2 BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION

Transcription

1 148 1 STATE OF MICHIGAN 2 BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION 3 In the matter of the application of CONSUMERS ENERGY COMPANY for Case No. U approval of its integrated resource plan pursuant to MCL and for Volume No. 5 5 other relief. / 6 MOTION HEARING 7 Proceedings held in the above-entitled matter 8 before Sharon L. Feldman, J.D., Administrative Law Judge 9 with MAHS, at the Michigan Public Service Commission, West Saginaw Highway, Lake Michigan Room, Lansing, 11 Michigan, on Wednesday, November 14, 2018, at 9:02 a.m. 12 APPEARANCES: 13 ANNE M. UITVLUGT, J.D. 14 Consumers Energy Company One Energy Plaza, Room EP Jackson, Michigan On behalf of Consumers Energy Company 17 BRYAN A. BRANDENBURG, J.D. Clark Hill, PLC Cesar E. Chavez Avenue Lansing, Michigan On behalf of Association of Businesses 20 Advocating Tariff Equity 21 MARGRETHE K. KEARNEY, J.D. Environmental Law & Policy Center Wealthy Street SE, Suite 256 Grand Rapids, Michigan On behalf of Environmental Law & Policy Center, 24 The Ecology Center, Union of Concerned Scientists, and Vote Solar 25

2 149 1 APPEARANCES Continued: 2 JENNIFER UTTER HESTON, J.D. Fraser Trebilcock Davis & Dunlap, P.C W. Allegan Street, Suite 1000 Lansing, Michigan On behalf of Solar Energy Industries Association 5 RICHARD J. AARON, J.D. 6 Dykema Gossett, PLLC Capitol View Townsend Street, Suite 900 Lansing, Michigan On behalf of Michigan Electric Transmission 9 Company (METC) 10 DON L. KESKEY, J.D. Public Law Resource Center, PLLC Albert Avenue, Suite 425 East Lansing, Michigan On behalf of Residential Customer Group and 13 Great Lakes Renewable Energy Association 14 DANIEL SONNEVELDT, SPENCER A. SATTLER, 15 Assistant Attorneys General 7109 West Saginaw Highway, Floor 3 16 Lansing, Michigan On behalf of Michigan Public Service Commission Staff REPORTED BY: Lori Anne Penn, CSR

3 150 1 Lansing, Michigan 2 Wednesday, November 14, At 9:02 a.m (Hearing resumes following adjournment of Thursday, 6 October 11, 2018.) 7 JUDGE FELDMAN: On the record. Good 8 morning, all. Can I ask the counsel present to place 9 their appearances on the record, please. Ms. Uitvlugt. 10 MS. UITVLUGT: Good morning, your Honor. 11 Anne Uitvlugt appearing on behalf of Consumers Energy. 12 JUDGE FELDMAN: Thank you. Ms. Heston. 13 MS. HESTON: Good morning, your Honor. 14 Jennifer Heston of the law firm of Fraser, Trebilcock, 15 Davis & Dunlap appearing on behalf of the Solar Energy 16 Industries Association. 17 JUDGE FELDMAN: Thank you. Mr. Aaron. 18 MR. AARON: Good morning, your Honor. 19 Richard Aaron appearing on behalf of METC. 20 JUDGE FELDMAN: Thank you. Mr. Sattler. 21 MR. SATTLER: Good morning, your Honor. 22 Spencer Sattler appearing on behalf of the MPSC Staff. 23 JUDGE FELDMAN: Thank you. 24 Mr. Sonneveldt. 25 MR. SONNEVELDT: Good morning, your

4 151 1 Honor. Daniel Sonneveldt appearing on behalf of the 2 Commission Staff. 3 JUDGE FELDMAN: Thank you. Ms. Kearney. 4 MS. KEARNEY: Good morning, your Honor. 5 Margrethe Kearney appearing on behalf of ELPC, UCS, Vote 6 Solar, and The Ecology Center. 7 JUDGE FELDMAN: Thank you. 8 Mr. Brandenburg. 9 MR. BRANDENBURG: Good morning, your 10 Honor. Bryan Brandenburg appearing on behalf of ABATE. 11 JUDGE FELDMAN: Thank you. Mr. Keskey. 12 MR. KESKEY: Good morning, your Honor. 13 Don Keskey appearing on behalf of the Residential 14 Customer Group and also Great Lakes Renewable Energy 15 Association. 16 JUDGE FELDMAN: All right. We have two 17 motions to strike that have been filed, we set this time 18 aside to take those up. There's also a motion to file 19 surrebuttal, which I understand from Ms. Uitvlugt before 20 going on the record that she and counsel for MEC are 21 having continuing discussions and may work that out, so 22 there's no need to address that today. 23 Starting with METC's motion to strike the 24 rebuttal testimony of Kevin M. Lucas, obviously responses 25 have been filed, Ms. Heston and Mr. Sonneveldt have filed

5 152 1 them. Did anybody else wish to be heard on this motion? 2 (No response.) All right. Very good. 3 Mr. Aaron, I have read your motion. This 4 is an opportunity for you to make any additional 5 arguments that you want for the record. 6 MR. AARON: Thank you, your Honor. And I 7 hope not to repeat what we've argued in our motion, I 8 want to try to keep it simple. I appreciate that you do 9 read material people submit, I don't want to belabor 10 things. 11 I do want to start off by saying, to the 12 extent that our testimony creates the impression that 13 METC is not supportive of solar being a part of the PCA, 14 that any kind of conclusion to that effect should be 15 disavowed. We don't have an opposition to using solar as 16 a resource, and I think that may be part of the 17 motivation for Mr. Lucas's rebuttal testimony in the 18 first instance. 19 JUDGE FELDMAN: Is that why you've said 20 in your motion that he obviously doesn't understand, 21 because that's a -- or is missing this important facet of 22 METC's position? 23 MR. AARON: I think that there was a 24 misunderstanding or could be a misunderstanding, and I 25 think that's part of it. Going forward, I think it

