S T A T E OF M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * *

Transcription

1 S T A T E OF M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * In the matter of the application of UPPER PENINSULA POWER COMPANY ) for authority to reconcile its revenue decoupling ) Case No. U- mechanism for 00. ) ) QUALIFICATIONS AND DIRECT TESTIMONY OF NICHOLAS M. REVERE MICHIGAN PUBLIC SERVICE COMMISSION October, 0

2 QUALIFICATIONS OF NICHOLAS M. REVERE CASE NUMBER U- PART I 0 0 Q. Please state your name and business address. A. My name is Nicholas M. Revere. My business address is Mercantile Way, Suite, Lansing, Michigan. Q. By whom are you employed and in what capacity? A. I am employed by the Michigan Public Service Commission (MPSC or Commission) as an Economic Analyst in the Rates and Tariffs section of the Regulated Energy Division. Q. Would you briefly describe your academic background? A. I received a Bachelor of Arts degree in Political Science and a Bachelor of Arts degree in Economics from Michigan State University in 00. In August of 00 and 00, I completed the annual National Association of Regulatory Utility Commissions (NARUC) regulatory studies program at Michigan State University, which included courses on ratemaking, rate case auditing, regulatory policy, and other regulatory issues. In September of 00, I completed the Institute for Public Utilities Advanced Regulatory Studies Program. Q. What are your current responsibilities at the MPSC? A. My current responsibilities include the following: preparing monthly bill comparisons for regulated gas and electric utilities and cooperatives for posting to the Commission website, assisting other MPSC Staff (Staff) members with various assignments and case work, preparation of case schedules and related materials for use by Staff, researching various proposals before the Commission involving rates and tariffs, and examination of tariff sheets submitted by regulated utilities and cooperatives for compliance with the Commission's Orders. I

3 QUALIFICATIONS OF NICHOLAS M. REVERE CASE NUMBER U- PART I 0 conduct statistical analyses and present financial and rate data, which includes compiling data and preparing graphs for the Consumer Forums held by the MPSC. I participate in cases before the Commission as assigned, including rate cases, Cooperative TIER cases, ex parte cases, and special contract cases. I also help with maintenance of the MPSC website. Q. Have you previously filed testimony in any cases before the Commission? A. Yes. I filed testimony in MPSC Case No. U- and U-, Consumers Energy s Electric Rate Cases, and MPSC Case No. U-, Detroit Edison s Electric Rate Case. I filed testimony in MPSC Case No. U-, MichCon Gathering Company v. Highmount Midwest Energy, which is an Act gas pipeline complaint case. I also filed testimony in MPSC Case No. U-, Consumers Energy s Gas Rate Case, MPSC Case No. U-, Michigan Consolidated Gas Company s Rate Case, MPSC Case No. U-, SEMCO Gas Company s Rate Case, MPSC Case No. U-, Consumers Energy s Electric Decoupling Mechanism Reconciliation, and MPSC Case No. U-0, Detroit Edison s Decoupling Mechanism Reconciliation.

4 DIRECT TESTIMONY OF NICHOLAS M. REVERE CASE NUMBER U- PART II 0 0 Q. What is the purpose of your testimony in this proceeding? A. The purpose of my testimony in this proceeding is to present Staff s recommended methodology for the pilot Revenue Decoupling Mechanism (RDM) reconciliation. I propose using actual revenue shortfalls to calculate the RDM surcharge. As an alternative, I propose using rate schedules, rather than arbitrary customer groups, to calculate the appropriate RDM surcharge on an average per customer basis. Q. Are you sponsoring any Exhibits? A. Yes, I am sponsoring the following Exhibits: Exhibit S-, Company s Method Removing Schedule A Exhibit S-, Company s Method Removing Schedule A and SL- Exhibit S-, Company s Method Using Staff Groups Exhibit S-, Staff Average Per Customer Method Exhibit S-, Staff Actual Exposure Method Exhibit S-, Comparison of Results Q. Please briefly describe each of your exhibits. A. Exhibit S- is a recalculation of the Company s Exhibit A-, pg. with Schedule A and associated net recoveries removed. Exhibit S- is a recalculation of the Company s Exhibit A-, pg. with Schedule A and SL- removed. Exhibit S- is calculated similarly to Company Exhibit A-, pg., but with Staff s recommended customer groupings. Exhibit S- is Staff s Average per Customer (APC) Method. Exhibit S- is Staff s Actual Exposure Method, which represents Staff s

