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UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION
) Consumers Energy Company, ) Docket No. EL14-____-000 )
CONSUMERS ENERGY COMPANY’S REQUEST FOR WAIVER
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TABLE OF CONTENTS
Page
I. EXECUTIVE SUMMARY ...... 2
II. DESCRIPTION AND BENEFITS OF ALTERNATIVE PROPOSALS ...... 3
1. Planned Outage ...... 3
2. Waiver of Must-Offer and Requirements to Purchase Replacement ZRCs ...... 3
3. Replacement ZRCs for Period in Question Only ...... 4
4. Financial Payment ...... 4
III. ISSUE AND PROPOSED SOLUTIONS ...... 4
A. The Classic Seven ...... 4
B. The 6.5 Week Disconnect ...... 5
C. Consumers Energy Cannot Continue to Operate the Classic Seven on Coal Beyond April 16, 2016 ...... 6
D. The MISO Resource Adequacy Tariff Requirements Are Unjust and Unreasonable in Relation to the 6.5 Week MATS Issue ...... 9
E. Consumers Energy’s Proposed Options to Remedy the 6.5 Week Disconnect ...... 14
1. The Classic Seven Participate in 2015-2016 Planning Reserve Auction and MISO Considers the 6.5 Weeks Difference as a Scheduled Outage ...... 15
2. The Classic Seven Participate in 2015-2016 Auction and the Commission Grants Waivers to the Must-Offer Requirements for the 6.5 Week Gap and for the Requirement to the Purchase Replacement ZRCs ...... 16
3. The Classic Seven Participate in 2015-2016 Auction and the Commission Requires Consumers Energy to Purchase ZRCs: (1) Only for the 6.5 Week Period and (2) Only if They Are Available ...... 17
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TABLE OF CONTENTS (continued) Page
4. The Classic Seven Participate in 2015-2016 Auction and the Commission Requires Consumers Energy to Pay a 6.5 Week Deficiency Charge if ZRCs are Not Available ...... 18
IV. THE PROPOSED REMEDIES MEET THE COMMISSION’S STANDARD FOR GRANTING WAIVER ...... 19
A. Good Faith ...... 20
B. Limited Scope ...... 21
C. Concrete Problem ...... 21
D. Undesirable Consequences ...... 22
V. REQUESTED DATE ...... 23
VI. COMMUNICATIONS ...... 23
VII. CONCLUSION ...... 24
Attachment A Testimony of David F. Ronk, Jr.
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UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION
) Consumers Energy Company, ) Docket No. EL14-____-000 )
CONSUMERS ENERGY COMPANY’S REQUEST FOR WAIVER
Pursuant to Rule 207(a)(5) of the Rules of Practice and Procedure of the Federal
Energy Regulatory Commission (“FERC” or the “Commission”),1 Consumers Energy Company
(“Consumers Energy”) respectfully requests a limited, one-time waiver of certain provisions of
the Open Access Transmission, Energy and Operating Reserve Markets Tariff (“Tariff”) of the
Midcontinent Independent System Operator, Inc. (“MISO”). Consumers Energy specifically
requests a waiver to promote reliability and prevent unjust and unreasonable costs to customers
that, absent relief, will occur due to the interplay of the United States Environmental Agency
(“EPA”) Mercury and Air Toxics Standards (“MATS”)2 and the MISO Tariff Resource
Adequacy Requirements as they pertain to seven of Consumers Energy’s coal fuel units with a
combined name plate capacity of 940.7 MW, collectively known as the “Classic Seven,”3 during
the 2015-2016 Planning Year.4
1 18 C.F.R. § 385.207(a)(5) (2013). 2 National Emission Standards for Hazardous Air Pollutants from Coal-and Oil-fired Electric Utility Steam Generating Units and Standards of Performance for Fossil-Fuel-Fired Electric Utility, Industrial-Commercial Institutional, and Small Industrial-Commercial-Institutional Steam Generating Units, available at http://www.gpo.gov/fdsys/pkg/FR-2012-02-16/pdf/2012-806.pdf (last visited Jun. 20, 2014). 3 The Classic Seven consist of: J.C. Weadock Unit 7 – Nameplate Capacity 151 MW; J.C. Weadock Unit 8 – Nameplate capacity 151 MW; B.C. Cobb Unit 4 – Nameplate Capacity 156 MW; B.C. Cobb Unit 5 – Nameplate Capacity 156 MW; J.R. Whiting Unit 1 – Nameplate Capacity 101.2 MW; J.R. Whiting Unit 2 – Nameplate Capacity 101.5 MW; and J.R. Whiting Unit 3 – Nameplate Capacity 124 MW. 4 Capitalized terms not otherwise defined herein have the meanings ascribed thereto in section 1 of the MISO Tariff. “Planning Year” is defined as “[t]he period of time from June 1st of one year to May 31st of the following year that is used for developing Resource Plans.”
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I. EXECUTIVE SUMMARY
The EPA’s MATS rule imposes emissions limitations that the Classic Seven
would be required to meet as of April 16, 2016. The cost of bringing the Classic Seven into
compliance with MATS cannot be justified and, as a result, Consumers Energy will be
suspending the operations of the Classic Seven no later than that date. The MISO Tariff, on the
other hand, has requirements that run over a Planning Year from June 1 through May 31 of the
subsequent year. If the Classic Seven are to be considered Capacity Resources by MISO during
the 2015-2016 Planning Year, the current MISO rules would require the Classic Seven to be
available for service for the entire Planning Year through Mary 31, 2016, even while the EPA
MATS compliance is the inventive for suspending operations 6.5 weeks earlier.
Absent a waiver of certain MISO rules as they apply to the Classic Seven or
modification to those rules pursuant to a complaint, there are no economically reasonable
alternatives for Consumers Energy to pursue. Consumers Energy may not withhold the Classic
Seven from offering into the MISO Planning Reserve Auction for the 2015-2016 Planning Year.
According to MISO’s interpretation of its Tariff, Consumers Energy is not permitted to declare a
forced or scheduled outage for the 6.5 week period even though it is obvious that the EPA
MATS rule is the cause of the suspension of operations. There is no mechanism within the MISO
Tariff that ensures that Consumers Energy will be able to buy replacement capacity through the
auction to cover the 6.5 week period. Instead, Consumers Energy could have to purchase
replacement capacity for the Planning Year at a cost of between $5.8 million to $84.8 million. As
a result, Consumers Energy would have far more capacity in its own generation fleet and under
contract than it needs for 45.5 weeks of the Planning Year prior to the date operation of the
Classic Seven is suspended including both summer and winter peak periods, just so that it can
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cover the fixed capacity obligation during the 6.5 weeks of spring when the need for capacity is
far lower.
In this Request for Waiver, Consumer Energy proposes four alternative
approaches to address this 6.5 week gap caused by the disconnect between EPA’s compliance
deadline and MISO’s Tariff requirements. Each of those is discussed in greater detail below.5
II. DESCRIPTION AND BENEFITS OF ALTERNATIVE PROPOSALS To address the problem created by the 6.5 week gap between the MATS
retirement deadline and the end of the 2015-2016 Planning Year, Consumers Energy proposes
that the Commission implement one of the following four options:
1. Planned Outage: The Commission should waive the portion of the MISO Tariff that would bar Consumers Energy from declaring the Classic Seven to be on an outage for the 6.5 week period at the end of the 2015-2016 Planning Year. Consumers Energy respectfully suggests that this is the best option available to obtain the benefits of the Classic Seven’s continued operations until forced to suspend operations by the EPA MATS rule. Under Section 69.A.5 of the MISO Tariff, the “must offer obligation does not apply to the extent that the Capacity Resource is unavailable due to a full or partial forced or scheduled outage.” This approach would recognize that the Classic Seven will be supplying capacity for 45.5 weeks of the 2015-2016 Planning Year, including during Summer and Winter peaks. Implementing this option would enhance reliability during peak periods without in any way jeopardizing reliability during the 6.5 week gap. As stated in the Testimony of David F. Ronk provided as Attachment A, Consumers Energy projects it will have a reserve margin of 47% in April 2016 and 28% in May 2016.6 Accordingly, there is no purpose that would be served by a requirement to purchase additional SRCs for these 6.5 weeks.
2. Waiver of Must-offer and Requirement to Purchase Replacement ZRCs: If the Commission determines it is not appropriate to consider the 6.5 week period as an outage, Consumers Energy respectfully requests that the Commission waive, for the 6.5 week period only, the must-offer requirement for the Classic Seven relative to the
5 These four alternative approaches are identical, in all material respects, to ones proposed by Indianapolis Power and Light Company (“IPL”) in its June 20, 2014 Request for Waiver or, in the Alternative Complaint in Docket No. EL14-70-000. Consumers Energy believes accepting IPL’s complaint and requiring MISO to modify its Tariff is preferred to granting any of the four proposed waiver requests. However, because Consumers Energy requires regulatory certainty with respect to the Classic Seven, it is filing the instant Request for Waiver. Should IPL’s complaint be granted, this Request for Waiver will become moot and will be withdrawn. 6 Attachment A, Testimony of David F. Ronk at 13 lines 8-11.
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energy and ancillary services market under Section 69A.5 and further waive for the same 6.5 week period the requirement to purchase replacement Zonal Resource Credits (“ZRCs”) under Section 69A.3.1.h. This proposal would capture the same benefits as identified under option 1: That is, it would: (1) take advantage of the Classic Seven’s available capacity for the 45.5 weeks of the 2015-2016 Planning Year and (2) recognize that Consumers Energy expects to maintain a planning reserve margin of between 47% and 28% during the 6.5 week period. Accordingly, it would be unnecessary to replace the ZRCs associated with the Classic Seven. 3. Replacement ZRCs for Period in Question Only: As a variant of the second option described above, if the Commission were to waive the must-offer requirement for the 6.5 week period, but find it necessary and appropriate for Consumers Energy to replace the Classic Seven ZRCs for the 6.5 week period, the Commission should condition any such requirement on the availability of replacement ZRCs to be purchased bilaterally at a just and reasonable cost and recognizes the limited, 6.5 week duration only. 4. Financial Payment: As a fourth alternative, Consumers Energy proposes that any fee or penalty associated with failing to have replacement capacity under contract for the 6.5 week period be capped by: (1) limiting the fee to 6.5 weeks and not the full 12 months of the Planning Year and (2) capping it at the annual auction clearing price. Under this proposal, the Commission should also make it clear that failure to obtain replacement capacity for the 6.5 week period in this case is not a tariff violation. If no ZRCs are available to purchase at a just and reasonable cost for the period from April 16 to May 31, 2016, then Consumers Energy found to be in violation of the MISO Tariff. In addition to expanding on the discussion set forth above, the remainder of this
Request for Waiver also demonstrates that the requested waiver: (1) is in good faith; (2) is of
limited scope; (3) will address a concrete problem; and (4) will not have undesirable
consequences.
Consumers Energy respectfully requests that the Commission issue an order on
this Request for Waiver within 60 days.
III. ISSUE AND PROPOSED SOLUTIONS
A. The Classic Seven
Consumers Energy is a public utility that owns and operates generating facilities
with a capacity of approximately 6,500 MW and serves over 1.8 million residential, commercial
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and industrial customers in the Lower Peninsula of the State of Michigan. Consumers Energy
plans to suspend for economic reasons the operation of seven coal-fueled units, collectively
known as the Classic Seven on April 15, 2016.
The Classic Seven consist of: J.C. Weadock Unit 7 – Nameplate Capacity 151
MW; J.C. Weadock Unit 8 – Nameplate capacity 151 MW; B.C. Cobb Unit 4 – Nameplate
Capacity 156 MW; B.C. Cobb Unit 5 – Nameplate Capacity 156 MW; J.R. Whiting Unit 1 –
Nameplate Capacity 101.2 MW; J.R. Whiting Unit 2 – Nameplate Capacity 101.5 MW; and J.R.
Whiting Unit 3 – Nameplate Capacity 124 MW. The Classic Seven have a continued Nameplate
Capacity of 940.7 MW.
In order to replace the generation lost through the suspension of operations of the
Classic Seven, Consumers Energy has committed to purchase a 542 MW gas-fueled generation
plant in Jackson, Michigan (“Jackson Facility”).7 The Jackson Facility will be incorporated into
Consumers Energy’s generation fleet before the date the operations of Classic Seven are
suspended.8 Consumers Energy will also take additional steps, which may include the expanded
use of Demand Response, to fully bridge any capacity gap by the time operations of the Classic
Seven are suspended.9
B. The 6.5 Week Disconnect On December 21, 2011, the EPA released the MATS final rule which limits
mercury, acid gases, and other toxic emissions from fossil fuel power plants. Affected sources
were required to comply within three years of the MATS effective date.10 Pursuant to Clean Air
Act (“CAA”) Section 112(i)(3)(B), some affected sources, including the Classic Seven were
7 Attachment A, Testimony of David. F. Ronk at 10, lines 13-16. 8 Id. 9 Id. at 16-20. 10 The rule was published on February 16, 2012 (77 Federal Register 9304) with an effective date of April 16, 2012.
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eligible for one-year extensions.11 Consumers Energy sought and received the one-year
extension.12 Thus, Consumers Energy may continue to operate the Classic Seven as coal-fueled
facilities until April 16, 2016. MISO’s capacity Planning Year, however, runs from a 12-month
period from June 1 to May 31 of the following year. Thus, there is an approximately 6.5 week
difference between the EPA-mandated compliance date and the MISO Planning Year.
C. Consumers Energy Cannot Continue to Operate the Classic Seven on Coal Beyond April 16, 2016. One potential solution was to obtain EPA’s permission to continue to operate the
Classic Seven through May 31, 2016 or longer. While EPA developed a process by which certain
affected sources could obtain an Administrative Order (“AO”) to operate in noncompliance for
up to an additional year pursuant to Section 113(a) of the CAA, the EPA Policy Memorandum
limited to AO option to only those generators whose shutdown will present a “reliability risk”
such that “operation of the unit after the MATS Compliance Date is critical to maintaining
electric reliability, and that failure to operate the unit would result in the violation of at least one
of the reliability criteria required to be filed with the Commission.”13 The applicable Planning
Authority (in this case MISO) must provide its concurrence.14
In the Policy Statement on the Commission’s Role Regarding the Environmental
Protection Agency’s Mercury and Air Toxics Standards issued on May 17, 2012 in Docket No.
11 See id. § 7412(i)(3)(B). 12 Attachment A, Testimony of David F. Ronk at 8, lines 2-5. 13 The Environmental Protection Agency’s Enforcement Response Policy For Use Of Clean Air Section 113(a) Administrative Orders In Relation To Electricity Reliability And The Mercury and Air Toxics Standard at 6-7 (Dec. 16, 2011) (“EPA Policy Memorandum”) available at http://www.epa.gov/compliance/resources/politices/civil/erp/mats-erp.pdf (last visited June 20, 2014). 14 Id. The EPA Policy Memorandum states that “in light of the complexity of the electric system and the local nature of many reliability issues, the EPA will, for purposes of using its Section 113(a) AO authority in this context, rely for identification and/or analysis of reliability risks upon the advice and counsel of reliability experts, including, but not limited to, the Federal Energy Regulatory Commission (‘FERC’), Regional Transmission Operators (‘RTOs’), Independent System Operators (‘ISOs’) and other Planning Authorities as identified herein, the North American Electric Reliability Corporation (‘NERC’) and affiliated regional entities, and state public service commissions (‘PSCs’) and public utility commissions (‘PUCs’). The EPA will work with these and other organizations, as appropriate; to ensure that claims of reliability risks are properly characterized and evaluated.” Id. at 2.
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PL12-1,15 the Commission required any utility seeking an AO to make an informational filing
with the Commission including the same information that the owner/operator submitted to the
EPA pursuant to the EPA Policy Memorandum.16 The Commission would review the Planning
Authority’s analysis included in each informational filing to ensure that it was reasonable and
sufficiently supported by the information supplied, recognizing the Planning Authority’s
knowledge of, and expertise in, local and regional conditions.17 The Commission would advise
the EPA whether, based on the Commission’s review of the informational filing, there might be a
violation of the Commission-approved Reliability Standard, or the Commission’s comments may
also identify issues within its jurisdiction other than a potential violation of Commission-
approved Reliability Standard.18
Under Section 38.2.7 of the MISO Tariff, MISO performs an Attachment Y
Reliability Study to determine whether the Generation Resource is necessary for the reliability of
the Transmission System. While MISO’s Tariff requires only that a Market Participant submit an
Attachment Y notice to MISO at least 26 weeks prior to retiring or suspending all or a portion of
a Generation Resource that it either owns or operates,19 MISO is on record as stating it prefers a
minimum of 24 months to consider retirements resulting from compliance with environmental
15 139 FERC ¶ 61,131 (2012). 16 Id. at P 15. 17 Id. at P 20. 18 Id. at P 21. 19 See Section 38.2.7 of the MISO Tariff (“A Market Participant shall complete and deliver to the Transmission Provider an Attachment Y Notice at least twenty-six (26) weeks prior to Retiring or Suspending all or a portion of a Generation Resource or a SCU that it either owns or operates.”)
