DTE Electric Company One Energy Plaza, 1208WCB Detroit, MI January 13, 2017

Transcription

1 One Energy Plaza, 1208WCB Detroit, MI Estella R. Branson (313) January 13, 2017 Ms. Mary Jo Kunkle Executive Secretary Michigan Public Service Commission 7109 West Saginaw Highway Lansing, Michigan Re: In the matter, on the Commissions own motion, establishing the method and avoided cost calculation for DTE ELECTRIC COMPANY to fully comply with the Public Utilities Regulatory Policy Act of 1978, 16 USC 2601 et seq. Case No. U (Paperless e-file) Dear Ms. Kunkle: Please find attached the Exhibits A-1 thru A-9 that were admitted into the record at the hearing held on January 12, If you have any questions or concerns with this filing, please feel free to contact me at the above referenced phone number. Very truly yours, Estella R. Branson Regulatory Case Management Analyst

2 Michigan Public Service Commission Case No.: U Exhibit: A-1 (Revised) DTE Electric's Preferred method: "Combined Cycle Gas Turbine" (CCGT) Avoided Cost Witness: L. K. Mikulan Page: 1 of 2 (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) Line No. Type of Technology Capacity Factor Estimate ELCC (Estimate) or MISO UCAP Capacity cost of a CCGT 1 Total Capacity Cost (20 MW QF) Energy Cost (CCGT variable cost [in 2016]) Capacity Cost Assumed annual energy (20 MW QF) Total first year Cost (20 MW QF) Energy Cost + Capacity Cost Capacity Cost Energy Cost Energy Cost + Capacity Cost (%) (%) ($1000s) ($1000s) ($/MWH) ($/MWH) (GWH) ($1000s) ($/MWH) (cents/kwh) (cents/kwh) (cents/kwh) (e) =(c)*(d) (g) = (e)/((b)*8.76*20) (h) = 20*8.76*(b) (i) = (e) + (f)*(h) (j) = (f) + (g) (k) = (g)*100/1000 (l) = (f)*100/1000 (m) = (j)*100/ Hydro 60% 92% $ 3,081 $ 2,835 $ $ $ 4,837 $ Biomass 80% 93% $ 3,081 $ 2,862 $ $ $ 5,531 $ Landfill Gas 85% 87% $ 3,081 $ 2,696 $ $ $ 5,532 $ Solar 20% 43% $ 3,081 $ 1,325 $ $ $ 1,992 $ Wind 35% 16% $ 3,081 $ 481 $ $ $ 1,649 $

3 Michigan Public Service Commission Case No.: U Exhibit: A-1 (Revised) DTE Electric's Preferred method: "Combined Cycle Gas Turbine" Witness: L. K. Mikulan (CCGT) Avoided Cost - Energy Cost by Year Page: 2 of 2 Line No. (a) Year (b) Energy Cost (CCGT variable cost) ($/MWH)

4 Michigan Public Service Commission Case No.: U Exhibit: A-2 Corrected Calculation of the CCGT Capacity Component Witness: L. K. Mikulan (a) (b) (c) (d) Line No. Description units Value Formula 1 Capacity of CCGT MW 1,059 input 2 Capital cost of CCGT (nominal) M$ $ 1,176 input with escalation 3 AFUDC M$ $ 129 Calculated over 5 year build 4 Fixed O&M $/kw $ 6.58 input 5 total cost of Fixed O&M M$ $ 6.97 =(1)*(4)/ Fixed Charge Rate % 11.50% input 8 9 Total Capital M$ $ 1,304 =(2) + (3) 10 Annual Capital M$ $ 150 =(7)*(9) Total fixed cost per year M$ $ 157 = (10) + (5) 13 Total fixed cost per year $/MW-year $ 148,229 =(12)/(1)*1,000, CCGT (1- ELCC) % 3.78% input 16 Apply CCGT ELCC $/MW-year $ 154,052 =(13)/(1-(15)) Capacity cost of a CCGT (20MW QF) $1,000 $ 3,081 =(16)*20/1000

