of capital investment necessary.20 Though the Company is not
7 asking for cost approval in this case, Staff wishes to clarify its position that
8 approval of the River Rouge 3 conversion in this case does not automatically
9 approve future recovery of capital investments in this project. Approval for the
10 recovery of these costs is most appropriate for a future PSCR or rate case.
11 Additionally, due to the affiliate nature of the fuel supply arrangement between
12 the Company and its subsidiary, E.E.S. Coke Battery, a renegotiation or renewal
13 of this contract would necessitate a more intensive review by Staff to ensure
14 compliance with the affiliate transactions guidelines.
15 Q. Does this conclude your direct testimony?
16 A. Yes.
19 Exhibit S-5.0, p. 14. 20 Exhibit S-5.0, p. 2. 12
S T A T E OF M I C H I G A N
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
* * * *
In the matter of the Application of ) DTE ELECTRIC COMPANY for ) approval of its Integrated Resource Plan ) Case No. U-20471 pursuant to MCL 460.6t, and for other relief ) )
EXHIBIT OF
ANNA N. N. SCHILLER
MICHIGAN PUBLIC SERVICE COMMISSION
August 21, 2019 Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: A. N. N. Schiller Company Discovery Responses to Staff Request Exhibit S-5.0 Page 1 of 16
Table of Contents STDE-2.11 ...... 2 STDE-2.12 ...... 3 STDE-5.7 ...... 4 STDE-5.8 ...... 5 STDE-5.9 ...... 6 STDE-10.1c ...... 13 STDE-10.1d ...... 14 STDE-10.6 ...... 15 STDE-13.14c ...... 16
Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: A. N. N. Schiller Company Discovery Responses to Staff Request Exhibit S-5.0 Page 2 of 16
STDE-2.11 MPSC Case No: U-20471______Requestor: Staff______Question No.: STDE-2.11______Respondent: R. C. Pratt/B. J. Marietta_ Page: 1 of 1______
Question: Paul, p 15: What testing was performed to confirm that running RR3 exclusively on industrial gas (blast furnace gas and coke oven gas) and natural gas is possible? What modifications to current equipment/other investments must be made in order to make this possible? Please provide a detailed list of all capital investment projects that will be needed to complete this conversion.
Answer: The unit was tested operating on industrial gases and without coal in early- 2019 to prove operations on industrial gases. The plant currently utilizes industrial gases, therefore no modifications to current equipment are required to operate the unit on industrial gases and no new investments are required to make operation on industrial gases possible. However, there are minor capital investments, which are currently being investigated, that are required to re- route plant water streams by October 2020 based on environmental regulations.
Attachments: None
Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: A. N. N. Schiller Company Discovery Responses to Staff Request Exhibit S-5.0 Page 3 of 16
STDE-2.12 MPSC Case No: U-20471______Requestor: Staff______Question No.: STDE-2.12______Respondent: R. C. Pratt/M. T. Paul__ Page: 1 of 1______
Question: Paul, p 17: What is the current source of BFG and COG utilized by RR3? Is this generated through the operations of the company, or purchased from another source? Does the Company anticipate this supply situation would change once RR3 operates exclusively on gas?
Answer: The current source of BFG and COG utilized by RR3 is from EES Coke Battery, L.L.C., which is a DTE Energy subsidiary. The Company does not anticipate this supply situation would change once RR3 operates exclusively on gas.
Attachments: None
Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: A. N. N. Schiller Company Discovery Responses to Staff Request Exhibit S-5.0 Page 4 of 16
STDE-5.7 MPSC Case No: U-20471______Requestor: Staff______Question No.: STDE-5.7______Respondent: M. T. Paul______Page: 1 of 1______
Question: Please provide the remaining estimated time of operation for all units in Exhibit A-12.
Answer: The Company has not made a decision to retire any peaking units at this time.
Attachments: None
Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: A. N. N. Schiller Company Discovery Responses to Staff Request Exhibit S-5.0 Page 5 of 16
STDE-5.8 MPSC Case No: U-20471______Requestor: Staff______Question No.: STDE-5.8______Respondent: T. L. Schroeder______Page: 1 of 1______
Question: Please provide the remaining estimated time of operation for all existing renewable units, including those listed in Exhibit A-8 as well as tables 7.5.1 and 7.5.2 in Exhibit A-3.
Answer: All renewable units were assumed to operate through the study period of 2040.
Attachments: None
Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: A. N. N. Schiller Company Discovery Responses to Staff Request Exhibit S-5.0 Page 6 of 16
STDE-5.9 MPSC Case No: U-20471______Requestor: Staff______Question No.: STDE-5.9a______Respondent: T. L. Schroeder______Page: 1 of 1______
Question: Please provide the generation output by unit of each year of the plan for the following, in a similar manner to the ‘Generation’ tab of WP LMK-23: a. BAU High Growth Load Sensitivity
Answer: Please see attachment ‘U-20471 STDE-5.9a BAU High Growth Load Sensitivity Generation’. Note that pumped storage generation is on a separate tab.
Attachments: The document listed below is available for download at the following hyperlink: https://dteenergy.sharepoint.com/sites/DiscoveryPortal/Elec/U- 204712019IRPPublic/default.aspx U-20471 STDE-5.9a BAU High Growth Load Sensitivity Generation
Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: A. N. N. Schiller Company Discovery Responses to Staff Request Exhibit S-5.0 Page 7 of 16
MPSC Case No: U-20471______Requestor: Staff______Question No.: STDE-5.9b______Respondent: T. L. Schroeder______Page: 1 of 1______
Question: Please provide the generation output by unit of each year of the plan for the following, in a similar manner to the ‘Generation’ tab of WP LMK-23: b. BAU No Gas Sensitivity
Answer: Please see attachment ‘U-20471 STDE-5.9b BAU No Gas Sensitivity Generation’. Note that pumped storage generation is on a separate tab.
Attachments: The document listed below is available for download at the following hyperlink: https://dteenergy.sharepoint.com/sites/DiscoveryPortal/Elec/U- 204712019IRPPublic/default.aspx U-20471 STDE-5.9b BAU No Gas Sensitivity Generation
Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: A. N. N. Schiller Company Discovery Responses to Staff Request Exhibit S-5.0 Page 8 of 16
MPSC Case No: U-20471______Requestor: Staff______Question No.: STDE-5.9c______Respondent: T. L. Schroeder______Page: 1 of 1______
Question: Please provide the generation output by unit of each year of the plan for the following, in a similar manner to the ‘Generation’ tab of WP LMK-23: c. BAU Demand Response before 2040 Sensitivity
Answer: Please see attachment ‘U-20471 STDE-5.9c BAU Demand Response before 2040 Generation’. Note that pumped storage generation is on a separate tab.
Attachments: The document listed below is available for download at the following hyperlink: https://dteenergy.sharepoint.com/sites/DiscoveryPortal/Elec/U- 204712019IRPPublic/default.aspx U-20471 STDE-5.9c BAU Demand Response before 2040 Generation
Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: A. N. N. Schiller Company Discovery Responses to Staff Request Exhibit S-5.0 Page 9 of 16
MPSC Case No: U-20471______Requestor: Staff______Question No.: STDE-5.9d______Respondent: T. L. Schroeder______Page: 1 of 1______
Question: Please provide the generation output by unit of each year of the plan for the following, in a similar manner to the ‘Generation’ tab of WP LMK-23: d. BAU CT Only Available Replacement Sensitivity
Answer: Please see attachment ‘U-20471 STDE-5.9d BAU CT only available replacement Generation’. Note that pumped storage generation is on a separate tab.
Attachments: The document listed below is available for download at the following hyperlink: https://dteenergy.sharepoint.com/sites/DiscoveryPortal/Elec/U- 204712019IRPPublic/default.aspx U-20471 STDE-5.9d BAU CT only available replacement Generation
Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: A. N. N. Schiller Company Discovery Responses to Staff Request Exhibit S-5.0 Page 10 of 16
MPSC Case No: U-20471______Requestor: Staff______Question No.: STDE-5.9e______Respondent: T. L. Schroeder______Page: 1 of 1______
Question: Please provide the generation output by unit of each year of the plan for the following, in a similar manner to the ‘Generation’ tab of WP LMK-23: e. REF High Load Growth Sensitivity
Answer: Please see attachment ‘U-20471 STDE-5.9e REF High Load Growth Sensitivity Generation’. Note that pumped storage generation is on a separate tab.
Attachments: The document listed below is available for download at the following hyperlink: https://dteenergy.sharepoint.com/sites/DiscoveryPortal/Elec/U- 204712019IRPPublic/default.aspx U-20471 STDE-5.9e REF High Load Growth Sensitivity Generation
Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: A. N. N. Schiller Company Discovery Responses to Staff Request Exhibit S-5.0 Page 11 of 16
MPSC Case No: U-20471______Requestor: Staff______Question No.: STDE-5.9f______Respondent: T. L. Schroeder______Page: 1 of 1______
Question: Please provide the generation output by unit of each year of the plan for the following, in a similar manner to the ‘Generation’ tab of WP LMK-23: f. REF No Gas Sensitivity
Answer: Please see attachment ‘U-20471 STDE-5.9f REF No Gas Sensitivity Generation’. Note that pumped storage generation is on a separate tab.
Attachments: The document listed below is available for download at the following hyperlink: https://dteenergy.sharepoint.com/sites/DiscoveryPortal/Elec/U- 204712019IRPPublic/default.aspx U-20471 STDE-5.9f REF No Gas Sensitivity Generation
Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: A. N. N. Schiller Company Discovery Responses to Staff Request Exhibit S-5.0 Page 12 of 16
MPSC Case No: U-20471______Requestor: Staff______Question No.: STDE-5.9g______Respondent: T. L. Schroeder______Page: 1 of 1______
Question: Please provide the generation output by unit of each year of the plan for the following, in a similar manner to the ‘Generation’ tab of WP LMK-23: g. REF EWR Incentive Cost Flat High Sensitivity
Answer: Please see attachment ‘U-20471 STDE-5.9g REF EWR Incentive Cost Flat High Sensitivity Generation’. Note that pumped storage generation is on a separate tab.
Attachments: The document listed below is available for download at the following hyperlink: https://dteenergy.sharepoint.com/sites/DiscoveryPortal/Elec/U- 204712019IRPPublic/default.aspx U-20471 STDE-5.9g REF EWR Incentive Cost Flat High Sensitivity Generation
Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: A. N. N. Schiller Company Discovery Responses to Staff Request Exhibit S-5.0 Page 13 of 16
STDE-10.1c MPSC Case No: U-20471______Requestor: Staff______Question No.: STDE-10.1c______Respondent: M. T. Paul______Page: 1 of 1______
Question: Referencing both discovery response STDE 2.9 and STDE 2.11: c. Referring to page 3 of Exhibit A-17.2, is the $2 million estimate for capital investment in the 2022 RR 3 retirement case representative of the estimated cost of this project? If not, what is the basis for this $2 million in capital investment?
Answer: The $2 million represents routine capitalized maintenance for items such as pumps, motors, and values required to maintain safe and environmentally compliant operations.
Attachments: None
Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: A. N. N. Schiller Company Discovery Responses to Staff Request Exhibit S-5.0 Page 14 of 16
STDE-10.1d MPSC Case No: U-20471______Requestor: Staff______Question No.: STDE-10.1d______Respondent: M. T. Paul______Page: 1 of 1______
Question: Referencing both discovery response STDE 2.9 and STDE 2.11: c. Will the costs and detailed project information be filed in the Company’s next rate case filing?
Answer: Yes.
Attachments: None
Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: A. N. N. Schiller Company Discovery Responses to Staff Request Exhibit S-5.0 Page 15 of 16
STDE-10.6 MPSC Case No: U-20471______Requestor: Staff______Question No.: STDE-10.6______Respondent: R. C. Pratt______Page: 1 of 1______
Question: Referencing both discovery response STDE 2.12, what are the current contract terms for the delivery of BFG and COG to River Rouge by EES Coke Battery, L.L.C.? Would this contract require renegotiation to allow for proper supply of fuel to RR3 once it runs exclusively on industrial gas?
Answer: The current contract terms for delivery of BFG and COG to River Rouge are that EES Coke shall sell on an as available basis and DTE Electric shall purchase all COG and BFG delivered to the Delivery Point by EES Coke. However, in the event that DTE Electric is unable through the use of commercially reasonable efforts to consume COG or BFG delivered or made available by EES Coke, then DTE Electric shall not be required to accept delivery or pay for such COG or BFG.
DTEE expects the fuel supply delivery to continue as under the current contract. These contracts may require renegotiation for commercial purposes.
Attachments: None
Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: A. N. N. Schiller Company Discovery Responses to Staff Request Exhibit S-5.0 Page 16 of 16
STDE-13.14c MPSC Case No: U-20471______Requestor: Staff______Question No.: STDE-13.14c______Respondent: M. T. Paul______Page: 1 of 1______
Question: All questions below reference both Exhibit A-12 and discovery response STDE-5.7. c. Please provide the location in the provided exhibits and workpapers of any analysis DTE has performed on the costs of maintaining the peaking units in Exhibit A-12; including, but not limited to, the increasing cost of operations and maintenance as the units age. If it was not included in the initial filing, please provide it in response to this question.
Answer: The cost of maintaining peaking units was not provided in exhibits or workpapers.
Peaker maintenance requirements are based on routine maintenance requirements and manufacturer’s major maintenance requirements triggered by unit operation, including run hours and startups, and regulations. The Company has not performed an analysis on the increasing costs of maintaining the peaking units as the units age since costs are generally driven by usage and not age.
Attachments: None
S T A T E OF M I C H I G A N
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
* * * *
In the matter of the Application of ) DTE ELECTRIC COMPANY for ) approval of its Integrated Resource Plan ) Case No. U-20471 pursuant to MCL 460.6t, and for other relief ) )
QUALIFICATIONS AND DIRECT TESTIMONY OF
ROGER A. DOHERTY
MICHIGAN PUBLIC SERVICE COMMISSION
August 21, 2019 QUALIFICATIONS OF ROGER A. DOHERTY CASE NUMBER U-20471 PART I
1 Q. Would you please state your name and business address for the record?
2 A. My name is Roger A. Doherty. My business address is 7109 West Saginaw
3 Highway, Lansing, Michigan 48917.
4 Q. By whom are you employed and what is your position?
5 A. I am employed by the Michigan Public Service Commission (MPSC or
6 Commission) as an Engineer in the Resource Adequacy and Retail Choice Section
7 in the Energy Resources Division.
8 Q. Would you please outline your educational background?
9 A. I earned a Bachelor of Science Degree in Biosystems Engineering and a Bachelor
10 of Science Degree in Environmental Studies & Applications with a Specialization
11 in Environmental Economics from Michigan State University in 2005. Since
12 joining the MPSC Staff (Staff), I have attended several training programs hosted
13 by the Michigan State University Institute of Public Utilities, including the
14 Annual Regulatory Studies Program sponsored by the National Association of
15 Regulatory Utility Commissioners (August 2017), Modeling Utility Financial
16 Impacts in a Dynamic World (September 2017), and Grid School (April 2018). I
17 have also attended several EUCI training courses including: Resource and
18 Portfolio Planning: Modeling and Monetizing Uncertainty and Risk Associated
19 with Renewables (August 2017), Long-Term Load Forecasting in MS Excel
20 (August 2018), and Integrated Resource Planning Summit (March 2019).
21 Q. Would you please outline your professional background?
22 A. In July 2006, I began working for the State of Michigan in the Michigan Energy
23 Office as a Staff Engineer. At the Michigan Energy Office, I was responsible for a
1
QUALIFICATIONS OF ROGER A. DOHERTY CASE NUMBER U-20471 PART I
1 variety of technical assistance and financial incentive programs for energy
2 efficiency and renewable energy projects in industrial, commercial, and
3 residential sectors. I also was responsible for energy code compliance programs,
4 economic development programs focused on technology roadmaps, and advanced
5 energy technology acceleration services. In June 2017, I joined the MPSC as a
6 Public Utilities Engineer. At the MPSC, I evaluate integrated resource plans (IRP)
7 and resource adequacy plans of utilities and alternative electric suppliers, review
8 capacity demonstrations to ensure they meet federal and state requirements, and
9 develop/analyze generation expansion planning models.
10 Q. Have you previously testified in cases before the Commission?
11 A. Yes, I previously testified in the following cases:
12 Case No. Description
13 U-18444 Contested case proceeding for determining the process and
14 requirements for a forward locational requirement under MCL 460.6w.
15 U-20165 Consumers Energy Company integrated resource plan pursuant to
16 MCL 460.6t
17 U-20300 Alpena Power Company integrated resource plan pursuant to MCL
18 460.6t.
2
DIRECT TESTIMONY OF ROGER A. DOHERTY CASE NUMBER U-20471 PART II
1 Q. What is the purpose of your testimony?
2 A. The purpose of my testimony is to provide a high-level assessment of DTE
3 Electric Company’s (DTE or the Company) modeling in this case. I provide an
4 overview of the model along with commentary on reducing complexity and
5 increasing transparency of the Company’s modeling approach. I review the
6 Company’s long-term proposed course of action (PCA) with respect to including
7 multiple PCA pathways instead of one PCA. I also evaluate the Company’s
8 inclusion of renewable resources to meet its own clean energy goals as a starting
9 point for its modeling, whether the Company fulfilled the modeling requirements
10 as defined in the Michigan Integrated Resource Planning Parameters.1 as well as
11 evaluating portions of the Company’s risk assessment.
12 Q. Are you sponsoring any exhibits?
13 A. Yes.
14 Exhibit S-6.0 DTE Discovery Response STDE 13.10-13.13
15 Exhibit S-6.1 Resource Additions (“Forced in” vs Optimized)
16 Exhibit S-6.2 DTE Discovery Response STDE-2.3b
17 Exhibit S-6.3 MIRPP Scenario and Sensitivity Requirements
18 Q. Were these exhibits prepared by you?
19 A. Exhibits S-6.1 and S-6.3 were prepared by me. Exhibits S-6.0 and S-6.2 were
20 provided by the Company in discovery.
1 Commission Order in Case No. U-18418. 11/21/2017 Order, Exhibit A. 3 DIRECT TESTIMONY OF ROGER A. DOHERTY CASE NUMBER U-20471 PART II
1 Q. Did the Company provide a 5, 10, and 15-year capacity outlook as required by the
2 MIIRP pursuant to MCL 460.6t?
3 A. Yes. The Company’s capacity outlook was provided with more granularity than
4 required. The Company provided an annual capacity outlook through 2040. The
5 Company’s capacity outlook included the starting point capacity position
6 projection as well as the capacity position projections under various alternative
7 plans. (Exhibit A-6 and A-7)
8 Q. Briefly describe the Company’s modeling approach for this IRP.
9 A. The Company used several different modeling platforms for various steps of its
10 integrated resource plan modeling. Staff Exhibit S-1.0 sponsored by Staff witness
11 Paul A. Proudfoot shows a flow chart of the various models used by the Company
12 showing how the models work together. PACE Global (PACE) used EPIS
13 Aurora® to perform a national fundamental forecast which provided the Company
14 with fuel, market, and emission prices. The outputs from PACE were used as
15 inputs to PROMOD® which captures the outage rates, heat rates, emissions and
16 energy prices of the Company’s existing fleet. The Powerbase database is used as
17 an interface between PROMOD® and Strategist®. Strategist® was used to
18 generate the build plans. Other inputs for the Strategist® model include the
19 Levelized Cost of Energy (LCOE) model, which was used to develop the fixed
20 costs portion of the present value of revenue requirements (PVRR) costs, and the
21 Revenue Requirement model, which was used to develop the PVRR costs for
22 technologies not included in the LCOE screening. The build plans generated by
23 Strategist® could be loaded into PROMOD® to model hourly
4 DIRECT TESTIMONY OF ROGER A. DOHERTY CASE NUMBER U-20471 PART II
1 dispatch of existing and new supply-side resources. For the Tier 2 retirement
2 analysis an output from the PROMOD dispatch model was used as an input into
3 the Revenue Requirements model to evaluate the potential early retirement of St.
4 Clair and Trenton Channel.
5 Q. Does Staff find the company’s approach to be reasonable?
6 A. It is reasonable but suffers from being overly complicated and not very
7 transparent which, as described by Staff witness Proudfoot, can lead to errors.
8 Staff suggests that the Company simplify the approach in subsequent IRP filings.
9 One way that the Company may be able to simplify its approach would be to
10 utilize a more fully functional platform that allows for both capacity expansion
11 modeling and production cost modeling.
12 Q. Describe the Company’s Proposed Course of Action (PCA).
13 A. DTE Electric IRP includes a PCA that separates the planning period into a
14 defined short-term (2020-2024) and a flexible long-term (2025-2040). The
15 defined short-term period includes new resources with cost approval requested in
16 this case, as well as new resources already approved (such as the Blue Water
17 Energy Center) or pending subsequent approval (such as resources from the REP
18 and VGP cases). For the flexible period of the PCA, the Company commits to
19 increasing renewables, increasing VGP, and retiring Belle River Power Plant by
20 20302 but does not propose a specific course of action to realize these
21 commitments. Instead the Company analyzes four different pathways that could
2 LKM-18. 5 DIRECT TESTIMONY OF ROGER A. DOHERTY CASE NUMBER U-20471 PART II
1 be used to meet future generation needs. The Company further clarified in
2 discovery (Exhibit S-6.0 DTE Discovery Response STDE 13.10-13.13) that the
3 flexible pathways were meant to represent a range of possible futures and that the
4 Company doesn’t necessarily expect to select the specific resources from any of
5 the four analyzed PCAs.
6 Q. What is Staff’s opinion of the Company’s flexible PCA approach?
7 A. Section 6(t)(3) of PA 341 requires the Company to “file with the Commission an
8 integrated resource plan that provides a 5-year, 10-year, and 15-year projection of
9 the utility’s load obligations and a plan to meet those obligations.” The idea of
10 multiple proposed courses of action is contrary to having a plan to meet load
11 obligations. Staff supports the general idea that the later years of an IRP should be
12 subject to change in future IRPs. Staff understands that the further into the future
13 one goes the more uncertainty there is about market conditions, technology costs,
14 fuel costs, and other vital inputs to an IRP. However, it is Staff’s position that the
15 Company should clearly identify a single PCA that the Company believes is most
16 likely given its base assumptions about the future. The Company should explain
17 what those assumptions are that led it to the selected PCA. The inclusion of
18 multiple PCAs in the IRP conflicts with the entire point of a proposed course of
19 action. Staff encourages all companies filing an IRP to highlight the uncertainty in
20 the assumptions utilized, as well as other potential resource plans that could make
21 sense given changes to those assumptions and unknown future conditions.
22 Q. What was the Company’s starting point for modeling?
6 DIRECT TESTIMONY OF ROGER A. DOHERTY CASE NUMBER U-20471 PART II
1 A. The Company’s starting point for all scenarios and sensitivities modeled in the
2 IRP include near-term resource additions such as the Blue Water Energy Center
3 (BWEC) as well as 554 MW of renewable additions to meet the 15% Renewable
4 Portfolio Standard (RPS) requirement. The Company’s starting point also
5 includes an additional 2,975 MW of renewable resource additions to meet the
6 Company’s own clean energy and carbon reduction goals.
7 Q. What is the Company’s clean energy goal?
8 A. In March 2018, the Company announced a commitment to achieve a clean energy
9 goal (EWR and renewables) of 50% by 2030, with at least half of that from
10 renewable energy.
11 Q. What is the Company’s carbon reduction goal?
12 A. The Company’s carbon reduction goal is to achieve an 80% reduction, from 2005
13 levels, by 2040.
14 Q. What is the result of including the resources necessary to meet the Company’s
15 Clean Energy goal as part of the starting point?
16 A. The Company uses the same starting point resources for each modeling scenario.
17 Including these resources in the starting point ensures that the Company meets its
18 stated goals but also results in no modeling analysis of these resources. The model
19 is not allowed to optimize to fill the capacity and energy needs served by these
20 resources. This reduces the value of the modeling. Exhibit S-6.1 Resource
21 Additions (“Forced in” vs Optimized) lists the new resources being added to
22 DTE’s portfolio from the present through 2040. As shown in Exhibit S-6.1, the
23 Company’s entire integrated resource plan adds over 7,000 MW of resources, of
7 DIRECT TESTIMONY OF ROGER A. DOHERTY CASE NUMBER U-20471 PART II
1 which only about 700 MW was allowed to be optimized by their original
2 modeling. This specific list includes the resources added in the DTE REF scenario
3 least cost plan. Other plans and PCAs in the IRP include different resources for
4 the replacement of Belle River but are consistent in terms of the total amount of
5 resources added.
6 Q. Is it Staff’s position that the Company’s model should have been allowed to
7 optimize for all of the resource additions listed on Exhibit S-6.1?
8 A. No. It is appropriate to include resources that are already approved, such as the
9 Blue Water Energy Center (BWEC) combined cycle plant, and resources that are
10 needed to meet a legislative requirement, such as the renewable portfolio standard
11 (RPS) resources as part of the starting point. Staff also supports the inclusion of
12 the three 1x1 CCGTs as a placeholder for Monroe replacement in 2040 into the
13 starting point, as a modeling technique, to keep consistency among the various
14 scenarios. The actual replacement of Monroe can be thoroughly evaluated in
15 future IRPs. Staff’s concern is primarily over the inclusion of resources needed to
16 meet the Company’s self-imposed clean energy goal as a part of their starting
17 point.
18 Q. In light of Staff’s concerns with what the Company modeled vs. included in the
19 starting point, did Staff request any additional modeling from the Company?
20 A. Yes. Staff did request that the Company make additional modeling runs that did
21 not include the clean energy goal renewable resources, instead optimizing to fill
22 that need. The Company complied with this request, which is provided in Exhibit
23 S-6.2 DTE Discovery Response STDE-2.3b.
8 DIRECT TESTIMONY OF ROGER A. DOHERTY CASE NUMBER U-20471 PART II
1 Q. What are the costs of the Company’s carbon and clean energy goals?
2 A. Even with the additional modeling provided by the Company, the costs (or
3 benefits) from a ratepayer perspective are not conclusive. The modeling shows a
4 range of present value of the revenue requirement (PVRR) deltas, between the
5 plans that include the starting point renewable resources and the fully optimized
6 plans. This range is from a savings of $44 million to a cost of $105 million, over
7 the four different scenarios (ET, EP, BAU, DTE REF), depending on the market
8 conditions and cost assumptions used. The fully optimized model was only used
9 to fill capacity needs and not allowed to add superfluous units. In most cases, the
10 renewable resources added to meet the clean energy goals were not needed to fill
11 a capacity need as they were superfluous, but there are market conditions possible
12 where the additional renewable resources would lead to a lower PVRR. The after-
13 the-fact nature of these fully optimized runs also means the build plans generated
14 from the fully optimized runs are excluded from the robust analysis of DTE’s IRP
15 and supporting testimony. Staff recommends that the base starting point resources
16 in future IRP cases consist of only new units that are already approved, under
17 construction, or planned with firm certainty (such as resources needed to meet a
18 legislative requirement). This language is consistent with the Michigan Integrated
19 Resource Planning Parameters, which directs specific new resources to be
20 included in the model if under construction or with regulatory approval.3
3 https://mi-psc.force.com/sfc/servlet.shepherd/version/download/068t0000001X2Co. 9 DIRECT TESTIMONY OF ROGER A. DOHERTY CASE NUMBER U-20471 PART II
1 Q. Did the Company’s approach to modeling to meet its clean energy and carbon
2 goals allow for optimization of clean resources?
