25 1 STATE OF MICHIGAN 2 BEFORE THE MICHIGAN PUBLIC ...
Transcript of 25 1 STATE OF MICHIGAN 2 BEFORE THE MICHIGAN PUBLIC ...
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1 STATE OF MICHIGAN
2 BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
3 In the matter, on the Commission's own
motion, to initiate a contested case
4 proceeding involving Consumers Energy
Company, Michigan Consolidated Gas Case No. U-15929
5 Company, Michigan Gas Utilities
Corporation, and SEMCO Energy Gas Volume 3
6 Company to investigate whether any
clarifications, revisions, or additions
7 should be made to certain approved gas
customer choice tariffs.
8 ________________________________________/
9 MOTION HEARING
10 Proceedings held in the above-entitled matter
11 before Daniel E. Nickerson, Jr., J.D., Administrative
12 Law Judge with SOAHR, at the Michigan Public Service
13 Commission, 6545 Mercantile Way, Room D, Lansing,
14 Michigan, on Tuesday, September 22, 2009, at 9:01 a.m.
15 APPEARANCES:
16 RAYMOND E. McQUILLAN, J.D.
Consumers Energy Company
17 One Energy Plaza Drive, Rm. EP11-241
Jackson, Michigan 49201
18
On behalf of Consumers Energy Company
19
MICHAEL J. SOLO, JR., J.D.
20 The Detroit Edison Company
One Energy Plaza, #688 WCB
21 Detroit, Michigan 48226
22 On behalf of Michigan Consolidated Gas Company
23
24
25 (Continued)
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1 APPEARANCES Continued:
2 SHERRI A. WELLMAN, J.D.
Miller, Canfield, Paddock and Stone, P.L.C.
3 One Michigan Avenue, Suite 900
Lansing, Michigan 48933
4
On behalf of SEMCO Energy Gas Company and
5 Michigan Gas Utilities Corporation
6 ERIC J. SCHNEIDEWIND, J.D.
Varnum, Riddering, Schmidt & Howlett, LLP
7 The Victor Center, Suite 810
201 N. Washington Square
8 Lansing, Michigan 48933
9 On behalf of Direct Energy
10 SPENCER A. SATTLER,
Assistant Attorney General
11 6545 Mercantile Way, Suite 15
Lansing, Michigan 48911
12
On behalf of Michigan Public Service
13 Commission Staff
14 - - -
15
16 REPORTED BY: Lori Anne Penn (CSR-1315)
17
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1 Lansing, Michigan
2 Tuesday, September 22, 2009
3 At 9:01 a.m.
4 - - -
5 (Hearing resumed following adjournment of July 21,
6 2009.)
7 JUDGE NICKERSON: On the record. Good
8 morning, everyone. This is the date and time set for a
9 motion hearing before the Michigan Public Service
10 Commission in Docket No. U-15929, and this is a case
11 involving the Commission's own motion.
12 My name is Daniel Nickerson, I'm an
13 administrative law judge assigned on this case.
14 Let's take appearances of counsel for the
15 record. Why don't we commence with the moving party
16 here, Mr. Schneidewind.
17 MR. SCHNEIDEWIND: Thank you, your Honor.
18 Eric Schneidewind appearing for Direct Energy.
19 MR. SOLO: Michael Solo appearing on
20 behalf of the Michigan Consolidated Gas Company.
21 MR. McQUILLAN: Your Honor, I'm Ray
22 McQuillan on behalf of Consumers Energy Company.
23 MS. WELLMAN: Sherri Wellman on behalf of
24 Michigan Gas Utilities Corporation and SEMCO Energy.
25 MR. SATTLER: Thank you, your Honor.
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1 Spencer Sattler appearing on behalf of the Michigan
2 Public Service Commission Staff.
3 JUDGE NICKERSON: All right. Thank you
4 for your appearances this morning.
5 Mr. Schneidewind, I've had an opportunity
6 to review your motion, I also had an opportunity to
7 review the objection to the petition for late
8 intervention filed by Consumers Energy, I think I said
9 that, and by Staff. I believe that was all that was
10 filed with regard to this particular motion.
11 You may proceed, Mr. Schneidewind.
12 MR. SCHNEIDEWIND: Thank you, your Honor.
13 As a procedural matter, I would like to point out that
14 our pleading was filed as a motion to grant petition for
15 late intervention, and pursuant to the Rules of Practice
16 and Procedure before the Commission, and particularly
17 Rule 335(2), the timeframe that we were to observe was to
18 file nine days before the hearing, which in fact we did,
19 but unless a different time is set by the Commission or
20 the presiding officer, parties responding to that motion
21 were supposed to file no less than five days if served by
22 mail, and no less than three days if served by delivery.
23 I do note that I received the Staff pleading yesterday
24 evening at 3:58 p.m., I received a Consumers Energy
25 response yesterday evening at 4:06 p.m., in a timeframe
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1 that did not permit the detailed type of response that I
2 would have liked to make for the tribunal. So I hope you
3 will indulge me, your Honor, in, first of all, a response
4 to those pleadings, and second of all, I object certainly
5 to the timing. I was under the impression this was a
6 motion and that the timeframes involved in the motions
7 would be observed, and I certainly didn't have a period
8 of time prescribed by the Commission's Rules to review
9 these matters before appearing today.