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regulations.20 Consumers Energy submitted its revised Attachment Y21 for the Classic Seven on
March 14, 2013 MISO informed IPL that the Classic Seven were not needed for reliability
purposes beyond April 15, 2016.22 Given that stated reliance of the EPA and the Commission on
the reliability analysis of the RTO, MISO’s Attachment Y determination effectively precluded
IPL from seeking an AO to extend operation of the facility past April 16, 2016.23
20 Midwest Independent Transmission System Operator, Inc.’s Response to Request for Evidence of Commissioner Phillip D. Moeller On EPA Issues from the November 2011 Reliability Conference, Docket No. AD12-1 at 8 (dated Nov. 23, 2011): “The present MISO tariff provides that generators that intend to retire or mothball a unit for more than 2 months notify MISO a minimum of 26 weeks beforehand. This approach is adequate where the plant owner’s decision to shut down operations is an economic one and is not a legal requirement with a firm shutdown date. In the case of an economic retirement, the tariff provides a mechanism to enable the plant to recover costs for continued operations until such time as an alternative system modification can be made that will maintain system reliability after retirement of the unit. The plant operator is made whole via a System Support Resource (SSR) contract for temporary continued operation. MISO finds the 26-week lead time generally adequate in such cases to evaluate the reliability impacts of the shutdown and negotiate a contract for continued operation if needed. However, where continued unit operation is not permitted due to regulatory requirements, this 26-week lead time is not sufficient to implement alternative system modifications. In such cases, a reasonable period to evaluate, plan and implement transmission system upgrades would be a minimum of 24 months.” 21 Attachment A, Testimony of David F. Ronk at 8, lines 6-8. 22 Id. at lines 8-9. In comments, MISO recognized that reliability encompassed more than compliance with the NERC standards: “It is also important to note that reliability standards are defined by NERC do not include resource adequacy requirements. Although resource adequacy is stated as reliability issue within the Staff White Paper, resource adequacy is not a NERC defined requirement. Instead, resource adequacy requirements are established in RTO tariffs (e.g., Module E of the MISO Tariff) and/or at the state utility commission level. Because of this, it is appropriate for the Commission and the EPA to grant considerable deference to state regulatory agencies and Transmission Providers, given their key responsibilities for supply adequacy and maintain grid system reliability.” Comments of the Midwest Independent Transmission System Operator dated February 29, 2012 in Docket No. AD12-1 at 4. 23 The EPA Policy Memorandum describes a process by which certain affected sources can obtain an AO to operate in noncompliance for an additional year pursuant to Section 113(a) of the CAA. Specifically, the EPA Policy Memorandum contemplates that the EPA will receive AO requests: (1) concerning electric generating units (“EGUs”) that may affect reliability due to deactivation; and (2) concerning EGUs that may affect reliability due to delays related to the installation of controls. Under Section 38.2.7 of the MISO Tariff, MISO performs an Attachment Y Reliability Study to determine whether the Generation Resource or Synchronous Condenser Unit (“SCU”) is necessary for the reliability of the Transmission System based on the criteria set forth in the Business Practices Manuals, but will not determine in this initial analysis the available alternatives to designating the Generation Resources or the SCU as an SSR Unit. MISO determined that the Classic Seven were not required for reliability.
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D. The MISO Resource Adequacy Tariff Requirements Are Unjust and Unreasonable in Relation to the 6.5 Week MATS Issue Previously reasonable market rules have become unjust and unreasonable as the
result of MISO’s changing from a monthly resource adequacy contract to an annual resource
adequacy contract, without considering the need to make necessary and corresponding changes
to the market rules defining the obligations to bid in energy markets each hour. What MISO has
inadvertently created is a set of rules that effectively forces a unit to retire prematurely on exactly
the last hour of a Planning Year or risk significant fines and penalties for retirement that occurs
during the subsequent Planning Year.
On July 20, 2011 in Docket No. ER11-4081, MISO filed changes to its resource
adequacy construct that, among other things, switched to an annual demonstration of adequacy
from a monthly one. On June 11, 2012, the Commission issued an Order conditionally accepting
the proposed revisions.24 MISO made the required compliance filing on July 11, 2012. Several
parties have sought rehearing of the Resource Adequacy Order,25 and others have challenged the
justness and reasonableness of MISO’s compliance filing.26 Nevertheless, the revised MISO
annual resource adequacy rules are in effect, subject to future order of the Commission.
When MISO switched to an annual resource adequacy test, it failed to consider
fully the implications of that change in the context of existing “must offer” rules that were not
modified. In particular, MISO did not modify the provisions in the MISO Tariff that make clear
that the Market Participant does not have a choice to refrain from offering capacity into the
24 Midwest Indep. Transmission Sys. Operator, Inc. 139 FERC ¶ 61,199 (2012) (the “Resource Adequacy Order”), reh’g pending. 25 The rehearings include an argument that the MISO Tariff should include the ability to substitute resources during the Planning Year. See, e.g., Request for Clarification and in the Alternative Petition for Rehearing of Illinois Municipal Electric Agency, Docket No. ER11-4081-001 at 4 (Jul. 11, 2012) (“It should not matter whether that capacity comes, in part, from one contract or another, or from a contract and a new facility, or any verifiable combination of contract, facility or demand response.”). 26 See Comments of Illinois Commerce Commission, Docket No. ER11-4081 (July 31, 2012). See also Motion for Leave to Answer and Answer of the Illinois Commerce Commission, Docket No. ER11-4081 (Sep. 2012).
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planning reserve auction for each and every hour of a Planning Year, even if the Market
Participant knows in advance of the Planning Year that the unit will not be available for the full
year. Section 63.3.a.i of the MISO Tariff imposes a must-offer obligation on available capacity:
“The following categories of conduct, whether by a single firm or by multiple firms, may warrant mitigation: i. Physical withholding of an Electric Facility including a Planning Resource, that is, not offering to sell or schedule the output of or services provided by an Electric Facility (including a Planning Resource) capable of serving the Energy and Operating Reserve Markets, RAR voluntary capacity auction, or any other market administered by the Transmission Provider. Such withholding may include, (i) declaring that an Electric Facility has been derated, forced out of service or otherwise become unavailable for technical reasons that are not true or cannot be verified, (ii) refusing to provide Offers or schedules for an Electric Facility, (iii) operating a Generation Resource in real time to produce an output level that is less than Dispatch Targets, or (iv) derating a transmission facility or interface for technical reasons that are not true or verifiable; or (v) operating a transmission facility in a manner that is not economic and causes a Binding Transmission Constraint or Binding Reserve Zone Constraint; or (vi) not submitting Planning Resource Offers to the RAR voluntary capacity auction for universally deliverable Planning Resources that are not designated to satisfy the capacity obligations of an LSE in MSIO or exported; (vii) exporting universally deliverable Planning Resource to Capacity market with prevailing prices less than 50 percent of the Auction Clearing Price; or (viii) declaring that the capability of Generation or Stored Energy Resource to provide Energy, Operating Reserve, or Planning Resources is reduced for reasons that are not true or verifiable Market Participants.”27 Under section 64.1.1.d.i, the Physical Withholding Threshold Quantity for a
Market participant is 50 MW for each LRZ. Thus, Sections 63.3.a.1. and 64.1.1.d.i, read
together, mean that Consumers Energy could be subject to penalties for physical withholding of
the Classic Seven if it did not participate in the 2015-2016 auction.
Under the MISO Tariff, Capacity Resources are quantified by applying forced
outage rates to installed capacity values to calculate an unforced capacity value (“UCAP”) for
27 Under Section 64.1.1.d.i, the Physical Withholding Threshold Quantity for a Market Participant is 50 MW for each LRZ. Thus, Consumers Energy could be subject to penalties for physical withholding of the Classic Seven if it did not participate in the 2015-2016 auction.
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the resource.28 A Market Participant can use Capacity Resources up to their UCAP values to
contribute towards Resource Adequacy Requirements.29 The UCAP values are converted to a
pre-qualified and fungible product, ZRCs, which are then offered in the capacity auction, self-
scheduled, or included in a Fixed Resource Adequacy Plan (“FRAP”). A Market Participant that
converts its UCAP MWs into ZRCs must submit Self-Schedules or Offers for Energy, and
Contingency Reserve, if qualified, for the Installed Capacity value of the Capacity Resources
converted into ZRCs “for each Hour of each day during the Planning Year.”30 The must-offer
obligation does not apply to the extent that the Capacity Resource is unavailable due to a full or
partial forced or scheduled outage.31But, MISO has thus far refused to permit Consumers Energy
to treat the 6.5 week period at the end of the 2015-2016 Planning Year as forced or scheduled
outage.
The unjust and unreasonable result of failing to modify the must-offer market
rules along with the change to an annual capacity adequacy construct is further exacerbated by
MISO’s changes to Section 69A.3.1.h, which now provides:
Market Participants that request a change in status for a Planning Resource in accordance with the System Support Resource (SSR) provisions described in Section 38.2.7 will no longer qualify as a Planning Resource effective as of the actual date that the status of the Resource changes to Retire or Suspend pursuant to Section 38.2.7. Market Participants that convert Unforced Capacity into a ZRC that clears in the PRA or was submitted in a FRAP (including a ZRC that was substituted for such cleared ZRC) will not be eligible to Retire or Suspend or otherwise be absolved of applicable performance requirements (as described in Sections 69A.3.9 and 69A.5) for such Planning resource, until the year following the Planning Year for which such ZRC cleared in a PRA or was used in a
28 MISO Tariff, Module E § 69A.4. 29 MISO’s Resource Adequacy Requirements are contained in Module E, Sections 68 to 70 of the MISO Tariff. 30 MISO Tariff, Module E § 69A.5 (emphasis added). 31 Id.
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FRAP, unless the Market Participant substitutes another ZRC within the same LRZ that did not clear in the PRA or was not used in a FRAP.32 Section 69A.3.1, as written, places the Market Participant at risk – keep the unit
operational or utilize another qualified ZRC that did not clear the auction. Again, this is a
provision that may be perfectly reasonable under a monthly resource adequacy construct but is
unreasonable under an annual resource adequacy construct. A Market Participant with a
generation unit that is scheduled for retirement should be able to coordinate the retirement
schedule with its ZRC requirements for a given month.
In the context of the annual resource adequacy construct, MISO’s must-offer rules
an unreasonable set of requirements. Absent favorable Commission action of this Request for
Waiver/Complaint, Consumers Energy may be forced to choose whether to violate the MISO
Tariff, and thereby subject itself to unspecified penalties under the MISO Tariff, and/or civil
penalties of up to $1 million per violation per day, or the EPA MATS rule.
Even with the failure to modify the must-offer requirements to mesh with an
annual capacity adequacy construct, MISO’s Tariff might be reasonable if there were a clear
mechanism under which replacement capacity could be purchased to cover any gap between
when an existing Capacity Resource retires and the end of the Planning Year. However, no such
mechanism exists in the current MISO Tariff.
First, under the MISO Tariff all ZRCs are offered into the annual auction. There is
no mechanism to buy replacement capacity for days, weeks, or months. Second, and more
32 MISO has proposed to revise this provision in Docket No. ER14-2113 so that the replacement ZCRs could come from Local Resource Zones other than the one in which the retiring unit is located so long as certain deliverability parameters are not violated. MISO’s proposed tariff revisions were accepted on August 1, 2014, Midwest Indep. Transmission Sys. Operator, Inc. 148 FERC ¶ 61,091 (2014). Depending on system conditions, this change has the potential to expand the potential pool of resources that could offer ZRCs, but in no way does the proposal guarantee the availability of replacement ZRCs at a reasonable cost, nor does it establish a means of compliance in the event no such replacement ZRCs are available.
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importantly, there are no guarantees that bilaterally-purchased replacement ZRCs would be
available at any price, let alone at a reasonable price. The unavailability of replacement ZRCs is
a very real possibility. While the MISO filing in that proceeding increases the possibility of
obtaining replacement ZRCs, there is no guarantee of availability, especially as other facilities
may face similar MATS requirements leading to additional retirements.33
The consequences of not being able to obtain replacement ZRCs are profound, as
recently detailed by MISO itself:
Several stakeholders asked MISO what happens if a Market Participant retires a Planning Resource without securing replacement ZRCs. MISO does not believe it has the authority to prevent such a retirement; for example, if the Market Participant has a judicial decree that orders retirement of a Planning Resource, MISO may be unable to trump the judicial decree. However, the Tariff specifies a process to address a Market Participant’s violation of a Tariff requirement: Failure to comply with any of the requirements and/or provisions of this Tariff shall subject a Market Participant to such reasonable charges, penalties, or other remedies or sanctions for noncompliance as may be recommended by the Transmission Provider and implemented through appropriate Commission proceedings. This provision establishes appropriate recourse in the circumstance that a Market Participant fails to obtain replacement ZRCs when it retires a Planning Resource.34 The confluence of the MISO must-offer requirement in Section 63.3.a.i and the
ZRC replacement requirement in section 69A.3.1.h means that a Market Participant must offer
its resources, even if it knows those resources will not be available throughout the upcoming
Planning Year, or face the prospect of being assessed penalties under the Federal Power Act for a
tariff violation for physical withholding. On the other hand, the same Market Participant will be
assessed penalties for a tariff violation if they are unable to purchase replacement ZRCs for the
portion of the year the unit will be shut down.
33 As MISO states on page 4 of its Filing Letter in Docket No. ER14-2113, its proposal “may mitigate circumstances where there are limited or no ZRCs available for replacement within the same LRZ, which could make replacement costly or impossible.” 34 MISO Filling Letter, Docket No. ER14-2113 at 8 (June 3, 2014), citing MISO Tariff Section 38.2.8 of Module C.
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In a memorandum to the Supply Adequacy Working Group (“SAWG”) dated
September 10, 2013, David Patton, MISO’s Independent Market Monitor (“IMM”), stated that if
a Market Participant could “[s]how that the replacement ZRCs may not be available or cost-
effective to obtain … then not offering the resource into the PRA would not be considered
physical withholding.”35 Unfortunately, IMM offers no tariff support for such an exemption nor
a means of identifying in advance of the PRA whether or not reasonably priced ZRCs will be
available after the PRA to fill a 6.5 week period. Accordingly, a Commission waiver of the
Replacement ZRC requirement, along with waiver of the must-offer requirement, would
constitute a just and reasonable outcome given Consumers Energy’s specific facts and
circumstances.
E. Consumers Energy’s Proposed Options To Remedy the 6.5 Week Disconnect As explained in the following sections, Consumers Energy has worked diligently
in seeking a resolution on the disconnect between he MATS requirement and the MISO Tariff.
On one hand, the shutdown of a generating facility for a 6.5 week period during an off-peak time
is not an atypical event – certainly not one that should have such potentially significant financial
penalties. Consumers Energy has explained both its responsibility to have sufficient resources to
meet its customers’ needs at all times and its projected planning reserve margin 47% to 28%,
even without the Classic Seven during April and May of 2016.36
35 See Memorandum from David Patton and Michael Chiasson to the Supply Adequacy Work Group at 2 (Sep. 10, 2013), available at https://www.misoenergy.org/Events/Pages/SAWG20120905.aspx (last visited Jun. 20, 2014). 36 Attachment A, Testimony of David. F. Ronk at 13 lines 8 through 11.
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1. The Classic Seven Participate in 2015-2016 Planning Reserve Auction and MISO Considers the 6.5 Weeks Difference as a Scheduled Outage The simplest and most straightforward remedy to the disconnect between the EPA
MATS deadline and the MISO resource adequacy Planning Year is to treat the 6.5 week period
as a scheduled outage. Under Section 69.A.5,
“Market Participants that convert Unforced Capacity from Capacity Resources into ZRCs that clear in the PRA/TPRA or are used in a FRAP (and that do not replace such ZRCs in accordance with Section 69A.3.1.h) must submit Self-Schedules or Offers for Energy, and Contingency Reserve if qualified, for the Installed Capacity value of the Capacity resources converted to ZRCs for each Hour of each day during the Planning Year, in the Day-Ahead Energy Market and all pre Day-Ahead and the first post Day-Ahead Reliability Assessment Commitment process. This must offer obligation does not apply to the extent that the Capacity Resource is unavailable due to a full or partial forced or scheduled outage, in accordance with the BPM for Resource Adequacy and the BPM for Outage Operations.” (emphasis added) This approach would treat MATS compliance as any other operational
circumstance that would force the shutdown of a unit. It recognizes that the Classic Seven will be
supplying capacity for approximately 45.5 weeks, including during summer and winter peaks.
Moreover, as explained in the Testimony of David F. Ronk, Consumers Energy
has compared its remaining portfolio of generation assets against its projected peak demands for
the April and May 2016 timeframes. As shown in the analysis, even without the Classic Seven,
Consumers Energy projects having 7,339 MW of available generation against a peak load of
4,968 MW in April and 5,724 in May 2016. This equates to a reserve margin of 47% and 28%
respectively.37 MISO has conducted its Attachment Y analysis and found that the shutdown of
the Classic Seven does not pose a reliability risk.
37 Id.
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Conversely, if Consumers Energy is forced to pay a fee at Cost of New Entry for
12 months as a financial replacement to the Classic Seven capacity, Consumers Energy estimates
that the cost would be approximately $85 million.38
2. The Classic Seven Participate in 2015-2016 Auction and the Commission Grants Waivers to the Must-Offer Requirements for the 6.5 Week Gap and for the Requirement to Purchase Replacement ZRCs Under the MISO Tariff:
A Forced Outage or Generator Forced Outage is an immediate reduction in output, Capacity or removal from service, in whole or in part, of a Generation Resource by reason of an Emergency or threatened Emergency, unanticipated failure, inability to return on schedule from a Planned Transmission Outage, or other cause beyond the control of the owner or operator of the facility, as specified in the relevant portions of the BPM for Outage Operations. A reduction in output or removal from service of a Generation Resource in response to changes in Energy Market conditions does not constitute a Generator Forced Outage.
A Generator Planned Outage is the scheduled removal from service, in whole or in part, of a Generation Resource for inspection, maintenance or repair with the approval of the Transmission Provider in accordance with the Business Practices Manuals.
