May 11, 2021 Ms. Lisa Felice Executive Secretary Michigan Public Service Commission 7109 West Saginaw Highway Lansing, MI 48917 RE: In the matter, on the Commission’s own motion, regarding the regulatory reviews, revisions, determination and/or approvals necessary for regulated electric providers to comply with Section 61 of 2016 PA 342 MPSC Case No: U-20713 In the matter of DTE ELECTRIC COMPANY’S application for the regulatory reviews, revisions, determinations, and/or approvals necessary for to fully comply with Public Act 295 of 2008 MPSC Case No: U-20851 Dear Ms. Felice: Attached for electronic filing in the above referenced matter is DTE Electric Company’s Initial Settlement Brief. Also attached is the Proof of Service. Very truly yours, Lauren D. Donofrio LDD/erb Enclosure cc: Service List Lauren D. Donofrio (313) 235-4017 [email protected]DTE Electric Company One Energy Plaza, 1635 WCB Detroit, MI 48226-1279
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May 11, 2021
Ms. Lisa Felice Executive Secretary Michigan Public Service Commission 7109 West Saginaw Highway Lansing, MI 48917
RE: In the matter, on the Commission’s own motion, regarding the regulatory reviews, revisions, determination and/or approvals necessary for regulated electric providers to comply with Section 61 of 2016 PA 342
MPSC Case No: U-20713
In the matter of DTE ELECTRIC COMPANY’S application for the regulatory reviews, revisions, determinations, and/or approvals necessary for to fully comply with Public Act 295 of 2008
MPSC Case No: U-20851 Dear Ms. Felice: Attached for electronic filing in the above referenced matter is DTE Electric Company’s Initial Settlement Brief. Also attached is the Proof of Service. Very truly yours, Lauren D. Donofrio LDD/erb Enclosure cc: Service List
DTE Electric Company One Energy Plaza, 1635 WCB Detroit, MI 48226-1279
STATE OF MICHIGAN
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
In the matter, on the Commission’s own ) motion, regarding regulatory reviews, ) revisions, determination and/or approvals ) Case No. U-20713 necessary for regulated electric providers ) to comply with Section 61 of 2016 PA 342. ) In the matter of DTE ELECTRIC ) COMPANY’S application for regulatory ) reviews, revisions, determinations, and/or ) Case No. U-20851 approvals necessary to fully comply with ) Public Act 295 of 2008 )
DTE ELECTRIC COMPANY’S INITIAL SETTLEMENT BRIEF
Dated: May 11, 2021
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TABLE OF CONTENTS
I. INTRODUCTION .................................................................................................................1 II. HISTORY OF PROCEEDINGS ............................................................................................2 III. AS-FILED POSITIONs .........................................................................................................7
A. DTE Electric’s application and supporting evidence ....................................................... 7 B. Staff As-Filed Position ..................................................................................................10 C. Intervenors As-filed Positions ........................................................................................11
IV. APPLICABLE LAW ........................................................................................................... 14 A. Governing Statutes ........................................................................................................14 B. Additional Considerations Established in Case No. U-18349 .........................................16
V. SETTLEMENT OUTLINE ................................................................................................. 17 VI. ARGUMENT ...................................................................................................................... 20
A. Settlement Terms Comply with All Applicable Law. .....................................................20 B. The Commission should approve the settlement agreement because it represents a
reasonable compromise and is in the public interest. ......................................................20 VII. RELIEF REQUESTED ................................................................................................. 22
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I. INTRODUCTION In this biennial review of DTE Electric Company’s (“DTE Electric” or the “Company”)
Voluntary Green Pricing (“VGP”) program, consolidated with its case seeking amendment of the
current Renewable Energy Plan (“REP”) to incorporate the VGP build plan, DTE Electric seeks
to expand its VGP offerings to better meet the needs of its customers, expand the Company’s
renewable footprint in Michigan, allow the Company to compete for renewable projects on an
equal footing with third-party developers, and account for the effect of Power Purchase
Agreements (“PPAs”) on the Company’s balance sheet. DTE Electric filed an Application
requesting that the Commission grant approval of the VGP plan and biennial review of the
Company’s MIGreenPower program (“MIGreenPower” or “Program”) pursuant to MCL
460.1061, including tariff revisions, ownership structure, financial compensation mechanism, and
other approvals. Concurrently, the Company filed an Application seeking approval of the
necessary accounting authority to effectuate the Company’s Renewable Energy Plan (“REP
Application”), including authorization to utilize the same accounting treatment and contract
approval process for proposed VGP projects as used for prior builds. DTE Electric also filed an ex
parte application seeking approval of three projects, the Whitetail Solar Build Transfer Agreement,
the Freshwater Solar Build Transfer Agreement, and the Calhoun County Solar Power Purchase
Agreement. All parties save one have reached a partial settlement on all elements in both dockets
except for the Company’s request for a financial compensation mechanism (FCM). The FCM
request is currently before the Commission awaiting an order. The settlement agreement represents
a reasonable compromise between all the parties, complies with all applicable laws, is in the public
interest, and DTE Electric requests the Commission approve it.
