August 15, Dear Ms. Kale:

Transcription

1 A CMS Energy Company August 15, 2017 Ms. Kavita Kale Executive Secretary Michigan Public Service Commission 7109 West Saginaw Highway Post Office Box Lansing, MI General Offices: LEGAL DEPARTMENT One Energy Plaza Jackson, MI Tel: Fax: (517) (517) CATHERINE M REYNOLDS Senior Vice President and General Counsel *Washington Office: 1730 Rhode Island Ave. N.W. Tel: (202) MELISSA M GLEESPEN Suite 1007 Vice President, Corporate Washington, DC Fax: (202) Secretary and Chief Compliance Officer Writer s Direct Dial Number: (517) Writer s Address: kelly.hall@cmsenergy.com SHAUN M JOHNSON Vice President and Deputy General Counsel H Richard Chambers Kelly M Hall Eric V Luoma Assistant General Counsel Ashley L Bancroft Robert W Beach Don A D Amato Robert A. Farr Gary A Gensch, Jr. Gary L Kelterborn Chantez P Knowles Mary Jo Lawrie Jason M Milstone Rhonda M Morris Deborah A Moss* Mirče Michael Nestor James D W Roush Scott J Sinkwitts Adam C Smith Theresa A G Staley Janae M Thayer Bret A Totoraitis Anne M Uitvlugt Aaron L Vorce Attorney Re: Case No. U In the matter, on the Commission s own motion, to open a docket to implement the provisions of Section 6w of 2016 PA 341 for CONSUMERS ENERGY COMPANY S service territory. Dear Ms. Kale: Enclosed for electronic filing in the above-captioned case, please find the Consumers Energy Company s Response to Constellation NewEnergy, Inc. s Motions to Strike. This is a paperless filing and is therefore being filed only in a PDF format. I have also included a Proof of Service showing electronic service upon the parties. Sincerely, Kelly M. Hall cc: Hon. Mark D. Eyster, Administrative Law Judge Parties per Attachment 1 to Proof of Service fl

2 S T A T E O F M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the matter, on the Commission s own motion, ) to open a docket to implement the provisions of ) Section 6w of 2016 PA 341 for ) CONSUMERS ENERGY COMPANY S ) Case No. U service territory. ) ) CONSUMERS ENERGY COMPANY S RESPONSE TO CONSTELLATION NEWENERGY, INC. S MOTIONS TO STRIKE Pursuant to Rule 432 of the Michigan Public Service Commission s ( MPSC or the Commission ) Rules of Practice and Procedure, R , and the procedural schedule approved by the Administrative Law Judge in this proceeding, Consumers Energy Company ( Consumers Energy or the Company ) files this Response to Constellation NewEnergy, Inc. s ( Constellation ) Motions to Strike, stating as follows: Exhibit A-21 (DFR-5) And Associated Rebuttal Testimony Constellation seeks to strike page 2, lines and page 12, line 4, beginning with the word This through the end of line 7 of Consumers Energy witness David F. Ronk, Jr. s rebuttal testimony and his associated Exhibit A-21 (DFR-5). This challenged portion of testimony and exhibit address MPSC Staff and Intervenors contentions in this case that the Cost of New Entry ( CONE ) should determine the State Reliability Mechanism ( SRM ) capacity charge. In support of his opposition to that position, Mr. Ronk s rebuttal testimony opines (page 12, lines 2-4) that CONE is not a high enough price to incent the building of new capacity by merchant generators. As support for this expert opinion, Mr. Ronk cited testimony by Lawrence J. Makovich provided on September 17, 2015 before the Michigan Senate Energy and Technology res

3 Committee. Mr. Ronk s Exhibit A-21 (DFR-5) is a copy of that testimony and also includes a July 2015 Report titled Meeting the Michigan Power Sector Challenge authored by Mr. Makovich and his associates at IHS Energy. The legislative testimony of Mr. Makovich forms part of the basis of Mr. Ronk s expert opinion and as such should be admitted pursuant to MRE 703. Additionally, the Commission s Rules of Practice and Procedure, which are liberally construed, allow for this information to be admitted and considered as part of this proceeding. Mr. Makovich s testimony is certainly information which the Commission may admit and give probative effect as it is of a type commonly relied upon by reasonably prudent persons in the conduct of their affairs. See R (1). The parties remain free to cross-examine Mr. Ronk on his conclusions, some of which are based upon review of Mr. Makovich s testimony presented to the Michigan Senate Energy and Technology Committee. As noted by Mr. Ronk, Mr. Makovich provided that analysis as part of the legislative study and debate which ultimately resulted in the enactment of Section 6w of Public Act 341 of 2016, the legislation which is the subject of this proceeding. That testimony is certainly relevant and probative to issues being considered in this case. In addition, the Report which is found at pages 16 through 43 of Exhibit A-21 (DFR-5) directly addresses and contradicts allegations about the state of regulated, unregulated, and hybrid power markets in the United States and Canada which were made by an Intervenor witness. See pages 34 through 36 of Constellation s witness Jeff D. Makholm s direct testimony, where he contends that unregulated power generation markets result in the widespread development and construction of new generation units. The challenged Report was part of the basis for Mr. Ronk s expert witness testimony, is relevant, and should be admitted for the Commission s consideration. res