10 With that procedural comment in mind, I
11 would like to go through the history of this matter and
12 not belabor it, but there are some specifics in which I
13 differ from the pleadings filed by both Staff and
14 Consumers.
15 It is true that the interventions were
16 prescribed by the Commission for June 2nd and a
17 prehearing conference for June 9th. And when Direct
18 Energy prepared and commenced to prepare their pleadings
19 to intervene late, it is true that we filed that on
20 September 8, but it is also true that in the process of
21 preparing to file that pleading, we did become aware of
22 the fact that settlement proceedings had been called by
23 the Commission Staff on September 9. That certainly was
24 a factor that caused us to initiate the intervention.
25 At the time that we became aware of that
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1 meeting and settlement conference on September 9, we did
2 lodge with the Staff a request, which I made verbally to
3 the Staff, that we be allowed to participate in that
4 proceeding. That request was denied. So as we go
5 through the background and the grounds for our
6 intervention, this becomes a very relevant matter,
7 because the chief objections to our intervention, as I
8 read them, that are made by both Consumers and Staff are
9 that we would, by intervening late, perhaps interfere
10 with or delay a settlement by commenting, by objecting or
11 whatever else. But it's ironic, and indeed I think
12 disturbing, that the very trouble and problem that the
13 Staff and Consumers raise could have been resolved by the
14 Staff if they had allowed Direct Energy to participate in
15 that settlement, then their objections would not have
16 been appropriate. So we're in a position here where the
17 Staff actually caused an event which could have prevented
18 the very problem that they raised, and I'll say more
19 about that later.
20 To go through the traditional
21 intervention test, obviously in Rule 201 we have to have
22 standing, and I think there's little or no question that
23 Direct Energy does meet the criteria for intervention and
24 standing in this case, and specifically the two-prong
25 test that calls for the interest to be within the zone of
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1 interest protected and a potential injury in fact. The
2 revisions proposed by Staff in their proposed guidelines
3 or revisions would cause significant injury potentially
4 to Direct Energy.
5 First of all, the Staff has proposed to
6 revise the definition of a legally authorized person in a
7 way that might even prevent signature on a contract by a
8 spouse of an account from being presumed to be legally
9 authorized. That certainly would make signing up
10 customers very difficult. The Staff proposes to revise
11 Section F2.1 to add to the length of the timeframe during
12 which a customer can cancel a contract that they've
13 signed; that could be a huge burden to a company that
14 obligates itself to purchase gas for that customer and
15 then finds itself with a cancelled contract. A third
16 point is a proposed revision to Section F2.6 of the rules
17 that would limit the term of all contracts, in other
18 words, vendors such as my client could no longer sign a
19 five-year contract or a four- or a three-year contract, I
20 believe the contracts would be limited to two years; that
21 would change the way we do business. And finally the
22 proposed revisions to Section F2.7 could be read to
23 prohibit verbal or electronic signatures. Once again,
24 this would cause a significant change and added expense,
25 we believe, to the way we do business. So I think
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1 they're's little doubt that Direct Energy, which is
2 probably the second largest gas Choice provider in the
3 State, would suffer an injury in fact if these revisions
4 are implemented, and certainly is within the zone of
5 interest to be protected.
6 Now, I think all the petitioners have
7 pointed out that the criteria to intervene under Rule 201
8 include good cause for the late intervention, and then
9 certainly a lack that the intervention will not cause
10 delay or prejudice.
11 Going to the issue of good cause, we have
12 pointed out at page 2 of our intervention that there was
13 in fact a hiatus in management responsibility for these
14 matters, and that occurred, it's unfortunate, but it's
15 simply a fact that there was really nobody minding the
16 store or in charge from early June through the end of
17 August.
18 Now, in looking at this issue of whether
19 there's good cause, there is precedent to the effect that
20 the law judge or presiding officer should in fact use
21 discretion rather than automatically denying or granting
22 a motion. In the case of Kowalski versus Fiutowski, 247
23 Mich App 156, the Court did hold, Appeals Court, that it
24 was an error to refuse to exercise discretion; and that's
25 all I'm asking the tribunal and your Honor to exercise
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1 today. And there is substantial precedent out there in
2 the Commission history for a grant of late intervention
3 and finding that there is good cause. First and
4 foremost, I'd like to point out the Commission's own
5 statements, and I'm not sure I have quite enough copies
6 here.
7 (Document provided to all parties.)
8 MR. SCHNEIDEWIND: And this document that
9 I'm passing out is a letter from the Commission's
10 executive secretary to an individual who presumably
11 wanted to intervene in a case, and her statement is to
12 the effect that -- and it's Case U-12766, I apologize for
13 sort of a blot in there -- that requests for late
14 intervention may be filed any time prior to the close of
15 the hearing record, and that's in paragraph four. And
16 that, I think you have to assume, is the position of the
17 Commission, that requests for late intervention may be
18 lodged at any time during the proceeding. There is not a
19 cutoff point.
20 Another case that I think yields valuable
21 precedent is in regards to the application of DTE Energy
22 Marketing, Inc., for a certificate of public convenience
23 and necessity, Case U-12197. And in that case, the law
24 judge presiding granted Detroit Edison's petition for
25 late intervention literally immediately prior to
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1 cross-examination of witnesses. Now, in this case,
2 cross-exam of witnesses is not until November, as I
3 recall, and indeed the testimony of intervenors is not
4 scheduled to occur until September 30, eight days from
5 now.