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II. HISTORY OF PROCEEDINGS
In its July 12, 2017 order, in Case No. U-18349 et al, the Commission provided guidance
to the utilities regarding the minimum requirements of voluntary renewable programs under
Section 61 of 2016 Public Act 342 (Act 342 or the Act) and required each utility to file plans to
comply with the Act. In its January 18, 2019 order in Case No. U-20343, at page four, the
Commission approved the Company’s Large Customer Voluntary Green Pricing Program (LC-
VGP) as a pilot. On February 21, 2019, in its order in Case No. U-18352, the Commission
approved DTE Electric’s revised MIGreenPower program as a Section 61-compliant program. In
the Commission’s January 23, 2020 order in U-18349, et al, the Commission ordered all electric
utilities to file a biennial review of their voluntary green pricing programs under Section 61 of the
Act, with DTE Electric’s filing scheduled for April of 2020. Due to the timing of the Company’s
integrated resource plan and amended REP cases, the Company requested an extension, and the
Commission granted the request in its May 8, 2020 order in this docket and Case No. U-18349 et
al., requiring DTE Electric to file its biennial review by August 31, 2020.
On August 31, 2020, DTE Electric filed its Application for Approval of its MIGreenPower
Voluntary Renewable Energy Program1 (“VGP Application”) to provide a status update on its
existing VGP programs and to support the relief requested in this case. The LC-VGP program is
compliant and ready to move forward on a non-pilot basis subject to a biennial review of the plan
itself.
The VGP Application requested determination that the MIGreenPower program, made up
of Rider 17 and Rider 19, as amended, satisfies MCL 460.1061 and is consistent with all other
1 In re DTE Electric Co, MPSC Case No. U-20713, Application, Dkt. No. 7.
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applicable provisions of 2008 PA 295; approval of the VGP program build plan to acquire
renewable resources to meet program demand; approval of the use of tax equity financing as a
permissible ownership structure; and approval of the Company’s proposed financial compensation
mechanism. In support of its VGP Application, DTE Electric filed the testimony and exhibits of
Brian T. Calka, David B. Harwood, and Edward J. Solomon, and testimony of Patrick D.
Kauffman.
Also, on August 31, 2020, the Company filed an Application for Ex Parte Approval of its
August 2020 Amended Renewable Energy Plan (“REP Application”) in case U-20851. The REP
Application requested a determination that the Company’s August 2020 Amended Renewable
Energy Plan is reasonable and prudent, and is consistent with all applicable provisions of 2008 PA
295, as amended; entry of an Order approving the revenue recovery mechanism surcharge of
$0.00/meter for all customer classes and allowing the Company to maintain a regulatory liability
throughout the Plan period through the application of transfer prices as requested in the filing; and
authorization of the necessary accounting authority to effectuate the Company’s REP, including
permission from the Commission to utilize the same accounting treatment and contract approval
process for these proposed VGP projects as recently approved for builds in case U-18232.2
Following the filing of the Company’s VGP and REP Applications, on August 31, 2020,
multiple Petitions to Intervene were filed, including Petitions from Soulardarity, Michigan
Environmental Council (“MEC”), National Resources Defense Council (“NRDC”) Michigan
Energy Innovation Business Council (“Michigan EIBC”), Institute for Energy Innovation (“IEI”)
and Advanced Energy Economy (“AEE”), Energy Michigan, Inc. (“Energy Michigan”), the City
2 In re DTE Electric, MPSC Case No. U-18232, July 9, 2020 Order, pp. 45-47.
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of Ann Arbor, Michigan Municipal Association for Utility Issues (“MI-MAUI”), the
Environmental Law and Policy Center (“ELPC”), the Ecology Center, and Vote Solar.
Staff filed an unopposed Motion to Consolidate on September 25, 2020. A prehearing
conference related to the consolidated matters was held on October 27, 2020, at which time the
Administrative Law Judge (“ALJ”) established a consent schedule and granted the previously filed
petitions to intervene. Pine Gate Renewables, LLC (“Pine Gate”), the Association of Businesses
Advocating Tariff Equity (“ABATE”), and Great Lakes Renewable Energy Association
(“GLREA”) subsequently filed Petitions to Intervene, which the ALJ granted.
On November 30, 2020, DTE Electric filed its Ex Parte Application for approval of the
Freshwater Solar Build-Transfer Agreement, White Tail Solar Build-Transfer Agreement
(“BTAs”) and Calhoun County Solar Purchase Power Agreement (“PPA”) and the Affidavit of
David B. Harwood and Navigant Affidavit of D. Dean Koujak. The Company requested the
Commission approve the associated transfer prices, capacity charges, the recovery of the costs,
which are supplied, engineered, procured and constructed under the Contracts through DTE
Electric’s Revenue Recovery Mechanism as an Incremental Cost of Compliance within the
Renewable Energy Standards under the Company’s Amended REP, assurance that the full costs
of Freshwater and White Tail and Calhoun County will be recovered through the combined
application of the transfer price mechanism for PSCR recovery, application of the Revenue
Recovery Mechanism surcharges under Act 295, and other mechanisms as determined by the
Commission to recover these costs after the renewable energy plan period in accordance with MCL
460.1047(6) for any unsubscribed portion of the generation from Freshwater, White Tail Solar and
Calhoun County.
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On December 15, 2020, DTE Electric filed the Direct Testimony and Exhibits of David B.
Harwood, Patrick D. Kauffman, Thomas W. Lacey, Marcus J. Rivard, and Sherri L. Wisniewski.