3 A. No. By pre-disposing the resources needed to meet its clean energy and carbon
4 goals, the Company did not allow for the mix of renewable resources to be
5 optimized for cost. Staff suggests that the Company utilize a modeling platform
6 that allows for optimization around emission limits as a possible method to both
7 evaluate the Company’s goals and optimize resources to meet them as compared
8 to a fully optimized model without the self-imposed clean energy and carbon
9 goals.
10 Q. Why is it important to compare a fully optimized build plan with the Company’s
11 starting point renewable plan?
12 A. The Company’s starting point renewable plan is based upon the Company-
13 imposed clean energy and carbon goals. These goals may or may not have
14 significant ratepayer impacts depending upon a number of variables, such as
15 commodity and technology prices. It is important to consider cost impacts to the
16 ratepayers as a result of the IRP resource selection when evaluating an IRP.
17 Q. What are Staff’s recommendations regarding the Company’s non-optimized
18 inclusion of the clean energy goal renewable resources in the Company’s starting
19 position?
20 A. The first of these clean energy goal renewable resources is planned to come into
21 operation in 2024. Staff recommends the Company be advised to file its next IRP
22 in 3 years from the Commission’s final order in this IRP, instead of the
23 legislatively required 5 years. Staff recommends the Company file its next IRP
10
DIRECT TESTIMONY OF ROGER A. DOHERTY CASE NUMBER U-20471 PART II
1 early enough to allow completion of the case, including a robust analysis of these
2 resources, prior to contracting and/or constructing these resources. Staff
3 recommends the Commission reinforce that approval of this IRP does not exclude
4 these resources from scrutinization in future IRP proceedings.
5 Q. Does the Company’s IRP modeling include any analysis of the renewable
6 resources added to achieve the 15% RPS by 2021?
7 A. No. As was stated earlier, Staff accepts the Company’s force-in of renewable
8 resources into its model to meet its legislative requirements. However, the
9 Commission Order in DTE’s Renewable Energy Plan (REP) Case4 refers a
10 portion of the resources in the REP to the IRP for a more robust review. Due to
11 the REP order, Staff finds it important to be clear about what the modeling in this
12 case did and did not analyze. The same renewable resources needed to meet the
13 RPS were included as a starting point in every modeling scenario. This is the case
14 for the original modeling as well as the additional modeling, performed by the
15 Company at Staff’s request,5 which did not include the renewable resources for
16 the Company’s clean energy goals. In other words, the modeling in Exhibit S-6.2
17 forces-in the same RPS wind resources as the original modeling performed by the
18 Company. The Company’s modeling did not analyze the various technologies that
19 could be used to meet the resource requirements of the RPS. It is Staff’s
20 perspective that these resource additions are more appropriately evaluated through
4 In the matter, on the Commission's own motion, regarding the regulatory reviews, revisions, determinations, and/or approvals necessary for DTE Electric Company to fully comply with Public Acts 295 of 2008., 7/18/2019 Order, MPSC Case No. U-20348. 5 Exhibit S-6.2. 11
DIRECT TESTIMONY OF ROGER A. DOHERTY CASE NUMBER U-20471 PART II
1 the Company’s procurement process, as discussed further in the Direct Testimony
2 of Staff witnesses Paul Proudfoot and Sarah A. Mullkoff.
3 Q. Did the Company run all the scenarios and sensitivities required in the Michigan
4 Integrated Resource Planning Parameters (MIRPP)?
5 A. Yes. The Company ran modeling for each of the three MIRPP required scenarios;
6 Business as Usual (BAU), Environmental Policy (EP), and Emerging Technology
7 (ET). The Company also evaluated the MIRPP required sensitivities. Company
8 witness Laura K. Mikulan provides testimony (Section IV: Scenarios and
9 Sensitivities, pages 32-44) describing the various scenarios and sensitivities
10 modeled by the Company for this IRP.
11 Q. Which specific model runs fulfill the requirements laid out in the MIRPP?
12 A. Exhibit S-6.3 MIRPP Scenario and Sensitivity Requirements shows the
13 Strategist® Text Reports and SAV files for various modeling runs that meet the
14 MIRPP scenario and sensitivity requirements. In addition to the model runs
15 shown in Exhibit S-6.3, the Company modeled many of these scenario and
16 sensitivities using different energy waste reduction percentages and cost
17 structures.
18 Q. Did Staff verify required inputs (load increases, fuel prices, technology costs, etc.)
19 associated with the various scenarios and sensitivities?
20 A. Staff was able to verify some of the Company’s input data. Refer to Staff witness
21 Olumide O. Makinde’s testimony for information on load forecasts, Staff witness
22 Nicolas G. Luciani’s testimony for information on fuel prices, Staff witness Cody
23 S. Matthews for information on renewable and energy storage technology costs
12
DIRECT TESTIMONY OF ROGER A. DOHERTY CASE NUMBER U-20471 PART II
1 and Staff witness Anna N. N. Schiller’s testimony for information on new and
2 existing generation.
3 Q. Why was Staff unable to verify all of the Company’s data?
4 A. The Company provided the Staff with an enormous amount of data to review:
5 over 500 workpapers, not including the exhibits provided by the Company in its
6 application. In addition, as demonstrated in Exhibit S-1.0, the Company utilized a
7 very complex modeling process and Staff found it difficult to track modeling
8 inputs/outputs through various stages of the Company’s modeling process. Also,
9 Staff did not have a license for all modeling platforms used in this process. Staff
10 was unable to replicate the modeling used by the Company for this reason.
11 As Staff has compressed time to review this case, Staff prioritized the data in
12 exhibits provided with the Company’s initial application and workpapers most
13 pertinent to the application. There was an error in the original modeling for the
14 ET and EP scenarios with respect to technology cost reduction of renewable
15 resources. The Company was able to correct this error and filed updated
16 testimony, exhibits and workpapers. The case schedule was extended 4 weeks to
17 allow for review of this additional data. Staff reviewed the data to the best of its
18 ability in the time allotted. However, due to the volume and complexity in the
19 Company’s modeling, it is possible some numbers or calculations were missed.
20 By focusing on the essential exhibits and modeling inputs, Staff believes it has
21 reviewed the critical data to conclude that the Company complied with the intent
22 of the MIRPP.
13 DIRECT TESTIMONY OF ROGER A. DOHERTY CASE NUMBER U-20471 PART II
1 In future IRPs, Staff recommends that the Company use a simpler approach to
2 modeling wherever possible to provide more transparency into the modeling and
3 allow intervening parties to better run their own models. In addition, the Company
4 should use the minimum number of software platforms possible for a complete
5 analysis and be able to provide access to all software inputs and outputs so that
6 intervenors may verify or run variations on the Company’s plan.
7 Q. Did the Company run any additional scenarios other than those required by the
8 MIRPP?
9 A. Yes. In addition to the MIRPP required scenarios and sensitivities, the Company
10 evaluated a DTE Reference (REF) scenario which uses the Company’s internal
11 planning assumptions, forecasts, and goals. The REF scenario uses DTE’s gas
12 price forecast as well as a CO2 price of $5 per ton in 2025 up to $10 per ton in
13 2040.
14 Q. Did the Company run any additional sensitivities other than those required by the
15 MIRPP?
16 A. Yes. The Company evaluated several additional sensitivities that were either
17 proposed by stakeholders or included at the Company’s discretion.
18 Q. Did the Company meet the modeling requirements set out in the April 27, 2018
19 Commission Order in U-18419?
20 A. Yes. Pursuant to the April 27, 2018 Commission Order in U-18419, DTE Electric
21 included in this IRP an evaluation of a “portfolio consisting of energy efficiency,
22 renewable energy, demand response, storage, and other non-fossil fuel options,
23 ramping up over the years preceding 2029, that could augment the approved
14
DIRECT TESTIMONY OF ROGER A. DOHERTY CASE NUMBER U-20471 PART II
1 natural gas combined cycle plant in 2022, and replace the capacity and energy lost
2 due to the retirement of the Belle River Power Plant.” For the REF and BAU
3 scenarios, the Company reviewed the least-cost build plans and compared them to
4 the first plan that did not include a gas unit to replace the Belle River Power Plant.
5 For the ET and EP scenarios, the least-cost plans did not include a gas unit to
6 replace the Belle River Power Plant.
7 Q. Did the Company perform a risk assessment?
8 A. Yes. The Company used five risk assessment methodologies to review its IRP.
9 Those five methodologies were: stochastic risk analysis, change analysis,
10 application of planning principles, evaluation of key inputs, and scenario and
11 global sensitivity analysis. My testimony will focus on the change analysis,
12 application of planning principles, evaluation of key inputs, and scenario and
13 global sensitivity analysis. Staff witness Olumide O. Makinde will cover the
14 Company’s stochastic risk analysis.
15 Q. What are the results of the Company’s change analysis risk assessment?
16 A. The change analysis is a qualitative assessment of the adaptability of the
17 Company’s PCA and is summarized on Table 15.9.1 of Company Exhibit A-3.
18 This analysis identifies several possible new situations that could arise in the
19 future along with possible causes for these changes. The change assessment
20 covered situations involving fuel prices, environmental regulation, changing load,
21 technology development/deployment, and transmission. The change assessment
22 analysis shows the value of flexibility within an integrated resource plan. All else
23 being equal, a flexible PCA that provides the ability to adapt to future conditions
15
DIRECT TESTIMONY OF ROGER A. DOHERTY CASE NUMBER U-20471 PART II
1 is better than a PCA that doesn’t have that adaptability. Staff’s preference for an
2 adaptable PCA should not be seen as support for the Company’s multiple pathway
3 approach where no specific proposed course of action is identified.
4 Q. What is Staff’s opinion on the Company’s evaluation of planning principles risk
5 assessment methodology?
6 A. For this IRP the Company identified seven planning principles: reliability, clean,
7 flexible and balance, reasonable risk, community impact, compliance, and
8 affordability. The Company then ranked several of the least cost plans as well as
9 the four identified PCA pathways by individual planning principle for all planning
10 principles other than compliance and affordability. The Company provided further
11 details of this risk analysis in Company Exhibit A-4, Appendix T. As a standalone
12 risk assessment, the subjective and arbitrary nature of the rankings as well as the
13 exclusion of an affordability ranking would be problematic. There are some
14 significant, unexplained disparities in rank of plans that appear very similar in
15 multiple categories. Staff does not object to its inclusion as part of a more
16 comprehensive risk assessment process, which is the case here, but does not find
17 significant value in this specific analysis.
18 Q. What is Staff’s opinion of the Company’s evaluation of key inputs risk
19 assessment?
20 A. The Company originally adopted the IRP inputs in mid-2018. Prior to filing in
21 February 2019, the Company revaluated 13 key IRP inputs for potential revision
22 and ultimately decided to update four. Table 15.11.1 of Company Exhibit A-3
23 details the Company’s evaluation of these key inputs. Staff understands that
16
DIRECT TESTIMONY OF ROGER A. DOHERTY CASE NUMBER U-20471 PART II
1 integrated resource planning is a lengthy process that begins long before the
2 Company files its plan and continues throughout the duration of the case. Key
3 inputs are constantly changing and IRP modeling is a snapshot in time based on
4 current data and assumptions. Staff appreciates the Company’s awareness of this
5 fact and its review of key IRP inputs. Staff takes no issue with how the Company
6 evaluated its key inputs and the decisions the Company made about which
7 updates to include or exclude.
8 Q. What is Staff’s opinion on the Company’s scenario and global sensitivity
9 analysis?
10 A. As discussed above, the Company complied with all scenario and sensitivity
11 requirements. The Company also included additional scenario and sensitivities,
12 either from the Company itself or other stakeholders, as appropriate. Staff has no
13 recommendations for additional scenarios or sensitivities at this time.
14 Q. Does Staff have any other concerns about the risk assessment performed by the
15 Company?
16 A. Yes. Staff recommends that in its next IRP, the Company include its PCA (or
17 multiple PCAs in this case) in its stochastic risk analysis. See Staff witness
18 Makinde for more discussion on the Company’s stochastic analysis.
19 Q. Please summarize your recommendations.
20 A. Staff recommends:
21 • The Commission advise the Company to file its next IRP three years from a
22 final order in this case in order to provide a thorough evaluation of the
23 Company’s clean energy goals and the resources used to meet those goals.
17
DIRECT TESTIMONY OF ROGER A. DOHERTY CASE NUMBER U-20471 PART II
1 • Future IRP modeling by the Company should only include resources that are
2 already approved, under construction, or will be (with firm certainty) as a
3 starting point for base case and MIRPP required scenarios.
4 • The Company uses a simpler approach to modeling in its next IRP, wherever
5 possible, to provide more transparency into the modeling to allow intervening
6 parties to better evaluate all scenarios and sensitivities.
7 • The Company identifies a single PCA for the entire planning period as the
8 most likely given current information and assumptions.
9 Q. Does this conclude your testimony?
10 A. Yes.
18
S T A T E OF M I C H I G A N
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
* * * *
In the matter of the Application of ) DTE ELECTRIC COMPANY for ) approval of its Integrated Resource Plan ) Case No. U-20471 pursuant to MCL 460.6t, and for other relief ) )
EXHIBITS OF
ROGER A. DOHERTY
MICHIGAN PUBLIC SERVICE COMMISSION
August 21, 2019 Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: R.A. Doherty Discovery Response SDTE-13.10-13.13 Exhibit S-6.0 Page 1 of 4 MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-13.10 Respondent: L. K. Mikulan/S. G. Pfeuffer Page: 1 of 1
Question: Please provide an explanation of the future conditions that would result in the Company selecting PCA Pathway A for the “flexible” period (2025-2040) of this IRP.
Answer: The Company does not expect to select the specific resources in PCA Pathway A or any of the four “flexible” pathways in the future, because the pathways were meant to represent a range of possible futures. In a future IRP we will update our assumptions based on new data and the evolution of markets and technology, run the optimization models, and then develop a new proposed course of action at that time, which may, or may not, resemble one of the four possible “flexible” pathways laid out in this IRP.
Attachments: N/A Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: R.A. Doherty Discovery Response SDTE-13.10-13.13 Exhibit S-6.0 Page 2 of 4 MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-13.11 Respondent: L. K. Mikulan/S. G. Pfeuffer Page: 1 of 1
Question: Please provide an explanation of the future conditions that would result in the Company selecting PCA Pathway B for the “flexible” period (2025-2040) of this IRP.
Answer: See answer to STDE-13.10
Attachments: N/A Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: R.A. Doherty Discovery Response SDTE-13.10-13.13 Exhibit S-6.0 Page 3 of 4 MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-13.12 Respondent: L. K. Mikulan/S. G. Pfeuffer Page: 1 of 1
Question: Please provide an explanation of the future conditions that would result in the Company selecting PCA Pathway C for the “flexible” period (2025-2040) of this IRP.
Answer: See answer to STDE-13.10
Attachments: N/A Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: R.A. Doherty Discovery Response SDTE-13.10-13.13 Exhibit S-6.0 Page 4 of 4 MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-13.13 Respondent: L. K. Mikulan/S. G. Pfeuffer Page: 1 of 1
Question: Please provide an explanation of the future conditions that would result in the Company selecting PCA Pathway D for the “flexible” period (2025-2040) of this IRP.
Answer: See answer to STDE-13.10
Attachments: N/A Michigan Public Service Commission Case: U‐20471 DTE Electric Company Witness: R.A. Doherty Resource Additions (“Forced” in vs Optimized) Exhibit: S‐6.1 Page 1 of 1
Resource Additions Included in Least Cost Plan in DTE Reference Scenario MW Reason for Inclusion Optimized Polaris Wind 168 Starting Point (RPS) No 2021 RPS Wind 225 Starting Point (RPS) No 2022 RPS Wind 150 Starting Point (RPS) No Solar + Storage Pilot 11 Starting Point (RPS) No BWEC 1150 Starting Point (Approved) No Dearborn CHP 34 Starting Point (Approved) No Original VGP 300 Starting Point (Approved) No Clean Energy Goal Wind 450 Starting Point No Clean Energy Goal Solar 2525 Starting Point No Demand Response 131 Starting Point No Additional VGP 165 Defined PCA No 2029/2030 CCGT 414 Modeled REF LCP Replace Belle River Yes Demand Response 259 Modeled REF LCP Replace Belle River Yes 2040 CCGTs 1242 Monroe Placeholder No TOTAL 7224
Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: R.A. Doherty Discovery Response SDTE-2.3b Exhibit S-6.2 Page 1 of 7 MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-2.3b Respondent: L. K. Mikulan Page: 1 of 7
Question: The Company has indicated the inclusion of several resources as a starting point of its IRP from the 2019-2040 timeframe.
b) If the Company has not performed model runs as described in question 9, would the Company run each of the MIRPP scenarios (not the corresponding sensitivities), allowing the model to optimize the entire planning period given the Company’s expected retirements discussed in this case? If yes, when would that information be available for Staff and intervenor to review? If no, why is the Company unwilling to provide transparency as to what the build plan would look like if the model could fully optimize throughout the study period?
Original Answer: Yes. This modeling is currently underway. The results will be provided to Staff and Intervenors as soon as they are completed.
Supplementary Answer: At Staff’s request, the Company has now completed the modeling that removed the starting point renewables, shown in Table 1 below, from the optimization. “Starting point renewables” are defined as the renewables beyond the current state REP requirement of 15%, which includes the renewables associated with the Company’s carbon reduction goals (50% by 2030 and 80% by 2040) and the clean energy goal of 25% renewables by 2030, as further described on page 36 of my revised testimony. This was done by converting the renewables that were previously modeled as zero cost transactions and “forced in” to every Strategist run, to Strategist alternatives and assigning the alternatives an associated PVRR cost. The original least-cost plans were forced into Strategist for each of the three MIIRP scenarios and the DTE Reference scenario. Then the starting point renewables were “turned off” in Strategist and the model optimized the build plans. The results of the original least-cost plan can be compared to the results of the revised least-cost plan run (which excludes the starting point renewables) for each of the four scenarios as run for STDE-2.3b. See results in Tables 2 thru 5 below. Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: R.A. Doherty Discovery Response SDTE-2.3b Exhibit S-6.2 Page 2 of 7 MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-2.3b Respondent: L. K. Mikulan Page: 2 of 7
Table 1: Starting Point Renewables converted to Strategist Alternatives wind MW Solar MW Strategist name 2024 150 WP24(1) 2025 50 S25-(1) 2026 75 S26 (1) 2027 100 S25-(2) 2028 2029 100 S25-(2) 2030 200 S100(1) 2031 100 200 S100(1), W100(1) 2032 200 S100(1) 2033 200 S100(1) 2034 100 200 S100(1), W100(1) 2035 200 S100(1) 2036 200 S100(1) 2037 100 200 S100(1), W100(1) 2038 200 S100(1) 2039 200 S100(1) 2040 200 S100(1)
by 2030 (MW) 150 525 by 2040 (MW) 300 2000
The first year of capacity need remains in 2029, coincident with the Belle River retirement, after removing the starting point renewables, although the capacity short position does increase from -159 MW short in the original runs to -303 MW short in the STDE-2.3b runs. Similarly, the short position increases from -585 MW in the original runs to -796 MW in 2030 in the STDE-2.3b runs after the starting point renewables are removed and replaced with alternatives. 2030 has the largest short position throughout the 2030’s until 2040. Due to the timing of the capacity short, the Strategist model had to solve for 2029 and 2030 and then again in 2040. This is similar to the original scenario runs. It should be noted that no additional scenarios (beyond the four described above), sensitivities, or risk analyses were performed. Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: R.A. Doherty Discovery Response SDTE-2.3b Exhibit S-6.2 Page 3 of 7 MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-2.3b Respondent: L. K. Mikulan Page: 3 of 7
There is a major difference in the STDE-2.3b runs from the original modeling that needs to be pointed out. In the original runs, three CCGT units were forced in 2040, along with market purchases, so the model did not optimize the 2040 build. In the STDE-2.3b runs, we thought it prudent to optimize for 2040 in recognition of the starting point renewables that were removed. Given the large amount of capacity needed in 2040 due to the Monroe retirement, the model had to be reconfigured to allow it to solve for 2040.
There is approximately 3,000 MW of capacity that needs to be filled in 2040. The Strategist model fills this need considering all feasible combinations of resources. The Company’s version of Strategist is limited to 1,250 different combinations of resource alternatives to fill the capacity need. If this number is exceeded, then the model will not solve.
The following modeling techniques were applied in the Strategist model in order for the model to solve for 2040: 1. Block size for solar and wind optimization alternatives were doubled to 200 MW and 300 MW respectively. Increasing the block size generates less states (or combinations of resources) in Strategist. 2. CCGTs were constrained to four total between 2030 and 2040. This is also consistent with the CO2 reduction goal levels. 3. Some of the less economic or smaller alternatives were “turned off” in the model. These included CVR/VVO, Lithium Ion battery, and the ability to select more than one CT. 4. Capacity purchases of the same amount in the least-cost plan in 2040 were allowed in the optimization runs. 5. Two separate optimizations were run for each scenario. First the model was optimized until 2030. Then the least-cost plan from the 2030 optimization was forced into the model and the 2040 optimization was performed. Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: R.A. Doherty Discovery Response SDTE-2.3b Exhibit S-6.2 Page 4 of 7 MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-2.3b Respondent: L. K. Mikulan Page: 4 of 7
Table 2: ET scenario results ET LCP with no assumed ET Original least cost starting point renewables plan (LCP) (STDE-2.3b LCP) 2% EWR 2% EWR 1050 MW Wind + (starting point renewables: 150 MW 2850 Wind 2030 build wind, 525 MW Solar) 3 CCGT, 825 MW Purchase + (starting point renewables: 300 MW wind, 2000 MW 3 CCGT, 1200 MW Solar, 259 2040 Build Solar) MW DR, 778 Purchase PVRR ($M) $12,805 $12,849 delta PVRR ($M) $44 Original LCP lower cost
Table 3: EP scenario results EP LCP with no assumed starting point renewables EP Original LCP (STDE2.3b LCP) 1.75% EWR 1.75% EWR 3150 MW Wind + (starting point renewables: 150 MW 2030 build wind, 525 MW Solar) 3750 Wind, 400 MW Solar 3 CCGT, 827 MW Purchase + (starting point 3 CCGT, 308 MW DR, 1000 renewables: 300 MW MW Solar, 816 MW 2040 Build wind, 2000 MW Solar) Purchase PVRR ($M) $13,173 $13,202 delta PVRR ($M) $29 Original LCP lower cost Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: R.A. Doherty Discovery Response SDTE-2.3b Exhibit S-6.2 Page 5 of 7 MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-2.3b Respondent: L. K. Mikulan Page: 5 of 7
Table 4: BAU scenario results BAU LCP with no assumed starting point renewables BAU Original LCP (STDE-2.3b LCP) 2% EWR 2% EWR CCGT + (starting point renewables: 150 MW 2030 build wind, 525 MW Solar) CCGT 3 CCGT, 534 MW Purchase + (starting point 3 CCGT, 259 MW DR, CT, renewables: 300 MW 1000 MW Solar, 510 MW 2040 Build wind, 2000 MW Solar) Purchase PVRR ($M) $13,563 $13,506 delta PVRR ($M) ($57) STDE-2.3b LCP lower cost
Table 5: DTE REF scenario results REF LCP with no assumed starting point renewables DTE REF Original LCP (STDE-2.3b LCP) 1.5% EWR 1.5% EWR CCGT, 259 MW DR + (starting point renewables: 150 MW wind, 525 MW CCGT, 308 MW DR, 600 2030 build Solar) MW wind 3 CCGT, 683 MW Purchase + (starting point renewables: 300 MW 3 CCGT, CT, 1600 MW Solar, 2040 Build wind, 2000 MW Solar) 652 Purchase PVRR ($M) $14,451 $14,346 delta PVRR ($M) ($105) STDE-2.3b LCP lower cost Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: R.A. Doherty Discovery Response SDTE-2.3b Exhibit S-6.2 Page 6 of 7 MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-2.3b Respondent: L. K. Mikulan Page: 6 of 7
Note, the PVRR values presented above for the “Original LCP” are not comparable to the PVRR values presented in my testimony for the same scenario LCPs due to the fact that the Renewables now have associated PVRR costs, whereas in testimony the renewables were modeled as zero cost transactions. In the ET and EP scenarios, the original least- cost plan, which included starting point renewables, was lower cost than the STDE-2.3b least-cost plan which excluded the starting point renewables. In the REF and BAU scenarios, the STDE-2.3b least-cost plan was lower cost than the original least-cost plan.
In all scenarios, the difference between the least-cost plans with and without the starting point renewables were all within $105M of each other. In certain circumstances, deviations from an optimized plan should be taken into consideration and selectively pursued. Examples include:
1. Ramping in renewables over a longer period of time is better for constructability, cash flow, execution, possible tax credit eligibility, and project management 2. Energy market value of renewables is achieved earlier 3. Costs, incentives, technologies, capacity factors, and capacity credits of renewables are still evolving rapidly. Changes in these assumptions for both wind and solar could cause the currently proposed plan to deviate from the optimal 2030 build plan as modeled in 2019. The ability to monitor these developing items is in line with the Company’s proposed flexible PCA.