4 Page 26, Lines 7 through 8 Constellation also seeks to strike the sentence of Mr. Ronk s rebuttal testimony in which he notes that representatives of Constellation noted that their future capacity planning process include potentially relying on utility capacity service for its retail load in Michigan in some years, with the corresponding application of the SRM capacity charge, but to also retain the ability to provide capacity service to its Retail Open Access ( ROA ) load. Constellation s argument that the referenced statement is inadmissible hearsay is incorrect. The statement made by Constellation does not fall within the definition of hearsay because it is an admission by a party-opponent. See MRE 801(d)(2). Constellation s Motions to Strike attempts to obscure this fact by claiming that the statement is not being offered against the party who made the statement. However, there is no requirement that the statement be offered as rebuttal against prefiled testimony presented by a party-opponent in order to qualify as an admission by a party-opponent. The challenged testimony of Mr. Ronk was indeed presented as rebuttal to Association of Businesses Advocating Tariff Equity s ( ABATE ) witness suggestion that alternative energy suppliers should be permitted to decide, on a year-to-year basis, whether to provide capacity to their ROA customers or to fall back on utility-provided capacity at the SRM capacity charge price. Mr. Ronk s rebuttal testimony opposes this position, and uses an admission of a party-opponent, Constellation, as part of the support for his opposition to the ABATE proposal. The fact that no witness of Constellation testified in this proceeding of the possibility of gaming utility capacity on a year-to-year basis does not mean that Consumers Energy cannot use a frank admission by Constellation that it indeed could do so if the term of the SRM capacity charge allows for such annual gaming. This type of admission of a party-opponent does not constitute hearsay under MRE 801(d)(2). res

5 Additionally, Constellation s objection to the admissibility of its representative s statements regarding their intent to use the ability to have their ROA customers switch back and forth between utility capacity service (and associated SRM capacity charge) and capacity service provided by Constellation based on the fact that the statement was made outside this proceeding, is contrary to the intent of the hearsay rule. The hearsay rule is intended to afford litigants the opportunity to cross-examine witnesses at trial. However, the harm that the hearsay rule of exclusion from evidence is not present when the out-of-court statement is that made by the party itself. The Michigan Supreme Court has articulated this principle as follows: It is axiomatic that the hearsay rule is designed to assure that evidence considered by the trier of fact has been subjected, with limited exceptions, to the test of cross-examination at trial. The hearsay exceptions set forth in MRE 803 and MRE 804 offer, at least theoretically, some independent bases of reliability to compensate for the fact that the declarant of a hearsay statement is not available to be cross-examined before the trier of fact. On the other hand, the statement made by a party-opponent, denominated nonhearsay, represents a rare exception in that it embodies no inherent assurance of trustworthiness. McCormick, Evidence (3d ed), 262, p 775. See also Strahorn, A reconsideration of the hearsay rule and admissions, 85 U Pa L R 484, 564 (1937), and Advisory Committee Note, FRE 801. The rationale for admitting a party-opponent statement, despite the hearsay rule, rests not upon any notion that the circumstances in which it was made furnigh the trier means of evaluating it fairly, but upon the adversary theory of litigation. A party can hardly object that he had no opportunity to cross-examine himself or that he is unworthy of credence save when speaking under sanction of oath. Morgan, Basic Problems of Evidence 266. To put it more colloquially, the admissibility of a party-opponent statement springs from a sense of fairness captured in the phrase, You said it; you re stuck with it. The hearsay rule operates to prevent a party from being stuck with what others have said without an opportunity to challenge them directly before the trier of fact. However, there is no reason, given the adversarial nature of our system, to extend the rule s protection to a party s own statements. In the more elegant words of nineteenth century jurisprudence: [T]he general rule is-and it has few exceptions-that a man s acts, conduct, and declarations, wherever made, provided they be res