A second prehearing regarding specifically the application for amendment of the Company’s
Amended REP, was held December 17, 2020. Staff and intervenors filed testimony on December
22, 2020 and December 23, 2020. The parties filed rebuttal testimony and exhibits on January 21,
2021. DTE Electric filed the rebuttal testimony and exhibits of David B. Harwood, Thomas W.
Lacey, Marcus J. Rivard, and Edward J. Solomon and rebuttal testimony of Brian T. Calka. Cross-
examination of Brian Calka and David Harwood was held on February 8, 2021. By agreement of
the parties, all direct testimony and rebuttal testimony was bound into the record, and all
accompanying exhibits were admitted into evidence.
The parties filed initial briefs on March 12, 2020. Thereafter the parties requested and the
ALJ issued a scheduling memo, on April 7, 2020, suspending the schedule as the parties were close
to reaching a settlement. On April 12 the parties submitted stipulations to the Commission which
advised that the parties had reached a partial settlement agreement that did not resolve the FCM
issue, and the parties agreed to submit new initial briefs on the sole topic of the FCM on or before
April 15 for all parties save GLREA, for whom the deadline would be April 19, 2021. The parties
also stipulated to a procedural schedule to address GLREA’s anticipated objection to the settlement
agreement. All parties agreed to shorten the time allowed for objections provided in Rule 431(3)
and agreed all objections must be made on or before April 20, 2021 at 5:00 p.m.
The parties filed the partial settlement agreement on April 14, 2021, along with memoranda
of understanding regarding DTE Electric’s creation of a Low-Income Solar Council, and the
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intentions of DTE Electric and Ann Arbor to pursue a joint community solar project.3 All parties
except Ann Arbor, Soulardarity and GLREA executed the settlement agreement submitted April
14. Subsequently, on April 19, the City of Ann Arbor filed its signature consenting to the
Settlement Agreement.4 One April 20, GLREA, filed its objections to the settlement agreement.
Soulardarity did not object to the Settlement Agreement.
The Commission issued an order April 21, 2021 adopting a schedule for a contested partial
settlement proceeding and a schedule for the remaining unsettled request for a financial
compensation mechanism. The Commission agreed to read the record in these consolidated
matters.
Pursuant to the Commission’s schedule, DTE Electric, the Staff, Soulardarity, and GLREA
filed testimony and exhibits on April 27, 2021. DTE Electric submitted the Initial Settlement
Testimony of Brian T. Calka. DTE Electric, the Staff, and ELPC, filed rebuttal testimony on May
4, 2021. DTE Electric submitted the Rebuttal Settlement Testimony of Brian T. Calka and Edward
J. Solomon. The ALJ held an evidentiary hearing May 6, 2021, at which all settlement initial and
rebuttal testimony and exhibits were bound into the record and the record was closed.
The record in this matter consists of 885 pages of public transcript and149 exhibits, as well
as one volume of limited confidential transcript.
3 The Settlement Agreement, Docket No. 138; Memorandum of Understanding, Docket No. 139; Memorandum of Understanding, Docket No. 155. 4 Letter and Executed Signature Page for City of Ann Arbor to Settlement Agreement filed April 14, 2021, Docket No. 151.
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III. AS-FILED POSITIONS
The as-filed positions of the parties incorporate the positions the Company took in its
application, direct testimony, and concessions made in rebuttal, and the positions of the Staff and
Intervenors is as expressed in their direct and rebuttal testimony filed in these cases. The intent of
this section is to give the Commission a view into the various positions represented by the parties
and to illustrate the substantial compromises made by all parties in the Settlement Agreement from
their as-filed positions.
A. DTE ELECTRIC’S APPLICATION AND SUPPORTING EVIDENCE
As outlined in Company Witness Calka’s testimony (3T 58-90), DTE Electric requested
approval of its VGP program, including MIGreenPower (Rider 17) and MIGreenPower LC-VGP
(Rider 19), pursuant to MCL 460.1061. The Company proposed: amendments to both Rider 17
and Rider 19, which meet the requirements of a voluntary green pricing program (3T 61); approval
of its build plan and approval to utilize the same accounting treatment and contract approval
process as prior builds (3T 72-84); approval of a process related to customer-requested offerings
(3T 71); approval to transfer an indirect ownership stake in future solar projects to a tax equity
member, where it is beneficial to do so, as well as approval to enter into Commission-approved
affiliated interest agreements related to the ownership and operation of the solar projects through
a tax equity financing structure (3T 84); and approval of a FCM for renewable energy PPAs
utilized in the MIGreenPower program (3T 85).
Proposed amendments to Rider 17 included a solar-only offering, which would allow
customers to choose their preferred renewable energy technology (wind or solar); a fixed-price
offering which would provide the option for customers to pay a fixed monthly amount to source
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their electricity from renewable energy; an amendment to the capacity credit, which will ensure
that customers participating in Rider 17 of the MIGreenPower program would receive a higher
capacity credit for the projects they have subscribed to if the capacity auction clears at greater than
75% of CONE; and a MIGreenPower Low-Income Donation Pilot, which would remove eligibility
barriers for low income customers to fully participate in the program and receive a credit on their
bills (3T 62-67).
Proposed amendments to Rider 19 include a flexible pre-payment option, which would
allow customers to meet their environmental and sustainability goals while accommodating their
individual budgetary constraints. Upon mutual agreement between the Company and an eligible
Rider 19 customer, the customer can make an upfront subscription payment instead of paying the
per-kWh subscription charge each month.
