STATE OF MICHIGAN DEPARTMENT OF ATTORNEY GENERAL …

STATE OF MICHIGAN DEPARTMENT OF ATTORNEY GENERAL

P.O. BOX 30755 LANSING, MICHIGAN 48909

BILL SCHUETTE ATTORNEY GENERAL

March 14, 2013

Ms. Mary Jo Kunkle Executive Secretary Michigan Public Service Commission 6545 Mercantile Way Lansing, MI 48911 Dear Ms. Kunkle: Re: MPSC Case No. U-16655 Pursuant to the Commission's E-Dockets User Manual, I am attaching the Attorney General's Official Exhibits AG-01, AG-02, AG-03, and AG-04 along with a proof of service. These exhibits were admitted by ALJ Eyster during the hearing.

Sincerely, Donald E. Erickson Assistant Attorney General

c All Parties

PROOF OF SERVICE - U-16655

The undersigned certifies that the Attorney General’s Official Exhibits AG-01 through AG-04 served upon the parties listed below, by e-mailing the same to them at the email addresses listed below on the 14th day of March 2013. ____________________________________ Donald E. Erickson Administrative Law Judge: Mark D. Eyster [email protected] MPSC Staff: Sattler A. Spencer [email protected] Robert W. Beach [email protected] MEC: Christopher M. Bzdok [email protected]

Consumers Energy Company: [email protected] Raymond E. McQuillan [email protected] ABATE: Robert A. W. Strong (P27724) [email protected]

Federal Energy Regulatory Commission • Market Oversight • www.ferc.gov/oversight.gov/oversight

Midwest Electric Market: Overview and Focal Points

1010

Midwest Electric Regions

Page 1 of 15

February 2012

MPSC Case No. U-16655 Exhibit AG-01 (MJM-1) Page 1 of 15 pages


Updated August 3, 2007


1010

Overview

Market Description

Midwest Reliability Organization (MRO) reliability region and the portion of the SERC reliability region in MISO and the ReliabilityFirst Corporation (RFC) reliability region not in PJM.

Geography

States covered: All or most of North Dakota, South Dakota, Nebraska, Minnesota, Iowa, Wisconsin, Illinois, Indiana, Michigan and parts of Montana, Missouri, Kentucky, and Ohio.

Reliability regions: Midwest Reliability Organization (MRO), Southeastern Electric Reliability Council (SERC) and ReliabilityFirst Corporation (RFC)

(These regions were formerly: East Central Area Reliability Coordination Agreement (ECAR), Mid-America Interconnected Network (MAIN), and Midcontinent Area Power Pool (MAPP) regions.)

Balancing authorities: See list on page 6.

Hubs: Cinergy, First Energy, Illinois, Michigan, Minnesota

RTO/ISO

Midwest ISO (MISO) (established 2002) administers a two-settlement (day ahead and real-time) energy market known as the Day-2 market. It produces hourly locational marginal prices that are rolled up into 5 regional hub prices. MISO also administers a monthly financial transmission rights (FTR) allocation and auction.

Midwest bilateral trading is active on the IntercontinentalExchange (ICE) at the Cinergy Hub and Northern Illinois Hub.

Midwest ISO 2006 State of the Markets ReportMarket Monitor: Dr. David Patton – Independent Market Monitor

Page 2 of 15

February 2012



Updated June 1, 2007


1010

Generation/Supply (MISO only)

Marginal fuel type: Coal

Generating capacity (summer 2006): 137,232 MW

Capacity reserve (summer 2006): 21,025 MW

Reserve margin (summer 2006): 18%

Demand (MISO only)

All time peak demand: 116 GW (set July 31, 2006)

All time peak demand for MISO market footprint excluding LG&E: 110.5 GW (set July 31, 2006)

In summer of 2006, demand reached record levels on several occasions due to extremely hot weather.