5 Michigan Public Service Commission Case No.: U Exhibit: A-3 Staff Method: Hybrid Proxy Plant Method Witness: L. K. Mikulan Page: 1 of 2 (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) Line No. Type of Technology Capacity Factor Estimate ELCC (Estimate) or MISO UCAP Total Capacity Cost (20 MW QF) Energy (actual LMP: option 1) Energy (Forecasted LMP: option2) $/MWH Energy (CC variable cost: option 3) NGCC fixed ICE Total Energy (using option 3) $/MWh Capacity $/MWH total first year (option 3) Assumed annual energy (20 MW QF) Energy Cost + Capacity Cost (%) (%) ($1000s) ($/MWH) ($/MWH) ($/MWH) ($/MWH) ($/MWH) ($/MWH) ($1000s) (GWH) ($/MWH) (i) = (g) + (h) (j) = (d)/(l) (k) = (m)*(l) (i) = 20*8.76*(b) (m) = (i) + (j) 1 Hydro 60% 92% $ 2,483 TBD $ $ $ 3.39 $ $ $ 5, $ Biomass 80% 93% $ 2,506 TBD $ $ $ 3.39 $ $ $ 6, $ Landfill Gas 85% 87% $ 2,360 TBD $ $ $ 3.39 $ $ $ 6, $ Solar 20% 43% $ 1,160 TBD $ $ $ 3.39 $ $ $ 2, $ Wind 35% 16% $ 421 TBD $ $ $ 3.39 $ $ 6.86 $ 2, $ 36.26

6 Michigan Public Service Commission Case No.: U Exhibit: A-3 Staff Method: Hybrid Proxy Plant Method Witness: L. K. Mikulan Energy Cost by Year Page: 2 of 2 (a) (b) (c) (d) Line No. Year Energy Cost (Option 1) all years Energy Cost (Option 2) all years Energy Cost (Option 3) all years ($/MWH) ($/MWH) ($/MWH) TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD

7 Michigan Public Service Commission Case No.: U Exhibit: A-4 Transfer Price Method developed under 2008 PA 295 Witness: L. K. Mikulan (a) (b) (c) (d) (e) Line No. Year Fixed Variable Escalation Transfer Price ($/MWH) ($/MWH) ($/MWH) $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 68.36

8 Michigan Public Service Commission Case No.: U Exhibit: A-5 Capacity Resource Plan Witness: L. K. Mikulan Years (a) (b) (c) (d) (e) (f) Line No. Description Resource Plan Requirement 2 3 DTE Electric Peak Demand Non-Coincident with MISO MW 10,423 10,395 10,397 10,370 10, Adjusted DTE Electric Peak Demand MW 10,050 10,023 10,025 9,999 10, UCAP Planning Reserve Margin (UPRM) MW Total Required Planning Resources MW 10,834 10,805 10,807 10,779 10, Planning Resources Owned Fossil & Nuclear Generation Resources (UCAP) MW 9,826 9,769 9,881 9,745 9, Demand Resources (Interruptible Load) MW Owned Renewable Generation Resources (UCAP) MW Long Term Purchases (UCAP) 21 PURPA MW Renewable MW Total Planning Resources (UCAP) MW 10,941 10,919 11,087 10,973 11, Required Capacity Purchases (Long) MW (107) (114) (280) (194) (328)

9 M.P.S.C. No. 1 - Electric STANDARD CONTRACT RIDER NO. 5 Case No.: U Exhibit: A-6 Page: 1 of 2 Revised Sheet No. D-xx.00 Cancels Revised Sheet No. D-xx.00 SMALL POWER PRODUCTION AND COGENERATION FACILITIES 20 MW AND SMALLER AVAILABILITY: Full service customers with on-site small power production or cogeneration facilities 20MW and smaller that seek to sell electric output from their facility to the Company may receive service under this tariff. This rate is available only to customers who obtain qualifying facility (QF) status from the Federal Energy Regulatory Commission. Prior to interconnection, the customer shall provide a copy of such notification to the Company. CHARACTER OF SERVICE: A Sales to customers: 1. As specified under the applicable filed rate. B Sales by the Customer to the Company: 1. As specified under contractual agreement. C D The customer shall install, at their expense, the necessary controlling, additional metering and protective equipment according to specifications of the Company. The Company shall not be liable for damage to customer-owned equipment caused by the interconnection. Billing for both sales to and sales from the customer will be calculated by the Company. RATE: A Sales to Customers: 1. Customer loads that are normally served by the customer s generator or prime mover must take standby service under Rider 3 unless otherwise exempted under the provisions of Rider 3, and must take supplemental service under an appropriate full service base tariff. B Sales by the Customer to the Company: 1. New Facilities: a. Energy Only Sales: The rate will be based on the day-ahead MISO locational hourly marginal energy price for the DTE Electric appropriate load node. Issued, 2016 Effective for service rendered on D. M. Stanczak and after, 2016 Vice President Regulatory Affairs Issued under authority of the Michigan Public Service Commission Detroit, Michigan dated, 201_ in Case No. U-18091