For both Rider 17 and Rider 19, the Company proposed to use the net premium, which is
the levelized cost of energy (“LCOE”) less the energy and capacity credits, as the evaluation basis
for cost-averaging new projects into the existing MIGreenPower project portfolios (3T 69-71).
The Company’s proposed build plan was set forth to meet total combined forecasted
demand for MIGreenPower’s Rider 17 and Rider 19 programs through 2025. The 420 MW
currently planned in 2022 is representative of contracts negotiated from the Company’s Fall 2019
Request for Proposal (“RFP”). The Company proposed to conduct a new RFP, with input from the
MI Power Grid Competitive Procurement Workgroup, to identify and develop projects to meet the
forecasted need for 2023-2025. The Company would work with stakeholders and Staff to design
an appropriate competitive solicitation for small-scale solar or solar plus storage projects (i.e.,
projects less than 25MW) with commercial operation dates (“COD”) in 2022 and 2023, as
encouraged in the Commission’s July 9, 2020 order issued in U-18232 (3T 72-84). The Company
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filed an Amended REP in Case No. U-20851 concurrently with its VGP Application in Case No.
U-20713 to utilize the same accounting treatment and contract approval structure for this build
plan as approved in the Commission’s July 9, 2020 order issued in U-18232 for prior VGP builds.
The Company is including demand in the build plan in anticipation of executing customer-
requested project contracts with public-sector entities. Each customer-requested contract would
have the same cost-based fee and credit structure as Rider 19. The projects would be compliant
with § 61 as each project’s costs would be allocated to the participating customer(s) for the life of
the project, the costs and accounting would be transparent, and the projects’ renewable energy
credits (“REC”) would not be used for 2016 PA 342 compliance purposes (3T 71-72). DTE
Electric would present executed customer-requested contracts to the Commission for approval ex-
parte (3T 82-83).
The Company is requesting approval to transfer an indirect ownership stake in future solar
projects to a non-affiliated tax equity member, where it is beneficial to do so, as well as approval
to enter into affiliated interest agreements related to the ownership and operation of the solar
projects through a tax equity financing structure. Tax equity asset ownership is a common practice
for developers of renewable energy projects throughout the country to maximize the value of tax
benefits provided for those projects. Third-party developers use this structure to take advantage of
the various tax benefits, beyond what the developer could utilize on its own. Utility customers
benefit from tax equity ownership structures through the utility’s decreased capital spending,
resulting in lower project costs. (3T 84).
Inclusion of an FCM for renewable energy PPAs utilized in the MIGreenPower program
is appropriate. The Commission has authority to approve the FCM proposed by the Company
under 2016 PA 341 § 6t(15). In addition, the proposed FCM structure is consistent with the
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structure that the Commission approved for UPPCo in Case No. U-20350 and the settlement of
Consumers Energy’s recent IRP case, Case No. U-20165.
B. STAFF AS-FILED POSITION
Staff filed the testimony of Witness Baldwin, Witness Hadala, Witness Matthews, and
Witness Nichols. Witness Baldwin recommended the Commission consider Staff’s community
solar program proposal as a vehicle to establish a community solar program rider for DTE Electric
(4T 383). Witness Hadala recommended approval of DTE Electric’s REP, including the White
Tail, Freshwater, and Savion projects (4T 387). She also recommended the Company not exclude
smaller projects for future RFPs (4T 389) and continue participation in the Competitive
Procurement Work Group (4T 390).
Witness Matthews supported DTE Electric’s 797 MW build plan and found the Company’s
near-term forecasts to be reasonable but suggested updated customer participation information and
forecasts be shared with Staff periodically in between biennial reviews to ensure the projects are
needed (4T 394). He supported approval of Rider 19 as a VGP-compliant program (4T 395) and
supported the Company’s proposed changes to both Riders 17 and 19 (4T 397). Witness Matthews
also supported DTE Electric’s MIGreenPower Low-Income Donation Pilot but recommended the
pilot permit direct sponsorship of customers. He also recommended the Company provide updates
in its semi-annual VGP Report and that the Company further explore additional low-income
offerings. Finally, Witness Matthews recommended information related to low-income criteria be
included in Rider 17 (4T 397-398), and program revenue be tracked separately, with any monthly
carryover credited with interest at the Company’s short-term borrowing rate (4T 398).
With respect to the Company’s request for an FCM applied consistent with the Commission
authority established in 2016 PA 341 § 6t(15), Witness Nichols found an FCM to be reasonable
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provided the incentive factor is no greater than the after-tax overall weighted average cost of
capital (4T 406-407). Witness Matthews recommended an FCM only apply to the subscribed
portion of VGP projects because DTE Electric would use unsubscribed VGP projects for
compliance purposes in its REP (4T 399).
C. INTERVENORS AS-FILED POSITIONS
MEC and NRDC filed the testimony of Witness Jester. He opined that the Company is
focusing efforts disproportionately on large customers and not setting reasonably comparable
objectives for its small customers (4T 523). He also noted with respect to the proposed tax equity
financing structure that it must be demonstrated that a proposed transaction would be advantageous
for VGP customers and consistent with standards for affiliate transactions (4T 533).
City of Ann Arbor filed the testimony of Witness Fang Wu. She raised concern that the
Company’s VGP program is too small and more expensive than alternatives (4T 690). The City
also offered the testimony of Missy Stults, who agreed with Witness Wu that the VGP program is
not cost competitive to serve the renewable energy needs of the City (4T 704) and listed virtual
PPAs, community solar, and aggregation as potential options to meet Ann Arbor’s needs (4T 719).
