August 31, Ms. Kavita Kale Executive Secretary Michigan Public Service Commission 7109 West Saginaw Hwy Lansing, MI 48917

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1 DTE Gas Company One Energy Plaza, 688 WCB Detroit, MI David S. Maquera (313) August 31, 2016 Ms. Kavita Kale Executive Secretary Michigan Public Service Commission 7109 West Saginaw Hwy Lansing, MI Re: In the matter of the Application of DTE Gas Company for a Gas Cost Recovery Reconciliation proceeding for the 12 months ending March 31, 2016 MPSC Case No. U R Dear Ms. Kale: Attached for electronic filing is DTE Gas Company s Objections to Retail Energy Supply Association s Petition to Intervene. Also attached is a Proof of Service. Very truly yours, DSM/lah Attachments cc: Service List David S. Maquera

2 STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the matter of the Application of ) DTE GAS COMPANY ) for a Gas Cost Recovery Reconciliation ) Case No. U R proceeding for the 12 months ending ) March 31, 2016 ) DTE GAS COMPANY S OBJECTIONS TO RETAIL ENERGY SUPPLY ASSOCIATION S PETITION TO INTERVENE Pursuant to Rule 411 of the Michigan Public Service Commission s ( Commission or MPSC ) Rules of Practice and Procedure, ( Commission Rules ) Mich Admin Code R , DTE Gas Company ( DTE Gas ) files these Objections to Retail Energy Supply Association s ( RESA ) Petition to Intervene ( Petition ). For reasons stated below, RESA s Petitions should be denied because it does not meet either part of the Commission s two-prong test for standing and should not be granted permissive intervention because RESA s participation will neither further the development of the record nor in any way materially advance resolution of the issues before the Commission in this gas cost recovery ( GCR ) reconciliation proceeding being conducted pursuant to MCL 460.6h, et seq. INTRODUCTION 1. Pursuant to 1939 PA 3, as amended, MCL 460.6h, et. seq. ( Act 304 ), DTE Gas has requested that the Commission approve its gas cost recovery reconciliation for the 12 months ending March 31, 2016, which does not affect alternative gas suppliers ( AGSs ) such as RESA s purported members. 1 1 Retail Energy Supply Association is an association of AGSs. See RESA s Petition, 1. 1

3 2. As a separate issue, the GCR and Supplier-of-Last-Resort ( SOLR ) Reservation Charge revenues and expenses for GCR customers are reconciled on a combined basis and the Reservation Charge revenues and expenses for gas customer choice ( GCC ) customers are reconciled separately. 2 In fact, DTE Gas s application and supporting testimony and exhibits are devoid of any request or suggestion that the SOLR reservation charge should be reconciled against RESA much less any of its members. 3. Previously, Commission-approved SOLR costs were borne solely by GCR customers despite the fact that DTE Gas was required to also act as SOLR for GCC customers pursuant to Section F1.19 of DTE Gas s Choice Tariff, which states that: The Company will act as Supplier of last resort under the Program. However, beginning with DTE Gas s GCR Plan case, the Commission approved apportioning the SOLR costs between both GCR and GCC customers and billing them for their respective shares of the SOLR costs. 3 Specifically, the Commission held in pertinent part that: As DTE Gas points out, in accordance with its GCC tariffs, the company is the SOLR in the event that an AGS defaults on its supply obligations or a customer chooses to return to bundled service. In contrast, no AGS has a legal obligation to act as the SOLR for all of the utility s customers. For these reasons and based on the well-reasoned findings and conclusions the ALJ articulated in the PFD, the Commission accepts the PFD s recommendation and concludes implementation of the proposed reservation charge to be assessed on GCC and GCR customers is appropriate. 4 The Commission further held in pertinent part that: Although IGS requested that the Commission use this opportunity to revisit DTE Gas s policy that requires it to maintain sufficient capacity to meet the needs of all of its customers, both GCC and GCR alike, the Commission rejects this recommendation based on its earlier analysis that the utility must meet its 2 See In re DTE Gas Co, MPSC Case No. U R, Application, Dkt. No. 1, 4. 3 See In re DTE Gas Co, MPSC Case No. U-17131, Order dated April 15, 2014, p. 27, B. 4 See In re DTE Gas Co, MPSC Case No. U-17131, Order dated April 15, 2014, p. 9. (Emphasis added.) 2