6 voluntary, are admissible against him, as it is fair to presume they correspond with the truth; and it is his fault if they do not. Truby v Seybert, 12 PA 101, 104 (1849). Shields v Reddo, 432 Mich 761, ; 443 NW2d 145 (1989). Footnote omitted. Constellation s argument is essentially that its representative s statement is inadmissible hearsay because it is being offered by Mr. Ronk as part of the rebuttal to ABATE s witness position which is consistent with the cited statement made by a Constellation representative. Both ABATE and Constellation are party-opponents of Consumers Energy in this proceeding, and the challenged statement was directly contrary to Consumers Energy s position as presented by Mr. Ronk. The fact that a party-opponent made the statement in a context outside testimony in this proceeding does not change the fact that it is an admission by a party-opponent and therefore does not fall within the definition of hearsay pursuant to MRE 801(d)(2). Constellation s strained argument also ignores the fact that a party-opponent admission need not be a statement against interest at all in order to be admissible. In the Shields v Reddo case, supra, the Michigan Supreme Court stated as follows: The rationale for the nonhearsay status of statements by party opponents is often confused with the rationale for statements against interest, MRE 804(b)(3), the presumed reliability of which is based on the converse of the proposition that lies are motivated by self-interest. The confusion is understandable given that the rule is referred to as the party-opponent admission rule, despite the fact that a statement need not be an admission in the ordinary meaning of the word to qualify as a party-opponent admission. Although party opponent admissions frequently do fall within the category of statements against interest, this is not necessarily the case. Party-opponent admissions need not be statements against interest at all to be admissible, nor, when they are statements which can be construed as against the interest of the party is it necessary, as under the statements-against-interest exception, that the statements have been against the party's interest at the time they were made. Id., footnote 19. res

7 Constellation s statement noted by Mr. Ronk s rebuttal testimony is a party-opponent admission as that term has been interpreted by the Michigan Supreme Court. It is therefore not hearsay. The statement included by Mr. Ronk is also relevant. It was noted by Mr. Ronk as part of his rebuttal testimony addressing the potential for the gaming of utility resources on a year-toyear basis. Contrary to Constellation s argument, the statement was not made to prove or disprove issues relating to the capacity demonstration requirements which are being determined in Case No. U The statement is directly relevant to the rates, terms and conditions of an SRM for Consumers, which Constellation itself states is the purpose of this proceeding at page 6 of its Motions to Strike. WHEREFORE, Consumers Energy Company respectfully requests the Administrative Law Judge to deny Constellation NewEnergy, Inc. s Motions to Strike in its entirety. Respectfully submitted, CONSUMERS ENERGY COMPANY Dated: August 15, 2017 By: Kelly M. Hall (P48083) Gary Gensch, Jr. (P66912) One Energy Plaza Jackson, Michigan Attorneys for Consumers Energy Company (517) res

8 S T A T E O F M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the matter, on the Commission s own motion, ) to open a docket to implement the provisions of ) Section 6w of 2016 PA 341 for ) CONSUMERS ENERGY COMPANY S ) Case No. U service territory. ) ) STATE OF MICHIGAN ) ) SS COUNTY OF JACKSON ) PROOF OF SERVICE Samantha J. O Rourke, being first duly sworn, deposes and says that she is employed in the Legal Department of Consumers Energy Company; that on August 15, 2017, she served an electronic copy of the Consumers Energy Company s Response to Constellation NewEnergy, Inc. s Motions to Strike upon the persons listed in Attachment 1 hereto, at the addresses listed therein. She further states that she also served a hard copy of the same document to the Hon. Mark D. Eyster at the address listed in Attachment 1 by depositing the same in the United States mail in the City of Jackson, Michigan, with first-class postage thereon fully paid. Samantha J. O Rourke Subscribed and sworn to before me this 15 th day of August, Melissa K. Harris, Notary Public State of Michigan, County of Jackson My Commission Expires: 06/11/20 Acting in the County of Jackson ps