The IMM has stated that use of the existing outage coordination process to
resolve the MATS retirement issue would be “inconsistent with the current Tariff provisions.”39
The IMM indicated he would not be opposed to “MISO filing for a tariff waiver or exception
that would allow planning resources to retire in April 2015 if MISO finds that there are no
adverse reliability consequences.”40
If the Commission determines it is not appropriate to grant waiver of these
definitions to enable the 6.5 week period to be considered a scheduled outage, Consumers
Energy believes the Commission should waive the must-offer requirement under Section 69A.5
38 Id. at 14, lines 6-12. 39 See Memorandum from David Patton and Michael Chiasson to the Supply Adequacy Work Group at 2 (Sep. 10, 2013), available at https://www.misoenergy.org/Events/Pages/SAWG20120905.aspx (last visited Jun. 20, 2014). 40 Id. Note the IMM was focused on the original MATS compliance deadline of 2015. As noted above, Consumers Energy has secured the 1-year extension for the Classic Seven.
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and the requirement to purchase replacement ZRCs under Section 69A.3.1.h for the 6.5 week
period between April 16 and May 31, 2016.
As discussed in the prior section, Consumers Energy is anticipated to maintain a
planning reserve margin of 47% to 28% between the time operations of the Classic Seven are
suspended and the end of the 2015-2016 Planning Year during the 6.5 week period. Accordingly,
it would be unnecessary to replace the ZRCs associated with the Classic Seven.
3. The Classic Seven Participate in 2015-2016 Auction and the Commission Requires Consumers Energy to Purchase ZRCs: (1) Only for the 6.5 Week Period and (2) Only if They Are Available If, despite the more than adequate projected planning reserve margin, the
Commission nevertheless determines that Consumers Energy should purchase replacement ZRCs
for the 6.5 week period, the Commission should place certain conditions on any such finding:
Consumers Energy should only be required to purchase ZRCs to the extent they are available. If there are less than 940.7 MW or they are not available for the 6.5 week product, the remaining obligation under Section 69A.3.1.h would be waived;
The Commission should specify that the replacement is only for the 6.5 week period and is not an annual product; and
Given the potential lack of a competitive market for this replacement product, the Commission should also place boundaries on the just and reasonable cost any replacement capacity could be offered. Under this third option, Consumers Energy would make good faith efforts to
replace the shutdown capacity from the Classic Seven with replacement capacity under Section
69A.3.1.h, as modified by the outcome in Docket No. ER14-2113. Consumers Energy would
take action despite being resource sufficient for the 6.5 week period and despite the lack of
assurance that the substitute capacity would actually be available during the 6.5 week period.
The primary benefit of this third option is that it would waive any financial
penalty of tariff violation for Consumers Energy’s inability to purchase capacity that doesn’t
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exist or exists only at prices that are not just and reasonable. If, for example, there are 900 MW
of available replacement ZRCs, that would be the limit of Consumers Energy’s responsibility to
make up for the 940.7 Classic Seven’s units. There would be no charge or penalty associated
with the remaining 40.7 MW for which Consumers Energy was unable to purchase replacement
ZRCs at a reasonable cost.
Given the limited potential pool of replacement capacity, in the event that the
Commission does not grant Consumers Energy a waiver under the first two options discussed,
the Commission must take measures to assure the replacement capacity is offered at just and
reasonable costs, and is reflective of the off-peak period in question. In addition, the Commission
should require that any Market Participant selling replacement ZRCs not schedule a planned
outage during the period covered by those replacement ZRCs. Without such a requirement,
customers may be paying for capacity that is not really available.
4. The Classic Seven Participate in 2015-2016 Auction and the Commission Requires Consumers Energy to Pay a 6.5 Week Deficiency Charge if ZRCs are Not Available In the event that none of the proposed mechanisms set forth above are approved
by the Commission, Consumers Energy respectfully requests that the Commission recognize the
unique circumstances presented here and limit any financial imposition to the value of off-peak
capacity during the 6.5 week period.
If the Commission determines that Consumers Energy must pay a fee for the 6.5
week period, the charge must be reasonable as to both the time and amount. It would be
inappropriate to require Consumers Energy to pay for an annual product when the Classic Seven
will be operational for the 45.5 weeks of the 2015-2016 Planning Year. The price should
recognize that the April to May period is off-peak. The Commission must also make it clear that
if no ZRCs or insufficient ZRCs are available to purchase at a just and reasonable cost for the
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period from April 16 to May 31, 2016, then Consumers Energy should not be found to be in
violation of the MISO Tariff.
IV. THE PROPOSED REMEDIES MEET THE COMMISSION’S STANDARD FOR GRANTING WAIVER Specifically, Consumers Energy requests waiver to either: (1) treat the 6.5 week
difference in the compliance deadlines as if the Classic Seven were on a scheduled outage41 or
(2) relieve the Classic Seven of the must-offer requirement of Section 69.A.5 of the MISO Tariff
for the period from April 16, 2016 through May 31, 2016 and the requirement to purchase
replacement ZRCs under Section 69A.3.1.h. If the Commission determines that, despite the
projected planning reserve margins of between 28% and 47% for Consumers Energy’s service
territory, Consumers Energy must purchase replacement ZRCs under Section 69A.3.1.h for this
period, the Commission should condition any such requirement on the availability of
replacement ZRCs at just and reasonable costs. At most, Consumers Energy should be subject to
a financial fee limited to the 6.5 week period and at the auction clearing price for zone 7. In no
instance should Consumers Energy’s efforts to comply with MATS be determined to result in a
Tariff violation.
In order to grant waivers to tariff provisions, the Commission has required that the
waiver meet four requirements; (1) Consumers Energy has been unable to comply with the tariff
provision at issue in good faith; (2) the waiver is of limited scope; (3) a concrete problem will be
remedied; and (4) the waiver does not have undesirable consequences, such as harming third
parties.42
41 Under Section 69.A.5, “[t]his must offer obligation does not apply to the extent that the capacity resource is unavailable due to full or partial forced or scheduled outage.” 42 Midcontinent Indep. Sys. Operator, Inc., 146 FERC ¶ 61,135 at P 8 (2014); citing PJM Interconnection, L.L.C., 135 FERC ¶ 61,069 at PP 8-9 (2011); ISO New England Inc., 134 FERC ¶ 61,182 at P 8 (2011); California Indep. Sys. Operator, Inc.,132 FERC ¶ 61,004 at P 10 (2010); Hudson Transmission Partners, LLC, 131 FERC ¶ 61,157 at
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A. Good Faith The Issues that have led to this waiver request arise from the confluence of EPA’s
requirements and the MISO Tariff – Consumers Energy has acted reasonably pursuant to its
service obligations to meet environmental requirements in a prudent manner. It is working
diligently to replace the capacity losses created by the mothballing of the Classic Seven.
There can be no question Consumers Energy has acted in good faith. First,
Consumers Energy has acted in a timely manner to submit its Attachment Y applications for the
Classic Seven to MISO so that the reliability analysis could be performed well in advance of the
Planning Year. Second, Consumers Energy is purchasing a gas-fueled generating plant that will
be incorporated into its fleet before the date that the Classic Seven units are mothballed and is
taking various additional steps which may include the expanded use of Demand Response, to
fully bridge any capacity gap. Third, Consumers Energy will be resource sufficient. As explained
by David F. Ronk, Consumers Energy will have a planning reserve margin of 28%-47% even
during the 6.5 week period after the Consumers Energy mothballing of the Classic Seven.43
Fourth, Consumers Energy has worked cooperatively with MISO to address the 6.5 week issue.
From September 2012 to December 2013, Consumers Energy and the other
participants in the SAWG worked with MISO to pursue a tariff amendment that would resolve
the issue.44 On December 11, 2013, MISO notified the SAWG that MISO did not intend to file
MATS tariff language:
P 10 (2010); Pittsfield Generating Co., L.P., 130 FERC ¶ 61,182 at P 9-10 (2010); accord ISO New England Inc.- EnerNOC, 122 FERC ¶ 61,297 (2008); Central Vermont Public Service Corp., 121 FERC ¶ 61,225 (2007); Waterbury Generation LLC, 120 FERC ¶ 61,007 (2007); Acushnet Co., 122 FERC ¶ 61,045 (2008). 43 Attachment A, Testimony of David F. Ronk at 13, lines 8-11. 44 See Whitepaper presented on behalf of DTE Electric, IPL, Wisconsin Public Service, Consumers Energy, and Hossier Energy at the June 2, 2013 SAWG meeting available at https://www.misoenergy.org/Events/Pages/SAWG20130606.aspx (last visited Jun. 20, 2014). See also, Minutes of the December 13, 2013 SAWG meeting, available at https://www.misoenergy.org/Events/Pages/SAWG20140109.aspx (last visited Jun. 20, 2014).
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“After careful evaluation of recent discussions with stakeholders and hearing the comments at the December 5 Supply Adequacy Working Group (SAWG) meeting, the Midcontinent Independent System Operator (MISO) will not initiate a FERC filing to exempt Planning Resources in order to meet environmental regulations from certain Replacement and Must Offer Tariff obligations. MISO understands that any Market Participant may opt to seek a waiver from FERC on these Module E-1 requirements. MISO is committed to continuing its stakeholder process through the SAWG on this topic including the development of enhancements to the Resource ZRC replacement provisions of the Tariff.” (Section 69A.3.1.h Mothballing, Decommissioning or Retirement of Resources)45 Accordingly, MISO expressly recognized the option of Market Participants seeking waiver.
In sum, Consumers Energy has worked diligently to comply with MATS and
pursue options in cooperation with other Stakeholders and MISO. If the issue is difficult to
resolve on a generic basis, the circumstance-specific waiver request is an appropriate means to
prevent unjust and unreasonable costs to Consumers Energy customers.
B. Limited Scope The issue presented is limited in scope. It is limited to a 6.5 week period at the
end of the 2015-2016 Planning Year brought on by the timing differential between a particular
EPA compliance deadline and the MISO Planning Year.
C. Concrete Problem The problem is concrete, as it addresses a specific issue with respect to the
relationship of the MATS compliance deadline and the MISO Planning Year that, absent waiver,
would cause Consumers Energy’s Classic Seven generating units to be treated inequitably.
Absent a waiver, Consumers Energy could be subject to significant and unreasonable penalties –
either subject to non-compliance with EPA regulations, non-compliance with MISO’s Tariff, or
forced to pay. These costs would not improve or supplement resource adequacy, but would only
require Consumers Energy customers to pay for expenses not needed to ensure resource
45 See Minutes of the December 13, 2013 SAWG Meeting.
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adequacy or reliability. Furthermore, there is significant risk that there will be no replacement
ZRCs to buy. Currently, there is no incremental auction under the MISO Tariff, and those with
excess capacity may not be in a position to sell ZRC’s bilaterally for a 6.5 week period at a just
and reasonable price.46
D. Undesirable Consequences Treating the 6.5 week period as an outage or granting the waiver of the must-offer
requirement for the Classic Seven will not harm third parties: (1) Consumers Energy will meet
all of its planning reserve requirements – the Classic Seven will be on line during the 2015
summer, fall, and 2015/2016 winter seasons; (2) Consumers Energy will have sufficient capacity
during the period in question; and (3) the waiver from the must-offer requirement for the
requested period will allow Consumers Energy’s generation to be treated equitably relative to all
other generators in the auction and prevent unnecessary costs to be imposed on Consumers
Energy.
Given the substantial reserve margins for this shoulder period, a requirement to
purchase replacement zonal ZRCs for the period in question47 would be an unnecessary and
unwarranted cost, and would be unjust and unreasonable. An additional 940.7 MW of
replacement capacity merely increases Consumers Energy’s expenses with no benefits to its
customers.
The Classic Seven will be available during the 2015 summer peak period and the
2015-2016 winter peak. Consumers Energy will either use this resource as a source to meet its
MISO Resource Adequacy Requirements for the 2015-2016 Planning Year. Granting the waiver
does not in any way mitigate Consumers Energy’s responsibility to maintain adequate resources
46 Attachment A, Testimony of David F. Ronk at 12, lines 11-12. As noted, Consumers Energy could also be subject to civil penalties. 47 See § 69A.3.1.h.
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and reserves to meet its reliability obligations at any time. Under the specific circumstances
presented herein, granting a waiver appropriately protects Consumers Energy from what would
be an unjust and unreasonable expense to procure unneeded additional capacity for this limited
6.5 week period.
Furthermore, Consumers Energy has significant concerns that it will be forced to
buy ZRCs for the whole Planning Year even though the Classic Seven will be available for 45.5.
weeks of the Planning Year. Consumers Energy should not be double charged – for supporting
both the operation of the Classic Seven and the purchase of replacement ZRCs or other fees. The
requested waiver provides the necessary correction to the one-time period timing difference
between the EPA’s MATS compliance deadline and the MISO 2015-2016 Planning Year.
V. REQUESTED DATE Consumers Energy requests that the Commission issue an order within 60 days of
the date of filing, August 7, 2014.
VI. COMMUNICATIONS All correspondence and communications concerning this filing should be directed to:
Deborah A. Moss Steven L. Gaarde Principal Attorney Director of Transmission and Consumers Energy Company Regulatory Strategies 1730 Rhode Island Avenue, NW Consumers Energy Company Suite 1007 Room P12-707A Washington, DC 20036 1945 W. Parnall Road (202) 778-3343 Jackson, Michigan 49201 [email protected] (517) 788-1096 [email protected]
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VII. CONCLUSION WHEREFORE, for the reasons discussed herein, Consumers Energy respectfully
requests that the Commission grant the requested relief as described herein.
/s/_Deborah A. Moss_____ Deborah A. Moss Principal Attorney Consumers Energy Company 1730 Rhode Island Avenue, NW Suite 1007 Washington, DC 20036 (202) 778-3343
Dated: August 7, 2014 Washington, D.C.
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CERTIFICATE OF SERVICE
I hereby certify that on this 7th day of August, 2014, I have served a copy of the
foregoing document upon each person designated on the official service list compiled by the
Secretary in this proceeding.
/s/_Deborah A. Moss____ Deborah A. Moss Principal Attorney Consumers Energy Company 1730 Rhode Island Avenue, NW Suite 1007 Washington, DC 20036 (202) 778-3343
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ATTACHMENT A
Testimony of David F. Ronk, Jr.
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UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION
) ) Consumers Energy Company ) Docket No. EL14-___-000 ) )
Testimony of David F. Ronk, Jr. 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
1 Q. Please state your name and business address.
2 A. My name is David F. Ronk, Jr. and my business address is 1945 West Parnall Road,
3 Jackson, Michigan 49201.
4 Q. By whom are you employed and in what capacity?
5 A. I am employed by Consumers Energy Company (“Consumers Energy” or the
6 “Company”) as Director for Electric Transactions and Wholesale Settlements.
7 Q. What are your responsibilities as the Director of Electric Transactions and Wholesale
8 Settlements?
9 A. Since August 1997, I have been responsible for the development of strategies to manage
10 the Company’s exposure to the financial risks associated with the operation of its
11 generating units and the purchase of capacity and energy from others to serve the
12 electricity demand of Consumers Energy customers. Between 2007 and 2012, I was also
13 responsible for the Company’s resource planning activities. Beginning in 2012, I also
14 became responsible for the Company’s settlements of wholesale transactions.
15 Q. Please summarize your educational background.
16 A. I received the degree of Bachelor of Science in Engineering with a specialty in Civil
17 Engineering from the University of Michigan in 1975.
18 Q. Are you a Professional Engineer?
19 A. Yes, I have been a Registered Professional Engineer in the State of Michigan since 1980.
20 Q. Please summarize your professional experience at Consumers Energy.
21 A. I have practiced engineering while employed by Consumers Energy since January 1976
22 with assignments including: (i) the construction of a 800 MW coal fueled electric
23 generating plant located near Grand Haven, Michigan; (ii) the development and
1
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1 engineering of a 50 MW wood fueled electric generating station proposed to be
2 constructed near Hersey, Michigan; (iii) the partial construction of a two unit 1350 MW
3 nuclear fueled electric generating plant located in Midland, Michigan; (iv) assistance to
4 attorneys defending the Company in litigation with the steam host associated with the
5 partially completed nuclear fueled electric generating plant, (v) development of a 1240
6 MW gas-fueled co-generation electric generating plant; (vi) design and procurement of
7 utility motor vehicles; (vii) operation of a fleet of rail cars used to haul coal; and (viii)
8 development of the Company’s Acid Rain Program compliance strategy and program.
9 Q. Have you testified before the Federal Energy Regulatory Commission (“FERC” or
10 “Commission”)?
