S T a T E O F M I C H I G
Total Page:16
File Type:pdf, Size:1020Kb
S T A T E O F M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * * In the matter, on the Commission’s own motion, ) regarding the regulatory reviews, revisions, ) determinations, and/or approvals necessary for ) INDIANA MICHIGAN POWER COMPANY ) Case No. U-15808 to fully comply with Public Acts 286 and ) 295 of 2008. ) __________________________________________) At the September 15, 2009 meeting of the Michigan Public Service Commission in Lansing, Michigan. PRESENT: Hon. Orjiakor N. Isiogu, Chairman Hon. Monica Martinez, Commissioner Hon. Steven A. Transeth, Commissioner OPINION AND ORDER On October 6, 2008, Governor Jennifer M. Granholm signed into law Public Acts 286 and 295 of 2008, which amended MCL 460.1 et seq. and created MCL 460.1001 et seq., respectively. On October 21, 2008, the Commission commenced this case to facilitate Indiana Michigan Power Company’s (I&M) obtaining the regulatory reviews, determinations, and approvals necessary for it to fully comply with the new acts. On August 10, 2009, I&M filed an application under MCL 460.1033(3), which requires Commission review and approval of unsolicited renewable energy contracts, for ex parte approval of a renewable energy purchase agreement (REPA) with Fowler Ridge II Wind Farm, LLC (Fowler Ridge). I&M requests that the Commission (1) accept the application for filing; (2) promptly make such investigation and give such notice as it may deem necessary in the circumstances; (3) determine that the approvals requested will not result in an alteration in I&M’s rates or rate schedules that will result in an increase in the cost of service to I&M’s customers, making ex parte approval appropriate; (4) approve the Fowler Ridge power purchase agreement (PPA) for purposes of Section 37 of Act 295 and the related capacity charges for purposes of Subsection 6j(13)(b) of Act 304; (5) find I&M’s decision to enter into the Fowler Ridge PPA reasonable and prudent; (6) find that confidential treatment of certain business information described in the application is appropriate and should be granted to the extent requested; and (7) grant such other and further relief as may be lawful, necessary, and proper. I&M states that the 20-year REPA will result in the provision of 50 nameplate megawatts of wind-powered electric capacity, energy, and renewable energy credits. I&M states in its application that its contract with Fowler Ridge is the result of a competitive request for proposal process. I&M filed a copy of the agreement with certain portions redacted to protect confidential information that might affect the competitive market. However, I&M offered the Commission Staff an opportunity to review an unredacted version of the contract. An electric provider shall submit to the Commission a contract for review and approval. If the Commission approves the contract, it shall be considered to be consistent with the electric provider's renewable energy plan. The Commission shall not approve a contract based on an unsolicited proposal unless the Commission determines that the unsolicited proposal provides opportunities that may not otherwise be available or commercially practical. MCL 460.1033(3). MCL 460.1037 provides in part: If, after the effective date of this act, an electric provider whose rates are regulated by the commission enters a renewable energy contract or a contract to purchase renewable energy credits without the associated renewable energy, the commission shall determine whether the contract provides Page 2 U-15808 reasonable and prudent terms and conditions and complies with the retail rate impact limits under section 45. In making this determination, the commission shall consider the contract price and term. If the contract is a renewable energy contract, the commission shall also consider at least all of the following: (a) The cost to the electric provider and its customers of the impacts of accounting treatment of debt and associated equity requirements imputed by credit rating agencies and lenders attributable to the renewable energy contract. The commission shall use standard rating agency, lender, and accounting practices for electric utilities in determining these costs, unless the impacts for the electric provider are known. (b) Subject to section 45, the life-cycle cost of the renewable energy contract to the electric provider and customers including costs, after expiration of the renewable energy contract, of maintaining the same renewable energy output in megawatt hours, whether by purchases from the marketplace, by extension or renewal of the renewable energy contract, or by the electric provider purchasing the renewable energy system and continuing its operation. (c) Electric provider and customer