Attachments: The following Non-Confidential attachments are available for download from the Company’s Discovery Portal using the hyperlink below. https://dteenergy.sharepoint.com/sites/DiscoveryPortal/Elec/U- 204712019IRPPublic/default.aspx U-20471 STDE 2.3b BAU LCP.txt U-20471 STDE 2.3b BAU OPTIMIZATION 2030.txt U-20471 STDE 2.3b BAU OPTIMIZATION 2040.txt U-20471 STDE 2.3b REF LCP.txt U-20471 STDE 2.3b REF OPTIMIZATION 2030 txt Michigan Public Service Commission Case: U-20471 DTE Electric Company Witness: R.A. Doherty Discovery Response SDTE-2.3b Exhibit S-6.2 Page 7 of 7 U-20471 MPSC Case No.: Staff Requestor: STDE-2.3b Question No.: L. K. Mikulan Respondent: 7 of 7 Page:
U-20471 STDE 2.3b REF OPTIMIZATION 2040.txt U-20471 STDE 2.3b ET LCP.txt U-20471 STDE 2.3b ET OPTIMIZATION 2030.txt U-20471 STDE 2.3b ET OPTIMIZATION 2040.txt U-20471 STDE 2.3b EP LCP.txt U-20471 STDE 2.3b EP OPTIMIZATION 2030.txt U-20471 STDE 2.3b EP OPTIMIZATION 2040.txt U-20471 STDE 2.3b Renewable capacity and energy.xls
The following Confidential Strategist Modeling files are available for download from the Company’s Discovery Portal to those whom have properly executed a Non-disclosure agreement subject to the protective order in this case and who hold a Strategist® License, using the hyperlink below. https://dteenergy.sharepoint.com/sites/DiscoveryPortal/Elec/U- 204712019IRPLicenseHolders/default.aspx NDA U-20471 STDE 2.3b BAU LCP.sav NDA U-20471 STDE 2.3b BAU OPTIMIZATION 2030.sav NDA U-20471 STDE 2.3b BAU OPTIMIZATION 2040.sav NDA U-20471 STDE 2.3b REF LCP.sav NDA U-20471 STDE 2.3b REF OPTIMIZATION 2030.sav NDA U-20471 STDE 2.3b REF OPTIMIZATION 2040.sav NDA U-20471 STDE 2.3b ET LCP.sav NDA U-20471 STDE 2.3b ET OPTIMIZATION 2030.sav NDA U-20471 STDE 2.3b ET OPTIMIZATION 2040.sav NDA U-20471 STDE 2.3b EP LCP.sav NDA U-20471 STDE 2.3b EP OPTIMIZATION 2030.sav NDA U-20471 STDE 2.3b EP OPTIMIZATION 2040.sav Michigan Public Service Commission Case: U‐20471 DTE Electric Company Witness: R.A. Doherty MIRPP Scenario and Sensitivity Requirements Exhibit: S‐6.3 Page 1 of 2
Business as Usual Starting Point High Load 50% ROA Return 2.5% EWR 200% Gas Price CT Only Build
WP LKM‐568 WP LKM‐558 BAU WP LKM‐539 WP LKM‐545 BAU WP LKM‐550 BAU WP LKM‐535 BAU BAU Hi Load ‐ 50% Choice Returns BAU flat high ‐ Hi Gas ‐ flat high ‐ CT Only ‐ flat high Strategist Text Report flat high ‐ 1.5 EE flat high ‐ 2 EE ‐ flat high ‐ 2 EE 2.5 EE 1.5 EE ‐ 1.5 EE
WP LKM ‐801 BAU BAU ‐ FLAT BAU ‐ FLAT HIGH BAU ‐ FLAT HIGH BAU ‐ FLAT HIGH ‐ FLAT HIGH COST HIGH COST ‐ HI COST ‐ 50 PCT CH BAU ‐ FLAT HIGH COST ‐ HI GAS ‐1.5 COST ‐ CT ONLY ‐ Strategist SAV File ‐ 1.5 EWR LOAD ‐2.0 EWR RETURN ‐2.0 EWR COST ‐ 2.5 EWR EWR 1.5 EWR
Emerging Technology Starting Point High Load 2.5% EWR 200 % Gas Price 25% RPS N/A ‐ Included as WP LKM‐583 ET starting point for WP LKM‐571 ET Hi Load ‐ flat low WP LKM‐575 ET WP LKM‐576 ET Hi all scenarios and Strategist Text Report flat low ‐1.5 EE ‐2 EE flat low ‐2.5 EE Gas ‐ flat low ‐1.5 EE sensitivities N/A ‐ Included as ET ‐ FLAT LOW starting point for ET ‐ FLAT LOW COST ‐ HI LOAD ‐ ET ‐ FLAT LOW ET ‐ FLAT LOW COST all scenarios and Strategist SAV File COST ‐ 1.5 EWR 2.0 EWR COST ‐ 2.5 EWR ‐ HI GAS ‐1.5 EWR sensitivities
Michigan Public Service Commission Case: U‐20471 DTE Electric Company Witness: R.A. Doherty MIRPP Scenario and Sensitivity Requirements Exhibit: S‐6.3 Page 2 of 2
Environmental Policy Starting Point High Load 2.5% EWR 200% Gas Price 50% Carbon Reduction
WP LKM‐613 WP LKM‐596 EP WP LKM‐607 EP Hi WP LKM‐602 EP 50% WP LKM‐592 EP EP Hi Load ‐ flat flat high ‐ 2.5 Gas ‐ flat high ‐ CO2 Reduction flat high Strategist Text Report flat high ‐ 1.5 EE high ‐ 1.75 EE EE 1.5 EE ‐ 1.5 EE
EP ‐ FLAT HIGH EP ‐ FLAT HIGH EP ‐ FLAT HIGH EP ‐ FLAT HIGH COST ‐ EP ‐ FLAT HIGH COST ‐ HI LOAD COST ‐ HI GAS ‐ COST ‐ HI GAS ‐1.5 50 PCT CO2 REDUCTION Strategist SAV File COST ‐ 1.5 EWR ‐1.75 EWR 2.5 EWR EWR 1.5 EWR
S T A T E OF M I C H I G A N
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
* * * *
In the matter of the Application of ) DTE ELECTRIC COMPANY for ) approval of its Integrated Resource Plan ) Case No. U-20471 pursuant to MCL 460.6t, and for other relief ) )
QUALIFICATIONS AND DIRECT TESTIMONY OF
APRIL M STOW
MICHIGAN PUBLIC SERVICE COMMISSION
August 21, 2019 QUALIFICATIONS OF APRIL M STOW CASE NUMBER U-20471 PART I
1 Q. Please state your full name, business address and occupation.
2 A. My name is April M. Stow and my business address is 7109 West Saginaw
3 Highway, Lansing MI 48917. I am employed as a departmental analyst in the
4 Renewable Energy Section of the Energy Resources Division at the Michigan
5 Public Service Commission (MPSC or Commission).
6 Q. Please describe your educational background.
7 A. In 2006, I earned a General Associates degree from Lansing Community College.
8 I am currently enrolled at Davenport University to pursue a bachelor’s degree.
9 Q. What is your professional work experience?
10 A. I have worked at the State of Michigan since 2004. My duties have consistently
11 increased, as I have come to know this organization from the ground up. From
12 2004 until 2009, I worked in the Executive Secretary Section. At the MPSC, I
13 acted as host to visitors and directed visitors to meetings in the building. From
14 2009 to 2014, I worked on the Electric Reliability Division as a Secretary under
15 Director Paul Proudfoot. My main responsibilities were e-filing various MPSC
16 Staff (Staff) filings into the E-Docket systems. I also was responsible for
17 scheduling meetings, proof-reading a wide range of MPSC Staff documents,
18 web editing and assisting Staff with travel logistics.
19 In 2014, I was hired as a Departmental Analyst in the Renewable
20 Energy Section. My work responsibilities include reviewing Renewable Energy
21 Plans for Cooperatives and Alternative Electric Suppliers, Renewable Energy
22 Compliance for all Electric Providers, Voluntary Green Pricing, web editor and
1 QUALIFICATIONS OF APRIL M STOW CASE NUMBER U-20471 PART I
1 MIRECS co-administrator. I coordinate and contribute to the annual Distributed
2 Generation Report and the Act 295 February 15 Report.
3 Q. Have you had any other training that is relevant to your testimony?
4 A. To keep up with the ever-changing renewable energy field, I have attended
5 various courses at the Institute of Public Utilities and other energy related
6 seminars and conferences.
7 Q. Have you filed testimony in any other proceedings before the Commission?
8 A. No.
2
DIRECT TESTIMONY OF APRIL M STOW CASE NUMBER U-20471 PART II
1 Q. What is the purpose of your testimony?
2 A. The purpose of my testimony is to provide Staff’s recommendations regarding
3 DTE’s proposal to include 465 MW up to 715 MW of Voluntary Green Pricing
4 (VGP) program renewable capacity in its defined Preferred Course of Action
5 (PCA) and potentially increasing the capacity to 1,390 MW as part of the flexible
6 PCA.
7 Q. What is the Company’s proposal?
8 A. DTE witness T. L. Schroeder testified that the Company is planning on additional
9 VGP capacity from 465 MW up to 715 MW in the first five years (by 2024).
10 Several pathways of the flexible PCA time period include adding as much as 675
11 MW of VGP capacity to achieve a total of 1,390 MW by 2030.
12 Q. Does Staff agree that the Company’s proposal for the additional VGP capacity
13 during the defined and flexible PCA time periods is reasonable?
14 A. Yes.
15 Q. Please explain.
16 A. The Company has already contracted 372 MW of participation in its Large
17 Customer Voluntary Green Pricing Program (LCVGP) pilot out of the 465 MW in
18 the proposed defined PCA. The Commission has approved the contracts for three
19 wind farms to supply the LCVGP totaling 455.45 MW.1
20 The Company has contacted a portion of their Industrial and Commercial
21 customers to gauge their interest in the LCVGP pilot program. In response to their
1Wind farms approved in U-18323: Isabella Wind I and II (383 MW) and Fairbanks Wind (72.45 MW). Fairbanks Wind generation will first be used for RPS compliance and, if needed, a portion of the generation will be used to supply the LCVGP. 3 DIRECT TESTIMONY OF APRIL M STOW CASE NUMBER U-20471 PART II
1 interest, the Company has proposed up to 1,390 MW for growth as referenced in
2 Discovery Response SDE-1.6a. Staff recommends the Commission find the
3 renewable energy supply planned for in the defined and flexible PCA time periods
4 is reasonable based on the information available at this time and contingent upon
5 the Company’s future plans to refine the forecasts.
6 Q. Does Staff recommend that the Commission approve DTE’s VGP proposal?
7 A. Yes. The range of VGP renewable energy projections are reasonable. The
8 Company will be marketing its VGP program and subscription rates and will
9 further refine VGP capacity needs in its next IRP filing. The Company is not
10 asking for cost recovery for additional VGP capacity.
11 Q. Has the Commission provided guidance on coordinating VGP renewable supply
12 with customer demand?
13 A. Yes. The October 5, 2018 Commission Order issued in DTE’s Section 61,
14 Voluntary Green Pricing Case, MPSC Case No. U-18352, included the following
15 language:
16 The Commission is concerned that without defined plans to dedicate 17 additional resources to these programs, there will be a lag between 18 customer demand and available resources, which would effectively violate 19 Section 61. 20 21 The Commission directed DTE to include VGP program participation forecast
22 information in the Company’s semi-annual reports, in part to ensure that VGP
23 program supply keeps pace with customer demand. Based on this Commission
24 direction, the Company must adequately plan to have supply available for its VGP
25 programs. The Commission approved the LCVGP in January 2019 and the
4 DIRECT TESTIMONY OF APRIL M STOW CASE NUMBER U-20471 PART II
1 Company plans to launch the program when the renewable energy assets are in
2 service in the 2021 timeframe. As the Company continues its development of this
3 new LCVGP it will gain knowledge about customer interest, which will be
4 reflected in its future semi-annual VGP program reports. Due to the timing of the
5 first semi-annual VGP report, forecasting for the LCVGP was not included.
6 Q. Does this conclude your testimony?
7 A. Yes.
5
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 ) DTE ELECTRIC COMPANY for ) approval of its Integrated Resource Plan ) Case No. U-20471 pursuant to MCL 460.6t, and for other relief ) )
QUALIFICATIONS AND DIRECT TESTIMONY OF
DAVID S. WALKER
MICHIGAN PUBLIC SERVICE COMMISSION
August 21, 2019 QUALIFICATIONS OF DAVID S. WALKER CASE NUMBER U-20471 PART I
1 Q. Please state your full name and business address for the record.
2 A. My name is David S. Walker and my business address is 7109 W. Saginaw Highway,
3 Lansing, Michigan 48917.
4 Q. By whom are you employed and in what capacity?
5 A. I am employed by the Michigan Public Service Commission (MPSC or Commission) as a
6 Public Utilities Engineer Specialist in the Energy Waste Reduction (EWR) Section of the
7 Energy Resources Division, providing staff assistance as the MPSC fulfills regulatory
8 responsibilities under Public Act 295 of 2008 (Act 295), as amended by Public Act 342 of
9 2016 (Act 342).
10 Q. What is your educational and professional background?
11 A. I earned a Bachelor of Science in Civil Engineering from Michigan State University. I
12 have held a Professional Engineering license from the State of Michigan continuously since
13 2001. From 1995 until 2000, I was the Assistant City Engineer for the City of South Haven,
14 Michigan. From 2000 through 2008, I was a Project Engineer at a private civil engineering
15 firm. I joined the MPSC Staff (Staff) in 2008 and have since completed the Regulatory
16 Studies Program of the Institute of Public Utilities.
17 Q. What are your responsibilities in your current position?
18 A. My duties include: serving as case coordinator and providing engineering review and
19 analysis of energy efficiency filings to determine compliance with Act 295; assisting
20 managers in preparation of written expert testimony and briefs; filing testimony; assisting
21 the manager of the contract for the state-selected administrator (Efficiency United) of
22 utility EWR programs; serving as Chair of the EWR Collaborative Program Design and
23 Implementation Workgroup; and serving as Chair of the MEMD Technical Subcommittee.
1 QUALIFICATIONS OF DAVID S. WALKER CASE NUMBER U-20471 PART I
1 These duties are expanding as the Commission implements Act 341 and Act 342, including
2 support for providers, determination of statewide integrated resource planning parameters,
3 initiating rulemaking for residential on-bill financing for rate regulated utilities, and
4 implementing EWR program changes.
5 Q. Have you previously testified before the Commission?
6 A. Yes. I have filed testimony in: U-15890-EO-A, The Detroit Edison Company’s EO plan
7 amendment in 2010; U-16302, Consumers Energy Company’s EO plan reconciliation; U-
8 16671, the Detroit Edison Company’s EO biennial review; U-16730, Michigan
9 Consolidated Gas Company’s EO biennial review; U-17050, Michigan Consolidated Gas
10 Company’s amended EO plan; U-17762, DTE Electric Company’s amended EO plan; U-
11 17763, DTE Gas Company’s amended EO plan; U-18224, Upper Michigan Energy
12 Resources Corporation’s certificate of necessity; U-18261, Consumers Energy Company’s
13 EWR plan; U-18332, DTE Electric Company’s EO plan reconciliation; U-18265, Upper
14 Peninsula Power Company’s EWR plan; U-18263, Indiana Michigan Power Company’s
15 EWR plan; U-18262, DTE Electric Company’s EWR plan; U-18268, DTE Gas Company’s
16 EWR plan; and, U-20029, DTE Electric Company’s EWR plan reconciliation.
2 DIRECT TESTIMONY OF DAVID S. WALKER CASE NUMBER U-20471 PART II
1 Q. What is the purpose of your testimony?
2 A. The purpose of my testimony is to provide recommendations regarding the energy waste
3 reduction (EWR) plan portion of the integrated resource plan (IRP) filed by DTE Electric
4 Company (Company).
5 Q. Are you sponsoring any exhibits?
6 A. Yes, I am sponsoring the following exhibit prepared by me:
7 Exhibit Description
8 Exhibit S-7 (DSW-1) EWR Costs Comparison
9 Q. Is this application by the Company a request for approval of an EWR plan as defined by
10 2016 PA 342?
11 A. No, this application is a request for approval of an IRP pursuant to Section 6t of 2016 PA
12 341. However, as explained below, IRP filings are required to consider EWR.
13 Q. Does Staff find acceptable the Company’s request for pre-approval of certain capital costs
14 associated with its EWR programs, projected to be $103 million for 2020 through 2022?
15 A. Yes, because Staff finds $103 million to be a reasonable estimate and it is Staff’s
16 understanding that the combined effect of 2016 PA 341 and 2016 PA 342 results in any
17 pre-approved EWR costs being reconciled per Section 74, 2016 PA 342.
18 Q. What level of EWR savings has the Company proposed in the proposed course of action
19 (PCA) described in the IRP?
20 A. The Company proposed a Defined PCA which includes EWR savings of 1.625% in 2020
21 and 1.75% in 2021 through 2024.1 A Flexible PCA was also proposed to succeed the
1 KLB-23, lines 3-7.
3 DIRECT TESTIMONY OF DAVID S. WALKER CASE NUMBER U-20471 PART II
1 Defined PCA, which includes either: 1.75% in 2025 through 2040; or, 1.875% in 2025
2 followed by 2.00% from 2026 through 2040.2
3 Q. Would these levels exceed the requirements of 2016 PA 342?
4 A. Yes, that act requires a minimum of 1.0% EWR savings as a standard. It further requires
5 exceeding 1.5% for a utility provider to earn the maximum financial incentive allowed.
6 Q. What does 2016 PA 341 say about EWR savings levels included in an IRP?
7 A. Section 6t(8)(a)(vii) requires the MPSC to consider if the Company proposed reasonable
8 and cost-effective levels of EWR.
9 Q. Are 1.625%, 1.75%, 1.875%, and 2.0% levels of EWR cost-effective?
10 A. Yes. The utility system resource cost test (USRCT), the benefit-cost test specified in 2016
11 PA 342, was used by the Company to determine the cost-effectiveness of different EWR
12 levels, and a ratio of greater than 1.0 indicates cost-effectiveness. The Company provided
13 a table3 of USRCT results indicating that the entire range, from 1.5% to 2.5% EWR, is
14 cost-effective. This table includes USRCT scores of 2.53 for 1.75% and 2.27 for 2.0%.4
15 Q. Please discuss the reasonableness of the Company’s proposed EWR levels.
16 A. There are a few indications that it would be reasonable for the Company to strive for a level
17 as high as 2.0%. First, EWR is cost effective. As mentioned above, the Company
18 calculated a benefit-cost ratio of 2.27 for a 2.0% savings level, meaning that the value of
19 the benefits is more than twice each unit of costs.
2 KLB-23, lines 10-13. 3 KLB-22, Table 5. 4 Exhibit A-3, page 80 listed 2.38 for 2.0%.
4 DIRECT TESTIMONY OF DAVID S. WALKER CASE NUMBER U-20471 PART II
1 Second, the Company states that “The model selected EWR levels that ranged from
2 1.5% to 2%,”5 therefore, it is important to determine the Company’s ability to achieve this
3 resource identified in the IRP because it has not yet been required to experience savings at
4 this level. The Company noted many factors that contribute to uncertainty in the
5 Company’s ability to deliver “high levels” of EWR.6 Staff agrees, to varying extents, with
6 many of these challenges, however, the Company seems to be more conservative in
7 approach than in the previous EWR plan filed under 2016 PA 342. For example, the reason
8 given for the 1.625% step in 2020 is to take a “measured approach”7 to increasing to 1.75%.
9 Staff notes that the Company raised the approved 2017 EWR Plan goal from 1.17%8 to
10 1.50%, and achieved 1.57%,9 when 2016 PA 342 raised the bar for earning the maximum
11 allowable financial incentive. In 2018, the Company again appears to have exceeded 1.5%,
12 achieving 1.55% per the filed, though not yet approved, EWR reconciliation case.10 If so
13 reconciled, the Company has exceeded the required savings goals and earned a financial
14 incentive in every year of the programs since 2009. Though it will be a challenge to
15 continue elevating EWR performance, Staff is confident that the Company has the program
16 infrastructure established and the experience necessary to implement a plan that will reach
17 2.0%.
18 Third, it is important to determine the actual costs of an EWR program that will
19 reach 2.0% savings in the Company’s service territory because there is indication that these
5 SGP-36. 6 KLB-25, lines 3-16 and KLB-26, lines 1-18. 7 LKM-142, line 24. 8 U-17762, VMC-28, Table 1. 9 KLB-8, Table 1. 10 U-20366, Exhibit A-7, page 2, Energy Waste Reduction 2018 Annual Report.
5 DIRECT TESTIMONY OF DAVID S. WALKER CASE NUMBER U-20471 PART II
1 costs may be less than anticipated by the Company whose approach, again, seems
2 comparatively conservative. Of higher levels of EWR, the Company notes “the costs of
3 the EWR program levels are quite uncertain” and considers “If EWR costs are found to be
4 higher than what is projected in the defined PCA, then the Company may refine its EWR
5 spend and/or savings as part of its EWR plan filed with the Commission every two years.”11
6 This idea is repeated: “If the actual costs are higher than anticipated, the program levels
7 would be evaluated and ramped down to lower, more cost-effective levels if necessary.”12
8 The Company never appears to contemplate that the EWR costs might be lower than
9 anticipated, thereby providing higher benefit cost ratios and better standing among
10 resources in the IRP. Consumers Energy recently filed its EWR plan for MPSC approval,
11 which included costs that were significantly lower than had been anticipated in its IRP. As
12 shown in Exhibit S-7, Consumers Energy’s EWR plan costs for 2021-2023 average $268
13 per MWh saved, which is 4% lower than the Company’s estimates of $279 per MWh saved,
14 but at an average savings level of 2.18%, which is 9% more than the 2.0% in the Company’s
15 IRP. Combining Consumers Energy’s actual cost experience for achieving an average
16 1.73% savings with its cost estimates for achieving an average of 2.18% suggests that it
17 would cost approximately $257 per MWh saved, compared to the Company’s estimate of
18 $279 per MWh saved. Such a difference would yield additional benefits and higher
19 benefit-cost ratio to be compared to other available resources in a more objective model.
20 Therefore, the Company should determine the actual costs for a resource identified as
21 significant in this IRP by striving to achieve high levels of EWR.
11 LKM-130. 12 LKM-135.
6 DIRECT TESTIMONY OF DAVID S. WALKER CASE NUMBER U-20471 PART II
1 Finally, there are no explicit penalties in either 2016 PA 342 or 2016 PA 341 strictly
2 for failing to achieve a goal that is higher than the EWR standard of 1.0%. Certainly, the
3 efforts to meet a goal must be reasonable and prudent. However, given the ability of energy
4 efficiency to be acquired incrementally now that the Company has the program
5 infrastructure established, it is conceivable that the Company could achieve somewhat less
6 than the planned amount, yet still have achieved a cost-effective resource. For example, if
7 the Company planned to achieve 2.0% energy savings, yet only realized 1.85% despite
8 best-efforts and non-wasteful spending, it may still be possible to receive the maximum
9 financial incentive allowed by 2016 PA 34213 and still be able to make course corrections
10 in IRP filings because the Company claims they are capacity long until 2029-2030.14
11 Q. Is there another item you wish to address?
12 A. Yes. The Company utilized end-use load shapes, mostly from secondary research, for
13 modeling EWR resources in this IRP. Consistent with my testimony in the Company’s
14 EWR plan case, U-18262, Staff encourages the continued development of the Company’s
15 EWR end-use load shape values and library, whenever prudent, to further improve the
16 EWR valuation in future IRP filings.
17 Q. What is Staff’s recommendation regarding the EWR goals presented in the Company’s
18 IRP?
19 A. For the reasons discussed above, Staff recommends that the Company adopt a 2.0% savings
20 goal.
21
13 Achieving 1.85% would exceed the 1.5% required by PA 2016 342, however, there are additional metrics included in Commission-approved financial incentive mechanisms. 14 LKM-21, lines 1-7.
7 DIRECT TESTIMONY OF DAVID S. WALKER CASE NUMBER U-20471 PART II
1 Q. Does this conclude your testimony?
2 A. Yes.
8
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 ) DTE ELECTRIC COMPANY for ) approval of its Integrated Resource Plan ) Case No. U-20471 pursuant to MCL 460.6t, and for other relief ) )
EXHIBIT OF
DAVID S. WALKER
MICHIGAN PUBLIC SERVICE COMMISSION
August 21, 2019
Case: U‐20471 Witness: David S. Walker Exhibit: S‐7 (DSW‐1) Page: 1 of 1 EWR Costs Comparison
Comparing DTE and Consumers Costs of 2.0% EWR Levels
(a) (b) (c) (d) (g) (e) (g) Line Description Total Savings Total Spend Total Cost Average Energy Savings Average Year MWh $ $/MWh Cost $/MWh % Savings % 1 Consumers Historical Performance 1 2017 562,121 134,880,964 240 1.69 240 1.73 2 Consumers Historical Performance 2 2018 586,784 141,406,452 241 1.76 3 Consumers Plan Cost Estimates 3 2021 724,851 188,640,000 260 2.18 4 Consumers Plan Cost Estimates 3 2022 719,323 193,800,000 269 268 2.17 2.18 5 Consumers Plan Cost Estimates 3 2023 722,235 197,280,000 273 2.19
6 Estimated Cost at 2.0% EWR Level 4 257 2.00
7 DTE IRP Cost Estimates 5 2021 934,875 263,000,000 281 2.00 8 DTE IRP Cost Estimates 5 2022 931,689 273,900,000 294 279 2.00 2.00 9 DTE IRP Cost Estimates 5 2023 925,783 241,400,000 261 2.00
(1) U‐20028: (b) Exhibit A‐3, (c) Exhibits A‐3 and A‐5, (e) Exhibit A‐1, Table 4‐2 (2) U‐20365: (b) Exhibit A‐3, (c) Exhibits A‐3 and A‐4, (e) Exhibit A‐1, Table 4‐2 (3) U‐20372 Exhibit A‐2, Table ES‐2 (4) Interpolated from historical performance and plan estimates. (5) Company Exhibit A‐21, lines 4 and 40 (c) Includes financial incentives. (d) = (c)/(b) S T A T E OF M I C H I G A N
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
* * * *
In the matter of the Application of ) DTE ELECTRIC COMPANY for ) approval of its Integrated Resource Plan ) Case No. U-20471 pursuant to MCL 460.6t, and for other relief ) )
QUALIFICATIONS AND DIRECT TESTIMONY OF
DAVID W. ISAKSON
MICHIGAN PUBLIC SERVICE COMMISSION
August 21, 2019 QUALIFICATIONS OF DAVID W ISAKSON CASE NUMBER U-20471 PART I
1 Q. Please state your name, address, and current position.
2 A. My name is David W. Isakson. My business address is 7109 West Saginaw Hwy,
3 Lansing, Michigan 48917. I am currently employed by the Michigan Public
4 Service Commission (MPSC or Commission) in the Rates and Tariff Section of
5 the Regulated Energy Division as a Departmental Analyst.
6 Q. Would you briefly describe your educational background?
7 A. I received a B.S. in economics from Central Michigan University in 2008. In
8 2011, I completed an M.A. in economics at Central Michigan University.
9 Q. Have you attended any seminars or other training courses?
10 A. Yes. In August 2012, I completed the National Association of Regulatory Utility
11 Commissioners (NARUC) Annual Regulatory Studies Program held at Michigan
12 State University. I attended the AEIC Advanced Load Research Seminar in
13 October 2012, and the Electric Cost of Service Study and Electric Utility Pricing
14 courses hosted by EUCI in July 2019.
15 Q. What are your responsibilities in your current position?
16 A. I participate in rate, tariff amendment, reconciliation, integrated resource plan
17 (IRP), special contract, ex parte tariff, and other cases under the supervision of the
18 Rates and Tariff manager. My work involves performing electric rate design, gas
19 rate design, and gas cost of service studies. My duties also involve performing
20 research on special topics such as rate benchmarking, load research, demand
21 response, and the economics of public utility regulation.
