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					                                                                 September 26, 2008




Ms. Mary Jo Kunkle                                                                    Via: E-Filing
Executive Secretary
Michigan Public Service Commission
6545 Mercantile Way, Ste. 7
Lansing, MI 48911

Re:    Alpena Power Company - 2009 PSCR
       Case No. U-15660

Dear Ms. Kunkle:

The 2009 PSCR application of Alpena Power Company, together with the written direct
testimony of the company’s witnesses, Mr. Steven Mitchell and Mr. Joseph Bedford, is being
electronically filed with the Michigan Public Service Commission pursuant to the Commission’s
directive. No paper filing is being made.

I am forwarding a draft notice of hearing by e-mail to Ms. Gloria Jones at
jonesg1@michigan.gov.

Please contact me if you have questions or need anything else. Thank you for your assistance.

Sincerely,
Timothy M.         Digitally signed by Timothy M. Gulden
                   DN: cn=Timothy M. Gulden, o=Gillard, Bauer,
                   Mazrum, Florip, Smigelski & Gulden, ou,

Gulden             email=tmgulden@gillardlaw.com, c=US
                   Date: 2008.09.26 09:24:10 -04'00'


Timothy M. Gulden
Attorney for Alpena Power Company

TMG/lmm

Enclosures
                              S T A T E OF M I C H I G A N

              BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION



In the Matter of the Application of              )
    ALPENA POWER COMPANY                         )
for Approval to Implement a Power                )                   Case No. U-15660
Supply Cost Recovery Plan for the twelve         )
months ending December 31, 2009.                 )
____________________________________             )


                                         APPLICATION


            Alpena Power Company, hereinafter referred to as "Applicant" hereby files this

Application requesting approval of a Power Supply Cost Recovery (“PSCR”) Plan in

accordance with Act 304 of the Public Acts of 1982 (“Act 304”), as hereinafter set forth and

respectfully represents to the Commission as follows:

       1.   Applicant is a private investor-owned Michigan utility corporation with its principal

office located in the City of Alpena, Alpena County, Michigan, supplying electric services to its

customers (approximately 16,000) within its service area which includes: the City of Alpena;

the Townships of Alpena, Green, Long Rapids, Maple Ridge, Ossineke, Sanborn, Wellington

and Wilson, in the County of Alpena; the Township of Presque Isle in Presque Isle County;

the Township of Caledonia in Alcona County; and the Village of Hillman and Township of

Hillman in Montmorency County, all in the State of Michigan.

       2.   Jurisdiction is pursuant to Sections 1, 2, 6, 7 and 8 of 1909 PA 106, as amended,

MCLA 460.551 et seq.; 1909 PA 300, as amended, MCLA 462.2 et seq.; Sections 3 and 4 of

1919 PA 419, as amended, MCLA 460.51 et seq.; Sections 4, 6 and 6a of 1939 PA3, as

amended, MCLA 460.1 et seq.; 1982 PA 304, as amended, MCLA 460.6a, 460.6b, 460.6j,

460.6k, 460.6l and 460.6m; 1969 PA 306, as amended, MCLA 24.201 et seq.; and the

Commission's Rules of Practice and Procedure, 1979 Administrative Code, R 460.17101 et

seq.




                                                                             APPLICATION
                                             1                               CASE U-15660
     3.    In 2009 Applicant proposes to purchase approximately 98% of its electric power

requirements from Consumers Energy Company under wholesale rates subject to the

jurisdiction of the Federal Energy Regulatory Commission and as approved by the

Commission in Case Nos. U-10705 and U-11029, and when available, from certain large

industrial customers under rates established by special contracts.

     4.    Applicant is presently serving its electric customers under rates and charges as

ordered by this Commission in its Opinion and Order in Case No. U-15250 dated June 12,

2007 and in Case No. U-15400 dated February 12, 2008, which concerned Applicant's 2008

PSCR Plan.

     5.    The Commission Order in Case No. U-15400 included the following:

          (a)    Approval of Applicant's 2008 PSCR Plan;

          (b)    Approval of a PSCR Factor of $0.0474 per kWh;

          (c)    Approval of the twelve-month billing period ending December 31, 2008 as

                 Applicant's PSCR Plan year.

     6.    This Application is filed to submit Applicant's PSCR Plan for the twelve months

ending December 31, 2009, pursuant to the requirements of Act 304. Accordingly, Applicant

herewith submits its testimony and exhibits providing the following:

          (a)    A description of expected sources of electric power supply and changes in

                 the cost of power supply anticipated over the twelve month period ending

                 December 31, 2009;

          (b)    A request for a specific PSCR factor for each of the twelve billing months

                 ending December 31, 2009;

          (c)    A description of all major contracts and power supply arrangements entered

                 into by Applicant for providing power supply during the twelve months ending

                 December 31, 2009;

          (d)    An evaluation of the reasonableness and prudence of decisions to provide

                 power supply in the manner described;

          (e)    An explanation of actions taken to minimize fuel costs.

                                                                           APPLICATION
                                            2                              CASE U-15660
     7.    In addition to the requirements for the PSCR Plan as described in Paragraph 6

above, Applicant is filing its five year forecast of the power supply requirements of its

customers, its anticipated sources of supply, and projections of power supply costs.

     8.    Act 304 provides that upon filing of a PSCR Plan by Applicant, the Commission

shall conduct a proceeding, to be known as a Power Supply and Cost Review, for the

purpose of evaluating the reasonableness and prudence of the plan, and establishing the

PSCR Factor to implement the PSCR Clause as incorporated in the Standard Rules and

Regulations and tariff rate schedules of the Applicant.

     9.    In accordance with the requirements of Act 304 for the implementation of a PSCR

Clause, Applicant has attached hereto as Exhibit A-1, six schedules of data and information

necessary to calculate its PSCR Factor.       Schedule 1 of Exhibit A-1 contains the PSCR

Factor, which reflects Applicant’s rolled in estimated under recovery for the 2008 Plan Year,

to be applied to each of the twelve billing months ending December 31, 2009.

     10.   Applicant is herewith seeking authority to apply a PSCR Factor of 13.57 mills per

kWh to all of its customers’ bills, except those rendered to its Alternative Energy Economic

Development Service and special contract customers whose service is excluded from

Alpena’s PSCR Plan for each of the twelve billing months ending December 31, 2009.

     11.   Applicant additionally is herewith seeking authority to continue rolling in prior year

PSCR over or under recoveries into the current Plan Year.

     12.   Applicant represents that the requested relief is necessary to allow recovery of

prudently incurred power supply costs.

           WHEREFORE, Applicant respectfully prays that this Commission:

     1.    Accept for filing this Application for approval of a Power Supply Cost Recovery

Plan and a Power Supply Cost Recovery Factor.

     2.    Upon acceptance of the filing of this Application, fix an early time and place for

hearing and give notice thereof in accordance with the law and rules of practices established

by this Commission.



                                                                             APPLICATION
                                             3                               CASE U-15660
     3.    Promptly make such investigation as it may deem necessary or advisable in the

circumstances.

     4.    Approve the Power Supply Cost Recovery Plan for the twelve billing months

ending December 31, 2009.

     5.    Approve the Power Supply Cost Recovery Factor of 13.57 mills per kWh of billed

kilowatt-hour sales for each of the twelve billing months ending December 31, 2009.

     6.    Approve the revised electric rate schedule attached hereto as Exhibit A-3.

     7.    Grant Applicant authority to continue to roll in prior year PSCR over or under

recoveries into the current Plan Year.

     8.    Grant Applicant such other and additional relief as it may deem appropriate.



Dated: September 26, 2008

                                                  Respectfully submitted,
                                                  ALPENA POWER COMPANY

                                                  Timothy M.          Digitally signed by Timothy M. Gulden
                                                                      DN: cn=Timothy M. Gulden, o=Gillard,
                                                                      Bauer, Mazrum, Florip, Smigelski & Gulden,


                                            By:
                                                  Gulden              ou, email=tmgulden@gillardlaw.com, c=US
                                                                      Date: 2008.09.26 09:24:34 -04'00'
                                                  ________________________
                                                  Attorney for Alpena Power Company
                                                  Timothy M. Gulden (P41232)
                                                  Gillard, Bauer, Mazrum, Florip, Smigelski,
                                                   and Gulden
                                                  109 E. Chisholm Street
                                                  Alpena, Michigan 49707
                                                  (989) 356-3444




                                                                                   APPLICATION
                                           4                                       CASE U-15660
                                TESTIMONY OF JOSEPH H. BEDFORD
                                         ON BEHALF OF
                                    ALPENA POWER COMPANY


 1   Q.   State your name and business address.

 2   A.   Joseph H. Bedford, Alpena Power Company, 401 N. 9th Avenue, Alpena, Michigan 49707.

 3   Q.   What is your educational background?

 4   A.   I received a Bachelor of Arts Degree in Accounting from Michigan State University (1992). I

 5        received a Master in Business Administration from Wayne State University (2003).

 6        Additionally, I maintain an active license as a Certified Public Accountant in the State of

 7        Michigan.

 8   Q.   What is your position with Alpena Power Company?

 9   A.   I am the Assistant Treasurer.

10   Q.   Please state your past work experience with Alpena Power Company, including your

11        present duties and responsibilities.

12   A.   I began employment with Alpena Power Company (“Alpena”) in January 2008 as Utility Finance

13        Manager. In August of 2008 I was appointed an officer of Alpena with the title of Assistant

14        Treasurer. I am currently working with the departing Chief Financial Officer with the intent to

15        assume his duties in early 2009.

16        My responsibilities include accounting, financial reporting, treasury management and

17        regulatory affairs. I am also responsible for the Company’s power supply and special

18        contracts with customers.

19   Q.   Did you have any work experience in the utility field prior to joining Alpena?

20   A.   Prior to joining Alpena, I worked for DTE Energy from November 2002 until January 2008. My

21        final title was Principle Financial Analyst working within the Energy Gas Group primarily

22        Michigan Consolidated Gas Company (MichCon). While employed by DTE Energy my primary

23        responsibilities included the preparation of Form 10-K’s and 10-Q’s as filed with the U.S.