6 Another case, in regards to the
7 application of Michigan Gas Storage Company and
8 Southeastern Michigan Gas Company for authority to merge,
9 Case U-11220, October 29, 1997, the late intervention of
10 Stone Container Corporation was granted at the beginning
11 of the evidentiary hearing. Once again, we are not even
12 at that stage.
13 I participated in Case U-15806 in which
14 the late intervention of NextEra Energy was granted two
15 weeks after the prehearing conference. So there is
16 substantial Commission precedent for the fact that the
17 parties can be granted late intervention and good cause
18 can be found.
19 I do note that the Staff in their
20 opposition to our intervention cite Case U-10059 and
21 10061 where a cooperative was denied intervention, but I
22 think it's worth pointing out that the facts of that case
23 might lead to a somewhat different conclusion, because I
24 believe that in that instance, the cooperative group,
25 instead of intervening in the case matter, had decided to
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1 pursue direct negotiations with Consumers Energy Company
2 as an alternative to in fact the route of intervention,
3 then the cooperative group decided that they could not --
4 that they would prefer to intervene, and the Commission,
5 it's true, did deny intervention, but it's also true that
6 the cooperative group had been at least allowed to
7 negotiate with the company and try reach a settlement.
8 In our case, we've been denied that opportunity. We have
9 been denied opportunity to get into the settlement
10 conference, even though we applied to do so before the
11 settlement conference was held, albeit on an informal
12 basis. So I think there is substantial precedent not
13 only for late intervention and to find good cause, but
14 also I think the case cited by the Staff actually could
15 be read to hold that a party can be granted late
16 intervention if in fact it's had another opportunity to
17 try to settle the matter and was afforded at least one
18 opportunity to gain input to the case or gain a
19 satisfactory resolution.
20 Now, the second grounds which parties
21 have opposed our intervention, the first being good
22 cause, gets to the point that our intervention will cause
23 a delay or prejudice. And indeed both Consumers and
24 Staff have cited the potential for settlement of this
25 case and that granting intervention at this stage may
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1 disrupt or somehow delay that settlement process. I
2 think as both parties admitted, a settlement conference
3 was held September 9, and we of course applied to
4 intervene September 8. I find the objections,
5 particularly on the part of Staff, somewhat astounding.
6 Once again, we were aware that a settlement conference
7 was in the offing, we intervened before that date, and we
8 requested the opportunity to participate in that
9 settlement. I'd ask your Honor to consider the fact that
10 if we had been allowed to participate in the settlement
11 conference and provide our input, none of the objections
12 of the Staff to the delay and to the disruption and all
13 that really would have been appropriate, because we would
14 have been in the meeting, we would have had a chance to
15 state our case, and hopefully to join in whatever
16 agreement may have been reached.
17 But I point out also to your Honor, at
18 this stage of the game, there really isn't any document
19 that -- there's conjecture about the fact there may be a
20 settlement, but to my knowledge, and I've certainly poked
21 around a bit to find out, no document as of yesterday had
22 been circulated, no agreement purportedly had been
23 reached as far as I can tell, no timeframe had been
24 established. So we're left with the point where the
25 objection of the Staff, which is that our intervention
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1 could delay a settlement, could have been prevented if in
2 fact we were allowed to participate in the settlement on
3 the 9th of September, a day after we filed, and certainly
4 more than a day after, or a day after we had verbally
5 requested the opportunity to participate and were
6 rejected in that request.
7 Now, let's take a look at this situation,
8 then. If in fact there is a settlement, and let's assume
9 for the sake of argument that the Staff is correct, that
10 a settlement is produced, if we were allowed to intervene
11 at this stage of the game, what would happen? Well, if
12 you take a look at Rule 333, the fact of the matter is
13 that if a partial -- if we did not agree with the
14 settlement, and that's making an assumption that I don't
15 think is really necessarily the case, we might agree with
16 it, but if we didn't, then the Staff then could file the
17 settlement document, and the Commission, if all parties
18 were not in agreement, would allow a 14-day comment
19 period, we would make a comment, and the Commission would
20 then decide to adopt or reject the settlement. So this
21 great -- the worst case in this situation for Staff if a
22 settlement is in the offing is that under Rule 333, the
23 Commission might allow 14 days for Direct Energy to
24 comment and state concerns with that settlement. Then
25 the Commission, if it were persuaded the settlement was
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1 good, could go right ahead and adopt that settlement.
2 So in that case, I would suggest to your
3 Honor that the delay involved or disruption is bordering
4 on trivial, but it's certainly minimal. It's a very few
5 days. Compare that with the time and expense of this
6 proceeding, and frankly, appeals, it might go up through
7 the court system if we aren't granted intervention. I
8 think there's no comparison. An intervention at this
9 stage of the game, particularly when there is no
10 settlement, can only allow directed comment, and then the
11 Commission can proceed to adopt a settlement if one
12 develops. That's really all we're asking for.
13 Now let's assume that a settlement does
14 not occur, that's case B. If a settlement does not
15 occur, Direct Energy, in the interest of expediting and
16 streamlining this procedure and avoiding delay and
17 burden, has waived on page 2 of their petition the right
18 to present testimony or to propound discovery questions.