22 Q. Have you previously presented testimony or participated in utility cases before the
23 MPSC?
1
QUALIFICATIONS OF DAVID W ISAKSON CASE NUMBER U-20471 PART I
1 A. Yes, I have presented testimony or participated in the following cases:
2 MPSC Case Company Description
3 U-17101-R Thumb Electric Cooperative TIER Rate Design, Auditing
4 U-17437 DTE Electric Company PLD Transition Plan
5 U-17643 Consumers Energy Company Gas Rate Design
6 U-17767 DTE Electric Company Electric Rate Design
7 U-17761 DTE Electric Company PLD Trans. Reconciliation
8 U-17999 DTE Gas Company Gas Cost of Service Study
9 U-18005 DTE Electric Company PLD Trans. Reconciliation
10 U-18014 DTE Electric Company Electric Rate Design, RDM
11 U-18124 Consumers Energy Company Gas Cost of Service Study
12 U-18322 Consumers Energy Company Electric Rate Design
13 U-18424 Consumers Energy Company Gas Cost of Service Study
14 U-18999 DTE Gas Company Gas Cost of Service Study
15 U-20102 Consumers Energy Company Electric TCJA Credit A
16 U-20103 Consumers Energy Company Gas TCJA Credit A
17 U-20134 Consumers Energy Company Electric Rate Design
18 U-20165 Consumers Energy Company IRP-Demand Response
19 U-20287 Consumers Energy Company Gas TCJA Credit B
20 U-20286 Consumers Energy Company Electric TCJA Credit B
21 U-20309 Consumers Energy Company TCJA Calculation C
22 U-20322 Consumers Energy Company Gas Cost of Service Study
2
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-20471 PART II
1 Q. What is the purpose of your testimony?
2 A. The purpose of my testimony is to sponsor Staff’s positions related to demand
3 response (DR). I will discuss the Company’s proposed DR pilot programs,
4 estimates for potential DR, Staff’s DR program-specific recommendations, the
5 three-phase DR framework approved by the Commission, and the general
6 nomenclature of time-of-use rates as it relates to DR.
7 Q. Are you sponsoring any exhibits?
8 A. Yes, I am sponsoring the following:
9 Staff Exhibit S-8.0, “Staff Demand Response Capital Expenditures.”
10 Staff Exhibit S-8.1, “Discovery Response STDE-4.”
11 Staff Exhibit S-8.2, “Staff DR Regulatory Process.”
12 Q. Please summarize Staff’s review of the Company’s application as it pertains to
13 DR.
14 A. At this time, Staff does not take issue with the Company’s proposed capital
15 spending on the interruptible air conditioning switch replacement or
16 programmable communicating thermostats1 and the associated increases in MW
17 for DR2 resources. Staff recommends a reduction in capital spending on other DR
18 pilots as described later in my direct testimony. Future O&M spending on DR will
19 be addressed in general rate cases, and any variation in post-IRP capital spending
20 and MW achieved for DR will be evaluated in reconciliation proceedings as
1 Company Exhibit A-26, lines 8-9. 2 Company Exhibit A-22. 3
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-20471 PART II
1 approved by the Commission3. Staff’s recommendations on the other aspects of
2 the Company’s DR pilots do not affect the Company’s MW projection.
3 Q. How does the Commission approved three-phase DR framework apply to the
4 Company’s IRP?
5 A. The first phase of the DR framework calls for the Company to propose a high-
6 level plan for DR, including capital spending but not O&M, in its IRP. The
7 second phase involves including the approved capital spending from the IRP in a
8 general rate case, followed by the third phase consisting of a reconciliation case
9 that ties total annual DR spending to the high-level IRP-based plan. Any
10 adjustments between the actual DR outcomes (i.e. spending, customer enrollment,
11 MW achieved) made in the reconciliation would then pass through to the
12 Company’s following general rate case. This framework allows the Company to
13 have an on-going opportunity to reevaluate existing DR programs, propose new
14 pilots, and match DR costs with results. A visual representation of the framework
15 can be found in Staff Exhibit S-8.2, which includes more detail on the process.
16 While Staff takes no issue with the forecasted amount of MW derived
17 from the Company’s DR programs, Staff recommends an adjustment to proposed
18 capital spending on DR for recovery in future rate cases. Also, as discussed later,
19 Staff’s tariff recommendations are best implemented through the Company’s in-
20 progress reconciliation case4 or other ex parte tariff cases.
3 September 15, 2017 Order in MPSC Case No. U-18369, p 10. 4 MPSC Case No. U-20521. 4
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-20471 PART II
1 DR Pilots Capital Request
2 Q. Are the Company’s proposed DR pilot programs reasonable?
3 A. Yes, in part. Staff does not take issue with the pilots described by the Company
4 that are currently underway. Staff finds that well designed and intentioned pilots
5 can provide valuable insight for future DR programs. However, the funding of
6 those programs requires more specification due to the nature of the three-phase
7 DR framework. On Company Exhibit A-26 the Company lists “Other DR Pilot
8 Programs” as a line item included in its requested DR capital for pre-approval.
9 Again, this total capital expenditure request, if approved by the Commission,
10 would be included in the Company’s next rate case and reconciled annually under
11 the three-phase DR framework. Staff recommends that the Commission not pre-
12 approve any capital spending for other DR pilots, save for the on-going Bring-
13 Your-Own-Device (BYOD) pilot and Electric Power Research Institute
14 Transportation Program pilot (EPRI pilot). First, this adjustment reduces the
15 Company’s projected total DR capital spending in 2020 by the difference between
16 the BYOD and EPRI pilots cost and $2.1M.5 Second, the adjustment will also
17 reduce the DR capital request by $2M in both 2021 and 2022.
18 Q. Why does Staff recommend a reduction of capital spending for other pilots?
19 A. With the exception of the BYOD and EPRI pilots, the Company failed to provide
20 compelling evidence of the prudency of additional pilots. Rather, the Company is
21 simply “…evaluating various battery storage pilots and their applicability to
5 The cost of the BYOD and EPRI pilots was provided through confidential discovery, so the specific capital adjustment is likewise provided in confidential Exhibit S-8.0. 5
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-20471 PART II
1 demand response.6” Staff witness Cody Matthews describes Staff’s amiability
2 towards the Company pursuing battery storage pilots, but capital pre-approval for
3 those or any other non-defined pilots is not reasonable in this IRP. Instead, in
4 alignment with the three-phase DR framework, the Company should propose
5 additional pilots in either future general rate cases or DR reconciliation cases
6 when the scope, purpose, and cost of those pilots are known. Pre-approval of the
7 Company’s requested “other pilots” capital spending in this case essentially
8 creates a $2M annual budget for DR pilots, which the Company may feel
9 pressured into spending regardless of the prudency of new pilots. Further, it is
10 imprudent to approve a budget for something as unknown as DR pilots that are
11 “still in the exploratory phase7” when the Company already has multiple
12 opportunities to request recovery for DR pilot capital spending when more details
13 are known. For these reasons, the Commission should not approve DR capital
14 spending for other pilots beyond the costs identified by the Company for the
15 BYOD and EPRI pilots.
16 Q. How does the three-phase DR framework reduce the risk associated with pilots
17 and how does that relate to cost pre-approval?
18 A. Pilots are only successful insofar as they aid in determining potential peak load
19 reduction associated with a program, provide data and insight on how customers
20 react to DR programs, how new DR technology functions, etc. Unlike widely
21 available DR programs, pilots cannot be measured by how many total MW of DR
6 Company witness Farrell Direct Testimony, p 16, lines 6-7. 7 Company witness Farrell Direct Testimony p 16, line 7. 6
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-20471 PART II
1 they provide, total PSCR or other operational savings are realized, nor overall
2 customer enrollment (pilots are often limited to a certain number of customers). In
3 short, pilots can give the Company some certainty on how well a DR program
4 will eventually perform, but results are not guaranteed. Because of this lack of
5 measurability, there exists a risk of overspending on pilots. A cost-benefit
6 analysis can be done on a fully available DR program, whereas the value of a pilot
7 can mostly be measured qualitatively (e.g. lessons learned). Staff cautions the
8 Commission that spending on pilots needs to be carefully examined and
9 considered along with the fact that it is difficult to pair prudence with something
10 that cannot be directly measured.
11 This raises the question of when a pilot program should be escalated
12 into a widely available DR program offered by the Company. Before the three-
13 phase DR framework was implemented, a utility may have been wary of
14 introducing new DR programs for fear of, despite its best efforts and intentions,
15 those programs not gaining critical mass with customers such that expected
16 results are not realized. In other words, there was the risk that a new DR program
17 would fail, and that the Commission would not allow recovery of spending on that
18 program. On the other hand, if a new DR program was wildly successful and
19 resulted in much more required capital and O&M than anticipated in past IRPs or
20 rate cases, then the Company would experience considerable regulatory lag in
21 recovering that unexpected spending increase. Now, under the DR framework, the
22 Company is offered the ability to show the Commission that unexpected variation
23 in costs, customer enrollment, or DR resource size (MW) is reasonable and
7
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-20471 PART II
1 prudent, and allow for a consistent annual recovery mechanism through
2 reconciliation proceedings. That is to say that the Company faces much lower risk
3 in implementing a new DR program, or optimizing existing programs, and should
4 thus be encouraged to do so. In summary, Staff’s concern is with the possibility
5 that too much spending for future pilots is approved when discrete measurements
6 of prudency do not exist, and the risk of success or failure of fully implemented
7 programs has been greatly reduced. Therefore, Staff recommends that the risk
8 reduction associated with the three-phase approach gives further cause to the
9 Commission to not pre-approve the capital associated with “other pilots” besides
10 the BYOD and EPRI pilots.
11 DR Pilot-Specific Recommendations
12 Q. What does Staff recommend regarding the Company’s Programmable
13 Communicating Thermostat (PCT) pilot?
14 A. Staff recommends updating tariff language for Rate D1.8, the residential Dynamic
15 Peak Pricing Rate, so that the Company can bid the PCT pilot into MISO as a DR
16 resource. The PCT pilot is tied to the Company’s dynamic peak pricing rate D1.8,
17 which includes a critical peak rate component that can be called by the Company
18 at its discretion. In discovery the Company indicated that the only issue
19 preventing the demand-side resource derived from the PCT pilot from qualifying
20 at MISO as a DR resource is related to the requirements of the Rate D1.8 tariff.8
21 That rate cannot qualify as a load modifying resource (LMR) because the
8 Staff Exhibit S-8.1, p 15. 8
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-20471 PART II
1 customer notification period before a critical peak period is not sufficiently short
2 per MISO LMR requirements. Currently, Rate D1.8 states that “Customers will be
3 notified by 6 P.M. the day before critical hours are expected to occur.9” MISO
4 requires a shorter notification window than the evening before an event. Staff
5 recommends that the Commission direct the company to update the Rate D1.8
6 tariff to sufficiently shorten the notification for a critical peak event to qualify as a
7 MISO DR resource. Staff recommends that the tariff change take place in either
8 the Company’s recently filed DR reconciliation case, or in an ex parte case filed
9 within three months of the conclusion of this IRP case; whichever is earlier. If the
10 Commission does not wish for the change in Rate D1.8 to also apply to current
11 dynamic peak pricing customers who are not on the PCT pilot, the tariff should
12 specify that exception.
13 Q. What does Staff recommend regarding the Company’s Bring-Your-Own-Device
14 pilot?
15 A. Staff recommends that the Company alter the BYOD pilot such that it may be
16 offered into the MISO market as a DR resource. After the pilot reaches its
17 maturity with an enrollment of 25,000 customers the pilot should be offered as a
18 DR resource of the Company’s choosing to MISO. Should the pilot develop into a
19 full program, it should also be bid into MISO beginning in 2022.
20 Q. Why is it important that DR programs qualify and register as a DR resource with
21 MISO when feasible?
9 DTE Electric Company Rate Book Fifth Revised Sheet No. D-14.00. 9
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-20471 PART II
1 A. Currently, the only residential DR programs the Company registers and bids into
2 MISO is interruptible air conditioning (IAC) rate D1.1 and controlled water
3 heating Rate D5. The total resource value of the IAC and water heating programs
4 are registered as a DR resources with MISO, but other residential DR rates are
5 not. Currently the effects of residential DR programs aside from IAC and water
6 heating are simply included in the historical peak load data. Other residential DR
7 programs and their effect on load shape are not explicitly accounted for in the
8 Company’s peak load forecast, so the load shift resulting from those programs is
9 manifested solely in previous years. If, for example, no critical peak days were
10 called by the Company in one year, then the capacity value of Rate D1.8 would
11 not be recognized in the proceeding peak load forecast. The potential to shift load
12 to off-peak periods has a real value in terms of capacity, whether or not that shift
13 actually occurred.
14 MISO compensates DR programs for this value as a capacity resource,
15 but not the Company’s residential programs not registered with MISO. Non-
16 dispatchable DR programs, as described by Company witness Farrell, will likely
17 never qualify to register at MISO, and it is unnecessary for them to do so because
18 MISO only values DR that can respond to capacity needs in the short term. The
19 Company’s PCT and BYOD pilot are both capable of dispatch, and thus are of
20 value in the market. While Staff and the Commission review the Company’s DR
21 resources in both IRPs and DR reconciliations, registration of those resources
22 with MISO requires additional testing requirements. In effect, MISO can act as a
23 backup verification of the value and capacity of DR resources.
10
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-20471 PART II
1 Q. Should the Company be required to bid the BYOD and PCT pilot into MISO as a
2 LMR in the next planning year?
3 A. No. Staff recognizes that the BYOD pilot is still ongoing through 2020, and
4 further refinement may be made to specific program parameters beyond Staff’s
5 recommendation herein before it is widely available as a DR program. Also, the
6 PCT pilot, and eventual program, may require additional adjustments to comply
7 with Staff’s recommended tariff language adjustments. Should the pilots prove
8 successful the Commission should require the Company to register both programs
9 as DR resources with MISO.
10 Time-of-Use (TOU) Rates
11 Q. Is the Company correct that the Commission “… mandated a TOU rate for all
12 residential customers.”10?
13 A. Technically, but it is important to make the distinction between the traditional
14 meaning of TOU rates in the context of DR, and what the Commission approved
15 in the Company’s previous rate case.11 The Commission approved a transition to a
16 summer on-peak rate as the default residential rate. The composition of the new
17 summer on-peak rate includes higher power supply charges for summer afternoon
18 hours and a lower charge for all other (i.e. non-summer and off-peak) hours.12
19 While this new summer on-peak rate fits the description of a time-of-use rate (in
20 that it varies by hour of the day, rather than only daily or seasonally), it does not
21 constitute a DR rate because it is designed to more accurately reflect costs, not to
10 Company witness Keegan O. Farrell Direct Testimony p 23, lines 6-7. 11 MPSC Case No. U-20162. 12 May 2, 2019 Order in MPSC Case No. U-20162, p 161-162. 11
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-20471 PART II
1 change behavior as DR rates are. In common parlance, and in the past for
2 Michigan utilities, TOU rates were generally used for DR, but the new summer
3 on-peak rate approved by the Commission is novel in that it is designed to reflect
4 cost differentials between summer on-peak hours and all other hours. A DR rate,
5 with TOU elements or otherwise, is not necessarily designed to recover actually
6 incurred costs, but rather incentivize shifts in customer energy usage in order to
7 reduce costs to the utility, passing on those savings to rate payers.
8 The fundamental difference between a demand response rate and the
9 Company’s proposal is the intent of each rate. The intent of a demand response
10 rate is to a alter a customer’s typical energy consumption for the purpose of
11 reducing costs faced by the utility, and therefore reducing revenue needed from
12 customers. The most easily identifiable cost reduction manifests in lower peak
13 capacity needs. In the future, distribution cost avoidance or system balancing (i.e.
14 shifting demand to times of higher renewable energy production) may drive
15 demand response rate design. Demand response accomplishes cost reduction by
16 introducing a prompt that elicits a response by the customer to change their
17 demand for energy at a defined time. A demand response rate structure that
18 encourages off-peak use is designed not for specific rate cost recovery, but with
19 the purpose of shifting the customer’s load.
20 Q. Why is it important to make a distinction between demand response rates and the
21 proposed summer on-peak rate?
22 A. The distinction is important because the purpose of the rate should inform its
23 design, and the results of that design should then be evaluated for reasonableness
12
DIRECT TESTIMONY OF DAVID W ISAKSON CASE NUMBER U-20471 PART II
1 and efficacy, in that order. The evaluation step in rate design determines if the rate
2 accomplishes its purpose, and whether the rate is efficient, stable, and
3 understandable. The standard residential rate is evaluated on how well it recovers
4 its allocated revenue requirement and reflects the costs caused by the customer’s
5 use of the system, and a demand response rate is evaluated on how well it
6 encouraged customer behavior and if it was cost effective (i.e. the total cost
7 reduction resulting from the program is greater than the cost of the program.)
8 Because the two types of rate have different purposes, and therefore different
9 evaluation goals, they are designed differently. In summary, while the
10 Commission approved a time-of-use rate as the default rate for all residential
11 customers, that rate is not a demand response program or rate, because it is
12 designed specifically to reduce costs to the Company to be passed on to
13 ratepayers.
14 Q. Does this conclude your direct testimony?
15 A. Yes, it does.
13
S T A T E OF M I C H I G A N
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
* * * *
In the matter of the Application of ) DTE ELECTRIC COMPANY for ) approval of its Integrated Resource Plan ) Case No. U-20471 pursuant to MCL 460.6t, and for other relief ) )
EXHIBITS OF
DAVID W. ISAKSON
MICHIGAN PUBLIC SERVICE COMMISSION
August 21, 2019
EXHIBIT S-8.0 IS CONFIDENTIAL AND BEING FILED UNDER SEAL WITH THE MPSC Case: U-20471 Witness: David W Isakson Exhibit: 8-1 Page 1 of 22
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-4.1 ] Respondent: K. O. Farrell Page: 1 of 1
Question: Please indicate whether the increase in interruptible A/C demand response that the Company is forecasting from 2019-2024 is predominantly due to the replacement of A/C switches or due to enrolling new customers?
Answer: The forecasted increase in MWs associated with the interruptible air conditioning program is due to the replacement of the A/C switches. No new customers were forecasted to take service under the rate.
Attachments: None
Staff Exhibit S-8.1 Page 1 of 16 Case: U-20471 Witness: David W Isakson Exhibit: 8-1 Page 2 of 22
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-4.2 ] Respondent: K. O. Farrell Page: 1 of 2
Question: Regarding Exhibit A-26 lines 2 and 8, why is the Company projecting to decrease its capital expenditures for the Interruptible Air Conditioning (IAC) program from the $2 million request in U-20162 to $1.8 million projection in this case? Is this amount in addition to the initial request in U-20162 or a decrease? Has the number of projected switch installations changed as a result of the adjustment in spending? Please explain.
Answer: The Company modified the projection of the capital expenditures for the IAC program from the request included in Case No. U-20162 and the request included in the current IRP filing. As indicated in the Exhibit A-26, line 18, DTE Electric is planning to accelerate unit installation in 2019 that was previously scheduled for 2020. A higher spend is projected for 2019, and accordingly this implies a lower spend in 2020. The higher investment during the 2019 period corresponds with a higher installation rate in that forecasted period, and also higher unit purchases to replenish inventories in anticipation of the device installation that will occur during the latter part of following year (2020). From a two-year (2019-2020) perspective, no change in total capital expenditure is projected. Overall, the investment plan is intended to attain the goal to complete the replacement of the approximately 275,000 units by 2023. Below, please see a table showing the change in capital expenditure projections between the requested amount in U-20162, and the requested amount in the current IRP filing.
Staff Exhibit S-8.1 Page 2 of 16 Case: U-20471 Witness: David W Isakson Exhibit: 8-1 Page 3 of 22
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-4.2 ] Respondent: K. O. Farrell Page: 2 of 2
Projection Projection Projection 4 Months 8 Months Total Projection Case No. ($ Year 2019 1/1/2020 - 5/1/2020 – Years 2019-2020 4/30/2020 12/31/2020 Thousand) $4,600 $2,000 $3,000* $9,600 U-20162
$7,800 $600 $1,200 $9,600 U-20471
Notes: Numbers rounded to the nearest one hundred thousand *Projection represents an internal estimate at the time of the analysis, and was not included or disclosed in case U-20162 since the period is beyond the respective test year in that case
Attachments: None
Staff Exhibit S-8.1 Page 2 of 16 Case: U-20471 Witness: David W Isakson Exhibit: 8-1 Page 4 of 22
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-4.3 ] Respondent: K. O. Farrell Page: 1 of 1
Question: Please indicate which demand response rates listed on Exhibit A-22 only allow for curtailment of load during a MISO event and which can be called by the Company based upon other factors not related to emergency, such as economic or distribution needs.
Answer: Program System Integrity Economic R10 Interrupt. Supply Rider X D1.1 Interruptible A/C X X D8 Interrupt. Supply Rate X R1.2 Process Heat X D3.3 Interrupt. General Service X X R1.1 Metal Melting X D5 Interrupt. Hot Water Heating X R12 Capacity Release X X
Attachments: None
Staff Exhibit S-8.1 Page 3 of 16 Case: U-20471 Witness: David W Isakson Exhibit: 8-1 Page 5 of 22
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-4.4 (NDA) ] Respondent: K. O. Farrell/legal Page: 1 of 1
Question: Please provide scoping documents for both the Bring Your Own Device pilot and Programmable Controllable Thermostat Program pilot that includes a breakdown of any costs the Company expects to incur for each program, what metrics the Company is measuring and the evaluation criteria the Company intends to use for evaluating the results to determine success or failure of the pilots. The cost breakdown should include equipment, installation labor, software, any contractor costs, etc. Please also provide any costs that would be incurred by the customer.
Answer: DTE Electric objects for the reason that the request seeks information that is the confidential or proprietary information of others, acquired by DTE Electric pursuant to a contract or license that prohibits disclosure. Subject to and without waiving this objection, the Company responds as follows: the information is contained in the attachments referenced below.
Attachments: The documents listed below are available on DTE Electric’s Confidential Discovery Portal, an invitation to which has been sent by email to individuals who have properly executed a non-disclosure agreement pursuant to the protective order issued in this case. https://dteenergy.sharepoint.com/sites/DiscoveryPortal/Elec/U- 204712019IRPConfidential/default.aspx
NDA U-20471 STDE 4.4 BYOD Scoping Document.pdf NDA U-20471 STDE 4.4 PCT Scoping Document.pdf
Staff Exhibit S-8.1 Page 4 of 16
Case: U-20471 Witness: David W Isakson Exhibit: 8-1 Page 6 of 22
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-4.5 ] Respondent: K. O. Farrell Page: 1 of 1
Question: At what customer enrollment point would the Company consider the BYOD program a full implementation program versus a pilot?
Answer: Customer enrollment is only one of the factors that will determine when the BYOD pilot becomes a full implementation program. The BYOD pilot will be referred to as a program when no other program modifications are being evaluated and the Company is confident that no other program modifications are needed. Some of the modifications that the Company is evaluating to increase program effectiveness are: 1. shortening the event length, 2. day of notifications and 3. different incentive structures.
Attachments: None
Staff Exhibit S-8.1 Page 5 of 16 Case: U-20471 Witness: David W Isakson Exhibit: 8-1 Page 7 of 22
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-4.6 ] Respondent: K. O. Farrell Page: 1 of 1
Question: Referencing witness Farrell’s testimony on page 13. Please provide the data that supports the “average peak demand reduction on a per customer basis ranged from 0.44 kW to 1.03 kW.”
Answer: The 0.44 kW reduction is the smallest average load reduction observed over any of the three called four-hour events on a per customer basis. The 1.03 kW reduction is the largest reduction observed in any hour on a per customer basis. The data for the three events are attached in spreadsheet U-20471 STDE-4.6 BYOD Results.xlsx
Attachments: The document listed below is available for download at the following hyperlink: https://dteenergy.sharepoint.com/sites/DiscoveryPortal/Elec/U- 204712019IRPPublic/default.aspx
U-20471 STDE-4.6 BYOD Results.xlsx
Staff Exhibit S-8.1 Page 6 of 16 Case: U-20471 Witness: David W Isakson Exhibit: 8-1 Page 8 of 22
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-4.7 ] Respondent: K. O. Farrell Page: 1 of 1
Question: Referencing page 13 of witness Farrell’s testimony, can the Company correlate specific customer characteristics to the customer peak reduction during a BYOD event (i.e. what differentiated customers who decreased demand more than others)?
Answer: The Company is unable to correlate specific customer characteristics to peak load reduction during a BYOD event.
Attachments: None
Staff Exhibit S-8.1 Page 7 of 16
Case: U-20471 Witness: David W Isakson Exhibit: 8-1 Page 9 of 22
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-4.8a ] Respondent: K. O. Farrell Page: 1 of 1
Question: Regarding the PCT program described on page 14 of witness Farrell’s testimony: please provide additional details of the four events called by the Company during the summer of 2018. Specifically, for each of the four events please provide:
a) The date of the called events.
Answer: Please see U-20471 STDE-4.8 PCT Results.xlsx.
Attachments: The document listed below is available for download at the following hyperlink: https://dteenergy.sharepoint.com/sites/DiscoveryPortal/Elec/U- 204712019IRPPublic/default.aspx
U-20471 STDE-4.8 PCT Results
Staff Exhibit S-8.1 Page 8 of 16 Case: U-20471 Witness: David W Isakson Exhibit: 8-1 Page 10 of 22
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-4.8b ] Respondent: K. O. Farrell Page: 1 of 1
Question: Regarding the PCT program described on page 14 of witness Farrell’s testimony: please provide additional details of the four events called by the Company during the summer of 2018. Specifically, for each of the four events please provide:
b) The total MW of load reduced for each hour during the critical hours.
Answer: See answer to STDE-4.8a
Attachments: None
Staff Exhibit S-8.1 Page 9 of 16
Case: U-20471 Witness: David W Isakson Exhibit: 8-1 Page 11 of 22
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-4.8c ] Respondent: K. O. Farrell Page: 1 of 1
Question: Regarding the PCT program described on page 14 of witness Farrell’s testimony: please provide additional details of the four events called by the Company during the summer of 2018. Specifically, for each of the four events please provide:
c) Any measures of customer participation recorded by the Company during the event.
Answer: See answer to STDE-4.8a
Attachments: None
Staff Exhibit S-8.1 Page 10 of 16 Case: U-20471 Witness: David W Isakson Exhibit: 8-1 Page 12 of 22
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-4.8d ] Respondent: K. O. Farrell Page: 1 of 1
Question: Regarding the PCT program described on page 14 of witness Farrell’s testimony: please provide additional details of the four events called by the Company during the summer of 2018. Specifically, for each of the four events please provide:
d) Data on any observed change to load in the hours immediately preceding and following the critical peak period.
Answer: See answer to STDE-4.8a
Attachments: None
Staff Exhibit S-8.1 Page 11 of 16 Case: U-20471 Witness: David W Isakson Exhibit: 8-1 Page 13 of 22
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-4.8e ] Respondent: K. O. Farrell Page: 1 of 1
Question: Regarding the PCT program described on page 14 of witness Farrell’s testimony: please provide additional details of the four events called by the Company during the summer of 2018. Specifically, for each of the four events please provide:
e) The LMP over the time period that the event was called.