4 operational requirements and has a legal obligation to act as the supplier of last resort for all of its customers. 5 Consequently, DTE Gas is now charging both GCR and GCC customers for their respective load proportionate shares of this SOLR obligation, which is now being reconciled pursuant to above paragraph 3. INTERVENTION BY RIGHT 4. In its Petition, RESA agree with DTE Gas that a petitioner s standing to intervene by right is based on a two-prong test requiring the intervenor to show: 1) that it will suffer an injury in fact, and 2) that its interests fall within the zone of interests to be protected and regulated. 6 Both components of this two-pronged test must be satisfied. 7 FIRST PRONG ANALYSIS 5. In its Petition, RESA claims that it satisfies the first part of the two-prong test for intervention by right because its members will suffer an injury in fact since DTE Gas s SOLR reservation charge will directly affect them. 8 However, RESA s petition to intervene is procedurally deficient because it failed to provide affidavits from any of its members providing testimony how such members are subject to the Reservation Charge. 9 For this reason alone, RESA fails to satisfy the first prong of the intervention by right test. 5 See In re DTE Gas Co, MPSC Case No. U-17131, Order dated April 15, 2014, p. 15. (Emphasis added.) 6 See RESA Petition, 6. 7 See Ass n of Data Processing Serv Org, Inc v Camp, 397 US 150 (1970), as applied to utility matters in Drake v The Detroit Edison Co, 453 F Supp 1123, 1127 (WD Mich 1978); see also In re Consumers Power Co, Case Nos. U and U-10061, 1992 Mich PSC LEXIS 257, at *3-4 (MPSC Aug 14, 1992); MPSC Case No. U-9852, Opinion and Order dated September 25, 1991, p See RESA Petition, 7. 9 See Friends of the Earth, Inc v Laidlaw Envtl Servs (TOC), Inc, 528 US 167, 183 (2000) (where the US Supreme Court held that injury in fact was demonstrated for the individual members of an association based on each member s affidavit). 3

5 6. RESA goes one step further and makes the conclusory assertions without any basis in fact that its association members would incur an injury such as costs to explain the charge to customers and may lose customers as a result of the charge. 10 However, not only is RESA s assertion unsupported, 11 it is actually contradicted by how the GCC program actually operates under the Commission-approved GCC tariffs. Specifically, DTE Gas performs all the billing and collection functions for GCC customers pursuant to the following GCC tariffs: The customer will remain a customer of the Company. The Company will read the meter and render a bill to the customer for the monthly customer charge, distribution charge, surcharges, penalties and taxes. The [AGS s] cost of gas charges will be billed as part of the Company s bill. Service is subject to the Company s Rate Book for Natural Gas Service as approved by the Commission. By requesting service on this Rate, the customer gives consent to the Company to furnish to the customer s [AGS] pertinent customer sales or transportation data. 12 (Emphasis added.) DTE Gas s GCC tariffs similarly provide that: All customer billing and remittance processing functions for services provided under Rate CC will be performed by the Company. The Supplier will be charged a monthly fee of $0.30 per customer account. The Company will be responsible for credit and collection activities for the amounts billed directly to the customer by the Company. 13 (Emphasis added.) Finally, DTE Gas s GCC tariffs further provide that DTE Gas pays the AGS every month for gas that the AGS delivers onto DTE Gas s system as follows: The Company shall remit to the Supplier, approximately 21 days from the end of each calendar month, an amount for the cost of gas equal to the MMBtu quantities that the Supplier has delivered onto the Company s system, not in excess of the Supplier s delivery obligation, multiplied by the lesser of the cost average actual 10 See RESA Petition, See Footnote 9, supra. 12 MPSC Tariff No. 1, Section F6. 13 MPSC Tariff No. 1, Section F