19 So there's no doubt that we will not add to the number of
20 witnesses, we will not burden parties with discovery, we
21 will do everything in our power to make sure that this
22 case proceeds smoothly and on the schedule that the
23 parties would have anticipated. We're not disputing the
24 schedule. So we're willing to make concessions to make
25 sure this case goes forward if it proceeds through
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1 cross-examination and testimony. And on the other hand,
2 the worst case is if there is a settlement, which is by
3 no means a certainty at this point, that the Commission
4 could go forward over any objections we might place on
5 the record. It seems to me that the argument that our
6 presence in this case would cause a delay or a burden, in
7 view of these concessions that Direct has made and in
8 view of the Commission's rules regarding settlement, the
9 objections are really bordering on immaterial. I mean
10 they -- we will not have a significant impact on this
11 case schedule, even if we wish to do so, which is by no
12 means certain at all.
13 The only other point made among the two
14 documents opposing our intervention is that Consumers did
15 raise the issue that our interests were represented by
16 other parties, and I think it's very clear from the
17 revisions to the rules proposed by Staff that each entity
18 doing business in this state, and certainly large ones
19 such as Direct, have different business models, different
20 marketing methods and each will be impacted differently
21 by the fact that you can not sign long-term contracts if
22 the Staff's proposals are adopted, that you may require
23 electronic signatures, the terms, you know, that
24 presumptions in terms of the legality of signatures may
25 be changed. So I don't think one marketer can represent
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1 the interests of another simply because they do not
2 market this product in the same way.
3 In conclusion, I guess I would like to
4 make three basic points. Direct really should have been
5 allowed to intervene, but more important, to participate
6 in the settlement talks on September 9. That could have
7 avoided almost all of the concerns raised by Staff and
8 Consumers regarding burden, regarding delay, regarding
9 potential problems from complications or added burden.
10 That did not happen because our request to participate
11 was rejected, but I think that should cause the law judge
12 to review objections, that if we do get in now, that we
13 would impair the settlement talks, to view those as
14 either, as immaterial or lacking in substance. The
15 actions certainly of Staff denied us the chance to
16 eliminate that problem.
17 The second point is that the delay, if
18 any, to a settlement process would be minimal simply
19 because of the Rules of Practice and Procedure which
20 guarantee a party only 14 days to comment, and then the
21 Commission can go ahead and adopt a contested settlement.
22 And if there is no settlement, we will brief issues, but
23 we have volunteered to streamline this by waiving our
24 right to testimony and discovery.
25 In the final analysis, all Direct Energy
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1 has really asked for here, when you look at our posture
2 in the settlement or our posture in the hearing, waiving
3 testimony, all we have asked for is the right to comment
4 on the record with comments that will be viewed as part
5 of the record. You know, certainly we could comment
6 under 207, but that's not part of the record. So that's
7 what we hope to get from this. And even though the
8 timing is late, the mere right of commenting from a party
9 so greatly affected is one that is not only not
10 disruptive, but is I think the minimum standard for
11 justice in this case. Thank you.
12 JUDGE NICKERSON: Thank you,
13 Mr. Schneidewind.
14 All right, any comments in opposition?
15 Mr. McQuillan.
16 MR. McQUILLAN: Thank you, your Honor.
17 Your Honor, I can identify the issues from the
18 prospective of Consumers Energy, and they're a little
19 different than what Mr. Schneidewind has suggested, which
20 has led us to a rather unusual situation of opposing a
21 late intervention.
22 The docket was commenced in April,
23 interventions should have been filed by June 2nd.
24 According to the documents which Mr. Schneidewind has
25 filed, he represents a very sophisticated client, a huge
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1 business entity, seventh largest utility company globally
2 as ranked by Forbes Magazine. This is not a mom and pop
3 operation, a small town business, someone who's not
4 sophisticated, someone who's not aware of regulatory
5 proceedings, someone not aware of regulatory rules; this
6 is a very sophisticated entity. This sophisticated
7 entity got actual notice of the docket, according to the
8 documents that I saw attached to the Staff's filing.
9 This talk about a manager didn't do something or did
10 something or anything else hardly rises to good cause,
11 your Honor; that's just a day-to-day decision within the
12 organization as to whether to participate or not. And
13 frankly, months have gone by. This isn't a situation
14 like he had gave us in illustration where someone came in
15 two weeks late and said how about if I get in now.
16 In response to the notion that I didn't
17 file a timely response to this petition to intervene, I
18 would merely direct your attention to the specific rules
19 on petitions to intervene, as well as the specific rule
20 on petition for late intervention which says my answer
21 was due the day before the hearing, so it was a timely
22 answer. Mr. Schneidewind just cited in general responses
23 to general motions, I believe there's a more specific
24 rule on this topic, and it deals with responses to late
25 intervention.
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1 In terms of why is there such concern by
2 Consumers of another marketer getting into this docket, a
3 lot of things have happened since June 2nd when those
4 petitions to intervene should have occurred, your Honor.
5 The Staff went to an extraordinary length in this docket,
6 for which I commend them certainly, to say that they
7 would provide a draft of their philosophies to all of the
8 parties prior to filing their testimony, and would even
9 consider responses from parties to that draft. Staff did
10 that, parties did respond, there was a lot of input.