24        Securities and Exchange Commission. Additionally, I prepared Forms P-521 and P-522 as

                                                                                    TESTIMONY OF
                                                 -1-                                J.H. BEDFORD
                                                                                    CASE U-15660
 1        filed with the Michigan Public Service Commission.        Prior to joining DTE Energy I was

 2        employed by CMS Energy between August 1998 through October 2002. I served in several

 3        capacities ranging from Staff Accountant for External Reporting, CMS Energy Parent

 4        Accounting Supervisor, Senior Oracle Analyst and finally as Consumers Energy Consolidations

 5        Manager. Prior to joining CMS Energy I owned and operated my own Cabinet Distribution

 6        company for three years. Finally, I began my career as an Auditor for two plus years with the

 7        Detroit office of Deloitte & Touche, my primary client was ANR Pipeline.

 8   Q.   Have you previously testified in any proceedings before this Commission?

 9   A.   Yes. I have testified on behalf of Alpena in its 2007 PSCR reconciliation Case U-15000-R

10   Q.   What is the purpose of your testimony in this proceeding?

11   A.   My testimony and exhibits in this proceeding are submitted to describe the anticipated

12        sources of power for the twelve-month period ending December 31, 2009; to discuss the

13        reasonableness of those sources; and to present Alpena’s forecasted system energy

14        requirements over the next five years.

15        My testimony will show that Alpena’s 2009 PSCR Plan and proposed Factor of 13.57 mills

16        per kWh is reasonable and prudent.

17        I am also testifying in support of Alpena’s request for continued authority to roll prior year

18        under or over recoveries into the subsequent year’s PSCR Plan.

19   Q. Please summarize the testimony and exhibits which you are presenting in support of

20        Alpena's PSCR Plan.

21   A.   My Testimony will address the following:

22        (a) A description of all major contracts and power supply arrangements entered into for

23              providing power supply during the twelve months ending December 31, 2009;

24        (b) An evaluation of the reasonableness and prudence of decisions to provide power

25              supply in the manner described; and,

26        (c)   An explanation of actions taken to minimize fuel costs.


                                                                                     TESTIMONY OF
                                               -2-                                   J.H. BEDFORD
                                                                                     CASE U-15660
 1        In support of my testimony I have prepared Exhibit A-4 entitled "Sources and Costs of

 2        Electric Power Supply - Twelve Months Ending December 31, 2009" and Exhibit A-5

 3        entitled "Five Year Forecast, 2009-2013".

 4   Q. Please describe all major contracts and power supply arrangements entered into by Alpena

 5        for providing power supply during the twelve months ending December 31, 2009.

 6   A.   Exhibit A-4, Schedule 1, is a general compilation of Alpena's existing and expected sources

 7        of power supply with major features and expected changes in the contracts also listed.

 8        Specifically, Alpena has entered into an amendment to a contract with Consumers Energy

 9        Company (“Consumers”) to purchase an amount of electricity necessary to supply electric

10        service to its retail customers. This contract continues through December 31, 2024. The

11        original contract was approved by the Commission in Case No. U-10705. The amendment

12        was approved in Case No. U-11029.

13        Alpena has entered into contracts to purchase excess power from its large industrial

14        customers whenever their generation exceeds their internal needs. These contracts were

15        requested by the customers and were negotiated to the benefit of both parties. The rates

16        to be paid under the agreements are for energy only; they do not include capacity

17        payments. The agreement with Lafarge Corporation (“Lafarge”) can be terminated with two

18        years written notice by either party. The agreement with Decorative Panels International

19        (“DPI”) can be terminated with six months written notice from either party.

20        Alpena has entered into a Call Option Agreement with Lafarge (the “Call Option”), whereby

21        Alpena has the right to purchase 10 MW of power during periods when a portion of

22        Alpena’s power supply from Consumers is interrupted. The agreement is for the months of

23        June 2009 through August 2009.

24   Q. Why did Alpena enter into the Call Option?

25   A.   In the summer of 2008 Alpena had a peak load of 60,097 kW. Of that amount 36,975 kW

26        was attributable to Alpena’s firm customers. Under Alpena’s contract with Consumers only


                                                                                   TESTIMONY OF
                                              -3-                                  J.H. BEDFORD
                                                                                   CASE U-15660
 1        35 MW of power is firm. Had an interruption occurred at that time Alpena would have met

 2        its firm customers’ requirements through purchases from Lafarge with whom it had a prior

 3        call option for 10 MW. Due to milder summer weather Alpena’s 2008 air conditioning load

 4        was lower than normal, for example, in 2007 Alpena has a peak load of 62,018 kW. of that

 5        amount 43,304 kW was attributable to Alpena’s firm customers. Alpena believes that 2007

 6        is a more representative of a typical period than is 2008.

 7        In developing the decision to pursue a call option arrangement with Lafarge the following

 8        steps were taken: 1) discussions with Consumers; 2) discussions with several wholesale

 9        power suppliers operating in Michigan; 3) an analysis by a consulting firm that provides

10        advice to purchasers of wholesale power; and 4) discussions with the management of

11        Lafarge; ultimately, Alpena determined that the most efficient way to obtain a firm supply of

12        power for the summer of 2009 was to renew the Call Option with Lafarge.

13   Q. Why is the Call Option the most efficient way to obtain the needed capacity for 2009?

14   A.   There are several reasons. First, based on discussions with potential wholesale suppliers,

15        the Call Option cost continues to be less than what was available from other suppliers.

16        Second, other available options would have required Alpena to pre-schedule the power,

17        usually at least a day ahead. To ensure the receipt of power when it was needed, Alpena

18        would probably end up scheduling the power more frequently than it actually is needed,

19        thereby increasing its energy costs.      Under the Call Option, Alpena has the ability to

20        schedule power only when needed, with as little as one hour notice.

21        Third, because Lafarge is interconnected to Alpena’s distribution system there are no

22        concerns regarding transmission service (such as cost, availability and scheduling).

23        Fourth, Alpena avoids becoming a Market Participant with Midwest Independent

24        Transmission System Operator (“MISO”). Becoming a Market Participant would result in

25        the incurrence of significant incremental and ongoing costs to provide the meter data and

26        energy scheduling that MISO requires.


                                                                                  TESTIMONY OF
                                              -4-                                 J.H. BEDFORD
                                                                                  CASE U-15660
 1        Fifth, even if Alpena was able to contract with Consumers for additional firm power it could

 2        not purchase that power under the existing bundled contract and therefore would have had

 3        to register with MISO as a Market Participant.

 4   Q. Please evaluate the reasonableness and prudence of decisions to provide power supply in

 5        the manner described.

 6   A.   I believe that the PSCR Plan is based on reasonable and prudent decisions to provide

 7        power supply requirements through purchases of firm and non-firm power from Consumers

 8        under FERC and MPSC approved rates, purchases of excess power from Alpena's

 9        industrial customers that have internal generation, and the purchase of summer capacity

10        from Lafarge.

11        First, and of primary importance, Consumers provides a source of firm power for Alpena's

12        customers with assured availability.     In addition to Consumers' own substantial power

13        supply facilities, its power deliveries to Alpena are backed-up by the generation and

14        transmission facilities of its extensive interconnections with other power systems.

15        Additionally, by contract, the non-firm portion of the purchases from Consumers will only be

16        interrupted to maintain its system integrity or when the only power purchases available to it

17        are emergency power purchases under its interchange agreements.

18        Second, the purchase of excess power from Alpena’s industrial customers aids in

19        maintaining supplier-customer relationships beneficial to both parties, maximizes the use of

20        existing generation, and provides an inexpensive source of power.

21        Third, Alpena has, via the Call Option, ensured that it will have enough firm capacity to

22        meet its firm load, even during periods when Consumers must interrupt its delivery of non-

23        firm power.

24        Fourth, Alpena receives power and energy adequate for its requirements at economical

25        prices. For 2009, Alpena estimates its average cost of power to be 6.21 cents per kWh

26        (See Exhibit A-1, Schedule 1). For the eight months ending August 31, 2008, the average


                                                                                  TESTIMONY OF
                                             -5-                                  J.H. BEDFORD
                                                                                  CASE U-15660
 1        cost of power was 5.81 cents per kWh. The increase in cost for 2009 compared to 2008 is

 2        due in part to increased fuel costs of approximately 0.1 cents per kWh and primarily due to

 3        the Consumers Capacity Settlement which results in approximately a 0.3 cents per kWh

 4        increase.

 5   Q. What is the nature of the Consumers Capacity Settlement?

 6   A. In 2008, Alpena was notified by Consumers that Consumers had failed to adjust the Capacity

 7        Charge to the appropriate contract rate. Alpena agreed that it was not billed properly for

 8        capacity charges from May 2001 through March of 2008. Through negotiations Alpena

 9        reached a settlement with Consumers regarding these previously unbilled capacity charges

10        that were rightfully due to Consumers under the current contract with Consumers.

11        Consumers requested the $2,686,980 of unbilled capacity charges along with associated

12        interest. On behalf of our customers, as a result of the negotiations, Alpena was able to

13        reduce the amount of unbilled capacity charges requested by Consumers by $120,000 and

14        eliminate any past or future associated interest on the settlement amount. This resulted in

15        an approximate interest savings of $895,000 for our customers.       The total negotiated

16        savings was approximately $1,015,000. The settlement calls for three annual payments of

17        $799,000 occurring each January starting in 2009 and ending in 2011. Also included was

18        a $170,100 payment that was made in July 2008.to recover the unbilled capacity charges

19        from January through March of 2008.

20   Q. What action has Alpena taken to reduce fuel costs?

21   A.   Alpena has no generation; therefore, it has no direct fuel costs. The FERC and MPSC

22        monitors the fuel and purchased power costs of Consumers.

23   Q. Does Alpena envision purchasing power from sources such as hydro-electric, wind, solar,

24        cogeneration and small power producers?

25   A.   Alpena does not expect these sources to materially impact its supply for the year 2009.

26        Alpena has rates in place to accommodate these sources should they appear in the form of


                                                                                 TESTIMONY OF
                                             -6-                                 J.H. BEDFORD
                                                                                 CASE U-15660
 1        Auxiliary Power Provisions and Cogeneration and Small Power Production Purchase Rate

 2        included in Alpena’s existing Rate Book. Alpena has several Net Metering customers

 3        however the net flow of energy to Alpena from these sources is insignificant. Alpena is

 4        willing to negotiate special contracts with developers of such power supplies. Alpena has

 5        been in contact with a potential developer of renewable energy, but as of this filing the

 6        discussions are preliminary and, in any event, it is not expected that the potential project

 7        will be placed into service in 2009.