6 153 1 illustrates the concern we have, and that is that, first 2 and foremost, as a proponent of the evidence, SEIA has to 3 lay a foundation that satisfies the conditions that would 4 give you a sense that the testimony is reliable, that 5 it's trustworthy, and that because its witness is 6 offering an opinion with respect to the studies that we 7 present, and going so far as to say that perhaps our 8 studies should be disregarded because he had so many 9 questions, the testimony has to be fair, and that's what 10 the Rules of Evidence are set up to assure. And you 11 know, our simple argument is that if you look at the 12 experience, training, or education that Mr. Lucas has 13 that's set forth in his direct testimony, he has 14 knowledge about renewable energy, he has knowledge about 15 rate design, he has knowledge about energy efficiency; 16 those things don't necessarily translate into an 17 analysis, understanding an analysis of the loss of load 18 event or necessarily transmission system operations and 19 management, or capacity or resource adequacy; and he 20 asked questions about our study that are not based on any 21 experience with, stated experience in his credentials 22 with respect to anything that has to do with 23 transmission, and that is I think the differences -- or 24 the difference of opinion between METC and SEIA. 25 I do want to say that I was struck by a

7 154 1 statement in the conclusion of the response to our motion 2 to strike, that it is ludicrous to argue that Mr. Lucas's 3 qualifications do not meet any of the criteria of MRE And ludicrous means amusing or laughable through 5 obvious absurdity, incongruity, exaggeration, or 6 eccentricity: meriting derisive laughter or scorn as 7 absurdly inept, false, or foolish, and I don't think 8 that's a fair characterization. We have an honest 9 dispute. And I have high regard for counsel sitting next 10 to me, I'm not JUDGE FELDMAN: Thank you. 12 MR. AARON: And I'm not even surprised, I 13 see these things happen from time to time. The point I 14 want to make is that when an argument concludes with the 15 idea that you have to characterize a difference of 16 opinion in that way, I don't think we've done anything 17 foolish or necessarily of derision, I think what we 18 are -- we do have is an honest difference of opinion as 19 to whether this person is qualified to offer the 20 testimony; and when you have to get to that point, I 21 think it reflects the arguments that would be persuasive 22 aren't there, and I think that's why you should grant our 23 motion to strike. 24 JUDGE FELDMAN: O.K. But based on his 25 resume, and in fact Mr. Lucas's educational background

8 155 1 bears a great deal of similarity to Mr. Marshall's, 2 correct? 3 MR. AARON: I believe that Mr. Lucas is a 4 mechanical engineer, and Mr. Marshall -- 5 JUDGE FELDMAN: His undergraduate degree 6 was in electrical engineering? 7 MR. AARON: Correct. 8 JUDGE FELDMAN: And they both went on to 9 get MBAs? 10 MR. AARON: Correct. And I would note 11 that a mechanical engineering degree is markedly 12 different than an electrical engineering degree. I have 13 a brother that's an electrical engineer and 14 brother-in-law who is a mechanical engineer, and you 15 should have a -- it makes for an interesting discussion 16 at Thanksgiving. 17 JUDGE FELDMAN: Perhaps. But would you 18 agree that a certain degree of quantitative analysis and 19 qualitative analysis as well are required to, within the 20 field, generally required within the field of mechanical 21 engineering? 22 MR. AARON: I think that someone has to 23 be able to understand qualitative math analysis, has to 24 understand quantitative analysis, but that doesn't -- I 25 mean I have a degree in economics, I know how to do

9 156 1 probability studies, that doesn't mean that I would be an 2 expert in running a Monte Carlo. 3 JUDGE FELDMAN: O.K. So there you have 4 it; Monte Carlo, what field would you say that belongs 5 to? 6 MR. AARON: I think fits within the 7 framework of what is done in the industry, and that is on 8 the transmission side. 9 JUDGE FELDMAN: But it's at heart a 10 statistical analysis, right, probabilistic? 11 MR. AARON: Oh, yeah, absolutely. And it 12 isn't in isolation that the probability analysis is done, 13 it's the application of that to a specific set of 14 assumptions and conclusions unique to transmission, not 15 to the energy world. 16 JUDGE FELDMAN: I noticed that your 17 motion basically seeks to strike the entirety of 18 Mr. Lucas's testimony, including exhibits that are really 19 discovery responses from the Company, right? 20 MR. AARON: Correct. Your Honor, if the 21 testimony is stricken that lays a foundation for 22 admission of the exhibits, there's no basis for admitting 23 the exhibits. If we were successful in striking 24 Mr. Lucas's testimony, and if I were asked, I think we 25 would certainly agree to the admission of those discovery

10 157 1 responses in lieu of cross of Mr. Marshall. 2 JUDGE FELDMAN: O.K. But some of the -- 3 some of the testimony that you're seeking to strike is 4 clearly of a fairly general nature, correct? 5 MR. AARON: Well, to the extent that 6 there's introductory material and so forth, yes, but it 7 all relates to the basic premise that the witness 8 recommends that our study should be disregarded. I'm not 9 sure there's much point in asking a witness to simply 10 have a general observation put into this case when it 11 isn't put in context with the remaining portion of his 12 testimony that would be meaningful. 13 JUDGE FELDMAN: Mr. Sonneveldt, did you 14 have anything that you wanted to argue in addition to 15 your response? 16 MR. SONNEVELDT: Not particularly. What 17 Staff wants to just make it very clear here in this 18 instance, that we're not interested -- we're not taking a 19 position with respect to the disagreement between the 20 parties in this motion over whether or not the witness 21 should testify, Staff is present because Staff wants to 22 make sure that the issues that are being discussed are 23 not prohibited here. We differentiate between the issues 24 at play here and the individual's testimony. Staff feels 25 that issues like transmission, resource adequacy, those