11 There was input on behalf of the utilities, there was
12 input on behalf of marketers, there were concerns raised
13 as to what was fair or unfair for customers, and so a lot
14 of interests were represented in that. Staff's testimony
15 then did make modifications, it wasn't some charade where
16 they say, tell us what you think but we're not going to
17 consider it; they made substantial modifications to their
18 positions in response to the input from various parties,
19 including marketing responses frankly, the responses from
20 marketing parties.
21 Discovery has been conducted in this
22 docket. The utilities have answered questions, the Staff
23 has answered a number of questions. Staff's testimony
24 was filed, and as I said, it was a modification of the
25 original philosophies that they presented.
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1 The next step, again to Staff's credit,
2 was to suggest a discussion where we got everybody
3 together and talked about Staff's position to see if
4 there was common ground. That took place, that was well
5 attended. I would guess there was 30 or 35 different
6 people that attended that particular meeting. There was
7 input from all parties; there was input from the Staff in
8 terms of the complaints that they had experienced over
9 the years from the gas marketing issues, there was
10 concerns from the marketers in terms of length of
11 contract, authorized persons, all of those topics were
12 discussed, none of those were forgotten. There was
13 responses from the utilities in terms of what billing
14 systems could accommodate or how long people, how we
15 would do our planning process, there was a very frank
16 dialogue, give and take by a lot of parties. So to now
17 suggest that another party can come in late and say, you
18 know, I don't agree with this or I don't like that or I
19 don't like this undoes everything. We go back to the
20 beginning now, your Honor, because the concessions that
21 were made by parties in responses to concessions from
22 other parties are off the table. We'd literally have to
23 start over. Now, Mr. Schneidewind may not care about
24 that, that may suit him fine, but it doesn't suit the
25 utility to have gone through this process and come what I
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1 think is, if we haven't crossed the finish line, we are
2 close to it, your Honor, in terms of a resolution, and if
3 we don't get a final resolution, I believe there's
4 perhaps only one issue on the table that would need to be
5 addressed during a hearing.
6 So when Mr. Schneidewind says, well, I
7 didn't get to attend that particular conference, number
8 one, he could have come to that conference, I doubt
9 anybody would have said, oh, you can't come into the
10 room, we will excuse you from the room. He could have
11 been there in an advisor role, he could have just talked
12 to the other marketers if he didn't want to sit at the
13 table. There's a lot of ways to express a viewpoint from
14 a party, particularly when it's the same viewpoint as the
15 other marketers have, and we've got five, six, seven of
16 them that have been granted intervention in this docket.
17 So it isn't as if the marketers are not represented in
18 this process.
19 But, too, I can understand the Staff
20 saying when we have settlement conferences with people
21 who have been granted intervention, who have followed the
22 rules, who have been granted intervention, attended a
23 prehearing conference, conducted discovery and everything
24 else, we aren't going to let people wander in off the
25 street to say that they like or don't like some aspect of
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1 it or that they perhaps don't know the history of it or
2 haven't gone through the process of hearing the Staff
3 present its philosophy and gone through the process of
4 giving a response to the Staff and seeing responses from
5 other parties and then seeing the product that the Staff
6 prepared in filing its testimony.
7 So I find that this is a slightly
8 different situation for a late intervention than the
9 usual one where somebody says, oh, you know, it came in,
10 secretary put it in the basket and it didn't get out of
11 the basket in time or that person was on vacation for a
12 couple weeks and it got lost in the shuffle and that's
13 regrettable and the organization would like to tighten
14 its procedures, but we all understand those circumstances
15 can occur. This is a very, very sophisticated business
16 entity who says, well, we had a change this our
17 management sometime in the summertime. Well, what was
18 going on in April, your Honor, when the docket was
19 started, when the notice was given from the Staff? What
20 was going on on June 2nd when the petitions to intervene
21 were due? We don't know. There's been no explanation
22 that said, oh, a secretary left or got sick or went on a
23 maternity leave or something or an attorney or a manager
24 took a new position and was slow in getting his work
25 resigned to other people and this was one of the things
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1 that fell through the cracks; there's no explanation like
2 that, it's just, well, we had a change of management
3 philosophy once this thing got pretty far down the road,
4 almost to the point of settlement. That's not the same
5 compelling notion as to why someone should get in two
6 weeks late as other situations that have presented
7 themselves to this Commission. So they don't frankly
8 have those kinds of equitable concerns saying, come on,
9 everybody can make a mistake, Consumers makes mistakes,
10 probably Staff makes a mistake or Mich Con makes a
11 mistake; this is very, very sophisticated entity that
12 says, well, at the end of the summer someone else looked
13 at this and said, well, we changed our mind, maybe we
14 should get in there now.
15 There's no reason why they couldn't have
16 been in communication with the Staff through this entire
17 process or with us through this entire process or with
18 other marketers through this entire process. I was not
19 aware of their request to participate frankly. I was
20 aware of their petition to intervene, but not that they
21 requested to show up; and frankly, I don't think that if
22 they had come to the conference they'd have been turned
23 away is my own personal opinion as to how things up here
24 operate on a general basis.