MI-Maui filed the testimony of County Administrator Gregory Dill, who stated the size
and cost of the VGP program would not allow Washtenaw County to meet its goal of becoming
carbon neutral by 2030 (4T 733-734). He encouraged the Company to develop MIGreenPower
offerings that are better designed to produce greenhouse gas (“GHG”) reductions rather than just
support programs that free up fossil generated power to be sold to other customers (4T 735). MI-
Maui also filed the testimony of Witness Vaughn, the Parks and Recreation Director for
Washtenaw County, who proposed bundling of customers (such as municipal governments or low-
income customers) to achieve a collective demand sufficient to qualify for Rider 19’s lower pricing
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(4T 742). He also proposed consideration of a solar project on County property, which would
generate power in excess of the municipality’s demand that could be used to benefit other
customers (4T 741).
Michigan EIBC, IEI, and AEE submitted testimony from Witness Marquis and Witness
Sherman. Witness Marquis generally supported the proposed changes to Rider 19 but encouraged
continued focus on competitive procurement allowing fair participation by third-party developers,
and requested the Commission scrutinize the proposed net premium evaluation approach (4T 675).
Witness Sherman supported approval of the Company’s proposed customer-requested project
offering for projects located in front of the meter, provided the Company utilizes competitive
bidding processes as described in her testimony. She supported a pilot community solar offering
as part of the proposed customer-requested project offering. She also advocated for steps to ensure
that any approved FCM contains sufficient information allowing bidders to easily calculate the full
price of any proposed PPA project in comparison to a build-transfer or Company-built project.
With respect to Small-Scale Competitive Procurement, she advocated for a mandate requiring the
Company to reduce costs for engineering studies and distribution studies and to maintain a public
interconnection queue (4T 651-653).
ABATE filed the testimony of Amanda Alderson, a consultant with Brubaker &
Associates. She recommended approval only of the portion of the build plan that would be
completed in 2022, but she recommended rejection of the remainder of the plan until committed
VGP customers for that capacity are provided (4T 427). She also advocated the PSCR Factor be
used to recover costs within DTE Electric’s REP, including VGP assets, only up to the lower of
the LCOE or the approved Transfer Price (4T 428-429). She proposed the capacity credit for Rider
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17 and Rider 19 be set equal to one another to avoid risk of Rider 19 customers receiving a lower
capacity credit than Rider 17 customers (4T 433).
GLREA filed the testimony of Robert Rafson, a member of the GLREA Regulatory Affairs
Committee and the owner of Chart House Energy, LLC, a renewable energy development
company. Mr. Rafson did not support the VGP program and Amended REP because he felt it
focused solely on large utility-scale Company-owned solar and third-party PPAs and failed to
include customer-owned distributed generation (“DG”), distributed energy resources (“DER”),
and community solar (4T 778). He wanted the Company to lift the present 1% customer-owned
DG resources cap (4T 775).
ELPC, the Ecology Center, and Vote Solar filed the testimony of Witness Binz. He opposed
the proposed FCM and encouraged the Commission to consider performance-based regulation,
possibly through a shared savings mechanism (4T 576-580). Like Staff Witness Nichols, he argued
that if the Commission did approve an FCM, it should be equivalent to DTE Electric’s after-tax
rate of return (4T 570).
Solar developer Pine Gate Renewables, LLC filed the testimony of its Vice President for
Regulatory and Government Affairs, Steve Levitas. Mr. Levitas opposed the proposed VGP and
Amended REP because it did not include procurement of renewable energy from small-scale solar
facilities, including qualifying facilities (“QFs”) under PURPA5 (4T 750). He also opposed an
FCM, in part, because he claimed the Company was required to enter into PPAs with QFs to
support the requirements of the VGP program despite otherwise lacking a capacity need (4T 766).
5 The Public Utility Regulatory Policies Act of 1978.
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Soulardarity filed the testimony of Witness Stewart, Witness Fisher, and Witness Koeppel.
Witness Stewart is a DTE Electric customer. She expressed concern regarding the proposed low-
income pilot due to procedural barriers to participation (4T 444-447). Ms. Stewart also advocated
for the inclusion of community solar in the Company’s low-income program (4T 449). Witness
Fisher is the Executive Director of Hope Village Revitalization. She supported development of
community solar in Highland Park, Michigan, as well as incorporating input from the community
with respect to these types of projects (4T 461-467). Witness Koeppel is the Executive Director of
Soulardarity. He proposed alternatives for community solar projects in low-income communities
as he did not believe the customer-requested product offering and the low-income pilot proposed
in this case were sufficient to meet the needs of low-income customers (4T 472-473).
IV. APPLICABLE LAW
As further discussed below, DTE Electric’s VGP Program, as amended by the Settlement
agreement both comports with the law as codified in 2008 PA 295, as amended, by 2016 PA 342,
MCL 460.1001 et seq., as well as the Commission’s guidance from its July 9, 2020 order in Case
No. U-18232, and the Commission should agree despite the criticisms of GLREA.