11 158 1 things are appropriate for an IRP, and they will continue 2 to come up in future IRPs, and we just want to make sure 3 that if testimony is stricken, that it's not an order 4 that somehow takes the position that these are not 5 subjects appropriate for an IRP. So that's Staff's 6 position. 7 JUDGE FELDMAN: All right. Ms. Heston. 8 MS. HESTON: Thank you, your Honor. 9 METC's motion to strike seeks to exclude from this case 10 every portion of Mr. Lucas's rebuttal testimony and 11 exhibits related to METC's witness, Mr. Marshall's 12 testimony. As we noted in our response, we think that 13 METC's motion to strike is without merit. 14 Mr. Lucas is qualified to serve as an 15 expert in this proceeding. As is noted in his resume 16 which is attached to his direct testimony as Appendix A, 17 Mr. Lucas is the director of rate design for SEIA, is 18 highly educated in fields that are heavily focused on 19 mathematics and quantitative analysis, he's been in the 20 industry for approximately eight years, and he's 21 testified before several state commissions on utility- 22 related issues. And contrary to METC's motion, a person 23 does not have to be a transmission engineer or a 24 transmission expert otherwise to be able to use critical 25 thinking and logical reasoning skills, some specialized

12 159 1 expertise in energy markets and knowledge about operating 2 characteristics of generating resources, and particularly 3 renewable resources, along with some quantitative 4 analysis to raise questions about another party's 5 testimony. 6 Importantly, Mr. Lucas did not try to 7 replicate in total the analysis that Mr. Marshall 8 conducted. Mr. Lucas did not perform his own Monte Carlo 9 analysis. Mr. Lucas did not utilize whatever software 10 Mr. Marshall utilized to try to replicate Mr. Marshall's 11 testimony; instead, Mr. Lucas utilized primarily his 12 quantitative analysis skills to raise questions about the 13 analysis that Mr. Marshall had done. 14 And importantly, Mr. Lucas never actually 15 says that the transmission system is or is not sufficient 16 to support Consumers' PCA. I think to reach that 17 ultimate conclusion, I think some transmission experience 18 or knowledge would be needed, but in fact Mr. Lucas 19 doesn't reach that ultimate conclusion, instead he stops 20 short of that and just simply raises concerns about the 21 analysis that Mr. Marshall has done, and that that should 22 be taken into consideration by the Commission when the 23 Commission considers Mr. Marshall's testimony in this 24 proceeding. 25 An examination of the testimony that METC

13 160 1 seeks to strike shows that Mr. Lucas is well qualified to 2 offer the rebuttal testimony that he actually offered. 3 In my response to METC's motion yesterday, I went 4 actually page by page through Mr. Lucas's rebuttal 5 testimony and explained how Mr. Lucas is qualified to 6 provide the actual testimony he gave. 7 For instance, on page 16, the question 8 asks: Please provide a summary Mr. Marshall's testimony, 9 and Mr. Lucas does. It doesn't require a transmission 10 engineering degree or transmission expertise to be able 11 to provide that summary. 12 Have you reviewed Mr. Marshall's CIL 13 analysis? Again, he provides a response indicating what 14 his level of review was with respect to Mr. Marshall's 15 CIL analysis. Again, you don't have to have specialized 16 transmission engineering or transmission expertise to be 17 able to provide a summary of a review that you conducted 18 of another party's testimony. 19 On page 18 he makes observations about 20 what model years Mr. Marshall spoke to in his testimony. 21 Again, I don't see why you have to have transmission 22 expertise to be able to observe what model years 23 Mr. Marshall utilized in his testimony. 24 He then asked the -- the question asked 25 Mr. Marshall to provide any insight as to whether the

14 161 1 limiting factor could be rectified that was identified in 2 Mr. Marshall's analysis; he responds yes, and then quotes 3 from a discovery response that Mr. Marshall gave. Again, 4 you don't have to have transmission engineering 5 experience or transmission expertise to be able to read a 6 discovery response that was provided by METC. 7 JUDGE FELDMAN: Do you need some 8 familiarity with the technical terms? 9 MS. HESTON: I think you some general 10 familiarity with the terms that are included in that and 11 to be able to comprehend what's being said, but I don't 12 think that there's anything in the discovery response 13 that's quoted in Mr. Lucas's testimony that is beyond the 14 scope of what Mr. Lucas is capable of comprehending. 15 JUDGE FELDMAN: And other than rate 16 design and the other issues that Mr. Aaron identified 17 that he worked on, has he held broader policy positions 18 that would have required him to gain some familiarity 19 with this sort of terminology? 20 MS. HESTON: Absolutely, your Honor. He 21 indicated in his resume that he's been working in the 22 energy field, specifically worked with the Maryland 23 Energy Administration on numerous legislative and 24 regulatory issues, and provided testimony before the 25 Maryland General Assembly and Maryland Public Service

15 162 1 Commission. I also would note that Mr. Lucas has been 2 working in this field in developing wholesale energy 3 markets primarily for renewable development, but he's 4 been involved in wholesale energy markets, and so he does 5 have knowledge about RTOs, and MISO and PJM specifically, 6 that provides him with a really rather broad basis for 7 being able to assess, you know, energy issues generally. 8 JUDGE FELDMAN: And transmission is an 9 important consideration when you look at wholesale 10 markets? 11 MS. HESTON: That's correct, your Honor. 12 That's correct. And so not to belabor this, but on page asks, what's the baseline reliability project which 14 was referenced in Mr. Lucas -- or Mr. Marshall's 15 discovery response; and Mr. Lucas provides the definition 16 of that from MISO's documentation. Again, you don't have 17 to be a transmission engineer or a transmission expert to 18 be able to quote a definition in MISO's documentation. 19 Moving over to page 19: Has METC 20 proposed a solution in the MTEP process; and then 21 Mr. Lucas discussed what is included in the MTEP process, 22 that for solutions that would resolve some of the issues 23 that were identified in Mr. Marshall's transmission 24 analysis, and specifically his CIL analysis. Again, 25 Mr. Lucas is qualified to speak to, you know, the MTEP