 8   Q. Please summarize the status of load management activities at Alpena.

 9   A.   Alpena's industrial customers, who account for approximately 38% of Alpena’s total load,

10        have time-of-day rates. Two of these customers are using their generation and/or are

11        operating their facilities so that their off-peak demands are greater than their on-peak

12        demands.      Additionally the Large Power rate has time-of-day rates, representing

13        approximately 10% of Alpena’s total load. Thus almost half of Alpena’s total load is being

14        served under time-of-day rates.

15   Q. What is your forecast for future increases in peak demand and energy requirements for the

16        Alpena Power Company system?

17   A.   Exhibit A-5 is a forecast of the System Energy Requirements for Alpena for the years 2009

18        through 2013. The various numbers for the year 2009 are explained in the testimony of Mr.

19        Mitchell. The requirements for Alpena’s Residential customers are expected to increase at

20        about 0.75% per year over the period. General Service customers’ load is expected to

21        increase at about 1.25% per year.            Standard Power customers’ load is expected to

22        increase at about 1.0% per year. Large Power customers’ load is expected to increase at

23        about 1.0% per year. The Industrial customers are expected to remain steady over the

24        period.

25        Alpena expects to purchase from its industrial customers collectively 6,430 MWh annually

26        over the period. Alpena plans to purchase the remainder of its needs from Consumers.


                                                                                  TESTIMONY OF
                                                 -7-                              J.H. BEDFORD
                                                                                  CASE U-15660
 1        The system demand in megawatts was estimated to increase at 1.0% per year.

 2        Alpena’s estimated power supply costs for 2010 through 2013 were calculated based upon

 3        scheduled capacity charge increases in the Consumers contract and estimated increases

 4        in energy charges. Additionally the Capacity Charge Settlement payment which will not be

 5        incurred beyond 2011 is factored in. Overall, the average price is expected to increase by

 6        1.0% in 2010, 0.8% in 2011, and 0.08% in 2013, and decrease by 3.5% in 2012.

 7        At this time, this is Alpena’s best forecast taking into account the uncertainty of the

 8        economy, the lack of control of its large industrial loads, the inability to predict the weather,

 9        and the unknown impact of alternate energy sources.

10   Q. How does Alpena plan to meet its future energy needs?

11   A.   The majority of Alpena’s requirements will continue to be met through purchases from

12        Consumers. Excess power purchases will be made from industrial suppliers on an "as

13        available" basis.

14        Alpena will comply with the Renewable Energy Standards that were recently passed by the

15        legislature.

16        Alpena will continue to investigate the availability of cogeneration and/or small power

17        production facilities. Alpena will assess opportunities, as they occur, to purchase power

18        from bulk power suppliers on either a short-term or long-term basis. Alpena will continue to

19        pursue the possibility of a joint project should any of its industrial customers desire to

20        expand their boiler capacity.

21        As required by the recently passed legislation, Alpena will continue encouraging

22        conservation by its customers. Alpena’s participation in energy saving programs and the

23        supplying of energy conservation information will be continued.

24   Q. In your opinion is the Power Supply Cost Recovery Plan filed by Alpena in this proceeding

25        the most reasonable and prudent plan available to Alpena at this time?

26   A.   Yes.   As I have testified, Consumers represents the most reliable source available to


                                                                                      TESTIMONY OF
                                               -8-                                    J.H. BEDFORD
                                                                                      CASE U-15660
 1        Alpena for the majority of its present and future power and energy requirements. I believe

 2        the overall cost of purchased power is economical.

 3   Q.   Why is Alpena requesting authority to continue to roll prior year under or over recoveries

 4        into the subsequent year’s PSCR Plan?

 5   A.   Rolling over or under recoveries into the subsequent year’s PSCR Plan was first approved

 6        for Alpena beginning with the 2007 Plan. Alpena wishes to continue this method which

 7        allows a more levelized PSCR factor to be applied to customers’ bills than the prior method

 8        which utilized surcharges or credits applied only during certain months.

 9   Q.   Please describe in detail how Alpena proposes to roll prior year under or over recoveries

10        into the subsequent year’s PSCR Plan on a continuous basis.

11   A.   Each year, as part of its PSCR Plan application, Alpena proposes to estimate the over or

12        under recovery that will occur in the current year. For example, in this application for the

13        2009 PSCR Plan the 2008 over or under recovery has been estimated. (See the testimony

14        of Steven K. Mitchell and Exhibit A-2.) The estimated over or under recovery, including

15        interest to the end of the current year, will be rolled in to the subsequent year’s PSCR Plan,

16        to be collected evenly throughout the year.       Alpena would continue to file a PSCR

17        Reconciliation case annually where the actual over or under recovery and applicable

18        interest would be determined.       These actual amounts would then be used in the

19        subsequent year to determine the over or under recovery for the subsequent year.

20        Using this process the PSCR factor for each Plan Year would consist of the amount

21        needed to recover the estimated over or under recovery from the previous year as well as

22        the amount to recover the Plan Year’s power supply costs.          When the over or under

23        recovery for the Plan Year is determined the actual over or under recovery for the prior

24        year would be used instead of the estimate that was used to set the Plan Year factor.

25   Q.   Does this complete your testimony?

26   A.   Yes, it does.


                                                                                     TESTIMONY OF
                                              -9-                                    J.H. BEDFORD
                                                                                     CASE U-15660
                                TESTIMONY OF STEVEN K. MITCHELL
                                         ON BEHALF OF
                                    ALPENA POWER COMPANY


 1   Q.   State your name and business address.

 2   A.   Steven K. Mitchell, Alpena Power Company, 401 N. 9th Avenue, Alpena, Michigan

 3        49707.

 4   Q.   What is your educational background?

 5   A.   I received an MBA from Lake Superior State University in May 1994.                In 1978 I

 6        graduated from Bemidji State University, Bemidji, Minnesota, with a Bachelor of Science

 7        Degree with my major course of study being Accounting.

 8   Q.   What is your position with Alpena Power Company?

 9   A.   I am Executive Vice President, Treasurer and Chief Financial Officer.

10   Q.   Please state your past work experience with Alpena Power Company, including your

11        present duties and responsibilities.

12   A.   I was employed by Alpena Power Company (“Alpena”) in July 1985 as Senior Utility

13        Accountant. I have been an officer of Alpena Power since April 1987. In September

14        2001 I assumed my present title and duties.

15        My responsibilities include accounting, financial reporting, and regulatory affairs. I am

16        also responsible for the Company’s power supply and special contracts with customers.

17   Q.   Did you have any work experience in the utility field prior to joining Alpena?

18   A.   Yes.     From September 1978 through June 1982, and again from November 1983

19        through May 1984, I was employed by the Federal Energy Regulatory Commission

20        (“FERC”) as an Auditor. I was responsible for planning and performing financial and

21        compliance audits of electric utilities and natural gas transmission companies.

22   Q.   Have you previously testified in any proceedings before this Commission?

23   A.   Yes. I have testified on behalf of Alpena in more than 40 cases, including: Case No. U-

24        15400, Alpena's 2008 PSCR plan; Case No. U-10615, concerning the issuance of long-


                                                                                    TESTIMONY OF
                                                  1                                 S. K. MITCHELL
                                                                                    CASE U-15660
 1        term debt in the form of Energy Thrift Certificates; Case No. U-15250, Alpena's latest

 2        general rate case; Case No. U-9111, concerning the sale of Alpena's hydro-electric

 3        facilities; Case No. U-10228 concerning Alpena's Standard Rules and Regulations; Case

 4        No. U-14110, Alpena’s latest depreciation rates case; and Case No. U-9854 concerning

 5        deferred taxes.

 6   Q.   Would you briefly describe the business and operations of Alpena?

 7   A.   Alpena is a private investor-owned Michigan utility Corporation with its office located in

 8        the City of Alpena, Michigan, supplying electric service to approximately 16,000

 9        customers in the Northeastern lower peninsula of Michigan.            Alpena purchases

10        approximately 98% of its electric power requirements from Consumers Energy Company

11        (“Consumers”) under wholesale rates subject to the jurisdiction of the FERC and

12        approved by the Commission in Case Nos. U-10705 and U-11029 and purchases

13        additional power, when available, from certain large industrial customers under rates

14        established under special contract.

15   Q.   How many total employees does Alpena have?

16   A.   Alpena has a total of 38 full-time employees and 1 part-time.

17   Q.   Are Alpena's present rate schedules on file with this Commission?

18   A.   Yes, they are. Alpena presently serves its electric customers under rates and charges

19        as ordered by the Commission in its Opinion and Order in Case No. U-15250 dated June

20        12, 2007 and its 2008 PSCR Plan as approved by the Commission’s February 12, 2008

21        order in Case No. U-15400.

22   Q.   What is the purpose of your testimony in this proceeding?

23   A.   Act 304 of The Public Acts of 1982 (Act 304) permits the recovery of fuel and purchased

24        power costs through incorporation of a PSCR Clause into a utility's tariffs. Consistent

25        with Act 304, the Commission on July 6, 1983, issued its Order authorizing Alpena to

26        incorporate a PSCR Clause in its rates (Case No. U-7556). On February 12, 2008 the

                                                                                  TESTIMONY OF
                                                 2                                S. K. MITCHELL
                                                                                  CASE U-15660
 1        Commission issued its Order to approve a PSCR Plan covering the twelve months

 2        ending December 31, 2008 (Case No. U-15400). Subsequent to July 6, 1983, Alpena

 3        has applied PSCR factors no higher than those authorized by the Commission.

 4        Under provision of Act 304, the plan for the twelve months ending December 31, 2009,

 5        must be filed "not less than three months before the beginning of the twelve-month

 6        period covering the plan" (para. 6j(3)).

 7        My testimony and exhibits in this proceeding are submitted to comply with the annual

 8        plan requirements of Act 304 for the twelve-month period ending December 31, 2009.

 9        My testimony will show that Alpena’s 2009 PSCR Plan and proposed Factor of 13.57

10        mills per kWh is reasonable and prudent.