price and cost risks if the renewable energy systems supporting the renewable energy contract move from contracted pricing to market-based pricing after expiration of the renewable energy contract. As required by Section 37 of Act 295, the Commission has considered each of the factors listed in Section 37(a), (b), and (c), and finds that the Fowler Ridge PPA should be approved. With regard to subsection (a), because the costs associated with this purchase agreement will be recovered under the funding mechanisms provided for in Act 295, it is unlikely that I&M would experience a financial rating change due to this contract. With regard to subsection (b), the 20- year contract term, which the Commission believes is the longest contract term presently offered by developers, provides I&M customers with an adequate source of renewable energy for a reasonable time. With regard to subsection (c), the possibility of this activity will not occur until the end of the 20-year contract term. Because this is an adequate contract length, review of possible replacement costs is unnecessary. Further, the Commission finds that the contract is Page 3 U-15808 reasonable and prudent and provides opportunities that may not otherwise be available or commercially practical. Ex parte review and approval is appropriate, as the REPA will not affect rates or rate schedules resulting in an increase in the cost of service to customers. The Commission finds no prohibition against ex parte approval of a REPA in Act 295. THEREFORE, IT IS ORDERED that the renewable energy purchase agreement between Indiana Michigan Power Company and Fowler Ridge II Wind Farm LLC, is approved for the purposes of compliance with 2008 PA 295. Due to its length and availability on the Commission’s website, a copy of the renewable energy purchase agreement is not attached to this order. A person may contact the Commission Staff at (517) 241-6170 or by e-mail at: [email protected] to obtain a print version of the document. The Commission reserves jurisdiction and may issue further orders as necessary. MICHIGAN PUBLIC SERVICE COMMISSION ________________________________________ Orjiakor N. Isiogu, Chairman ________________________________________ By its action of September 15, 2009. Monica Martinez, Commissioner ________________________________ ________________________________________ Mary Jo Kunkle, Executive Secretary Steven A. Transeth, Commissioner Page 4 U-15808 Indiana Michigan Power Company Page 1 of 112 Indiana Michigan Power Company Page 2 of 112 Indiana Michigan Power Company Page 3 of 112 Indiana Michigan Power Company Page 4 of 112 Indiana Michigan Power Company Page 5 of 112 Indiana Michigan Power Company Page 6 of 112 Indiana Michigan Power Company Page 7 of 112 Indiana Michigan Power Company Page 8 of 112 Indiana Michigan Power Company Page 9 of 112 Indiana Michigan Power Company Page 10 of 112 Indiana Michigan Power Company Page 11 of 112 Indiana Michigan Power Company Page 12 of 112 Indiana Michigan Power Company Page 13 of 112 Indiana Michigan Power Company Page 14 of 112 Indiana Michigan Power Company Page 15 of 112 Indiana Michigan Power Company Page 16 of 112 Indiana Michigan Power Company Page 17 of 112 Indiana Michigan Power Company Page 18 of 112 Indiana Michigan Power Company Page 19 of 112 Indiana Michigan Power Company Page 20 of 112 Indiana Michigan Power Company Page 21 of 112 Indiana Michigan Power Company Page 22 of 112 Indiana Michigan Power Company Page 23 of 112 Indiana Michigan Power Company Page 24 of 112 Indiana Michigan Power Company Page 25 of 112 Indiana Michigan Power Company Page 26 of 112 Indiana Michigan Power Company Page 27 of 112 Indiana Michigan Power Company Page 28 of 112 Indiana Michigan Power Company Page 29 of 112 Indiana Michigan Power Company Page 30 of 112 Indiana Michigan Power Company Page 31 of 112 Indiana Michigan Power Company Page 32 of 112 Indiana Michigan Power Company Page 33 of 112 Indiana Michigan Power Company Page 34 of 112 Indiana Michigan Power Company Page 35 of 112 Indiana Michigan Power Company Page 36 of 112 Indiana Michigan Power Company Page 37 of 112 Indiana Michigan Power Company Page 38 of 112 Indiana Michigan Power Company Page 39 of 112 Indiana Michigan Power Company Page 40 of 112 Indiana Michigan Power Company Page 41 of 112 Indiana Michigan Power Company Page 42 of 112 Indiana Michigan Power Company Page 43 of 112 Indiana Michigan Power Company Page 44 of 112 Indiana Michigan Power Company Page 45 of 112 Indiana Michigan Power Company Page 46 of 112 Indiana Michigan Power Company Page 47 of 112 Indiana Michigan Power Company Page 48 of 112 Indiana Michigan Power Company Page 49 of 112 Indiana Michigan Power Company Page 50 of 112 Indiana Michigan Power Company Page 51 of 112 Indiana Michigan Power Company Page