A. GOVERNING STATUTES
The statute governing this VGP plan proceeding is 2016 Act 342, which amended 2008 PA
295, MCL 460.1001 et seq., by adding Section 61, MCL 460.1061, which requires electric
providers to offer a voluntary green pricing program. This Section states:
An electric provider shall offer to its customers the opportunity to participate in a voluntary green pricing program under which the customer may specify, from the options made available by the electric provider, the amount of electricity attributable to the customer that will be renewable energy. If the electric provider’s rates are regulated by the commission, the program, including the rates paid for renewable energy, must be approved by the commission. The customer is
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responsible for any additional costs incurred and shall accrue any additional savings realized by the electric provider as a result of the customer’s participation in the program. If an electric provider has not yet fully recovered the incremental costs of compliance, both of the following apply:
(a) A customer that receives at least 50% of the customer’s average monthly electricity consumption through the program is exempt from paying surcharges for incremental costs of compliance.
(b) Before entering into an agreement to participate in a commission-approved voluntary green pricing program with a customer that will not receive at least 50% of the customer’s average monthly electricity consumption through the program, the electric provider shall notify the customer that the customer will be responsible for the full applicable charges for the incremental costs of compliance and for participation in the voluntary renewable energy program as provided under this section.
DTE Electric filed its Application for Approval of its August 2020 Amended Renewable
Energy Plan in accordance with the Clean, Renewable, and Efficient Energy Act, 2008 PA 295, as
amended by 2016 PA 342, MCL 460.1001 et seq. MCL 460.1022(3) provides that the
“commission shall conduct a contested case hearing on the proposed plan . . . [and] the commission
shall approve, with any changes consented to by the electric provider, or reject the plan and any
amendments to the plan.” MCL 460.1022(5) further states that “the commission shall approve the
plan or any amendments to the plan” if the Commission determines that the plan is reasonable and
prudent, and that it is consistent with the purpose and goal set forth in MCL 460.1001(2) and (3)
and was designed to meet the renewable energy standard through 2029. MCL 460.1001(2) and (3)
provide:
(2) The purpose of this act is to promote the development and use of clean and renewable energy resources and the reduction of energy waste through programs that will cost-effectively do all of the following:
(a) Diversify the resources used to reliably meet the energy needs of consumers in this state.
(b) Provide greater energy security through the use of indigenous energy resources available within the state.
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(c) Encourage private investment in renewable energy and energy waste reduction.
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(3) As a goal, not less than 35% of this state's electric needs should be met through a combination of energy waste reduction and renewable energy by 2025, if the investments in energy waste reduction and renewable energy are the most reasonable means of meeting an electric utility's energy and capacity needs relative to other resource options.
B. ADDITIONAL CONSIDERATIONS ESTABLISHED IN CASE NO. U-18349
The Commission set requirements for VGPs in its July 12, 2017 Order in Case No. U-
18349, and later clarified these (at the request of Staff) in a subsequent order issued December 20,
2017 (together, the “U-18349 Orders”). In the July 12 Order in U-18349, the Commission stated
it would evaluate VGP programs for the following criteria:
(1) the programs should be cost-of-service based to avoid subsidization by non-participants; (2) the program terms, [renewable energy] technologies utilized, location of [renewable energy] sources, and costs and savings incurred by a customer should be transparent and clearly explained; (3) the program should contain accurate price signals with clearly broken-down costs, especially with respect to marketing and administrative costs; and (4) [renewable energy] generation under the program must be additional to the 15% requirement under Section 28 and separate from the provider’s renewable energy plans (REPs), which will require accurate accounting and verification of RECs to avoid overlap. [In re DTE Electric Co, MPSC Case No. U-18352, Dkt. No. 17, 3─4.]
In the December 20, 2017 Order in U-18349, the Commission summarized the additional
requirements that a VGP program should optimally contain:
(1) a menu of options for customers with varying [renewable energy] needs to choose from; (2) [renewable energy] generation that is additional to the 15% requirement in Act 295 and located within the provider’s service territory (taking into account certain constraints and a need for flexibility); (3) a tracking and verification mechanism through Michigan Renewable Energy Certification System (MIRECS) or a similar third party for any REC produced under the VGP programs to avoid overlap with a provider’s REP; (4) a bar on program enrollment caps at this time; (5) minimum enrollment terms if desired by the provider; and (6) transparency in program terms, price, costs, and savings. [Id. at 5─6.]
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V. SETTLEMENT OUTLINE
The Settlement Agreement reached among the parties is comprehensive, and addresses
each and every aspect of the Application. The terms are outlined below:
small scale solar procurement); 2024: 183 MW to 623 MW; and 2025: 132 MW.
3. Increased reporting frequency of updated sales forecasts.
4. Approves tax equity financing as an allowable utility financing structure for all
future BTAs and self-developed projects so long as tax equity partners are not DTE
affiliates, tax equity financing costs are included in future RFP bids, and additional
reporting requirements.
5. REP will be amended as proposed, with the addition of some protections against
excessive inclusion of REP costs in power supply cost recovery factors, and additional
protections against future need to implement a surcharge.
6. Approval of the White Tail Solar BTA, Freshwater Solar BTA, and Calhoun
County Solar PPA Contracts.
7. Approval of proposed modifications and tariff amendments to Rider 17 as requested
in the application, including the Low-Income Donation Pilot, and fixed-price billing
options, and the merger of projects used to support Rider 17 and Rider 19, swap of certain
higher cost Rider 17 renewable assets with lower cost compliance assets, and extension of
the general Rider 19 credit methodology to Rider 17.
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8. Approval of proposed modifications and tariff amendments to Rider 19 including
pre-payment options and a commitment to work on potential incentives for customer long-
term contracts.