Answer: Please see attached spreadsheet STDE-4.8e LMP Prices.xlsx
Attachments: The document listed below is available for download at the following hyperlink: https://dteenergy.sharepoint.com/sites/DiscoveryPortal/Elec/U- 204712019IRPPublic/default.aspx
STDE-4.8e LMP Prices.xlsx
Staff Exhibit S-8.1 Page 12 of 16 Case: U-20471 Witness: David W Isakson Exhibit: 8-1 Page 14 of 22
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-4.9 ] Respondent: K. O. Farrell Page: 1 of 1
Question: What is the expected average peak savings per customer the Company expects to see with the PTC program? Please provide the data that supports this savings number or range. If an excel document is involved, please provide the document with all formulae intact.
Answer: The Company expects to see a reduction of 1.0 kWh per hour per customer during a called event. This reduction is consistent with the reduction seen during the initial SmartCurrents Dynamic Peak Pricing Pilot the Company conducted in 2012 and 2013 with partial funding from U.S. Department of Energy under the SmartGrid Investment Grant. The final report of SmartCurrents Dynamic Peak Pricing Pilot is attached.
Attachments: The document listed below is available for download at the following hyperlink: https://dteenergy.sharepoint.com/sites/DiscoveryPortal/Elec/U- 204712019IRPPublic/default.aspx
DTE SmartCurrents Final Report.pdf
Staff Exhibit S-8.1 Page 13 of 16 Case: U-20471 Witness: David W Isakson Exhibit: 8-1 Page 15 of 22
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-4.10a ] Respondent: K. O. Farrell Page: 1 of 1
Question: Please indicate whether or not the thermostats under these programs would support program modifications that would allow the programs to qualify as LMRs for:
a) BYOD program
Answer: Yes, the thermostats in the BYOD pilot program would support program modifications that would allow the program to qualify as an LMR.
Attachments: None
Staff Exhibit S-8.1 Page 14 of 16 Case: U-20471 Witness: David W Isakson Exhibit: 8-1 Page 16 of 22
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-4.10b ] Respondent: K. O. Farrell Page: 1 of 1
Question: Please indicate whether or not the thermostats under these programs would support program modifications that would allow the programs to qualify as LMRs for:
b) PCT program
Answer: Yes, the thermostats in the PCT pilot program would support program modifications that would allow the program to qualify as an LMR. However, the program itself is unable to qualify as an LMR due to it being tied to the Dynamic Peak Pricing rate. The dynamic peak pricing rate cannot qualify as an LMR due to the length of the notification window.
Attachments: None
Staff Exhibit S-8.1 Page 15 of 16 Case: U-20471 Witness: David W Isakson Exhibit: 8-1 Page 17 of 22
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-4.11 ] Respondent: K. O. Farrell Page: 1 of 1
Question: Please provide the results and evaluation of the commercial customer facility pilot conducted in 2018. If the results are not available, when does the Company expect the results could be made available to Staff?
Answer: This pilot included various customer assets at host customer NextEnergy including chilled and chiller water pumps, air handler units (AHU), load bank (microgrid), generator, and an EV charger that were all interconnected with multiple control system protocols. The results from the 2018 events are shown in the table below.
Date Event Length (hours) Assets used DR Reduction (kW) 2/2/2018 2 Generator 60.0 3/12/2018 2 AHU1, EV Charger 4.6 3/28/2018 2 AHU1/2, EV Charger 13.6 6/26/2018 2 AHU 1/2 31.3 7/25/2018 3 AHU 1/2 18.0 8/9/2018 2 AHU 2, Generator 59.7 8/16/2018 2 AHU 1/2, Generator 82.4 8/24/2018 2 Generator 83.5 8/28/2018 2 AHU 1/2, Generator 46.5 10/3/2018 2 AHU 1/2, Generator 2.7 10/9/2018 2 AHU 1, Generator 12.4 11/27/2018 2 Generator 5.8
Attachments: None
Staff Exhibit S-8.1 Page 16 of 16 Case: U-20471 Witness: David W Isakson Exhibit: 8-1 Page 18 of 22
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-4.12 (NDA) ] Respondent: K. O. Farrell/legal Page: 1 of 1
Question: What is the expected cost to the Company for the demand response pilot that involves the management of PEV charging? Please confirm that the pilot does not involve current customer PEV’s.
Answer: DTE Electric objects for the reason that the request seeks information that is the confidential or proprietary information of others, acquired by DTE Electric pursuant to a contract or license that prohibits disclosure. Subject to and without waiving this objection, the Company responds as follows:
NDA Narrative Start
NDA Narrative End
Attachments: The documents listed below are available on DTE Electric’s Confidential Discovery Portal, an invitation to which has been sent by email to individuals who have properly executed a non-disclosure agreement pursuant to the protective order issued in this case. https://dteenergy.sharepoint.com/sites/DiscoveryPortal/Elec/U- 204712019IRPConfidential/default.aspx
NDA U-20471 STDE 4.12 EPRI Scoping Document.pdf
Staff Exhibit S-8.1 Page 17 of 16 Case: U-20471 Witness: David W Isakson Exhibit: 8-1 Page 19 of 22
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-4.13 ] Respondent: K. O. Farrell Page: 1 of 1
Question: Please provide the scoping document and evaluation criteria the Company and EPRI are using to conduct the PEV DR pilot and to evaluate the success or failure of the pilot. Please detail the findings from the first event, called on February 26, 2019. When does the Company expect final results to be available?
Answer: The main objectives and evaluation criteria established by the Company and the OEMs include learning about the demand reduction (kW) during DR events, testing different timing of event windows (9am-11am, 11am- 3pm, 3pm-7pm, 7pm-10pm), PEV user behavior in response to different incentives (up-front incentives vs incentivizing per event), override (opt-in / opt-out) approach by PEV user, and deliverability of event (ensure communication signals functioned properly).
During the first event called on February 26, 2019, the OEMs experienced some technological communication issues on their end with vehicles not receiving the signal to power off during the time of the event. These types of communication issues were expected and have since been resolved for future events. The Company has not yet finalized the evaluation techniques for all planned events. The Company and OEMs plan to call a total of 12 events before the end of August 2019, averaging about 2 events per month from February through August. To date, there have been eight events called. The Company plans to compile all event results in Q4 2019, with an expectation to have final pilot results by Q1 2020 based on the table within the Scope of Work documentation shown below.
Refer to STDE 4.12 for the scoping document, which is only available to individuals who have properly executed a non-disclosure agreement subject to the protective order in this case.
Attachments: None
Staff Exhibit S-8.1 Page 13 of 16 Case: U-20471 Witness: David W Isakson Exhibit: 8-1 Page 20 of 22
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-4.14 ] Respondent: K. O. Farrell Page: 1 of 1
Question: Please reference witness Farrell’s testimony on page 15, lines 13-14. The Company is assessing the applicability of one or more pilots similar to the pilot with NextEnergy at a different location. What are the scope, goals, and evaluation criteria for the “one or more similar pilots” the Company is assessing for a different location? What is the expected cost of those pilots?
Answer: One of the goals of the initial pilot with Enbala and NextEnergy in 2018 was to test the technology and communication between the software and technology hardware installed on the customer assets onsite. Ensuring those assets were interrupted when called upon during DR events was the main objective. Since the initial pilot concept and goals have been proven, the Company expects to expand the pilot to other C&I customers who have interest in joining a building automation pilot. A full scope of the next project has not been determined.
Attachments: None
Staff Exhibit S-8.1 Page 14 of 16 Case: U-20471 Witness: David W Isakson Exhibit: 8-1 Page 21 of 22
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-4.15 ] Respondent: K. O. Farrell Page: 1 of 1
Question: Please provide any report, summary, or case study resulting from the Company’s partnership with NextEnergy as described on page 15 of witness Farrell’s testimony.
Answer: If partnership with NextEnergy is referring to the building automation pilot conducted at the NextEnergy facility with Enbala, please see answer to STDE 4.11 for results. In addition, please see attached final report form building automation pilot.
Attachments: The document listed below is available for download at the following hyperlink: https://dteenergy.sharepoint.com/sites/DiscoveryPortal/Elec/U- 204712019IRPPublic/default.aspx
U-20461 STDE-4.15 DTE-Enbala Final Report.pdf
Staff Exhibit S-8.1 Page 15 of 16 Case: U-20471 Witness: David W Isakson Exhibit: 8-1 Page 22 of 22
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-4.16a ] Respondent: K. O. Farrell Page: 1 of 1
Question: Referring to Exhibit A-26, please identify the projected spending amount for each individual pilot program categorized as “Other DR Pilot Programs” on line 10.
a) Does “Other DR Pilot Programs” include spending on the Company’s partnership with NextEnergy as described on page 15 of witness Farrell’s testimony?
Answer: No, “Other DR Pilot Programs” does not include spending on the Company’s partnership with NextEnergy.
Attachments: None
Staff Exhibit S-8.1 Page 16 of 16 Case: U-20471 Witness: David W Isakson Exhibit: 8-2 Page 1 of 1
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 ) DTE ELECTRIC COMPANY for ) approval of its Integrated Resource Plan ) Case No. U-20471 pursuant to MCL 460.6t, and for other relief ) )
QUALIFICATIONS AND DIRECT TESTIMONY OF
ZACHARY C. HEIDEMANN
MICHIGAN PUBLIC SERVICE COMMISSION
August 21, 2019
QUALIFICATIONS OF ZACHARY C. HEIDEMANN CASE NUMBER U-20471 PART I 1 Q. Please state your name and business address.
2 A. My Name is Zachary C. Heidemann and my business address is 7109 W. Saginaw Hwy.,
3 Lansing, Michigan 48917.
4 Q. By whom are you employed and in what capacity?
5 A. I am employed in the Energy Resources Division of the Michigan Public Service
6 Commission (MPSC or Commission). I am a Public Utilities Engineer in the Generation
7 and Certificate of Need (GCON) Section, which is responsible for assisting in the
8 implementation of Public Act 341 of 2016 and evaluating applications for transmission
9 siting pursuant to Public Act 30 of 1995.
10 Q. Please describe your educational background.
11 A. I earned a Bachelor of Science in Mechanical Engineering in 2006 from Michigan State
12 University and a Master of Science in Mechanical Engineering from Georgia Institute of
13 Technology in 2013.
14 In addition, I have attended two multi-day training sessions offered through the
15 Midcontinent Independent System Operator (MISO) on the capacity expansion planning
16 software Electric Generation Expansion Analysis System (EGEAS) and multiple training
17 sessions as well as a conference on Aurora XMP (April 2018) offered by Energy Exemplar.
18 Aurora XMP is an energy market price forecasting software that can also be used in
19 capacity expansion planning. I have also attended Grid School (April 2018) offered though
20 the Institute of Public Utilities at Michigan State University, as well as two courses
21 organized by Electric Utilities Consultants, Inc., Long Term Load Forecasting in MS Excel
22 (August 2018) and Integrated Resource Planning Summit Conference (March 2019).
23 Q. Please describe your professional experience.
1 QUALIFICATIONS OF ZACHARY C. HEIDEMANN CASE NUMBER U-20471 PART I 1 A. I worked as a graduate research assistant at Georgia Institute of Technology from 2007
2 until 2014. I was assigned to study the effect of fluid dynamic shear stress on spruce tree
3 somatic embryos. My responsibilities included developing a microfluidic encapsulation
4 device and modeling the two-phase flow of the device in FLUENT and COMSOL. In
5 addition, I designed a program using the BioPerl module to connect with BLAST DNA
6 database and automate the retrieval of search results to find similar DNA base pair
7 combinations within related species.
8 Upon completion of my Master’s degree, I accepted a position at Franklin Energy
9 as an Efficiency Engineer in October of 2014. My responsibilities included the evaluation
10 of energy savings for custom retrofit projects and final inspection to ensure that energy
11 efficiency projects were properly installed by energy efficiency contractors. Additionally,
12 I verified outside estimates and evaluated assumptions made by third-party consultants
13 regarding energy savings.
14 In 2017, I accepted a position at the Michigan Agency for Energy as a Public
15 Utilities Engineer, in the Energy Markets section. My responsibilities included
16 participation in the MISO transmission system modeling as a stakeholder, including the
17 MISO Transmission Expansion Planning (MTEP) process. I also represented Michigan in
18 other MISO stakeholder engagement meetings and advised MPSC Staff (Staff) about the
19 impact of changing MISO policies. In March 2018, I was transferred from MAE to the
20 MPSC GCON section, where I maintain stakeholder involvement in the MTEP process and
21 other modeling efforts at the MPSC related to generation and transmission planning.
22 Q. Have you filed testimony before the Commission?
2 QUALIFICATIONS OF ZACHARY C. HEIDEMANN CASE NUMBER U-20471 PART I 1 A. Yes, I have filed testimony in Case No. U-20165, Consumers Energy Company’s 2018
2 Integrated Resource Plan regarding retirement analysis and modeling scenarios and
3 sensitivities; Case No. U-18091, DTE Electric Company’s PURPA Avoided Cost Remand
4 verifying that the avoided cost calculation inputs came from Case No. U-18419; and Case
5 No. U-20350, Upper Peninsula Power Company’s Integrated Resource Plan regarding
6 modeling assumptions modeling scenarios, risk analysis, and transmission analysis.
3 DIRECT TESTIMONY OF ZACHARY C. HEIDEMANN CASE NUMBER U-20471 PART II 1 Q. What is the purpose of your testimony?
2 A. The purpose of my testimony is to review the transmission assessment carried out by the
3 International Transmission Company (ITC) at the behest of DTE Energy Company (the
4 Company or DTE) and determine if they complied with MCL 460.6t(5)(h) and the
5 surrounding transmission analysis requirements as laid out in Section XII of the December
6 20th, 2017 Commission Order in Case No. U-15896.
7 Q. Are you sponsoring any Exhibits?
8 A. Yes. I am sponsoring the following Exhibits:
9 Exhibit S-9.0 MISO Generation Interconnection Queue for Select
10 Michigan Counties
11 Exhibit S-9.1 Excerpt of MISO MTEP 2019 Projects
12 Q. Please explain Exhibit S-9.0.
13 A. Exhibit S-9.0 is a filtered version of the Midcontinent Independent System Operator
14 (MISO) Generation Interconnection Queue (GIQ) that was retrieved on June 10th, 2019
15 from the MISO Energy website. The full GIQ was downloaded as a .CSV file and opened
16 in Excel. I filtered the data by project status for only those projects that had not yet been
17 interconnected or had not been withdrawn. I then filtered the GIQ by state, so that only
18 Michigan projects would be presented. Finally, I filtered the counties represented that
19 roughly approximate DTE’s service territory such that only projects in Wayne, Oakland,
20 Saint Clair, Macomb, Washtenaw, and Monroe counties were represented. The result is a
21 list of proposed generation projects in MISO within a rough approximation of DTE’s
22 service territory.
23 Q. Please explain Exhibit S-9.1.
4 DIRECT TESTIMONY OF ZACHARY C. HEIDEMANN CASE NUMBER U-20471 PART II 1 A. Exhibit S-9.1 is a selected set of excerpts from the MISO Transmission Expansion Plan
2 (MTEP19) Second Subregional Planning Meeting (SPM) presentation presented on June
3 4th, 2019 at ITC headquarters in Novi, Michigan. This was an open meeting and all the
4 materials from the meeting are considered public. Exhibit S-9.1 includes the slides for
5 projects that could be replaced by the “Romeo” project that is in the area between the St.
6 Clair Power Plant, the Blue Water Energy Center (BWEC), and the load pocket in Oakland
7 County. Also included are the two Static Var Compensator projects proposed by ITC to
8 mitigate the voltage issues at the Enrico Fermi Nuclear Plant (Fermi) surrounding the
9 proposed retirement of Trenton Channel Unit 9.
10 Transmission Alternatives and Analysis
11 Q. Please explain how the Company complies with MCL 460.6t(5)(h).
12 A. The Commission laid out five requirements to comply with MCL 460.6t(5)(h). All of these
13 requirements are contained within Section XII of the Integrated Resource Plan Filing
14 Requirements1 (Filing Requirements). Therefore, by complying with the Filing
15 Requirements laid out in section XII, the Company is in compliance with MCL
16 460.6t(5)(h).
17 Q. Did DTE assess the cost of transmission changes required to accommodate the proposed
18 resources in the Proposed Course of Action (PCA) in accordance with Section XII(a) of
19 the Filing Requirements?
20 A. Yes. The Company worked with ITC to produce 14 different sensitivities that evaluated
21 the cost to mitigate issues that arose due to the addition of generation resources.2 The
1 Commission Order in Case No. U-15896 12/20/2017 Order, Exhibit A. 2 Pre-Filed Direct Testimony and Exhibits of Jestin M. Hunnell, p 6.
5 DIRECT TESTIMONY OF ZACHARY C. HEIDEMANN CASE NUMBER U-20471 PART II 1 results of this study are shown on page 2 of Exhibit A-39. These data show that for a single
2 contingency analysis there is a relatively narrow band of cost for the varying levels of
3 generation. The Company confirmed with ITC, after it developed its flexible PCA, that
4 sensitivities considered in the ITC study are representative of all four paths of the PCA.3
5 Q. Did the Company meet the requirements of Section XII(b) of the Filing Requirements by
6 offering “A detailed description of the utilities efforts to engage local transmission owners
7 in the utilities IRP process in an effort to inform the IRP process and assumptions,
8 including a summary of meetings that have taken place”?
9 A. Yes. The Company began meeting with ITC regarding its IRP and associated transmission
10 studies on May 3, 2018. The Company gave a detailed overview of its meetings with ITC
11 in Exhibit A-38. This includes meeting attendees, meeting minutes/agendas, and email
12 communication between DTE and ITC regarding likely transmission costs for the
13 Company’s PCA and the effect the PCA would have on the Capacity Import Limit (CIL)
14 and Capacity Export Limit (CEL) for MISO Local Resource Zone 7 (Zone 7).
15 Q. Did DTE analyze the CIL and CEL as well as local congestion concerns as required by
16 Section XII(c) of the filing requirements?
17 A. Yes, the Company stated the most recent CIL and CEL given by MISO. The CIL and CEL
18 for Zone 7 are 3,211 MW and 1,358 MW respectively for the 2019/2020 planning year.4
19 The Company also included the MISO forecasted CIL for planning year 2023/2024. The
20 expected CIL for this time period is 4,287 MW. DTE solicited a study from ITC to
21 determine if the changing generation mix of Michigan could affect the ability of Zone 7 to
3 Pre-Filed Direct Testimony and Echibits of Jestin M. Hennell, Exhibit A-38.2. 4 Pre-Filed Direct Testimony and Exhibits of Jestin M. Hunnell, p 8.
6 DIRECT TESTIMONY OF ZACHARY C. HEIDEMANN CASE NUMBER U-20471 PART II 1 import capacity on a longer time scale in year 2028. The results of this study are presented
2 in Table 1 in the Direct Testimony of Company witness Jestin M. Hunnell and pages 3 and
3 4 of Exhibit A-39.
4 Q. Please describe the CIL and CEL study’s methodology.
5 A. ITC modeled two sensitivities with three scenarios that have different utility scale solar
6 penetrations in each sensitivity. In one set of the sensitivities, the current voltage criteria
7 for Fermi remained in place; while in the other the sensitivity, the voltage criteria were
8 relaxed to 0.92 per unit. The relaxation of the voltage criteria was used as a proxy for
9 resolving the voltage issues at the Fermi switchyard identified in Trenton Channel 9
10 Attachment Y proceedings.5
11 Q What were the results of this ITC study?
12 A. A major take away from this study is that if the issues at the Fermi switchyard that were
13 discussed in the ITC study go unresolved and there is no solar added to the grid in 2028,
14 Michigan will be unable to import capacity from other MISO Zones.6 The addition of solar
15 does mitigate this issue, but the CIL would be reduced to under 3000 MW. If the voltage
16 issues at the Fermi switchyard are mitigated, then the CIL is estimated to be raised to 4283
17 MW in 2028 without the addition of solar. The proposed addition of solar generation could
18 potentially increase the CIL beyond this amount.
19 Q. Why were low voltage issues in the Fermi switchyard a focus of study?
20 A. The low voltage issues identified in the Fermi switchyard were initially identified in an
21 Attachment Y proceeding for the retirement of Trenton Channel 9. DTE submitted to
5 Id at, pp10-11. 6 Pre-Filed Direct Testimony and Exhibits of Jestin M. Hunnell, p 11.
7 DIRECT TESTIMONY OF ZACHARY C. HEIDEMANN CASE NUMBER U-20471 PART II 1 MISO the Attachment Y filing for Trenton Channel Unit 9 on January 30th, 2018.7 MISO
2 studied the retirement of Trenton Channel Unit 9 occurring on June 1st, 2022. Originally,
3 Trenton Channel 9 was going to be designated a System Support Resource (SSR) and go
4 through the accelerated SSR process where a proposed transmission solution would be
5 vetted and approved by MISO in six months. However, ITC put forth a mitigating solution
6 of Static VAR Compensators (SVC) with a cost of $62 million into MISO’s MTEP19.8
7 The ITC proposed solution is split into two projects: MTEP number ITCT-15917 and
8 ITCT-15923. Both of these projects can be viewed in Exhibit S-9.1. MISO is looking at
9 ITC’s SVCs, generators proposed by DTE in the MISO GIQ and other non-transmission
10 alternatives as options to remove the Trenton Channel 9 SSR designation. In accordance
11 with the MISO business practice manual, non-transmission alternatives include demand
12 response and generation. The current MISO GIQ has many proposed generators in DTE’s
13 service territory that may help resolve this issue.9 The result of the Attachment Y process
14 being concurrent with the MTEP19 Cycle is that the most economic solution to replace
15 the retiring Trenton Channel 9 Unit will be recommended to the MISO Planning Advisory
16 Committee and recommended for approval.10
17 Q. Is Staff concerned about the results presented in the ITC study regarding the CIL?
18 A. No. The fact that the issues surrounding the Fermi switchyard are being considered in an
19 Attachment Y proceeding means that for Trenton Channel 9 to retire these issues must be
20 resolved. DTE has committed to the retirement of Trenton Channel 9 in 2022, so these
21 issues will be resolved before the 2028 time frame the ITC study considers. While a higher
7 Pre-Filed Direct Testimony and Exhibits of Jestin M. Hunnell, Exhibit, A-40 p 5. 8 Pre-Filed Direct Testimony and Exhibits of Jestin M. Hunnell, p 12. 9 Exhibit 9.0 10 Pre-Filed Direct Testimony and Exhibits of Jestin M. Hunnell, p 12.
8 DIRECT TESTIMONY OF ZACHARY C. HEIDEMANN CASE NUMBER U-20471 PART II 1 CIL shown in the ITC with the addition of solar generation would allow Zone 7 utilities to
2 contract for capacity from other MISO zones to a greater extent, Company witness Shawn
3 D. Bergdorf points out imports to Zone 7 are not currently constrained by the CIL but
4 instead by Zone 7’s local clearing requirement being so close to the planning reserve
5 margin requirement (PRMR).11 This effectively limits the ability to import capacity into
6 Zone 7 to the difference between the CIL and PRMR, or what is termed the “effective
7 capacity import limit.”12
8 Q. Does the Company discuss the effects on the transmission system of other retirements?
9 A. Yes. The Company discusses the retirement of St. Clair Units 1, 2, 3, 6, and 7. The MISO
10 Attachment Y study identified some issues that could be mitigated by operational measures
11 in the short term.13 However, there are many projects in the surrounding area in the 2019
12 MTEP cycle, listed in Exhibit S-9.1, that offer other options to resolve voltage or thermal
13 issues as a result of the St. Clair units retiring. In addition to the retirement of the St. Clair
14 units, these projects are likely driven by a combination of factors including, but not limited
15 to, load growth in the Oakland area and line ratings methodology changes. ITC has
16 successfully developed a whole system solution that can mitigate many of these issues at a
17 lower cost. This project has been named “Romeo” and was given the MTEP number ITCT-
18 17164. The Romeo project is estimated to have a significantly lower cost than the suite of
19 projects that it replaces.
20 Q. Did the Company fulfill section XII(d) and (e) of the filing requirements?
11 Pre-Filed Direct Testimony and Exhibits of Shawn D. Bergdorf. pp 7-9. 12 Per-Filed Direct Testimony and Exhibits of Shawn D. Bergdorf. pp 7-9. 13 Pre-Filed Direct Testimony and Exhibits of Jestin M. Hunnell, p 14.
9 DIRECT TESTIMONY OF ZACHARY C. HEIDEMANN CASE NUMBER U-20471 PART II 1 A. Yes. The combination of the ITC study that looked at both the anticipated transmission
2 upgrades based on the flexible PCA and the effect of retiring Trenton Chanel 9 on the CIL,
3 in conjunction with the public version of the Attachment Y proceeding, satisfy the
4 requirements of section XII(d) and (e) of the filing requirements.
5 Q. Does Staff have any recommendations for the Company regarding transmission
6 alternatives and its cooperation with ITC?
7 A. Yes, Staff recommends that DTE continue to work with ITC to produce meaningful
8 reviews of the effects of the Zone 7 generation fleet change on the transmission system and
9 the associated cost that comes with any necessary changes to the transmission system. Staff
10 is encouraged by the joint efforts of ITC and DTE. Through such cooperation, Staff
11 believes that DTE and ITC can continue to search for whole system solutions to address
12 necessary changes to the transmission system.