5 DIRECT TESTIMONY OF NICHOLAS M. REVERE CASE NUMBER U- PART II 0 0 recommended methodology. Exhibit S- is a comparison of the results of each of Staff s Exhibits and the Company s calculation. Q. Please explain the differences between the Company s method and the alternatives presented by Staff. A. There are two major differences between the method presented by the Company and the methods presented by Staff. First, Staff conducts its calculations on the basis of rate schedule rather than on the basis of the customer groups utilized by the Company. Second, Staff excludes additional schedules from its calculations. Q. Why does Staff conduct its calculations on the basis of rate schedule? A. It is Staff s position that using rate schedules, as is done in the Company s Cost of Service Studies to allocate costs, is more appropriate than using the groups used by the Company. In addition, the large difference in average use between the rate schedules the Company s groups consist of makes it inappropriate to combine the rates schedules in the same manner as the Company. For example, the actual usage per customer for schedule A- is around, (Exhibit S-, line, column a), while the actual usage per customer for schedule AH- is almost double that (Exhibit S-, line, column b). As the number of customers on A- is ten times the number on schedule AH-, the average usage per customer for the combined group would skew towards that for A-, while not reflecting reality for either schedule. Both schedules are included in the Residential class in the Company s calculation. The effect for Secondary and Primary schedules is even greater. For example, the actual average usage for P- customers is more than ten times greater than that for C- customers. At the same time, there were ten times

6 DIRECT TESTIMONY OF NICHOLAS M. REVERE CASE NUMBER U- PART II 0 0 as many customers on the C- schedule. Again, the results from combining these two schedules reflects reality for neither. In fact, in extreme cases, the change in average usage for a combined group could move in a direction opposite that of its constituent schedules. The effect using rate schedules would have on the results of the reconciliation is quantified on Exhibit S-. The result is a net recovery amount of $,, which is approximately $. million lower than that requested by the Company. Q. Is conducting the calculations for this reconciliation on the basis of rate schedule consistent with the Commission Order authorizing the pilot Revenue Decoupling Mechanism (PRDM)? A. Yes. In the December, 00 Order in MPSC Case No. U-, pg., the Commission states the following: The application of the mechanism upon specific customer groups, customer classes, or a combination thereof, will be determined in the reconciliation proceeding. Based on the quoted language, Staff applied the mechanism to rate schedules, which in Staff s opinion are the most appropriate customer groups as described above. Q. What rate schedules has Staff excluded from its calculations? A. Staff excludes the rates excluded by the Company (the per-lamp lighting rates) and two additional rates; Schedule A and SL-. Q. Why did Staff exclude Schedule A?

7 DIRECT TESTIMONY OF NICHOLAS M. REVERE CASE NUMBER U- PART II 0 0 A. Schedule A had only one customer, and that customer went bankrupt part of the way through the decoupling period. To include this schedule in the calculation would reimburse the Company for sales losses which are known to be outside the intent of this PRDM reconciliation. In its November, 00 Order in MPSC Case No. U- (pp. -), the Commission implied that the PRDM was intended to permit Consumers (and thereby the Company) to recover lost revenue resulting from energy efficiency measures: The Commission agrees in concept with both Consumers and the Staff. A decoupling mechanism is typically created as a solution to further the public policy objectives of assisting customers to use energy more efficiently and reduce the utility s reliance on certain existing fuel sources, while reducing overall costs. The principal purpose of decoupling is to transform the current regulatory paradigm that gives a utility a strong incentive to sell as much electricity as possible, without regard to the negative effects upon overall costs and individual customer bills. Decoupling can be utilized to manage changes in electricity sales attributable to updated building codes, expanded energy efficiency programs (including federal and state weatherization programs), upgrades in appliance efficiency, and other similar demand side policies. Decoupling is a ratemaking mechanism that removes the link between energy sales, or throughput, and the utility s non-fuel revenues. With decoupling, differences between projected and actual sales, and the associated differences in the utility s revenues, are reconciled periodically. A well-crafted decoupling