11 A. Yes, I sponsored testimony or submitted affidavits in the following proceedings:
12 FERC Docket No. ER98-4421, et. seq., the Company’s 2004 Generation Market 13 Power Analysis;
14 FERC Docket No. ER02-1021, Supplemental Protest against Ontario Energy Trading 15 International Corporation.
16 Q. Have you previously provided testimony before the Michigan Public Service
17 Commission (“MPSC”) before?
18 A. Yes. I sponsored testimony in the following proceedings:
19 MPSC Case No. U-10710-R, the Company’s 1995 Power Supply Cost Recovery 20 (“PSCR”) Reconciliation Case, regarding the treatment of Sulfur Dioxide Emission 21 Allowances;
22 MPSC Case No. U-10973-R, the Company’s 1996 PSCR Reconciliation Case;
23 MPSC Case No. U-11180, the Company’s 1997 PSCR Plan Case, regarding the 24 treatment of Sulfur Dioxide Emission Allowances and certain permit conditions;
25 MPSC Case No. U-12488, regarding certain terms and conditions of service for retail 26 open access customers;
2
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1 MPSC Case No. U-13917, the Company’s 2004 PSCR Plan Case, regarding electric 2 capacity requirements; the appropriate calculation of energy payment rates under 3 certain qualified facility contracts, and the appropriate treatment of third party sales 4 revenues in calculating PSCR costs;
5 MPSC Case No. U-14031, regarding the calculation of the Hold Harmless Amount 6 associated with the proposed Resource Conservation Plan (“RCP”);
7 MPSC Case No. U-14274, the Company’s 2005 PSCR Plan Case, regarding electric 8 capacity requirements and costs for 2005;
9 MPSC Case No. U-14347, regarding Operating and Maintenance expense and Capital 10 cost associated with Electric and Fuel Supply for 2006 test year and Power Supply 11 cost for the five-year period 2005 through 2009;
12 MPSC Case No. U-13917-R, the Company’s 2004 PSCR Reconciliation Case, 13 regarding power supply costs incurred in 2004;
14 MPSC Case No. U-14701, the Company’s 2006 PSCR Plan Case, regarding electric 15 capacity requirements and costs for 2006;
16 MPSC Case No. U-14274-R, the Company’s 2005 PSCR Reconciliation Case, 17 regarding power supply costs incurred in 2005;
18 MPSC Case No. U-15001, the Company’s 2007 PSCR Plan Case, regarding electric 19 capacity requirements and costs for 2007;
20 MPSC Case No. U-15245, regarding Operating and Maintenance expense and Capital 21 cost associated with Electric and Fuel Supply for 2008 test year and Power Supply 22 cost for the five-year period 2007 through 2011;
23 MPSC Case No. U-14701-R, the Company’s 2006 PSCR Reconciliation Case, 24 regarding Power Supply Costs incurred in 2006;
25 MPSC Case No. U-15290, regarding the Company’s Balanced Energy Initiative;
26 MPSC Case No. U-15415, the Company’s 2008 PSCR Plan Case, regarding electric 27 capacity requirements and costs for 2008;
28 MPSC Case No. U-15001-R, the Company’s 2007 PSCR Reconciliation Case, 29 regarding Power Supply Costs incurred in 2007;
30 MPSC Case No. U-15645, regarding Operating and Maintenance expense and Capital 31 cost associated with Electric and Fuel Supply for 2009 test year and Power Supply 32 cost for the five-year period 2007 through 2013;
3
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1 MPSC Case No. U-15675, regarding the Company’s 2009 PSCR Plan, regarding 2 electric capacity requirements and costs for 2009;
3 MPSC Case No. U-15805/U-15889, regarding the 2009 Renewable Energy Plan and 4 Energy Optimization Plan;
5 MPSC Case No. U-15415-R, the Company’s 2008 PSCR Reconciliation Case, 6 regarding Power Supply Costs incurred in 2008;
7 MPSC Case No. U-16045, the Company’s 2010 PSCR Plan, regarding electric 8 capacity requirements and costs for 2010;
9 MPSC Case No. U-16191, regarding Operating and Maintenance expense and Capital 10 cost associated with Electric and Fuel Supply for the test year ended June 30, 2011 11 and Power Supply cost for the 12-month period ended June 30,2011;
12 MPSC Case No. U-15675-R, the Company’s 2009 PSCR Reconciliation Case, 13 regarding Power Supply Costs incurred in 2009;
14 MPSC Case No. U-16300, the Company’s 2009 Renewable Cost Reconciliation 15 Case, regarding renewable energy costs incurred in 2009;
16 MPSC Case No. U-16432, the Company’s 2011 PSCR Plan, regarding electric 17 capacity requirements and costs for 2011;
18 MPSC Case No. U-16543, the Company’s application for approval of a Renewable 19 Energy Plan amendment;
20 MPSC Case No. U-16794, regarding Operating and Maintenance expense and Capital 21 costs associated with Energy Supply Operations for the test year ended September 30, 22 2012;
23 MPSC Case No. U-16045-R, the Company’s 2010 PSCR Reconciliation Case, 24 regarding Power Supply Costs incurred in 2010;
25 MPSC Case No. U-16301, the Company’s 2010 Renewable Cost Reconciliation 26 Case, regarding renewable energy costs incurred in 2010;
27 MPSC Case No. U-16890, the Company’s 2012 PSCR Plan, regarding electric 28 capacity requirements and costs for 2012;
29 MPSC Case No. U-16581, the Company’s application for biennial review of its 30 Renewable Energy Plan;
31 MPSC Case No. U-16432-R, the Company’s 2011 PSCR Reconciliation Case, 32 regarding Power Supply Costs incurred in 2011;
4
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1 MPSC Case No. U-16655, the Company’s 2011 Renewable Cost Reconciliation 2 Case, regarding renewable energy costs incurred in 2011;
3 MPSC Case No. U-17087, regarding capacity planning matters associated with the 4 test year beginning January 1, 2013, and subsequent periods;
5 MPSC Case No. U-17095, the Company’s 2013 PSCR Plan, regarding electric 6 capacity requirements and costs for 2013;
MPSC Case No. U-16890-R, the Company’s 2012 PSCR Reconciliation Case, regarding Power Supply Costs incurred in 2012;
7 MPSC Case No. U-17301, the Company’s application for biennial review of its 8 Renewable Energy Plan;
9 MPSC Case No. U-17321, the Company’s 2012 Renewable Cost Reconciliation Case 10 regarding renewable energy costs incurred in 2012 and the Company’s compliance 11 with Michigan’s renewable portfolio standards;
12 MPSC Case No U-17317, the Company’s 2014 PSCR Plan regarding electric 13 capacity requirements and costs for 2014;
14 MPSC Case No. U-17496, the Company’s application for MPSC approval of a 15 process for acquiring capacity; and
16 MPSC Case No. U-17631, the Company Renewable Cost Reconciliation Case, 17 regarding renewable energy costs incurred in 2013.
18 Q. What is the purpose of your testimony?
19 A. The purpose of my testimony is to provide background and facts relevant to Consumers
20 Energy’s request for waiver of certain provisions of the Open Access Transmission,
21 Energy and Operating Reserve Markets Tariff (“Tariff”) of the Midcontinent Independent
22 System Operator, Inc. (“MISO”). My testimony also describes the efforts Consumers
23 Energy has made through the MISO stakeholder process to mitigate the Tariff non-
24 compliance risks, assure resource adequacy, and prevent financial harm to Consumers
25 Energy customers that will be caused by the U.S. Environmental Protection Agency’s
26 (“EPA”) Mercury and Air Toxics Standards (“MATS”) deadline, which is 6.5 weeks
5
20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
1 before the end of the MISO annual Resource Adequacy Capacity Construct Planning
2 Year. In general, my testimony supports various factual assertions that relate to material
3 arguments contained within the accompanying request for waiver.
4 Q. Was this testimony prepared by you or under your direct supervision?
5 A. Yes.
6 Q. Are you sponsoring any exhibits with your direct testimony?
7 A. Yes. I am sponsoring the following exhibits:
8 Exhibit A – Notices Provided in the form of MISO Tariff Attachment Y
9 Exhibit B – November 9, 2012 MISO Certification of Need Letters
10 Exhibit C – February 28, 2013 MDEQ MATS Extension Letters
11 Exhibit D – March 14, 2013 Revised Notices Provided in the form of MISO Tariff
12 Attachment Y
13 Exhibit E – Revised MISO Certification Letters
14 Exhibit F – Whitepaper on 6.5 Week Problem
15 Exhibit G – July 11, 2013 SAWG Presentation on MISO’s Response to 6.5 Week
16 Problem
17 Exhibit H – August 8, 2013 SAWG Presentation on MISO’s Response to 6.5 Week
18 Problem
19 Exhibit I – Consumers Energy’s July 25, 2013 Comments to MISO on 6.5 Week
20 Problem
21 Exhibit J – December 13, 2013 SAWG Motion on Tariff Changes
22 Q. Were these exhibits prepared by you or under your direct supervision?
23 A. Yes.
6
20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
1 MATS BACKGROUND
2 Q. Please describe the EPA MATS deadline.
3 A. The EPA’s MATS rules take effect on April 16, 2015. The EPA delegated to state
4 environmental agencies the authority to give generation owners a one-year extension of
5 that deadline when the generation owner can show that suspension of the operation of the
6 units would result in electrical system reliability issues. Consumers Energy originally
7 intended to comply with the April 16, 2015 deadline for the seven generation units that
8 are the subject of this filing. As such, Consumers Energy announced to MISO its
9 intention to suspend operation of the units on that date by providing notice in the form of
10 MISO Tariff Attachment Y to MISO indicating those plans (Exhibit A). As a result of
11 the Tariff process, MISO determined that the units were needed for reliability beyond
12 April 16, 2015 (Exhibit B). Accordingly, Consumers Energy obtained a one-year
13 extension from the Michigan Department of Environmental Quality (“MDEQ”) (Exhibit
14 C), meaning that the deadline for compliance on those units is now April 16, 2016, and
15 they must be retired or mothballed on that date or be subject to civil penalties. Having
16 received the one-year extension from the MDEQ, Consumers Energy provided revised
17 notice in the form of MISO Tariff Attachment Y that it intended to suspend operation of
18 the units on April 15, 2016 (Exhibit D). MISO determined that the units were not needed
19 for reliability beyond April 15, 2016 (Exhibit E). As noted earlier, this deadline is
20 approximately 6.5 weeks prior to the end of the 2015-2016 MISO Planning Year, which
21 runs from June 1, 2015 through May 31, 2016.
7
20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
1 Q. Is there any other EPA process that would permit compliance beyond April 16, 2016?
2 A. Yes. If a generation owner has received a one-year extension from a state environmental
3 agency, as Consumers Energy has done, then the generation owner can request an
4 Administrative Order (“AO”) from the EPA. However, an AO is not an extension of the
5 compliance deadline beyond April 16, 2016. It is only an agreement that the EPA will
6 not seek civil penalties for noncompliance. Other regulatory bodies would retain their
7 authority to seek penalties. The EPA cannot grant an AO until after the MATS deadline
8 has passed, and then only if the generation owner presents a written analysis stating that
9 retirement or suspension of the unit would present a reliability risk. Studies of reliability
10 risk are to be conducted by the Planning Authority. MISO is the Planning Authority for
11 Consumers Energy, and MISO conducts its studies through the Attachment Y process.
12 As noted above, Consumers Energy submitted the required notice to MISO for each of
13 the seven units that will be retired or mothballed. While MISO determined that
14 retirement or mothballing would pose a reliability risk after April 16, 2015, MISO also
15 determined that, due to planned transmission upgrades, the units will no longer be
16 required for reliability after April 16, 2016. Therefore, Consumers Energy would not
17 qualify to receive an AO and keep the units online and in compliance with MATS.
18 Q. Describe the units to be mothballed.
19 A. The units to be mothballed are collectively known as the “Classic Seven.” J.C. Weadock
20 Units 7 & 8 (“Weadock Units”) are located in Hampton Township, Michigan. The
21 Weadock Units have a nameplate capacity of 151 MW each. B.C. Cobb Units 4 & 5
22 (“Cobb Units”) are located in Muskegon, Michigan. The Cobb Units have a nameplate
23 capacity of 156 MW each. J.R. Whiting Units 1, 2, & 3 (“Whiting Units”) are located in
8
20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
1 Erie, Michigan. Whiting Unit 1 has a nameplate capacity of 101.2 MW, Whiting Unit 2
2 has a nameplate capacity of 101.5 MW, and Whiting Unit 3 has a nameplate capacity of
3 124 MW. The total nameplate capacity of all seven units is 940.7 MW.
4 Q. Are these units being mothballed or retired?
5 A. Consumers Energy provided notice that it intended to suspend service of the Classic
6 Seven units through April 15, 2019. See Exhibit A.
7 Q. Should these units receive the same treatment as Indianapolis Power and Light
8 Company’s (“IPL”) units since they will not be retired on April 16, 2016, as the IPL units
9 will be?
10 A. Yes. The effect of Consumers Energy’s plan to suspend operation (or mothball) these
11 units will still create a 6.5 week gap in the availability of the capacity of these units in the
12 2015 Planning Year due to the arbitrary date determined by the enactment of MATS and
13 the arbitrary date of the end of MISO’s Planning Year. As is the case with IPL’s Eagle
14 Valley units, MISO has determined that suspension of Consumers Energy’s Classic
15 Seven units on April 16, 2016 will not create a reliability issue.
16 Q. In addition to suspending operation on April 16, 2016, what other scenarios did
17 Consumers Energy consider?
18 A. Consumers Energy evaluated the possibility of either retrofitting or refueling the Classic
19 Seven units in such a way that they could continue to be operated in compliance with
20 MATS, and thus avoid the need to suspend operation. However, Consumers Energy has
21 an obligation to serve customers in a reasonable and prudent manner, as regulated by the
22 MPSC. Retrofitting the plants to bring them in compliance with MATS, or refueling
9
20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
1 them to operate on natural gas, would not have been justified as reasonable and prudent
2 based on the information available at that time.
3 Q. What steps has Consumers Energy taken to replace the generation being mothballed?
4 A. Consumers Energy has committed to purchase a gas-fueled electric generation plant in
5 Jackson, Michigan, which will be incorporated into Consumers Energy’s generation fleet
6 before the date that the Classic Seven units are mothballed. The capacity of this plant is
7 542 MW. Consumers Energy is taking various additional steps to replace the remaining
8 capacity losses created by mothballing the Classic Seven. Consumers Energy is
9 confident that these additional steps, which may include, for example, expanded use of
10 customer self-generation, interruptible service and Demand Response in addition to
11 capacity additions, will be adequate to fully bridge any capacity gap. However,
12 Consumers Energy should not have to rush through the creation of any new programs or
13 further expedite the purchase of the Jackson plant in order to have those resources
14 available by the start of the 2015-2016 MISO Planning Year on June 1, 2015, when the
15 Classic Seven units will continue to be available until April 16, 2016. The duplication of
16 capacity for the first 45.5 weeks of the 2015-2016 MISO Planning Year is wholly
17 unnecessary, particularly when no reliability issue exists for the remaining 6.5 weeks of
18 the 2015 MISO Planning Year.1
1 If the Jackson Plant ZRCs are able to be transferred from their use prior to ownership transfer to the Company on the date of ownership transfer the Company’s shortfall may be as little as 400 MW assuming no other measures are implemented. The examples used in this testimony assume the shortfall for the remainder of the Planning Year remain at 942 MW.
10
20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
1 Q. Describe the 6.5 week issue created by the MISO annual Capacity Construct and the EPA
2 MATS deadline.
3 A. MISO’s annual capacity construct requires all available generation in the MISO footprint
4 to participate in the annual auction, which occurs on March 31st prior to the beginning of
5 the subsequent Planning Year. The subsequent Planning Year runs from June 1st through
6 the following May 31st. The next auction will therefore be held on March 31, 2015 for a
7 Planning Year running from June 1, 2015 through May 31, 2016. Generation owners that
8 own and operate units that will retire due to MATS requirements, and who have received
9 the one-year extension, will retire those units on April 16, 2016, approximately 6.5 weeks
10 prior to the end of that Planning Year.
11 Under the annual capacity construct, as specified in the MISO Tariff, units that
12 “clear” (or are sold to bidders) in the annual capacity auction must be available for all
13 8,760 hours2 of the Planning Year, unless they are on a scheduled or forced outage.
14 Therefore, a unit that clears in the auction and is subsequently forced to retire prior to the
15 end of the Planning Year is required, under the MISO Tariff, to purchase replacement
16 capacity or pay a capacity deficiency charge for the remainder of the Planning Year,
17 regardless whether the replacement capacity is actually needed. The MISO Tariff
18 requires all generation within the MISO footprint that is not on outage to be offered into
19 the day-ahead or real-time co-optimized market every day. Further each Market
20 Participant can only legally withhold 50 MW from the annual capacity auction; any
21 resources held out of the auction beyond 50 MW are considered to be physically withheld
22 and would be subject to investigation for market manipulation.
2 2016 is a leap year thus the 2015-2016 Planning Year will have 8,784 hours, rather than the typical 8,760 hours.
11
20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
1 Q. Please describe the difficulties and restrictions associated with procuring replacement
2 capacity or replacement Zonal Resource Credits (“ZRCs”).
3 A. Once cleared and settled in the auction, the MISO Tariff requires generation owners with
4 units that will be retired or suspended during the Planning Year to replace that capacity
5 with equivalent ZRCs, which are an annual financial capacity product. A generation
6 owner cannot purchase a 6.5 week quantity of ZRCs through the auction, and such an
7 amount may not be available on the bilateral market. Any replacement ZRCs must be
8 from sources that were originally offered but not cleared in the auction, from new
9 generation, or from the 50 MW legally withheld by a market participant. However, there
10 is no Tariff provision or rule that can compel the owner of the qualified ZRCs to sell
11 them to a party needing them, nor are there any provisions that ensure the cost will be just
12 and reasonable. Generation that is retired or suspended on April 16, 2016, will be
13 available and be required to be offered into the markets for 45.5 weeks of the 52 week
14 Planning Year, and since all Planning Reserve Margin Requirements (“PRMR”) are
15 cleared and settled, this requirement to buy replacement ZRCs puts the generation owner
16 at risk. Either they will: (1) be forced to buy replacement ZRCs at a price inconsistent
17 with appropriate seasonal prices; or (2) be unable to buy replacement ZRCs, end up out
18 of compliance with the Tariff, and be exposed to penalties.
19 Q. What is Consumers Energy’s analysis of the resource adequacy in the 6.5 weeks at the
20 end of the 2015-2016 Planning Year?
21 A. Consumers Energy is obligated to meet the energy needs of its customers. The 6.5 week
22 period at the end of the Planning Year is a period of low demand. During the 6.5 week
23 period at issue, Consumers Energy will have more than enough generation online to meet
12
20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
1 the needs of its customers, even with the Classic Seven units offline. Even without those
2 units, Consumers Energy projects having 7,339 MW of available generation against a
3 projected peak load of 4,968 MW in April 2016 and 5,724 MW in May 2016. This
4 equates to a reserve margin of 47% and 28%, respectively. Buying replacement ZRCs,
5 therefore, will do nothing to improve the reliability of service to Consumers Energy’s
6 customers, and will result in its customers being charged more with no corresponding
7 benefit.