Peak demand growth: 3.4% (2005-2006)

Summer Peak Demand (GW): 112.2 (2005) 116 (2006) 110.5 (2006 MISO market footprint excluding LG&E)

Source: Derived from MISO Data

Prices (MISO only)

Annual Average Day-Ahead Price at Cinergy Hub: $50.54/MWh (2005) $40.44/MWh (2006)

Prices increased in 2005 as a result of disturbances to the natural gas market. Prices declined in 2006 as natural gas storage levels remained above historical ranges throughout the injection season (April through October).

Page 3 of 15

February 2012



Updated May 3, 2007


1010

Interconnections/Seams

Since the start of the Day-2 market on April 1, 2005, persistent transmission constraints in the Wisconsin and the Upper Peninsula of Michigan (WUMS) and Minnesota areas have caused their prices to diverge from other areas of MISO, usually at times of high loads or decreased generation supply.

Page 4 of 15

February 2012


Federal Energy Regulatory Commission • Market Oversight • www.ferc.gov/oversight

Midwest Annual Average Bilateral Prices

Source: Derived from the Platts data.

Midwest Electric Market: Annual Bilateral Prices

1012

Annual Average Day Ahead On Peak Prices ($/MWh)2007 2008 2009 2010 2011 5-Year Avg

Cinergy $61.20 $66.88 $34.65 $41.51 $41.17 $51.20Michigan Hub $64.43 $69.15 $36.56 $43.68 $42.73 $53.81Minnesota Hub $72.32 $67.46 $32.09 $36.86 $34.57 $53.62NI Hub $58.93 $66.13 $34.47 $40.85 $40.31 $50.57Illinois Hub $59.88 $62.52 $31.36 $38.22 $38.12 $48.65MAPP South $61.18 $69.18 $33.31 $37.60 $35.48 $51.28

Updated January 11, 2012

Page 5 of 15

February 2012



Daily Average of MISO Day-Ahead Prices - All Hours

Midwest Electric Market: Last Month’s RTO Prices

Source: Derived from Bloomberg data1128

$0

$25

$50

$75

$100

$125Ja

n-01

Jan-

04

Jan-

07

Jan-

10

Jan-

13

Jan-

16

Jan-

19

Jan-

22

Jan-

25

Jan-

28

Jan-

31

Pric

e ($

/MW

h)

Indiana Hub Illinois HubMichigan HubMinnesota HubN Illinois Hub (PJM)

30 Day Rolling Average

$0

$20

$40

$60

$80

$100

2007

2008

2009

2010

2011

2012

Updated: February 14, 2012

Page 6 of 15

February 2012



Daily Average of MISO Day-Ahead Prices - All Hours

Midwest Electric Market: RTO Prices

Source: Derived from Bloomberg data1013

$0

$25

$50

$75

$100

$125

Jan-

11Fe

b-11

Mar

-11

Apr-1

1M

ay-1

1Ju

n-11

Jul-1

1Au

g-11

Sep-

11O

ct-11

Nov-

11De

c-11

Jan-

12

Pric

e ($

/MW

h)

Indiana Hub Illinois HubMichigan HubMinnesota HubN Illinois Hub (PJM)

30 Day Rolling Average

$0$20$40$60$80

$100

2007

2008

2009

2010

2011

2012


Page 7 of 15

February 2012



MISO/PJM Index Day-Ahead On-Peak Prices

Midwest Electric Market: MISO/PJM Index Prices

Source: Derived from Platts data1194

$0

$50

$100

$150

$200

$250

$300Ja

n-10

Feb-

10M

ar-1

0Ap

r-10

May

-10

Jun-

10Ju

l-10

Aug-

10Se

p-10

Oct

-10

Nov

-10

Dec

-10

Jan-

11Fe

b-11

Mar

-11

Apr-1

1M

ay-1

1Ju

n-11

Jul-1

1Au

g-11

Sep-

11O

ct-1

1N

ov-1

1D

ec-1

1Ja

n-12

Michigan HubIndiana HubMinnesota HubIllinois HubMAPP SouthPJM WestNI Hub

Monthly Average

$0$25$50$75

$100$125

2006

2007

2008

2009

2010

2011

2012

Pric

e ($

/MW

h)


