Analysis of

Exhibit 1 Analysis of Wolverine Transmission System Using the Federal Energy Regulatory Commission 7-Factor Test June 10, 2002 GDS Associates, Inc. Engineers and Consultants Purpose In February 2002, GDS Associates Inc. (“GDS”) was requested by Wolverine Power Supply Cooperative (“Wolverine” or “WPSC”) to evaluate the Wolverine transmission facilities using the Federal Energy Regulatory Commission’s (“Commission”) 7-Factor Test. Since Wolverine is not subject to state commission regulation of its rates, rather than determining a retail/wholesale jurisdictional facilities split, this analysis provides an assessment of whether Wolverine’s integrated transmission voltage facilities actually perform a transmission function or a distribution function according to the Commission’s 7-Factor Test. As part of this assignment, GDS prepared and delivered a summary of the preliminary findings at the Wolverine Power Supply Cooperative annual Power Supply Symposium held in Traverse City, Michigan on March 4, 2002. This report more fully documents the results of GDS’ application of the FERC 7-Factor Test to Wolverine’s transmission facilities. Analysis Method Detailed Information was gathered for this analysis through formal, written requests to Wolverine. In addition, formal interviews and follow-up conversations were conducted with key Wolverine personnel covering various functional areas, including management, rates, planning, and operations. The gathered information included details of: • • • • Background information for Wolverine and its Members Background information on the Michigan Municipal/Cooperative Coordinated Pool (“MCCP”) and its Members WPSC system peak loads WPSC system generation GDS Associates, Inc. Page 1 • • • • • • • • Computer Aided Design format WPSC transmission one-line diagrams Computer Aided Design format WPSC breaker diagrams WPSC interconnection information 2003 summer peak load power flow model Member distribution substation lists Recent WPSC Regulatory filings Consumers Energy 7-Factor testimony MCCP operating characteristics and practice information Based on this information, a detailed concept of all the uses and functions of the WPSC transmission facilities was formed. This functional analysis was followed by a detailed technical analysis of the 2003 summer peak power flow information to determine a typical pattern of peak load use of the WPSC system. Finally, based on the information developed from these analyses each of the Commission’s 7 factors were evaluated. GDS Associates, Inc. Page 2 Description of Wolverine Power Supply Cooperative Wolverine is a Michigan generation and transmission (“G&T”) electric cooperative providing wholesale service under long-term, all requirements contracts to its five member cooperatives: Cherryland Electric Cooperative; Great Lakes Energy Cooperative; Presque Isle Electric & Gas Co-op; Homeworks Tri-County Electric Cooperative; and Wolverine Power Marketing Cooperative. Wolverine is regulated by the Commission and has an approved Open Access Transmission Tariff (“OATT”) on file. Wolverine transmits power on its OATT transmission system and sells this power at wholesale to its member distribution cooperatives. Its four member distribution cooperatives resell this power at retail to end-use customers located within northern and western portions of Michigan’s lower peninsula. The service territories of the four individual distribution cooperatives are clustered and spread out over approximately a 220-mile stretch along the western half of the lower peninsula of Michigan. The territories of three of these cooperatives, Presque Isle, Cherryland and Homeworks TriCounty are each contained in a distinct geographic area of the Wolverine transmission region. The Great Lakes Distribution Cooperative, however, is comprised of distinct areas which are not all contiguous and which span nearly the entire area of the Wolverine transmission system. The individual member distribution cooperative service territories are shown in the Wolverine Power Supply Cooperative map included as Attachment 1. GDS Associates, Inc. Page 3 Wolverine Transmission System Description The following paragraphs provide the “raw material” that was analyzed with respect to the Commission’s 7-Factor Test. Wolverine’s electric power transmission voltage level facilities are comprised of 1,573 miles of 44 kV, 69 kV and 138 kV facilities. 382 miles of these facilities are radial transmission facilities that provide transmission service to distribution substations. For purposes of this 7-Factor analysis, these radial transmission facilities are assumed to have, at the present time, the two characteristics of distribution that are described by the 7-Factor Test indicators two and three (see page 10). On this basis, these radial transmission facilities are assumed, for this analysis, to be used in local distribution. All of the radial facilities operate at 69kV with the exception of two line segments, which operate at 44kV. These radial facilities are shown color-coded on the map in Attachment 2. Unless otherwise noted in the remaining discussion in this report, reference to Wolverine’s “transmission system,” “networked …facilities,” or the ”Wolverine system” means the networked (non-radial) OATT transmission facilities. The Wolverine OATT transmission facilities consist of 26 miles of 44 kV transmission facilities, which are planned for conversion to 69 kV in 2003, 1,082 miles of 69 kV facilities, and 82 miles of 138 kV facilities. The following table summarizes the Wolverine facilities that are booked to transmission accounts. Table 1 Voltage 69 kV/44 kV 138 kV 69 kV Mileage 382 82 1,082 Function Distribution Transmission Transmission GDS Associates, Inc. Page 4 44 kV1 26 Transmission Attachment 3 provides the individual Wolverine line segments that comprise its transmission system. Wolverine’s transmission system integrates Wolverine’s generating resources with its member distribution cooperative loads served from the member distribution cooperative distribution systems. The following table indicates the number of distribution cooperative substations in each area of the Wolverine system. It also indicates the average load served from a distribution substation in each area. The substations comprising this list are shown in detail in Attachment 4 Table 2 Wolverine Power Supply Cooperative Distribution Substation Load Distribution Cooperative Presque Isle Cherryland Homeworks Tri-County Great Lakes North Great Lakes West Great Lakes South Number of Substations 17 15 21 29 8 33 Average Load (MW) 2.6 3.8 2.6 3.3 2.4 3.1 Wolverine owns some transmission facilities that are not directly interconnected with the Wolverine OATT transmission system. Wolverine is a joint owner of 64% interest in the Consumers Energy (“Consumers” or “CE”) Tittabawassee-South transmission line. Also, Wolverine has a 15 MW entitlement to transmission over the entire Consumers Transmission grid as a result of a joint ownership interest in 1 The 44 kV is to be converted to 69 kV by the year 2003. GDS Associates, Inc. Page 5 Consumers’ Campbell Unit No. 3 plant. Neither of these Wolverine transmission entitlements is included in this analysis. Wolverine, along with eight members of Michigan Public Power Agency (MPPA) comprise the Municipal/Cooperative Coordinated Pool (MCCP). The MCCP Agreement between the MPPA and Wolverine establishes the operation of the pool. Four municipal systems in the MCCP are directly interconnected with the Wolverine transmission system. These four are Grand Haven, Lowell, Traverse City and Zeeland. The other four MPPA members are not directly connected to the Wolverine transmission system, but are interconnected with Wolverine through the Consumers transmission system. These municipals are Charlevoix, Harbor Springs, Lansing and Petoskey. Wolverine provides itself and the municipal members of the MCCP with transmission service over its integrated transmission system to integrate MCCP resources with pool loads. Wolverine owns and operates its integrated transmission system and has an OATT filed with the Commission; however, the MCCP does not have a pool-wide OATT. The following table indicates the Wolverine member locations of the direct connections between the four municipals and the Wolverine transmission system. Table 3 Direct Connections Municipal Traverse City Grand Haven Zeeland Lowell Wolverine Member Cherryland Great Lakes South Great Lakes South Great Lakes South and Homeworks Tri-County GDS Associates, Inc. Page 6 The Wolverine transmission system is directly interconnected with the Consumers Energy system at 11 locations. The following table provides the transmission interconnection points. Table 4 Interconnection Points with Consumers Energy IP Airport Livingston Oden Alba Grand Traverse Pere Marquette Redwood Vestaburg Sternberg Blendon Bradley Voltage (kV) 138 138 138 138 138 138 138 138 138 138 138 GDS Associates, Inc. Page 7 MCCP Power Supply Resources The following table summarizes the power supply resources of each MCCP member with direct connection to the WPSC transmission system. Table 5 MCCP Member Wolverine Wolverine Wolverine Wolverine MPPA Members: Petoskey, Charlevoix, Harbor Springs & Traverse City City of Lansing Traverse City City of Zeeland All Resource Gaylord Burnips Vestaburg Hersey Kalkaska MW 75 25 25 70 502 Tower Traverse City Zeeland Off-System plus Supplemental 20 313 24 2 3 Scheduled for commercial operation in November 2002. Scheduled for retirement. GDS Associates, Inc. Page 8 Wolverine OATT Transmission Service There are currently three WPSC OATT customers taking transmission service on the Wolverine transmission system pursuant to five contracts for transmission service. One such OATT customer is Kleber Limited Partnership (“Kleber”). Kleber owns and transmits hydroelectric power from the Tower hydroelectric plant in Wolverine’s Presque Isle area across Wolverine’s transmission system to the City of Lansing just off the extreme south end of the Wolverine transmission system. This transmission service is non-firm Point-to-Point transmission service. The Great Lakes Energy member distribution cooperative takes long-term firm Point-to-Point transmission service under Wolverine’s OATT to transmit power and energy to its customer, Kalium. The Kalium contract expires in August 2002 and, if renewed, will be for Network Integration Transmission Service on the Wolverine system. Great Lakes Energy also takes network service to provide power and energy to another customer, Ice Mountain. Finally, Engage Energy has executed blanket firm and non-firm Point-to-Point transmission service agreements under Wolverine’s OATT. GDS Associates, Inc. Page 9 The Commission’s 7-Factor Test In Order No. 888, the Commission stated its exclusive jurisdiction over the rates, terms, and conditions of unbundled retail transmission in interstate commerce, up to the point of local distribution. With this assertion, the Commission also recognized the need by utilities to know which regulator has jurisdiction over which facilities and services in order to meet state and federal filing requirements. The Commission, therefore, propounded several technical factors for determining what constitutes “facilities used in local distribution.” To this end, the Commission proposed seven indicators of local distribution to be evaluated on a case-by-case basis: (1) Local distribution facilities are normally in close proximity to retail customers. Local distribution facilities are primarily radial in character. Power flows into local distribution systems; it rarely, if ever, flows out. When power enters a local distribution system, it is not reconsigned or transported on to some other market. Power entering a local