8 Q. Please explain what the cost to your customers would be for replacement of the ZRCs.
9 A. The MISO annual capacity construct does not permit a generation owner to purchase
10 prospective replacement ZRCs in the auction. To effectively purchase replacement ZRCs
11 the Company would need to retire (or possibly suspend operation of) the units prior to the
12 first day of the Planning Year and then enter the Planning Resource Auction short of the
13 ZRCs that would otherwise be provided by the retired units. The market would clear
14 with less capacity available to supply the same amount of demand for the entire Planning
15 Year and probably increase the clearing price for the entire market. To develop an
16 estimate of potential price exposure to just Consumers Energy due to the suspension of
17 the Classic Seven units, Consumers Energy used the most recent auction clearing price
18 for Zone 7 as well as the current Cost of New Entry (“CONE”) to develop a range of
19 potential prices. We anticipate the price for the 2015 Planning Year will fall in that range
20 however the specific prices to be observed are highly dependent on the offers of multiple
21 market participants. The equation to calculate this is:
22 $/MW-day x volume in MW x 365 days.
13
20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
1 Using current market prices, the cost of replacement ZRCs would be:
2 $16.75 x 940.7 MW x 365 days = $5,751,204.63
3 Using the current CONE price:
4 $246.85 x 940.7 MW x 365 days = $84,757,305.18
5 Thus the cost to replace the 940.7 MW of capacity for the full year may range between
6 $5.7 million and $84.7 million, if the capacity is able to be purchased. Additionally the
7 loss of capacity for the Planning Year will increase the clearing price on any additional
8 capacity the Company planned to purchase in the Planning Resource Auction.
9 In addition to these dollar amounts, stakeholder discussions have been taking
10 place at the MISO Supply Adequacy Working Group (“SAWG”) regarding the
11 application of MISO’s Capacity Deficiency Charge for entities that are unable to replace
12 their retired or mothballed ZRCs. Under a proposal being considered by the SAWG,
13 entities that are required to replace a resource for most of a Planning Year may be liable
14 to pay nearly three times the value of CONE per MW in assessments under the Capacity
15 Deficiency Charge, imposing even further costs on ratepayers.
16 Q. Will requiring Consumers Energy’s customers to pay for replacement ZRCs during the
17 6.5 week period add value for MISO Market Participants?
18 A. No. Requiring such payment will not improve reliability nor make any new generation
19 available. At the same time, this requirement will impose costs on Consumers Energy’s
20 customers and allocate that money elsewhere, while conveying no additional benefits to
21 any party. Such a practice amounts to extracting money from customers for no tangible
22 reason, artificially creating new costs.
14
20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
1 Q. MISO’s filing in Docket No. ER14-2113-000 provides for Tariff changes that would
2 allow for replacement ZRCs to be procured outside of Zone 7. Does that filing materially
3 change the ability of Consumers Energy to procure replacement ZRCs?
4 A. The Tariff changes proposed in Docket No. ER14-2113-000 may add some flexibility in
5 the procurement of replacement ZRCs, but it will not completely address the problem.
6 While market participants will be able to purchase ZRCs from other zones within MISO,
7 provided that capacity import and export limits are not violated, the filing does not allow
8 the ZRCs to be purchased from outside the MISO footprint. Because a number of
9 generation units from across MISO are scheduled to retire or be mothballed, the amount
10 of available ZRCs from any location in MISO will decrease. However, there will still be
11 enough generation to meet load during the 6.5 week period regardless of the ability to
12 procure replacement ZRCs.
13 Q. Please describe any efforts Consumers Energy made in the MISO stakeholder process to
14 resolve the 6.5 week problem.
15 A. Consumers Energy, together with IPL, DTE Electric, Wisconsin Public Service, and
16 Hoosier Energy, produced a whitepaper that discussed the MATS issue, which was
17 presented at the June 6, 2013 SAWG meeting. (Exhibit F). The whitepaper and
18 presentation discussed several options to address the 6.5 week problem. At subsequent
19 SAWG meetings in July and August 2013, MISO presented its analysis in response to the
20 whitepaper, looking at general solutions, including treating the 6.5 week period as an
21 outage. (Exhibits G and H respectively). Consumers Energy provided additional written
22 comments to MISO in response to these SAWG discussions (Exhibit I). In September
23 2013, MISO’s Independent Market Monitor (“IMM”) stated that the IMM would not
15
20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
1 support the outage option, as it was not consistent with the MISO Tariff, but added that
2 the IMM was not opposed to MISO filing for a Tariff change. Consequently, at the
3 December 13, 2013 SAWG meeting, stakeholders passed a resolution asking MISO to
4 file a Tariff revision that would exempt generation resources from being required to
5 procure replacement ZRCs if they were retired or mothballed in order to comply with
6 state or federal environmental regulations, including MATS (Exhibit J). Consumers
7 Energy voted in favor of this resolution and verbally advocated for it at the SAWG.
8 Q. What was MISO’s reaction?
9 A. Despite 16 months of good faith negotiations between MISO and its stakeholders, MISO
10 announced that they would not make Tariff revisions, even with clear support from
11 stakeholders through the SAWG. MISO reasoned that, even though the MATS issue is a
12 unique, one-time problem, MISO did not want to create an exemption that could apply to
13 future environmental retirements or suspensions. MISO did add the caveat that
14 stakeholders were still free to ask FERC for a waiver.
15 Q. Will MISO’s proposed solution in Docket No. ER14-2113-000 increase the available
16 capacity?
17 A. No. The effect of the solution in Docket No. ER14-2113 will be to allow capacity to be
18 more freely bought and sold across the entire MISO footprint, not just within zones, but
19 the actual amount of capacity will not be affected.
20 Q. Does MISO need to be concerned about reliability during this 6.5 week period?
21 A. No. While both MISO and Consumers Energy take appropriate actions to maintain
22 reliability year round, MISO does not need to be concerned during the 6.5 week period at
23 issue in this case. This is a shoulder period and, as discussed earlier, without the Classic
16
20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
1 Seven, Consumers Energy will have a reserve margin of 47% in April 2016 and a reserve
2 margin of 28% in May 2016.
3 Q. Does this conclude your testimony?
4 A. Yes.
17
20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
EXHIBIT A
Notices Provided in the form of MISO . Tariff Attachment Y 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
I •· I C~nsu~ I Count onUs
A CMS Energy Company Timotfw J. Sparks, P. E. Vice President February 8, 2012 Energy Supply Operations
Jeffrey R. Webb Senior Director - Expansion Plmming Midwest Independent Transmission System Operator, Inc. 701 City Center Drive Carmel, IN 46032
Re: Notice oflntent to Place Generation Units in Extended Reserve Shutdown Status
Consumers Energy Company ("Consumers Energy" or the "Company") hereby provides notice to Midwest Independent Transmission System Operator, Inc. ("MISO") that it intends to place . seven (7) generating units into Extended Reserve Shutdown status effective April 1, 2015. Attached m·e notices of such intent in accordance with section 38.2.7 of MISO's Open Access Transmission, Energy m1d Operating Reserve Markets Tariff ("Tariff").
Your letter of Janum·y 23,2012 advised the Company ofMISO's policy for treatment of requests to decommission generating units or place generating units into extended reserve shutdown status service in accordance with section 38.2.7 of the Tariff. Your letter advised that MISO may regm·d such requests as (a) definitive plans to decommission generating units or initiate placement of generating units in extended reserve shutdown status or (b) scenm·ios for MISO to study and report expected transmission system impacts resulting from implementation of plans to decommission or place generating units in extended reserve shutdown status. So as to avoid unnecessm·y confusion the following clarification is being provided to MISO at this time.
The Company intends to place the seven (7) ·generating units in extended reserve shutdown status for a period of not less than 12 months beginning no later thm1 Aprill, 2015. Specifically those units m·e: Cobb Units 4 and 5; Weadock Units 7 and 8; and Whiting Units 1, 2, and 3.
Additionally, as requested in your letter, this response also serves as confirmation that the Company, in accordance with Tariff Section 38.2.7 is ready to enter into a System Support Resource ("SSR") Agreement, consistent with the Attachment Y -1.
Just as MISO needs definitive indications of Consumers' plans so that it can act accordingly, Consumers needs to have timely indication as to whether MISO intends to enter an SSR Agreement regarding any of these plm1ts so that Consumers can plan accordingly. Section 38.2.7 calls for Consumers to provide 26 weeks' notice of its plans to place these plants in extended reserve shutdown so that MISO can do required studies of system needs. Consumers expects and· ,, 1 requests that MISO notify Consumers within 26 weeks of this· letter (i.e. by August 7, 2012) ,I ! whether it chooses to enter one or more SSR Agreement(s) with Consumers regm·ding these 1 i
~Confidentia l Business Information ~
1945 W. Parna/1 Road • Jackson, M/49201 • Tel: 511788 1053 • Fax: 517788 5882 • www.consumersenergy.com 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
.•'
plants. If MISO is unable to provide Consumers with a definitive indication of its plans by that date, please inform me of that at your earliest convenience.
In the event you have any questions regarding this matter, please contact Mary Caldwell at (517) 788-2039.
Regards,
Timothy J. Sparks Vice President Energy Supply Operations
cc: Mary Caldwell David F. Ronk, Jr. Dennis Dobbs
~ Con fidenti a l Business Information ~ 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
·''
ATTACHMENT Y Notification ofPetential Resource/SCU CI1ange of Status Version: 0.0.0 Effective: 7/28/2010 ATTACHMENT Y
Notification ofPotential Generation Resource/SCU Change of Status
This is a notification of potential change of Generation Resource or Synchronous Condenser Unit ("SCU") status in accordance with Section 38.2.7.a ofthe Tariff. An electronic copy ofthe completed form will be accepted by the Transmission Provider, however, a form will not be considered complete until the original form c9ntaining an original signature, including all attachments, is received by the Transmission Provider at the following address: Midwest ISO, Attention: Director ofTransmission Planning; 701 City Center Drive, Cannel, IN 46032.
The Transmission Provider may request additional information as reasonably necessary to
supp01t operations under the Tariff.
Name ofMarket Pmticipant owning and/or operating the Generation Resource ______Consumers Energy Company
Type of interest in Generation Resource: Q!: Owner of Generation Resource
~Operator of Generation Resomce
Name of Market Participant owning and/or operating the Synchronous Condenser Unit ("SCU")
Type of interest in SCU: 0 Owner ofSCU 0 Operator of SCU
Market Participant's state of organization or incorporation __M~_· c_h_i-=g_a_n ______20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
Generation Resource/SCU [plant and unit number(s)] __J_. R:- ._w_hi_t_i_n_g_u_n_i_t_s_1-_3___ _
As ofthe1st of April , 2015 Market Participant has definitely decided that it will [check
one]
[] decommission and retire the Generation Resource/SCU.
[1 suspend operation of and mothball the Generation Resource/S_CU for a period of not
less than - -12-- months or disconnect the Generation Resource/SCU fi·om the Transmission Provider Transmission System for a period of not less than
---- months. The estimated time to return the mothballed or disconnected
Generation Resource/SCU to service is ---- months. 1 Unit - 3 Years 2 Units - 3 Years 9 Months 3 Units - 4 Ye ars 3 Months The Generation Resource/SCU is fmi:her described as follows:
Location: Erie, Michigan
Number and type of generating unit(s) .2_£oal Fired
RMR Capacity in MW: ~
Power Factor Lagging
(i) __ P.F. (at Generator Main Leads) Whiting 1 0. 922 Whiting 2 0.924 Whiting 3 0 . 932 (ii) __ P.F. (at high side ofMain Powet· Transformer) Whiting 1 0 . 948 Whiting 2 0.949 Whiting 3 0 .957 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
Power Factor Leading
(i) __ P.F. (at Generator Main Leads) Whi t ing 1 0. 967 Whiting 2 0. 965 Whiti ng 3 0.935 (ii) __ P .F, (at high side of Main Power Transformer) Whiting 1 0.943 Whiti ng 2 0.942 Whiting 3 0. 901
Delivery Point: J. R. Whiti ng Substation
Revenue Meter Location (Use Resource IDs): J . R. Whiting Substa tion Operational and Environmental Limitations (check and describe all that apply):
(a) Operational 0 Maximum annual hours ofoperation: ______0 Maximum annual MWh: ____ · ______
0 Maximum annual starts: ------
D Other: ------· ------
(b) Environmental D Maximum annual NQ emissions: ______
D Maximum annual SQ emissions: ______
D Other:
I understand and agree that this notification is Confidential Information .under the Transmission Provider's Tariff and will not be made public by the Transmission Provider unless the Generation Resource/SCU becomes subject to an SSR Agreement. This notification is not intended to constitute an offer to enter into a binding Support Supply Resource Agreement, but is intended only as a notification ofthe status of the Generation Resource/SCU, in accordance with the Transmission Provider's Tariff.
The undersigned certifies that I am an officer ofthe Market Participant that owns or operates the Generation Resource/SCU, that I am authorized to execute and submit this notification on behalf of Generation Resource/SCU, and that the statements contained herein are true and correct. 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
;: 1
I ' '
Name: T J SPARJ(S Title: VP Energy Supply Operations Date: . Zj!Jfzol 2- - 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
..~ .
STATE OF Michigan
COUNTY OF Jackson
Before me, the undersigned authority, this day appeared Timothy J. Sparks , kn own to me to be the person whose name is subscribed to the foregoing Instrument, who, after first being sworn by me deposed and said:
"I am an officer of Consumers Energy Company , I am authorized to execute and submit the foregoing notification on behalf of· Consumers Energy Company , and the statements contained in such application are true and correct."
SWORN TO AND SUBSCRIBED TO BEFORE ME, the undersigned authority on this 8th day of February , 2012.
\1mm >. < um.~d.t~ Notary Public, State of M·, ~ h~~'r)
My Commission expires Oe.(:... cl..\, ;;l.G 1..3 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
' .
ATTACHMENT Y Notification ofPetential Resource/SCU Change of Status Version: 0.0.0 Effective: 7/28/2010 ATTACH1VIENT Y
Notification ofPotential Generation Resource/SCU Change of Status
This is a notification of potential change of Generation Resource or Synchronous Condenser Unit ("SCU'') status in accordance with Section38.2.7.a of the Tariff. An electronic copy ofthe completed forfl.l. will be accepted by the Transmission Provider, however, a form will not be considered complete until the original form containing an original signature, including all attachments, is received by the Transmission Provider at the following address: Midwest ISO, Attention: Director ofTransmission Planning; 701 City Center Drive, Carmel, 1N 46032.
The Transmission Provider may request additional information as reasonably necessary to
suppmt operations under the Tariff.
Name of Market Pa1ticipant owning and/or operating the Generation Resource ______Consumers Energy Company
Type of interest in Generation Resource: l2c Owner of Generation Resource li9 Operator of Generation Resource
Name ofMarket Participant owning and/or operating the Synchronous Condenser Unit ("SCU")
Type of interest in SCU: 0 Owner of SCU 0 Operator of SCU
Market Pa1ticipant's state of organization or incorporation _..:M..::i:..:ch=i..,_ga:::.:n:.::.______20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
Generation Resource/SCU [plant and unit number(s )] _.....::J:..:·c..:::c:...:.·__:_:_We:::::a=.:d=.:o::..:c::.::k=-..:::U=n:::.it::.:s::..___.:7'---=&:.__::_8 __ _
As of the lstof April , 2o1s , Madcet Participant has definitely decided that it will [check
one]
[ ] decommission and retire the Generation Resource/SCU.
[x] suspend operation of and mothball the Generation Resource/SCU for a period of not
12 less than ----months or disc01mect the Generation Resource/SCU fi·om the Transmission Provider Transmission System for a period ofnot less than
----months. The estimated time to return the mothballed or disconnected Generation Resource/SCU to service is ____ months. 1 Unit - 3 Years 2 Units - 3 Years 6 Months The Generation Resource/SCU is further described as follows:
Location: Hampton Township, Michigan
Number and type ofgeneratingunit(s) 2 Coal Fired
RMR Capacity in MW: ~
Power Factor Lagging
(i) __ P.F ..(at Generator Main Leads) Weadock 7 o. 875 Weadock 8 0.92 (ii) __ P.F. (at high side of Main Power Transformer) Weadock 7 0.912 Weadock 8 0.95 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM ..
Power Factor Leading
(i) __ P.F. (at Generator Main Leads) Weadock 7 o. 97 Weadock 8 0.971 (ii) __ P.F. (at high side ofMain Power Transformer) Weadock 7 0.944 \11eadock 8 0.945
Delivery Point: D. E. Karn Substation or J. C. Weadock Substation
Revenue Meter Location (Use Resource IDs): D. E. Karn Substation or J. c. Weadock Substation Operational and Environmental Limitations (check and describe all that apply):
(a) Operational D Maximum annual hours ofoperation: ______D Maximum annual MWh: ---~--·------
D Maximum arumal starts: ------
D Other: ------
(b) Environmental D Maximum annual NQ emissions: ------
D Maximum annual SQ emissions: ______
D Other: ------
I understand and agree that this notification is Confidential Information under the Transmission Provider's Tariff and will not be made public by the Transmission Provider unless the Generation Resource/SCU becomes subject to an SSRAgreement. This notification is not intended to constitute an offer to enter into a binding Suppmt Supply Resource Agreement, but is intended only as a notification of the status ofthe Generation Resource/SCU, in accordance with the Transmission Provider's Tariff.