9 ATTACHMENT 1 TO CASE NO. U Administrative Law Judge Hon. Mark D. Eyster Administrative Law Judge 7109 West Saginaw Highway Post Office Box Lansing, MI eysterm@michigan.gov Counsel for the Michigan Public Service Commission Staff Meredith R. Beidler, Esq. Bryan A. Brandenburg, Esq. Lauren D. Donofrio, Esq. Assistant Attorneys General Public Service Division 7109 West Saginaw Highway Post Office Box Lansing, MI beidlerm@michigan.gov brandenburgb@michigan.gov donofriol@michigan.gov Counsel for Attorney General, Bill Schuette Celeste R. Gill, Esq. Assistant Attorney General ENRA Division 6 th Floor Williams Building Post Office Box Lansing, MI gillc1@michigan.gov AG-ENRA-Spec-Lit@michigan.gov Counsel for the Sierra Club Tracy J. Andrews, Esq. Christopher M. Bzdok, Esq. Kimberly Flynn, Legal Assistant Karla Gerds, Legal Assistant Olson, Bzdok & Howard, P.C. 420 East Front Street Traverse City, MI tjandrews@envlaw.com chris@envlaw.com kimberly@envlaw.com karla@envlaw.com Counsel for Wal-Mart Stores East, LP and Sam s East, Inc. Melissa M. Horne, Esq. Higgins, Cavanagh & Cooney, LLP 10 Dorrance Street, Suite 400 Providence, RI mhorne@hcc-law.com Counsel for the Association of Businesses Advocating Tariff Equity ( ABATE ) Michael Pattwell, Esq. Sean P. Gallagher, Esq. Clark Hill PLC 212 East Grand River Avenue Lansing, MI mpattwell@clarkhill.com sgallagher@clarkhill.com Stephen A. Campbell, Esq. Clark Hill PLC 500 Woodward Avenue, Suite 3500 Detroit, MI scampbell@clarkhill.com Consultants for ABATE James R. Dauphinais Michael P. Gorman Brubaker & Associates, Inc. Physical Address Swingley Ridge Road, Suite 140 Chesterfield, MO Mailing Address Post Office Box St. Louis, MO jdauphinais@consultbai.com mgorman@consultbai.com sl Page 1 of 3

10 ATTACHMENT 1 TO CASE NO. U (Continued) Counsel for the Residential Customer Group Don L. Keskey, Esq. Brian W. Coyer, Esq. Public Law Resource Center PLLC 333 Albert Avenue, Suite 425 East Lansing, MI donkeskey@publiclawresourcecenter.com bwcoyer@ publiclawresourcecenter.com Counsel for Energy Michigan, Inc., Calpine Energy Solutions, LLC, the Michigan Chemistry Council Timothy J. Lundgren, Esq. Laura A. Chappelle, Esq. Toni L. Newell, Esq. Varnum, LLP The Victor Center, Suite North Washington Square Lansing, MI tjlundgren@varnumlaw.com lachappelle@varnumlaw.com tlnewell@varnumlaw.com Counsel for Wolverine Power Supply Cooperative, Inc. Richard J. Aaron, Esq. Courtney F. Kissel, Esq. Dykema Gossett, PLLC 201 Townsend Street, Suite 900 Lansing, MI raaron@dykema.com ckissel@dykema.com Counsel for Constellation NewEnergy, Inc. Jennifer U. Heston, Esq. The Victor Center, Suite West Allegan, Suite 1000 Lansing, MI jheston@fraserlawfirm.com Counsel for the Michigan Municipal Electric Association Nolan J. Moody, Esq. Peter H. Ellsworth, Esq. Dickinson Wright PLLC 215 South Washington Square, Suite 200 Lansing, MI nmoody@dickinsonwright.com pellsworth@dickinsonwright.com Jim B. Weeks, Esq. 809 Centennial Way Lansing, MI jweeks@mpower.org Counsel for the Michigan State Utility Workers Council, Utility Workers Union of America, AFL-CIO John R. Canzano, Esq. Patrick J. Rorai, Esq. McKnight, Canzano, Smith, Radtke & Brault, P.C. 423 North Main Street, Suite 200 Royal Oak, MI jcanzano@michworkerlaw.com prorai@michworkerlaw.com Counsel for Spartan Renewable Energy, Inc. Jason T. Hanselman, Esq. Dykema Gossett, PLLC 201 Townsend Street, Suite 900 Lansing, MI jhanselman@dykema.com Counsel for The Kroger Company Kurt J. Boehm, Esq. Jody Kyler Cohn, Esq. Boehm, Kurtz & Lowry 36 East Seventh Street, Suite 1510 Cincinnati, Ohio kboehm@bkllawfirm.com jkylercohn@bkllawfirm.com sl Page 2 of 3

11 ATTACHMENT 1 TO CASE NO. U (Continued) Consultant for The Kroger Company Kevin Higgins Energy Strategies, LLC Parkside Towers 215 South State Street, Suite 200 Salt Lake City, UT khiggins@energystrat.com sl Page 3 of 3