distribution system is consumed in a comparatively restricted geographical area. Meters are based at the transmission/local distribution interface to measure flows into the local distribution system. Local distribution systems will be of reduced voltage.4 (2) (3) (4) (5) (6) (7) 4 FERC Stats. & Regs. ¶ 31,036 at 31,771 (1996). GDS Associates, Inc. Page 10 The Purpose and Use of the 7-Factor Test The Commission determined that the 7-Factor Test is specifically designed as an aid in determining the line between transmission facilities and distribution facilities for unbundled retail transmission by the public utility that previously provided bundled retail service to the end-user. Thus, the Commission specifically designated the 7-Factor Test for use in such applications as distinguished from unbundled wholesale transmission service. Unbundled wholesale transmission service refers to transmission of electric energy that is being sold for resale, or transmission to retail by intervening utilities. The Commission further explained that “intervening utilities” are utilities between the new retail generation supplier and the public utility that previously provided bundled retail service to the end-user. In these two latter cases (unbundled wholesale transmission and retail transmission by intervening utilities), the Commission’s case law supports a “bright line” with respect to such transmission. This bright line discussed by the Commission is already established for the Wolverine transmission system. Pursuant to Michigan’s retail electric restructuring program, Wolverine members have voluntarily begun offering unbundled services to the largest retail customers. These Wolverine members own and operate the radial distribution systems at 12 kV and 25 kV that provide the distribution service to the enduser retail customers. The Wolverine-owned transmission facilities only provide transmission of electricity that is being sold for resale. The Wolverine transmission system is not and has never been used to provide bundled transmission and power service to retail customers. Wolverine’s bright line, therefore, is the point that GDS Associates, Inc. Page 11 separates Wolverine transmission facilities from the distribution systems of its members and other on-system wholesale customers. 7-Factor Test Analysis Overview The Wolverine member distribution cooperatives provide unbundled retail access pursuant to Michigan’s restructuring program, while at the same time providing bundled retail services over distribution facilities to their distinct end-user customers in their local geographic areas. Each Wolverine member receives its wholesale power supply at its interconnection points with the Wolverine transmission system. Thus, four separate and distinct end-user retail systems operated by Wolverine’s member cooperatives are supplied transmission service over the Wolverine transmission system. In addition to this, four MCCP-member cities provide retail service to end-users within the Wolverine system area. Each of these four cities is directly connected and receives wholesale power from the Wolverine transmission system. Each of these four cities comprises a separate and distinct retail market area. Wolverine pools power from four generating plants previously described that are interconnected to the Wolverine transmission system. In addition, Wolverine members import power through the Wolverine system ties from jointly owned generating units located on the Consumers’ transmission system. Also, several municipal members of the MCCP are joint owners of a 50 MW generating unit at Kalkaska which will begin commercial operation in November 2002. This generating unit is located on the WPSC transmission system. Three of the Kalkaska joint owners are not directly GDS Associates, Inc. Page 12 interconnected to the Wolverine system and receive their Kalkaska entitlements as a Wolverine system export. The off-system MPPA cities are Petoskey, Charlevoix and Harbor Springs. The on-system municipal with Kalkaska entitlement is Traverse City, which is located in the Cherryland area of the Wolverine system. The Wolverine transmission system and each of these wholesale transmission uses of the Wolverine transmission system is depicted and quantified in the figure of Attachment 5 to this report. This Attachment represents a “snapshot” of the projected 2003 summer peak power flows on the WPSC transmission system. This schematic drawing depicts six distinct “bubbles” that represent the principal member cooperative end-use areas served by the Wolverine transmission system. Three of the bubbles are dedicated to the Great Lakes distribution cooperative members’ distinct subareas of end use, which span the full length of the Wolverine transmission system. The remaining three distinct bubbles on this diagram represent the other three distribution cooperative members’ end-use areas – Presque Isle, Cherryland, and Homeworks Tri-County. The schematic also indicates the transmission ties with the Consumers Energy transmission system. The ties located in one end-use area are aggregated together and shown as a single tie between WPSC and CE. This schematic also shows the four on-system municipal members’ end-use areas. In addition, the diagram shows the generation and load in each of the WPSC areas. Finally, all of the transmission facilities interconnecting the various sub-areas on the WPSC system are aggregated together and shown as single interconnecting lines between the appropriate areas and sub-areas of the WPSC system. The numbers on GDS Associates, Inc. Page 13 the diagram represent the MW flows of power to load, power from generation to the system, and transmission system power flows among the WPSC areas and sub-areas and between the sub-areas and CE and the municipal entities. This diagram graphically demonstrates the network transmission functions and uses represented by the various power flows on the Wolverine transmission system. (1) Local distribution facilities are normally in close proximity to retail customers. This factor is intended to test the electrical distance between the ultimate endusers or consumers of power and the various portions of the electrical transmission system. In a radial transmission line, the path of the power flow is well defined and distance traveled is easily and clearly determinable. When power flows through a networked (“looped”) transmission system the power flows over all available paths and a single distance traveled by power ultimately delivered to a single retail customer is, in general, indeterminable. The facts of the Wolverine transmission system are clear. The 44 kV, 69 kV and 128 kV transmission facilities are predominately a network system that span approximately 220 miles. Power flows over this entire looped system to Wolverine wholesale power purchasers. It travels simultaneously over all the parallel paths from Wolverine’s and others’ sources of power to the delivery points to wholesale customers of the power. The distance this power travels is the entire distance of the network system. There are no retail customers served directly by the Wolverine 69 kV and 138 kV transmission facilities. This fact, coupled with the simultaneous use of all the GDS Associates, Inc. Page 14 networked paths of this system that spans large distances shows that none of the Wolverine 44 kV, 69 kV or 138 kV facilities are in close proximity to retail customers. Once power leaves this Wolverine transmission system, it enters lower voltage radial facilities owned by distribution cooperatives or municipal utilities. The flow of power on these facilities can be traced clearly to the retail end-users. The nature and physical configuration of these lower voltage facilities is such that power only flows a few miles before it reaches its retail destination. Generally, design considerations limit the distance that power travels on such facilities to be, most often, less than about 20 miles. These facts support the conclusion that Wolverine’s networked 44 kV, 69 kV, and 138 kV facilities are transmission facilities and not local distribution facilities. (2) Local distribution facilities are primarily radial in nature. Wolverine’s 44 kV, 69 kV and 138 kV transmission facilities are predominately networked facilities and are not radial or radially operated (see Table 1). The exceptions are approximately 382 miles of 44 kV and 69 kV facilities that are short radial segments and that serve stations that transform voltage for ultimate delivery to retail end-users. These radial segments are treated by Wolverine, consistent with the newly established regional practice in Michigan, as distribution function facilities. Wolverine’s member distribution cooperative-owned and the municipal-owned systems are the radial delivery systems that convey the power from the Wolverine facilities to the ultimate retail end-users. These facts support the conclusion that Wolverine’s networked 44 kV, 69 kV, and 138 kV facilities are transmission facilities and not local distribution facilities. GDS Associates, Inc. Page 15 (3) Power flows into distribution facilities, but rarely (if ever) flows out. All looped Wolverine facilities support two-way flow of power. Networked facilities, by nature and design, transport power flexibly and reliably from an everchanging mix of resources. The system is designed to automatically redistribute flows and provide back-up functions when system elements are unavailable. This accommodation of continuously changing power supplies and back-up function requires each element of the networked system to support continuously varying power flow. The flow of power into and out of the Wolverine system can be examined at three different system levels: (1) the points of interconnection to the Consumers Energy system; (2) internal Wolverine system flows at the borders of the members’ end-use areas; and (3) the points of interconnection to the wholesale customers served from Wolverine’s facilities. Wolverine’s interconnection points are sometimes referred to as Points of Delivery (“PODs”) or Points of Receipt (“PORs”). These labels are only useful when isolating and examining certain specific functions of the Wolverine system. Such labels do not adequately convey all of the functions or the nature of the Wolverine facilities. For example, the Wolverine interconnection to CE can be referred to as PODs that convey CE supplemental power purchases from the CE system to the Wolverine system. Or, looking at it from Wolverine’s perspective, the same points can be viewed as Wolverine system PORs for the same power flow. Wolverine, however, can also make opportunistic sales from its on-system resources. For this function, the CE GDS Associates, Inc. Page 16 interconnection points reverse flow and change their labels. For opportunity sales of Wolverine power, the CE interconnection points become PODs from Wolverine to CE. Indeed, several of the WPSC/CE interconnection points from time to time show flows from Wolverine to CE. The figure in Attachment 5 shows power flows at peak load from Wolverine to CE at Airport and Vestaburg. Wolverine representatives report that the Airport flows have been recorded up to about 30 MW into CE, and Vestaburg flows up to about 20 MW. In addition, the flows between Wolverine’s Great Lakes South area and CE show the aggregate of the CE/Wolverine flows at four interconnections. Wolverine reports that the Sternberg interconnection has been observed to flow up to about 10 MW into CE. These flows to CE demonstrate that the Wolverine system provides two-way flow of power. Additionally, the Wolverine facilities provide service to six distinct geographic areas of the four distribution cooperative members. One member, Great Lakes, serves a larger