The undersigned certifies that I am an officer of the Market Participant that owns or operates the Generation Resource/SCU, that I am authorized to execute and submit this notification on behalf of Generation Resource/SCU, and that the statements contained herein are true and conect. 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
Signature
Name: -T J SPARKS Title: VP Energy Supply Operations Date: -z,}0fz.ot2 r 1 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
STATE OF Michigan
COUNTY OF Jackson
Before me, the undersigned authority, this day appeared Timothy J. Sparks , known to me to be the person whose name is subscribed to the foregoing instrument, who, after first being sworn by me deposed and said:
"I am an officer of Consumers Energy Company , I am authorized to execute and submit the foregoing notification on behalf of Consumers Energy Company , and the statements contained in such application are true and correct."
SWORN TO AND SUBSCRIBED TO BEFORE ME, the undersigned authority on this 8th day of February , 2012.
Umrm, ~- .h~~
Notary Public, State of ~ <'h~(\..Y\
My Commission expires D~~. d..<]J ;;).O )3 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
ATTACHMENT Y Notification ofPetential Resource/SCU Change of Status Version: 0.0.0 Effective: 7/28/2010 ATTACHMENT Y
Notification of Potential Generation Resource/SCU Change of Status
This is a notification of potential change of Generation Resource or Synchronous Condenser Unit ("SCU") status in accordance with Section 38.2.7.a oftbe Tariff. An electronic copy ofthe completed form will be accepted by the Transmissimi Provider, however, a form will not be considered complete until the original form containing an original signature, including all attachments, is received by the Transmission Provider at the following address: Midwest ISO, Attention: Director of Transmission Planning; 701 City Center Drive, Carmel, lN 46032.
The Transmission Provider may request additional information as reasonably necessary to
s~1pport operations under the Tariff.
Name ofMarket Participant owning and/or operating the Generation Resource ______Consumers Energy Company
Type of interest in Generation Resoui·ce: ef Owner of Generation Resource
l]c Operator of Generation Resource
Name of Market Participant owning and/or operating the Synchronous Condenser Unit ("SCU")
Type of interest in SCU: 0 Owner of SCU 0 Operator of SCU
Market Participant's state of organization or incorporation __M_i -'-9_h_ig"'""a_n______20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
' I I
B.C. Cobb Units 4 & 5 Generation Resource/SCU [plant and unit number(s)] ------
As of the 1stof April , 2015, Market Participant has defmitely decided that it will [check
one]
[] decommission and retire the Generation Resource/SCU.
[~ suspend operation of and mothball the Generation Resource/SCU for a period of not 12 less than ---- months or disconnect the Generation Resource/SCU from the Transmission Provider Transmission System for a period of not less than
- - --months. The estimated time to return the mothballed or disconnected Generation Resource/SCU to service is - --- months. 1 Unit - 3 Years 2 Units - 3 Years 6 Months The Generation Resource/SCU is finiher described as follows:
Location: Muskegon, Michigan
Number and type of generating unit(s) ~oa l Fired
RMR Capacity in MW: ~
Power Factor Lagging .
(i) _ _ P.F. (at Generator Main Leads) Cobb 4 o. 898 Cobb 5 0 . 933 (H) _ _ P.F. (at high side ofMain Power Transfonner) Cobb 4 0 . 934 Cobb 5 0.959 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
Power Factor Leading
(i) __ P .F. (at Generator Main Leads) Cobb 4 o . 9 8 9 Cobb 5 0.986 (ii) __ P.F. (at high side ofMain Power Transformer) Cobb' 4 o. 971 Cobb 5 0.968 ·
Delivery Point: B.c. Cobb Substation
Revenue Meter Location (Use Resource IDs): B.c. Cobb substation Operational and Environmental Limitations (check and describe all that apply):
(a) Operational D Maximum annual hours ofoperation: ______D Maximum annual MWh: ------
D Maximum annual starts: ------
DOther: ----·------· ------
(b) Enviromnental D Maximum annual NQ emissions: ______
0 Maximum annual SQ emissions: ______
D Other:
I m1derstand and agree-that this notification is Confidential Information under the Transmission Provider's Tariff and will not be made public by the Transmission Provider unless the Generation Resource/SCU becomes subject to an SSR Agreement. This notification is not intended to constitute an offer to enter into a binding Support Supply Resource Agreement, but is intended only as a notification of the status of the Generation Resource/SCU, in accordance with the Transmission Provider's Tariff.
The undersigned certifies that I am an officer of the Market Participant that owns or operates the Generation Resource/SCU, that I am authorized to execute and submit this notification on behalf of Generation Resource/SCU, and that the statements contained herein are true and correct. 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
Name: _ _ T_. _J_S_P_i\R_K_S__ Title: VP,Energy Supply Operations Date: --L/~8"47DL..=Z::....:.O...:.__l2.-=- --- - 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
STATE OF Michigan
COUNlY OF Jackson
Before me, the undersigned authority, this day appeared Timothy J. Sparks , known to me to be the person whose name is subscribed to the foregoing instrument, who, after first being sworn by me deposed and said:
"I am an officer of Consumers Energy Company_, I am authorized to execute and submit the foregoing notification on behalf of Consumers Energy Company , and the statements contained in such application are true and correct."
SWORN TO AND SUBSCRIBED TO BEFORE ME, the undersigned authority on th is 8th day of February , 2012.
Notary Pu blic, State of tv\\ t..h'\1\ \}_Y\ ~
My Commission expires Oe:.e.. . ';lJJ &o \ 2> 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
EXHIBITB
November 9, 2012 MISO Certification of Need Letters 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
Jeffrey R. Webb Senior Director, Expansion Planning MIS ~~ DirectDial: 317-249-5412 E-mail: [email protected]
November 9, 2012
Timothy J. Sp!'lrks Vice President, Energy Supply Operations Consumers Energy 1945 W Parnall Rd Jackson, MI 49201
Re: J.R. Whiting 1. 2 & 3 Suspension Request
Mr. Sparks:
On Febrmuy 8, 2012 you submitted an Attachment Y for the suspension of J.R. Whiting generating units 1, 2 & 3 from April, 1 2015 to March 31, 2018. After being reviewed for power system reliability impacts as provided for tmder Section 38.2.7 of MISO's Open Access Transmission, Energy, and Operating Reserve Markets Tariff ("Tariff'), the suspension of generating units J.R. Whiting 1, 2 & 3 prior to the completion of Bulk Electric System ("BES") upgrades, or other alternative, would result in system reliability issues. Therefore, MISO will commence an open stakeholder process to develop and review alternatives to enable operation of the units to be suspended. The ability to suspend the units as requestt!d will depen~ OIJ. the availability and implementation schedule of alternatives to maintain system reliability that are consistent with applicable regulat01y requirements.
MISO is ready to certify the need for the units in the event that solutions are not able to be implemented in time, and Consumers Energy Company seeks remedies from regulat01y authorities.
This letter acknowledges that you did not exercise your right to rescind your Attachment Y submission. MISO will promptly post to OASIS that an Attachment Y request was received for J.R. Whiting ge1ierating units 1, 2 & 3 and that a SSR study concluded the units are needed for system reliability.
Sincerely,
cc: Kathy Wetzel, Consumers John Andree~ ITC ·
Midwest Independent P.O. Box 4202 1125 Energy Park Drive 317.249.5400 Transmission System Operator, Inc. Carmel, Indiana 46082·4202 st. Paul. Minnesota 55108 wv.w.mlsoenergy.org 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
feffrey R. Webb Senior Director, Expansion Planning Direct Dial: 317-249-5412 E-mail: [email protected]
~overnber9,2012
Timothy J. Sparks Vice President, Energy Supply Operations Consumers Energy 1945 W Pamall Rd Jackson, MI 49201
Re: J.C. Weadock 7 & 8 Suspension Request
Mr. Sparks:
On Febma1y 8, 2012 you submitted an Attachment Y for the suspension of J.C. Weadock generating units 7 & 8 from April, I 2015 to March 31, 2018. After being reviewed for power system reliability impacts as provided for under Section 38'.2.7 of MISO's Open Access Transmission, Energy, and Operating Reserve Markets Tariff ("Tariff'), the suspension of generating units J.C. Weadock 7 & 8 prior to the completion of Bulk Electric System ("BES") upgrades, or other altemative, would result in system reliability issues. Therefore, MISO will commence an open stakeholder process to develop and review alternatives to enable operation of the units to be suspended. The ability to S\lspend the units as requested will depend on the availability and implementation schedule of altematives to maintairt system reliability that are consistent with applicable regulatory requirements.
MISO is ready to ce1iizy the need for the units in the event that solutions are not able to be implemented in time, and Consumers Energy Company seeks remedies from regulat01y authorities.
This letter acknowledges that you did not exercise your right to rescind your Attachment Y submission. MISO will promptly post to OASIS that an Attachment Y request was received for J.C. Weadock generating units 7 & 8 and that a SSR study concluded the units are needed for system reliability.
Sincerely, _j~\j),L Jeffrey R. Webb
cc: Kathy Wetzel, Constuners Jolm Andree, ITC
Midwest Independent P.O. Box 4202 1125 Energy Park Drive 317.249.5400 Transmission System Op!lrator, Inc. Cannel, Indiana 46082-4202 St. Paul, Minnesota55108 www.mlsoenergy.org 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
Jeffrey R. Webb MIS ~) Senior Director, Expansion Planning Direct Dial: 317-249-5412 E-mail: [email protected]
November 9, 2012
Timothy J. Sparks Vice President, Energy Supply Operations Consumers Energy 1945 W ParnaJl Rd Jackson, MI 49201
Re: B.C. Cobb 4 & 5 Suspension Request
Mr. Sparks:
On February 8, 2012 you submitted an Attachment Y for the suspension of B.C. Cobb generating units 4 & 5 from April, 1 2015 to March 31, 20i8. After being reviewed for power system reliability impacts as provided for undet· Section 38.2.7 of MISO's Open Access Transmission, Energy, and Operating Ryserve Markets Tariff ("Tariff'), the suspension of generating units B.C. Cobb 4 & 5 prior to the completion of Bulk Electric System ("BES") upgrades, or other alternative, would result in system reliability issues. Therefore, MISO will commence an open stakehol~er process to develop and review alternatives to enable operation of the units to be suspended. The ability to suspend the units as requested will depend on the availability and implementation schedule of altematives to maintain system reliability that are consistent with applicable regulatory requirements.
MISO is ready to certify the need for the units in the event that solutions are not able to be implemented in time, and Consumers Energy Company seeks remedies from regulatoty authorities.
This letter acknowledges that you did not exercise your right to rescind your Attachment Y submission. MISO will promptly post to OASIS that an Attachment Y request was received for B.C. Cobb generating units 4 & Sand that a SSR sh1dy concluded the units are needed for system reliability.
Sincerely, _j~t{__ Jeffrey R. Webb
cc: Kathy Wetzei,.Consumers John Andree, lTC
Midwest Independent P.O. Box 4202 11 25 Energy Park Drive 317.249.5400 Transmission System Operator. Inc. Cannel, Indiana 46082·4202 St. Paul, Minnasota55108 www.misoenergy.org 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
EXHIBIT C
February 28, 2013 MDEQ MATS Extension Letters 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
STATE OF MICHIGAN DEPARTMENT OF ENVIRONMENTAL QUALITY LANSING RICK SNYDER DAN WYANT GOVERNOR DIRECTOR
February 28, 2013
Mr. Thomas Gesinski Consumers Energy BC Cobb Facility 151 North Causeway Muskegon, Michigan 49445-3301 SRN: 82836, Muskegon County
Subject: Mercury and Air Toxics Standards Extension of Compliance Request
Dear Mr. Gesinski:
This letter is in reference to your request for an extension of compliance for the federal Mercury and Air Taxies Standards (40 CFR 63 Subpart UUUUU, also known as MATS) received on December 21, 2012, for the Consumers Energy BC Cobb Facility located at 151 North Causeway Road, Muskegon, Michigan. You requested a one year extension of compliance for Units 4 and 5 because the suspension of the operation of these units would result in electrical system reliability issues. Your request for an extension of compliance to the requirements of MATS until April16, 2016, has been approved by the Air Quality Division, pursuant to the delegation of authority from the United States Environmental Protection Agency (EPA).
Further, in accordance with the February 28, 2013, Variance Suspension of Enforcement of Rules 1506 and 1507, the R 336.2503 compliance deadline has been extended. A copy of the Variance is attached.
Please note, if you wish to request for an extension of compliance that will extend beyond April16, 2016, the request must be sent to the Administrator of the EPA.
If you have any questions, please contact me.
Attachment cc/att: Mr. Greg Myers, Consumers Energy Mr. Jim Sygo, Deputy Director, DEQ Ms. Heidi Hollenbach, DEQ Mr. Brian Carley, DEQ
CONSTITUTION HALL • 525 WEST ALLEGAN STREET· P.O. BOX 30473 • LANSING, MICHIGAN 48909·7973 www.mlchlgan.gov/deq • (800) 662-9278 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
STATE OF M ICHIGAN DEPARTMENT OF ENVIRONMENTAL QUALITY DEl\ LANS ING RICK SNYDER DAN WYANT GOVERNOR DIRECTOR
February 28, 2013
Mr. Guy Packard Consumers Energy JC Weadock Facility 2742 North Weadock Highway Essexville, Michigan 48732 SRN: 82840, Bay County
Subject: Mercury and Air Toxics Standards Extension of Compliance Request
Dear Mr. Packard:
This letter is in reference to your request for an extension of compliance for the federal Mercury and Air Toxics Standards (40 CFR 63 Subpart UUUUU, also known as MATS) received on December 21, 2012, for the Consumers Energy JC Weadock Facility located at 2742 North Weadock Highway, Essexville, Michigan. You req uested a one year extension of compliance for Units 7 and 8 because the suspension of the operation of these units would result in electrical system reliability issues. Your request for an extension of compliance to the requirements of MATS until April16, 2016, has been approved by the Air Quality Division, pursuant to the delegation of authority from the United States Environmental Protection Agency (EPA).
Further, in accordance with the February 28, 2013, Variance Suspension of Enforcement of Rules 1506 and 1507, the Rule 336.2503 compliance deadline has been extended. A copy of the Variance is attached.
Please note, if you wish to request for an extension of compliance that will extend beyond April16, 2016, the request must be sent to the Administrator of the EPA.
Since,y, ~vee{_ ~-~~. &fnson~lwig , Chief MmN~ Air Quality Division .~ 517-373-7069
Attachment cc/att: Mr. Greg Myers, Consumers Energy Mr. Jim Sygo, Deputy Director, DEQ Mr. Chris Hare, DEQ Mr. Brian Carley, DEQ
CONSTITUTION HALL • 525 WEST ALLEGAN STREET • P.O. BOX 30473 • LANSING, MICHIGAN 48909-7973 www.mlchlgan.gov/deq • {800) 662-9278 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
STATE OF MICHIGAN DEPARTMENT OF ENVIRONMENTAL QUALITY LANSING RICK SNYDER DAN WYANT GOVERNOR OJRECTOR
February 28, 2013
Mr. Neil Dziedzic Consumers Energy J.R. Whiting Facility 4525 East Erie Road Erie, Michigan 48133 SRN: 82846, Monroe County
Subject: Mercury and Air Taxies Standards Extension of Compliance Request
Dear Mr. Dziedzic:
This letter is in reference to your request for an extension of compliance for the federal Mercury and Air Toxics Standards (40 CFR 63 Subpart UUUUU, also known as MATS) received on December 21, 2012, for the Consumers Energy J.R. Whiting Facility located at 4525 East Erie Road, Erie, Michigan. You requested a one year extension of compliance for Units 1, 2, and 3 bec~use the suspension of the operation of these units would result in electrical system reliability issues. Your request for an extension of compliance until April 16, 2016, has been approved by the Air Quality Division, pursuant to the delegation of authority from the United States Environmental Protection Agency (EPA).
Further, in accordance with the February 28, 2013, Variance Suspension of Enforcement of Rules 1506 and 1507, the R 336.2503 compliance deadline has been extended. A copy of the Variance is attached.
Please note, if you wish to request for an extension of compliance that will extend beyond April16, 2016, the request must be sent to the Administrator of the EPA
If you have any questions, please contact me.
~ (i"Z~~ //~//:( - ~:fd-~ . ~f!/t:t;~ Ar.TIMr- C~- ·- ~.VinsOr;·H ellwig, Chief Air Quality Division 517-373-7069
Attachment cc/att: Mr. Greg Myers, Consumers Energy Mr. Jim Sygo, Deputy Director, DEQ Mr. Scott Miller, DEQ Mr. Brian Carley, DEQ
CONSTITUTION HALL • 525 \NEST ALLEGAN STREET • P.O. BOX 30473 • LANSING, MICHIGAN 48909-7973 ...... ,;w.mlchlgan.gov/deq • (800) 662-9278 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
EXHIBITD
March 14, 2013 Revised Notices Provided in the form of MISO Attachment Y 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
ATTACHMENT Y Notification of Potential Resource/SCU Change of Status Version: 1.0.0
Effective: 9/24/2012
ATTACHMENT Y
Notification of Potential Generation Resource/SCU Change of Status
This is a notification of potential change of Generation Resource or Synchronous Condenser
Unit ("SCU") status in accordance with Section 38.2.7.a of the Tariff. An electronic copy of the
completed form will be accepted by the Transmission Provider, however, a form will not be
considered complete until the original form containing an original signature, including all
attachments, is received by the Transmission Provider at the following address: Midwest ISO,
Attention: Director of Transmission Planning; 720 City Center Drive, Carmel, IN 46032.
The Transmission Provider may request additional information as reasonably necessary to
support operations under the Tariff.
