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Exhibit D-5
STATE OF MICHIGAN
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
In the matter of the application of )
EDISON SAULT ELECTRIC COMPANY )
for classification of its transmission and ) Case No. U-12690
distribution facilities and related )
transactions )
APPLICATION
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Edison Sault Electric Company ("Edison Sault") requests Michigan Public
Service Commission ("MPSC" or "Commission") approval of the classification of
its transmission and distribution facilities and related transactions, saying in
support of its request that:
1. Edison Sault is a Michigan corporation with principal offices located
in Sault Ste. Marie, Michigan, and is engaged in the generation, purchase,
transmission, distribution and sale of electric energy. Edison Sault is a wholly
owned subsidiary of Wisconsin Energy Corporation and, therefore an affiliate of
Wisconsin Electric Power Company ("Wisconsin Electric"). Edison Sault provides
retail electric service to approximately 22,000 customers located on Michigan's
Upper Peninsula. Edison Sault owns approximately 340 miles of transmission
facilities with ratings from 69 kilovolts ("kV") to 138 kV. Edison Sault's
transmission facilities are interconnected with the transmission facilities of
Cloverland Electric Cooperative, Consumers Energy Company, and Wisconsin
Electric .
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2. Edison Sault and other participating entities are forming the American
Transmission Company LLC ("ATC LLC"). The other participating entities in the
formation of the ATC LLC are expected to include Wisconsin Electric, Wisconsin
Power & Light Company, Wisconsin Public Service Corporation, South Beloit Water
Gas and Electric Company, Madison Gas & Electric Company and Wisconsin Public
Power Inc. Other utilities may also join in the formation of the ATC LLC.
3. FERC Order No. 888, issued on April 24, 1996, stated a policy goal of
"remove[ing] impediments to competition in the wholesale bulk power marketplace
and to bring more efficient, lower cost power to the Nation's electricity
consumers." This policy was reiterated by FERC in its adoption on December 20,
1999 of Order No. 2000, "Advancement of the Formation of Regional Transmission
Organization." FERC Order 888 also encouraged public utilities and their state
regulatory authorities to attempt to agree to utility specific transmission
classifications and allocations which the utilities could file with the FERC.
4. The participating entities of the ATC LLC predominately serve electric
customers in either the State of Wisconsin or the Upper Peninsula of Michigan.
In Wisconsin, the State Legislature took the first step toward the creation of
more competitive electric markets with the adoption of 1997 Wisconsin Act 204
("Act 204"), effective May 1, 1998. Act 204 required Wisconsin public utilities
to transfer control of their transmission facilities to either an independent
system operator ("ISO") or an independent transmission owner ("ITO") by June 30,
2000. The general policy thrust of Act 204 B creation of an electric
transmission system that
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promotes open access with non-discriminatory rates and terms - had already been
adopted by FERC.
5. The Wisconsin Legislature in 1999 continued the direction of its
policies with the adoption of Reliability 2000, or "R2K" which contained
provisions regarding the creation of a transmission company in the State of
Wisconsin. R2K was adopted as part of the 1999 budget bill, which was signed
into law as 1999 Wisconsin Act 9 on October 27, 1999.
6. In furtherance of implementing the policy objectives of the FERC and
the state of Wisconsin, Wisconsin Electric filed with the FERC on January 6,
2000, its Application For Authorization to Transfer Jurisdictional Transmission
Assets Pursuant to Section 203 of the FPA. On March 31, 2000, the FERC issued in
Docket No. EC00-45-000 its Order Authorizing Disposition of Jurisdictional
Facilities. The jurisdictional transmission assets of Wisconsin Electric to be
transferred to a transmission company pursuant to the FERC will be determined
based upon the classification of such assets by the Public Service Commission of
Wisconsin ("PSCW") in Docket 05-E1-119 and the MPSC. On August 28, 2000, Edison
Sault filed with FERC in Docket No. EC-131-000 a similar request for authority
to transfer its transmission assets to the ATC LLC.