area, which is comprised of three separate end-user areas. These six distinct end-user areas are depicted by the “bubbles” shown in Attachment 5. Each of these bubbles represent a geographic portion of the Wolverine 44 kV, 69 kV and 138 kV network facilities that convey power from sources to wholesale customers and then on to ultimate end-users. Once power enters a bubble, it is approaching the member’s and others’ local end-user facilities that are electrically and geographically in the vicinity of the ultimate end-users. If the Wolverine facilities only supported one-way flow of power, once power entered these distinct end-user areas, it would not leave. The figure shows power flowing into and out of Wolverine’s end-user areas. This graphically GDS Associates, Inc. Page 17 depicts the Wolverine system support for two-way power flow in this peak load modeling scenario. The third level of the Wolverine system that can be examined for power flow characteristics is the level of interconnection to the ultimate end-user systems. This level shows that power flows from Wolverine 44 kV, 69 kV, and 138 kV facilities at these PODs to distribution and rarely, if ever, flows in the opposite direction. This demonstrates that the Wolverine transmission/distribution interface is the POD to the end-user systems. All of the facts set forth in this section support the conclusion that Wolverine’s networked 44 kV, 69 kV, and 138 kV facilities are transmission facilities and not local distribution facilities. (4) When power enters a local distribution system, it is not reconsigned or transported on to some other market. The Wolverine local markets are defined by Wolverine’s individual member distribution cooperative end-use areas and Wolverine’s on-system municipal end-use areas. The point in the system where power can be identified as entering one of these final destination markets is that point where it can be defined as reaching its final destination and not transported to some other market beyond that point. The power that flows on Wolverine’s 44 kV, 69 kV and 138 kV facilities is 100% wholesale power that cannot be identified as related to only a single specific end-user destination market. The Wolverine transmission facilities pool the power that ultimately is delivered to the end-user markets. The pooled power is that of the MCCP control area which consists of Wolverine’s four member distribution cooperatives, its four on-system municipal members, and its four off-system municipal members. Some of the power GDS Associates, Inc. Page 18 pooled by these entities is injected directly from generating units into the Wolverine transmission system. Some of the power is received from the CE ties to the Wolverine transmission system. Approximately 310 MW of the pooled power is obtained from Wolverine member off-system resources and is transmission to the members by Wolverine facilities. Approximately 215 MW of Wolverine member on-system resources are pooled by these entities. The on-system power supply is transmitted by the Wolverine facilities to the directly connected members by the Wolverine system. Likewise, the eight municipal systems pool on-system hydro generation, and in 2003 will begin pooling 50 MW of new on-system generation to four of the municipal systems. Of these four municipal systems, one of them on-system and three of them off-system. Additionally, the Wolverine system supports opportunistic off-system sales of available energy. The markets for the Wolverine system power flow are many and varied. Finally, the Wolverine member systems voluntarily are open to Michigan’s retail choice program and offer wheeling services to the largest retail customers. The Wolverine transmission system, therefore, pools and facilitates the transmission of resources among many entities that serve distinct market areas. These facts support the conclusion that Wolverine’s networked 44 kV, 69 kV, and 138 kV facilities are transmission facilities and not local distribution facilities. (5) Power entering a local distribution system is consumed in a comparatively restricted geographical area. The discussion associated with the preceding four points defines the ways in which the Wolverine transmission system is used to convey power over a 220-mile GDS Associates, Inc. Page 19 stretch of the State of Michigan. This consists of approximately 1,200 miles of networked transmission facilities that provide no end-user service directly to retail customers. The power flows into and out of these facilities, which support bi-directional flows. The system is used to convey power for the varied uses of the MCCP control area and accommodates Michigan retail wheeling. Only when power leaves this system and is conveyed to the distribution facilities of the member systems and others does the power finally enter a restricted geographic area where it is ultimately consumed by endusers. These facts support the conclusion that Wolverine’s networked 44 kV, 69 kV, and 138 kV facilities are transmission facilities and not local distribution facilities. (6) Meters are based at the transmission/local distribution interface to measure flows into the local distribution system. The Wolverine system wholesale delivery meters are located at the distribution substation interconnection points with the 44 kV, 69 kV, and 138 kV facilities. These meters measure the flow from the Wolverine transmission facilities and into the enduser distribution facilities for ultimate consumption. The Wolverine 69 kV transmission substations are equipped with supervisory control and data acquisition (“SCADA”) meters, which are used for system control and monitoring of the two-way flow at those transmission substations. These SCADA meter values are telemetered to a Wolverine control center which monitors facility flows for system control. The wholesale delivery meters at the distribution substations are the meters that measure the one-way flow of power to the end-user systems and are the points that define the transition between transmission and distribution. These facts support the conclusion that Wolverine’s GDS Associates, Inc. Page 20 networked 44 kV, 69 kV, and 138 kV facilities are transmission facilities and not local distribution facilities. (7) Local distribution systems will be of reduced voltage. All of the member and other entity end-user systems that convey power to ultimate destination markets within limited geographic areas are 12 kV and 25 kV distribution voltages. These voltages are traditionally considered distribution level and are reduced from the 44 kV, 69 kV, and 138 kV voltages that are Wolverine’s transmission level voltages. These facts support the conclusion that Wolverine’s networked 44 kV, 69 kV, and 138 kV facilities are transmission facilities and not local distribution facilities. Conclusion: The Wolverine OATT transmission facilities operated at 44 kV, 69 kV and 138 kV perform transmission functions for the transmission of wholesale power on behalf of multiple customers on and off the WPSC system. Wolverine members have voluntarily opened their system in advance of statutory requirements to support the State of Michigan’s recently commenced retail open access program. In addition, the functional and technical analysis with respect to each of the Commission’s 7 factors supports the classification of these WPSC system facilities as transmission facilities and not local distribution facilities. GDS Associates, Inc. Page 21 Attachment 2 C C Attachment 3 page 1 of 3 TRANSMISSION LINE SEGMENT ALTONA - MORLEY Bagley Tap BASS LAKE - WOLF LAKE BLACK LAKE - HAMMOND BAY BOYNE CITY - HAYES BROHAM TAP BROOKS TAP Canadian Lakes JCT. - Canadian Lakes CARSON CITY TAP CENTRAL LAKE - GRAVES CROSSING CHESTER - EATON RAPIDS COLFAX TAP COPEMISH - THOMPSONVILLE DRENTH TAP EAST BAY - BATES EAST JORDAN - EASTPORT EAST JORDAN JCT. - EAST JORDAN EASTPORT - BARNARD FINGERBOARD TAP FOUNTAIN TAP FOWLER - GREENBUSH GARFIELD - TIMBERLEE GOODWIN JCT. - GOODWIN GRAND LEDGE TAP GRAWN - INTELOCHEN JCT. HAGENSVILLE TAP HARBOR - WEST TRAVERSE HILLMAN - BEAVER LAKE HINTON TAP INTERLOCHEN TAP JOHANNESBURG TAP KALKASKA TAP KARLIN TAP LAKE ANN-INTERLOCHEN JCT. LAKE LEELANAU - SUTTONS BAY JCT. LEBANON TAP LEROY - HARTWICK LEROY - TUSTIN LEWISTON - LOVELLS LINCOLN JCT. - LINCOLN LOWELL TAP MIDDLEVILLE TAP NEW ERA TAP ODEN - HARBOR OSCEOLA - OSCEOLA JCT. OTSEGO TAP PARIS TAP PELLSTON - CROSS VILLAGE PIERSON JCT. - PIERSON POSEN - GRAND LAKE SEBEWA TAP SILVER LAKE - LEMON JCT. SOUTH AIRPORT TAP SOUTH BOARDMAN - FIFE LAKE SUTTONS BAY TAP TIMBERLEE - SUTTONS BAY JCT. TOWER - BLACK LAKE VICTORY TAP WEIDMAN - STEVENSON WESTPHALIA TAP WESTWOOD - CLAM RIVER WESTWOOD - MANISTEE RIVER WINN TAP SCOTTVILLE - RIVERTON WEARE TAP AIRPORT 138 - CONSUMERS ENERGY ALBA TO CONSUMERS ENERGY 138 ATLANTA - AIRPORT 138 BRADLEY TIE 138 LAKE COUNTY - PERE MARQUETTE LIVINGSTON - ATLANTA 138 ADVANCE - ADVANCE D VOLTAGE 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 44 44 138 138 138 138 138 138 69 MILES 10.37 0.1 11.14 12.78 11.85 1.34 3.22 1 5.63 7.9 18.41 0.08 8.86 0.24 5.89 11.42 2.17 9.93 6.58 6.41 9.04 3.9 0.37 3.86 3.84 5.7 10.64 13.12 0.42 1.05 6.84 2.13 0.15 8.71 4.32 4.66 9.7 7.67 15.19 8.13 5.28 0.42 0.07 3.31 0.74 7.76 1.26 9.08 1.91 9.89 0.01 6.28 0.08 7.95 2.62 8.45 4.21 4.95 11.45 3.87 11.42 11.93 3.16 6.51 4.72 1.32 0.36 30.62 0.51 18.37 31.17 0.91 Attachment 3 page 2 of 3 ADVANCE - ELMIRA ADVANCE - WILSON ADVANCE D - EAST JORDAN JCT. AIRPORT - POSEN ALBA - MANCELONA ALLENDALE - BLENDON ALPINE TO GAYLORD PLANT ALTONA - HINTON JCT. ALTONA - VESTABURG ATLANTA - AVALON AVALON - HILLMAN BAGLEY - GAYLORD BALDWIN - PLAINS JCT. BASELINE JCT. - LEMON JCT. BASS LAKE - BRETHREN BLENDON - FAIRVIEW BOYNE CITY - PETOSKEY BURNIPS - DRENTH JCT. BURNIPS - GOODWIN JCT. BURNIPS - LOWELL JCT. CADILLAC - LEROY 138 CANADA CREEK - ATLANTA CASNOVIA - CEDAR SPRINGS CASNOVIA - STERNBERG CEDAR SPRINGS - HOWARD CITY CHEBOYGAN - MULLET LAKE CHESTER - MULLIKEN JCT. CHESTER - VERMONTVILLE COLFAX - WALKERVILLE COPEMISH - BRETHREN COPEMISH - KARLIN JCT. CRAWFORD - VESTABURG DEERFIELD - WINN JCT. EAST BAY - POTTER EAST JORDAN JCT. - GRAVES CROSS ELMIRA - ALPINE FAIRVIEW - DRENTH JCT. FAIRVIEW - ZEELAND PLANT FOWLER - ESSEX JCT. FOWLER-WESTPHAILIA JCT. GARFIELD - TRAVERSE CITY BAYSIDE GAYLORD - JOHANNESBURG JCT. GAYLORD PLANT TO BAGLEY GOODWIN JCT. - WAYLAND GRAND HAVEN - OSIPOFF GRAND TRAVERSE - GRAWN GRAVES CROSSING - ALBA GRAWN - GARFIELD GRAWN - KARLIN JCT. HART - BASELINE JCT. HART - REDWOOD HART - WALKERVILLE HASTINGS - GUN LAKE JCT. HAWKS - HAGENSVILLE JCT. HERSEY - ALTONA HERSEY - LEROY HERSEY - LEROY JCT. HERSEY - LINCOLN JCT. HERSEY - OSCEOLA JCT. HERSEY - PARIS JCT. HESPERIA - RODGERS HILLMAN - AIRPORT 69 HINTON JCT. - PIERSON JCT. HOWARD CITY - PIERSON JCT. LAKE COUNTY - BASS LAKE LAKE COUNTY- FOUNTAIN JCT. LEWISTON - ATLANTA LEWISTON - JOHANNESBURG JCT. LINCOLN JCT. - BALDWIN MANCELONA - WESTWOOD MARTINY - OSCEOLA JCT. MARTINY - WEIDMAN MIDDLEVILLE JCT - WAYLAND MILLERSBURG - HAWKS 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 16.26 4.7 4.66 16.21 4.51 2.11 3.41 4.7 19.52 12.16 9.58 3.32 6.94 2.39 18.11 7.49 10.48 11.3 13.09 39.06 19.3 13.84 10.45 19.39 14.88 9.38 9.18 10.69 2.36 10.81 13.59 8.99 7.04 4.32 7.14 3.61 1.1 0.56 4.71 10.13 3.72 7.43 4 4.58 2.94 5.21 4.72 7.87 6.61 5.56 1.59 9.49 5.61 7.43 24.02 14.3 14.59 3.05 4.02 3.51 13.96 8.76 9.25 9.14 8.35 6.25 12.02 10.19 16.47 6.7 10.69 8.37 10.69 9.53 Attachment 3 page 3 of 3 MULLET LAKE - FINGERBOARD JCT. NEW ERA JCT. - LEMON JCT. NEWAYGO - CASNOVIA NORTH SHADE - ESSEX JCT. NORTH SHADE - VESTABURG ODEN - PELLSTON ODESSA - MIDDLEVILLE JCT. ODESSA TO SEBEWA JCT. ONAWAY - CANADA CREEK OSIPOFF - ALLENDALE PARIS JCT. - BROHMAN JCT. PELLSTON - CHEBOYGAN PETOSKEY - ODEN PLAINS