May 14, Enclosed for electronic filing is the Revised Settlement Agreement. Also enclosed is the Proof of Service.

Transcription

1 Founded in 1852 by Sidney Davy Miller SHERRI A. WELLMAN TEL (517) FAX (517) Miller, Canfield, Paddock and Stone, P.L.C. One Michigan Avenue, Suite 900 Lansing, Michigan TEL (517) FAX (517) MICHIGAN: Ann Arbor Detroit Grand Rapids Kalamazoo Lansing Troy FLORIDA: Tampa ILLINOIS: Chicago NEW YORK: New York CANADA: Windsor CHINA: Shanghai MEXICO: Monterrey POLAND: Gdynia Warsaw Wrocław May 14, 2018 Ms. Kavita Kale Executive Secretary Michigan Public Service Commission 7109 W. Saginaw Highway, 3rd Floor Lansing, MI Re: SEMCO Energy Gas Company Tax Reform Credit A Case No. U Dear Ms. Kale: Enclosed for electronic filing is the Revised Settlement Agreement. Also enclosed is the Proof of Service. If you should have any questions, please kindly advise. Very truly yours, Miller, Canfield, Paddock and Stone, P.L.C. SAW/clc Enclosures cc: Parties of Record Steve McLean Jennifer Dennis By: Sherri A. Wellman

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 consider changes in the rates ) of all the Michigan rate-regulated ) electric, steam and natural gas utilities ) Case No. U to reflect the effects of the federal Tax ) Cuts and Jobs Act of 2017: ) SEMCO ENERGY GAS COMPANY ) files an application for determination of Credit A ) as described in order U ) REVISED SETTLEMENT AGREEMENT As provided in 78 of the Administrative Procedures Act of 1969 ( APA ), as amended, MCL , and Rule 431 of the Rules of Practice and Procedure Before the Commission, Mich Admin Code, R , SEMCO Energy Gas Company ( SEMCO Gas or the Company ), the Michigan Public Service Commission ( MPSC or the Commission ) Staff ( Staff ), Association of Businesses Advocating Tariff Equity ( ABATE ) and the Michigan Attorney General Bill Schuette ( AG ), hereby agree as follows: 1. On February 22, 2018, the Commission issued an order in Case No. U ( February 22 Order ), directing SEMCO Gas to file no later than March 30, 2018, an application and supporting direct case to address going-forward adjustments to its base rates to reflect the reduction in the federal corporate tax rate arising from the Tax Cuts and Jobs Act ( TCJA ). 2. On March 29, 2018, SEMCO Gas filed with the Commission in this docket its Application, along with the testimony and exhibits of its witness Steven Q. McLean. In its

3 March 29, 2018 direct case filing, based on the settlement reached in the Company s last general base rate case in U-16169, SEMCO Gas proposed approval of base-rate credits for its retail sales and transportation customers reflective of the Company s reduced federal corporate tax expense associated with the enactment of the TCJA. 3. On April 2, 2018, the Commission s Executive Secretary issued a Notice of Hearing and a correspondence directing SEMCO Gas to mail the Notice of Hearing to all cities, incorporated villages, townships, and counties in its service area, and to all intervenors in Case No. U On April 4, 2018, SEMCO Gas caused to have filed in this docket an affidavit of mailing the Notice of Hearing. 4. On April 18, 2018, Administrative Law Judge Sharon L. Feldman presided over the prehearing conference. The Staff appeared at the prehearing and ABATE and the AG were granted intervention. 5. On April 20, 2018, based on an understanding reached by the parties at the prehearing, SEMCO Gas filed the supplemental direct testimony and exhibits of Witness McLean. In the April 20, 2018 supplemental filing, SEMCO Gas identified the impact of the TCJA on the Company s Main Replacement Program ( MRP ) revenue requirement and associated charges most recently approved by the Commission in Case No. U The supplemental filing reflected a reduction to the MRP annual revenue requirement and proposal to reduce the MRP surcharges for the Company s sales and TR-1 customers. 6. Subsequently, the parties discussed the issues in this case and have negotiated the terms of this Revised Settlement Agreement, and agree as follows: 2