13 Q. Does this conclude your testimony?
14 A. Yes. This concludes my testimony.
10
S T A T E OF M I C H I G A N
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
* * * *
In the matter of the Application of ) DTE ELECTRIC COMPANY for ) approval of its Integrated Resource Plan ) Case No. U-20471 pursuant to MCL 460.6t, and for other relief ) )
EXHIBITS OF
ZACHARY C. HEIDEMANN
MICHIGAN PUBLIC SERVICE COMMISSION
August 21, 2019 Michigan Publice Service Commission Case: U-20471 DTE Electric Company Witness: Z. C. Heidemann MISO Generation Interconnection Queue for Select Michigan Counties Exhibit: S-9.0 Page: 1 of 1
Request Service Summer Winter Project # Status Queue Date In Service Date Transmission Owner County State Study Cycle Study Phase Type POI Name MW MW Fuel Generating Facility J1046 Active 3/12/2018 10/31/2020 ITC Transmission Washtenaw County MI DPP-2018-APR Study Not Started NRIS Majestic - Lemoyne 345 kV Line Tap 50 50 Battery Storage BS Battery Storage J1056 Active 3/12/2018 10/31/2020 ITC Transmission Monroe County MI DPP-2018-APR Study Not Started NRIS Lulu - Monroe 345 kV Line Tap 200 200 Wind WT Wind Turbine J1062 Active 3/12/2018 10/31/2021 ITC Transmission Washtenaw County MI DPP-2018-APR Study Not Started NRIS Majestic - Lemoyne 345 kV Line Tap 200 200 Solar PV Photovoltaic J1068 Active 3/12/2018 10/31/2020 ITC Transmission Washtenaw County MI DPP-2018-APR Study Not Started NRIS Dorset 120 kV Substation 200 200 Wind WT Wind Turbine J1224 Active 4/27/2019 10/30/2022 ITC Transmission Washtenaw County MI DPP-2019-Cycle 1 Study Not Started NRIS Majestic - Milan 345 kV Line Tap 170 170 Solar PV Photovoltaic J1237 Active 4/29/2019 9/1/2022 ITC Transmission Washtenaw County MI DPP-2019-Cycle 1 Study Not Started NRIS Majestic - Milan 345kV Line 175 175 Solar PV Photovoltaic J1256 Active 4/29/2019 10/30/2022 ITC Transmission Washtenaw County MI DPP-2019-Cycle 1 Study Not Started NRIS Dorset 120 kV Substation 150 150 Solar PV Photovoltaic J1262 Active 4/29/2019 6/1/2019 ITC Transmission Wayne County MI DPP-2019-Cycle 1 Study Not Started ERIS Waterman 120kV Substation 25 25 Gas Combined Cycle J1329 Active 4/29/2019 10/30/2022 ITC Transmission Washtenaw County MI DPP-2019-Cycle 1 Study Not Started NRIS Majestic - Milan 345 kV Line Tap 20 20 Battery Storage BS Battery Storage J1331 Active 4/29/2019 6/30/2022 ITC Transmission St. Clair County MI DPP-2019-Cycle 1 Study Not Started NRIS Greenwood 120 kV Substation 100 100 Solar PV Photovoltaic J1346 Active 4/29/2019 1/1/2022 ITC Transmission Wayne County MI DPP-2019-Cycle 1 Study Not Started NRIS Brownstown 345kV Substation 334 382 Gas CT Combustion Turbine (Simple Cycle) J1451 Active 4/26/2019 10/30/2022 ITC Transmission Washtenaw County MI DPP-2019-Cycle 1 Study Not Started NRIS Dorset 120 kV Substation 25 25 Battery Storage BS Battery Storage J646 Active 6/16/2016 7/1/2010 ITC Transmission Macomb County MI DPP-2017-FEB GIA ERIS Carbon - connecting to ITC at Jewel, St-Clair and Spokane substations 1.6 0 Landfill Gas OT Other J793 Active 6/16/2017 5/14/2021 ITC Transmission St. Clair County MI DPP-2017-AUG PHASE 2 NRIS Belle River - Fitz #2 345 kV Line Tap 1175 1175 Combined Cycle Combined Cycle J799 Active 6/16/2017 9/1/2019 ITC Transmission Washtenaw County MI DPP-2017-AUG PHASE 2 NRIS Milan - Pioneer 120kV Line Tap 189 189 Solar PV Photovoltaic J833 Active 6/16/2017 4/1/2020 ITC Transmission Washtenaw County MI DPP-2017-AUG PHASE 2 NRIS Milan-Pioneer 120kV line tap 100 100 Solar PV Photovoltaic Case: U-20471 Witness: Z. C. Heidemann Exhibit: S-9.1 Page 1 of 23 ITCT: Target Appendix A Projects: Baseline Reliability Projects/Other-Reliability.Michigan Public Service Commission ITCT-15917 Fermi 345 kV SVC and ITCT-15923 SVC for Import at Fermi DTE Electric Company Excerpt of MISO MTEP 2019 Projects
ITCT-15917 Fermi 345 kV SVC Cap Bank/SVC addition New T-Line Rebuild T-Line Project Description: New Transformer Station Equip Upgrade Sag Remediation Install a -100/+600 MVAR SVC near the Fermi 345kV switchyard. The New Station SVC will be installed as two -50/+300 MVAR SVC's at a new switchyard New Breaker (sharing some common station equipment) outside Fermi property, tentatively named Leroux. Two 345kV circuits (vacant sides of the Fermi- Brownstown #2 and Fermi-Brownstown length TBD based on station siting, but approximately 2 miles in total) will be installed on the #3 345kV structures from the new station into the existing Fermi switchyard. System Need: The 2018 Fermi 2 Nuclear Plant NPOA Transmission study demonstrated an inability of the system to adhere to ITC's transient voltage recovery criteria for all tested contingencies. In addition, voltages lower than the bus specific criteria at the Fermi 345kV bus (<0.984 pu) were identified in an ongoing MISO attachment Y study. This project is being proposed by ITC as a mitigation for that constraint. Estimated Cost: $60.0 M Expected ISD: 6/31/2023 15917 Project Type: & Baseline Reliability Project 15923 Target Appendix: A in MTEP19
15 Case: U-20471 Witness: Z. C. Heidemann Exhibit: S-9.1 ITCT: Target Appendix A Projects: Baseline Reliability Projects/Other-Reliability. Page 2 of 23 Michigan Public Service Commission
ITCT-15917 Fermi 345 kV SVC and ITCT-15923 SVC for Import at Fermi DTE Electric Company
Excerpt of MISO MTEP 2019 Projects ITCT-15923 SVC for Import at Fermi Cap Bank/SVC addition New T-Line New Transformer Rebuild T-Line Project Description: Station Equip Upgrade Sag Remediation New Station Increase the total SVC capability of the Fermi 345kV SVC project New Breaker (MTEP #15917) by 300 MVAR (for a total of +900 MVAR) for import capability into the LP of Michigan. Each SVC at Fermi would be a -50/+450 MVAR range SVC. The additional 300 MVAR would be all Mechanically Switched Capacitor Banks, controlled by the SVC controls. System Need: Import capability into the LP of Michigan. Estimated Cost:
$2.0 M Expected ISD: 6/31/2023
Project Type: 15917 Other - Reliability & 15923 Target Appendix: A in MTEP19
16 Case: U-20471 Witness: Z. C. Heidemann Exhibit: S-9.1 ITCT-15917 Fermi 345 kV Page 3 of 23 Michigan Public Service Commission MISO’s Project Justification: Analysis Summary (Steady-State) DTE Electric Company Excerpt of MISO MTEP 2019 Projects Voltage Violations Monitored Facility worst voltage violation in % Bus # Bus Name Base Base Case N-1 G-1 or N- N-1 N-1-1 No of kV or G-1 Volt. Volt. 1 Volt. P11 P2 P7 P3 P6 Cases Limit Limit Dev. Volt Volt. Volt Volt. Volt Volt. Volt Volt. Volt Volt. (%) Limit (%) Dev. Dev. Dev. Dev. Dev. 264621 19ENFPP 345 98.4 3 99 3.254 98.97 3.279 98.6 3.65 95.51 11 Analysis Summary: • MISO identified multiple open issues (voltage drop below voltage limit and/or voltage deviation limit stipulated in the current Fermi 2 Nuclear Power Plant Interface Requirement (“NPIR”) in single initiating events and double contingency events seen in multiple summer and shoulder cases • The proposed SVC project can mitigate the identified steady-state voltage violations • MISO may need to conduct transient stability analysis to confirm the effectiveness of the proposed SVC project to mitigate the voltage recovery issues identified in MISO’s SSR study and in ITCT’s 2018 NPOA study. • A recommendation TBD
17 Case: U-20471 Witness: Z. C. Heidemann Exhibit: S-9.1 Page 4 of 23 ITCT-15923 SVC for Import at Fermi Michigan Public Service Commission MISO’s Project Justification: Analysis Summary (Steady-State) DTE Electric Company Excerpt of MISO MTEP 2019 Projects
A decision about this project will be determined later based on the outcome of project # 15917
18 Case: U-20471 Witness: Z. C. Heidemann ITCT: Target Appendix A Projects: Baseline Reliability Projects. Exhibit: S-9.1 Page 5 of 23 ITCT-15751 Fitz 345/120 kV Transformer #2 Michigan Public Service Commission DTE Electric Company ITCT-16011 Lenox 2nd 345/120 kV Transformer Excerpt of MISO MTEP 2019 Projects
MTEP Project Name Description Expected Cost Cap Bank/SVC addition New T-Line ID ISD New Transformer Rebuild T-Line Station Equip Upgrade Sag Remediation Fitz 345/120 kV Install a second 345/120 kV 15751 12/31/2022 $7.3M New Station Transformer #2 transformer at Fitz. Lenox 2nd 345/120 Install a second 345/120 kV 16011 12/31/2022 $8.4M kV Transformer transformer at Lenox
System Need for 15751: 16011 “Transformer #1 at Fitz is projected to become overloaded for the shutdown plus contingency scenario involving the Belle River – Lenox 345 kV and Belle River – St. Clair 345 kV lines. The overloads 15751 were identified in the 2023 near-term peak load and 2028 long-term peak and off-peak load models with the Ludington units generating with flow to IESO across the Michigan-Ontario interface.”
System Need for 16011: “The 345/120kV transformer #301 at Lenox is projected to overload for a shutdown-plus-contingency that takes out the Belle River – St. Clair 345 kV and Jewell – Lenox 345 kV lines. The limiting element on this branch is the transformer, breaker and station equipment at Lenox 120 kV position “HD”.
20 MISO, using Ventyx Velocity Suite © 2014 Case: U-20471 Witness: Z. C. Heidemann Exhibit: S-9.1 Page 6 of 23
ITCT-15751 Fitz 345/120 kV Transformer #2 Michigan Public Service Commission DTE Electric Company MISO’s Project Justification: Analysis Summary Excerpt of MISO MTEP 2019 Projects
Thermal Violations: Before Detroit Cable Project and Caniff Station After Detroit Cable Project and Caniff Station Equipment Upgrade Equipment Upgrade Worst Loading (%) Worst Loading (%) Rating N-1 N-1-1 Count N-1 N-1-1 Count Monitored Facility (MVA) P0 P1 P11 P2 P7 P20 P3 P6 of OL P0 P1 P11 P2 P7 P20 P3 P6 of OL Cases Cases 264746 19FITZ 345 265228 19FITZ 120 1 739 103.4 3 103.5 3 Analysis Summary:
• MISO identified 5 open issues in double contingency events seen in 3 cases. No system adjustment found. • ITCT’s proposed project # 17164 (Romeo 345 kV) as alternative. If approved, it can mitigate the identified overloading. The scope of Romeo project is not yet finalized; please refer to ITCT’s presentation about it. • MISO recommends moving this project to Appendix A if Romeo project is not approved, otherwise, move this project to Appendix B.
21 Case: U-20471 Witness: Z. C. Heidemann Exhibit: S-9.1 Page 7 of 23
ITCT-16011 Lenox 2nd 345/120 kV Transformer Michigan Public Service Commission DTE Electric Company MISO’s Project Justification: Analysis Summary Excerpt of MISO MTEP 2019 Projects
Thermal Violations: Before Detroit Cable Project and Caniff Station After Detroit Cable Project and Caniff Station Equipment Upgrade Equipment Upgrade Worst Loading (%) Worst Loading (%) Rating N-1 N-1-1 Count N-1 N-1-1 Count Monitored Facility (MVA) P0 P1 P11 P2 P7 P20 P3 P6 of OL P0 P1 P11 P2 P7 P20 P3 P6 of OL Cases Cases 264888 19LENOX 345 264749 19LENOX1 120 1 739 98.7 1 98.7 1 Analysis Summary:
• MISO identified 2 marginal overload issues in double contingency events seen in one summer peak 2024 scenario the loading decreases to 95.5% in 2029 case. • ITCT’s proposed project # 17164 (Romeo 345 kV) as alternative. If approved, it can mitigate the identified overloading. The scope of Romeo project is not yet finalized; please refer to ITCT’s presentation about it. • MISO recommends moving this project to Appendix B; this project may be revisited in a future planning cycle if the load forecast changes and Romeo 345 kV Project is not approved.
22 Case: U-20471 Witness: Z. C. Heidemann Exhibit: S-9.1 ITCT: Target Appendix A Projects: Baseline Reliability Projects. Page 8 of 23 Michigan Public Service Commission DTE Electric Company ITCT-16017 Jewell – St. Clair #1 345 kV Rebuild Excerpt of MISO MTEP 2019 Projects
Project Description: Cap Bank/SVC addition New T-Line Rebuild T-Line Rebuild approximately 30.2 miles of the Jewell – St. Clair #1 345 kV New Transformer Station Equip Upgrade Sag Remediation line to 2-2156 ACSR. Also, upgrade station equipment at Jewell and New Station St. Clair 345 kV stations. System Need: The Jewell – St. Clair 345 kV circuit is projected to overload for several shutdown-plus-contingency and double-circuit tower contingencies that involve the loss of St. Clair – Stephens #2 345 kV and or Belle River – Lenox 345 kV lines. The overloaded facilities are the 2-954 ACSR conductor, sag limit, and equipment at Jewell and St. Clair 345 kV stations. Estimated Cost:
$77.8 M
Expected ISD: 16017 12/31/2027 Project Type: Baseline Reliability Target Appendix: A in MTEP19
26 MISO, using Ventyx Velocity Suite © 2014 Case: U-20471 Witness: Z. C. Heidemann Exhibit: S-9.1 Page 9 of 23
ITCT-16017 Jewell – St. Clair #1 345 kV Rebuild Michigan Public Service Commission DTE Electric Company MISO’s Project Justification: Analysis Summary Excerpt of MISO MTEP 2019 Projects
Thermal Violations: Worst Loading (%) Rating N-1 N-1-1 Monitored Facility in PSS-E Count (MVA) P0 P1 P11 P2 P7 P20 P3 P6 of OL Cases 264580 19JEWEL 345 264656 19STCPP 345 1 1328 123.8 121.7 7 Analysis Summary: • MISO identified multiple open issues in single-initiating and double contingency events seen in 7 cases. No system adjustment found. • ITCT’s proposed project # 17164 (Romeo 345 kV) as alternative. If approved, it can mitigate the identified overloading. The scope of Romeo project is not yet finalized; please refer to ITCT’s presentation about it. • MISO recommends moving this project to Appendix A if Romeo project is not approved, otherwise, move this project to Appendix B.
27 Case: U-20471 Witness: Z. C. Heidemann Exhibit: S-9.1 Page 10 of 23 ITCT: Target Appendix A Projects: Baseline Reliability Projects. Michigan Public Service Commission DTE Electric Company ITCT-16019 Belle River – Lenox 345 kV Rebuild Excerpt of MISO MTEP 2019 Projects
Project Description: Cap Bank/SVC addition New T-Line New Transformer Rebuild T-Line Rebuild approximately 19.6 miles of the Belle River – Lenox 345 kV Station Equip Upgrade Sag Remediation line to 2-T2 795 ACSR. Also, upgrade station equipment at Belle New Station River 345 kV. System Need: The Belle River – Lenox 345 kV circuit is projected to overload for numerous contingencies, including a T-1 that takes out Belle River – St. Clair 345 kV line. The overloaded facilities are the 2-954 ACSR conductor, sag limit, and station equipment at Belle River 345 kV.
Estimated Cost: 16019
$52.1 M Expected ISD: 12/31/2024 Project Type: Baseline Reliability Target Appendix: A in MTEP19
28 MISO, using Ventyx Velocity Suite © 2014 Case: U-20471 Witness: Z. C. Heidemann Exhibit: S-9.1 ITCT-16019 Belle River – Lenox 345 kV Rebuild Page 11 of 23 Michigan Public Service Commission DTE Electric Company MISO’s Project Justification: Analysis Summary Excerpt of MISO MTEP 2019 Projects
Thermal Violations: Worst Loading (%) Rating N-1 N-1-1 Monitored Facility in PSS-E Count (MVA) P0 P1 P11 P2 P7 P20 P3 P6 of OL Cases 264604 19BLRPP 345 264888 19LENOX 345 1 1517 102.3 116.4 102.5 98.0 125.4 5
Analysis Summary: • MISO identified multiple open issues in single-initiating and double contingency events seen in 5 cases. No system adjustment found. • ITCT’s proposed project # 17164 (Romeo 345 kV) as alternative. If approved, it can mitigate the identified overloading. The scope of Romeo project is not yet finalized; please refer to ITCT’s presentation about it. • MISO recommends moving this project to Appendix A if Romeo project is not approved, otherwise, move this project to Appendix B.
29 Case: U-20471 Witness: Z. C. Heidemann Exhibit: S-9.1 Page 12 of 23 ITCT: Target Appendix A Projects: Baseline Reliability Projects. Michigan Public Service Commission DTE Electric Company ITCT-16018 Jewell – Lenox 345 kV Rebuild Excerpt of MISO MTEP 2019 Projects
Project Description: Cap Bank/SVC addition New T-Line Rebuild approximately 8.3 miles of the Jewell – Lenox 345 kV line to New Transformer Rebuild T-Line Sag Remediation 2-1431 ACSR. Also, upgrade station equipment at Jewell and Lenox Station Equip Upgrade New Station 345 kV stations. System Need: The Jewell – Lenox 345 kV circuit is projected to overload for numerous contingencies, including a T-1 that takes out Belle River – St. Clair 345 kV line. The overloaded facilities are the 2-954 ACSR conductor, sag limit, and equipment at Jewell and Lenox 345 kV stations. Estimated Cost: 16018 $20.03 M Expected ISD: 12/31/2029 Project Type: Baseline Reliability Target Appendix: A in MTEP19
30 MISO, using Ventyx Velocity Suite © 2014 Case: U-20471 Witness: Z. C. Heidemann Exhibit: S-9.1 ITCT-16018 Jewell – Lenox 345 kV Rebuild Page 13 of 23 Michigan Public Service Commission DTE Electric Company MISO’s Project Justification: Analysis Summary Excerpt of MISO MTEP 2019 Projects
Thermal Violations: Worst Loading (%) Rating N-1 N-1-1 Monitored Facility in PSS-E Count (MVA) P0 P1 P11 P2 P7 P20 P3 P6 of OL Cases 264580 19JEWEL 345 264888 19LENOX 345 1 1277 95.3 110.4 95.0 123.2 5
Analysis Summary: • MISO identified multiple open issues in single-initiating and double contingency events seen in 5 cases. No system adjustment found. • ITCT’s proposed project # 17164 (Romeo 345 kV) as alternative. If approved, it can mitigate the identified overloading. The scope of Romeo project is not yet finalized; please refer to ITCT’s presentation about it. • MISO recommends moving this project to Appendix A if Romeo project is not approved, otherwise, move this project to Appendix B.
31 Case: U-20471 Witness: Z. C. Heidemann Exhibit: S-9.1 ITCT: Target Appendix A Projects: Baseline Reliability Projects. Page 14 of 23 Michigan Public Service Commission DTE Electric Company ITCT-15861 Bunce Creek – Fitz 120 kV Rebuild Excerpt of MISO MTEP 2019 Projects
Project Description: Cap Bank/SVC addition New T-Line The proposed solution is to rebuild ~12.5 miles of the Bunce Creek – Fitz New Transformer Rebuild T-Line 120 kV line that is comprised of 795 ACSR and six-wired 477 ACSR Station Equip Upgrade Sag Remediation conductor only utilizing 2156 ACSS conductor and reterminate the line from New Station Bus 101 to Bus 104 at Bunce Creek. System Need: The Bunce Creek – Fitz 120 kV line is projected to become overloaded for numerous contingency types with the most severe loadings caused by shutdown plus contingencies involving the Belle River – St. Clair 345 kV line plus one of a number of other transmission facilities. The overloads were identified in the 2023 and 2028 peak load models with the Ludington units generating and the flow is mainly to IESO across the Michigan-Ontario interface. 15861 Estimated Cost: $18.7 M Expected ISD: 12/31/2022 Project Type: Baseline Reliability Target Appendix: A in MTEP19
32 MISO, using Ventyx Velocity Suite © 2014 Case: U-20471 Witness: Z. C. Heidemann Exhibit: S-9.1 ITCT-15861 Bunce Creek – Fitz 120 kV Rebuild Page 15 of 23 Michigan Public Service Commission DTE Electric Company MISO’s Project Justification: Analysis Summary Excerpt of MISO MTEP 2019 Projects
Thermal Violations: Worst Loading (%) Rating N-1 N-1-1 Monitored Facility in PSS-E Count (MVA) P0 P1 P11 P2 P7 P20 P3 P6 of OL Cases 264536 19BUNCE1 120 265228 19FITZ 120 1 314 130.3 6 Analysis Summary: • MISO identified multiple open issues in double contingency events seen in 6 cases. No system adjustment found. • ITCT’s proposed project # 17164 (Romeo 345 kV) as alternative. If approved, it can mitigate the identified overloading. The scope of Romeo project is not yet finalized; please refer to ITCT’s presentation about it. • MISO recommends moving this project to Appendix A if Romeo project is not approved, otherwise, move this project to Appendix B.
33 Case: U-20471 Witness: Z. C. Heidemann Exhibit: S-9.1 Page 16 of 23
ITCT: Target Appendix A Projects: Baseline Reliability Projects. Michigan Public Service Commission DTE Electric Company 23 line rebuild/reconductor projects below $10 million (1/4) Excerpt of MISO MTEP 2019 Projects
ID Project Name Description / ITCT’s Justification ISD Cost Cap Bank/SVC addition New T-Line Lee – Lake Huron Pumping Rebuild 5.4 miles utilizing 954 ACSR conductor New Transformer Rebuild T-Line 15843 12/31/2027 $7.1M 1 Tap 120 kV Rebuild and upgrade the 266 ACSR line entrance at Lee. Station Equip Upgrade Sag Remediation Adams – Burns 2 120 kV Rebuild 0.3 mile of 795 ACSR conductor to 1431 New Station 15862 12/31/2027 $432k Rebuild ACSR Rebuild 1.13 miles of the Belle River – St. Claire Belle River – St. Clair 345 345 kV line using 2-T2 795 ACSR conductor. 16021 12/31/2023 $7.7M kV Rebuild Also, upgrade station equipment at Belle River and St. Clair 345 kV stations. System Need for 15843: 15843 “The Lee – Lake Huron Pumping 1 Tap 120 kV section of the Lee – Menlo 120 kV line is projected to become marginally overloaded in the five year out models for shutdown plus contingencies involving either the Belle River – St. Clair 345 kV line. This line is significantly overloaded in the 10 year out models. The overloads were identified peak and off-peak load models with the Ludington units generating and flow out of ITCT across the Michigan-Ontario 15862 interface.”
System Need for 15862: “The 120 kV section between Adams and Burns 2 tap is projected to overload for various contingencies, including T-1, for the 2, 5, and 10 year cases in the 2018 assessment. The overloaded facility is the 795 ACSR conductor and the sag limit on this section.”
System Need for 16021: The Belle River – St. Claire 345 kV circuit is projected to be heavily overloaded for numerous contingencies, including basecase, G-1, and T-1 contingencies. The overloaded facilities are all the conductors on this circuit and most of the station equipment at Belle River 345 kV and 16021 St. Claire 345 kV stations, including 345 kV breakers.
39 MISO, using Ventyx Velocity Suite © 2014 Case: U-20471 Witness: Z. C. Heidemann ITCT-15843 Lee – Lake Huron Pumping 1 Tap 120 kV Rebuild, Exhibit: S-9.1 ITCT-15862 Adams – Burns 2 120 kV Rebuild, and Page 17 of 23 Michigan Public Service Commission ITCT-16021 Belle River – St. Clair 345 kV Rebuild DTE Electric Company Excerpt of MISO MTEP 2019 Projects MISO’s Project Justification: Analysis Summary
Worst Loading (%) Max loading Rating N-1 N-1-1 Preliminary Proj. ID MTEP19 Project Name Monitored Facility in PSS-E Count with Thermal Violations and Analysis Summary (MVA) Recommendtion P0 P1 P11 P2 P7 P20 P3 P6 of OL Romeo 345 Cases kV project
-MISO identified 8 open issues double contingency events seen in 6 cases. No system adjustment found. -ITCT’s proposed project # 17164 (Romeo 345 kV) as Lee – Lake Huron Pumping 264588 19LEE1 120 264732 Move to alternative. If approved, it can mitigate the identified 15843 128 94.9 109.6 5 <90% 1 Tap 120 kV Rebuild 19LHPMPT 120 1 Appendix A overloading. -MISO recommends moving this project to Appendix A if Romeo project is not approved, otherwise, move this project to Appendix B. -MISO identified mulitple open issues double Adams – Burns 2 120 kV 264520 19ADAMS 120 264556 Move to contingency events seen in 8 cases. No system 15862 289 93.4 97.4 90.2 123.0 8 N/A Rebuild 19BURNS2 120 1 Appendix A adjustment found. -MISO recommends moving this project to Appendix A -MISO identified 7 open issues double contingency events seen in 3 cases. No system adjustment found. -ITCT’s proposed project # 17164 (Romeo 345 kV) as Belle River – St. Clair 345 264604 19BLRPP 345 264656 Move to alternative. If approved, it can mitigate the identified 16021 1983 90.4 91.8 110.8 3 <90% kV Rebuild 19STCPP 345 1 Appendix A overloading. -MISO recommends moving this project to Appendix A if Romeo project is not approved, otherwise, move this project to Appendix B.
For more details, please refer to Project Justification Results in Appendix 2
40 Case: U-20471 Witness: Z. C. Heidemann Exhibit: S-9.1 Page 18 of 23
ITCT: Target Appendix A Projects Baseline Reliability Projects. Michigan Public Service Commission DTE Electric Company 23 line rebuild/reconductor projects below $10 million (2/4) Excerpt of MISO MTEP 2019 Projects
MTE Project Name Description Exp. Cost P ID ISD Cap Bank/SVC addition New T-Line New Transformer Rebuild T-Line Northwest - Southfield Rebuild 0.13 mile of 477 ACSR conductor to 1431. Sag Remediation 3143 12/31/2029 $172k Station Equip Upgrade 120 kV Upgrade the station equipment at Northwest 120 kV. New Station Bismarck-Stephens #2 Rebuild 3.61 miles of 795 ACSS and 954 ACSR 15883 12/31/2027 $4.8M 120 kV Rebuild conductors to 2156 ACSR. 16016 Rebuild 4.8 miles of 477 ACSR X2 and 1431 ACSR 16066 15883 Pontiac - Walton 120 kV 15890 15890 conductors using 2156 ACSR. Upgrade station 12/31/2025 $6.4M Rebuild 15963 equipment at Pontiac 120kV and Walton 120 kV. Rebuild 4.33 miles using 1431 ACSR conductor with Hager - Sunset 120 kV 15959 single circuit steel structures and replace equipment 12/31/2026 $9.3M Rebuild at Hager Pos HD. Rebuild 2.6 miles of 954 ACSR conductor to 2156 16015 Quaker-Drexel Tap 120 15963 ACSR. Upgrade the station equipment at Quaker 12/31/2028 $2.7M kV Rebuild 120 kV. Rebuild 0.259 mile using 2156 ACSR conductor with Sunset - Quaker 120 kV 16015 single circuit steel structures and replace equipment 12/31/2025 $482k Rebuild 15959 16068 at Quaker Pos HD and Sunset Pos HN. Rebuild 0.797 using 2156 ACSR conductor with Pontiac - Joslyn 120 kV 16016 single circuit steel structures and replace t 12/31/2028 $1.2M Rebuild equipment at Joslyn Pos HI. Pontiac – Colorado Tap Rebuild 1.9 miles of 954 ACSR conductor to 1431 16066 12/31/2028 $2.5M 120 kV Rebuild ACSR and upgrade equipment at Pontiac 120 kV. Benson – Stephens 120 Rebuild 1.17 miles of 795 ACSR conductor to 1431 3143 16068 12/31/2028 $1.6M kV Rebuild ACSR and upgrade equipment at Stephens 120 kV. System Need for these project, provided by ITCT, can be found in Appendix 1
41 MISO, using Ventyx Velocity Suite © 2014 Case: U-20471 ITCT-16016 Pontiac - Joslyn 120 kV Rebuild, Witness: Z. C. Heidemann Exhibit: S-9.1 ITCT-16066 Pontiac – Colorado Tap 120 kV Rebuild, and Page 19 of 23 Michigan Public Service Commission ITCT-16068 Benson – Stephens 120 kV Rebuild DTE Electric Company MISO’s Project Justification: Analysis Summary Excerpt of MISO MTEP 2019 Projects
Worst Loading (%) Max loading Preliminary MTEP19 Proj. Monitored Facility Rating N-1 N-1-1 with Recommen Project Thermal Violations and Analysis Summary ID in PSS-E (MVA) Count of Romeo dtion Name P0 P1 P11 P2 P7 P20 P3 P6 OL Cases 345 kV project -MISO identified 8 open issues double contingency events seen in 2 cases. No system adjustment found. Pontiac - 264634 19PONTC1 Move to -ITCT’s proposed project # 17164 (Romeo 345 kV) as alternative. If approved, 16016 Joslyn 120 120 264794 375 97.0 100.4 2 <90% Appendix it can mitigate the identified overloading. kV Rebuild 19JSLYN 120 1 A -MISO recommends moving this project to Appendix A if Romeo project is not approved, otherwise, move this project to Appendix B. - MISO identified that this line can get loaded at up to 98% of its emergency rating due to double contingency events seen in 3 case. No system Pontiac – adjustment found. 264903 19CLRDT1 Move to Colorado - ITCT’s proposed project # 17164 (Romeo 345 kV) as alternative, if approved, 16066 120 264940 289 90.7 97.4 2 <90% Appendix Tap 120 kV can reduce the identified loading to below 90% 19PONTC2 120 1 B Rebuild - MISO recommends moving this project to Appendix B. This project may be revisited in a future planning cycle if the load forecast changes and Romeo project not approved -MISO identified 8 open issues double contingency events seen in 7 cases. Benson – No system adjustment found. 264535 19BENSN Move to Stephens -ITCT’s proposed project # 17164 (Romeo 345 kV) as alternative. If approved, 16068 120 264663 248 91.1 92.0 93.6 115.4 7 <90% Appendix 120 kV it can mitigate the identified overloading. 19STEPH 120 1 A Rebuild -MISO recommends moving this project to Appendix A if Romeo project is not approved, otherwise, move this project to Appendix B.