8 DIRECT TESTIMONY OF NICHOLAS M. REVERE CASE NUMBER U- PART II 0 0 mechanism will likely mean that changes in revenue resulting from changes in consumption will no longer cause a utility to file a general rate case. Rather, a utility s need to file a general rate case will be driven by changes in the utility s underlying costs. [emphasis added.] In Staff s opinion, it would not be consistent with the above language to include Schedule A in the PRDM reconciliation because although Schedule A revenues have declined, it is not attributable to energy efficiencies. Rather, the reduced usage on this rate schedule is due mainly to the bankruptcy of the only customer taking service on it. Consequently, Staff has also excluded all Schedule A related bankruptcy proceeding recoveries from this proceeding. Q. Using the Company s methodology, what would happen if the Commission includes Schedule A in this reconciliation? A. As the only Schedule A customer is no longer taking service from the Company, the net amount to be recovered from this customer would actually be recovered from other customers in the group defined by the Company. It would be unreasonable to charge other customers for the change in usage associated with the customer formerly on Schedule A going bankrupt. Q. How does Staff s methodology impact the PRDM reconciliation calculation? A. The effect of removing Schedule A, along with the recovery amounts, from the Company s calculation is shown on Exhibit S-. The result is a net recovery amount of $,,, which is approximately half a million dollars lower than that requested by the Company.

9 DIRECT TESTIMONY OF NICHOLAS M. REVERE CASE NUMBER U- PART II 0 0 Q. Why does the language used in the Order referenced have any bearing on the instant case? A. The Order referenced approved the decoupling mechanism that the Company s PRDM being reconciled in this proceeding was based on. Q. Why did Staff exclude SL-? A. Staff maintains that excluding SL- is consistent with the exclusion of the other lighting rates. Lighting customers have less opportunity to reap the benefits from the Company s EO efforts than other customers. Also, the use of an average use per customer method is inappropriate for these customers, as the average use per light would be a more accurate way of looking at their EO reductions, were any to occur. Efficiency measures, such as replacing a light with a more efficient model that produces the same output, would be captured in a usage per light measure. Using a usage per customer method would capture changes due to a customer adding or removing lights for reasons unrelated to energy efficiency. The results from removing both Schedule A and SL- from the Company s Exhibit A-, pg. are shown on Exhibit S-. The result is a net recovery amount of $,,. This is approximately half a million dollars lower than that requested by the Company. Q. If the Commission decides to approve a reconciliation based on an average per customer method, what does Staff recommend? A. Staff recommends the Commission approve the calculation on Exhibit S- if it decides an average per customer calculation is appropriate. This method incorporates all the changes Staff maintains are necessary for the average per

10 DIRECT TESTIMONY OF NICHOLAS M. REVERE CASE NUMBER U- PART II 0 0 customer to yield reasonable results, as discussed previously. This method results in a net recovery amount of $,. Q. Does Staff recommend the Commission approve an average per customer method? A. No. It is Staff s position that conducting the reconciliation on an average per customer basis is inappropriate. Q. Why is it Staff s position that the average per customer methodology is inappropriate? A. A comparison of the average per customer usage on Staff s exhibit S- with that on the Company s Exhibit A-, pg. demonstrates how the change in average customer usage can vary dramatically based on the way customers are grouped. The effect on the net amount to be recovered from customers of all the methods presented is shown on Exhibit S-. Q. Which of its calculations does Staff recommend the Commission approve? A. Staff recommends the Commission approve Staff s Actual Exposure method, which is laid out on Exhibit S-. This method compares the Company s total actual sales per rate schedule with the total forecasted sales per rate schedule used to calculate the rates approved in MPSC Case No. U-. The resulting difference in sales per rate schedule is multiplied by each schedule s non-fuel rate to give the net recovery amount per schedule. This method gives the Company s actual exposure to changes in revenue due to the sales changes between the rate case and what was actually experienced by the Company. Q. Why does Staff support the Actual Exposure methodology?