25 So as you put these things together and
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1 say is there good cause, frankly, there isn't -- I
2 appreciate Mr. Schneidewind's position, you've got to
3 represent your clients -- but there isn't here, this was
4 just a management philosophy from a very sophisticated
5 entity. And number two, does it change anything in the
6 proceeding, and my feeling is yes, it changes everything
7 in the proceeding. There's been a dynamic that's
8 established between the Staff, the companies and the
9 marketers, with customer interests represented as well,
10 and for someone to come in late and say, well, you know,
11 now I don't think I'm going to like that one provision,
12 now I don't think this provision is as favorable to me as
13 I want it, nothing was done in an abstract, everything
14 was done in the give and take of a negotiating session, a
15 very candid negotiating session where a lot of opinions
16 were expressed and a lot of responses were made and
17 concessions that were made were made recognizing that the
18 final result would be acceptable to all the various
19 entities, to the Staff, to the utilities and to the
20 marketers; and so for another marketer to come in late
21 and say, well, I'm not sure I like it that much, I can
22 appreciate that, but they also were in a position where
23 they could have avoided this in the first place, they
24 could have participated from the beginning. They knew
25 about it, Staff had e-mailed it to them or sent it to
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1 them electronically in some fashion, and they just chose
2 not to do it.
3 So my frustration is that now that we
4 think that this thing is to the point where we
5 practically could be drafting the settlement agreement
6 which we believe had complete consensus at that meeting
7 between all of the participates, we're now saying, I
8 don't know, is Mr. Schneidewind's client going to like
9 this, going to like that, going to want to change this,
10 going to want to change that; we've already had those
11 discussions on those topics, and that's why we feel
12 there's prejudice to us and that it's going to cause
13 delay, and if it does cause delay, if you can do a
14 settlement, it's much quicker than doing a contested
15 settlement which may include not just two weeks to file
16 comments, but may include testimony in support of the
17 settlement, testimony in opposition of the settlement, it
18 may involve a role for the administrative law judge to
19 make a recommendation, there's a lot more to it than just
20 saying oh, the worst case is a two-week delay in the
21 Commission receiving a settlement.
22 So Consumers believes that for these
23 specifics circumstances, this petition to intervene
24 should not be granted. I'm not saying that we're always
25 going to take a position in any other case that petitions
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1 to intervene are unwise, but due to the circumstances of
2 this docket, we think it's unwise in this case. We'd ask
3 that it be denied.
4 JUDGE NICKERSON: Thank you, sir.
5 Anyone else? Mr. Sattler.
6 MR. SATTLER: Yes, your Honor. Thank
7 you. More than three months have passed since the
8 prehearing in this case, and more than five months have
9 passed since the Commission initiated this proceeding,
10 and during that time, your Honor, Staff has devoted
11 numerous hours to preparing its testimony in this case
12 and to discussing settlement with the other parties; and,
13 your Honor, if you allow Direct Energy to intervene now,
14 you're going to place all the time and effort that Staff
15 devoted to its testimony and all the time and effort it
16 devoted to settlement discussions at risk. Direct Energy
17 hasn't provided a good reason to do this. It's not as if
18 Direct Energy didn't know about the case; the Commission
19 mailed a copy of its order initiating this case to Direct
20 Energy when it issued the order, but at that time, Direct
21 Energy chose not to intervene.
22 There is, however, good reason to deny
23 Direct Energy its petition to intervene. As I noted,
24 Staff has devoted numerous hours to its testimony and to
25 settlement, and permitting Direct Energy to intervene
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1 prejudices Staff and all the other parties that have
2 participated in those negotiations as Mr. McQuillan has
3 described them. And also, it could potentially prolong
4 the proceeding. If Direct Energy intervenes and disrupts
5 the settlement proceedings, it's going to be a much
6 longer proceeding than it would otherwise.
7 To address Mr. Schneidewind's point that
8 we didn't allow them to participate in the settlement, it
9 is true, and the reasons we didn't allow them to
10 participate are the same today as they were then: We
11 were concerned, we had the same concerns then that we
12 have now, we were concerned that they would bring new
13 issues to the table that would disrupt the settlement.
14 We had enough parties at the table, we didn't need one
15 more party with different issues, and we were concerned
16 that it would prolong the proceeding if they disrupted
17 the settlement. They didn't file their petition until
18 the very day before the settlement. We knew shortly
19 before then that they were interested in participating,
20 but nonetheless, it was very close to the date that we
21 had scheduled for the settlement conference.
22 And let me tell you about the time and
23 effort you'd be putting at risk if you allowed them to
24 intervene. After the prehearing, Staff distributed its
25 proposed tariffs to all the parties to allow them an
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1 opportunity to comment on our proposed tariffs informally
2 so that we could incorporate those comments into the
3 tariffs that we actually filed, and Staff undertook the
4 substantial task of reviewing all those comments, I
5 believe that every party commented, and made a decision
6 on each one whether or not we were going to incorporate
7 those into Staff's tariffs. Staff met with all the
8 parties for a day and discussed all the remaining issues
9 that hadn't been resolved previously when we amended our
10 proposed tariffs. A lot of preparation went into that
11 meeting, and Staff has met with the parties since to
12 discuss other outstanding issues. Staff is still
13 discussing settlement, and we believe we are close to a
14 settlement. In fact, we would like to distribute
15 tariffs, revised tariffs tomorrow to all the parties to
16 see if they think it accurately reflects what we talked
17 about in our settlement discussion.
18 So Staff has gone to great time and
19 effort to allow Direct Energy -- I'm sorry. We've gone
20 through great time and effort, and to allow Direct Energy
21 in the case at this point jeopardizes everything Staff
22 has been working toward, because Direct Energy does bring
23 new issues to the table. For example, one of the issues
24 that they've raised with us informally is the automatic
25 renewal of the fixed-price contract, and that was not an
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1 issue that was brought to the table by any other party,
2 and frankly, Staff doesn't want to bring that issue to
3 the table.