6 price per Mcf billed to the Supplier s customers that month, converted to MMBTu, or 110% of the cost of gas billed to sales customers pursuant to the Company s Rule C7. The average actual price per Mcf billed to the Supplier s customers is the total amount billed to [AGS s] customers for that billing month divided by the total quantity, in Mcf, billed to [AGS s] customers for the same month. The amount to be remitted shall be reduced for any applicable Supply Equalization Charges, Administrative Fees, Billing Fees, Failure Fees, and/or amounts owed pursuant to the annual price reconciliation per F (Emphasis in the original.) Thus, the GCC tariffs show that the GCC customers are still DTE Gas s customers with respect to all non-commodity charges. Consistent with the Company s above GCC tariffs, DTE Gas performs all the billing and collection functions for its customers that elect to purchase the gas commodity from an AGS. Thus, RESA s purported members are not at any risk for nonpayment or uncollectible costs from any GCC customer related to the SOLR reservation charge. Therefore, RESA fails to satisfy the first prong of the intervention by right test since none of its purported members suffer any injury in fact from the SOLR reservation charge. SECOND PRONG ANALYSIS 7. In addition, RESA claims that it satisfies the second part of the two-prong test for intervention by right because their interests fall within the zone of interests to be protected and regulated in this GCR proceeding. 15 However, RESA has no interest in this proceeding because it (or any of its purported members) is neither subject to the GCR factor nor the SOLR reservation charge being litigated in this proceeding. Instead, RESA s (or rather its purported members) interest is merely and solely competitive in nature. Furthermore, RESA s (or its purported members) competitive interest will be best served by a higher GCR factor to the detriment of GCR customers. Conversely, the level of the SOLR reservation charge will have no 14 MPSC Tariff No. 1, Section F See RESA Petition 8. 5

7 impact on RESA s (or its purported members) competitive interest because such charge is equally applied to both GCR and GCC customers. Accordingly, a competitive interest does not fall within any zone of interests for this proceeding In fact, the Michigan Court of Appeals has previously affirmed the Commission s denial of National Energy Marketers Association s ( NEMA ) petition to intervene in a DTE Gas GCR proceeding, MPSC Case Nos and 15042, on the basis that NEMA s interests were primarily that of a competitor. 17 In this case, RESA admits in its Petition that its purported members are competitors of DTE Gas. 18 Therefore, RESA s Petition is in all substantive respects identical to NEMA s petition to intervene, which the Michigan Court of Appeals held was properly denied by the Commission on the basis that competitors generally do not have standing to intervene in a PSC proceeding. 19 Like NEMA s petition to intervene, RESA s Petition should also be denied since it has admitted that its purported members interests are that of a competitor to DTE Gas. 9. Furthermore, in DTE Gas GCR Plan case, intervention was denied to Direct Energy and IGS because they are competitors of DTE Gas. Specifically, it was held that: As a result, I find that Direct Energy and Interstate Gas Supply do not meet the two-prong test for standing. As alternative gas suppliers their interest is simply competitive, and as a result it does not give rise to an injury in fact, and instead any claimed injury is also purely speculative. As everyone has noted, the Commission has repeatedly held that competitive interests do not fall within the zone of interest. And that claimed future injury is also not sufficient to satisfy the test for standing. 16 See Drake v The Detroit Edison Co, 453 F Supp 1123, 1130 (WD Mich 1978), citing, Clinton Cmty Hosp Corp v Southern Maryland Med Ctr, 374 F Supp 450 (D Md 1974). 17 See In re Mich Consol Gas Co, No , 2010 Mich App LEXIS 137, *16 (Mich Ct App Jan 21, 2010) attached as Exhibit A. 18 See RESA Petition, In re Mich Consol Gas Co, 2010 Mich App LEXIS, at *15. 6