9. Approval of DTE Electric’s proposed customer-requested offering, modified to
include only ahead-of-meter projects until after conclusion of the MPSC MI Power Grid
New Technologies and Business Models collaborative on the subject,6 ex parte approval
of customer-requested contracts, a special competitive bidding process to apply to these
projects, creation of an Anchor Tenant Community Solar Pilot, with a commitment to work
with Ann Arbor to make its landfill solar project the first Anchor Tenant project in the
pilot.
10. Approval of a Low-Income Solar Pilot where DTE Electric will donate 30% of the
costs, not to exceed $300,000 per project, of three local solar projects (one each located in
Detroit, Highland Park, and River Rouge) with commercial operation dates in 2022-2024
(one per year), will create a Low-Income Solar Council to participate in the Pilot, will
provide on-bill credits to low-income subscribers at no cost to them (credits calculated as
in Rider 19), a portion of voluntary contributions made via the MIGreenPower Low-
Income Donation Pilot will go towards funding this pilot, and the Company will include
and study pairings of different energy waste reduction products with the pilots.
11. DTE Electric agreed to a methodology to be used for requests for proposals issued
for projects for the upcoming VGP build plan included in the settlement, which commits
to open, non-discriminatory procurement process that fairly considers different ownership
6 There is an exception for the Ann Arbor landfill solar pilot only, which may be behind-the-meter for on-site electricity use.
19
structures, VGP qualifying resource types, sizes/capacities, and locations with
transparency on how they will be evaluated, which is open to all VGP qualifying resources
without a minimum project size threshold. The Agreement includes specific commitments
to increase transparency and clarity around evaluation of non-price factors and bonus
factors, contract terms, FCM parameters, includes specific requirements and methodology
associated with use of terminal value analysis, separation of employees with responsibility
for bidding projects from those who are involved in any part of the RFP process, pre-RFP
meeting with developers, use of an independent third-party evaluator for solicitations
where the Company or an affiliate may bid, and a post-RFP meeting.
12. DTE Electric will solicit 100 MWac of small-scale solar (less than 25 MWac and
greater than 550kWac) build-transfer projects from those projects with pending
interconnection applications as of the date of Commission approval of the settlement and
will acquire projects that meet project guidelines. Neither DTE Electric nor its affiliates
will bid. The parties agreed to a pre-RFP meeting, pre-qualification of developers prior to
bidding, short-listing of projects based upon projected levelized cost of energy only without
consideration of non-price factors, a batch-study interconnection process with project off-
ramps, and announcement of winning bids via a final ranking of projects by as-bid LCOE
plus interconnection costs.
13. The Company will participate in a Carbon Offset and Reduction Work Group.
14. DTE Electric will report on its pilots via the guidance the Commission provided in
its February 8, 2021 Order in Case No. U-20645.
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VI. ARGUMENT
The Commission should approve the Settlement Agreement because it represents a
reasonable compromise among the parties from their as-filed positions in this matter. It is
reasonable, prudent, and in compliance with all applicable laws, and it is in the public interest.
A. SETTLEMENT TERMS COMPLY WITH ALL APPLICABLE LAW.
Company Witness Brian Calka testified that the terms of the settlement agreement comply
with all VGP requirements and REP requirements (5T 844).
B. THE COMMISSION SHOULD APPROVE THE SETTLEMENT AGREEMENT BECAUSE IT REPRESENTS A REASONABLE COMPROMISE AND IS IN THE PUBLIC INTEREST.
Company Witness Brian Calka testified that the Commission should approve the
Settlement Agreement because, in addition to meeting all the legal and statutory requirements of
the VGP and REP programs, the Settlement Agreement provides extensive benefits to DTE
Electric customers (5T 844). Mr. Calka highlighted the following customer benefits:
• Inclusion of future VGP projects into the REP will maintain the ability to offer customers a subscription charge based on levelized cost of energy as well as backstopping provisions through the REP;
• VGP build plan will provide enough capacity to support the growing customer base in DTE Electric’s MIGreenPower program;
• Approval of White Tail Solar build transfer agreement (BTA), Freshwater Solar BTA, and Calhoun County Solar power purchase agreement (PPA) will add cost-effective projects to DTE’s MIGreenPower portfolio, ultimately decreasing the net premium to all VGP customers; Moving Pinnebog wind park, Lapeer solar park, and O’Shea solar park (72.65 MW in total) into the REP as compliance projects, bringing the Assembly solar park PPA (79 MW) into the VGP and combining with existing Rider 19 projects will greatly reduce the MIGreenPower net premium for residential and small commercial customers as well as slightly reduce the net premium for large customers;
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• Ahead-of-meter customer requested offerings as well as an Anchor Tenant Community Solar pilot will provide customers with even more options to pursue their renewable energy goals;
• Rider 17 proposed tariff amendments and MIGreenPower Low-Income Donation Pilot will offer customers additional ways to support renewable energy investments that align with customer research;
• Low-Income Solar Pilot will seek to provide three communities and respective eligible low-income customers with the benefits of a community solar array and associated bill credits from a full subscription;
• Tax equity financing structure will permit cost-effective financing means for new projects, which will reduce costs for all customers. [5T 844-845.]