7. Act 9 included legislative policy directions to guide the PSCW in
classifying transmission facilities. For example, based on the participating
utility network system, Act 9 states that any facilities designed and operated
at a nominal voltage of 50kV, including radials, are presumed to be
transmission. A copy of Act
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9 is attached as Attachment A hereto. Following notice and participation by
interested parties, the PSCW issued its Final Decision on July 13, 2000 in
Docket 05-E1-119 classifying Wisconsin Electric's transmission facilities.
8. Effective June 5, 2000, 1939 PA 3 was amended by 2000 PA 141 ("Act
141") to permit all retail electric customers in the state of Michigan to have a
choice of electric suppliers. No later than January 1, 2002, the Commission
must issue orders establishing the rates, terms and conditions to allow all
retail customers to choose an alternative electric supplier. In order to
facilitate the implementation of customer choice provided for in Act 141, it is
necessary for the MPSC to classify Edison Sault's transmission and distribution
facilities.
9. Transmission lines with voltages of 50 kV or higher are generally used
for the transmission of electricity in the Upper Peninsula of Michigan. The bulk
of Edison Sault's transmission system consists of 69 kV voltage, with 138 kV
lines also being used. The decision of the PSCW to classify facilities with
voltages of 50 kV or higher as transmission is suitable for use by Edison Sault
as that is the manner in which electricity is transmitted in the Upper
Peninsula. Such a classification would also treat Edison Sault's transmission
assets which will be transferred to the ATC LLC, in a manner identical to the
assets being transferred by the predominate Wisconsin based utilities. Edison
Sault is requesting that the MPSC similarly classify its facilities of 50 kV or
higher as transmission facilities. Edison Sault proposes to file with this
Commission within 90 days of the MPSC's final order in this case, an inventory
of all its facilities, classified in the manner prescribed by this
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Commission. All utility assets classified as transmission facilities will be
conveyed to ATCLLC at net book value (original cost less accumulated book
depreciation).
10. Edison Sault is also requesting that the MPSC authorize any other
approvals that may be needed to facilitate transfer of such transmission
facilities to the ATC LLC. When the exact facilities to be transferred are
determined Edison Sault will provide the dollar value of the facilities to be
transferred.
11. Pursuant to the Commission's May 3, 2000 Order in Case No. U-11916,
Edison Sault is required to notify the Commission in writing of certain asset
transfers. To the extent such Order is applicable, the instant Application is
intended to provide the required notification.
12. Further, the Michigan Uniform System of Accounts for Electric
Utilities requires MPSC approval of proposed journal entries to record the
transfer of certain property with an original cost of over $100,000. To the
extent the Uniform System of Accounts is applicable, Edison Sault requests
approval of its proposed journal entries as reflected in Attachment B.
13. Edison Sault represents that approval of this Application without
hearings will save the time and expense the MPSC would otherwise be required to
devote to this proceeding, will eliminate regulatory delay, and will allow
Edison Sault to begin the implementation of customer choice in a timely manner.
Moreover, Edison Sault represents that there is no legal requirement for notice
and hearing because approval of the Application does not increase the cost of
service or rates for its electric customers in Michigan.
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WHEREFORE, Edison Sault Electric Company requests the Commission to approve
of the classification of the Company's facilities of 50 kV or higher as
transmission facilities, and grant any other approvals that may be needed to
facilitate transfer of such assets to the ATC LLC.
Respectfully submitted,
EDISON SAULT ELECTRIC COMPANY
Dated: October 27, 2000 By: _______________________________
Harvey J. Messing (P 23309)
Loomis, Ewert, Parsley
Davis & Gotting, P.C.
232 S. Capitol Ave., Suite 1000
Lansing, Michigan 48933
(517) 482-2400
Attorney for EDISON SAULT ELECTRIC
COMPANY