11   Q. Please summarize the testimony and exhibits which you are presenting in support of

12        Alpena's PSCR Plan.

13   A.   My Testimony will address the following:

14        (a) A description of expected sources of electric power supply and changes in the cost

15             of power supply anticipated over the twelve months ending December 31, 2009;

16             and

17        (b) A request for a specific PSCR factor for each of the twelve billing months ending

18             December 31, 2009;

19        My Testimony will refer to Exhibit A-1 which consists of six schedules, as listed:

20             Schedule 1, entitled “Determination of Proposed Power Supply Cost Recovery

21             Factor - January 1, 2009 through December 31, 2009”;

22             Schedule 2, entitled “Monthly Summary of Forecasted Power Supply Costs -

23             Twelve Months Ending December 31, 2009”;

24             Schedule 3, entitled “2009 System Power Forecast”;

25             Schedule 4, entitled “Consumers Energy”;

26             Schedule 5, entitled “Other Sources”;

                                                                                    TESTIMONY OF
                                                     3                              S. K. MITCHELL
                                                                                    CASE U-15660
 1             Schedule 6, entitled “Non PSCR Sales”.

 2        I will also refer to Exhibit A-2 entitled “2008 Plan Year Over (Under) Recovery Estimate

 3        and Factor”.

 4        I will also refer to Exhibit A-3 entitled "Proposed Tariff Sheets Incorporating PSCR Plan

 5        for the Twelve Months Ending December 31, 2009".

 6        All of the above exhibits were prepared by me.

 7   Q. Does Alpena have any customers whose service is not subject to Alpena’s PSCR Plan?

 8   A.   Yes. Since 1996 Alpena has had a special contract customer whose service is not

 9        subject to Alpena’s PSCR Plan. The special contract was approved by the Commission

10        in Case No. U-10948.      In addition, beginning in March 2008 Alpena has had one

11        customer taking service under its Alternative Energy Economic Develepont Service

12        (“AEEDS”) tariff. That tariff, which was approved by the Commission in Case No. U-

13        15487, is not subject to Alpena’s PSCR Plan.

14   Q. Please describe Alpena's expected sources of electric power supply and changes in the

15        cost of power supply anticipated over the twelve months ending December 31, 2009.

16   A.   Alpena expects to continue purchasing the major portion of its power from Consumers.

17        A small portion of its power will come from two of its large industrial customers on an "as

18        available" basis.

19        As shown on Exhibit A-1, Schedule 1, Page 1, Alpena anticipates the purchase of

20        332,609,000 kWh from Consumers (Line 5) and 6,430,000 kWh from Other Sources

21        (Line 6) during 2009.

22        The month-by-month breakdown supporting these projected needs is contained in

23        Exhibit A-1, Schedule 3. The megawatt hour needs of Alpena’s four industrial customers

24        (two customers taking service under Alpena’s Large Industrial Service tariff as well as

25        the AEEDS and special contract customers) were derived from person-to-person

26        discussions with the local management of these customers and compared to historical

                                                                                   TESTIMONY OF
                                                  4                                S. K. MITCHELL
                                                                                   CASE U-15660
 1        trends. The needs of Alpena’s Residential, General Service, Standard Power, Large

 2        Power, Outdoor Protective Lighting and Street and Highway Lighting customers were

 3        based on historical trends.      The Losses column represents 6.25% of the total

 4        requirements of the various classes of customers, except for the non-PSCR customers

 5        whose losses are estimated at three percent (as provided in the AEEDS tariff and the

 6        special contract), to account for line and transformation losses. The total of all these

 7        needs is Alpena’s total system requirements.

 8        The expected excess generation furnished by the two industrial customers was obtained

 9        by discussion with their respective managers. The remaining portion of Alpena’s power

10        supply will be furnished by Consumers.

11   Q. What are the specific PSCR Factors which Alpena is requesting for each of the twelve

12        billing months ending December 31, 2009?

13   A.   As shown on Exhibit A-1, Schedule 1, Page 1, Alpena's PSCR Plan requests a PSCR

14        Factor of 13.57 mills per kWh (Line 15) for each of the twelve billing months ending

15        December 31, 2009.      This PSCR Factor is based on the power supply cost base

16        included in base rates of 50.41 mills as authorized in Case No. U-15250.

17   Q. Please explain how the proposed PSCR Factor was derived.

18   A.   First, a System Power Forecast (Exhibit A-1, Schedule 3) for the calendar year 2009 was

19        derived as explained above.

20        Second, for each source of power, each months' estimated billing determinants were

21        applied to the rates anticipated to be in effect each month.

22        For power purchased from Consumers, Firm and Supplemental energy rates were

23        estimated based upon observed trends and discussions with Consumers personnel.

24        The capacity rates and kilovar rates were taken from the contract with Consumers, as

25        amended. In addition, for January, the capacity charge settlement payment that Mr.

26        Bedford discusses in his testimony is included. See Exhibit A-1, Schedule 4, for the

                                                                                TESTIMONY OF
                                                   5                            S. K. MITCHELL
                                                                                CASE U-15660
 1        monthly purchased power cost calculations for power purchased from Consumers.

 2        For the energy bills of the Other Sources the estimated avoided energy costs per kWh

 3        were used. (See Exhibit A-1, Schedule 5.)

 4        Thus, Exhibit A-1, Schedule 1, provides the determination of the Proposed PSCR Factor

 5        for 2009. The TOTAL Purchased Power Costs of $17,183,274 (Line 4) divided by the

 6        TOTAL System Energy Requirements of 276,827,000 kWh (Line 8) equals

 7        $0.062072/kWh (Line 9), or 62.07 mills/kWh (Line 10). Comparing 62.07 mills/kWh to

 8        the 50.41 mills/kWh base cost (Line 11) indicates an increase of 11.66 mills/kWh (Line

 9        12). To convert this production level cost to a customer level cost, it is multiplied by

10        1.0625 to allow for losses, which results in 12.39 mills/kWh (Line 13). The proposed

11        2008 Under-Recovery factor of 1.18 mills/kWh (Line 14) is added resulting in a PSCR

12        Factor to be applied in each of the twelve months of 2009 of 13.57 mills/kWh.

13   Q. How was the kWh required to serve the non-PSCR customers and the associated cost

14        determined?

15   A.   The amount of kWh was determined by adding a loss factor of 3% to the forecasted

16        sales to the non-PSCR customers. This loss factor is identical to the one included in the

17        special contract and the AEEDS tariff.

18        The cost associated with the power purchased to serve the special contract customer

19        was determined by applying the estimated costs associated with Supplemental Power

20        from Consumers to the kWh determined as described above.                  The costs of

21        Supplemental Power include a kilovar charge, which has been included in the

22        calculation. This method has been consistenly applied since the special contract went

23        into effect in 1996.

24        The cost associated with the power purchased to serve the AEEDS customer was the

25        estimated Power Supply Charges under that tariff.      Those charges are designed to

26        reflect the actual incremental cost of the power purchased to serve AEEDS customers.

                                                                                 TESTIMONY OF
                                                   6                             S. K. MITCHELL
                                                                                 CASE U-15660
 1        Those charges include both kWh and kilovar charges.

 2   Q. Please explain Exhibit A-2, Schedule 1.

 3   A.   Exhibit A-2, Schedule 1 sets forth by month, Alpena’s estimated 2008 power supply cost

 4        under recovery. Actual power supply costs and revenues are shown for January through

 5        August 2008, along with estimates for the remainder of the year. Alpena’s estimated

 6        2008 under recovery, including interest, is $326,772.

 7   Q. Please explain Exhibit A-3.

 8   A.   Exhibit A-3 are Tariff Sheet changes necessary to incorporate the proposed PSCR

 9        Factor into Alpena’s Tariffs in order to implement the PSCR Plan for the twelve billing

10        months ending December 31, 2009.            This is in accordance with the procedures

11        authorized in Case No. U-7557.

12   Q. Do you plan to change the power supply base costs of 50.41 mills per kWh presently

13        included in Alpena's tariffs?

14   A.   No. In Alpena’s most recent general rate case (Case No. U-15250) the Commission

15        approved a change in the power supply base from 35.85 mills to 50.41 mills per kWh,

16        effective June 13, 2007. Alpena believes that a change in the base rate at this time is

17        not warranted.

18   Q.   Does this complete your testimony?

19   A.   Yes, it does.




                                                                                TESTIMONY OF
                                                  7                             S. K. MITCHELL
                                                                                CASE U-15660
             ALPENA POWER COMPANY
                CASE NO. U-15660



                    EXHIBIT A-1

                       INDEX

SCHEDULE 1   Determination of Proposed Power Supply Cost Recovery
             Factor - January 1, 2009 through December 31, 2009

SCHEDULE 2   Monthly Summary of Forecasted Power Supply Costs

SCHEDULE 3   2009 System Power Forecast

SCHEDULE 4   Consumers Energy

SCHEDULE 5   Other Sources

SCHEDULE 6   Non PSCR Sales
                                                                  Case No. U-15660
                                                                  Exhibit A-1
                                                                  Schedule 1
                                                                  Page 1 of 2
                                                                  Witness: Mitchell
                              ALPENA POWER COMPANY

                        DETERMINATION OF PROPOSED
                    POWER SUPPLY COST RECOVERY FACTOR
                  JANUARY 1, 2009 THROUGH DECEMBER 31, 2009


 LINE                                                             TWELVE MONTH
NUMBER             DESCRIPTION                                       TOTAL

         PURCHASED POWER COSTS:

  1      Consumers Energy Company                                 $     20,519,483
  2      Other Sources                                            $        489,006
  3      Non-PSCR (Sales)                                         $     (3,825,215)

  4      TOTAL Purchased Power Costs                              $     17,183,274


         SYSTEM ENERGY REQUIREMENTS:

  5      Consumers Energy Company                                       332,609,000 kWh
  6      Other Sources                                                    6,430,000 kWh
  7      Non-PSCR (Sales)                                               -62,212,000 kWh

  8      TOTAL Energy Requirements                                      276,827,000 kWh


  9      Average Cost of Power in Dollars per kWh                          0.062072
         (Line 4 / Line 8)

  10     Average Cost of Power in Mills per kWh                               62.07
  11     Base Cost of Power in Mills per kWh                                  50.41

  12     Difference from Base Cost in Mills per kWh                           11.66

  13     Difference Adjusted for Losses      ( 11.66 x 1.0625 )               12.39
  14     2008 Under Recovery Factor          (See Exhibit A-2)                 1.18

  15     PSCR Factor in Mills per kWh                                         13.57
                                                                           Case No. U-15660
                                                                           Exhibit A-1
                                                                           Schedule 1
                                                                           Page 2 of 2
                                                                           Witness: Mitchell