4 I believe that we have listened to their
5 comments informally. Mr. Schneidewind implied that we
6 completely kept them from the table, but we have their
7 comments, we have sat down and met with them, so Staff
8 has met and considered Direct Energy's concerns.
9 In conclusion, your Honor, it's not
10 unprecedented to deny a party's petition for late
11 intervention. In fact, as we pointed out in our reply
12 brief, the Commission denied a party's petition to
13 intervene in a case very similar to this.
14 Mr. Schneidewind would have you believe that that case is
15 distinguishable because that party was allowed to
16 negotiate with the other parties in that case; but like I
17 mentioned, we have listened, Staff has listened to Direct
18 Energy's concerns informally, we haven't completely kept
19 them from the table. I think that the circumstances in
20 that are very similar to this case, and I think that the
21 language from the case speaks for itself in just how
22 similar the circumstances are.
23 The Commission in that case held: The
24 Commission agrees with the ALJ that the MMCG has failed
25 to make any showing of good cause to justify the
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1 tardiness of its request to intervene. From the
2 statements made during oral argument and the
3 presentations contained in its application for leave to
4 appeal, it is clear that although the MMCG was well aware
5 of the filing deadline for interventions, it nevertheless
6 decided to intervene in a timely manner -- decided not to
7 intervene in a timely manner -- I'm sorry. It
8 nevertheless decided not to intervene at that time;
9 however, that the MMCG may now regret its decision not to
10 intervene in a timely manner is not sufficient reason to
11 excuse its tardiness. I think the same exact reasoning
12 applies here.
13 And because allowing Direct Energy to
14 intervene will prejudice the parties, it may prolong the
15 proceeding, and Direct Energy hasn't given any good
16 reason your Honor should do that. That's it.
17 JUDGE NICKERSON: All right. Thank you,
18 Mr. Sattler. One question, Mr. Sattler. Staff's
19 decision to not allow Direct Energy to participate in the
20 settlement, would that have been the case if it had been
21 any party that was not, any company that was not a party
22 to the proceeding? In other words, were you singling out
23 Direct Energy because they were Direct Energy, or would
24 Staff's decision have applied to any company that was not
25 a party to this proceeding at that particular time?
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1 MR. SATTLER: Yes, I believe that Staff's
2 decision would have applied to any party that was not a
3 party to the proceeding at that time.
4 JUDGE NICKERSON: You said the same thing
5 I should have avoided, any party. Any company that was
6 not a party to the proceeding?
7 MR. SATTLER: Yes, any company that was
8 not a party to the proceeding. I believe our position
9 would have been consistent if there had been another
10 company that wanted to participate that was not a party.
11 JUDGE NICKERSON: All right. O.K.
12 Anyone else?
13 MR. SOLO: Yes, your Honor.
14 JUDGE NICKERSON: Mr. Solo.
15 MR. SOLO: Thank you. MichCon also
16 objects to the late intervention of Direct Energy, and
17 for the reasons clearly stated by Consumers Energy and
18 the Staff. The Company contends that no good cause has
19 been established for late intervention, and allowing late
20 intervention at this late stage would be prejudicial to
21 the parties based on all the reasons provided by
22 Consumers and Staff. That's all, your Honor.
23 JUDGE NICKERSON: All right. Thank you,
24 Mr. Solo.
25 Ms. Wellman.
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1 MS. WELLMAN: Your Honor, SEMCO and MGUC
2 also object to the late intervention as a matter of
3 precedent. I do not think Direct Energy has met the
4 standard for good cause. I think it opens the door to
5 granting late interventions any time.
6 And I would point out to your Honor that
7 this correspondence that was handed out by
8 Mr. Schneidewind dated February 9, 2001, is a
9 correspondence from the executive secretary, and as I'm
10 sure your Honor is aware, the Commission only speaks
11 through its orders, not through its staff. And I would
12 note that she only indicates that you may file late
13 interventions, there's no indication that they're
14 granted. Thank you.
15 JUDGE NICKERSON: Thank you, Ms. Wellman,
16 appreciate that.
17 All right. Mr. Schneidewind, I know you
18 want to respond. You have five against you.
19 MR. SCHNEIDEWIND: Well, I think it's
20 noteworthy that among the five against me, there are none
21 of the intervenors present, and indeed we contacted all
22 of the intervenors and determined that they had no
23 objection to our participation, so it's really the
24 companies and the Staff that oppose.
25 And once again, I guess I would like to
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1 stress the fact that it's truly unfortunate we --
2 Mr. McQuillan says, gee, Direct could have shown up at
3 this meeting and nobody would have objected, but indeed
4 we asked to show up and indeed there was an objection,
5 and rather than to provoke some confrontation, we chose
6 not to attend.
7 If you step back from this and look at
8 the magnitude of the business interests affected and then
9 ask, O.K., what is the prejudice or harm to the process,
10 the fact is if there is this agreement which is basically
11 a done deal, and that's certainly what has been presented
12 here, it will be circulated, it will be presented to the
13 Commission, and at the end of the day, if Direct is
14 granted party status, it will have only the right to file
15 comments and to do that within 14 days. We won't be able
16 to disrupt. If there are no more meetings, if there's
17 just a draft being circulated, what's to disrupt? We'll
18 file our comments. That's it. That's what we're allowed
19 to do under the Rules.