Staff too testified that the Settlement Agreement is in the public interest. Staff Witness Julie Baldwin testified that the compromise achieves several key benefits:
• provides for voluntary green pricing (VGP) program supply through 2025, including approval of the Freshwater, White Tail, and Calhoun County solar contracts
• establishes the competitive bidding process DTE will use to obtain future VGP supply
• provides for up to three low-income community solar projects as part of a low-income solar pilot with an analysis and Commission filing in 2025
• provides for a MIGreenPower low-income donation pilot
• provides for an anchor tenant community solar pilot
• establishes a small-scale solar process providing for DTE to purchase up to 100 MWac of projects with pending interconnection applications
Despite the disparate positions of the parties to this case, the parties nevertheless came together to
reach a compromise that balances all the competing issues in this case in a way that is most
advantageous to DTE Electric’s customers, and furthers the Legislature’s goals in enacting the
State’s VGP and REP requirements. The Settlement furthers this State’s and the Company’s
commitment to increasing access to clean energy at reasonable rates for VGP customers, provides
new methods to assist our municipal and corporate customers to meet their individual clean energy
goals, and provides low-income customers with new access to clean energy. The Commission
should approve this Settlement Agreement as it is in the public interest to do so.
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VII. RELIEF REQUESTED
DTE Electric requests that the Commission approve the contested Settlement Agreement.
May 11, 2021
Respectfully submitted,
DTE ELECTRIC COMPANY
By:_________________________________ Attorneys for DTE Electric Company Lauren Donofrio (P66026) Paula Johnson-Bacon (P55862) One Energy Plaza, 1635 WCB Detroit, Michigan 48226 (313) 235-7052
STATE OF MICHIGAN
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
In the matter, on the Commission’s own motion, ) regarding the regulatory reviews, revisions, ) determination and/or approvals necessary for ) Case No. U-20713 regulated electric providers to comply with ) Section 61 of 2016 PA 342. )
In the matter of DTE ELECTRIC COMPANY’S ) application for the regulatory reviews, revisions, ) determinations, and/or approvals necessary for ) Case No. U-20851 to fully comply with Public Act 295 of 2008 )
PROOF OF SERVICE
STATE OF MICHIGAN ) ) ss. COUNTY OF WAYNE )
ESTELLA R. BRANSON states that on May 11, 2021, she served a copy of DTE Electric
Company’s Initial Settlement Brief via electronic mail upon the persons listed on the attached
service list.
______ ESTELLA R. BRANSON
MPSC Case No. U-20713/U-20851 Page 1
ADMINISTRATIVE LAW JUDGE Honorable Martin Snider 7109 West Saginaw Hwy Lansing, MI 48917 [email protected] ASSOCIATION OF BUSINESSES ADVOCATING TARIFF EQUITY (ABATE) Bryan A. Brandenburg Michael J. Pattwell Clark Hill PLC 212 East César E. Chávez Avenue Lansing, MI 48906 [email protected][email protected] Stephen A. Campbell 500 Woodward Avenue, Suite 3500 Detroit, MI 48226 [email protected] CITY OF ANN ARBOR; MICHIGAN MUNICIPAL ASSOCIATION FOR UTILITY ISSUES (MI-MAUI) Valerie J.M. Brader Catherine T. Dobrowitsky Rivenoak Law Group, P.C. 3331 W. Big Beaver Rd., Ste. 109 Troy, MI 48084 [email protected][email protected][email protected] ENERGY MICHIGAN Timothy J. Lundgren Justin K. Ooms The Victor Center 201 N. Washington Square, Ste. 910 Lansing, MI 48933 [email protected][email protected]
ENVIRONMENTAL LAW & POLICY CENTER; VOTE SOLAR; THE ECOLOGY CENTER; SOLAR ENERGY INDUSTRIES ASSOCIATION Margrethe Kearney 1514 Wealthy Street SE, Suite 256 Grand Rapids, MI 49506 [email protected][email protected][email protected] GREAT LAKES RENEWABLE ENERGY ASSOCIATION Don L. Keskey Brian W. Coyer University Office Place 333 Albert Avenue, Suite 425 East Lansing, MI 48823 [email protected][email protected] MICHIGAN ENERGY INNOVATION BUSINESS COUNCIL (EIBC); INSTITUTE FOR ENERGY INNOVATION(IEI); ADVANCED ENERGY ECONOMY (AEE) Laura A. Chappelle Timothy J. Lundgren The Victor Center 201 N. Washington Square, Ste. 910 Lansing, MI 48933 [email protected][email protected] MICHIGAN ENVIRONMENTAL COUNCIL (MEC); NATURAL RESOURCES DEFENSE COUNCIL (NRDC) Christopher M. Bzdok Lydia Barbara-Riley Olson, Bzdok & Howard, P.C. 420 East Front Street Traverse City, MI 49686 [email protected][email protected][email protected][email protected][email protected]
MPSC STAFF Amit T. Singh Nicholas Q. Taylor 7109 West Saginaw Hwy, 3rd Floor Lansing, MI 48917 [email protected][email protected] PINE GATE RENEWABLES LLC Jennifer Utter Heston Fraser Trebilcock Davis & Dunlap, P.C. 124 W. Allegan Street, Ste. 1000 Lansing, MI 48933 [email protected] SOULARDARITY Nick Leonard Executive Director Great Lakes Environmental Law Center 4444 Second Avenue Detroit, MI 48201 [email protected] Robert A. Weinstock Mark N. Templeton Rebecca J. Boyd University of Chicago Law School Abrams Environmental Law Clinic 6020 South University Avenue Chicago, IL 60637 [email protected][email protected][email protected]