                                    ALPENA POWER COMPANY

                      PURCHASED POWER SUPPLY COST RECOVERY FACTOR
                                         BY MONTH
                           JANUARY 2009 THROUGH DECEMBER 2009

                            Total       Cost       Base                                         PSCR
         Purchased         System        in       Cost In                    Loss              Factor
 Month   Power Cost         KWH         Mills      Mills     Diff      x    Factor    =        In Mills

JAN         2,194,298      24,244,000     90.51      50.41    40.10    x     1.0625   =           42.61

FEB         1,321,608      21,056,250     62.77      50.41    12.36    x     1.0625   =           13.13

MAR         1,362,562      23,500,000     57.98      50.41      7.57   x     1.0625   =             8.04

APR         1,204,597      20,605,000     58.46      50.41      8.05   x     1.0625   =             8.55

MAY         1,274,649      22,039,250     57.84      50.41      7.43   x     1.0625   =             7.89

JUN         1,386,747      22,704,000     61.08      50.41    10.67    x     1.0625   =           11.34

JUL         1,509,787      24,988,000     60.42      50.41    10.01    x     1.0625   =           10.64

AUG         1,480,839      24,828,750     59.64      50.41      9.23   x     1.0625   =             9.81

SEP         1,375,446      23,394,000     58.79      50.41      8.38   x     1.0625   =             8.90

OCT         1,303,784      22,438,250     58.11      50.41      7.70   x     1.0625   =             8.18

NOV         1,334,096      22,412,500     59.52      50.41      9.11   x     1.0625   =             9.68

DEC         1,434,861      24,617,000     58.29      50.41      7.88   x     1.0625   =             8.37


TOTAL      17,183,274     276,827,000     62.07      50.41    11.66    x     1.0625   =           12.39
                                                     Case No. U-15660
                                                     Exhibit A-1
                                                     Schedule 2
                                                     Page 1 of 1
                                                     Witness: Mitchell

                       ALPENA POWER COMPANY

                   MONTHLY SUMMARY OF
              FORECASTED POWER SUPPLY COSTS
           TWELVE MONTHS ENDING DECEMBER 31, 2009

                        ESTIMATED COSTS

        Consumers                      Non-PSCR
Month    Energy           Other         (Sales)            Total

JAN        2,302,780          40,088      -148,570           2,194,298
FEB        1,316,440          92,588       -87,420           1,321,608
MAR        1,591,426          40,088      -268,952           1,362,562
APR        1,452,481          40,088      -287,972           1,204,597
MAY        1,594,881          15,788      -336,020           1,274,649
JUN        1,771,085          67,113      -451,451           1,386,747
JUL        1,908,543          68,438      -467,194           1,509,787
AUG        1,895,686          58,438      -473,285           1,480,839
SEP        1,747,882          14,463      -386,899           1,375,446
OCT        1,655,819          13,138      -365,173           1,303,784
NOV        1,604,844          13,138      -283,886           1,334,096
DEC        1,677,616          25,638      -268,393           1,434,861

TOTAL     20,519,483         489,006    -3,825,215         17,183,274


                  ESTIMATED COST IN MILLS/KWH

        Consumers                      Non-PSCR
Month    Energy           Other         (Sales)            Total

JAN       88.04           52.40         -57.14             90.51
FEB       62.49           52.46         -50.68             62.77
MAR       58.14           52.40         -59.77             57.98
APR       58.61           52.40         -59.99             58.46
MAY       58.73           59.58         -64.31             57.84
JUN       61.01           253.26        -70.54             61.08
JUL       60.95           258.26        -73.00             60.42
AUG       60.90           220.52        -74.24             59.64
SEP       59.01           54.58         -61.41             58.79
OCT       57.72           49.58         -57.73             58.11
NOV       58.68           49.58         -56.22             59.52
DEC       57.96           49.78         -57.10             58.29

TOTAL     61.69           76.05         -80.53             62.07
                                   Case No. U-15660
                                   Exhibit A-1
                                   Schedule 3
                                   Page 1 of 2
                                   Witness: Mitchell

           ALPENA POWER COMPANY
        2009 SYSTEM POWER FORECAST
             (IN MEGAWATT HOURS)

            SOURCES OF POWER

        Consumers                        Total
Month    Energy        Other            System

JAN          26,157          765               26,922
FEB          21,068        1,765               22,833
MAR          27,370          765               28,135
APR          24,784          765               25,549
MAY          27,156          265               27,421
JUN          29,031          265               29,296
JUL          31,315          265               31,580
AUG          31,130          265               31,395
SEP          29,618          265               29,883
OCT          28,688          265               28,953
NOV          27,349          265               27,614
DEC          28,943          515               29,458

TOTAL       332,609        6,430             339,039
                                                                Case No. U-15660
                                                                Exhibit A-1
                                                                Schedule 3
                                                                Page 2 of 2
                                                                Witness: Mitchell

                         ALPENA POWER COMPANY
                      2009 SYSTEM POWER FORECAST
                           (IN MEGAWATT HOURS)

                                   USES OF POWER

                      General         Standard      Large        Protective         Street
Month   Residential   Service          Power        Power          Lights           Lights

JAN           8,950         2,650          4,000        2,800               85               8
FEB           7,550         2,425          3,900        2,600               85               8
MAR           7,700         2,475          3,975        2,600               85               8
APR           6,575         2,275          3,850        2,700               85               8
MAY           6,575         2,325          3,950        2,850               85               8
JUN           6,675         2,375          4,225        3,000               85               8
JUL           7,675         2,625          4,400        3,150               85               8
AUG           7,575         2,575          4,425        3,250               85               8
SEP           6,725         2,375          4,125        3,100               85               8
OCT           7,100         2,375          4,200        2,850               85               8
NOV           7,600         2,325          4,200        2,850               85               9
DEC           8,800         2,700          4,250        2,750               85               9

             89,500       29,500         49,500        34,500          1,020                 98

                                     Alt Energy    Special                        Total
Month                 Industrial     Econ Devel    Contract        Losses        System

JAN                         4,325          1,100        1,500          1,504          26,922
FEB                         3,250          1,000          725          1,290          22,833
MAR                         5,275          1,100        3,400          1,517          28,135
APR                         3,900          1,050        3,750          1,356          25,549
MAY                         4,950          1,100        4,125          1,453          27,421
JUN                         5,000          1,050        5,350          1,528          29,296
JUL                         5,575          1,100        5,300          1,662          31,580
AUG                         5,450          1,100        5,275          1,652          31,395
SEP                         5,600          1,050        5,250          1,565          29,883
OCT                         4,500          1,100        5,225          1,510          28,953
NOV                         4,025          1,050        4,000          1,470          27,614
DEC                         4,575          1,100        3,600          1,589          29,458

Total                     56,425         12,900        47,500         18,096         339,039
                                                                        Case No. U-15660
                                                                        Exhibit A-1
                                                                        Schedule 4
                                                                        Page 1 of 13
                                                                        Witness: Mitchell
                                     ALPENA POWER COMPANY

                                      CONSUMERS ENERGY
                                        2008 SUMMARY

        Total kWh                          332,609,000 kWh x   0.98           325,956,820 kWh

        Firm Power:
         Capacity Charges
           First 20,000                       240,000 kW @     21.00            5,040,000
           Excess                             180,000 kW @     24.78            4,460,400
            Total Capacity                    420,000 kW @     22.62            9,500,400

         Energy Charges:
93.3%     Used Energy                      286,037,200 kWh @   0.0253           7,224,846
 6.7%     Non-Used Energy                   20,562,800 kWh @   0.0010              20,563
           Total Energy                    306,600,000 kWh @   0.0236           7,245,409

             Total Firm Power              286,037,200 kWh @   0.0585          16,745,809

        Supplemental Power:
         Capacity Charges                   39,919,620 kWh @   0.0147             586,817
         Energy Charges                     39,919,620 kWh @   0.0594           2,371,381
          Total Supplemental                39,919,620 kWh @   0.0741           2,958,198

        KVAR Charge                            66,000 kVAR @   0.2496              16,476

        Capacity Charge Settlement                                                799,000

        Total Bill                         332,609,000 kWh @   0.0617          20,519,483
                                                                       Case No. U-15660
                                                                       Exhibit A-1
                                                                       Schedule 4
                                                                       Page 2 of 13
                                                                       Witness: Mitchell
                                     ALPENA POWER COMPANY

                                      CONSUMERS ENERGY
                                          JANUARY

        Total kWh                          26,157,000 kWh x   0.98            25,633,860 kWh

        Firm Power:
         Capacity Charges
           First 20,000                       20,000 kW @     21.00              420,000
           Excess                             15,000 kW @     24.78              371,700
            Total Capacity                    35,000 kW @     22.62              791,700

         Energy Charges:
92.0%     Used Energy                      23,956,800 kWh @   0.0247             591,733
 8.0%     Non-Used Energy                   2,083,200 kWh @   0.0010               2,083
           Total Energy                    26,040,000 kWh @   0.0228             593,816

             Total Firm Power              23,956,800 kWh @   0.0578           1,385,516

        Supplemental Power:
         Capacity Charges                   1,677,060 kWh @   0.0147              24,653
         Energy Charges                     1,677,060 kWh @   0.0550              92,238
          Total Supplemental                1,677,060 kWh @   0.0697             116,891

        KVAR Charge                            5,500 kVAR @   0.2496               1,373

        Capacity Charge Settlement                                               799,000

        Total Bill                         26,157,000 kWh @   0.0880           2,302,780
                                                                  Case No. U-15660
                                                                  Exhibit A-1
                                                                  Schedule 4
                                                                  Page 3 of 13
                                                                  Witness: Mitchell
                                ALPENA POWER COMPANY

                                 CONSUMERS ENERGY
                                     FEBRUARY

        Total kWh                     21,068,000 kWh x   0.98            20,646,640 kWh

        Firm Power:
         Capacity Charges
           First 20,000                  20,000 kW @     21.00              420,000
           Excess                        15,000 kW @     24.78              371,700
            Total Capacity               35,000 kW @     22.62              791,700

         Energy Charges:
87.0%     Used Energy                 20,462,400 kWh @   0.0248             507,468
13.0%     Non-Used Energy              3,057,600 kWh @   0.0010               3,058
           Total Energy               23,520,000 kWh @   0.0217             510,526