Page 8 of 15

February 2012



Eastern Daily Index Day-Ahead On-Peak Prices

Midwest Electric Market: Last Month’s Eastern Index Prices


$0

$50

$100

$150

$200

$250Ja

n-01

Jan-

03Ja

n-05

Jan-

07Ja

n-09

Jan-

11Ja

n-13

Jan-

15

Jan-

17Ja

n-19

Jan-

21Ja

n-23

Jan-

25Ja

n-27

Jan-

29Ja

n-31

Indiana HubPJM WestWest New YorkMass HubDominion Hub

Monthly Average

$0

$50

$100

$150

$200

2006

2007

2008

2009

2010

2011

2012

Pric

e ($

/MW

h)


Page 9 of 15

February 2012



MISO/PJM Index Day-Ahead On-Peak Prices

Midwest Electric Market: Last Month’s MISO/PJM Index Prices


$0

$50

$100

$150

$200

$250

$300Ja

n-01

Jan-

03

Jan-

05

Jan-

07

Jan-

09

Jan-

11

Jan-

13

Jan-

15

Jan-

17

Jan-

19

Jan-

21

Jan-

23

Jan-

25

Jan-

27

Jan-

29

Jan-

31

Michigan HubIndiana HubMinnesota HubIllinois HubMAPP SouthPJM WestNI Hub

Monthly Average

$0

$25

$50

$75

$100

$125

2006

2007

2008

2009

2010

2011

2012

Pric

e ($

/MW

h)


Page 10 of 15

February 2012



Midwestern Daily Index Day-Ahead On-Peak Prices

Midwest Electric Market: Last Month’s Midwestern Index Prices


$0

$100

$200

$300

$400

$500

$600Ja

n-01

Jan-

03

Jan-

05

Jan-

07

Jan-

09

Jan-

11

Jan-

13

Jan-

15

Jan-

17

Jan-

19

Jan-

21

Jan-

23

Jan-

25

Jan-

27

Jan-

29

Jan-

31

Indiana HubNorth SPPInto EntergyERCOT North

Monthly Average

-$15$10$35$60$85

$110$135$160$185$210$235$260

2006

2007

2008

2009

2010

2011

2012

Pric

e ($

/MW

h)


Page 11 of 15

February 2012



Eastern Daily Index Day-Ahead On-Peak Prices

Midwest Electric Market: Eastern Index Prices


$0

$50

$100

$150

$200

$250Ja

n-10

Feb-

10M

ar-1

0Ap

r-10

May

-10

Jun-

10Ju

l-10

Aug-

10Se

p-10

Oct

-10

Nov

-10

Dec

-10

Jan-

11Fe

b-11

Mar

-11

Apr-1

1M

ay-1

1Ju

n-11

Jul-1

1Au

g-11

Sep-

11O

ct-1

1N

ov-1

1D

ec-1

1Ja

n-12

Indiana HubPJM WestDominion HubWest New YorkMass Hub

Monthly Average

$0$25$50$75

$100$125$150

2006

2007

2008

2009

2010

2011

2012

Pric

e ($

/MW

h)


Page 12 of 15

February 2012



Implied Heat Rates at MISO and PJM Hubs - Weekly Averages

Midwest Electric Market: MISO/PJM Implied Heat Rates

Source: Derived from Platts on-peak electric and natural gas price data1133

0

4,000

8,000

12,000

16,000

20,000

24,000

28,000Ja

n-10

Feb-

10M

ar-1

0Ap

r-10

May

-10

Jun-

10Ju

l-10

Aug-

10Se

p-10

Oct-

10No

v-10

Dec-

10Ja

n-11

Feb-

11M

ar-1

1Ap

r-11

May

-11

Jun-

11Ju

l-11

Aug-

11Se

p-11

Oct-

11No

v-11

Dec-

11Ja

n-12

Impl

ied

Hea

t Rat

e (B

tu/k

Wh)

Cinergy-Columbia Gas AppalachiaMichigan-Michigan Consumers CitygateMinnesota-Northern VenturaNI-Chicago CitygatePJM West - Columbia Gas Appalachia