11 DIRECT TESTIMONY OF NICHOLAS M. REVERE CASE NUMBER U- PART II 0 A. Since the average use per customer is dependent on potentially arbitrary groupings, Staff strongly recommends that actual revenue gains/shortfalls, as shown on Exhibit S-, be approved by the Commission. The result is a net recovery amount of $,. Q. Are there any other modifications to the reconciliation that might have been appropriate, were other circumstances to hold? A. Yes. If the Company had any choice sales included in the rate case amounts or in the data from over the decoupling period, it would have been necessary to adjust for the effects of choice migration. This would have required that the calculations be done separately for power supply and distribution within the rate schedules, with the power supply portion applying only to full service and the distribution applying to both full-service and choice customers. It would also have required an adjustment to the power supply sales in order to remove the effects of choice migration from the results. As the Company had no choice sales in the rate case or over the decoupling period, these modifications were unnecessary. Q. Does this complete your testimony? A. Yes, it does. 0

12 S T A T E OF M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * In the matter of the application of UPPER PENINSULA POWER COMPANY ) for authority to reconcile its revenue decoupling ) Case No. U- mechanism for 00. ) ) EXHIBITS OF NICHOLAS M. REVERE MICHIGAN PUBLIC SERVICE COMMISSION October, 0

13 Michigan Public Service Commission Case No.: U- Upper Peninsula Power Company Exhibit: S- Revenue Decoupling Mechanism Witness: Nicholas M. Revere Company's Method Removing Schedule A Page: of Date: October, 0 (a) (b) (c) (d) (e) (f) Secondary () Primary () Total/Average Line No. Description Residential () Bundled ROA Bundled ROA Rate Case Nonfuel Charges Proposed Tariff Revenue $,, $,, $0 $,0,0 $0 $,,0 Less: Fuel Revenue ($,,) ($,,0) $0 ($,,0) $0 ($,,0) Nonfuel Revenue $,, $,, $0 $,, $0 $,,00 Annual Sales (kwhs),,,, 0,, 0,, Nonfuel Charge ( / kwh) Rate Case Sales & Customers 00 Annual Sales (kwhs),,,, 0,, 0,, 00 Monthly No. of Customers,, 0 0 0, Rate Case Sales/Customer,0, 0,, 0, Actual Sales & Customers 00 Annual Sales (kwhs),, 0,0, 0 0,,0 0,, Monthly No. of Customers,, 0 0, Actual Sales/Customer,, 0,0, 0,0 Calculation of Revenue Decoupling Surcharges Annual kwh Sales/Customer Rate Case Sales/Customer,0, 0,, 0, Actual Sales/Customer,, 0,0, 0,0 Sales/Customer Variance,0 0 (0,0) 0 Nonfuel Charge ( /kwh) Nonfuel Revenue Variances ($/Customer) $. $.0 $0.00 ($,.) $0.00 Rate Case Monthly No. of Customers,, Gross Nonfuel Revenue Variance $, $, $0 ($,) $0 $,, Net Recoveries $0 $0 $0 $0 $0 $0 0 Net Nonfuel Revenue Variance $, $, $0 ($,) $0 $,, 0 Projected Sales (kwh) from Case No. U-,,0,,0 0,, 0,, RDM Surcharges ( /kwh) (0.0) Note : Residential = A-, AH-, A-, and AH-. Note : Secondary = C-, H-, P-, CP-U Secondary, SL-, C-, H-, and P-. Note : Primary = CP-U Primary, CP-U Transmission, and WP-.