JCT. - COLFAX PLAINS JCT. - STAR LAKE PORTLAND - LOWELL JCT. PORTLAND - MULLIKEN JCT. PORTLAND - WESTPHALIA JCT. PORTLAND -SEBEWA JCT. POSEN - HAGENSVILLE JCT. POTTER - GRAND TRAVERSE 69 SCOTTVILLE - VICTORY JCT. SHELBY - NEW ERA JCT. SHELBY - RODGERS SOUTH BOARDMAN - CADILLAC SOUTH BOARDMAN - EAST BAY SOUTH BOARDMAN - KALKASKA JCT. STAR LAKE - LAKE COUNTY STERNBERG - GRAND HAVEN TOWER - FINGERBOARD JCT. TOWER - MILLERSBURG TOWER - ONAWAY VERMONTVILLE - HASTINGS VICTORY JCT. - FOUNTAIN JCT. WAYLAND - GUN LAKE JCT. WEIDMAN - DEERFIELD WESTWOOD - KALKASKA JCT. WHITE CLOUD - BROHMAN JCT. WHITE CLOUD - HESPERIA WHITE CLOUD - NEWAYGO WILSON - BOYNE CITY WINN JCT. - CRAWFORD EDEN - CRYSTAL VALLEY JCT. HART - CITY OF HART HART - CRYSTAL VALLEY JCT. KEWADIN - MILTON SCOTTVILLE - EDEN HARTWICK - MARION TOTAL 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 44 44 44 44 44 12 9.75 1.15 9.86 3.88 19.29 11.05 19.79 3.37 9.08 14.53 14.73 18.43 5.24 10.24 7.02 20.82 6.4 8.73 6.85 6.37 2.24 2.21 4.21 5 28.03 15.93 8.09 7.72 9.67 2.63 12.31 4.82 23.53 6.96 5.58 9.7 6.95 8.09 22.12 12.99 3.04 0.71 7.45 4 5.18 3.45 6.12 9.71 1572.75 ATTACHMENT 4 Wolverine Power Supply Cooperative List of Distribution Substations Served from Wolverine OATT Transmission Facilities Presque Isle: Atlanta Airport Avalon Beaver Island (see GLN) Black Lake Canada Creek Cheboygan Fingerboard Grand Lake Hammond Bay Hagenville Hawks Hillman Lewiston Millersburg Mullet Lake Onaway Posen CherryLand: Bates Brethren Copemish East Bay Garfield Grawn Interlochen Karlin Lake Ann Lake Leenanau Potter South Airport Suttons Bay Timberlee Thompsonville Homeworks: Tri-Co Altona Crawford Chester Carson City Deerfield Eaton Rapids Fowler Greenbush Grand Ledge Hinton Lebanon Martin Lake Odessa Portland Stevenson Sebewa Vestaburg Vermontville Weidman Westphalia Winn Load 3 1.5 2.4 3.2 2 5.4 2.7 1.7 1.6 2 2 2.4 6.8 1.1 2.7 1.8 2.1 17 4.7 1.4 2 6 7.7 6.8 4 1 4.3 3.5 3.6 4.3 2.7 1.8 2.8 15 6.4 2.8 2.2 1.3 1.4 2.7 1.5 1.5 2.4 0.6 1 2.6 2.8 2.7 2.6 1 6.4 1.4 5.5 3 2.3 # Great Lakes North: Advance Alpine Barnard Boyne City Beaver Island Bagley Clam River Cross Village Central Lake East Jordan Elmira East Port Fife Lake Gaylord #1 Gaylord #2 Goodwin Hayes Harbor #1 & #2 Johannesburg Kalkaska Lovells Mancelona Manistee River Pellston Petoskey South Boardman subsite Wilson West Traverse Westwood Great Lakes West: Bass Lake Eden Fife Lake subsite Fountain Riverton Stickney Star Lake Victory Tap Load 2.1 4.6 2 5 1.4 4.1 3.3 2.4 2.9 2.2 5.3 3.2 2.1 1.7 3.5 0.9 3 6.2 2.7 2 5.6 3.4 4.6 2.7 6.1 3 3.4 2.9 3.2 # Great Lakes South: Allendale Baseline Brohman Baldwin Brooks Burnips Cadallac Colfax Cedar Springs Casnovia Drenthe Howard City Hesperia Hastings Hart Hartwick Lincoln Leroy Middleville Morley New Era Newaygo Osceola Otsego Paris Rodgers Shelby Silver Lake Tustin White Cloud Wayland Weare Walkerville Great Lake South/West Shared Station: Wolf Lake Great Lakes South/Homeworks Shared Station: Hersey Pierson Load 3.4 3.1 2.7 4.2 3.2 3.6 0.7 5 2.2 1.8 3.1 3.1 2.5 3.2 1.9 3.5 1.7 2.5 2.7 3.2 2.9 2 6.1 2.5 1.7 3.7 2.7 6.3 2.2 5 4.4 2 3.2 # 29 3.6 1.2 2.1 2.8 1.7 1.7 3.9 2.5 8 33 2.2 1 3.2 5.3 2 AVERAGE PRESQUE ISLE LOAD AVERAGE CHERRYLAND LOAD AVERAGE GREAT LAKES NORTH LOAD AVERAGE GREAT LAKES SOUTH LOAD AVERAGE GREAT LAKES WEST LOAD AVERAGE HOMEWORKS/TRICOUNTY LOAD TOTAL WOLVERINE Avg MW # 2.6 17 3.8 15 3.3 29 3.1 33 2.4 8 2.6 21 3.6 126 NOTE: shared subs only included in "Total Wolverine" 21 NOTE: Loads based on 2003 summer WPSC power flow P:\23046\007\Dist Subs List.xls WPSC Transmission 2003 Summer Peak Legend: MW Cooperative Load G CE Living 19.7 Oden G Alba Attachment 5 GLN PI Airport CE 2.4 MW Generation MW Line Flows 75 G 20.6 Grand Traverse 1 96.7 29.3 48 16.4 G Traverse City Grand Traverse 2 4.3 47.5 CE 26.7 CL G Kalkaska Gen .3 0 GLS Tri Co 58.7 G G 89.9 63.1 GLW 11.3 7.5 22.9 15.2 G 0 20.3 106.8 12.9 7.7 Lowell 65 Grand Haven 39.1 CE Pere Marquette 38.1 19.3 CE 13.3 Redwood Cherryland Electric Cooperative (“CL”) Sternberg Consumers Energy (“CE”) Bradley Great Lakes Energy North (“GLN”) Brendon Great Lakes Energy West (“GLW”) HomeWorks Tri-County Electric Cooperative (“Tri Co”) Presque Isle Electric & Gas Co-op (“PI”) Wolverine Power Supply Cooperative (“WPSC”) Zeeland CE Vestaburg Exhibit 2 Exhibit 3 STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the matter, on the Commission’s own motion, to make an administrative determination regarding the proper classification of transmission and distribution facilities of WOLVERINE POWER SUPPLY COOPERATIVE, INC., and to submit Findings to the Federal Energy Regulatory Commission. ) ) ) ) ) ) ) Case No. U-13862 AFFIDAVIT OF ERIC D. BAKER, P.E. February 22, 2005 1 STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION Wolverine Power Supply Cooperative, Inc. ) Case No. U-13862 Table of Contents Qualifications……………………………………………………………………………...6 Purpose of Affidavit……………………………………………………………………….8 Wolverine Concerns……………………………………………………………………….8 Factor 1: Local distribution facilities are normally in close proximity to retail customers….………………………………………………………………………………9 A. Proximity of Retail Customers…………………………………………………….9 B. Consumers’ 46 kV Circuit Structure Design is Typical of Distribution; Wolverine’s 69 kV Circuit Structure Design is Not……………………………..10 Factor 2: Local distribution facilities are primarily radial in character………………….12 A. Wolverine’s 69 kV and Above Facilities Represent a Highly Looped Network……………………………………………...…………………….……..12 B. Wolverine’s Planning Criteria for 69 kV and Above Facilities are Typical of Transmission and Consumers’ 46 kV Planning Criteria are Typical of Distribution………………………………………………………………………12 C. Transmission Use for Retail Service Does Not Preclude Transmission Classification………………………………………………………………….….14 D. Load Between Breakers Does Not Preclude Transmission Classification………14 E. Wolverine Should Point to Specific Detroit Edison (DTE) Radial Facilities Referenced in Its (Turner) Analysis……………………………………………...15 2 Factor 3: Power flows into local distribution systems; it rarely, if ever, flows out……...15 A. Power Regularly Flows Out of Wolverine’s System….…………………………15 B. Wolverine’s System is Capable of Exporting Power 90% of the Time……….…18 C. Information Included in Wolverine’s EQR is Irrelevant to Present Filing………19 Factor 4: When power enters a local distribution system, it is not reconsigned or transported on to some other market……………………………………………………..19 A. Wolverine Reconsigns All Power Transmitted Over Its Transmission System……………………………………………………………………………19 B. Power Entering Wolverine’s System is Transported on to Other Markets………21 C. New Technical Analysis on Participation Factors……………………………….22 Factor 5: Power entering a local distribution system is consumed in a comparatively restricted geographical area……………………………………………………………...23 A. System Line Miles per Source is Preferred Metric………………………………23 B. Power Transmitted on Wolverine’s 69 kV System is Consumed in a Wide Geographical Area………………………………………………………….……24 Factor 6: Meters are based at the transmission/local distribution interface to measure flows into the local distribution system……………………………………………….…25 A. Wolverine Has Meters at 69 kV Interfaces With the Local Distribution Systems…………………………………………..………………………………25 B. Wolverine’s EMS/SCADA System is an Industry-Leading Transmission Product………………………………………………………………………..….26 3 Factor 7: Local distribution systems will be of reduced voltage………………………...27 A. Wolverine’s 69 kV is a Transmission Voltage………………………...………...27 B. 69 kV is a Common Voltage in the Midwest ISO…...…………………………..29 Other Matters…………………………………………………………………………….30 Summary…………………………………………………………………………………32 List of Tables Table 1: Comparison of Looped Miles to Total System Miles…………………………..12 Table 2: Wolverine Interconnections with Outside Entities……………………………..16 Table 3: Wolverine Interconnection Power Flows………………………………………17 Table 4: Wolverine Exclusive Export Path………………………………………………18 Table 5: Consumers 46 kV and Wolverine 69 kV Service to Non-Retail Customers…...20 Table 6: System Line Miles per Source…………………......…………………………...24 Table 7: Examples of 69 kV Transmission in MISO Footprint……………….………....30 Table 8: Classification of Wolverine Facilities………………………………………….32 List of Exhibits Exhibit 1: Distribution Underbuild Line Miles on 69 kV Transmission Lines………….34 Exhibit 2: Map of Wolverine’s 69 kV System and METC’s 138 kV and 345 kV Systems…………………………………………………………………………………..35 Exhibit 3: Map of Consumers’ 46 kV System…………………………………………...36 Exhibit 4: Wolverine Interconnection Power Flow Graphs……………………….…37-43 Exhibit 5: Wolverine, Grand Haven and Lowell 2004 Hourly Load Duration Curve and Generation Capacity Available Inside Wolverine’s Network…………………………...44 Exhibit 6: PJM Tag(s) and Wolverine Generation Log(s)……………………...……45-46 4 Exhibit 7: AEP Tag(s) and Wolverine Generation Log(s)………………………...…47-50 Exhibit 8: Allegheny Power Tag(s) and Wolverine Generation Log(s)……………...51-53 Exhibit 9: Dayton Power & Light Tag(s) and Wolverine Generation Log(s)………..54-55 Exhibit 10: Duquesne Light Tag(s) and Wolverine Generation Log(s)…………...…56-58 Exhibit 11: PJM Service Area……………………………………………………………59 Exhibit 12: AEP Service Area…………………………………………………………...60 Exhibit 13: Allegheny Power Service Area……………………………………………...61 Exhibit 14: Dayton Power & Light Service Area………………………………………..62 Exhibit 15: Duquesne Light Service Area……………………………………………….63 Exhibit 16: General Electric XA/21 SCADA System Functionality Brochure………64-71 5 STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION Wolverine Power Supply Cooperative, Inc. ) Case No. U-13862 Eric D. Baker, being first duly sworn, deposes and says: Qualifications My name is Eric D. Baker. My business address is Wolverine Power Supply Cooperative, Inc. (“Wolverine”), 10125 W. Watergate Road, P.O. Box 229, Cadillac, Michigan 49601. I graduated from Michigan Technological University in 1988 with a Bachelor of Science in Electrical Engineering. I am a Professional Engineer licensed in the State of Michigan. I am currently enrolled in the Master of Business Administration program at Western Michigan University’s Haworth College of Business. I have also received training in forecasting, rates and economic operation of power systems. After graduation, I was employed by Wolverine as an Electrical Engineer. In this position, I was responsible for conducting power flow studies for transmission planning and developing long-range transmission planning studies for Wolverine. I also produced long-range demand and energy forecasts for Wolverine and each of its member cooperatives. In 1990, I was project engineer on a load management and distribution automation system. In September 1995, I was promoted to Rates and Planning Manager. In this position, I was responsible for long-range power supply planning and transmission planning for Wolverine, assisting in bulk power supply negotiations, directing transmission planning and providing rate design and support for Wolverine and its member cooperatives. 