Name of Market Participant owning and/or operating the Generation Resource or Synchronous Condenser Unit ("SCU") Consumers Energy Company
Type of interest in Generation Resource or SCU: 0
.fXl Owner of Generation Resource/SCU IiOperator of Generation Resource/SCU
Market Participant's state of organization or incorporation _ __;;Mi=·c;..::;h::=.ig""an;.:=... ______;__
Generation Resource/SCU [plant and unit number(s)] J.C. Weadock Units 7 & 8 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
Market Participant has definitely decided and hereby certifies that it will [check one]
[] decommission and retire the Generation Resource/SCU commencing on_ [day] of ___ [month] of [year].
Suspend for economic reasons operation of the Generation Resource/SCU commencing on .li_ [day] of April [month] of 2016 [year] and will resume operations on~ [day] of April [month] of 2019 [year].
The Generation Resource/SCU is further described as follows:
Location: Hampton Township, Michigan
CONS.WEA]2QCK7 Unit Name: Weadock Unit 7 CPNode Nameplate Capacity in MW: ---=-1::::...:51=----- CONS.WEADOCK8 Unit Name: %adock Tinit 8 CPNode Nameplate Capacity in MW: 151
Unit Name: ______CPNode_ __ Nameplate Capacity in MW: ___
Unit Name: ______CPNode_ __ Nameplate Capacity in MW: _ _ _
Revenue Meter Location (Use Resource IDs): Hampton Township, Michigm:L
Market Participant understands and agrees that this notification-is binding as provided under Section 38.2.7 of the Transmission Provider's Tariff and will not be made public by the Transmission Provider except as provided for under Section 38.2.7(a) of the Tariff
The undersigned ce1tifies that he or she is an officer of the Market Participant that owns or operates the Generation Resource/SCU, that he or she is authorized to execute and submit this notification on behalf of Generation Resource/SCU, and that the statements contained herein are true and correct.
Name: Timothy J. Sparks Title: Vice President-Energy Supply Operations Date: March 14, 2013 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
STATE OF Michigan
COUNTY OF Jackson
Before me, the undersigned authority, this day appeared Timothy J. Sparks , known by me to be the person whose name is subscribed to the foregoing instrument, who, after first being sworn by me deposed and said:
"I am an officer of Consumers Energy Co. , I am authorized to execute and submit the foregoing notification on behalf of Consumers Energy Co. and the statements contained in such application are true and correct."
SWORN TO AND SUBSCRIBED TO BEFORE ME, the undersigned authority on this the ___!i_ day of March ,201_3-
Notary Public, State of,~:;1- t:.') <~·'-> i I My Commission expires 9 -/& -dll / f i t I I l~ llon i\/1. ~1\falker - · r Not::1·ry Pubjlc ~ ,.Jackson County Ml t ~lY_QO!Ilm S?.£1:2 9-}6~201 4 t l
I I t i ·l i 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
ATTACHMENT Y Notification of Potential Resource/SCU Change of Status Version: 1.0.0
Effective: 9/24/2012
ATTACHMENT Y
Notification of Potential Generation Resource/SCU Change of Status
This is a notification of potential change of Generation Resource or Synchronous Condenser
Unit ("SCU") status in accordance with Section 38.2.7.a of the Tariff. An electronic copy ofthe
completed form will be accepted by the Transmission Provider, however, a fo rm will not be
considered complete until the original form containing an original signature, including all
attachments, is received by the Transmission Provider at the following address: Midwest ISO,
Attention: Director of Transmission Planning; 720 City Center Drive, Cannel, IN 46032.
The Transmission Provider may request additional information as reasonably necessary to
support operations under the Tariff.
Name of Market Participant owning and/or operating the Generation Resource or Synchronous Condenser Unit ("SCU") Consumers Energy Company
Type of interest in Generation Resource or SCU: 0
M Owner of Generation Resource/SCU [iOperator of Generation Resource/SCU
Market Participant's state of organization or incorporation ----=Mi='c::::b=-igc:an==------
Generation Resource/SCU [plant and unit number(s)] ____. B::...;..::.C:....:.·--=C=-=oc.=.b.::..b--=4--=&c:....::..5____ _ 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
Market Participant has deftnitely decided and hereby cettifies that it will [check one]
[] decommission and retire the Generation Resource/SCU commencing on·_ [day] of --=--- [month] of [year].
Suspend for economic reasons operation of the Generation Resource/SCU commencing on 12._ [day] of April [month] of 2016 [year] and will resume operations on.!l_ [day] of April [month] of 2019 [year].
The Generation Resource/SCU is further described as follows:
Location: ---Muskegon,------Michigan------CONS. Unit Name: Cobb Unit 4 CPNode COBBLN'ameplate Capacity in MW: 156 CONS. . Unit Name: Cobb Unit 5 CPNode COBB5Nameplate Capacity in MW: 156
Unit Na.tne: ______CPNode_ _ _ Nameplate Capacity in MW: ___
Unit Nrune: ______CPNode___ Nameplate Capacity in MW: ______
Revenue Meter Location (Use Resource IDs): ___M _ u_sk_e_,g'-o_n'-,Mi __'c _ hi--''g"'"a_n__ ___
Market Participant understands and agrees that this notification is binding as provided under Section 38.2.7 ofthe Transmission Provider's Tariff and will not be made public by the Transmission Provider except as provided for under Section 38.2.7(a) of the Tariff.
The undersigned certifies that he or she is an officer ofthe Market Participant that owns or operates the Generation Resource/SCU, that he or she is authorized to execute and submit this Ii notification on behalf of Generation, Resource/SCU, and that the statements contained herein are f true and correct. i \' i I ! i ~ I Na.tne: Timothy J. Spades f Title: Vice President-Energy Supply Operations I I Date: March 14,2013 I I ~ 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
STATE OF Michigan
COUNTY OF Jackson
Before me, the undersigned authority, this day appeared Timothy J. Sparks , known by me to be the person whose name is subscribed to the foregoing instrument, who, after first being sworn by me deposed and said:
"I am an officer of Consmners Energy Co., I am authorized to execute and submit the foregoing notification on behalf of Consumers E11ergy Co. and the statements contained in such application are true and correct."
SWORN TO AND SUBSCRIBED TO BEFORE ME, the undersigned authority on this the _1.4___ day of March , 201}. 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
ATTACHMENT Y Notification of Potential Resource/SCU Change of Status Version: 1.0.0
Effective: 9/24/2012
ATTACHMENTY
Notification of Potential Generation Resource/SCU Change of Status
This is a notification of potential change of Generation Resource or Synchronous Condenser
Unit ("SCU") status in accordance with Section 38.2.7.a ofthe Tariff. An electronic copy ofthe
completed form will be accepted by the Transmission Provider, however, a form will not be
considered complete until the original form containing an original signature, including all
attachments, is received by the Transmission Provider at the following address: Midwest ISO,
Attention: Director ofTransmission Planning; 720 City Center Drive, Carmel, IN 46032.
The Transmission Provider may request additional information as reasonably necessary to
suppmt operations under the Tariff.
Name of Market Participant owning and/or operating the Generation Resource or Synchronous Condenser Unit ("SCU") Conswners Energy Company
Type of interest in Generation Resource or SCU: 0
Ixl Owner of Generation Resource/SCU
tiOperator of Generation ~Zesource/SCU
Market Participant's state of organization or incorporation ---=-Mi=·c==hi=<' g::>.:an::::::.... ______
_ Generation Resource/SCU [plant and unit number(s)] J.R. Whiting 1-3 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
Market Participant has definitely decided and hereby certifies that it will [check one]
[ ] decommission and retire the Generation Resource/SCU commencing on _ [day] of ___ [month] of [year]. i I j [¥ Suspend for economic reasons operation of the Generation Resource/SCU I commencing on ..12_ [day] of April [month] of20 16 [year] and will resume I operations on ___li_ [day] of April [month] of 2019 [year]. I I I The Generation Resource/SCU is fut1her described as follows: I I Location: _ __.E..,.I._..,-ie...., ...... M...,t...,· c,... h-".!ig.,a""'n ___ _ _ i I . CONS. i Unit Name: Whiting Unit 1 CPNodeWH1TING1Nameplate Capacity in MW: 101.2 I CONS. Unit Name: Whiting Unit 2 CPNodeWHITING2Nameplate Capacity in MW: 101.5 CONS. Unit Name: Whiting Unit 3 CPNodeWIDTING3Nameplate Capacity in MW: 124
Unit Name: ______CPNode.___ Nameplate Capacity in MW: ____
Revenue Meter Location (Use Resource IDs): _ _.E...,~r....,ie""''-"'M"""t""''c:uhl"l;;·g,.a.....n _ _ ___
Market Participant understands and agl.'ees that this notification is binding as provided under Section 38.2.7 of the Transmission Provider's Tariff and will not be made public by the Transmission Provider except as provided for under Section 38.2.7(a) ofthe Tariff.
The undersigned certifies that he or she is an officer of the Market Participant that owns or operates the Generation Resource/SCU, that he or she is authorized to execute and submit this notification on behalf of Generation Resource/SCU, and that the statements contained herein are true and correct.
~Signature - Name: Timothy J. Sparks Title: Vice President-Energy Supply Operations Date: March 14,2013 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
STATE OF Michigan
COUNTY OF Jackson
Before me, the undersigned authority, this day appeared Timothy J. Sparks , known by me to be the person whose name is subscribed to the foregoing instrument, who, after first being sworn by me deposed and said:
"I am an officer of Consumers Energy Co., I am authorized to execute and submit the foregoing notification on behalf of Consumers Energy Co. and the statements contained in such application are true and correct."
SWORN TO AND SUBSCRIBED TO BEFORE ME, the undersigned authority on this the _lL day of March , 2013.
Notary Public, State of /i 1'd(}" 4,
My Commission expires q..-/t?roJVI1 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
EXHIBITE
Revised MISO Certification Letters 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
Jeffrey R. Webb Senior Direc~or; -~xp_ans!on Planning 317.249.5412 . . . jwebb@mlsoenergy' .org MIS\ ~ VIA OVERNIG ..IT DELIVERY
June 5, 2013
Timothy J. Spru·lcs Consumers Energy Company 1945 W. Pamall Road Jackson, MI 49201
Subject: Approval of J.R. Whiting Units 1, 2 & 3 Attachment Y Suspension Request
Deru· Mr. Sparks:
On Febmary 8, 2012, Conswners Energy Company requested that MISO conduct an Attachment Y study for the suspension of J.R. Whiting Units 1, 2 & 3 effective April!, 2015 and resuming operations on March 31, 2018. After being reviewed for power system reliability impacts as provided for under Section 38.2.7 ofMISO's Open Access Transmission, Energy, and Operating Reserve Markets Tariff ("Tru·iff'), MISO dete1mined that the suspension of the J.R. Whiting Units 1, 2 & 3 would result in reliability issues unless altematives to mitigate the issues were identified. On March 14, 2013, Conswners Energy Company amended the Attachment Y Notice to revise the suspension date to begin April15, 2016 and resuming operations on April15, 2019. After review with stakeholders alternatives were identified such that the suspension of J.R. Whiting Units 1, 2 & 3 wo~tld not result in violations of applicable reliability criteria. Therefore, J.R. Whiting Units 1, 2 & 3 may Suspend without the need for the generators to be designated as System Support Resource ("SSR") units, as defined in the Tariff.
This letter aclmowledges that you did not exercise your right to rescind your Attachment Y submission.
Please do not hesitate to contact me if you have any questions on this matter.
Respectfully, J -~vJ .LL Jeffrey R. Webb Senior Director, Expansion Planning
Midcontinent Independent P.O. Box 4202 1125 Energy Park Drive www.mlsoenergy.org System Operator, Inc. Carmel, Indiana 46082-4202 St. Paul, Minnesota 55108 317·249-5400 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
Jeffrey R. Webb Senior Director, Expansion Planning 317.249.5412 [email protected]
VIA OVERNIGHT DELIVERY
Jtme 5, 2013
Timothy J. Sparks Consmners Energy Company 1945 W. Pamall Road Jackson, MI 49201
Subject: Approval of B.C. Cobb Units 4 & 5 Attachment Y Suspension Request
Dear Mr. Sparks:
On February 8, 2012, Consumers Energy Company requested that MISO conduct an Attachment Y study for the suspension of B.C. Cobb Units 4 & 5 effective April 1, 2015 and resuming operations on March 31, 2018. After being reviewed for power system reliability impacts as provided for under Section 38.2.7 ofMISO's Open Access Transmission, Energy, and Operating Reserve Markets Tariff ("Tariff'), MISO detennined that the suspension of the B.C. Cobb Units 4-& 5 would result in reliability issues unless altematives to mitigate the issues were identified. On March 14, 2013, Consumers Energy Company amended the Attachment Y Notice to revise the suspension date to begin Apri115, 2016 and resuming operations on April15, 2019. After review with stakeholders altematives were identified such that the suspension ofB.C Cobb Units 4 & 5 would not result in violations of applicable reliability criteria. Therefore, B.C. Cobb Units 4 & 5 may Suspend without the need for the generators to be designated as System Suppmt Resource ("SSR") units, as defined in the Tariff.
This letter acknowledges that you did not exercise your right to rescind yom Attachment Y submission.
Please do not hesitate to contact me if you have any questions on this matter.
Respectfully, J 1Jt--trfl._ lJ . ~t,_ Jeffrey R. Webb Senior Director, Expansion Planning
Midcontinent Independent P.O. Box 4202 1125 Energy Park Drive www.misoenergy.org System Operator, Inc. Carmel, Indiana 46082-4202 St. Paul, Minnesota 55108 317·249·5400 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
Jeffrey R. Webb Senior Director, Expansion Planning 317.249.5412 MIS" [email protected] VIA OVERNIGHT DELIVERY
June 12,2013
Timothy J. Sparks Consumers Energy Company 1945 W. Parnall Road Jackson, MI 49201
Subject: Approval of J.C. Weadock Units 7 & 8 Attachment Y Suspension Request
Dear Mr. Sparks:
On June 5, 2013, MISO sent a notification letter to Consumers Energy Company approving the suspension of the J.C. Weadock Units 7 & 8. This letter contained a typographical error inconectly identifying that the J.C. Weadock Units 4 & 5 were evaluated in the reliability analysis. This statement should have indicated that the analysis applied to the J.C. Weadock Units 7 & 8, and this letter contains the correction to the previous notification.
On February 8, 2012, Consumers Energy Company requested that MISO conduct an Attaclm1ent Y study for the suspension of J.C. Weadock Units 7 & 8 effective April 1, 2015 and resuming operations on March 31, 2018. After being reviewed for power system reliability impacts as provided for under Section38.2.7 ofMISO's Open Access Transmission, Energy, and Operating Reserve Markets Tariff ("Tariff'), MISO determined that the suspension of the J.C. Weadock Units 7 & 8 would result in reliability issues unless alternatives to mitigate the issues were identified. On March 14, 2013, Consumers Energy Company amended the Attachment Y Notice to revise the suspension date to begin April15, 2016 and resuming operations on April 15, 2019. After review with stakeholders altematives were identified such that the suspension of J.C. Weadock Units 7 & 8 would not result in violations of applicable reliability criteria. Therefore, J.C. Weadock Units 7 & 8 may Suspend without the need for the generators to be designated as System Support Resource ("SSR") units, as defined in the Tariff.
This letter acknowledges that you did not exercise your right to rescind your Attachment Y submission.
Please do not hesitate to contact me if you have any questions on this matter.
Respectfully, f) O ~ - . t ~/kJ~_(;?_kJ ~ Jeffr{d,fi. Webb Senior Director, Expansion Plam1ing Midcontinent Independent P.O. Box 4202 1125 Energy Pari< Drive www.mlsoenergy.org System Operator, Inc. Carmel, Indiana 46062·4202 St. Paul, Minnesota 55106 317-249-5400 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
EXHIBITF
Whitepaper on 6.5 Week Problem 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
Conflict with MISO Capacity Planning Year definition and EPA MATS Timeline {5/31/13)
A. Issue of Concern:
A number of MISO generation owners will be required to retire/suspend their units effective either April 16, 2015 or April16, 2016 (the later date would be applicable if the generation owner was granted a one-year waiver by the relevant state environmental agency). This retirement/suspension will be necessary to avoid a violation ofthe EPA Mercury and Air Taxies Standards (MATS) if those owners choose not to incur the cost to install the equipment needed to comply with MATS.
It is expected that much of this capacity will remain operational until the April16, 2015 (or 2016) MATS compliance date. This would mean that from a MJSO capacity perspective, this ·capacity would be available for all except about the last 6 weeks (mid-April through the end of May) of the applicable capacity Planning Year (PY). Notably however, this capacity would be available for the remaining 46 weeks of the PY, including the critical summer period.
Recognizing the MJSO Tariff requires that qualified capacity be available for the full PY (unless the capacity can be replaced by qualifying capacity from within the same Resource Zone for the balance of the PY), the capacity required to shut down for MATS compliance for the last six weeks ofthe PY would not be able to be qualify for the MISO Capacity Auction for that PY. This places a hardship on any LSE relying on that capacity to meet their Planning Reserve Margin for that PY in that they would be required to pay for replacement capacity.
It has long been recognized in capacity markets that the true value of capacity lies within the summer period. There has typically been little co ncern with maintaining reliability from a capacity sufficiency perspective to cover the lower peak loads outside of the summer period. MISO even acknowledged this point in the May 2013 SAWG meeting presentation on the use of a Generator Maintenance Limit with the statement that:
"Past LOLE simulations show that the summer months of June, July, and August are the only months that have historically contributed to the Annual LOLE of 0.1 days/per year" (stated in slide 13, which graphically shows data for 2009 - 2012)
A group of the potentially impacted generation owners within MISO (see the list of interested stakeholders in Section D) request that MISO give consideration to this issue and the potential solutions identified below, and request that MISO work with stakeholders to develop a mutually agreeable resolution for this situation.