16 163 1 process that does occur at MISO and what resources are or 2 are not included in that MTEP process. 3 The testimony then goes on to ask, you 4 know: Is MISO required to address issues that would 5 result in violations of reliability standards; and 6 Mr. Lucas says yes, and then notes that MISO could not 7 allow a reliability violation to continue to occur. 8 Again, a generalized knowledge about the role of MISO is 9 all that's needed to be able to provide that testimony. 10 And then also on page 19: If this 11 project is completed by June 2023, and the project is the 12 project that's included in the MTEP, what would the 13 result be; and he provides the change in the CIL that 14 would result from that, but that number that's identified 15 on page 19 is pulled directly from Mr. Marshall's 16 discovery response. This isn't a number that Mr. Lucas 17 independently generated, this is just simply a recitation 18 of Mr. Marshall's analysis and results of his analysis 19 based upon the discovery request that was posed. 20 And then the next question is: Given the 21 type of issue and timing of the proposed resolution, is 22 it likely that this issue is specifically caused by the 23 PCA; and Mr. Lucas testifies no, and then provides some 24 observations about the relationship between 25 Mr. Marshall's CIL analysis and the dates that he was

17 164 1 looking at and the dates that resources would be coming 2 online in Consumers' PCA. Again, I don't think you have 3 to be a transmission engineer to make observations about 4 the relative dates in which various events would occur 5 under Consumers' proposal and then the analysis of the 6 dates that Mr. Marshall used in his analysis. 7 And then going on on page 20: Please 8 describe Mr. Marshall's LOLE analysis. Again, it's just 9 a summary of Mr. Marshall's testimony. 10 Page 21 was the MISO MTEP18 Accelerated 11 Fleet Change scenario. Again, Mr. Lucas is just citing a 12 definition from MISO as to what that is. 13 Page 22: Do you have any observations 14 about the LOLE analysis; and again, Mr. Lucas is only 15 just summarizing the analysis that was performed by 16 Mr. Marshall. 17 Mr. Lucas then raises concerns about the 18 transparency in Mr. Marshall's LOLE analysis, and again, 19 concerns about the transparency of that analysis and 20 whether that's a black box, those are all concerns that 21 have been raised by numerous different parties to this 22 proceeding. We normally have a black box analysis, 23 modeling runs that have been done that numerous parties 24 have raised concern about, and when you can't look at 25 what's going on in that analysis, that it raises

18 165 1 concerns. 2 On page 23, the question is asked of 3 Mr. Lucas: Are you surprised about -- that we can't get 4 information about what was included in the model; and 5 then again Mr. Lucas makes observations about, yeah, 6 that's an issue and a concern. Again, I don't think you 7 have to be a transmission engineer to be able to provide 8 that testimony. 9 JUDGE FELDMAN: You would characterize 10 that as a quantitative analysis that is well within, or 11 that you believe is well within Mr. Lucas's experience 12 and education? 13 MS. HESTON: That's correct, your Honor. 14 Moving over to page 24, the question asks: 15 Notwithstanding the disqualifying issue about the 16 analysis being a black box type analysis, can you discuss 17 what you were able to learn about the analysis from the 18 information that was provided; and Mr. Lucas describes 19 what it was that he was able to learn from discovery 20 responses and from Mr. Marshall's testimony about the 21 work that he did do. 22 The question: What peak load does 23 Mr. Marshall use as a baseline; again, Mr. Lucas's 24 response is just simply a recitation of the information 25 that was provided by Mr. Marshall himself in his

19 166 1 discovery response, and so it's just a description that 2 was provided by Mr. Marshall as to what peak load he used 3 as a baseline in his analysis. 4 Then it goes on, pages 24 through 29, 5 there's several questions all related to how wind 6 generation was incorporated into Mr. Marshall's analysis, 7 and then in the observations and, about operating 8 characteristics related to wind, these are all, the 9 operating characteristics of wind is squarely within the 10 scope of Mr. Lucas's experience, extensive experience 11 with renewable energy. 12 And then page 29 through 32 are these 13 observations by Mr. Lucas about solar energy and how 14 solar energy, the assumptions about solar energy that 15 were used by Mr. Marshall may not be reflective of 16 Mr. Lucas's experiences with solar energy and the 17 operating characteristics of solar facilities going 18 forward. 19 I do note in METC's response that METC 20 has concerns that Mr. Marshall's analysis modeled 21 Consumers' PCA, and so to raise questions about how 22 different technologies going forward, such as the 23 single-axis tracking technology, might affect 24 Mr. Marshall's analysis, I think METC believes that 25 that's irrelevant, because what METC modeled was what

20 167 1 Consumers has proposed. Well, Mr. Lucas has made a 2 critique of Consumers' PCA, indicating that Consumers' 3 PCA assumes all fixed-tilt solar, and that going forward, 4 advances in solar technology, such as using single-axis 5 tracking technology, may result in higher capacity 6 factors, those technologies would mean either less solar 7 to meet Consumers' resource adequacy requirements, or if 8 we actually install the amount of solar that Consumers 9 was proposing, we'd have even excess capacity to meet 10 peak demand. And so given that Mr. Lucas has made that 11 observation about Consumers' PCA, that there's a 12 possibility that the Commission may direct Consumers to 13 look at single-axis tracking technology going forward; if 14 that were done, then it stands to reason that the 15 concerns raised by Mr. Marshall about transmission 16 concerns may be lessened if this type of technology is 17 deployed in the future. So I don't think it's irrelevant 18 for Mr. Marshall -- or for Mr. Lucas to at least observe 19 that if you use different assumptions in Mr. Marshall's 20 analysis, assumptions that are being advanced elsewhere 21 in this proceeding, that it might change the results. 22 Pages 32 through 36 are again 23 observations by Mr. Lucas about other forms of generating 24 resources besides wind and solar, it specifically speaks 25 to light and also comments on planning resources such as