4 a. SEMCO Gas s direct case, as supplemented, is reasonable and prudent and fully reflects the Credit A TCJA benefits as identified by the Commission in the February 22 Order. Specifically, the parties agree that the annual base rate revenue requirement reduction associated with Credit A is $5,978,884, and the credits, as proposed by Staff, reflected on the tariff sheets attached hereto as Attachment 1 allocate the revenue requirement reduction on a cost-of-service basis to SEMCO Gas s sales and transportation customers. b. The parties also agree that the annual MRP revenue requirement reduction associated with the TCJA is $564,717, and the reduced MRP surcharges reflected on the tariff sheet attached hereto as Attachment 2 reflect the reduction and are based on the same methodology and allocation factors approved in Case No. U c. The parties agree that the Commission should approve, effective July 1, 2018, the tariff sheets reflective of the base-rate credits for the Company s sales and transportation customers and the reduced MRP surcharges attached hereto as Attachment 1 and Attachment 2, respectively. d. SEMCO Gas agrees that within 60 days of Commission approval of this Revised Settlement Agreement, the Company will file its Credit B application and direct case as required by the February 22 Order. 7. It is the opinion of the parties that this Revised Settlement Agreement will promote the public interest, will aid the expeditious conclusion of this case, and will minimize the time and expense which would otherwise have to be devoted to this matter by the parties. This Revised Settlement Agreement is not severable, and all provisions of the same are dependent upon all other provisions contained herein. 3

5 8. This Revised Settlement Agreement has been made for the sole and express purpose of settling this case. All offers of settlement and discussions relating hereto are, and shall be considered, privileged under MRE 408 and shall not be used in any manner, or be admissible for any other purpose in connection with this proceeding or any other proceeding hereof. 9. Neither the parties to the revised settlement nor the Commission shall use this Revised Settlement Agreement or the order approving it, as precedent in any other case or proceeding, except as necessary to carry out its terms. 10. This Revised Settlement Agreement is intended to be a final disposition of this proceeding, and the parties join in respectfully requesting that the Commission grant prompt approval. The parties agree not to appeal, challenge or contest the Commission s Order accepting and approving this Revised Settlement Agreement without modification. If the Commission does not accept the Revised Settlement Agreement without modification, the Agreement shall be withdrawn and shall not constitute any part of the record in this proceeding or be used for any other purpose whatsoever. 11. Because this Revised Settlement Agreement is uncontested, and because the Commission s February 22, 2018 Order in Case No. U (p. 10) established a schedule whereby the Commission would read the record in this proceeding thus dispensing with the Proposal for Decision, it is on this basis that the parties agree that the issuance of a Proposal for Decision pursuant to Section 81 of the Administrative Procedures Act of 1969 ( APA ), MCL , is unnecessary. Notwithstanding, and alternatively, the parties agree to waive the provisions of Section 81 of the APA in connection with this Revised Settlement Agreement. 4

6 SEMCO ENERGY GAS COMPANY Ujgttk!C/! Ygnnocp Fkikvcnn{!ukipgf!d{<!Ujgttk!C/! Ygnnocp FP<!EP!?!Ujgttk!C/!Ygnnocp! gockn!?!ygnnocpuboknngtecphkgnf/ eqo!e!?!wu Fcvg<!3129/16/25!22<56<42!. Dated: May 14, 2018 By: 15(11( One of its Attorneys Sherri A. Wellman (P38989) Paul M. Collins (P69719) Miller, Canfield, Paddock and Stone, P.L.C. One Michigan Avenue, Suite 900 Lansing, MI (517) MICHIGAN ATTORNEY GENERAL Okejcgn!Oqqf{! 3129/16/25!24<38<12!.15(11( Dated: May 14, 2018 By: His Attorney Michael E. Moody (P51985) Assistant Attorney General Michigan Department of Attorney General 525 W. Ottawa Street P.O. Box Lansing, MI (517) ASSOCIATION OF BUSINESSES ADVOCATING TARIFF EQUITY Dated: May 14, 2018 By: Its Attorney Bryan A. Brandenburg (P77216) Clark Hill PLC 212 E. Cesar E. Chavez Avenue Lansing, MI (517)