Page 13 of 15

February 2012



Weekly Power Generation & Temps. - Central Industrial Region

Midwest Electric Market: Generation Output and Temperatures

Source: Derived from EEI and NOAA data1115

-80-60-40-20

020406080

Deg

ree

Day

sD

evia

tion

from

Nor

mal

02,0004,0006,0008,000

10,00012,00014,00016,00018,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Ele

ctric

Gen

erat

ion

(GW

h)

2007-11 Range2012


Page 14 of 15

February 2012



Weekly Power Generation & Temps. - West Central

Midwest Electric Market: WC Generation Output and Temperatures

Source: Derived from EEI and NOAA data1116

0

2,000

4,000

6,000

8,000

10,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Ele

ctric

Gen

erat

ion

(GW

h)

2007-11 Range2012

-80-60-40-20

020406080

Deg

ree

Day

sD

evia

tion

from

Nor

mal


Page 15 of 15

February 2012


(a) (b) (c) (d)Counterparty Capacity

On-Peak Off-PeakMW-Year MWh MWh

1 Experimental Advanced Renewable Program 0.000 1,444.886 577.9542 Elk Rapids Hydroelectric 0.200 1,286.172 1,353.9823 North American Natural Resources ‐ Lennon 0.263 4,797.322 5,399.7834 Scenic View Dairy ‐ Fennville 0.400 1,855.334 2,069.0315 Scenic View Dairy ‐ Freeport 0.626 2,902.844 3,284.6726 WM Renewable Energy ‐ Northern Oaks 1.400 5,599.375 6,773.2117 Zeeland Farm Services ‐ Plant 2 1.500 5,425.421 6,484.3368 2011 Total 4.389 23,311.354 25,942.969

Energy Delivered


Exhibit: AG‐02 (M

(e) (f) (g) (h) (i) (j)

On-Peak Off-Peak On-Peak Off-Peak$/MW-Year $/MWh $/MWh $ $ $

40,000.00 74.47 0.00 0.00 107,595.90 43,038.3440,000.00 70.83 40.71 8,000.00 91,093.60 55,114.8540,000.00 72.85 41.41 10,532.38 349,473.94 223,631.4440,000.00 71.35 41.10 16,000.00 132,376.90 85,033.1340,000.00 71.55 41.08 25,034.03 207,699.31 134,937.0440,000.00 72.58 41.38 56,000.00 406,425.27 280,296.2440,000.00 72.97 41.43 60,000.00 395,886.05 268,640.7940,000.00 72.52 40.38 175,566.40 1,690,550.97 1,090,691.83

2011 TRANSFER COST CALCULATION SUMMARY

Capacity Transfer Price

Energy Transfer PriceTotal Capacity Transfer Cost

Total Energy Transfer Cost


MJM‐2) Revised Company Exhibit A‐1(TPC‐1)

(k) (l) (m)Payment Difference

(Payment - Transfer Cost)

$ $ $

150,634.24 977,579.58 826,945.34154,208.45 228,248.14 74,039.69583,637.76 918,913.32 335,275.56233,410.03 297,459.11 64,049.08367,670.38 705,091.72 337,421.34742,721.52 984,534.40 241,812.88724,526.84 1,120,755.78 396,228.94

2,956,809.21 5,232,582.05 2,275,772.84

Total Transfer Cost


(a) (b) (c) (d) (e)

Description Jan Feb Mar Apr

Monthly and Total

Surcharge Revenue1 Residential 3,931,821$ 3,916,386$ 3,930,571$ 3,932,850$ 2 Commercial 1,802,441 1,792,294 1,801,194 1,788,300 3 Industrial 613,807 616,475 612,710 611,675 4 Streetlighting 98,833 117,856 106,350 106,450 5 Total Surcharge Revenue 6,446,902$ 6,443,011$ 6,450,825$ 6,439,275$

6 Rate Making Adjustment -$ - 1,837,000 221,000

Expenses:7 Excess Costs From PPAs 31,924$ (45,306) 17,586 (15,141) 8 Admin Costs 28,976 14,250 1,500 29,129 9 Total Expenses 60,900$ (31,056)$ 19,086$ 13,988$