             Total Firm Power         20,462,400 kWh @   0.0636           1,302,226

        Supplemental Power:
         Capacity Charges               184,240 kWh @    0.0147               2,708
         Energy Charges                 184,240 kWh @    0.0550              10,133
          Total Supplemental            184,240 kWh @    0.0697              12,841

        KVAR Charge                       5,500 kVAR @   0.2496               1,373

        Total Bill                    21,068,000 kWh @   0.0625           1,316,440
                                                                  Case No. U-15660
                                                                  Exhibit A-1
                                                                  Schedule 4
                                                                  Page 4 of 13
                                                                  Witness: Mitchell
                                ALPENA POWER COMPANY

                                 CONSUMERS ENERGY
                                      MARCH

        Total kWh                     27,370,000 kWh x   0.98            26,822,600 kWh

        Firm Power:
         Capacity Charges
           First 20,000                  20,000 kW @     21.00              420,000
           Excess                        15,000 kW @     24.78              371,700
            Total Capacity               35,000 kW @     22.62              791,700

         Energy Charges:
92.0%     Used Energy                 23,956,800 kWh @   0.0249             596,524
 8.0%     Non-Used Energy              2,083,200 kWh @   0.0010               2,083
           Total Energy               26,040,000 kWh @   0.0230             598,607

             Total Firm Power         23,956,800 kWh @   0.0580           1,390,307

        Supplemental Power:
         Capacity Charges              2,865,800 kWh @   0.0147              42,127
         Energy Charges                2,865,800 kWh @   0.0550             157,619
          Total Supplemental           2,865,800 kWh @   0.0697             199,746

        KVAR Charge                       5,500 kVAR @   0.2496               1,373

        Total Bill                    27,370,000 kWh @   0.0581           1,591,426
                                                                  Case No. U-15660
                                                                  Exhibit A-1
                                                                  Schedule 4
                                                                  Page 5 of 13
                                                                  Witness: Mitchell
                                ALPENA POWER COMPANY

                                 CONSUMERS ENERGY
                                      APRIL

        Total kWh                     24,784,000 kWh x   0.98            24,288,320 kWh

        Firm Power:
         Capacity Charges
           First 20,000                  20,000 kW @     21.00              420,000
           Excess                        15,000 kW @     24.78              371,700
            Total Capacity               35,000 kW @     22.62              791,700

         Energy Charges:
92.0%     Used Energy                 23,165,600 kWh @   0.0250             579,140
 8.0%     Non-Used Energy              2,014,400 kWh @   0.0010               2,014
           Total Energy               25,180,000 kWh @   0.0231             581,154

             Total Firm Power         23,165,600 kWh @   0.0593           1,372,854

        Supplemental Power:
         Capacity Charges              1,122,720 kWh @   0.0147              16,504
         Energy Charges                1,122,720 kWh @   0.0550              61,750
          Total Supplemental           1,122,720 kWh @   0.0697              78,254

        KVAR Charge                       5,500 kVAR @   0.2496               1,373

        Total Bill                    24,784,000 kWh @   0.0586           1,452,481
                                                                  Case No. U-15660
                                                                  Exhibit A-1
                                                                  Schedule 4
                                                                  Page 6 of 13
                                                                  Witness: Mitchell
                                ALPENA POWER COMPANY

                                 CONSUMERS ENERGY
                                       MAY

        Total kWh                     27,156,000 kWh x   0.98            26,612,880 kWh

        Firm Power:
         Capacity Charges
           First 20,000                  20,000 kW @     21.00              420,000
           Excess                        15,000 kW @     24.78              371,700
            Total Capacity               35,000 kW @     22.62              791,700

         Energy Charges:
92.0%     Used Energy                 23,956,800 kWh @   0.0251             601,316
 8.0%     Non-Used Energy              2,083,200 kWh @   0.0010               2,083
           Total Energy               26,040,000 kWh @   0.0232             603,399

             Total Firm Power         23,956,800 kWh @   0.0582           1,395,099

        Supplemental Power:
         Capacity Charges              2,656,080 kWh @   0.0147              39,044
         Energy Charges                2,656,080 kWh @   0.0600             159,365
          Total Supplemental           2,656,080 kWh @   0.0747             198,409

        KVAR Charge                       5,500 kVAR @   0.2496               1,373

        Total Bill                    27,156,000 kWh @   0.0587           1,594,881
                                                                  Case No. U-15660
                                                                  Exhibit A-1
                                                                  Schedule 4
                                                                  Page 7 of 13
                                                                  Witness: Mitchell
                                ALPENA POWER COMPANY

                                 CONSUMERS ENERGY
                                       JUNE

        Total kWh                     29,031,000 kWh x   0.98            28,450,380 kWh

        Firm Power:
         Capacity Charges
           First 20,000                  20,000 kW @     21.00              420,000
           Excess                        15,000 kW @     24.78              371,700
            Total Capacity               35,000 kW @     22.62              791,700

         Energy Charges:
94.0%     Used Energy                 23,688,000 kWh @   0.0252             596,938
 6.0%     Non-Used Energy              1,512,000 kWh @   0.0010               1,512
           Total Energy               25,200,000 kWh @   0.0237             598,450

             Total Firm Power         23,688,000 kWh @   0.0587           1,390,150

        Supplemental Power:
         Capacity Charges              4,762,380 kWh @   0.0147              70,007
         Energy Charges                4,762,380 kWh @   0.0650             309,555
          Total Supplemental           4,762,380 kWh @   0.0797             379,562

        KVAR Charge                       5,500 kVAR @   0.2496               1,373

        Total Bill                    29,031,000 kWh @   0.0610           1,771,085
                                                                  Case No. U-15660
                                                                  Exhibit A-1
                                                                  Schedule 4
                                                                  Page 8 of 13
                                                                  Witness: Mitchell
                                ALPENA POWER COMPANY

                                 CONSUMERS ENERGY
                                       JULY

        Total kWh                     31,315,000 kWh x   0.98            30,688,700 kWh

        Firm Power:
         Capacity Charges
           First 20,000                  20,000 kW @     21.00              420,000
           Excess                        15,000 kW @     24.78              371,700
            Total Capacity               35,000 kW @     22.62              791,700

         Energy Charges:
96.0%     Used Energy                 24,998,400 kWh @   0.0253             632,460
 4.0%     Non-Used Energy              1,041,600 kWh @   0.0010               1,042
           Total Energy               26,040,000 kWh @   0.0243             633,502

             Total Firm Power         24,998,400 kWh @   0.0570           1,425,202

        Supplemental Power:
         Capacity Charges              5,690,300 kWh @   0.0147              83,647
         Energy Charges                5,690,300 kWh @   0.0700             398,321
          Total Supplemental           5,690,300 kWh @   0.0847             481,968

        KVAR Charge                       5,500 kVAR @   0.2496               1,373

        Total Bill                    31,315,000 kWh @   0.0609           1,908,543
                                                                  Case No. U-15660
                                                                  Exhibit A-1
                                                                  Schedule 4
                                                                  Page 9 of 13
                                                                  Witness: Mitchell
                                ALPENA POWER COMPANY

                                 CONSUMERS ENERGY
                                      AUGUST

        Total kWh                     31,130,000 kWh x   0.98            30,507,400 kWh
                                                                                  0
        Firm Power:
         Capacity Charges
           First 20,000                  20,000 kW @     21.00              420,000
           Excess                        15,000 kW @     24.78              371,700
            Total Capacity               35,000 kW @     22.62              791,700

         Energy Charges:
96.0%     Used Energy                 24,998,400 kWh @   0.0254             634,959
 4.0%     Non-Used Energy              1,041,600 kWh @   0.0010               1,042
           Total Energy               26,040,000 kWh @   0.0244             636,001

             Total Firm Power         24,998,400 kWh @   0.0571           1,427,701

        Supplemental Power:
         Capacity Charges              5,509,000 kWh @   0.0147              80,982
         Energy Charges                5,509,000 kWh @   0.0700             385,630
          Total Supplemental           5,509,000 kWh @   0.0847             466,612

        KVAR Charge                       5,500 kVAR @   0.2496               1,373

        Total Bill                    31,130,000 kWh @   0.0609           1,895,686
                                                                  Case No. U-15660
                                                                  Exhibit A-1
                                                                  Schedule 4
                                                                  Page 10 of 13
                                                                  Witness: Mitchell
                                ALPENA POWER COMPANY

                                 CONSUMERS ENERGY
                                    SEPTEMBER

        Total kWh                     29,618,000 kWh x   0.98            29,025,640 kWh

        Firm Power:
         Capacity Charges
           First 20,000                  20,000 kW @     21.00              420,000
           Excess                        15,000 kW @     24.78              371,700
            Total Capacity               35,000 kW @     22.62              791,700

         Energy Charges:
96.0%     Used Energy                 24,192,000 kWh @   0.0255             616,896
 4.0%     Non-Used Energy              1,008,000 kWh @   0.0010               1,008
           Total Energy               25,200,000 kWh @   0.0245             617,904

             Total Firm Power         24,192,000 kWh @   0.0583           1,409,604

        Supplemental Power:
         Capacity Charges              4,833,640 kWh @   0.0147              71,055
         Energy Charges                4,833,640 kWh @   0.0550             265,850
          Total Supplemental           4,833,640 kWh @   0.0697             336,905

        KVAR Charge                       5,500 kVAR @   0.2496               1,373

        Total Bill                    29,618,000 kWh @   0.0590           1,747,882
                                                                  Case No. U-15660
                                                                  Exhibit A-1
                                                                  Schedule 4
                                                                  Page 11 of 13
                                                                  Witness: Mitchell
                                ALPENA POWER COMPANY

                                 CONSUMERS ENERGY
                                     OCTOBER

        Total kWh                     28,688,000 kWh x   0.98            28,114,240 kWh

        Firm Power:
         Capacity Charges
           First 20,000                  20,000 kW @     21.00              420,000
           Excess                        15,000 kW @     24.78              371,700
            Total Capacity               35,000 kW @     22.62              791,700

         Energy Charges:
94.0%     Used Energy                 24,496,400 kWh @   0.0256             627,108
 6.0%     Non-Used Energy              1,563,600 kWh @   0.0010               1,564
           Total Energy               26,060,000 kWh @   0.0241             628,672