6 In April 1996, I was promoted to Assistant General Manager/Planning and Engineering Manager. In this position, my duties expanded to include management of Wolverine’s Energy Control Center personnel and its engineering department as well. The Energy Control Center responsibilities include merchant operations and transmission operations. The engineering group is responsible for design projects and long-range planning for generation, transmission and distribution. In October 2001, I was promoted to Vice President of Power Marketing. In this position, my duties expanded to include oversight of Wolverine’s generation facilities, relay technicians and instrumentation and communication technicians. While in the latter two positions, I was responsible for the acquisition, siting, engineering and construction of seven generating units totaling 175 MW at four locations, including one greenfield location. In December 2003, my title was changed to Vice President of Power Supply & Engineering. My duties remained the same as those in my previous position. In June 2004, I was promoted to Senior Vice President of Engineering & Strategy. In this position, my responsibilities changed to include oversight of Wolverine’s transmission system operations division, which is responsible for the operation and maintenance of Wolverine’s transmission facilities, while management of the Energy Control Center was assigned to another division to allow the Engineering and Strategy division to focus on long-range transmission and power supply planning. Throughout my career, I have been involved with or responsible for long-range power supply and transmission planning. 7 Purpose of Affidavit The purpose of my Affidavit is to supplement the extensive technical analysis GDS Associates, Mr. Arnold Turner and the Midwest ISO (MISO) already provided to the Commission, to provide new additional key data supporting this extensive technical analysis and to correct material inaccuracies included in the January 31, 2005 and April 4, 2003 Affidavits of Timothy J. Sparks. My Affidavit will reference Case U-11283 and the Testimony of Mr. Allen C. Erickson extensively. Further references will be directed at the Affidavits of Timothy J. Sparks as identified above. Wolverine Concerns In the mid-1990s, Consumers made a strategic decision to argue for distribution classification of its 46 kV system and 138 kV radials presumably to maximize the number of assets under a distribution wheeling rate to assist Consumers with the looming reality of retail choice. In Case No. U-11283, Consumers set out to prove that its 46 kV system was distribution despite the fact that it had always previously been classified as transmission. In fact, prior to 1999, Consumers Energy charged for Network Transmission based upon a Transmission Revenue Requirement (TRR) that included its 46 kV facilities. Only since 1999 has Consumers (now METC) charged for Network Transmission based on a TRR that excluded its 46 kV system. Now, Consumers attempts to twist the 7-Factor Test into something it is not. It is evident from the testimony and comments of Consumers Energy in response to Wolverine that it is attempting to change the rules of the 7-Factor Test and make it a 8 transmission test. Consumers’ approach is not only wrong, it is illogical. FERC made it clear in Order 888 that the 7-Factor Test is a test to identify facilities serving a distribution function and establish jurisdictional boundaries for traditionally vertically integrated utilities. Consumers attempts to muddy the waters of seven fairly simple factors; they have corrupted the 7-Factor Test and have tried to make it into a transmission test. The irony of Consumers’ manufactured rules, had they been applied to Consumers’ (now METC’s) system, is that they would have led to a conclusion that much of the Consumers (now METC) 138 kV looped system was not transmission either! Factor 1: Local distribution facilities are normally in close proximity to retail customers. A. Proximity of Retail Customers Wolverine worked in conjunction with its largest distribution member, Great Lakes Energy Cooperative (Great Lakes), to determine the proximity, relative to Wolverine’s facilities, of customers in the Great Lakes system. Great Lakes customers represent 57% of the total load of Wolverine’s four distribution cooperatives and serves as a good proxy for the entire Wolverine network. This analysis indicates that 11.6% of Great Lakes’ customers are within one mile of a looped 69 kV line, and 5.3% are within one mile of a radial 69 kV line. The total of 16.9% of Great Lakes’ customers that are within one mile of a 69 kV line is significantly lower than the 60% comparative statistic of Consumers’ customers within one mile of its 46 kV lines. In MPSC Case No. U-11283, Mr. Erickson testified that, 9 “…46 kV lines have been intentionally routed as close to retail customers as practical. Over sixty percent of Consumers Energy’s load is located within one mile of 46 kV lines.” Wolverine estimates that its figure of approximately 17% of customers within one mile of transmission facilities is comparable with METC’s 138 kV system. B. Consumers’ 46 kV Circuit Structure Design is Typical of Distribution; Wolverine’s 69 kV Circuit Structure Design is Not Wolverine has conducted a survey of vegetation inventory and planning professionals to determine certain characteristics of Consumers’ 46 kV lines. Wolverine’s survey included interviews with vegetation inventory and planning professionals in Michigan and a review of data generated from line maintenance inspection contractors that have completed entire inspections of Consumers Energy’s 46 kV system. This survey of Consumers Energy’s 46 kV system indicates that Consumers’ 46 kV system is underbuilt with lower voltage distribution circuits over the majority of its 4,342 line miles, such that at least 60% of Consumers’ 46 kV is underbuilt with Consumers Energy distribution voltage lines. This is very typical of distribution facilities, which are in close proximity to retail load and typically have short spans conducive to underbuild construction. In contrast, Wolverine’s 69 kV lines are underbuilt with distribution on only a very small percentage of its system. Wolverine reviewed its as-built drawings of transmission plan and profiles to determine the amount of distribution line underbuild installed on Wolverine’s 69 kV transmission system. This extensive analysis showed that only an incidental amount, less than 3%, is underbuilt with lower voltage distribution. See attached Exhibit 1 (Page 34), which summarizes the location and amount of distribution line underbuild on Wolverine’s 69 kV transmission system. This is typical of 10 transmission facilities, which are not necessarily routed in close proximity to retail load but rather are routed in as straight a line as practicable to connect load and generation. Furthermore, Wolverine’s typical 450’ to 600’ spans are not conducive to underbuild construction. In contrast, Wolverine estimates that typical spans on Consumers’ 46 kV system are approximately 150’ to 250’ in length. The routing for Wolverine’s transmission system was determined based on the most direct and economical route available to connect Wolverine’s power generation sources, transmission interconnections with other utility systems and load centers. For example, Wolverine’s 69 kV Tower to Atlanta transmission line connects Wolverine’s Tower generation facility with Wolverine’s Atlanta transmission substation. The routing for this 24-mile transmission line follows a direct north-south path. Only two, 2.5 MVA distribution substations are connected with this transmission line. To further illustrate this point, consider Wolverine’s 69 kV lines from Portland to Burnips, White Cloud to Rodgers and Leroy to South Boardman. These three lines traverse areas not served by Wolverine’s member-distribution cooperatives in order to follow the most direct route as possible, and only have 3.5 MW of connected load (divided between two distribution substations) over 143 miles of 69 kV transmission line. This routing scenario is typical of the remainder of Wolverine’s transmission system. In no way do these facilities resemble distribution. Wolverine’s 69 kV and above facilities are not in close proximity to retail customers; therefore, Wolverine’s 69 kV and above facilities fail this test of distribution. 11 Factor 2: Local distribution facilities are primarily radial in character. A. Wolverine’s 69 kV and Above Facilities Represent a Highly Looped Network Exhibit 2 (Page 35) is a map showing Wolverine’s 69 kV system and METC’s 138 kV and 345 kV systems. Exhibit 3 (Page 36) is a map showing Consumers’ 46 kV system. Table 1 compares the relative percentages of looped segments with respect to total system line miles. In his testimony in Case No. U11283, Mr. Erickson testified that, “More than 90% of Consumers Energy’s line miles with nominal voltage of 120 kV and above are part of a looped network and, therefore, are classified as transmission. The remainder are classified as nontransmission.” With 73% of its line miles configured as looped segments, Wolverine’s system more closely resembles Consumers/METC’s 138 kV system (at 91% of the line miles configured as looped segments), than Consumers’ 46 kV system (at 42% of the line miles configured as looped segments). This supports a classification of Wolverine’s system as transmission. TABLE 1 Comparison of Looped Miles to Total System Miles Looped (Miles) Looped & Radial (Miles) Percent Looped/Total (%) Consumers 46 kV 1,820 4,333 42% Wolverine 69 kV Consumers/METC 138 kV 1,051 3,346 1,449 3,678 73% 91% B. Wolverine’s Planning Criteria for 69 kV and Above Facilities are Typical of Transmission and Consumers’ 46 kV Planning Criteria are Typical of Distribution Wolverine’s transmission system planning criteria are typical transmission planning criteria. Wolverine is required to annually file FERC Form No. 715, Annual 12 Transmission Planning and Evaluation Report. Wolverine’s system is planned such that no loss of load is acceptable as a means to meet single contingency conditions. From Wolverine’s FERC Form No. 715 filed April 1, 2004: “For emergency conditions (outage of a single circuit, bus, or autotransformer), the following conditions should be met: 1. Transmission system voltages should range from 90.0 to 105.0 percent of nominal. 2. Transmission lines should not be loaded above the emergency ampacity rating of the conductors. 3. Transmission system auto-transformers should not be loaded above their maximum rating at a temperature rise of 65 deg C or as determined by the IEEE loading guidelines established in IEEE Std. C57.91. 4. Transmission facility must not exceed the emergency rating of that facility.” The shedding of significant amounts of customer load is not acceptable in order to defer capital investment in Wolverine’s system. This planning criteria applied to Wolverine’s system is significantly more stringent than criteria commonly applied to distribution systems, including the planning criteria applied to Consumers’ 46 kV system. Mr. Erickson, in Case No. U-11283, testified that, “Radial facilities are characterized by the fact that loss of load can result from a single contingency outage of lines or equipment.” He continues, “Although Consumers Energy’s 46 kV facilities are operated as a mixture of radial and looped facilities, the planning of all 46 kV facilities incorporates the acceptability of losing load due to single equipment or line outages. Opening lines to maintain single contingency loading within continuous thermal capability would make 84% of the 46 kV system radial.” Wolverine believes that Consumers could allow as much as 100 MVA load loss as acceptable in its 46 kV planning criteria. Consumers’ planning criteria for its 46 kV system are typical for distribution and in sharp contrast to Wolverine’s typical 13 transmission planning criteria that do not rely on load loss. These planning criteria clearly show that Wolverine is not a distribution system. C. Transmission Use for Retail Service Does Not Preclude Transmission Classification In its Response Comments, Commission Staff has stated that Wolverine’s 69 kV facilities are primarily radial in character. Staff’s comments indicate that while some of the facilities operating at 69 kV are looped as well as radial, all of the facilities are primarily radial in character and dedicated to delivery of energy to local distribution. The same can be said of almost all of METC’s 138 kV facilities. Further, Consumers states on page 15 of its Initial Comments in Section II.B.2.b., “For example, before Consumers transferred its transmission facilities and before FERC Order No. 888 Open Access Tariff, those facilities provided relatively little wholesale service. Since they were largely used to serve the needs of Consumers’ own retail customers, they only incidentally were used for wholesale delivery to other utilities. But they were just as much transmission facilities then as they are now.” [Emphasis added.] This statement confirms that although a transmission system is largely used for service to retail customers, it does not preclude that system from being characterized as transmission. D. Load Between Breakers Does Not Preclude Transmission Classification The existence of distribution substations fed from Wolverine’s system does not make this system radial in character. In fact, there are in excess of 200 distribution substations fed directly from METC’s 138kV transmission system. Mr. Sparks’ statistics on this subject are grossly misleading. Wolverine’s system is clearly not a radial system and therefore fails this test of distribution. 