21 168 1 demand response and the DR and how different assumptions 2 about those might change the results of Mr. Marshall's 3 analysis. 4 And then Mr. Lucas goes on on page 36 to 5 basically provide summaries of his conclusions from his 6 assessments is that, you know, if you change the 7 assumptions that are used in Mr. Marshall's analysis, 8 that the results may change, and I don't think that's an 9 astounding conclusion, or doesn't, certainly doesn't 10 require a transmission engineer for a person to be able 11 to logically reason that may be the outcome. 12 And then at the end, page 39 through 40, 13 Mr. Lucas provides his recommendation which suggests that 14 the Commission should give -- should disregard 15 Mr. Marshall's analysis, which, certainly at a minimum, 16 the Commission should at least take into account the 17 effect that if you change the assumptions, then the 18 concern about the transmission system not being able to 19 support Consumers' proposed PCA may be an overblown 20 concern and shouldn't be a basis for rejecting Consumers' 21 PCA in this proceeding. And that's really the gist of 22 Mr. Lucas's rebuttal testimony. 23 I think Mr. Lucas is perfectly qualified 24 to provide the testimony he actually gave. I don't think 25 Mr. Lucas's rebuttal testimony is beyond the scope of his

22 169 1 knowledge, skills, experience, training, or education. I 2 do think the rebuttal testimony is relevant to this 3 proceeding and the issues raised by Mr. Marshall, as well 4 as issues raised by other parties. I don't think the 5 Commission would be confused by Mr. Lucas's testimony, 6 nor is it a waste of time for the Commission to consider 7 that there are adjustments, tweaks that could be made to 8 Mr. Marshall's analysis that could dramatically change 9 the conclusions of Mr. Marshall's analysis. 10 And then I'll just, in conclusion, your 11 Honor, I'll note again, and I laid this out pretty 12 extensively in my written response, but even if you 13 thought that Mr. Lucas was not highly qualified to 14 provide the testimony that he gave, it should go to the 15 weight of the evidence and not its admissibility, and so 16 I do think that you should allow Mr. Lucas to provide 17 this testimony and that you should deny METC's motion in 18 its entirety. 19 JUDGE FELDMAN: Thank you. Mr. Aaron, 20 anything further? 21 MR. AARON: Real quickly, your Honor. I 22 don't -- in response to Staff, I've never argued, and nor 23 would we be arguing, that transmission issues aren't 24 appropriate in this case, that's why we're here. 25 JUDGE FELDMAN: I understand.

23 170 1 MR. AARON: And in response to SEIA 2 counsel's arguments, if you just took this in general, 3 you would think that 90 percent of Mr. Lucas's testimony 4 was a harmless summary of what Mr. Marshall said; and if 5 that were true, to what end? It isn't necessary to 6 summarize testimony that's already going to be in the 7 record. It, it's necessary to have all this harmless 8 summary that anybody can do to reach the critiques that 9 he reaches, and it's those critiques that are unfair 10 criticisms if he does not have the qualification to reach 11 those conclusions. He has to have a basic understanding 12 based on knowledge, experience, or skill set that isn't 13 evident in the foundation that's been laid for his 14 background to be able to articulate something about 15 transmission planning, operation, and analysis. And he 16 recommends, based on a lack of understanding, that the 17 Commission disregard the study, and that is the critical 18 component here. Everything else builds up to that. 19 So we're not arguing that we're beyond 20 criticism. It has to be fair. And in order to be fair, 21 it has to be founded on some essential elements that 22 qualify the witness to make those kind of -- he's a smart 23 guy, I don't question that. It's just not fair if you 24 don't have the experience, knowledge, training, or 25 education to do that, and that's what we're asking you to

24 171 1 insist on. 2 JUDGE FELDMAN: I understand your point, 3 Mr. Aaron, and I understand your quarrel with 4 Ms. Heston's use of the word ludicrous. But aside from 5 that, I don't see unfairness when this testimony is 6 really working with the underlying assumptions that 7 Mr. Marshall has himself incorporated into his own 8 analysis. I look at Mr. Lucas's qualifications and his 9 background and experience, he seems to have the basic 10 qualifications to conduct and understand quantitative 11 analysis, and I don't see that there is such an obvious 12 deficiency in his background that I should disqualify him 13 from presenting this testimony. 14 You are welcome, if there is transmission 15 system specific knowledge which is pertinent to 16 Mr. Lucas's analysis, are you welcome to show any 17 deficiencies through your cross-examination of Mr. Lucas, 18 and as Ms. Heston said, that clearly can be considered in 19 deciding what weight, if any, to give to Mr. Lucas's 20 testimony. But absent that at this point, I'm going to 21 allow Ms. Heston to present her testimony. 22 And Ms. Heston, I have to commend you on 23 an excellent response, considering everything that 24 everybody has on their plate right now, I appreciate all 25 the time you took to go through that.

25 172 1 MR. AARON: Thank you. 2 MS. HESTON: Thank you, your Honor. 3 JUDGE FELDMAN: Both of you, of course, I 4 compliment on your arguments this morning, and always 5 appreciate your raising these issues in a timely fashion. 6 Now we need to turn to the motion to 7 strike portions of Mr. Troyer's testimony. 8 MS. UITVLUGT: Your Honor, if I may for 9 just a moment, can we go off the record? 10 JUDGE FELDMAN: Yes. Off the record. 11 (At 9:40 a.m., a brief discussion was held off the 12 record.) 13 JUDGE FELDMAN: Back on the record. 14 Ms. Heston. Let me ask -- Ms. Heston, I'm sorry -- did 15 anybody other than Staff and Consumers Energy wish to be 16 heard on this matter in addition to Ms. Heston? (No 17 response.) No. O.K. Thanks. Ms. Heston. 18 MS. HESTON: Thank you, your Honor. 19 Again, as Mr. Aaron noted earlier, we are confident that 20 you've read the prefiled materials in this proceeding, so 21 I won't just reiterate what we've said in our original 22 filing, but I do want to respond to comments that were 23 made by the Commission Staff and then Consumers in its 24 response to our pleading. 25 As you know, SEIA requests that you move