14 Michigan Public Service Commission Case No.: U- Upper Peninsula Power Company Exhibit: S- Revenue Decoupling Mechanism Witness: Nicholas M. Revere Compay's Method Removing Schedule A and SL- Page: of Date: October, 0 (a) (b) (c) (d) (e) (f) Secondary () Primary () Total/Average Line No. Description Residential () Bundled ROA Bundled ROA Rate Case Nonfuel Charges Proposed Tariff Revenue $,, $,, $0 $,0,0 $0 $,, Less: Fuel Revenue ($,,) ($,,) $0 ($,,0) $0 ($,,0) Nonfuel Revenue $,, $,00,00 $0 $,, $0 $,,0 Annual Sales (kwhs),,,00,0 0,, 0,, Nonfuel Charge ( / kwh) Rate Case Sales & Customers 00 Annual Sales (kwhs),,,00,0 0,, 0,, 00 Monthly No. of Customers,, 0 0 0,0 Rate Case Sales/Customer,0, 0,, 0, Actual Sales & Customers 00 Annual Sales (kwhs),, 0,0,0 0 0,,0 0,0, 0 00 Monthly No. of Customers,, 0 0,0 Actual Sales/Customer,, 0,0, 0, Calculation of Revenue Decoupling Surcharges Annual kwh Sales/Customer Rate Case Sales/Customer,0, 0,, 0, Actual Sales/Customer,, 0,0, 0, Sales/Customer Variance,0 0 (0,0) 0 Nonfuel Charge ( /kwh) Nonfuel Revenue Variances ($/Customer) $. $. $0.00 ($,.) $0.00 Rate Case Monthly No. of Customers,, Gross Nonfuel Revenue Variance $, $0, $0 ($,) $0 $,, Net Recoveries $0 $0 $0 $0 $0 $0 0 Net Nonfuel Revenue Variance $, $0, $0 ($,) $0 $,, 0 Projected Sales (kwh) from Case No. U-,,0,,0 0,, 0,, RDM Surcharges ( /kwh) (0.0) Note : Residential = A-, AH-, A-, and AH-. Note : Secondary = C-, H-, P-, CP-U Secondary, C-, H-, and P-. Note : Primary = CP-U Primary, CP-U Transmission, and WP-.

15 Michigan Public Service Commission Case No.: U- Upper Peninsula Power Company Exhibit: S- Revenue Decoupling Mechanism Witness: Nicholas M. Revere Company's Method Using Staff Groups Page: of Date: October, 0 (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) (n) (o) Line No. Description A- AH- A- AH- C- H- P- SL- C- H- P- WP- CP-U Sched. A Total/Average Rate Case Nonfuel Charges Proposed Tariff Revenue $,, $,0, $,, $, $0,0,0 $,0,0 $,,0 $, $, $0, $,, $,, $,,0 $,, $,, Less: Fuel Revenue ($,0,0) ($,,0) ($,,) ($,) ($,,) ($,00) ($,0,) ($,) ($,) ($,) ($,) ($,,0) ($,,) ($,00,) ($,,) Nonfuel Revenue $,, $,,0 $,, $, $,, $,00 $,0, $, $, $,0 $, $0, $,, $,0, $,,0 Annual Sales (kwhs),,0,,0,,0,,,,,,0,0, 0,,,,,0,0,0,,,0,,0,0, Nonfuel Charge ( / kwh) Rate Case Sales & Customers 00 Annual Sales (kwhs),,0,,0,,0,,,,,,0,0, 0,,,,,0,0,0,,,0,,0,0, 00 Monthly No. of Customers,,,,, Rate Case Sales/Customer,,,,,,, 0,,,0,,0,,,,,0, Actual Sales & Customers 00 Annual Sales (kwhs),,0 0,,,,,,0,,,,,,,,,,,,,,,,,,, 0 00 Monthly No. of Customers,,, 0, 0, Actual Sales/Customer,,,,,,,,,0,,,,,,0,,, Calculation of Revenue Decoupling Surcharges Annual kwh Sales/Customer Rate Case Sales/Customer,,,,,,, 0,,,0,,0,,,,,0, Actual Sales/Customer,,,,,,,,,0,,,,,,0,,, Sales/Customer Variance 0,,0, () (,0),, (,0),,, Nonfuel Charge ( /kwh) Nonfuel Revenue Variances ($/Customer) $. $. $0. $. $. $. $.0 $. $. ($0.) ($.) $,. ($,00.) $,0. Rate Case Monthly No. of Customers,,,, Gross Nonfuel Revenue Variance $0, $,0 $ $, $, $, $, $, $,0 ($,0) ($,) $, ($,) $,0 $,0, Net Recoveries $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 ($00,000) ($00,000) 0 Net Nonfuel Revenue Variance $0, $,0 $ $, $, $, $, $, $,0 ($,0) ($,) $, ($,) $,0 $, 0 Projected Sales (kwh) from Case No. U-,,,,,,,0,,0,,,,0,0,,,,,,0,,,, 0,0, RDM Surcharges ( /kwh) (0.) (0.0) 0.0 (0.) 0.000