             Total Firm Power         24,496,400 kWh @   0.0580           1,420,372

        Supplemental Power:
         Capacity Charges              3,617,840 kWh @   0.0147              53,182
         Energy Charges                3,617,840 kWh @   0.0500             180,892
          Total Supplemental           3,617,840 kWh @   0.0647             234,074

        KVAR Charge                       5,500 kVAR @   0.2496               1,373

        Total Bill                    28,688,000 kWh @   0.0577           1,655,819
                                                                  Case No. U-15660
                                                                  Exhibit A-1
                                                                  Schedule 4
                                                                  Page 12 of 13
                                                                  Witness: Mitchell
                                ALPENA POWER COMPANY

                                 CONSUMERS ENERGY
                                     NOVEMBER

        Total kWh                     27,349,000 kWh x   0.98            26,802,020 kWh

        Firm Power:
         Capacity Charges
           First 20,000                  20,000 kW @     21.00              420,000
           Excess                        15,000 kW @     24.78              371,700
            Total Capacity               35,000 kW @     22.62              791,700

         Energy Charges:
94.0%     Used Energy                 23,688,000 kWh @   0.0257             608,782
 6.0%     Non-Used Energy              1,512,000 kWh @   0.0010               1,512
           Total Energy               25,200,000 kWh @   0.0242             610,294

             Total Firm Power         23,688,000 kWh @   0.0592           1,401,994

        Supplemental Power:
         Capacity Charges              3,114,020 kWh @   0.0147              45,776
         Energy Charges                3,114,020 kWh @   0.0500             155,701
          Total Supplemental           3,114,020 kWh @   0.0647             201,477

        KVAR Charge                       5,500 kVAR @   0.2496               1,373

        Total Bill                    27,349,000 kWh @   0.0587           1,604,844
                                                                  Case No. U-15660
                                                                  Exhibit A-1
                                                                  Schedule 4
                                                                  Page 13 of 13
                                                                  Witness: Mitchell
                                ALPENA POWER COMPANY

                                 CONSUMERS ENERGY
                                     DECEMBER

        Total kWh                     28,943,000 kWh x   0.98            28,364,140 kWh

        Firm Power:
         Capacity Charges
           First 20,000                  20,000 kW @     21.00              420,000
           Excess                        15,000 kW @     24.78              371,700
            Total Capacity               35,000 kW @     22.62              791,700

         Energy Charges:
94.0%     Used Energy                 24,477,600 kWh @   0.0258             631,522
 6.0%     Non-Used Energy              1,562,400 kWh @   0.0010               1,562
           Total Energy               26,040,000 kWh @   0.0243             633,084

             Total Firm Power         24,477,600 kWh @   0.0582           1,424,784

        Supplemental Power:
         Capacity Charges              3,886,540 kWh @   0.0147              57,132
         Energy Charges                3,886,540 kWh @   0.0500             194,327
          Total Supplemental           3,886,540 kWh @   0.0647             251,459

        KVAR Charge                       5,500 kVAR @   0.2496               1,373

        Total Bill                    28,943,000 kWh @   0.0580           1,677,616
                                                                       Case No. U-15660
                                                                       Exhibit A-1
                                                                       Schedule 5
                                                                       Page 1 of 1
                                                                       Witness: Mitchell

                            ALPENA POWER COMPANY

                                  OTHER SOURCES

  2008                    Effective                       Call              Total
  Month   KWH         x     Rate      =   Amount     +   Option    =       Amount

JAN         765,000         0.05240         40,088             0                40,088
FEB       1,765,000         0.05246         92,588             0                92,588
MAR         765,000         0.05240         40,088             0                40,088
APR         765,000         0.05240         40,088             0                40,088
MAY         265,000         0.05958         15,788             0                15,788
JUN         265,000         0.06458         17,113        50,000                67,113
JUL         265,000         0.06958         18,438        50,000                68,438
AUG         265,000         0.06958         18,438        40,000                58,438
SEP         265,000         0.05458         14,463             0                14,463
OCT         265,000         0.04958         13,138             0                13,138
NOV         265,000         0.04958         13,138             0                13,138
DEC         515,000         0.04978         25,638             0                25,638

TOTAL     6,430,000         0.05428        349,006       140,000               489,006
                                                                        Case No. U-15660
                                                                        Exhibit A-1
                                                                        Schedule 6
                                                                        Page 1 of 1
                                                                        Witness: Mitchell

                             ALPENA POWER COMPANY

                                      NON PSCR
                                        SALES
 2009                                       KWH             KVAR
 Month   KWH          x   Rate       =     Charge       +   Charge       =       Amount

JAN       2,678,000        0.05537           148,269             301                  148,570
FEB       1,776,750        0.04909            87,223             197                   87,420
MAR       4,635,000        0.05791           268,397             555                  268,952
APR       4,944,000        0.05813           287,370             602                  287,972
MAY       5,381,750        0.06232           335,368             652                  336,020
JUN       6,592,000        0.06836           450,635             816                  451,451
JUL       6,592,000        0.07075           466,384             810                  467,194
AUG       6,566,250        0.07196           472,479             806                  473,285
SEP       6,489,000        0.05950           386,096             803                  386,899
OCT       6,514,750        0.05593           364,373             800                  365,173
NOV       5,201,500        0.05446           283,250             636                  283,886
DEC       4,841,000        0.05532           267,811             582                  268,393

TOTAL    62,212,000        0.06149          3,817,655           7,560               3,825,215
             ALPENA POWER COMPANY
                CASE NO. U-15660



                    EXHIBIT A-2

                       INDEX

SCHEDULE 1   2008 Plan Year Over (Under) Recovery Estimate and
             Factor

SCHEDULE 2   Monthly Summary of Forecasted Power Supply Costs

SCHEDULE 3   Consumers Energy

SCHEDULE 4   Other Sources

SCHEDULE 5   Non PSCR Sales
                                                                                                                                                                        U-15660
                                                                                                                                                                        Exhibit A-2
                                                                                                                                                                        Schedule 1
                                                                                                                                                                        Page 1 of 1
                                                                                                                                                                        Witness: Mitchell

                                                                                      ALPENA POWER COMPANY

                                                                2008 PLAN YEAR OVER (UNDER) RECOVERY ESTIMATE AND FACTOR


                                      Actual       Actual         Actual        Actual          Actual      Actual      Actual      Actual      Estimate    Estimate      Estimate          Estimate
                                      Jan-08       Feb-08         Mar-08        Apr-08          May-08      Jun-08      Jul-08      Aug-08      Sep-08       Oct-08       Nov-08            Dec-08

Base Including Losses                                                                                                                             0.05356     0.05356       0.05356            0.05356
PSCR Factor                                                                                                                                       0.00474     0.00474       0.00474            0.00775 *
 Total PSCR Revenue/kWh                0.00000       0.00000       0.00000       0.00000         0.00000     0.00000     0.00000     0.00000      0.05830     0.05830       0.05830            0.06131

Sales Subject to PSCR               23,436,914 20,550,072 22,482,414 19,513,392 20,380,540 20,273,427 22,469,028 22,154,713 21,718,000 22,044,000 22,093,000                                23,043,000

PSCR Revenue                         1,366,372     1,192,993      1,294,088    1,127,896        1,188,185   1,181,941   1,309,944   1,291,620   1,266,159   1,285,165     1,288,022          1,412,766

Applicable Power Costs               1,363,670     1,270,956      1,254,463    1,153,593        1,248,875   1,298,402   1,567,111   1,349,940   1,339,668   1,324,236     1,387,036          1,385,602

Monthly Over (Under) Recovery             2,702       -77,963       39,625        -25,697         -60,690    -116,461    -257,167     -58,321     -73,509     -39,071       -99,014             27,164

Prior Year Over (Under) Recovery       398,359

YTD Over (Under) Recovery              401,061       323,099       362,724       337,027         276,337     159,876      -97,291    -155,612    -229,120    -268,191      -367,206           -340,041


Monthly Interest                          3,664         3,319         3,143         3,207          2,811       1,999         287        -527         -802      -1,036         -1,324             -1,473

YTD Interest                              3,664         6,983       10,126         13,334         16,145      18,144      18,431      17,904       17,102      16,066        14,742             13,269

Estimated 2008 Over (Under) Recovery & Interest                                                                                                                                               -326,772

Estimated 2009 kWh PSCR Sales                                                                                                                                                           276,827,000

2008 Under Recovery Factor (Mills per kWh)                                                                                                                                                         1.18
 (To be applied in 2009)

                                   * This is a blend of the billed and unbilled PSCR factors.
                                                     U-15660
                                                     Exhibit A-2
                                                     Schedule 2
                                                     Page 1 of 1
                                                     Witness: Mitchell

                       ALPENA POWER COMPANY

                    MONTHLY SUMMARY OF
               FORECASTED POWER SUPPLY COSTS
              SEPTEMBER 2008 THRU DECEMBER 2008

                        ESTIMATED COSTS

        Consumers                     Non-PSCR
Month    Energy           Other        (Sales)              Total

SEP        1,621,950         14,463       -296,745           1,339,668
OCT        1,591,363         13,138       -280,265           1,324,236
NOV        1,666,413         13,138       -292,515           1,387,036
DEC        1,621,924         25,638       -261,960           1,385,602

TOTAL      6,501,650         66,377    -1,131,485            5,436,542
                                                                  U-15660
                                                                  Exhibit A-2
                                                                  Schedule 3
                                                                  Page 1 of 4
                                                                  Witness: Mitchell
                                ALPENA POWER COMPANY

                                 CONSUMERS ENERGY
                                    September-08

        Total kWh                     27,512,226 kWh x   0.98             26,961,981 kWh

        Firm Power:
         Capacity Charges
           First 20,000                  20,000 kW @     21.00               420,000
           Excess                        15,000 kW @     24.78               371,700
            Total Capacity               35,000 kW @     22.62               791,700

         Energy Charges:
91.5%     Used Energy                 23,058,000 kWh @   0.0241              555,698
 8.5%     Non-Used Energy              2,142,000 kWh @   0.0005                1,071
           Total Energy               25,200,000 kWh @   0.0221              556,769

             Total Firm Power         23,058,000 kWh @   0.0585            1,348,469

        Supplemental Power:
         Capacity Charges              3,903,981 kWh @   0.0147               57,389
         Energy Charges                3,903,981 kWh @   0.0550              214,719
          Total Supplemental           3,903,981 kWh @   0.0697              272,108