26 173 1 to strike the testimony that begins on page 21, line 18, 2 through page 23, line 20, of Mr. Troyer's rebuttal 3 filing. And I will note, your Honor, that Consumers' 4 rebuttal filing consisting of almost 800 pages of 5 testimony and exhibits, and we've made a very targeted 6 motion to strike with respect to just two pages. 7 JUDGE FELDMAN: Approximately 745, yeah. 8 MS. HESTON: Thank you, your Honor, for 9 the clarification. But yes, this is a very targeted 10 motion to strike, this is not something that is wide- 11 ranging or sweeping with respect to Consumers' rebuttal 12 filing. We certainly appreciate allowing parties to make 13 the case that they want to make, but to the extent that 14 it exceeds sort of what we recognize as the bounds of 15 appropriate rebuttal, we felt compelled to address these 16 two pages of Mr. Troyer's rebuttal filing. 17 In this portion of Mr. Troyer's rebuttal 18 testimony, he introduces for the first time in this 19 proceeding a proposal to retroactively apply the 20 competitive solicitation model for setting avoided cost 21 rates that Consumers proposes in this case to Consumers' RFP, request for proposal. Mr. Troyer introduces 23 this proposal in response to statements made about the 24 reasonableness of Consumers' recently approved avoided 25 cost rates by GLREA's witness, Mr. Rafson. Mr. Troyer

27 174 1 states that the rates approved in the proceeding 2 should not be maintained, which was not a surprise 3 because Consumers has been proposing to update the rates 4 approved in the proceeding using the competitive 5 solicitation proposal throughout its presentation in this 6 proceeding. What was a surprise was that Mr. Troyer has 7 affirmatively asserted, again for the first time in its 8 rebuttal filing, that the Commission should use the RFP to set new avoided cost rates. That testimony is not 10 proper rebuttal, it's a proposal that could have been 11 presented as part of Consumers' direct case, and is in 12 fact an amendment of the requested approvals by the 13 Company in its initial filing, which it's prohibited from 14 doing under the Section 6t portion of Public Act 342, I 15 believe, the IRP statute, your Honor, and as such, the 16 testimony should be stricken. 17 There is harm to SEIA by allowing the 18 testimony to stand as part of Consumers' rebuttal filing. 19 We've been denied an opportunity to effectively engage in 20 full discovery of Consumers' new proposal and provide an 21 opportunity to respond to Consumers' new proposal that 22 new avoided cost rates should be set in this proceeding 23 utilizing the 2018 solar RFP, which I'll note for the 24 record the actual results of that RFP seem to still be 25 pending, they're not even available for parties to review

28 175 1 as part of this case. Certainly had we known that 2 Consumers wanted to use the results of that RFP to set 3 new avoided cost rates, we would have conducted discovery 4 on that RFP. 5 JUDGE FELDMAN: Prior to the filing of 6 the rebuttal testimony? 7 MS. HESTON: That's correct, your Honor, 8 exactly. Consumers may claim that it's not actually 9 seeking approval of the avoided cost rates and revised 10 contract terms in this proceeding, but instead would file 11 as part of a subsequent proceeding, but it's not clear 12 what process would be given to parties in a subsequent 13 proceeding. The Commission Staff indicated in their 14 testimony that they thought that when contracts were 15 presented to the Commission for approval stemming from a 16 new competitive solicitation model, that those contracts 17 should be approved on an expedited basis, even on an ex 18 parte basis. The Commission Staff also took the position 19 that new avoided cost rates coming out of an approved 20 competitive solicitation model should be expeditiously 21 approved on an ex parte proceeding. So if the Commission 22 does adopt Consumers' competitive solicitation model, now 23 adopts the idea that it should apply retroactively to the RFP, and adopts the Commission Staff's proposal that 25 all this should be done ex parte, expedited going

29 176 1 forward, we've effectively been denied an opportunity to 2 really delve into and review that RFP, as well as the 3 results of that RFP and how it may impact avoided cost 4 rates going forward, which, without question, would 5 adversely affect the interests of SEIA's members as well 6 as those of Cypress Creek, who's also a party to this 7 proceeding, as well as numerous other qualified 8 facilities that rely upon those avoided cost rates going 9 forward. So there could be really very serious harm to 10 SEIA and its members and to other QFs if this proposal is 11 now adopted by the Commission, particularly in 12 conjunction with the Commission Staff's proposals about 13 expedited ex parte approval going forward. 14 Staff says in the testimony -- or in its 15 response -- sorry -- that the testimony is proper 16 rebuttal, suggesting that it's responsive to evidence 17 introduced or a theory developed by other parties. When 18 a party says that existing rates are reasonable, which is 19 what GLREA's witness testified to, proper rebuttal is to 20 provide evidence that it's reasonable or not reasonable; 21 that evidence could come from all sorts of places, 22 including Consumers' alleged experiences with its solar RFP. It's not proper rebuttal, however, to say 24 that Consumers now has a new proposal for changing 25 existing rates that should be approved as part of this

30 177 1 proceeding. 2 And I'll note, your Honor, starting, if 3 you look at page 21 of Mr. Troyer's rebuttal testimony, 4 which is really the start of the focus of this motion, 5 the first Q and A say: Do you, you know, do you disagree 6 with other witnesses who support maintaining the U avoided cost rates? Mr. Troyer says: Yes, I disagree 8 and then he goes on and cites evidence as to why the 9 existing avoided cost rates, in Mr. Troyer's view, are 10 not reasonable, and he cites MEIBC's exhibit, Exhibit 11 EIB-3, which provides some preliminary indications about 12 the results of the Company's 2018 RFP, we're not seeking 13 to strike that Q and A. I think that's a legitimate 14 question to ask Mr. Troyer, and I think the response that 15 he provides as to why he believes that existing avoided 16 cost rates are not accurate and reasonable is an 17 appropriate rebuttal response. 18 But then he goes on. And starting on 19 page line 18 it says: Should the 2018 solar RFP be used 20 to establish new avoided cost rates; and the answer is an 21 unequivocal affirmative yes. So at this point Consumers 22 is now asserting that the should approve the 2018 solar 23 RFP results to be used for establishing new avoided cost 24 rates as part of this case, and that's where we take 25 exception to what Mr. Troyer has done in his rebuttal