8 Furthermore, as [DTE Gas], the Staff and the Attorney General have pointed out, the Michigan Court of Appeals recently affirmed in its January 21, 2010 decision, 20 In re Michigan Consolidated Gas Company, the Commission s denial of the National Energy Marketers Association s petition to intervene in a similar [DTE Gas] gas cost recovery proceeding 21 because its interests were primarily that of a competitor. Again the interests of Direct Energy Services and Interstate Gas Supply are also competitive in nature and therefore the Court of Appeals decision is controlling. Furthermore, contrary to Direct Energy and Interstate assertions, they do not represent ratepayers or customers and do not have members. Finally, the issues that Direct Energy and Interstate seek to raise which concern [DTE Gas] s gas customer choice program or related tariff issues are outside the scope of this Act 304 proceeding, and there they are not relevant. Consequently, permissive intervention is also not appropriate in this case. I agree that customers interests can be adequately protected by other parties in this case such as the Staff, the Attorney General, and the RRC, MCAAA. So for these reasons and all of the reasons stated by [DTE Gas], the Staff and the Attorney General, the petition to intervene is denied. 22 (Emphasis added.) 10. In regard to the issues in this proceeding, RESA s interests are competitive with respect to DTE Gas, which are outside the zone of interests pertinent to this GCR reconciliation proceeding. Therefore, RESA s interests fall outside the zone of interests of this GCR reconciliation proceeding. Accordingly, RESA has failed to satisfy the second prong as well as the first prong of the intervention by right test. Thus, RESA does not have any standing to intervene by right in this GCR Plan Case and its Petition should be dismissed with prejudice. 20 See In re Mich Consol Gas Co, No , 2010 Mich App LEXIS 137, *15-16 (Mich Ct App Jan 21, 2010) 21 See In re Mich Consol Gas Co, MPSC Case Nos. U and U See In re Michigan Consolidated Gas Company, MPSC Case No. U-16146, T 35-36; see also In re Michigan Consolidated Gas Co, MPSC Case No. U-13902, T 10 (where both intervention by right and permissive intervention was also denied to Energy America, LLC in [DTE Gas] s 2005 GCR Plan case) 7

9 PERMISSIVE INTERVENTION 11. The Commission at times has recognized that intervention of a particular party may further the development of record evidence or in some way materially advance the case. This is often characterized as permissive intervention. 12. It is implicit that to further the development of record evidence or materially advance the case requires that the interests of the party seeking permissive intervention must be relevant to the scope of the proceeding. However, RESA s (or its purported members) interests is not relevant to this GCR reconciliation proceeding because their interests are that of energy marketers participating in the competitive unregulated energy marketplace, 23 which is not provided for in Act In fact, RESA s interests have no place in this GCR proceeding because it would interject unnecessary contentiousness thereby delaying ultimate relief while adding nothing to the record that the other participating parties who have valid standing will provide. A prime example of such unnecessary contentiousness is RESA s filing of a frivolous and entirely meritless motion for a protective order in Case No. U to seal information from the electronic docket that did not belong to either RESA or any of its purported members, but instead belonged to DTE Gas In addition, RESA s reliance on being granted permissive intervention in past Commission proceedings is misplaced. Specifically, RESA s reliance on its intervention in Case No. U is misplaced because that case is distinguishable from this GCR case since the SOLR reservation Charge in Case No. U was initially proposed to be billed directly to the 23 See RESA s Petition, See MCL 460.6h, et seq. 25 See In re DTE Gas Co, MPSC Case No. U-17691, RESA Motion for Protective Order, Dkt. No. 71; see also In re DTE Gas Co, MPSC Case No. U-17691, DTE Gas Response to RESA s Motion for Protective Order, Dkt. No. 77N. 8