10 Case No.: U Exhibit: A-6 Page: 2 of 2 M.P.S.C. No. 1 - Electric Revised Sheet No. D-xx.00 Cancels Revised Sheet No. D-xx.00 STANDARD CONTRACT RIDER NO. 5 (Contd.) SMALL POWER PRODUCTION AND COGENERATION FACILITIES 20 MW AND SMALLER b. Capacity and Energy Sales: If capacity is needed, the rate will be based on the avoided capacity and energy costs in the Company s biennial avoided cost filing with the Commission. This rate will be adjusted to be reflective of the forecasted capacity factor, availability, operating schedule and the ability of the Company to dispatch the customer s generation. The rate so determined will apply to facilities with a capacity of 100 kw or less. The rate for facilities having a capacity over 100 kw up to 20MW will be made under negotiated agreement. 2. Existing Facilities: a. Energy Only Sales: The rate will be based on the day ahead MISO locational hourly marginal energy price for the DTE Electric appropriate load node. b. Capacity and Energy Sales: No recognition will be made for capacity unless substantial proof is shown that the generator and protective equipment is new or equivalent to new. Refurnishing old equipment will not qualify the facility as new capacity. 3. A one mill per kilowatthour charge shall be assessed to all customers on this rate to offset the Company's additional administrative expenses associated with these transactions. SPECIAL PROVISIONS AND CONDITIONS: A Capacity Sales to the Company: 1. Annually the customer shall supply the Company with a schedule of all planned outages for the year in question. The customer and the Company shall agree to a maintenance schedule of mutual benefit. 2. Contract Capacity: The contract must specify the minimum and maximum kw capacity available to the utility from the facility under normal operating conditions. 2. Availability: The customer shall supply the Company with a statement of the projected annual availability of the capacity stated in the Contract Capacity. B Additional Provisions and Conditions for Cogeneration: 1. Capacity Factor: The customer shall supply the Company with a statement of the projected capacity factor and operating schedule for the cogeneration facility. 2. Failure of the cogeneration facility to operate at the level of performance forecasted by the customer shall result in the Company adjusting the capacity purchase price to reflect the demonstrated performance of the cogeneration facility in question. Issued, 2016 Effective for service rendered on D. M. Stanczak and after, 2016 Vice President Regulatory Affairs Issued under authority of the Michigan Public Service Commission Detroit, Michigan dated, 201_ in Case No. U-18091

11 Michigan Public Service Commission DTE Electric's Response to Discovery Questions CAADE-1.3a-f Case No.: U Exhibit: A-7 1 of 6 MPSC Case No.: U Respondent: T. A. Bloch Requestor: CAA-1 Question No.: CAADE-1.3a Question: Exhibit A-6, under Rate, B.2.b. says that for capacity and energy sales, No recognition will be made for capacity unless substantial proof is shown that the generator and protective equipment is new or equivalent to new. Refurnishing old equipment will not qualify the facility as new capacity. a. Please describe what DTE means by [n]o recognition will be made for capacity in the provision cited above. Answer: DTE does not intend to enter into a capacity contract unless substantial proof is shown that the generator and protective equipment is new or equivalent to new.

12 Michigan Public Service Commission DTE Electric's Response to Discovery Questions CAADE-1.3a-f Case No.: U Exhibit: A-7 2 of 6 MPSC Case No.: U Respondent: T. A. Bloch Requestor: CAA-1 Question No.: CAADE-1.3b Question: Exhibit A-6, under Rate, B.2.b. says that for capacity and energy sales, No recognition will be made for capacity unless substantial proof is shown that the generator and protective equipment is new or equivalent to new. Refurnishing old equipment will not qualify the facility as new capacity. b. Assuming that the answer to a. above is that DTE intends to only pay for capacity to which it gives recognition, please describe in detail the reason for DTE s position that it should only pay for capacity from equipment that is new or equivalent to new. Answer: The avoided capacity rates are based on the avoided costs of building new generation. DTE Electric customers are entitled to the reliability and other technical benefits of new or equivalent to new equipment when committing to purchase capacity for years. To do otherwise is like buying a used car for the price of a new one and expecting the same reliability and benefits.

13 Michigan Public Service Commission DTE Electric's Response to Discovery Questions CAADE-1.3a-f Case No.: U Exhibit: A-7 3 of 6 MPSC Case No.: U Respondent: T. A. Bloch Requestor: CAA-1 Question No.: CAADE-1.3c Question: Exhibit A-6, under Rate, B.2.b. says that for capacity and energy sales, No recognition will be made for capacity unless substantial proof is shown that the generator and protective equipment is new or equivalent to new. Refurnishing old equipment will not qualify the facility as new capacity. c. Please describe in detail what DTE means by substantial proof ; the basis for DTE s application of this standard of proof; the basis for DTE s assignment of this burden of proof to the generator; and how DTE expects that the utility and the generator will know when this standard of proof is satisfied. Answer: Substantial proof means providing technical support and or certification acceptable to DTE Electric that the generator and protective equipment is new or equivalent to new. Similar requirements have been included in DTE Electric s (formerly Detroit Edison s) approved Rider Nos. 5 and 6 since the 1980 s.