31 178 1 testimony. 2 JUDGE FELDMAN: Now you understand their 3 argument that the results were not available when they 4 filed their original testimony? 5 MS. HESTON: That's correct. 6 Consumers -- results of the RFP were not available when 7 Consumers filed its original testimony, but it was 8 certainly aware that it was conducting this RFP, and it 9 could have said in its application that we have a new 10 competitive solicitation methodology for setting avoided 11 cost rates, we'd like the Commission to approve it, and 12 we'd like the Commission to approve it for this RFP that 13 we've issued almost simultaneously with the filing of 14 their application in this proceeding, and they did not 15 say that. In fact, their application, if you look, as I 16 noted in my motion itself, made clear that if the 17 Commission approved that competitive solicitation 18 methodology for setting avoided cost rates, that it would 19 apply -- it would be applied to future competitive 20 solicitations to set future avoided cost rates. 21 JUDGE FELDMAN: And you're looking at 22 Mr. Troyer's direct testimony? 23 MS. HESTON: That's in addition to the 24 actual application filed by Consumers itself. I did note 25 that in Consumers' response, Consumers relies exclusively

32 179 1 on the request for approvals portion of its application 2 to say, well, on a more generalized basis, that they were 3 requesting approval of a competitive solicitation 4 methodology, or requesting approval to use that to set 5 new avoided cost rates, and we don't disagree that 6 Consumers is seeking approval of a competitive 7 solicitation methodology for setting new avoided cost 8 rates, we just had no idea, and Consumers never suggested 9 it at all, that it would be applied retroactively. In 10 fact, the application and the testimony supporting it 11 specifically indicated that it would be applied, if 12 approved, going forward. 13 In response, Consumers also indicated in 14 its response that Mr. Troyer's rebuttal testimony 15 referring to the 2018 solar RFP is simply an example of 16 how Consumers' proposed competitive solicitation 17 methodology should be used to set rates. Again, I 18 disagree with that characterization as the testimony was 19 filed. Again, on page 21, the question is: Should the RFP solar -- I'm sorry. Should the 2018 solar RFP 21 be used to establish new avoided cost rates; and the 22 affirmative answer was yes. If Mr. Troyer was just 23 simply providing a hypothetical example of how the 24 Commission would set new avoided cost rates based upon a 25 competitive solicitation and some of the data that they

33 180 1 now have available to them from the 2018 solar RFP, I 2 don't think we would have objected to simply a 3 hypothetical example of how this could have been applied. 4 It's the actual affirmative assertion that it should now 5 be applied and new rates should fall out of this 2018 RFP 6 that SEIA finds objectionable. 7 Again in its response Consumers claims 8 that Mr. Troyer's testimony refutes the reasonableness of 9 relying upon a natural gas plant for determining avoided 10 cost rates. Again, I'll note for the record that the 11 reference to the natural gas hybrid proxy plant 12 methodology is in the portion of Q and A on page 21 that 13 we're not seeking to strike. 14 Consumers claimed in response that we 15 were on notice they wanted this -- I think I already 16 mentioned this -- but we were on notice that they were 17 pursuing a competitive solicitation methodology to set 18 avoided cost rates, and we agree that we were on notice 19 they were pursuing that methodology, but had no notice 20 that it would be applied to the 2018 RFP. 21 Consumers next claims it should not be 22 prohibited from using data other parties are using in 23 this case. Again, we would not have an objection to 24 Consumers' use of Exhibit EIB-3 to rebut the notion that 25 existing avoided cost rates are, in Consumers' view, no

34 181 1 longer reasonable. 2 JUDGE FELDMAN: Or to support their 3 contention that they're no longer reasonable? 4 MS. HESTON: That correct. That, again, 5 would be proper rebuttal to the issues raised by GLREA's 6 witness, but again, to affirmatively assert that new 7 rates should be set using the 2018 RFP is beyond the 8 scope of proper rebuttal. We did not have notice that 9 that was going to be an issue in this proceeding. We are 10 prejudiced by it. And for those reasons, your Honor, we 11 ask that you grant our motion to strike. Again, out of 12 nearly 750 pages of exhibits and testimony filed by 13 Consumers, we're very specifically focused on these two 14 pages that we think are beyond the bounds of what should 15 be permitted in the form of rebuttal. 16 JUDGE FELDMAN: All right. So I think I 17 understand your argument. But let me just specifically 18 call your attention to Consumers Energy's argument at 19 page 6 of its response where it says in big bold letters, 20 the Company is not modifying its requested approvals in 21 this proceeding. Do you agree with that statement? 22 MS. HESTON: I don't, your Honor. I 23 think its requested approval was for a competitive 24 solicitation methodology for setting avoided cost rates 25 that would be applied prospectively; assuming the

35 182 1 Commission issues its order in April, perhaps there would 2 be a secondary order, supplemental order in June of this 3 next year, it would then be applied thereafter, to 4 competitive solicitations that would occur thereafter. 5 JUDGE FELDMAN: How is it that 6 competitive solicitations are supposed to take place is 7 one of the issues that there's some dispute among the 8 parties on in this case, right? 9 MS. HESTON: That's exactly right, your 10 Honor. The process for conducting competitive 11 solicitation is a highly disputed process, it's very 12 nuanced, it's very detailed, and so it's highly unlikely 13 that whatever the Commission ultimately determines is 14 appropriate for a competitive solicitation process, that 15 the 2008 solar RFP would apply. So, again, to ask the 16 Commission to retroactively allow the results of that 17 RFP to be used to set new avoided cost rates is, again, 18 is I think beyond the bounds of what was anticipated, we 19 had no notice of that, and would not be reasonable, and 20 we are harmed by that result. 21 JUDGE FELDMAN: Thank you. 22 Mr. Sonneveldt. 23 MR. SONNEVELDT: Thank you, your Honor. 24 Just a couple points here, I won't revisit everything in 25 our short response brief. But first I'd like to point