16 Michigan Public Service Commission Case No.: U- Upper Peninsula Power Company Exhibit: S- Revenue Decoupling Mechanism Witness: Nicholas M. Revere Staff Average Per Customer Method Page: of Date: October, 0 (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) Line No. Description A- AH- A- AH- C- H- P- C- H- P- WP- CP-U Total Rate Case Nonfuel Charges Proposed Tariff Revenue $,, $,0, $,, $, $0,0,0 $,0,0 $,,0 $, $0, $,, $,, $,,0 $,, Less: Fuel Revenue ($,0,0) ($,,0) ($,,) ($,) ($,,) ($,00) ($,0,) ($,) ($,) ($,) ($,,0) ($,,) ($,,) Nonfuel Revenue $,, $,,0 $,, $, $,, $,00 $,0, $, $,0 $, $0, $,, $,, Annual Sales (kwhs),,0,,0,,0,,,,,,0,0,,,,,0,0,0,,,0,, Nonfuel Charge ( / kwh) Rate Case Sales & Customers 00 Annual Sales (kwhs),,0,,0,,0,,,,,,0,0,,,,,0,0,0,,,0,, 00 Monthly No. of Customers,,,,,0 Rate Case Sales/Customer,,,,,,,,,0,,0,,,, Actual Sales & Customers 00 Annual Sales (kwhs),,0 0,,,,,,0,,,,,,,,,,,,,,,,0, 0 00 Monthly No. of Customers,,, 0,,0 Actual Sales/Customer,,,,,,,,0,,,,,,0, Calculation of Revenue Decoupling Surcharges Annual kwh Sales/Customer Rate Case Sales/Customer,,,,,,,,,0,,0,,,, Actual Sales/Customer,,,,,,,,0,,,,,,0, Sales/Customer Variance 0,,0 () (,0),, (,0) Nonfuel Charge ( /kwh) Nonfuel Revenue Variances ($/Customer) $. $. $0. $. $. $. $.0 $. ($0.) ($.) $,. ($,00.) Rate Case Monthly No. of Customers,,,, Gross Nonfuel Revenue Variance $0, $,0 $ $, $, $, $, $,0 ($,0) ($,) $, ($,) $, 0 Projected Sales (kwh) from Case No. U-,,,,,,,0,,0,,,,0,0,,,,,0,,,, 0,, RDM Surcharges ( /kwh) (0.) (0.0) 0.0 (0.)