B. Request for Relief:
Given the situation explained above, certain generation owners would like to explore alternatives for PY 2014-2015 and PY 2015-2016 that would allow them to re ceive most, if not all, of the capacity credit they would have otherwise been afforded except for the fact their units will not be available for the
1 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
April16 to May 31 portion of the PY due to the EPA MATS rule. These generation owners would support any studies that MISO would want to perform associated with this request to verify that some or all of the impacted units ca n be taken out of service during this brief period while still maint aining the one day in ten year loss of load expectation standard.
It is assumed that the Attachment Y process will be followed for the generation in question, and that the issue related to the MATS effective date will apply both for units with a System Support Resource (SSR) Agreement and for those units for which MISO has indicated an SSRagreement is not required.
C. Possible Options to Resolve Issue of Concern
1. Unit by Unit Outage Study for Six Week Period of Concern:
On a unit by unit basis, MISO ·would allow the generat ion owner to decla re June 151 as the effective retirement/suspension date. The generation owner would then request MISO approva l for a planned outage to occur between April16 and May 31 of the releva nt PY.
MISO could then use t he same process that would be used for any other generator requesting an outage during this period to verify there would not be a system reliability impact, and (hopefully) would be able to approve the outage request after completing the same analysis as would be done if t he unit was not going to be retired/suspended. If the outage request is approved by MISO following the normal outage impact study, then that generat or would be deemed to meet the criteria for being "available" for t he full Planning Year and would be able to participate in the MISO capacity auction and rece ive capacity credit for that Planning Year.
This alternative seems to be relatively simple to implement, and on the surface it doesn't seem that this alternative should. require a tariff change. lfthe study indicates a reliability iss ue would occur as a result of the mid-April shutdown, then either the generation owner would not participate in the capacity auction or the generat ion owner could still exercise t he option to provide qualifying substitute capacity for the last six weeks of the Planning Yea r.
2. MISO Seeks Relief for "Emergency Only" Operation of Generation Sl:fbject to MATS
In Docket PL12-1-000, on May 17, 2012 FERC issued a policy statement rega rding the Commission's role in the EPA MATS rule. FERC defined an advisory role for the Com mission and the Planning Authority in the evaluation of administrative order requests for extension of t he MATS deadline. The evaluation would be conducted pursuant to section 307(a) of the FPA, t he Commission's general investigative authority.
Given MISO's role as the Reliability Coo rdinator and the Plan ning Authority, MISO should eva luate the impact of the 6-week gap on t he ability to maintain resource adequacy for PY 2014-2015 and PY 2015-2016 and potentially seek extension ofthe MATS compliance deadline from April16 to June 1.
2 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
During that 6-week period, generators subject to MATS would be offered as "emergency only" and only committed during a MISO-declared capacity deficiency. In this manner, generation subject to MATS is only committed and dispatched if absolutely necessary to avoid adverse impacts to end-use customers.
One difficultly with this approach is with getting all the necessary approvals (both from FERC and the EPA) before each generator owner must make a commitment (in March 2014 for PY 2014-2015) to participate in the next MISO capacity auction. If this approach is used, a filing would need to be made as soon as possible to overcome all the potential regulatory delays.
3. MISO Tariff Change:
Given the narrow and clearly defined nature of this issue, another alternative could be for MISO to make a Section 205 filing to request a tariff change to provide an exception to allow the definition of PY 2014-2015 and PY 2015-2016 to specifically exclude the two six week periods starting on April 16th. This seems like a reasonable request in that the dates for which MATS becomes effective was developed totally outside the control of both MISO and the generation owners.
To ensure sufficient time to get this tariff change request through the FERC review process before the decision has to be made on the part ofthe generation owners on whether to offer their MATS impacted capacity into the next MISO Capacity Auction (March 2014), this filing would need to be made as soon as possible.
4. State Regulatory Action:
Per the MISO Tariff it is clearly within the purview of each state regulatory entity to specify a Planning Reserve Margin Requirement (PRMR) for their respective state that is lower than the PRMR recommended by MISO. An argument could be made that if the state regulatory entity chooses to do so they could indicate to MISO that they would be willing to accept the reduced PRMR that would result from the unavailability of a particular generator located in their state that would be unavailable for the last six weeks ofthe PY due to the MATS effective date, and request that MISO allow that unit to receive capacity credit as if the unit was available for the full PY under this stipulation. Alternatively, the state regulatory entity could agree to accept the lower PRMR for the entire year, and an agreement could be made separately between the state regulator and the generator owner that the unit in question would remain in service for all but the last six weeks of the PY.
This approach has a particular benefit in that for many utilities the cost of capacity purchases made through the MISO capacity auction is a direct "pass through" to customers under the state regulatory process, subject to a prudency review. The state regulatory entity in essence would make the decision whether the customers in that state should be assessed the extra costs
3 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
associated with procuring alternative ca pacity because the capacity affected by MATS would not be available for the full PY under a rigid interpretation ofthe MISO Tariff.
5. Procure Substitute Capacity for the Balance of the PY:
Each LSE owning generation that would expect to be retired/suspended for the last six weeks of the PY could attempt to procure qualifying capacity to cover that six week period. Per the MISO Tariff, that capacity would have to be procured from within the LSE's loca l resource zone.
The availability of any excess capacity available for this period could be an issue for some LSEs (note that in the May 15 presentation to the Markets Committee, the IMM indicated that the cleared amounts in the recent capacity auction for in Zones 1 (Western MISO) and 7 (Michigan) only slightly exceeded the local Clearing Requirement). Furthermore, even if there was surplus capacity in the Zone available that did not clear the PY Capacity Au ction, obtaining this capacity at a reasonable price would also be of concern.
6. Pay the Deficiency Charge for the Balance of the PY:
Another possible solution might be for the generation owner that whose unit is shut down for the last six weeks of the PY to pay the deficiency charge (2.748 times CONE) prorated to only apply for this six week period. This option is not likely to be economic compared to the other alternatives listed above, and would likely require a tariff changes to allow for a " partial" deficiency charge payment, but may be worthy of consideration.
D. MISO Market Participants Requesting MISO to Address This Concern:
DTE Electric
Indianapolis Power & Light
Wisconsin Public Service Corp.
Consumers Energy
Hoosier Energy
4 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
EXHIBIT G
July 11, 2013 SAWG Presentation on MISO's Response to 6.5 Week Problem 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
MATS Capacity Credit Issue
Supply Adequacy Working Group - Agenda Item 2
7/11/2013 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
== • • • 0 - (/) ·fr~ ,...-+a 0 en < ·.:,fl "'0 en (1) "' .Q) ,...-+a 7\ -· c CD 0 CD < ::J ::J en OJ (1)-· 0 Q) -0.. (") •~ • CD 7\ 1 (Q 1 ., 0 CD c CD ::J Cl. 0.. rr Q) (") 7\ Q) ::J 0.. z CD ~ (/) ,...-+a CD "'0 en
N 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
Issue Background: • Mercury and Air Toxins Standard (MATS) will require a number of unit retirements by April 16, 2015 and 2016 respectively • MISO's current rules require capacity resources to meet their performance obligations for an entire planning year (June through May) • Capacity Resources that retire during a planning year must replace their capacity • Replacement capacity may be hard to find and could lead to significant costs • Several stakeholders have asked MISO to consider options for dealing with this "transition period"
MISO 3 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
Options 1. Leverage outage coordination p'rocess to review retirement requests as outages from capacity resources to ensure reliability - Maintenance Limit study process could be an option 2. MISO seek emergency only operation waiver for generation subject to MATS for the April 16 -J.une 1 2015 and 2016 periods 3. Tariff change to provide a must offer exemption for units retiring to comply with MATS 4. MPs who retire without replacement pay deficiency charge for remainder of Planning Year 5. Reconfiguration Auctions to allow for replacement capacity through a market based mechanism 6. Status Quo - Require bilateral replacement capacity
~ 4 MIS ~...... ~ 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
Next Steps
• Stakeholders provide feedback on preferred options -by July 25 to Kevin Larson. • MISO to develop a proposal based on stakeholder · feedback and present at a future SAWG meeting
~ 5 MIS ~....-~ 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
Contact Info
• Kevin Larson - (317) 249 - 5829 [email protected] • MISO Stakeholder Working Group- SAWG https://www.misoenergy.org/STAKEHOLDERCENTER/COMMITTE ESWORKGROU PSTASKFORCES/SAWG/Pages/home .aspx
~~ 6 MIS ~·-·-~ 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
EXHIBITH
August 8, 2013 SAWG Presentation on MISO's Response to 6.5 Week Problem 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
MATS Capacity Credit Issue
Supply Adequacy Working Group
August 8, 2013 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
• • • • 0 < CD z CD < ....,Q) -·CD ,..!... ~ ....,CD 3
N 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
issue background
• Mercury and Air Toxins Standard (MATS) may require a number of unit retirements by April 16, 2015 and 2016. • MISO's current rules require capacity resources to meet their · performance obligations for an entire planning year (June through May). • Capacity Resources that retire during a planning year must replace their capacity. • Replacement capacity may be difficult to obtain and could lead to significant c_osts to the procuring entity. • Several stakeholde~s have asked MISO to consider options for dealing with this "transition period".
MISO 3 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
options - results
Use existing outage coordination process . i! • • 2. MISO to seek emergency-only 10 favorable; 3 opposed operation waiver for generation l I subject to MATS for the April 16 - ++ . 2 favorable, 1 "impractical" June 1 periods (2015 & 2016) 3. Tariff change to provide a must-offer exemption for units retiring to comply ++ 2 favorable; 3 opposed with MATS 4. Pay deficiency charge for remainder of Planning Year ... None favorable; 2 opposed 5. Reconfiguration Auctions to allow for replacement capacity through a +++++ . market based mechanism 1 favorable, 4 "acceptable", 1 opposed 6. Status Quo - bilateral replacement • I capac1ty J +++++ 4 favorable, 1 "acceptable" '------··------·-·--
MISO 4 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
MISO perspective: near-term
• A combination of Option #1 (use the existing processes) and Option #6 (status quo) appears to be the simplest, efficient solution. • Replacing the capacity, or • Maintenance I outage combined with retirement on 5/31 If MISO sees reliability issue, MP will be contacted. • MISO willing to support resources seeking emergency only waivers for the periods in question.
MIS ~~ 5 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
MISO perspective: longer-term
• Stakeholder feedback clear that more robust solution required. • Other issues that are related include: • Gas I Electric • Mid-year contracts • New units with "late" availability • Unit ownership changes • Seasonal LOLE changes • MISO is open to a market-based, long-term solution.
MISO 6 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
Contact Info
• Resource Adequacy Group [email protected]
• Ted Kuhn (317) 249- 5844 [email protected]
• MISO Stakeholder Working Group- SAWG https ://www. m isoenergy.org/ST AKE HOLDE RCE NTE R/COM M ITTE ESWORKGROU PST ASKFORCES/SAWG/Pages/home.aspx
MISO 7 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
EXHIBIT I
Consumers Energy's July 25,2013 Comments to MISO on 6.5 Week Problem 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
Consumers Energy's Comments on MISO's "MATS Capacity Credit Issue" Presentation
July 25, 2013
Consumers Energy appreciates MISO's efforts over the last several months to address the issue that will exist when MATS forces some generators into retirement in either 2015 or 2016. At the July 11th Supply Adequacy Working Group meeting, six options were discussed to address the six-week gap problem:
1. Leverage outage coordination process to review retirement requests as outages from capacity resources to ensure reliability. 2. MISO seeks emergency-only operation waiver for aU generation subject to MATS, for 1 the April16 h - June 1st periods in 2015 and 2016. 3. Make a tariff change to provide must-offer exemption for units retiring to comply with MATS. 4. Require market participants who retire without procming replacement capacity to pay deficiency charge for the remainder of the Planning Year. 5. Hold Reconfiguration Auctions to allow for replacement capacity through a market-based mechanism 6. Maintain the status quo - require retiring generation to procure bilateral replacement capacity.
Consumers Energy believes that Option 1 is the best option presented to date. While Consumers Energy does not believe this solution is perfect, it offers the best plan for creating a workaround of the maintenance limit requirements.
Option 1 mitigates some of the problems associated with the overly prescriptive one year capacity construct. The inherent problem with an annual construct is that it creates a situation where LSEs could be required to unnecessarily purchase double capacity for much of year, even though the resources are physically available. Option 1 does a better job of reflecting reality, by allowing units to be counted for capacity during periods where they are actually online.
If MISO does not receive sufficient support for Option 1, Consumers Energy believes that Option 5 could also be acceptable alternative to Option 1. Option 5 recognizes that the transmission system isn't constrained during the shoulder months allowing for greater access to capacity within the MISO footprint.
In considering other options Consumers Energy is particularly opposed to Option 4, which would require market participants who retire without procuring replacement capacity to 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
pay a deficiency charge. This option would not remediate the drop-off in capacity nor provide an effective means for MISO to plan for that eventuality. Consumers Energy is also opposed to Option 6, the status quo. Requiring market participants to procure bilateral replacement capacity, in a situation where retirements are going to be widespread, could lead to a market power situation.
Therefore, Consumers Energy is s·upportive of implementing Option 1 as the best means of addressing the issue, and Option 5 as an alternative to Option 1. 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
EXHIBITJ
December 13, 2013 SA WG Motion on Tariff Changes 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
DRAFT MATS Tariff Language
69A.3.1.h Mothballing, Decommissioning or Retirement of Resources
.L Market Patticipants that request a change in status for a Planning Resource in
accordance with the System Support Resource (SSR) provisions described in Section
38.2.7 will no longer qualify as a Planning Resource effective as of the actual date that
the status of the Resource changes to Retire or Suspend pursuant to Section 38.2.7.
Market Participants that convert Unforced Capacity into a ZRC that clears in the PRA
will not be eligible to Retire or Suspend such Planning Reso~ ~!-.until the year following
the Planning Year for which such ZRC cleared in a PRA~~s~ t~ Market Participant . yf~~ y substitutes another ZRC within the same LRZ th"(, ~ c ear in the PRA~. provided, however, that a Generation Resource does no~c~hg~fn status to Retire because of an ~ inability to comply with the U.S. Enviro~J\tal, f;';:otection Agency's Mercury and Air Taxies Standards {MATS). L' ~ /'.~ --~
~·- Y' 2. If a Market Emi:ic i ~·il,fiotifies the Transmission Provider in writing at least 6 months rior t. ~~~ 5 that a Generation Resource with ZRCs will be unable to ~ operate in compliance with MATS, then as of Aprill6, 2015 the Market Participant for
such Generation Resource: (1) will not be required to substitute ZRCs from the LRZ
where the Generation Resource is located for the remainder of the Planning Year; (2) will
not be obligated to comply with the Must Offer requirements in Section 69A.5 from April
16, 2015 until the remainder ofthe Planning Year; and (3) will no longer receive daily
ACP or Transitional ACP payments for ZRCs associated with such Generation Resource
from April 16, 2015 until the remainder of the Planning Year.
WAS:203900.1 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
.:L If a Market Participant has sought and received an extension on compliance with
MATS from the relevant enforcement authority (i. e., either a state or federal regulator
authorized as a Clean Air Act Title V permitting authority) for Generation Resources,
then the provisions of Section 69A.3.l.h(2) and 69A.5 shall apply for the 2015-2016
Planning Year.
WAS:203900.1 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION
City of Jackson )
State of Michigan )
TESTIMONY OF DAVID F. RONK
I, David F. Ronk, being duly sworn, depose and that the statements contained in the foregoing Testimony on behalf of Consumers Energy Company in this proceeding are true and correct to the best of my knowledge, information, and belief.
Subscribed and sworn before
me on this 5~ day of August, 2014
Printed Name: J(.Yl.n.) l. v.fo..-J
My Commission expires: (!Jq~2-/z.01~ •,, I 20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM
UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION
) Consumers Energy Company, ) Docket No. EL14-____-000 )
NOTICE OF REQUEST FOR WAIVER
Take notice that on August 7, 2014, Consumers Energy Company (“Consumers Energy”) filed a Request for Waiver of certain provisions of the Open Access Transmission, Energy and Reserve Markets Tariff (“Tariff”) of the Midcontinent Independent System Operator, Inc. (“MISO”) pursuant to Rule 207(a)(5) of the Commission’s Rules and Practice and Procedure requesting that the Commission waive requirements of the MISO Tariff for failing to address the specific circumstances resulting from compliance with the Environmental Protection Agency Mercury and Air Toxics Standards.
Any person desiring to intervene or to protest this filing must file in accordance with Rules 211 and 214 of the Commission’s Rules of Practice and Procedure (18 C.F.R. §§985.211 and 385.214). Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a notice of intervention or motion to intervene, as appropriate. Such notices, motions, or protests must be filed on or before the comment date.
The Commission encourages electronic submission of protests and interventions in lieu of paper using the “eFiling” link at http://www.ferc.gov. Persons unable to file electronically should submit an original and 14 copies of the protest or intervention to the Federal Energy Regulatory Commission 888 First Street, N.E., Washington, D.C. 20426.
This filing is accessible on-line at http://www.ferc.gov, using the “eLibrary” link and is available for review in the Commission’s Public Reference Room in Washington, D.C. There is an “eSubscription” link on the web site that enables subscribers to receive e-mail notification when a document is added to a subscribed docket(s). For assistance with any FERC Online service, please e-mail [email protected], or call (866) 208-3676 (toll free). For TTY, call (202) 502-8659.
Comment Date 5:00 p.m. Eastern Daylight Time on [DATE]
20140807-5167 FERC PDF (Unofficial) 8/7/2014 4:47:30 PM Document Content(s) 080714 Request for Waiver.PDF...... 1-115