14 Michigan Public Service Commission DTE Electric's Response to Discovery Questions CAADE-1.3a-f Case No.: U Exhibit: A-7 4 of 6 MPSC Case No.: U Respondent: T. A. Bloch Requestor: CAA-1 Question No.: CAADE-1.3d Question: Exhibit A-6, under Rate, B.2.b. says that for capacity and energy sales, No recognition will be made for capacity unless substantial proof is shown that the generator and protective equipment is new or equivalent to new. Refurnishing old equipment will not qualify the facility as new capacity. d. Please explain in detail why DTE believes that only capacity that is connected with protective equipment that is new or equivalent to new should be given recognition. Answer: See response to CAADE-1.3b.

15 Michigan Public Service Commission DTE Electric's Response to Discovery Questions CAADE-1.3a-f Case No.: U Exhibit: A-7 5 of 6 MPSC Case No.: U Respondent: T. A. Bloch Requestor: CAA-1 Question No.: CAADE-1.3e Question: Exhibit A-6, under Rate, B.2.b. says that for capacity and energy sales, No recognition will be made for capacity unless substantial proof is shown that the generator and protective equipment is new or equivalent to new. Refurnishing old equipment will not qualify the facility as new capacity. e. Please explain in detail why DTE believes that only capacity that is provided by a generator that is new or equivalent to new should be given recognition. Answer: See response to CAADE-1.3b.

16 Michigan Public Service Commission DTE Electric's Response to Discovery Questions CAADE-1.3a-f Case No.: U Exhibit: A-7 6 of 6 MPSC Case No.: U Respondent: T. A. Bloch Requestor: CAA-1 Question No.: CAADE-1.3f Question: Exhibit A-6, under Rate, B.2.b. says that for capacity and energy sales, No recognition will be made for capacity unless substantial proof is shown that the generator and protective equipment is new or equivalent to new. Refurnishing old equipment will not qualify the facility as new capacity. f. Please explain in detail why refurnished equipment is not considered new for purposes of DTE s recognition of capacity under the abovecited provision. Answer: See response to CAADE-1.3b.

17 Michigan Public Service Commission DTE Electric's Response to Discovery Question ELPCDE-2.46a Case No.: U Exhibit: A-8 1 of 1 MPSC Case No.: U Respondent: T. A. Bloch Requestor: ELPC-2 Question No.: ELPCDE-2.46a Question: Reference Exhibit A-6 at pages 1 and 2. a. Why does the Company differentiate between New Customers and Existing Customers? Answer: The distinction is not between new and existing customers, rather new and existing generating facilities. This distinction limits the Company s obligation to purchase capacity from existing generating facilities unless substantial proof is shown that the generator and protective equipment is new or equivalent to new.

18 Michigan Public Service Commission DTE Electric's Response to Discovery Question ELPCDE-2.47 Case No.: U Exhibit: A-9 1 of 1 MPSC Case No.: U Respondent: T. A. Bloch/Legal Requestor: ELPC-2 Question No.: ELPCDE-2.47 Question: Answer: Reference Exhibit A-6 at page 2. Please identify the authority under PURPA for inclusion in the tariff of the one mill per kilowatthour charge to all customers to offset administrative expenses. objects to responding to this request for the reason that it seeks a legal opinion. Subject to and without waiving the above objection, the Company states as follows: Section of the PURPA definitions provides that interconnection costs means the reasonable costs of connection, switching, metering, transmission, distribution, safety provisions and administrative costs incurred by the electric utility directly related to the installation and maintenance of the physical facilities necessary to permit interconnected operations with a qualifying facility, to the extent such costs are in excess of the corresponding costs which the electric utility would have incurred if it had not engaged in interconnected operations, but instead generated an equivalent amount of electric energy itself or purchased an equivalent amount of electric energy or capacity from other sources (emphasis added). Section of the PURPA Interconnection costs states: (a) Obligation to pay. Each qualifying facility shall be obligated to pay any interconnection costs which the State regulatory authority (with respect to any electric utility over which it has ratemaking authority) or nonregulated electric utility may assess against the qualifying facility on a nondiscriminatory basis with respect to other customers with similar load characteristics. (b) Reimbursement of interconnection costs. Each State regulatory authority (with respect to any electric utility over which it has ratemaking authority) and nonregulated utility shall determine the manner for payments of interconnection costs, which may include reimbursement over a reasonable period of time.