10 AGSs. 26 By contrast, the SOLR reservation charge in this case will be billed directly to both GCR and GCC customers instead of the AGSs. Similarly, RESA s reliance on its past intervention in past general rate or non GCR cases is also misplaced because general rate cases are distinguishable from a GCR proceeding conducted under Act Furthermore, RESA s reliance on its intervention in Case Nos. U-17332, U , and U is misplaced because the Commission s decision to grant them permissive intervention in those cases are an aberration and outlier decisions when compared to past Commission and Michigan Court of Appeal decisions discussed in Paragraphs 8 and 9 above denying competitors of DTE Gas such as RESA any intervention, permissive or otherwise, in DTE Gas s GCR cases. RESA may argue that the doctrine of stare decisis precludes denying RESA permissive intervention in this GCR Plan case. 29 However, stare decisis is not a complete bar to overruling precedent. For example, the Michigan Supreme Court recently overruled itself in the same case only four (4) months after the order in question was issued. 30 In Anglers of the AuSable, it was noted that while stare decisis plays a respected role in Michigan jurisprudence, it is appropriate to overrule precedent when doing so serves the best interests of Michigan s jurisprudence. 31 In Anglers of the AuSable, the interests of Michigan s jurisprudence were best served when the Michigan Supreme Court overruled a four-month old order because that four- 26 See RESA Petition See RESA Petition See RESA Petition, 21. A final Commission order is still pending for Case Nos. U and U Stare decisis is defined as [t]he doctrine of precedent, under which a court must follow earlier judicial decisions when the same points arise against in ligitation. Black s Law Dictionary 1537 (9th ed 2009). 30 See Anglers of the AuSable, Inc v Mayer Family Inv, LLC, 489 Mich 884, 796 NW2d 240 (2011). 31 Id at 889. (Young, C.J., concurring). 9

11 month old order itself disregarded the mootness 32 doctrine in order to overrule precedent from six years prior. 33 Thus, overruling and vacating the four-month old order did not actually undo precedent, but in fact restored precedent from six years prior. 34 Likewise, denying RESA permissive intervention in this GCR proceeding would not undo precedent, but restore past precedent of denying DTE Gas s competitors such as AGSs permissive intervention in GCR proceedings. Therefore, permissive intervention should not be granted to RESA. WHEREFORE all the reasons discussed above, DTE Gas Company respectfully requests that the Administrative Law Judge find that the petition to intervene filed by Retail Energy Supply Association should be denied with prejudice. Respectfully submitted, DTE GAS COMPANY By: Its Attorneys Richard P. Middleton (P41278) David S. Maquera (P66228) One Energy Plaza, 688 WCB Detroit, Michigan Dated: August 31, 2016 (313) An issue that is moot is defined in pertinent part as [a] matter in which a controversy no longer exists; a case that presents only an abstract question that does not arise from existing factors or rights. Black s Law Dictionary1099 (9 th ed 2009). 33 See Anglers of the AuSable, supra, at Id. 10

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20 STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the matter of the Application of ) DTE GAS COMPANY for a Gas ) Cost Recovery Reconciliation ) Case No. U R proceeding for the 12 months ending ) March 31, 2016 ) STATE OF MICHIGAN ) ) ss. COUNTY OF WAYNE ) PROOF OF SERVICE ESTELLA R. BRANSON, being duly sworn, deposes and says that on the 31 st day of August, 2016, she served a copy of DTE Gas Company s Objections to Retail Energy Supply Association s Petition to Intervene, via electronic mail upon the persons listed on the attached service list. Subscribed and sworn to before me this 31 st day of August, 2016 ESTELLA R. BRANSON Lorri A. Hanner, Notary Public Wayne County, Michigan My Commission Expires: Acting in Wayne County

21 MPSC Case No. U R SERVICE LIST ADMINISTRATIVE LAW JUDGE Hon. Mark D. Eyster Michigan Public Service Commission 7109 W. Saginaw Highway Lansing, MI ATTORNEY GENERAL Celeste R. Gill Assistant Attorney General Environment, Natural Resources, and Agriculture Division 6th Floor, G. Mennen Williams Bldg. P.O. Box Lansing, MI MPSC STAFF Spencer A. Sattler Bryan A. Brandenburg Assistant Attorneys General Public Service Division 7901 W. Saginaw Highway, 3 rd fl Lansing, MI sattlers@michigan.gov brandenburgb@michigan.gov RETAIL ENERGY SUPPLY ASSOCIATION Jennifer Utter Heston Fraser Trebilcock Davis & Dunlap, PC 124 W. Allegan, Ste Lansing, MI jheston@fraserlawfirm.com