Surcha

MPSC Case No. U-16655 Exhibit AG-03 Page 1 of 3

Exhibit: AG‐03 (

(f) (g) (h) (i) (j) (k)

May Jun Jul Aug Sep Oct

3,929,457$ 3,928,204$ 3,922,248$ 3,929,023$ 1,030,325$ 1,021,825$ 1,773,978 1,781,441 1,764,564 1,765,574 638,678 624,827

603,462 612,311 602,867 603,531 129,316 131,326 106,312 106,353 106,398 105,300 105,350 49,064

6,413,209$ 6,428,309$ 6,396,077$ 6,403,428$ 1,903,669$ 1,827,042$

221,000 221,000 221,000 221,000 221,000 221,000

56,152 37,220 (18,239) (32,593) (72,082) (58,265) - - 29,129 1,080 249,324 29,129

56,152$ 37,220$ 10,890$ (31,513)$ 177,242$ (29,136)$

arge Revenue and Costs (By Month & Total)


(MJM‐3) Revised Company Exhibit A‐7(SH‐1)

(l) (m) (n)

Nov Dec Total

1,021,397$ 1,024,078$ 35,518,185$ 620,151 621,459 16,774,901 125,776 128,462 5,391,718 49,011 49,014 1,106,291

1,816,335$ 1,823,013$ 58,791,095$

221,000 54,000 3,659,000

2,107 (60,216) (156,853) 6,692 1,247 390,456 8,799$ (58,969)$ 233,603$


(a) (b) (c) (d)

Description Jan Feb Mar

Monthly and Total

1 Total REC Expenditures 9,100$ 194,246$ 180,025$

2 1/2 of Current Month Expenditu 4,550$ 97,123$ 90,013$ 3 Prior Year Return 53,241 - - 4 Beginning Balance (Prior Ending 1,271,385 1,333,726 1,527,972 5 Amount Subject to Carrying Cos 1,329,176$ 1,430,849$ 1,617,985$

6 Rate of Return 9.80% 9.80% 9.80%Monthly Rate of Return 0.82% 0.82% 0.82%

8 Carrying Cost 10,855$ 11,685$ 13,214$

9 Carrying Cost Recorded 10,855 11,685 13,214

10 Cumulative 10,855 22,540 35,754

R

MPSC Case No. U-16655 Exhibit AG-04 (MJM-4) Page 1 of 3

(e) (f) (g) (h) (i) (j)

Apr May Jun Jul Aug Sep

226,088$ 216,024$ 223,146$ 223,252$ 200,279$ 215,827$

113,044$ 108,012$ 111,573$ 111,626$ 100,140$ 107,914$ - - - - - -

1,707,997 1,934,085 2,150,109 2,373,255 2,596,507 2,796,786 1,821,041$ 2,042,097$ 2,261,682$ 2,484,881$ 2,696,647$ 2,904,700$

9.80% 9.80% 9.80% 9.80% 9.80% 9.80%0.82% 0.82% 0.82% 0.82% 0.82% 0.82%

14,872$ 16,677$ 18,470$ 20,293$ 22,023$ 23,722$

14,872 16,677 18,470 20,293 22,023 23,722

50,626 67,303 85,773 106,066 128,089 151,811

Renewable Energy Credit (REC) Inventory Return (By Month & Total)


Exhibit: AG‐04 (MJM‐4) Revised Company Exhibit A‐9(SH‐3)

(k) (l) (m) (n)

Oct Nov Dec Total

220,231$ 195,541$ 2,766,494$ 4,768,213$

110,116$ 97,771$ 1,383,247$ - - -

3,012,613 3,232,844 3,428,385 6,194,879 3,122,729$ 3,330,615$ 4,811,632$

9.80% 9.80% 9.80%0.82% 0.82% 0.82%

25,502$ 27,200$ 39,295$

25,502 27,200 39,295

177,313 204,513 243,808


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