For more details, please refer to Project Justification Results in Appendix 2
44 Case: U-20471 Witness: Z. C. Heidemann Exhibit: S-9.1 Page 20 of 23
ITCT: Target Appendix A Projects: Baseline Reliability Projects. Michigan Public Service Commission DTE Electric Company 14 sag remediation projects (2/3) Excerpt of MISO MTEP 2019 Projects
MTEP Project Name Description Exp. Cost Cap Bank/SVC addition New T-Line ID ISD New Transformer Rebuild T-Line Sag Remediation Remediate the sag limit on the entire ~29.9 Station Equip Upgrade New Station mile-long length of 954 ACSR conductor of Bennett - Greenwood 120 the Bennett – Greenwood 120 kV line to at 15842 12/31/2022 $138k 15842 kV Sag Remediation least the planned target summer normal/summer emergency rating of 170 MVA/816 Amps. The proposed solution is to remediate the sag limit on the Burns 2 Tap – Fitz 120 kV 16013 section of the Burns 2 Tap – Fitz 120 kV Adams – Fitz 120 kV line to increase its 15844 12/31/2022 $198k Sag Remediation summer emergency rating to a minimum of 377 MVA/1814 Amps. The in-service date of the proposed project 15844 is December 31, 2022. Raise the sag limit on the Giddings – Giddings - Colorado 120 15885 Colorado 120 kV section to at least 272 12/31/2021 $222k kV Sag Remediation MVA. St. Clair - Stephens #2 345 Completely remove sag limit on the St. Clair 15885 kV Sag Remediation and – Stephens #2 345kV to conductor limit and 16006 12/31/2021 $2.8M Station Equipment replace station equipment at Stephens and Upgrade St. Clair substations. 16006 Raise the sag limit on the Thetford – Jewell Thetford – Jewell 345 kV 345 kV line to at least 1537 MVA and 16013 12/31/2021 $5.5M Sag Remediation upgrade equipment at Thetford 345 kV station. All project justifications provided by ITCT can be found in Appendix 1
55 MISO, using Ventyx Velocity Suite © 2014 Case: U-20471 ITCT-15842 Bennett - Greenwood 120 kV Sag Remediation Witness: Z. C. Heidemann Exhibit: S-9.1 ITCT-15844 Burns 2 Tap – Fitz 120 kV Sag Remediation Page 21 of 23 Michigan Public Service Commission ITCT-15885 Giddings - Colorado 120 kV Sag Remediation DTE Electric Company MISO’s Project Justification: Analysis Summary Excerpt of MISO MTEP 2019 Projects
Worst Loading (%) Preliminary MTEP19 Project Monitored Facility in Rating Proj. ID N-1 N-1-1 Count Recommendtion Thermal Violations and Analysis Summary Name PSS-E (MVA) P0 P1 P11 P2 P7 P20 P3 P6 of OL Cases
Bennett - 264567 19GRNEC 120 Move to Appendix -No thermal violations identified; loading < 90% 15842 Greenwood 120 kV 144 0 264721 19BENET 120 1 B -Move to Appendix B Sag Remediation - MISO identified multiple open issues in double Burns 2 Tap – Fitz - Loading decrease if Romeo 345 kV project gets 264556 19BURNS2 120 Move to Appendix 15844 120 kV Sag 339 110 0 approved. 265228 19FITZ 120 1 A Remediation - MISO recommends moving this project to Appendix A if Romeo project is not approved. - MISO identified multiple open issues in double Giddings - Colorado 264833 19GIDDINGTP1 Move to Appendix contingency events seen in 7 cases. No system adjustment 15885 120 kV Sag 120 264904 19CLRDT2 212 95.9 104.8 3 A found. Remediation 120 1 - MISO recommends moving this project to Appendix A
For more details, please refer to Project Justification Results in Appendix 2
56 Case: U-20471 Witness: Z. C. Heidemann Exhibit: S-9.1 Page 22 of 23 ITCT: Target Appendix A Projects: Baseline Reliability Projects. Michigan Public Service Commission DTE Electric Company 16 terminal/station equipment upgrade (2/2) Excerpt of MISO MTEP 2019 Projects
MTEP Project Name Description Exp. Cost Cap Bank/SVC addition New T-Line ID ISD New Transformer Rebuild T-Line Sag Remediation Bismarck 120 kV – Station Equip Upgrade Upgrade the station equipment at Bismarck 15882 Upgrade JC Station 12/31/2021 $25k New Station 120 kV position “JC”. Equipment Bloomfield - Hood Station Upgrade the station equipment at 15884 12/31/2021 $25k Equipment Upgrade Bloomfield 120 kV position “HE”. Evergreen 120 kV – Upgrade the station equipment at 15954 Upgrade HG Station 12/31/2021 $75k 16007 Evergreen 120 kV position “HG”. Equipment Northeast 120 kV Upgrade the Northeast 120 kV reactor at 16009 12/31/2022 $1.2M Upgrade KD Reactor position “KD”. Pontiac 120 kV – Upgrade Upgrade the station equipment at Pontiac 16007 HC & GQ Station 12/31/2021 $40k 120 kV positions “HC” and “GQ”. Equipment Replace the existing Northeast 120 kV 15884 15882 Northeast 120 kV Breaker circuit breaker HE with a circuit breaker 15739 12/31/2020 $254k HE Replacement capable of interrupting at least 50 kA (short circuit limitations). 15739 15954 16009
System Need for these project, provided by ITCT, can be found in Appendix 1
66 MISO, using Ventyx Velocity Suite © 2014 Case: U-20471 ITCT-15739 Northeast 120 kV Breaker HE Replacement Witness: Z. C. Heidemann Exhibit: S-9.1 ITCT-16009 Northeast 120 kV Upgrade KD Reactor Page 23 of 23 Michigan Public Service Commission ITCT-16007 Pontiac 120 kV – Upgrade HC & GQ Station Equipment DTE Electric Company MISO’s Project Justification: Analysis Summary Excerpt of MISO MTEP 2019 Projects
Worst Loading (%) Max loading Preliminary MTEP19 Project Monitored Facility in Rating with Romeo Recommendt Proj. ID N-1 N-1-1 Thermal Violations and Analysis Summary Name PSS-E (MVA) Count of 345 kV ion P0 P1 P11 P2 P7 P20 P3 P6 OL Cases project
- MISO identified that this line can get loaded at up to 97% of its 264635 19PONTC emergency rating due to double contingency events seen in 2 345 264634 624 97.1 2 <90% Pontiac 120 kV – 19PONTC1 120 1 case. No system adjustment found. Upgrade HC & Move to - ITCT’s proposed project # 17164 (Romeo 345 kV) as 16007 GQ Station Appendix A alternative. If approved, it can mitigate the identified 264635 19PONTC Equipment overloading. 345 264638 624 93.8 1 <90% 19PONTC3 120 3 - Considering the low cost, MISO recommends moving this project to Appendix A (jf Romeo project is not approved). -MISO identified multiple open issues in single-initiating and double contingency events seen in 6 cases. No system Northeast 120 kV 264623 19NEASTS adjustment found. Move to 16009 Upgrade KD 120 264625 19NEAST 170 111.0 6 -ITCT’s proposed project # 15981 (DCP) as alternative. If Appendix B Reactor 120 2 approved, it can mitigate the identified overloading. -MISO recommends moving this project to Appendix A if DCP is not approved, otherwise, move this project to Appendix B.
Northeast 120 kV - ITCT conducted short circuit analysis and identified the need to Move to Breaker HE replace the existing Northeast 120 kV circuit breaker HE with a circuit 15739 Short circuit analysis conducted by ITCT Appendix A Replacement breaker capable of interrupting at least 50 kA -MISO recommends moving this project to Appendix A
For more details, please refer to Project Justification Results in Appendix 2 68 S T A T E OF M I C H I G A N
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
* * * *
In the matter of the Application of ) DTE ELECTRIC COMPANY for ) approval of its Integrated Resource Plan ) Case No. U-20471 pursuant to MCL 460.6t, and for other relief ) )
QUALIFICATIONS AND DIRECT TESTIMONY OF
CODY S. MATTHEWS
MICHIGAN PUBLIC SERVICE COMMISSION
August 21, 2019 QUALIFICATIONS OF CODY S. MATTHEWS CASE NUMBER U-20471 PART I
1 Q. Please state your name and business address.
2 A. My name is Cody S. Matthews. My business address is 7109 W. Saginaw Hwy.,
3 Lansing, Michigan 48917.
4 Q. By whom are you employed and in what capacity?
5 A. I am employed by the Michigan Public Service Commission (MPSC or
6 Commission) as a Public Utilities Engineer Specialist in the Renewable Energy
7 Section of the Energy Resources Division.
8 Q. Please describe your educational background.
9 A. I earned a Bachelor of Science degree in Engineering from Michigan State
10 University in 2014.
11 Q. Would you please describe your professional background?
12 A. In 2014 I began working for the MPSC in the Smart Grid Section. I reviewed
13 sections of utility rate case filings that pertained to smart grid, advanced metering
14 infrastructure (AMI), demand response (DR), information technology (IT), and
15 cyber-security. In 2019 I was transferred into the Renewable Energy Section and
16 am focusing on electric provider’s Renewable Energy Plan and reconciliation
17 filings, electric utility interconnection, integrated resource plan filings, and
18 activities related to the Public Utility Regulatory Policies Act (PURPA) of 1978.
19 Q. Have you received any work-related training since starting your employment with
20 the MPSC?
21 A. Yes. I have attended several programs hosted by the Institute of Public Utilities at
22 Michigan State University including Introduction to Public Utility Regulation, the
23 full two-week fundamental and intermediate course, and the Advanced
1 QUALIFICATIONS OF CODY S. MATTHEWS CASE NUMBER U-20471 PART I
1 Regulatory Studies Program, as well as the Michigan Forum on Economic
2 Regulatory Policy. Additionally, I have participated in several conferences both in
3 person and online concerning cyber security, IEEE 1547, and other renewable
4 energy related topics.
5 Q. Have you previously testified before the Commission?
6 A. Yes, I have testified in the following cases:
7 - No. U-17767, DTE Electric Company’s general electric rate case.
8 - No. U-17999, DTE Gas Company’s gas rate case.
9 - No. U-18014, DTE Electric Company’s general electric rate case.
10 - No. U-18255, DTE Electric Company’s general electric rate case.
11 - No. U-18370, Indiana Michigan Power Company’s general electric rate case.
12 - No. U-18999, DTE Gas Company’s gas rate case.
13 - No. U-20137, Indiana Michigan Power Company’s opt-out tariff case.
14 - No. U-20165, Consumers Energy Integrated Resource Plan
15 - No. U-20162, DTE Electric Company’s general electric rate case.
16 - No. U-18091, DTE Electric Company’s avoided cost case.
2
DIRECT TESTIMONY OF CODY S. MATTHEWS CASE NUMBER U-20471 PART II
1 Q. What is the purpose of your testimony in this proceeding?
2 A. The purpose of my testimony is to present the Michigan Public Service
3 Commission’s Staff (Staff) recommendations regarding energy storage, renewable
4 energy modeling inputs, future renewable energy procurement, and the Public
5 Utility Regulatory Policies Act of 1978 (PURPA), in DTE Electric Company’s
6 (DTE or the Company) request for approval of its Integrated Resource Plan (IRP).
7 Q. Are you sponsoring any exhibits in this proceeding?
8 A. No.
9 Renewable Energy Modeling Inputs
10 Q. Has Staff analyzed the renewable energy modeling assumptions within the
11 Company’s IRP?
12 A. Yes. Staff has reviewed the modeling inputs assumptions for wind and solar based
13 on the 2018 National Renewable Energy Laboratory (NREL) Annual Technology
14 Base (ATB).
15 Q. Does Staff believe the renewable energy modeling inputs the Company used
16 within its IRP are reasonable?
17 A. Staff believes that developing the Company’s model based on the NREL ATB is
18 reasonable.
19 Q. Does Staff have any concerns about the Company’s modeling of its starting point
20 renewables?
21 A. Based on Staff witness Doherty’s exhibit S-6.2, while the company did force
22 certain chosen renewables, both qualitatively and quantitatively for its starting
23 points, when the Company was asked through discovery to update the model
3
DIRECT TESTIMONY OF CODY S. MATTHEWS CASE NUMBER U-20471 PART II
1 allowing starting point renewables to be optimized there wasn’t a substantial cost
2 difference given the magnitude of the overall spend. Staff does note that there is a
3 cost difference, moving to a generation fleet that favors renewables and promotes
4 generation diversity to lower the risk the ratepayers face when relying heavily on
5 natural gas. While Staff finds the Company’s starting point renewables reasonable
6 and prudent in this case, the nature of plans is that they may change. Thus, it is
7 important that in future IRPs the Company continue to analyze and update this
8 plan, as well as support and demonstrate the reasonableness and prudence of the
9 updated plan. In its current IRP, the Company chose to make these renewables its
10 starting point by forcing them into the models; in future IRPs, the Company
11 should not force in these renewables and let the models truly optimize and select
12 the most economic generation.
13 Energy Storage
14 Q. Has Staff analyzed the energy storage modeling inputs within the Company’s
15 IRP?
16 A. Yes. Staff was able to review the modeling inputs based on Lazard’s Levelized
17 Cost of Storage Analysis 4.0 and the NREL ATB.
18 Q. Does Staff believe the energy storage modeling assumptions within the IRP are
19 reasonable and meet its requirement to better evaluate storage options as outlined
20 in the Commission’s April 27, 2018 Order in U-18419?
21 A. Yes, the Company’s method of developing energy storage modeling assumptions
22 was reasonable.
4 DIRECT TESTIMONY OF CODY S. MATTHEWS CASE NUMBER U-20471 PART II
1 Q. Does Staff have any recommendations for future considerations of energy
2 storage?
3 A. Yes, in this case, the Company relied on the Staff’s Demand Response Potential
4 Study to determine that energy storage in demand response is not cost
5 competitive1 and was therefore not selected in DTE’s economic screening
6 process. While the demand response potential study did determine that storage
7 was not cost effective at that time, the potential study was completed in 2017 and
8 since then, the cost of energy storage has continued to decrease. Based on this
9 information and consistent with the potential study, Staff believes the Company
10 should continue to investigate the use of storage in demand response programs
11 and develop storage-based programs as the costs continue to fall and the
12 efficiency of storage continues to increase year over year. The approval of the
13 pilot costs should be done once the study is developed as stated by Staff witness
14 David Isakson.
15 Q. Does Staff have any further recommendations?
16 A. Yes. The Company is planning to increase its renewable energy generation from
17 the mandated 15%, up to the Company’s own 50% clean energy goal with at least
18 half coming from renewable energy2, to meet its own carbon reduction goal of
19 80% carbon reduction by 20403. This clean energy goal is coupled with the
20 Company’s estimate that the voluntary green pricing program (VGP) may grow
1 Farrell direct testimony, p 16. 2 Schroeder direct testimony, p 7. 3 Pfeuffer direct testimony, p 13. 5 DIRECT TESTIMONY OF CODY S. MATTHEWS CASE NUMBER U-20471 PART II
1 up to 715 MW by 20244. This increase of intermittent resources with the
2 anticipated loss of spinning reserves in DTE’s current generation mix may
3 potentially impact the reliability and power quality of DTE’s system. Spinning
4 reserves from combustion-based generation are available in short notice for
5 reaction to voltage and frequency upsets in the system. If the Company plans to
6 shift its generation mix to include a much larger portion of renewables, the
7 Company should continue to analyze energy storage to address potential
8 reliability and power quality issues associated with intermittent resources.
9 Company witness Chang cites Ludington Pumped Hydro, an existing
10 energy storage facility in the Company’s generation mix, as “a significant source
11 of flexibility in Zone 7 and its ability to respond to steep ramps in the net load,
12 support peak requirements, and reduce the volume of renewable generation
13 curtailments will become increasingly valuable as renewable generation in
14 Michigan increases.”5 With the substantial changes to DTE’s current generation
15 mix, it would be prudent to look into the addition of similar resources, especially
16 with the resource adequacy challenges cited in DTE’s Brattle report.6 Staff
17 believes that energy storage, both in conjunction with renewable resources and as
18 a method of managing the resource adequacy issues addressed in Company
19 Exhibit A-47, should be further studied before the Company’s next IRP.
4 Pfeuffer direct testimony, p 15. 5 Witness Chang, p. 8. 6 Company exhibit A-47 6 DIRECT TESTIMONY OF CODY S. MATTHEWS CASE NUMBER U-20471 PART II
1 Future Renewable Procurement
2 Q. Does DTE’s proposal describe the ownership options for future renewable energy
3 procurement?
4 A. No, the Company does not describe the ownership options for its future renewable
5 energy procurement.
6 Q. Does Staff have any recommendations concerning the Company’s future
7 renewable energy procurement?
8 A. Yes. In the Commission’s July 18, 2019 Order in case. No. U-18232, the Commission 9 commented on that fact that the Company did not support its renewable energy plan to rely
10 exclusively on company-owned generation and described why the Company should explore 11 Power Purchase Agreements (PPA) through Requests for Proposal (RFP) 7:: 12 With respect to the company-owned wind generation that is projected to be built farther out in the
13 plan period and will thus, not qualify for the full PTC, the Commission finds that there is
14 insufficient evidence on the record to approve this portion of the proposed REP at this time. The 15 company has demonstrated the savings that will accompany projects qualifying for 100% of the 16 PTC, but the absence of those savings for company-owned generation raises questions for the
17 Commission as to whether company-owned generation can be cost-effective when compared 18 with alternative sources of generation. DTE Electric is correct that MCL 460.1001 and MCL 19 460.1022 do not explicitly require a utility to include alternatives to company-owned generation 20 in its REPs. However, the Commission is required to determine whether a plan is “prudent” or 21 cost effective and the Commission finds that in this instance, where the Commission is not 22 convinced by the record that the later planned wind projects are cost-effective, an analysis of 23 alternatives like third-party PPAs would have proven helpful in coming to a determination. 24 [7/18/2019 Order, Case No. U-18232, p. 23]
7 Case No. U-18232 7/18/19 Order p 21. 7 DIRECT TESTIMONY OF CODY S. MATTHEWS CASE NUMBER U-20471 PART II
1 The Commission went on to say that the renewable generation assets that do not
2 qualify for 100% of the federal production tax credit proposed by the Company
3 will be addressed in its IRP, stating:
4 By statute, the IRP is intended to be a comprehensive look at 5 supply-side resources needed to meet a utility’s additional 6 generation capacity needs. See, MCL 460.6t(1)(f). As such, the 7 Commission will examine DTE Electric’s proposed renewable 8 generation not approved in this order in the IRP, enabling the 9 Commission to look at the proposed projects along with other 10 renewable technologies with the aid of a fully developed and more 11 robust evidentiary record. The Commission notes the importance 12 of comparing technologies as the renewable energy technology 13 landscape is quickly evolving and the company should consider 14 expanding the inputs to its bidding parameters to be inclusive of 15 these changes. [Id., p. 25]
16 Based on the Commission’s Order with respect to the Company’s renewable
17 energy plan case and consistent with Consumers Energy’s IRP settlement8, Staff
18 believes the future renewable energy procurement should be split 50/50 between
19 company-owned projects and PPAs and completed through a resource
20 procurement process that includes multiple procurement and resource options.
21 The Company should follow the competitive bidding guidelines as discussed in
22 Staff witness Paul Proudfoot and Sarah Mullkoff’s direct testimony.
23 PURPA
24 Q. Did DTE discuss PURPA in this IRP filing?
8 Case No. U-20165 6/7/19 Order Exhibit A, p 8 8 DIRECT TESTIMONY OF CODY S. MATTHEWS CASE NUMBER U-20471 PART II
1 A. Yes. First, Company witness Laura Mikulan states for all scenarios in the
2 modeling portion, the starting point assumes that all existing PURPA contracts are
3 renewed which is consistent with the Commission’s April 27, 2018 Order in Case
4 No. U-18419. Witness Mikulan added that no sensitivities pertaining to PURPA
5 were run based on the Company having no capacity need until 2029. Updated
6 PURPA avoided costs for DTE are pending a determination in Case No. U-18091.
7 Second, Company witness Don Stanczak recommends a five-year outlook as the
8 appropriate timeframe for determining a capacity need under PURPA. Witness
9 Stanczak also recommends lowering the standard offer threshold for PURPA
10 contracts to 150 kW.
11 Q. What does Staff recommend?
12 A. In Case No. U-18091, Staff made several recommendations for DTE with regard
13 to PURPA and continues to support those recommendations. Staff recommends
14 that DTE abide by the decisions that the Commission upheld in Case No. U-
15 18091 before it was remanded. These decisions include: the qualifying facility
16 (QF) retains ownership of any RECs from the renewable generation; the standard
17 offer contract shall be available at 5, 10, 15, or 20 years at the QF’s choice; and
18 the size cap for the standard offer will be 550 kW. Staff also supports DTE’s
19 five-year planning horizon for determining a capacity need under PURPA.
20 In Case No. U-18091, Staff supported the Commission’s order to base avoided
21 cost inputs on the actual data from the Blue Water Energy Center natural gas
22 combined cycle plant, approved in Case No. U-18419. Staff added optional
9 DIRECT TESTIMONY OF CODY S. MATTHEWS CASE NUMBER U-20471 PART II
1 alternatives for the Commission to consider when calculating the avoided costs
2 for DTE.
3 Staff also recommended, in Case No. U-18091, that DTE include a PURPA
4 review in its next IRP filing. DTE forecasts no capacity need for the planning
5 period included in the IRP. If DTE is found to have a capacity need, an interim
6 PURPA review can be ordered. If not, the next IRP filed by DTE should include
7 a PURPA review. In order to comply with PURPA § 292.302 (2), Staff
8 recommended that the Commission direct DTE to file biennial avoided cost
9 updates to the U-18091 docket. Staff maintains its positions filed in Case No. U-
10 18091 on remand and awaits the Commission order in the remanded case.
11 Q. Does this conclude your testimony?
12 A. Yes.
10 S T A T E OF M I C H I G A N
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
* * * *
In the matter of the Application of ) DTE ELECTRIC COMPANY for ) approval of its Integrated Resource Plan ) Case No. U-20471 pursuant to MCL 460.6t, and for other relief ) ______)
QUALIFICATIONS AND DIRECT TESTIMONY OF
TAYLER BECKER
MICHIGAN PUBLIC SERVICE COMMISSION
August 21, 2019 QUALIFICATIONS OF TAYLER BECKER CASE NUMBER U-20471 PART I
1 Q. Please state your full name and business address for the record.
2 A. My name is Tayler Becker, and my business address is the Michigan Public
3 Service Commission’s (Commission) office at 7109 West Saginaw Highway,
4 Lansing, Michigan 48917.
5 Q. By whom are you employed and in what capacity?
6 A. I am employed by the Michigan Public Service Commission as a Public Utilities
7 Engineer in the Electric Operations Section. As a Public Utilities Engineer, one
8 of my responsibilities is to perform analysis of electric capital and operations and
9 maintenance investment plans and evaluate the reasonableness and prudency of
10 including these investments in customer rates.
11 Q. Would you please outline your educational background?
12 A. I earned a Bachelor of Science degree in Engineering Technology from Lawrence
13 Technological University in 2012. Since joining the Commission in 2012, I have
14 participated in the 2013 Michigan Forum on Economic Regulatory Policy, the
15 2018 Wisconsin Public Utility Institute’s Energy Utility Course, the 2019 IPU
16 Power Grid School through Michigan State University, and the 2019 IPU
17 Intermediate Course through Michigan State University. I have also completed
18 10 Pipeline and Hazardous Materials Safety Administration (PHMSA) Inspector
19 Training and Qualification lead courses as a Gas Safety Engineer. The PHMSA
20 courses for which I have completed are as follows:
21 PHMSA-PL1250 (Safety Evaluation of Gas Pipeline Systems)
22 PHMSA-PL1255 (Gas Pressure Regulation and Overpressure Protection)
23 PHMSA-PL1310 (Plastic and Composite Materials)
1
QUALIFICATIONS OF TAYLER BECKER CASE NUMBER U-20471 PART I
1 PHMSA-PL3242 (Welding and Welding Inspection of Pipeline Materials)
2 PHMSA-PL3256 (Pipeline Failure Investigation Techniques)
3 PHMSA-PL3293 (Corrosion Control of Pipeline Systems)
4 PHMSA-PL3257 (Pipeline Safety Regulation Application and Compliance
5 Procedures)
6 PHMSA-PL3291 (Fundamentals of SCADA System Technology and Operation)
7 PHMSA-PL3292 (Safety Evaluation of Inline Inspection (ILI)/Pigging Programs)
8 PHMSA-PL3355 (Safety Evaluation of Control Room Management Programs)
9 Q. Would you please outline your professional experience?
10 A. In May 2010, I began working at the Michigan Department of Transportation as
11 an Engineering Intern in the Central Soils Laboratory and, later, the Load-Rating
12 Program. As an intern, I performed many job functions including but not limited
13 to subsurface investigations, quality control and asset management functions,
14 structural analysis, traffic safety, and bridge inventory maintenance. After
15 graduating from Lawrence Technological University, I was hired as a Public
16 Utilities Engineer in the Smart Grid Section with the Michigan Public Service
17 Commission where I oversaw the deployment of Advanced Metering
18 Infrastructure (AMI) in Michigan and performed research functions related to data
19 privacy and cybersecurity concerns with AMI deployment. I served as a member
20 of the Smart Grid Consumer Collaborative while employed in the Smart Grid
21 Section. In August 2013, I accepted a position in the Gas Operations Section as a
22 Gas Safety Engineer performing operations and maintenance inspections,
23 construction inspections, and incident investigations related to pipeline systems in 2
QUALIFICATIONS OF TAYLER BECKER CASE NUMBER U-20471 PART I
1 Michigan. The inspections and investigations were performed to ensure
2 compliance with the Michigan Gas Safety Standards related to system design,
3 cathodic protection, public awareness, damage prevention, odorization, leak
4 survey, and Control Room Management. I also represented the Pipeline and
5 Hazardous Materials Safety Administration (PHMSA) as their agent
6 representative in Michigan to assist in inspection and failure investigation efforts.