7 MICHIGAN PUBLIC SERVICE COMMISSION STAFF Jgcvjgt! O/U/!Fwtkcp Fkikvcnn{!ukipgf!d{!Jgcvjgt!O/U/!Fwtkcp! FP<!ep?Jgcvjgt!O/U/!Fwtkcp-!q-! qw?cvvqtpg{!igpgtcn!rwdnke!ugtxkeg! Fkxkukqp-!gockn?fwtkcpjBokejkicp/iqx-! e?wu! Fcvg<!3129/16/25!24<52<53!.15(11( Dated: May 14, 2018 By: Its Attorney Heather M.S. Durian (P67587) Michigan Public Service Commission 7109 W. Saginaw Highway, 3 rd Floor Lansing, MI (517) \

8 Cvvcejogpv!2!vq!Ugvvngogpv!Citggogpv! Rcig!2!qh!3 M.P.S.C. - No. 1 ^ Gas SEMCO ENERGY GAS COMPANY (T.C.J.A. Credit A Case No. U-20115) Continued From Sheet No. D-2.00 Original Sheet No. D-2.01 Tax Cuts and Jobs Act Credit A ^ This credit is pursuant to the adjustment of the federal corporate tax rate on a going forward basis. This credit is to be on a volumetric basis. Tax Cuts and Jobs Act Credit A (Surcharge) Rate Class Amount/Dth Order No. Residential ($0.1738) per Dth U GS-1 ($0.1509) per Dth U GS-2 ($0.1000) per Dth U GS-2 ($0.0769) per Dth U-20115

9 Cvvcejogpv!2!vq!Ugvvngogpv!Citggogpv! Rcig!3!qh!3 M.P.S.C. - No. 1 _ Gas SEMCO ENERGY GAS COMPANY (T.C.J.A. Credit A Case No. U-20115) Continued From Sheet No. E-1.00 Original Sheet No. E-1.01 Tax Cuts and Jobs Act Credit A _ This credit is pursuant to the adjustment of the federal corporate tax rate on a going forward basis. This credit is to be on a volumetric basis. Tax Cuts and Jobs Act Credit A (Surcharge) Rate Class Amount/Dth Order No. TR-1 ($0.0470) per Dth U TR-2 ($0.0421) per Dth U TR-3 ($0.0318) per Dth U-20115

10 Cvvcejogpv!3!vq!Ugvvngogpv!Citggogpv Rcig!2!qh!2

11 STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * * In the matter on the Commission s own ) motion, to consider changes in the rates ) of all the Michigan rate-regulated ) electric, steam and natural gas utilities ) Case No. U to reflect the effects of the federal Tax ) Cuts and Jobs Act of 2017: ) SEMCO ENERGY GAS COMPANY ) files an application for determination of Credit A ) as described in order U ) STATE OF MICHIGAN ) ) ss COUNTY OF INGHAM ) PROOF SERVICE Crystal L. Chacon, being first duly sworn, deposes and says that on May 14, 2018 she served the Revised Settlement Agreement upon the parties listed on the attached Service List via electronic mail. Subscribed and sworn before me on this 14 th day of May, Crystal L. Chacon Kimberly S. Fox, Notary Public State of Michigan, Eaton County My Commission Expires: July 20, 2023 Acting in Ingham County

12 SERVICE LIST Administrative Law Judge Honorable Sharon L. Feldman Michigan Public Service Commission 7109 W. Saginaw Highway, 3rd Floor Lansing, MI Michigan Public Service Commission Staff Heather M.S. Durian Michigan Public Service Commission 7109 W. Saginaw Highway, 3rd Floor Lansing, MI Michigan Attorney General Bill Schuette Michael E. Moody Assistant Attorney General Michigan Department of Attorney General Special Litigation Division P.O. Box Lansing, MI Association of Businesses Advocating Tariff Equity Bryan A. Brandenburg Clark Hill PLC 212 E. Cesar E. Chavez Avenue Lansing, MI \