36 183 1 out, I'm not sure that the Staff is the only one that 2 believed this to be a logical extension of the testimony. 3 There has been a lot of discovery already by other 4 parties and intervenors on this whole RFP issue, and so I 5 don't think Staff's alone in its understanding. 6 In addition, I want to respond to this -- 7 I heard the statement that this process that's currently 8 going would foreclose all review. I'm not sure that's 9 the case either, because, No. 1, there is history of, in 10 ex parte matters that if there is an intervenor, they 11 could be converted to a contested case. Furthermore JUDGE FELDMAN: You mean in that piece to 13 respond to what happens down the road MR. SONNEVELDT: Correct. 15 JUDGE FELDMAN: -- should the Commission 16 adopt this proposal to use the June 2018 RFP to set 17 avoided cost rates going forward? 18 MR. SONNEVELDT: Yes, your Honor, that's 19 what I was responding to. 20 JUDGE FELDMAN: And then Staff believes 21 that those contracts could come in, the Commission could 22 review and approve them on an ex parte basis, and you're 23 saying you wouldn't anticipate that they would be 24 approved on ex parte basis if there were any intervenors 25 who had questions about those contracts?

37 184 1 MR. SONNEVELDT: Correct, your Honor, I 2 have no indication that, yes, that they would be analyzed 3 or considered as ex parte under those circumstances. 4 But in addition, if -- with respect to 5 foreclosing all review, it does beg another question of 6 if not there, how could it be done; and I'd point out, 7 too, that there are annual energy reconciliation cases, 8 and so if those were -- it could be handled there, and 9 this model is based on solar energy, so it would fit in a 10 renewable energy reconciliation case, it doesn't even 11 guarantee that they would get recovery for all of the 12 costs under that review, so. 13 JUDGE FELDMAN: You're telling me you 14 approve of the Company's proposal is what you're telling 15 me, that Staff approves of the proposal to use the 16 June 2018 capacity solicitation on a going-forward basis, 17 and you are telling me how you envision that that would 18 work? 19 MR. SONNEVELDT: Yes, in a way, your 20 Honor. I'm not sure we approve it as much as I think 21 Staff understood that this was one of the logical 22 conclusions of the original testimony and the original 23 filing that Consumers made, and the subsequent arguments 24 related to whether or not the existing avoided costs are 25 reasonable. Staff recognizes they're old and outdated,

38 185 1 and the natural, logical conclusion was that Staff 2 believed that the new avoided cost rates would be set and 3 used. 4 JUDGE FELDMAN: But logically based on 5 the June 2018 capacity solicitation or RFP, logically 6 based on that is what you're saying? 7 MR. SONNEVELDT: Not necessarily, but it 8 made sense to hear it proposed or raised. 9 JUDGE FELDMAN: Do you view it as a new 10 proposal, though, or not a new proposal? That's the 11 question, one of -- my biggest question for Staff. 12 MR. SONNEVELDT: Staff did not view it as 13 a new proposal that has arisen strictly out of the 14 rebuttal testimony, no. 15 JUDGE FELDMAN: So where do you look 16 backward in the Company's direct case to find that they 17 would use the June 2018 RFP? 18 MR. SONNEVELDT: I don't think there's 19 any one specific place that we look to, but I think we 20 had a, maybe in the original filing in a paragraph that 21 appeared in the original motion to strike where it talked 22 about future IRP filings and future avoided costs, I just 23 think we may have been working under different 24 assumptions as to what future may have been indicating as 25 soon as the avoided, new avoided rates -- avoided cost

39 186 1 rates were set or determined through an RFP, that they 2 should be used. 3 JUDGE FELDMAN: One that after the 4 Commission had an opportunity to consider what the 5 parameters of that solicitation ought to be? 6 MR. SONNEVELDT: Correct. 7 JUDGE FELDMAN: Which would suggest 8 after, logically after the conclusion of this case; am I 9 right? 10 MR. SONNEVELDT: I can see that position, 11 yes. 12 JUDGE FELDMAN: All right. Anything 13 further? 14 MR. SONNEVELDT: No, your Honor. 15 JUDGE FELDMAN: All right. 16 MS. UITVLUGT: May I go, your Honor? 17 JUDGE FELDMAN: Yes, Ms. Uitvlugt. 18 MS. UITVLUGT: Thank you. I have just a 19 couple of points I would like to make, and hopefully I 20 would like to provide some clarity with respect to 21 Mr. Troyer's testimony as well for your Honor as I 22 previously have discussed and actually indicated in my 23 response to SEIA's motion. 24 First, I would like to say for the record 25 that while the Company did have an extensive rebuttal

40 187 1 filing, the fact that only two pages of that filing was 2 targeted as a motion to strike does not -- should not in 3 any way mean the motion to strike in and of itself is 4 reasonable. 5 Second, I would like to clarify the use 6 of the word retroactive. In using this word, the Company 7 has no intent to backdate or retroactively apply any 8 avoided cost rates in this case, and I just wanted to say 9 that for purposes of clarity to anyone who thought that 10 that may be something the Company would or could be 11 proposing to do. 12 In reviewing the Company Witness Troyer's 13 testimony, there's a couple of points that should be 14 clear. 15 (1) The Company is proposing to change avoided 16 costs in this case. That's been an issue that's been 17 highly debated numerous times. 18 (2) The Company is proposing to use an avoided 19 cost -- or excuse me -- a competitive bidding methodology 20 to change avoided costs in this case; or we have an 21 alternative proposal that Mr. Troyer describes. 22 (3) The Company is proposing that it has no 23 capacity need, and when it has no capacity need, the 24 Company's proposing that it should be -- the Commission 25 should approve PRA rates for the capacity portion of