        KVAR Charge                       5,500 kVAR @   0.2496                 1,373

        Total Bill                    27,512,226 kWh @   0.0590            1,621,950
                                                                  U-15660
                                                                  Exhibit A-2
                                                                  Schedule 3
                                                                  Page 2 of 4
                                                                  Witness: Mitchell
                                ALPENA POWER COMPANY

                                 CONSUMERS ENERGY
                                     October-08

        Total kWh                     27,858,601 kWh x   0.98             27,301,429 kWh

        Firm Power:
         Capacity Charges
           First 20,000                  20,000 kW @     21.00               420,000
           Excess                        15,000 kW @     24.78               371,700
            Total Capacity               35,000 kW @     22.62               791,700

         Energy Charges:
92.0%     Used Energy                 23,989,000 kWh @   0.0243              582,933
 8.0%     Non-Used Energy              2,086,000 kWh @   0.0005                1,043
           Total Energy               26,075,000 kWh @   0.0224              583,976

             Total Firm Power         23,989,000 kWh @   0.0573            1,375,676

        Supplemental Power:
         Capacity Charges              3,312,429 kWh @   0.0147               48,693
         Energy Charges                3,312,429 kWh @   0.0500              165,621
          Total Supplemental           3,312,429 kWh @   0.0647              214,314

        KVAR Charge                       5,500 kVAR @   0.2496                 1,373

        Total Bill                    27,858,601 kWh @   0.0571            1,591,363
                                                                  U-15660
                                                                  Exhibit A-2
                                                                  Schedule 3
                                                                  Page 3 of 4
                                                                  Witness: Mitchell
                                ALPENA POWER COMPANY

                                 CONSUMERS ENERGY
                                    November-08

        Total kWh                     28,169,007 kWh x   0.98             27,605,627 kWh

        Firm Power:
         Capacity Charges
           First 20,000                  20,000 kW @     21.00               420,000
           Excess                        15,000 kW @     24.78               371,700
            Total Capacity               35,000 kW @     22.62               791,700

         Energy Charges:
90.0%     Used Energy                 22,680,000 kWh @   0.0244              553,392
10.0%     Non-Used Energy              2,520,000 kWh @   0.0005                1,260
           Total Energy               25,200,000 kWh @   0.0220              554,652

             Total Firm Power         22,680,000 kWh @   0.0594            1,346,352

        Supplemental Power:
         Capacity Charges              4,925,627 kWh @   0.0147               72,407
         Energy Charges                4,925,627 kWh @   0.0500              246,281
          Total Supplemental           4,925,627 kWh @   0.0647              318,688

        KVAR Charge                       5,500 kVAR @   0.2496                 1,373

        Total Bill                    28,169,007 kWh @   0.0592            1,666,413
                                                                  U-15660
                                                                  Exhibit A-2
                                                                  Schedule 3
                                                                  Page 4 of 4
                                                                  Witness: Mitchell
                                ALPENA POWER COMPANY

                                 CONSUMERS ENERGY
                                    December-08

        Total kWh                     28,411,695 kWh x   0.98             27,843,461 kWh

        Firm Power:
         Capacity Charges
           First 20,000                  20,000 kW @     21.00               420,000
           Excess                        15,000 kW @     24.78               371,700
            Total Capacity               35,000 kW @     22.62               791,700

         Energy Charges:
93.0%     Used Energy                 24,217,200 kWh @   0.0245              593,321
 7.0%     Non-Used Energy              1,822,800 kWh @   0.0005                  911
           Total Energy               26,040,000 kWh @   0.0228              594,232

             Total Firm Power         24,217,200 kWh @   0.0572            1,385,932

        Supplemental Power:
         Capacity Charges              3,626,261 kWh @   0.0147               53,306
         Energy Charges                3,626,261 kWh @   0.0500              181,313
          Total Supplemental           3,626,261 kWh @   0.0647              234,619

        KVAR Charge                       5,500 kVAR @   0.2496                 1,373

        Total Bill                    28,411,695 kWh @   0.0571            1,621,924
                                           U-15660
                                           Exhibit A-2
                                           Schedule 4
                                           Page 1 of 1
                                           Witness: Mitchell

            ALPENA POWER COMPANY

                OTHER SOURCES

  2008                    Effective
  Month   KWH         x     Rate       =        Amount

SEP        265,000           0.05458                 14,463
OCT        265,000           0.04958                 13,138
NOV        265,000           0.04958                 13,138
DEC        515,000           0.04978                 25,638

TOTAL     1,310,000          0.05067                 66,377
                                                                        U-15660
                                                                        Exhibit A-2
                                                                        Schedule 5
                                                                        Page 1 of 1
                                                                        Witness: Mitchell

                                 ALPENA POWER COMPANY

                                       NON PSCR
                                        SALES
 2008                                       KWH             KVAR
 Month   KWH          x   Rate       =     Charge       +   Charge       =        Amount

SEP       4,670,000        0.06341           296,134             611                   296,745
OCT       4,670,000        0.05988           279,654             611                   280,265
NOV       4,920,000        0.05933           291,904             611                   292,515
DEC       4,920,000        0.05313           261,416             544                   261,960

TOTAL    19,180,000        0.05899          1,129,108           2,377                 1,131,485
             ALPENA POWER COMPANY
                CASE NO. U-15660




                    EXHIBIT A-3

                       INDEX

SCHEDULE 1   Proposed Tariff Sheet Incorporating PSCR Plan
             for the Twelve Months Ending December 31, 2009
 
M.P.S.C. No. 9
Alpena Power Company                                                               Revised Sheet No. D-3.00
(To revise Power Supply Cost Recovery Factors)                  Cancels            Revised Sheet No. D-3.00

                             POWER SUPPLY COST RECOVERY CLAUSE
                                 (Continued from Sheet No. D.2.00)

                            POWER SUPPLY COST RECOVERY FACTORS

                                                 Maximum
                                                 Authorized          Actual
                                                   2009
                                                   PSCR              Factor
                                Billing            Factor            Billed
                                Month             ($/kWh)           ($/kWh)
                              Jan-2009            0.01357
                              Feb-2009            0.01357
                              Mar-2009            0.01357
                              Apr-2009            0.01357
                              May-2009            0.01357
                              Jun-2009            0.01357
                               Jul-2009           0.01357
                              Aug-2009            0.01357
                              Sep-2009            0.01357
                              Oct-2009            0.01357
                              Nov-2009            0.01357
                              Dec-2009            0.01357




The Company will file a revised Sheet No. D-3.00 monthly to reflect the actual factor to be billed the
following month.



                                                                              (continued on Sheet No. D-4.00)
Issued               ,   , by                                         Effective for bills rendered on
Ann K. Burton, President                                              and after January 1, 2009
Alpena, MI 49707
                                                                      Issued under authority of the
                                                                      Michigan Public Service Commission
                                                                      dated         ,    ,
                                                                      in Case No. U-15660
             ALPENA POWER COMPANY
                CASE NO. U-15660


                    EXHIBIT A-4

                       INDEX

SCHEDULE 1   Sources and Costs of Electric Power Supply
             Twelve Months Ending December 31, 2009
                                                                    Case No. U-15660
                                                                    Exhibit A-4
                                                                    Page 1 of 1
                                                                    Witness: Bedford
                          ALPENA POWER COMPANY
                    Sources and Costs of Electric Power Supply
                    Twelve Months Ending December 31, 2009
1.   Present Sources of Electric Power Supply

            (a) Consumers Energy Company

                    (1) Firm Power

                    (2) Non-Firm Power

            (b) Lafarge Corporation

                    (1) Excess Energy

                    (2) Call Option

            (c) Decorative Panels International (Excess Energy)

2.   Expected Sources of Electric Power Supply

            (a) Consumers Energy Company

                    (1) Firm Power

                    (2) Non-Firm Power

            (b) Lafarge Corporation

                    (1) Excess Energy

                    (2) Call Option

            (c) Decorative Panels International (Excess Energy)

3.   Cost of Power Supply Anticipated Over 12 Months Ending December 31, 2009

            (a) Consumers Power Company -- Wholesale for Resale Electric Service

                    (1) Present rate: Wholesale for Resale Electric Service Contract

                    (2) Anticipated Changes: Capacity Charge Settlement

            (b) Lafarge Corporation
                    (1) Present Rate: Special Contract

                    (2) Anticipated Changes: None

            (c) Decorative Panels International

                    (1) Present Rate: Special Contract

                    (2) Anticipated Changes: None
             ALPENA POWER COMPANY
                CASE NO. U-15660




                    EXHIBIT A-5

                      INDEX

SCHEDULE 1   Forecasted System Energy Requirements (MWH)
             2009 - 2013
                                                                                                                   Case No. U-15660
                                                                                                                   Exhibit A-5
                                                                                                                   Schedule 1
                                                                                                                   Witness: Bedford


                                                          ALPENA POWER COMPANY

                                        FORECASTED SYSTEM ENERGY REQUIREMENTS (MWH) 2009-2013


                                             2009               2010             2011             2012                    2013

Residential                                          89,500             90,171           90,847           91,528                  92,214

General Service                                      29,500             29,795           30,093           30,394                  30,698

Standard Power                                       49,500             50,119           50,745           51,379                  52,021

Large Power                                          34,500             34,845           35,193           35,545                  35,900

Lights                                                1,118              1,124            1,130            1,136                   1,142

Industrial                                          116,825            116,825          116,825          116,825                 116,825

Losses                                               18,096             18,217           18,339           18,462                  18,587

Less: Special Contract Sales w/Losses               -62,212            -62,212          -62,212          -62,212                 -62,212

  TOTAL PSCR Requirements                           276,827            278,884          280,960          283,057                 285,175


Consumers Energy                                    332,609            334,666          336,742          338,839                 340,957

Miscellaneous                                         6,430              6,430            6,430            6,430                   6,430

Less: Special Contract Sales w/Losses               -62,212            -62,212          -62,212          -62,212                 -62,212

  TOTAL PSCR Sources                                276,827            278,884          280,960          283,057                 285,175


System Demand (MW)                                     62.0               62.6             63.2             63.8                      64.4


Purchased Power Cost                          $17,183,274        $17,484,066      $17,755,131      $17,261,582              $17,529,869


PSCR Costs in Mills/kWh                               62.07              62.69            63.19            60.98                   61.47

PSCR Factor                                           12.39              13.05            13.58            11.23                   11.75

				
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