20 So I would ask, you know, your Honor,
21 also to consider that to be precise about it, it was a
22 situation where nobody was in charge of this issue
23 through the whole summer at Direct, it wasn't where
24 somebody was sitting there saying, I don't want to do
25 anything; it's where, I am given to understand, where the
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1 person who used to be in charge was no longer, but they
2 had not placed a new person in charge. So there was a
3 hiatus, it wasn't somebody sitting there twiddling their
4 thumbs. That's an honest description of what happened.
5 But once again, all I ask for at the end
6 of the day here is if there's a settlement, the right to
7 comment within 14 days; if there isn't a settlement, the
8 right to file briefs and reply briefs. That's all we're
9 going to get out of this, and that's not disruptive and
10 that's not going to upset deals that have been made,
11 simply filing comments. So my response is that there is
12 no delay and no prejudice here if we are granted
13 intervention. Thank you, your Honor.
14 MR. SATTLER: Your Honor, may I respond
15 to that?
16 JUDGE NICKERSON: It's his motion, he has
17 the last word, so we'll wrap it up here.
18 All right. Mr. Schneidewind is
19 absolutely correct, that the ALJ does have discretion,
20 and I will exercise that discretion, and the discretion I
21 will exercise is the application of the facts as they
22 have been presented to the Rules which are applicable in
23 this particular case.
24 Now, in this case the Commission's order
25 was issued on April 16, 2009; along with that Commission
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1 order was a press release. In addition to the order and
2 the press release, also on April 16, a copy of the order
3 was served electronically to Direct Energy Services,
4 among many others involved. The prehearing was set in
5 the Commission order for June 9th, 2009. Now, the
6 intervention was also set for June 2nd, 2009, which was
7 seven days before the prehearing. Direct Energy filed
8 its petition to intervene on September 8, 2009, some
9 three months after the date for filing of the petition to
10 intervene. Three months is significant in this
11 particular case. It is not the example that
12 Mr. McQuillan pointed out where it's a couple weeks late
13 due to some issues at the company; everybody understands
14 those sorts of things, everyone makes mistakes, and
15 that's understandable, but in this particular case, three
16 months is significant.
17 Now, the Rules of Practice and Procedure
18 before the Commission, Rule 201 specifically provides
19 that the petition for late intervention must show good
20 cause, it must show there will not be delay, and it must
21 show that it will not unduly prejudice the proceedings.
22 Good cause in this particular case,
23 Mr. Schneidewind indicates that in June, I believe he
24 said the June timeframe to the end of August was the
25 period of time where there was the hiatus at Direct
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1 Energy. Well, that doesn't explain what happened between
2 the notice in April to the June time period. And the
3 good cause really has to be something legally
4 significant, such as no notice, which is not alleged
5 here, or that the notice was somehow fatal, and that's
6 not alleged here either. So I don't find that there's
7 good cause.
8 As it relates to the delay, I think
9 Mr. McQuillan and Mr. Sattler both indicated that they've
10 exerted a great amount of time, energy, resources and
11 even good will towards the settlement discussions, and
12 they're very close, they indicate, to actually issuing
13 something, the tariff, which would be the written
14 evidence of the settlement discussions.
15 Now, I recognize the Commission said that
16 this matter shall be commenced or shall be wrapped up, or
17 that the proceedings shall terminate by April of 2010,
18 but that's not the delay that we need to focus on in this
19 particular case; the delay we need to focus on is the
20 delay to the proceedings, and allowing a party to
21 intervene at this particular time I think would delay the
22 proceeding.
23 But even more to the point is the
24 prejudice to the parties that have participated and have
25 been involved in these settlement discussions. Again, a
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1 lot of time, energy, resources and give and take back and
2 forth, and now to interject yet another party into that I
3 think, as Mr. McQuillan indicates, does significantly
4 change the dynamics of the matter.
5 So for all those reasons, I think that
6 good cause has not been shown, and I think that there
7 would be prejudice to the parties, and so the petition
8 for intervention, late intervention filed by Direct
9 Energy Services I'm ruling should be denied on this date.
10 All right. Is there anything else for
11 the record?
12 MR. McQUILLAN: Nothing further, your
13 Honor. Thank you.
14 MR. SCHNEIDEWIND: No, your Honor.
15 JUDGE NICKERSON: All right. Thank you,
16 all, very much.
17 (At 9:51 a.m., the hearing adjourned.)
18 - - -
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1
2
3 C E R T I F I C A T E
4
5 I, Lori Anne Penn (CSR-1315), do hereby
6 certify that I reported in stenotype the proceedings had
7 in the above-entitled matter, that being Case No.
8 U-15929, before Daniel E. Nickerson, Jr., J.D.,
9 Administrative Law Judge with SOAHR, at the Michigan
10 Public Service Commission, 6545 Mercantile Way, Lansing,
11 Michigan, on Tuesday, September 22, 2009; and do further
12 certify that the foregoing transcript constitutes a true
13 and correct transcript of my stenotype notes.
14
15
16
17 ______________________________________
18 Lori Anne Penn, CSR-1315
19 33231 Grand River Avenue
20 Farmington, Michigan 48336
21
22
23 Dated: September 23, 2009
24
25
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