14 E. Wolverine Should Point to Specific Detroit Edison (DTE) Radial Facilities Referenced in Its (Turner) Analysis When DTE spun off its transmission component to ITC, the criteria used to determine the transmission/distribution nature of its 120 kV radials were the characteristics of the load being served. If the radial served a single retail customer, then it was classified as distribution. If the radial serviced a distribution substation, then it was classified as transmission. This point is further clarified when the Otsego distribution substation was added to the Robin/Wabash to Imlay Pumping radial. This 120 kV radial was originally classified as distribution and owned and operated by DTE. However, when DTE added the Otsego distribution substation, a substation designed to serve multiple retail customers, the line segment from Robin/Wabash to Otsego was reclassified as transmission and came under the control of ITC. The remaining portion of the radial, Otsego to Imlay Pumping station, remained under the control of DTE. Factor 3: Power flows into local distribution systems; it rarely, if ever, flows out. A. Power Regularly Flows Out of Wolverine’s System The following table lists all of Wolverine’s interconnections with other entities at 69 kV and 138 kV. 15 TABLE 2 Wolverine Interconnections with Outside Entities Voltage Wolverine 69 kV to MPPA 69 kV Wolverine 69 kV to MPPA 69 kV Wolverine 69 kV to MPPA 69 kV Wolverine 69 kV to MPPA 69 kV Wolverine 69 kV to MPPA 69 kV Wolverine 69 kV to MPPA 69 kV Wolverine 69 kV to MPPA 69 kV Wolverine 69 kV to MPPA 69 kV Wolverine 69 kV to MPPA 69 kV Wolverine 69 kV to MPPA 69 kV Wolverine 69 kV to MPPA 69 kV Wolverine 69 kV to METC 138 kV Wolverine 69 kV to METC 138 kV Wolverine 69 kV to METC 138 kV Wolverine 69 kV to METC 138 kV Wolverine 69 kV to METC 138 kV Wolverine 69 kV to METC 138 kV Wolverine 69 kV to METC 138 kV Wolverine 69 kV to METC 138 kV Wolverine 69 kV to METC 138 kV Wolverine 138 kV to METC 138 kV Wolverine 138 kV to METC 138 kV Wolverine 138 kV to METC 138 kV Entity Traverse City L&P Traverse City L&P Traverse City L&P MPPA Grand Haven BL&P Grand Haven BL&P Grand Haven BL&P Zeeland BPW Zeeland BPW Zeeland BPW City of Lowell METC METC METC METC METC METC METC METC METC METC METC METC Facility G Traverse Sub (GV 422) G Traverse Sub (GV 822) Hall Street Substation Kalkaska Generation Grand Haven North Sub Grand Haven Substation Osipoff Substation Fairview Sub (Zeeland) Fairview Sub (Riley) Zeeland Substation Lowell Substation G Traverse Sub (#1 XFMR) G Traverse Sub (#3 XFMR) Alba Substation Blendon Substation Bradley Substation Oden Substation Redwood Substation Sternberg Substation Vestaburg Substation Pere Marquette Substation Livingston Substation Airport Substation A number of these interconnections exhibit two-way flow. Table 3 illustrates that two-way flow is exhibited on nearly 50% of Wolverine’s interconnections to other entities. In addition, MPPA’s 50 MW Kalkaska CT generation facility and Grand Haven’s 87 MW base load Sims 3 generation facility are 100% dependent upon Wolverine’s 69 kV system to flow their output power to the various MPPA members. This supports a classification of Wolverine’s system as transmission. 16 TABLE 3 Wolverine Interconnection Power Flows Voltage Wolverine 69 kV to MPPA 69 kV Wolverine 69 kV to MPPA 69 kV Wolverine 69 kV to MPPA 69 kV Wolverine 69 kV to MPPA 69 kV Wolverine 69 kV to MPPA 69 kV Wolverine 69 kV to MPPA 69 kV Wolverine 69 kV to MPPA 69 kV Wolverine 69 kV to MPPA 69 kV Wolverine 69 kV to METC 138 kV Wolverine 69 kV to METC 138 kV Wolverine 69 kV to METC 138 kV Entity TCL&P TCL&P TCL&P GHBL&P GLBL&P GLBL&P ZBPW Lowell METC METC METC Facility Hall Street Sub G Traverse (GV422) G Traverse (GV 822) G Haven North Grand Haven Osipoff Fairview (Zeeland) Lowell Sternberg Vestaburg Airport Flow Out of WPC (MWh) 315,961 Flow Out of WPC (% of Time) 100.0% Flow Into WPC (MWh) 0 Flow Into WPC (% of Time) 0.0% 41,882 30,592 40,204 9,537 275 3,292 29.0% 77.0% 100.0% 28.0% 0.7% 12.5% 98,139 4,814 0 61,849 150,181 83,353 71.0% 23.0% 0.0% 72.0% 99.3% 87.5% Data Source: 2004 Interchange data from Wolverine’s Energy Control Center. Power routinely flows out of the Wolverine 69 kV transmission system. As you can see from attached Exhibit 4 (Pages 37 and 38), power flows out of the Wolverine 69 kV transmission system to Traverse City Light & Power and the City of Lowell 100% of the time. Again, referencing Exhibit 4 (Pages 39 and 40), we see that power flows out of the Wolverine 69 kV transmission system to Grand Haven 29% of the time and to Zeeland through the Fairview tie 77% of the time. Finally, power flows out of Wolverine’s 69 kV transmission system to METC 28% of the time through the Sternberg substation, nearly 13% of the time through the Airport substation and nearly 1% of the time through the Vestaburg substation. See Exhibit 4 (Pages 41 through 43). Contrast these statistics to Consumers’ 46 kV system. In MPSC Case No. U-11283, Mr. Erickson testified that, “Consumers Energy’s 46 kV system generally does not transfer power back into the 138 kV network. A review of 1995 and 1996 hourly 138/46 kV flow data showed flow into the 138 kV system occurred rarely, occurring at only three of 108 substations. Those flows occurred about one-third of the time at two substations and less than 1% of the time at the other.” 17 B. Wolverine’s System is Capable of Exporting Power 90% of the Time Exhibit 5 (Page 44) shows the hourly load on the Wolverine transmission system during 2004. This is another example of data that Mr. Sparks chooses to ignore. Wolverine’s system is capable of exporting power 90% of the time. Wolverine has performed power flows to support this capability. Contrast this against Consumers’ 46 kV network where net power export never occurs due to the fact that Consumers’ 46 kV load always exceeds the approximately 500 MW of connected 46 kV generation. The fact that Wolverine’s system is typically a net importer of generation is because the majority of connected generation is peaking capacity and is uneconomical to run during many hours of the year. However, this generation is available to support the grid. It is also important to note that the Wolverine 69 kV and above network is the exclusive path of export for generation that it does not own. See Table 4. TABLE 4 Wolverine Exclusive Export Path Size (MW) Sources Owners Sinks Grand Haven, Traverse City, Petoskey, Charlevoix, Harbor Springs, Zeeland and Lowell Grand Haven, Traverse City, Petoskey, Charlevoix, Harbor Springs, Zeeland and Lowell 87 Sims 3 and Grand Haven Diesels Grand Haven 50 Kalkaska Traverse City, Petoskey, Harbor Springs, Charlevoix and Lowell 18 C. Information Included in Wolverine’s EQR is Irrelevant to Present Filing The information provided by Consumers on Wolverine’s EQR is irrelevant to this filing. Wolverine does have a FERC Open Access Transmission Tariff (OATT) to allow non-discriminatory access to its transmission system by third parties. The number of participants currently using the transmission service does not determine whether such service should be classified as transmission. The “handful of neighboring municipal utilities” (page 18 of Consumers’ Initial Comments dated January 31, 2005) and the four distribution members of Wolverine that do rely on Wolverine’s 69 kV transmission system represent approximately 1,208 MW of peak load and over 338,000 customers in Michigan.1 The conclusion is that Wolverine’s 69 kV transmission system fails the Factor 3 test of distribution. Factor 4: When power enters a local distribution system, it is not reconsigned or transported on to some other market. A. Wolverine Reconsigns All Power Transmitted Over Its Transmission System Factor 4 is really a very simple and specific two-part test. The first part of the test clearly states that power entering a distribution system is not reconsigned. Since Wolverine is a generation and transmission (G&T) cooperative, all of the power that Wolverine takes title to is transmitted over its transmission system for reconsignment, either to one of Wolverine’s member distribution cooperatives or to third parties in other markets, who then correspondingly take title at the point of delivery. 1 Wolverine’s four distribution members comprise 428 MW peak and over 208,000 customers; the municipal utilities of Charlevoix, Grand Haven, Harbor Springs, Lansing, Lowell, Petoskey, Traverse City and Zeeland comprise 780 MW peak and over 130,000 customers. Data based on summer 2005 projections. 19 Contrast this to Consumers’ 46 kV system. In MPSC Case No. U-11283, Mr. Erickson’s testimony states, “A limited number of 46 kV facilities supply non-retail customers. However, the vast majority of power entering the 46 kV system is not reconsigned or transported onto some other market.” Mr. Erickson’s testimony further states that, “Service to MCCP at 46 kV is about 0.5% of Consumers peak load, wholesale to Bay City is about 0.9% of Consumers peak load and the remaining delivery points are about 0.9% of Consumers peak load.” Table 5 clearly shows that 100% of the power transmitted through Wolverine’s 69 kV and above system is reconsigned, contrasted against the 2.3% of power reconsigned over Consumers’ 46 kV system. This data clearly shows that Wolverine’s 69 kV and above system does reconsign power and that Wolverine’s 69 kV and above system clearly fails this test of distribution. TABLE 5 Consumers 46 kV Service to Non-Retail Customers Non-retail Customer MCCP Bay City Remaining Delivery Points Total % 0.5 0.9 0.9 2.3 Wolverine 69 kV Service to Non-Retail Customers Non-retail Customer Grand Haven Lowell Zeeland Kalkaska Tower Kleber Limited Partnership Remaining Delivery Points Total Data Source: Wolverine’s 2004 summer peak demand. % 13.3 1.5 1.3 9.2 0.1 74.6 100.0 20 B. Power Entering Wolverine’s System is Transported on to Other Markets The second part of Factor 4 clearly states that power entering a distribution system is not transported on to some other market. Setting aside the argument that Wolverine’s member distribution cooperatives are not another market, an argument that Wolverine vehemently disagrees with, it is impossible to conclude that Michigan municipals are not another market. Furthermore, it is even more a stretch to conclude that utilities in Ohio and Pennsylvania are not another market. The following transactions are examples of power that enters Wolverine’s transmission system and is “transported on to some other market”: • On January 27, 2005, from 13:00 to 14:00 power generated at Wolverine’s Burnips station was transported on Wolverine’s transmission system to the PJM market. See Exhibit 6 (Pages 45 and 46). • On August 28, 2004, from 15:00 to 18:00 power generated at Wolverine’s Hersey station was transported on Wolverine’s transmission system to the AEP market. See Exhibit 7 (Pages 47 through 50). • On July 27, 1999, from 12:00 to 20:00 power generated at Wolverine’s Burnips and Hersey stations was transported on Wolverine’s transmission system ultimately to the Allegheny Power market. See Exhibit 8 (Pages 51 through 53). • On July 22, 1999, from 20:00 to 21:00 power generated at Wolverine’s Hersey and Vestaburg stations was transported on Wolverine’s transmission system ultimately to the Dayton Power & Light market. See Exhibit 9 (Pages 54 and 55). 