17 Michigan Public Service Commission Case No.: U- Upper Peninsula Power Company Exhibit: S- Revenue Decoupling Mechanism Witness: Nicholas M. Revere Staff Actual Exposure Method Page: of Date: October, 0 (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) Line No. Description A- AH- A- AH- C- H- P- C- H- P- WP- CP-U Total/Average Rate Case Nonfuel Charges Proposed Tariff Revenue $,, $,0, $,, $, $0,0,0 $,0,0 $,,0 $, $0, $,, $,, $,,0 $,, Less: Fuel Revenue ($,0,0) ($,,0) ($,,) ($,) ($,,) ($,00) ($,0,) ($,) ($,) ($,) ($,,0) ($,,) ($,,) Nonfuel Revenue $,, $,,0 $,, $, $,, $,00 $,0, $, $,0 $, $0, $,, $,, Annual Sales (kwhs),,0,,0,,0,,,,,,0,0,,,,,0,0,0,,,0,, Nonfuel Charge ( / kwh) Rate Case Sales & Customers 00 Annual Sales (kwhs),,0,,0,,0,,,,,,0,0,,,,,0,0,0,,,0,, 00 Monthly No. of Customers,,,,,0 Rate Case Sales/Customer,,,,,,,,,0,,0,,,, Actual Sales & Customers 00 Annual Sales (kwhs),,0 0,,,,,,0,,,,,,,,,,,,,,,,0, 0 00 Monthly No. of Customers,,, 0,,0 Actual Sales/Customer,,,,,,,,0,,,,,,0, Calculation of Revenue Decoupling Surcharges Annual kwh Sales Rate Case Sales,,0,,0,,0,,,,,,0,0,,,,,0,0,0,,,0,, Actual Sales,,0 0,,,,,,0,,,,,,,,,,,,,,,,0, Sales Variance,,, (,0),,,,,,0, 0, 0,0,0,, (,,0) (,,) Nonfuel Charge ( /kwh) Nonfuel Revenue Variances ($) $,. $,. ($,.) $,0.0 $,.0 $,.0 $0,. $,. $,. $,0.0 $,. ($,.0) $, 0 Projected Sales (kwh) from Case No. U-,,,,,,,0,,0,,,,0,0,,,,,0,,,, 0,, RDM Surcharges ( /kwh) (0.00) (0.)

18 Michigan Public Service Commission Case No.: U- Upper Peninsula Power Company Exhibit: S- Revenue Decoupling Mechanism Witness: Nicholas M. Revere Comparison of Results Page: of Date: October, 0 Company APC Company APC - A Company APC - A & SL- Company w/ Staff Groups Staff APC Staff Actual Exposure Exhibit Exhibit Exhibit Exhibit Exhibit Exhibit A-, pg. S- S- S- S- S- Total Non-Fuel Revenue Variance $,, $,, $,, $, $, $,

19 STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * * STATE OF MICHIGAN ) ) Case No. U- County of Ingham ) PROOF OF SERVICE Linda G. Brauker, being duly sworn, deposes and says that on October, 0, A.D., she ed a copy of the attached MPSC Testimony and Exhibits to the persons as shown on the attached list. Linda G. Brauker Subscribed and sworn to before me this th day of October, 0. Steven J. Cook Notary Public, Ingham County, Michigan My Commission Expires: April 0, 0

20 Upper Peninsula Power Company Sherri A. Wellman Miller Canfield Paddock & Stone, PLC One Michigan Ave., Ste. 00 Lansing, MI Calumet Electronics Corporation Michael J. Brown Carlin Edwards Brown & Howe, PLLC 0 W. St. Joe Hwy. Ste. 0 Lansing, MI mbrown@cebhlaw.com Administrative Law Judge Hon. Peter L. Plummer Administrative Law Judge Spencer A. Sattler Attorney General Michigan Public Service Commission Mercantile Way, Ste. P.O. Box 0 Lansing, MI 0 plummerp@michigan.gov sattlers@michigan.gov Case U- Proof of Service