7 In February 2018, I accepted my current position as a Public Utilities Engineer in
8 the Electric Operations Section overseeing system reliability in Michigan and
9 serving as an expert witness in electric distribution rate cases.
10 Q. Have you previously presented testimony before the Commission?
11 A. Yes. I presented testimony in Docket No. U-20134 (Consumers Energy Rate
12 Case) and Docket No. U-20165 (Consumers Energy IRP Case).
3
DIRECT TESTIMONY OF TAYLER BECKER CASE NUMBER U-20471 PART II
1 Q. What is the purpose of your testimony?
2 A. The purpose of my testimony is to analyze both the reasonableness and prudency
3 of the DTE Electric (DTE or Company) projected electric distribution capital
4 spending plans related to Conservation Voltage Reduction (CVR)/Volt-Var
5 Optimization (VVO).
6 Q. Are you sponsoring any exhibits in this proceeding?
7 A. Yes.
8 S-10.0 (TJB-1) CVR/VVO Reporting
9 S-10.1 (TJB-2) Discovery Responses
10 Q. Did you consult with any other Commission Staff (Staff) members in preparing
11 your testimony?
12 A. Yes. I consulted with various Staff members involved in the Company’s
13 Integrated Resource Plan (IRP) filing. Staff developed a workgroup team for
14 each of the major topics following the Company’s IRP application, one of which
15 was distribution upgrades and CVR/VVO.
16 Q. Please provide an overview of the Company’s proposed CVR/VVO capital
17 distribution investment spending plans in the application in this matter.
18 A. DTE has developed a Proposed Course of Action (PCA) which has been split into
19 two parts: 1) the near-term defined PCA covering years 2020-2024 and 2) the
20 flexible PCA covering years 2025-2035. The defined PCA includes a CVR/VVO
21 pilot program by 2020 and proposes pre-approval of capital costs related to
22 CVR/VVO that the Company will commence within three years of the
23 Commission’s approval of the IRP. DTE specifically requests pre-approval of
4
DIRECT TESTIMONY OF TAYLER BECKER CASE NUMBER U-20471 PART II
1 $0.7 Million in expected capital costs for the CVR/VVO pilot program from 2019
2 to 2020. The Company will execute the CVR/VVO program in 2026 as part of
3 the flexible PCA, given the program’s feasibility and cost effectiveness.
4 Q. Is the Company requesting pre-approval of Operations and Maintenance (O&M)
5 spending for the CVR/VVO pilot program?
6 A. No.
7 Q. Is the CVR/VVO program new, and is it outlined in the Company’s Electric
8 Distribution Operations Five-Year Investment and Maintenance Plan (Five-Year
9 Plan)?
10 A. The CVR/VVO program is considered by DTE to be a new and separate program
11 from energy waste reduction (EWR) and demand response (DR).1 Also, the
12 program is briefly incorporated in the Five-Year Plan by describing the equipment
13 retrofits and replacements needed to optimize system efficiency, demonstrating
14 that the program does align with the Company’s planned future distribution
15 investments. There are no projected costs or benefits related to the program
16 outlined in the Five-Year Plan.
17 Q. What is the Company’s CVR/VVO program, and does it have a clear objective?
18 A. Yes. The program has an objective described through Discovery Question No.
19 STDE-9.6 in Exhibit S-10.1 (TJB-2) as “…identify a cost-effective way to reduce
20 energy consumption and meet capacity needs for Michigan customers.” Page 6,
21 lines 4-8 of Company witness Yujia Zhou’s testimony also describes the
1 See DTE’s response to Discovery Question No. STDE-9.7. 5
DIRECT TESTIMONY OF TAYLER BECKER CASE NUMBER U-20471 PART II
1 program’s objective as “reducing losses, managing voltage volatility due to
2 intermittent renewable generation, optimizing operating parameters, and/or
3 optimizing power factors, etc.” CVR/VVO is designed to reduce customer
4 voltage levels by operating in the lower portion of the allowable voltage ranges
5 (120-114V) outlined in ANSI Standard C84.1. The Company is relying on
6 substation upgrades, circuit upgrades, and existing equipment to allow for the
7 coordinated control and equipment needed for CVR/VVO to meet its MW
8 capacity reduction goals.
9 Q. What are the capacity reduction goals?
10 A. Page 17, lines 11-12 of Company witness Zhou’s testimony provides an expected
11 50 megawatts (MW) of peak demand reduction and 65 gigawatt hours (GWh) of
12 energy reduction.
13 Q. What equipment and technology does the Company need to install to support the
14 CVR/VVO program, and what existing equipment will be used?
15 A. DTE’s current CVR/VVO program is designed to utilize various electric
16 equipment including, but not limited to, transformer load tap changers, line
17 regulators, and capacitor banks in order to maintain voltages within the targeted
18 range. Another element required to support the program is to enhance remote
19 monitoring through technology upgrades to improve or enable circuit voltage
20 including, but not limited to, installation of Remote Terminal Units and
21 supervisory control and data acquisition (SCADA) substations, line sensors, and
6
DIRECT TESTIMONY OF TAYLER BECKER CASE NUMBER U-20471 PART II
1 controllable capacitor banks.2 Assessment of power flow and voltage conditions
2 is vital to the effectiveness of the program. DTE anticipates installation of line
3 sensors to perform this function on the primary distribution lines while AMI data
4 is intended to verify voltage readings at the customer locations. Considering the
5 increasing grid modernization investments DTE is making, Staff encourages DTE
6 to use the most modern equipment and infrastructure installations currently in the
7 system when selecting CVR/VVO circuits as an effort to utilize the full potential
8 of distribution investments that have already been made.
9 Q. What information does the Company intend to gather/track as part of the proposed
10 CVR/VVO pilot?
11 A. Staff used DTE’s discovery answers shown in Exhibit S-10.1 (TJB-2),3 which
12 state the intent is to measure energy reduction (MWh), peak demand reduction
13 (MW), and track voltage levels at the substation and individual circuits to ensure
14 the voltages fall within the allowable voltage ranges defined in ANSI Standard
15 C84.1. Staff believes that the information DTE plans to measure is crucial and
16 necessary, but also recommends further reporting below with topics reflected in
17 Exhibit S-10.0 (TJB-1) to appropriately track the costs and benefits of the
18 program.
19 Q. Does the Company have a planning model/system to forecast the level of
20 Distributed Energy Resource (DER) penetration at the distribution level?
21 A. No.4
2 See DTE’s response to Discovery Question No. STDE-2.15a. 3 See DTE’s response to Discovery Question No. STDE-2.13 and 9.1. 4 See DTE’s response to Discovery Question No. STDE-9.10. 7 DIRECT TESTIMONY OF TAYLER BECKER CASE NUMBER U-20471 PART II
1 Q. What are your thoughts regarding DTE’s CVR/VVO program?
2 A. Staff is generally supportive of the CVR/VVO program and believes the Burns &
3 McDonnell study is an applaudable starting point. Staff believes that piloting a
4 new program such as this is a prudent step in allowing DTE to evaluate the
5 feasibility and cost effectiveness of a program before ramping up. However, there
6 are areas that have apparently not been explored or considered that could
7 significantly impact the CVR/VVO circuits’ feasibility and cost effectiveness in
8 the near and long-term future if not considered in the pilot stages of the program.
9 Q. Does Staff have concerns with the Company’s CVR/VVO program as part of the
10 defined PCA or the potential flexible PCA?
11 A. Staff is concerned with 1) DTE’s ability to stay within the 120-114V range in all
12 areas of the circuit to optimize the capabilities of each CVR/VVO circuit, 2)
13 DTE’s motivation to leverage existing equipment in the system to support the
14 CVR/VVO program, 3) the amount of information DTE plans to obtain/track as
15 part of the CVR/VVO pilot program, and 4) DTE’s lack of a DER planning model
16 or forecast at the distribution circuit level in the future to effectively
17 accommodate DERs without impacting the program’s scheme.
18 Q. Does Staff recommend approval of the costs associated with the CVR/VVO pilot
19 as part of the defined PCA?
20 A. Yes. Staff considers the current projected costs and capacity reductions to be
21 reasonable. In order to address the aforementioned concerns, Staff recommends
22 the following if the CVR/VVO piloting in 2019-2020 is approved as part of the
23 defined PCA.
8
DIRECT TESTIMONY OF TAYLER BECKER CASE NUMBER U-20471 PART II
1
2 1) Staff recommends that DTE consider existing investments such as grid
3 modernization infrastructure when selecting CVR/VVO circuits and to fully
4 utilize the potential and capabilities of existing infrastructure to make
5 CVR/VVO successful.5
6
7 2) Staff recommends that DTE establish DER penetration forecasting on
8 their circuits to be used in selecting CVR/VVO circuits. Cost effective and/or
9 successful CVR/VVO circuits enabled today may be subject to distribution
10 voltage profile changes6 through increasing DER including solar and energy
11 storage in the future. This type of modification to the circuit could require
12 additional investments and make the circuit(s) no longer cost effective. DERs are
13 increasing, and the impacts to the electric system should be considered to make
14 prudent investments for the future.
15
5 Response to Discovery Question No. STDE-9.5 demonstrates that success of the pilot is based on the net present value of the impact to customer revenue requirement. If the energy and capacity savings exceed the investments of the CVR/VVO pilot, then the pilot will be considered successful. 6 United States Environmental Protection Agency document involving government employees, industry experts, and consultants titled “Conservation Voltage Reduction/Volt VAR Optimization EV&M Practices” (https://www.energystar.gov/sites/default/files/asset/document/Volt%20Var%20and%20CVR%20EMV%2 0Best%20Practice%2006-01-17clean%20-%20508%20PASSED.PDF) and an article titled “Hierarchical Look-Ahead Conservation Voltage Reduction Framework Considering Distributed Energy Resources and Demand Reduction” (https://pdfs.semanticscholar.org/7087/ef4480eb672f4c18b0817c0ed41fad5c64f9.pdf?_ga=2.120033601.81 1067033.1565013100-1626912755.1564688575) supports the notion that DER penetration can lead to unexpected and significant voltage changes. 9
DIRECT TESTIMONY OF TAYLER BECKER CASE NUMBER U-20471 PART II
1 3) Staff recommends that DTE incorporate circuits using DERs into their
2 2019-2020 CVR/VVO piloting program to evaluate the impacts to the electric
3 system and CVR/VVO enabled circuit(s).
4
5 4) Staff recommends DTE file annual CVR/VVO-specific reporting in this
6 docket consisting of the information in Exhibit S-10.0 (TJB-1), at a
7 minimum, in accordance with MCL 460.6t(14). CVR/VVO-specific reporting
8 is recommended to aid Staff in tracking CVR/VVO implementation and program
9 performance. The circuit-level tracking mechanism allows for the ability to track
10 the Company’s projected spend and capacity levels so that they can be compared
11 with actuals and assist Staff and the Commission to determine the success of the
12 CVR/VVO investment and determine whether or not the program is performing
13 as expected. The reporting will also assist Staff in reviewing capital costs
14 associated with the CVR/VVO program in future rate case(s).
15 Q. Did the Company provide a clear breakdown in spending of the $0.7 million?
16 A. No. Based on the results of the Burns & McDonnell study, an average of
17 $30,000-$40,000 per circuit in capital investments are needed. The Company,
18 through the Burns and McDonnell study, decided to arrive to the projected capital
19 spend of $0.7 million by multiplying $35,000 by the 20 circuits from 2019-2020.7
20 DTE plans to have and share the complete list of equipment to be installed for
21 each of the 20 circuits by the end of January 2020.8 DTE plans to recover capital
7 See DTE’s response to Discovery Question No. STDE-2.15c. 8 See DTE’s response to Discovery Question No. STDE-2.15a. 10
DIRECT TESTIMONY OF TAYLER BECKER CASE NUMBER U-20471 PART II
1 spend amounts associated with the 2019-2020 pilot program in the Company’s
2 next rate case.9
3 Q. How would Staff like to see proposed distribution investments presented in future
4 IRP cases?
5 A. Staff suggests that the Company provide full transparency by aligning IRP
6 resource investments with the Five-Year Plan. This will provide Staff with a
7 holistic view of the Company’s resource and electric system investments to allow
8 for a robust review of the investments that will ultimately serve the Company’s
9 load and show how those load serving resources may also provide reliability
10 benefits to the electric distribution grid.
11 Q. Regarding resource investments that also provide distribution benefits, what level
12 of detail would Staff suggest the Company provide in its next IRP filing?
13 A. Staff would encourage the Company to share detailed projected investments at a
14 circuit and substation level by line item, if known, to assist Staff in developing a
15 clear distinction of distribution investments and allow for appropriate review.
16 Q. Does this conclude your testimony?
17 A. Yes.
9 See DTE’s response to Discovery Question No. STDE-9.3. 11
S T A T E OF M I C H I G A N
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
* * * *
In the matter of the Application of ) DTE ELECTRIC COMPANY for ) approval of its Integrated Resource Plan ) Case No. U-20471 pursuant to MCL 460.6t, and for other relief ) ______)
EXHIBITS OF
TAYLER BECKER
MICHIGAN PUBLIC SERVICE COMMISSION
August 21, 2019 Case No.: U‐20471 Michigan Public Service Commission Exhibit No.: S‐10.0 (TJB‐1) DTE Electric Witness: T. Becker CVR/VVO Reporting Page 1 of 1
IRP ‐ Annual CVR/VVO Capital Spend and Results Tracking (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) Line No. List of Capital Investments (including cost) Energy Reduction (MWh) Peak Demand Reduction (MW) Minimum Voltage Maximum Voltage Number of Variance(s) Outside of 114‐120V Causes of Variance(s) Outside of 114‐120V Variance Duration Outside of 114‐120V Meets Objectives (Y/N) CVR Factor* Circuit Characteristics Necessary Changes/Lessons Learned 1 CVR Circuit A 2 CVR Circuit B 3 CVR Circuit C Total
* The CVR factor is the ratio between the change in energy savings and the change in voltage. The factor can serve as a key component in identifying the potential savings in additional CVR circuits Case No.: U-20471 Michigan Public Service Commission Exhibit No.: S-10.1 (TJB-2) DTE Electric Witness: T. Becker Discovery Responses Page 1 of 9
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-2.13 Respondent: Y. Zhou Page: 1 of 1
Question: Please provide the metrics that the Company intends to measure to evaluate its CVR/VVO pilot?
Answer: The Company intends to measure energy reduction (MWh) as well as peak demand reduction (MW) as key metrics to evaluate CVR/VVO. Additionally, the Company intends to track voltage levels at the substation, as well as for individual circuits, including at feeder ends to inform the effectiveness of voltage reduction and ensure voltages for electrical power systems and equipment are within allowable voltage ranges, defined by ANSI standard C84.1.
Attachments: None Case No.: U-20471 Michigan Public Service Commission Exhibit No.: S-10.1 (TJB-2) DTE Electric Witness: T. Becker Discovery Responses Page 2 of 9
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-2.15a Respondent: Y. Zhou Page: 1 of 1
Question: Please provide the following for each of the 20 CVR/VVO pilot circuits in 2019-2020.
a) A complete list of all equipment that the Company will need to install for each circuit. Please differentiate circuit versus substation equipment.
Answer: Until detailed design for each circuit is complete, it is not known which equipment will be installed for each circuit and substation. However, as discussed in my testimony, Page 14, lines 6-21, the technology upgrades needed to implement a CVR/VVO program include two major components. One is to enhance remote monitoring and control capability at substations and circuits. The technology upgrades could take the form of: x Installing Remote Terminal Units (RTU) and SCADA at substations to enable remote voltage and current monitoring, and to enable remote control of the transformer load tap changers, when needed x Installing advanced line sensors on circuits to enable remote monitoring of circuit voltage The other technology enhancement is to install or upgrade line capacitor banks to improve voltage conditions, particularly at the tail ends of the circuits. The technology upgrades could take the form of: x Installing remote controllable capacitor banks to improve circuit voltage profile during peak hours x Upgrading existing capacitor banks to improve circuit voltage profile during peak hours DTE plans to share the complete list of all equipment to be installed for each circuit and substation with Staff after detailed design is complete, which will be complete for all 20 circuits by the end of January 2020.
Attachments: None Case No.: U-20471 Michigan Public Service Commission Exhibit No.: S-10.1 (TJB-2) DTE Electric Witness: T. Becker Discovery Responses Page 3 of 9
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-2.15c Respondent: Y. Zhou Page: 1 of 1
Question: Please provide the following for each of the 20 CVR/VVO pilot circuits in 2019-2020.
c) Include known costs if equipment is already in inventory or estimated costs if equipment is not in inventory. Please show how these projected costs align with the $0.7 Million for CVR/VVO pilots.
Answer: Until detailed design for each circuit is complete, it is not known which equipment is or is not in inventory or how the projected costs align with the $0.7 million for CVR/VVO pilots. The types of modifications expected are installation of sensors and communications, settings changes, and minor equipment reconfiguration. The average cost for Groups 1 and 2 is estimated to be $30,000 - $40,000 per circuit, inclusive of all expected costs including labor and equipment. This is a high-level estimate and has not been specifically broken out into component parts at this stage, as labor and equipment will vary significantly by circuit and substation. The average of the range is $35,000 per circuit, and the pilot will include 20 circuits ($35,000 * 20 = $700,000.) This is described in more detail on pages 13 – 15 of my direct testimony.
Attachments: None
Case No.: U-20471 Michigan Public Service Commission Exhibit No.: S-10.1 (TJB-2) DTE Electric Witness: T. Becker Discovery Responses Page 4 of 9
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-9.1 Respondent: Y. Zhou Page: 1 of 1
Question: According to the response to discovery question STDE-2.13, DTE plans to measure energy reduction, demand reduction, and intends to track voltage levels at various points in the system. Please identify all information DTE will obtain/track as part of the 2019-2020 Conservation Voltage Reduction and Volt-Var Optimization CVR/VVO pilot program.
Answer: As the response to STDE-2.13 states,
“The Company intends to measure energy reduction (MWh) as well as peak demand reduction (MW) as key metrics to evaluate CVR/VVO. Additionally, the Company intends to track voltage levels at the substation, as well as for individual circuits, including at feeder ends to inform the effectiveness of voltage reduction and ensure voltages for electrical power systems and equipment are within allowable voltage ranges, defined by ANSI standard C84.1.”
At this point, there is no additional information that DTE Electric plans to obtain/track as part of the 2019-2020 CVR/VVO pilot program.
Attachments: None
Case No.: U-20471 Michigan Public Service Commission Exhibit No.: S-10.1 (TJB-2) DTE Electric Witness: T. Becker Discovery Responses Page 5 of 9
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-9.3 Respondent: Y. Zhou Page: 1 of 1
Question: Please identify how DTE intends to recover the capital and O&M spend amounts associated with the CVR/VVO pilot program as part of the defined PCA.
Answer: DTE Electric intends to recover the capital and O&M spend amounts associated with the CVR/VVO pilot program as part of the defined PCA in the Company’s next rate case.
Attachments: None
Case No.: U-20471 Michigan Public Service Commission Exhibit No.: S-10.1 (TJB-2) DTE Electric Witness: T. Becker Discovery Responses Page 6 of 9
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-9.5 Respondent: Y. Zhou Page: 1 of 1
Question: Page YZ-5, lines 21-22 state, “Assuming the pilot is successful, the Company will start executing the CVR/VVO program for targeted areas in 2026, as part of the flexible PCA.” Please identify what DTE considers to be a “successful” pilot and how success will be measured in the 2019-2020 pilot period.
Answer: DTE Electric will determine the success of the pilot based on the net present value of the impact to customer revenue requirement. If the energy and capacity savings exceed the investments of the CVR/VVO pilot, then the pilot will be considered successful.
Attachments: None
Case No.: U-20471 Michigan Public Service Commission Exhibit No.: S-10.1 (TJB-2) DTE Electric Witness: T. Becker Discovery Responses Page 7 of 9
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-9.6 Respondent: Y. Zhou Page: 1 of 1
Question: Please identify and describe the objectives of the CVR/VVO program and explain how the pilots in 2019-2020 are aligned to support the objectives of the program.
Answer: The objective of the CVR/VVO program is to identify a cost-effective way to reduce energy consumption and meet capacity needs for Michigan customers. Per page 17, lines 11-12, of my testimony, “The CVR/VVO program is expected to generate 50 MW of peak demand reduction and 65 GWH of energy reduction.” Per page 16, lines 13-16, of my testimony, “The goal of the pilot is to verify the CVR/VVO implementation on a diverse portfolio of circuits to better understand program costs and benefits as well as any field execution constraints.”
Attachments: None
Case No.: U-20471 Michigan Public Service Commission Exhibit No.: S-10.1 (TJB-2) DTE Electric Witness: T. Becker Discovery Responses Page 8 of 9
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-9.7 Respondent: Y. Zhou Page: 1 of 1
Question: Please confirm that the CVR/VVO program is a new program that is considered by DTE to be separate program from EWR and DR.
Answer: DTE Electric considers the CVR/VVO program to be a new program and separate from EWR and DR.
Attachments: None
Case No.: U-20471 Michigan Public Service Commission Exhibit No.: S-10.1 (TJB-2) DTE Electric Witness: T. Becker Discovery Responses Page 9 of 9
MPSC Case No.: U-20471 Requestor: Staff Question No.: STDE-9.10 Respondent: Y. Zhou Page: 1 of 1
Question: Please describe whether or not there is a planning model/system to forecast the level of DER penetration at the distribution circuit level.
Answer: DTE Electric does not have a planning model/system to forecast the level of DER penetration at the distribution circuit level.
Attachments: None
STATE OF MICHIGAN
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
* * * * *
In the matter of the Application of ) DTE ELECTRIC COMPANY for ) approval of its Integrated Resource Plan ) Case No. U-20471 pursuant to MCL 460.6t, and for other relief ) )
PROOF OF SERVICE
Linda G. Brauker, being duly sworn, deposes and says that on August 21, 2019, A.D., she emailed a copy of the attached MPSC Testimony and Exhibits to the persons as shown on
the attached list.
______Linda G. Brauker
Subscribed and sworn to before me this 21st day of August, 2019.
______Angela P. Sanderson Notary Public, Shiawassee County, Michigan Acting in the County of Eaton My Commission Expires May 21, 2024
Service List for U-20471
DTE Electric Company Environmental law & Policy Center Lauren D. Donofrio Margrethe Kearney Martin Heiser Environmental Law & Policy Center DTE Electric Company 1514 Wealthy St, SE One Energy Plaza Suite 256 Detroit, MI 48226 Grand Rapids, MI 49506 [email protected] [email protected] [email protected] [email protected] Jean-Luc Kreitner 35 E. Wacker Drive, Suite 1600 Energy Michigan, Inc. Chicago, IL 60601 Geronimo Energy [email protected] Convergen Energy LLC City of Ann Arbor Michigan Environmental Council Timothy J. Lundgren Natural Resources Defense Council Justin K. Ooms Sierra Club Varnum Attorneys at Law Christopher Bzdok 201 North Washington Sq. Tracy Jane Andrews Suite 910 Lydia Barbash-Riley Lansing, MI 48933 Olson, Bzdok & Howard [email protected] 420 E. Front St. [email protected] Traverse City, MI 49686 [email protected] Great Lakes Renewable Energy Association [email protected] Don L. Keskey [email protected] Brian W. Coyer Public Law Resource Center PLLC. International Transmission Company d/b/a ITC 333 Albert Ave, Suite 425 Transmission East Lansing, MI 48823 Richard J. Aaron [email protected] Dykema Gossett PLLC [email protected] Capitol View 201 Townsend St., Suite 900 Cypress Creek Renewables, LLC. Lansing, MI 48933 Jennifer Utter Heston [email protected] Fraser Trebilcock Davis & Dunlap, P.C. [email protected] 124 West Allegan St., Suite 1000 Lansing, MI 48933 Midland Cogeneration Venture, LP [email protected] Heelstone Development, LLC Jason Hanselman Michigan Public Power Agency John A. Janiszewski Nolan J. Moody Dykema Gossett PLLC Peter H. Ellsworth 201 Townsend, Suite 900 Dickinson Wright PLLC Lansing, MI 48933 215 S. Washington Square, Suite 200 [email protected] Lansing, MI 48933 [email protected] [email protected] [email protected] SOULARDITY Rebecca J. Boyd Mark Templeton Robert A. Weinstock [email protected] [email protected] [email protected]
Service List for U-20471
ABATE Attorney General Dana Nessel Michael J. Pattwell Joel King Bryan A. Brandenburg Special Litigation Division Tina Bibbs (Legal Assistant) 525 W. Ottawa St. P.O. Box 30755 Clark Hill Lansing, MI 48909 212 E. Cesar E. Chavez Ave. [email protected] Lansing, MI 48906 [email protected] [email protected] [email protected] Administrative Law Judge [email protected] Hon. Sally Wallace Administrative Law Judge James R. Dauphinais Michigan Public Service Comm. Maria E. Decker (Administrative Asst.) 7109 W. Saginaw Hwy., 3rd Floor [email protected] Lansing, MI 48917 [email protected] [email protected]
Michigan Energy Innovation Business MPSC Staff Council (EIBC) and the Institute Heather Durian for Energy Innovation (IEI) Amit Sing Toni L. Newell Daniel Sonneveldt Varnum Attorney at Law Assistant Attorneys General 333 Bridge St., NW Michigan Public Service Comm. Grand Rapids, MI 49504 7109 W. Saginaw Hwy., 3rd Floor [email protected] Lansing, MI 48917 [email protected] Laura A. Chappelle [email protected] Varnum Attorney at Law [email protected] 201 North Washington Sq. Suite 910 Lansing, MI 48933 [email protected]