21 • On July 22, 1999, from 18:00 to 20:00 power generated at Wolverine’s Hersey and Vestaburg stations was transported on Wolverine’s transmission system ultimately to the Duquesne Light market. See Exhibit 10 (Pages 56 through 58). This data clearly shows that power entering the Wolverine 69 kV and above network is transported to other markets and that Wolverine’s 69 kV and above system clearly fails this test of distribution. C. New Technical Analysis on Participation Factors First, it is important to note on this point that significant power flow analyses were completed in the GDS Report and the MISO Report. In fact, most conclusions in these reports were substantiated by load flow analysis. Assertions that Wolverine has not presented power flow analyses are erroneous. Second, Consumers absurdly attempts to apply an extremely narrow test (MWmile) to attempt to show Wolverine’s transmission system as distribution instead of literally applying the test. Factor 4 has little, if anything, to do with MW-mile analysis. The factor is attempting to determine if a system is ever used to reconsign power or transport power to another market. It seems Consumers wants to confuse this simple test with superfluous information because the literal application of the test so convincingly proves that Wolverine’s 69 kV and above network is not a distribution system. Nevertheless, Wolverine has engaged Stephen S. Miller, P.E., of Commonwealth Associates, Inc. to provide expert technical analysis in the area of participation factors. Please see Mr. Miller’s Affidavit in which he discusses new findings that support the earlier technical analyses of GDS Associates, Inc., Mr. Arnold Turner and the MISO. 22 Even in the absence of Mr. Miller’s supplemental power flow analyses, Wolverine clearly fails this test of distribution. Factor 5: Power entering a local distribution system is consumed in a comparatively restricted geographical area. A. System Line Miles per Source is Preferred Metric In MPSC Case No. U-11283, Mr. Erickson offers a measure of the average length that power flows as an indication that Consumers’ 46 kV system is distribution under FERC Factor 5. His measure of the length of the flow path is based on the average length of line, which, without the provision of any detailed analysis, might be assumed to be the distance between breakers on the 46 kV system. This measure of average length of power flow is flawed, however, because it essentially assumes that the source of the power into the 46 kV system (whether a tie to a higher voltage, or a generator) is at one end of the line segment being measured and the load is at the other end. This is the same as assuming that every other “node” (breaker substation) in Consumers’ 46 kV system has either generation or a tie to a higher voltage connected to it. This is certainly not the case. Instead of using Mr. Erickson’s measure of the average distance power flows, a technically significant metric for use is system line miles per source. This measure more accurately simulates power flow on the system emanating from the sources, which are generators or ties to higher voltages, to the loads. The implicit assumption is that the average distance that power flows is half the distance between sources. This average distance is typically a longer distance than an average line length. Mr. Erickson’s average line length is more an indication of the density of sectionalizing stations/devices and the network topology than power flow distances. 23 Table 6 compares this measure, based on the number of ties to higher voltages and generation interconnections, for Consumers’ 46 kV system, METC’s 138 kV and 345 kV systems and Wolverine’s 69 kV system. As shown in Table 6, using this metric for Wolverine’s 69 kV system indicates power flow distances that range between those of METC’s 138 kV and 345 kV systems. All three of these higher voltage systems exhibit average power flow distances significantly greater than those of Consumers’ 46 kV system. This supports a classification of Wolverine’s system as transmission. TABLE 6 System Line Miles per Source System Consumers 46 kV METC 138 kV Wolverine 69 kV METC 345 kV No. of Sources 116 65 20 14 Line Miles 4,330 3,346 1,450 1,948 Line Miles per Source 37 52 73 139 Average Distance Power Flows 19 26 36 70 Data Source: 2005 MISO summer peak model; 2002 Platt’s Directory of Electric Power Producers and Distributors. B. Power Transmitted on Wolverine’s 69 kV System is Consumed in a Wide Geographical Area The following are examples of power transmitted on Wolverine’s 69 kV system and consumed in diverse, wide geographical areas: • PJM market (per Exhibit 11 (Page 59), parts of Michigan, Ohio, Kentucky, Illinois, Indiana, West Virginia, Virginia, Delaware, Pennsylvania, New Jersey, Maryland). • AEP market (per Exhibit 12 (Page 60), parts of Michigan, Ohio, Indiana, Kentucky, West Virginia, Virginia). • Allegheny Power market (per Exhibit 13 (Page 61), parts of Maryland, Ohio, Pennsylvania, Virginia and West Virginia). 24 • Dayton Power & Light market (per Exhibit 14 (Page 62), 24 counties in West Central Ohio). • Duquesne Light market (per Exhibit 15 (Page 63), southwestern Pennsylvania). Again, Factor 5 leaves no room for compromise as Mr. Sparks attempts to indicate in his testimony and affidavit. The factor requires that power entering a distribution system is consumed in a comparatively restricted geographical area. Wolverine’s 69 kV and above facilities fail this test of distribution. Factor 6: Meters are based at the transmission/local distribution interface to measure flows into the local distribution system. A. Wolverine Has Meters at 69 kV Interfaces With the Local Distribution Systems Factor 6 of the 7-Factor Test clearly states, “Meters are based at the transmission/local distribution interface to measure flows into the local distribution system.” Wolverine has meters at all 69/12.5 kV and 69/24.9 kV substations. Contrast this against a Great Lakes 24.9 kV circuit: Wolverine steps down and meters the voltage at 69 kV to 24.9 kV and Great Lakes subsequently steps the voltage down again to 12.5 kV. There is no metering at the 24.9/12.5 kV transformation. In MPSC Case No. U-11283, Mr. Erickson’s testimony states that, “Supervisory Control and Data acquisition (SCADA) devices are installed on the transmission system to monitor flows and control switching equipment. SCADA equipment is installed in substations, which transform voltage from 138 kV to 46 kV. SCADA equipment is generally not installed in Consumers Energy substations, which transform the voltage from 46 kV to lower voltage. The location of Consumers Energy’s SCADA devices supports a conclusion that Consumers Energy’s 138/46 kV substations are the interface between its transmission and local distribution systems. Application of this indicator supports a conclusion that the 138 kV system should be classified as transmission and the 46 kV system should be classified as distribution.” 25 Mr. Erickson’s testimony introduced SCADA into the discussion of Factor 6. Mr. Erickson concludes that since “SCADA equipment is installed in substations which transform voltage from 138 kV to 46 kV” that the lower voltage system must be distribution. That statement is not compelling because METC has SCADA at its 345 kV to 138 kV substations and this does not mean that the 138 kV system must be distribution. This entire argument is moot when Factor 6 is applied as it is written: “Meters are based at the transmission/local distribution interface to measure flows into the local distribution system.” Wolverine meters are located at the 69/12.5 kV and 69/24.9 kV interface between Wolverine’s transmission system and its member distribution systems. B. Wolverine’s EMS/SCADA System is an Industry-Leading Transmission Product However, since Mr. Erickson does bring up SCADA, it is important to understand that Wolverine has in place a robust, real-time EMS/SCADA system. This XA/21system, sold by General Electric Company (GE), is an industry-leading product for optimization of generation and transmission systems. There are over 100 systems installed worldwide at some of the world’s largest utilities, including Southern Company, Southern California Edison, San Diego Gas & Electric and National Grid (UK). The XA/21 has a modular architecture containing applications targeted specifically for transmission systems. Examples of this are in the Generation Dispatch and Control (GDC) suite, such as Interchange Scheduling, Automatic Generation Control and Reserve Monitoring. Wolverine’s contract with GE includes licensing for all of those modules. The XA/21 also has a suite of Power Network Applications (PNA) modules that Wolverine licenses 26 as well. Examples of these modules are the State Estimator, Contingency Analysis, Powerflow and Security Constrained Dispatch. In contrast, GE also offers distribution monitoring products called ENMAC and GE Smallworld PowerOn. Many of the larger vertically integrated utilities that have the XA/21 for their transmission system also have one of these products or a similar product to perform their distribution management functions. Since Wolverine’s 69 kV and above system is transmission, Wolverine does not use ENMAC, GE Smallworld PowerOn or any similar distribution product. A brochure illustrating the transmission functionality of GE’s XA/21 system is included as Exhibit 16 (Pages 64 through 71). The functionality of Wolverine’s XA/21 EMS/SCADA system is superior to the level of functionality used by Consumers Energy to monitor its 46 kV system. There is really no comparison between the visibility and control that Wolverine has of its 138 kV and 69 kV transmission system and that which Consumers Energy has of its 46 kV distribution system. This factor indicates that Wolverine’s 69 kV and above system is not a distribution system. Factor 7: Local distribution systems will be of reduced voltage. A. Wolverine’s 69 kV is a Transmission Voltage In the 7-Factor Test, the FERC sets out to codify the characteristics of a distribution system. Persons familiar with the power industry and, specifically, distribution facilities, appreciate these general characteristics, including the fact that distribution lines are of a reduced voltage. The reduced voltages allow safer routing through populated areas, lower clearances and inexpensive installation costs for this 27 portion of the system that represents the majority of the line-length in any electrical system. These reduced voltages represent the ‘curb-side’ voltage from which residential, commercial and most industrial customers take service through a service transformer. These service transformers are typically a pole-top transformer, but sometimes padmount transformers are used, especially for larger loads. The exception to this is the infrequent industrial customer with a large load that might take service at a higher voltage because it has its own substation on site, or at least its own high-voltage transformers. Knowing that there are exceptions to every rule, the FERC allowed for these exceptions by adding language like “normally” to Factor 1, “primarily” to Factor 2, and “rarely, if ever” to Factor 3. The FERC included no such qualification for Factor 7: “Local distribution systems will be of reduced voltage.” The room for interpretation, instead, is in the manner in which one defines “reduced”. In his testimony in this case, Mr. Sparks would propose that Wolverine’s 69 kV system is distribution because there exist higher voltages in Michigan, namely, 120 kV, 138 kV, 230 kV, 345 kV and 765 kV. Mr. Sparks’ argument is one of semantics, not of real-world functional/technical use of the Wolverine system. In fact, one could have made the argument, just as arbitrarily, that 138 kV is local distribution because there exists three higher voltages in the state. Instead, Wolverine literally applies a functional/technical treatment of this factor. In the Wolverine system, the true distribution voltages are at 12.5 kV and 25 kV. These are the voltages at which customers take service through the service transformer, and these are the voltages of the lines that leave the distribution substations to distribute the energy to individual customers. Wolverine’s 69 kV system does not serve customers directly. Even the few relatively large industrial customers whose load warrants a 28 dedicated substation, take service at a reduced voltage (typically, the 69 kV is transformed to 12.5 kV at the distribution substation, and then transformed further to lower voltages – 480 V or 240/120 V, for example, before entering their facilities). These two voltages, 12.5 kV and 25 kV, are the reduced voltages, the true distribution voltages, on Wolverine’s system. The 69 kV is the transmission voltage. This factor clearly supports a classification of transmission for the Wolverine system. B. 69 kV is a Common Voltage in the Midwest ISO Wolverine’s network is at a typical transmission voltage appropriate in design and configuration. Wolverine has classified its 69 kV assets since the late 1940s as transmission in accordance with REA’s, then RUS’s, then FERC’s Uniform System of Accounts. Mr. Sparks has made several erroneous and misleading comments regarding the use of 100 kV as the cut-off for transmission. He even infers that MISO does not recognize 69 kV transmission. Both of these assertions are patently false. The FERC refused to establish such a simple “bright line” test. In fact, this is the very reason for the 7-Factor Test. Furthermore, 69 kV is a common transmission voltage throughout the Midwest. MISO states in its January 31, 2005 Comments that, “The pole miles of 69 kV transmission facilities for the Midwest ISO’s investor-owned utilities is 18,606 miles out of a total of 63,105 pole miles or approximately 30% of all transmission pole miles within the Midwest ISO region.” Table 7 shows just a few of the companies that MISO refers to that have 69 kV transmission facilities. 29 TABLE 7 Examples of 69 kV Transmission in MISO Footprint Company American Transmission Company LLC Cincinnati Gas & Electric Company PSI Energy, Inc. Southern Indiana Gas and Electric Company Wolverine Power Supply Cooperative, Inc. Northern States Power Company (Wisconsin) FirstEnergy’s American Transmission Systems, Inc. Northern Indiana Public Service Company Union Electric Company Data Source: 2003 FERC Form 1 for all companies. 69 kV Line Miles 3,519.3 535.7 2,511.7 538.5 1,457.0 1,034.8 2,285.8 1,623.9 32.7 Wolverine’s transmission system is not a reduced voltage system typical of distribution systems and clearly fails this test of distribution. Other Matters Consumers’ attempts to discredit the joint planning benefits of a joint transmission zone are shameful. Consumers fails to recognize today what it has failed to recognize for decades—that joint planning is a two-way street. In response to Mr. Arnold Turner, Consumers argues on page 8 of Timothy J. Sparks’ January 31, 2005 Technical Review that, “WPSC can interconnect with METC right now, as it has done in many places, regardless of whether or not it belongs to a joint pricing zone with METC. What WPSC means is that it could connect to the METC transmission system more cheaply because it could shift most of the cost to Consumers Energy customers. Similarly, WPSC can connect with Consumers Energy’s 46 kV system right now. WPSC just has to ask. WPSC would then pay METC its transmission rate as well as Consumers Energy’s Wholesale Distribution Service rate, which would not change if WPSC participated with METC in the METC pricing zone. Turner’s assumed benefits are an illusion.” This statement illustrates exactly the reason that joint planning and a joint zone will benefit Consumers’ customers. Consumers does not take into consideration 30 Wolverine’s transmission system in the planning of its distribution system. There are several areas on the Wolverine network that Consumer Energy’s customers would have benefited from ties to the Wolverine system. In fact, Consumers has taken specific steps to ignore the presence of the Wolverine system. In the late-1990s, Consumers disconnected from the Wolverine network in Hersey, Michigan. This radial 46 kV network of Consumers in the Reed City area benefited from a tie with Wolverine at this location as Wolverine’s system generally exported power to the lower-voltage end of Consumers’ 46 kV lines. Subsequent to disconnecting from Wolverine, Consumers’ customers faced several significant outages in the Reed City area, while simultaneously, Wolverine’s network was growing even stronger at Hersey due to the addition of 50 MW of generation. Other examples, include the Zeeland and Redwood areas of the Wolverine network where interconnections to Wolverine’s system offered potentially cheaper and more robust options for Consumers, yet Wolverine’s overtures for joint planning were rebuffed. Perhaps, an even more damning example is the Leelanau Peninsula. In this case, an overture from one of Wolverine’s member-distribution cooperatives to Consumers to explore the interconnection of Wolverine’s and Consumers’ radial systems to mutually improve reliability was spurned on the grounds that Consumers did not want to give any credence to Wolverine that it’s system could support Consumers in any way. Consumers would apparently rather jeopardize its system reliability or pursue more expensive or duplicative system improvements than utilize Wolverine’s system where appropriate. Presumably, Consumers does this to perpetuate its long-standing argument that Wolverine does not have a transmission system. Consumers’ apparent 31 disregard for customer reliability is inconceivable to Wolverine who is owned by its customers. Summary Application of the FERC 7-Factor Test leads to the conclusion that, with the exception of 69 kV radial lines and associates facilities that serve a single retail account, the lines of Wolverine which transmit electricity at 69 kV and above, including all associated facilities, should be classified as transmission under the FERC 7-Factor Test criteria. In contrast, all 69/12.5 kV and 69/25 kV step-down facilities including all associated facilities should be classified as distribution facilities. A breakdown of these facilities and their classification follows: TABLE 8 Classification of Wolverine Facilities Description 138 kV Lines 138/69 kV Stations 69 kV Lines 69 kV Radials 69 kV Transmission Stations 69 kV Distribution Stations 46 kV Ties 1 2 Transmission 80.2 Miles 12 1,053.4 Miles 394.3 Miles 33 N/A N/A Distribution N/A N/A N/A 3.9 Miles1 N/A 134 32 Radials serving dedicated substations including Morley 2, Osceola, Reynolds, Sebewa and Winn. Milton, Plains Road and Resort. 32 DISTRIBUTION UNDERBUILD LINES MILES ON 69 kV TRANSMISSION LINES DIST. U/B LINE MILES DIST. U/B LINE MILES LINE NAME Advance - Boyne City Advance - East Jordan Jct. Advance - Elmira Airport - C.P. Co. Tie Airport - Posen Altona - Morley Altona - Pierson Altona - Vestaburg Atlanta - Airport 138kV Atlanta - Hillman Baldwin - Walkerville Baseline Tap (D.C. w/ HT-SH) Bass Lake - Brethren Bass Lake - Wolf Lake Black Lake - Hammond Bay Boyne City - Hayes Boyne City - Petoskey Brohman Tap Brooks Tap Burnips - Lowell Junction Burnips - Wayland Canadian Lakes Tap Carson City Tap Casnovia - Cedar Springs Casnovia - Grand Haven Cedar Springs - Howard City Cheboygan - Tower Chester - Eaton Rapids Chester - Vermontville Copemish - Brethren Copemish - Thompsonville Crawford - Vestaburg Drenthe Tap East Bay - Bates East Bay - Grawn East Jordan - Eastport East Jordan Jct - Westwood East Jordan Jct. - East Jordan Eastport - Barnard Eden - Hart Elmira - Gaylord (LV-AA D.C.) MILES 8.11 5.60 17.20 1.32 16.25 10.37 15.89 19.52 30.62 21.74 19.51 0.21 18.11 11.14 12.78 11.85 10.48 1.34 3.21 37.06 17.81 0.99 5.63 10.40 29.06 14.86 21.76 18.41 10.69 10.81 8.86 8.99 0.23 5.89 11.86 11.42 23.07 2.17 9.93 12.63 14.33 0.62 6.58 6.41 9.04 27.88 17.62 0.36 37.63 3.86 0.47 7.90 20.20 12.54 24.45 5.70 10.64 2.87 12.83 13.80 24.02 19.52 14.59 23.08 LINE NAME Hersey - White Cloud Hillman - Airport Hillman - Beaver Lake Hinton Tap Interlochen Tap Johannesburg Tap Kalkaska Tap Kewadin - Milton Lake County - Bass Lake Lebanon Tap Leroy - Hartwick Leroy - Tustin Lewiston - Atlanta MILES 26.33 8.76 13.12 0.42 1.05 6.84 2.13 3.45 8.35 4.66 9.70 7.67 12.02 15.19 8.13 31.17 26.10 0.42 9.53 30.48 0.74 7.76 1.26 18.43 9.08 16.32 9.14 7.02 15.58 18.86 9.72 9.89 1.59 0.27 5.33 0.65 0.68 0.20 1.90 Lewiston - Lovells Lincoln Tap Livingston - Atlanta 138kV Lowell - Portland Middleville Tap Millersburg - Hawks Odessa - Wayland Osceola Tap Otsego Tap 0.79 0.37 0.51 0.83 0.74 0.11 Paris Tap Pellston - Cheboygan Pellston - Cross Village 4.77 0.72 Petoskey - Pellston Pierson Jct - Howard City Plains Junction - Star Lake 0.11 0.13 Portland - Chester Portland - Fowler Portland - Odessa Posen - Grand Lake Redwood - Hart Rewood Tie Scottville - Eden Scottville - Lake County Scottville - Riverton Shelby - Rodgers Silver Lake Tap 6.12 15.42 6.51 5.00 6.28 15.93 7.95 47.33 7.72 2.62 0.17 27.74 4.21 12.31 1.30 23.53 4.95 9.49 11.19 4.72 17.46 11.45 3.87 11.42 11.93 15.04 22.85 36.08 3.15 0.28 1.01 U/B miles vs. total 69kV line miles ratio 1.93 0.27 6.78 0.61 0.37 0.77 1.45 0.20 1.36 0.71 South Boardman - East Bay South Boardman - Fife Lake South Boardman - Leroy Star Lake - Lake County Fairview Tap (Zeeland D.C Tap) Fingerboard Tap Fountain Tap Fowler - Greenbush Fowler - Vestaburg Gaylord - Lewiston Goodwin Tap Grand Haven - Burnips Grand Ledge Tap Grand Traverse Tap Graves Crossing - Central Lake Grawn - Copemish Grawn - Lake Ann Grawn - Lake Leelanau Hagensville Tap Harbor - West Traverse Harbor Tap Hart - Shelby Hawks - Posen Hersey - Altona Hersey - Baldwin Hersey - Leroy 138kV Hersey - Weidman 1.88 Suttons Bay Tap Timberlee Tap 0.51 Tower - Atlanta Tower - Black Lake 0.27 Tower - Millersburg Traverse City Light & Power Tie 2.42 0.23 Vermontville - Hastings Victory Tap Walkerville - Hart Wayland - Hastings Weare Tap Weidman - Crawford Weidman - Stevenson Westphalia Tap 0.43 0.31 0.18 Westwood - Clam River Westwood - Manistee River Westwood - South Boardman White Cloud - Casnovia White Cloud - Rodgers 0.20 Winn Tap TOTALS 1529.37 40.28 2.6% Exhibit 1, Page 34 Exhibit 2, Page 35 Exhibit 3, Page 36 Exhibit 4, Page 37 Exhibit 4, Page 38 Exhibit 4, Page 39 Exhibit 4, Page 40 Exhibit 4, Page 41 Exhibit 4, Page 42 Exhibit 4, Page 43 Wolverine, Grand Haven and Lowell 2004 Hourly Load Duration Curve and Generation Capacity Available Inside Wolverine's Network 500 450 400 350 300 250 200 150 100 50 0 0% 10% 20% 30% 40% 50% 60% Generation 70% 80% 90% 100% Load Curve Exhibit 5, Page 44 Exhibit 6, Page 45 Exhibit 6, Page 46