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Exhibit D-6
STATE OF MICHIGAN
BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION
In the matter of the application of )
WISCONSIN ELECTRIC POWER COMPANY )
for classification of its transmission and ) Case No. U-12691
and distribution facilities and related )
transactions )
)
APPLICATION
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Wisconsin Electric Power Company ("Wisconsin Electric") 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. Wisconsin Electric is a public utility that owns electric generation,
transmission and distribution facilities in the States of Wisconsin and
Michigan, as well as natural gas distribution facilities located in the State of
Wisconsin. Wisconsin Electric provides retail electric service to approximately
one million customers located throughout portions of southeastern, central and
northern Wisconsin and the Upper Peninsula of Michigan. Wisconsin Electric also
provides retail natural gas service to approximately 380,000 customers located
in the State of Wisconsin. Wisconsin Electric's retail operations in the State
of Wisconsin are subject to the jurisdiction of the Public Service Commission of
Wisconsin ("PSCW") and in the State of Michigan to the Commission. Wisconsin
Electric also transmits and sells electric energy at wholesale subject to the
jurisdiction of the Federal Energy Regulatory Commission ("FERC") under Part II
of the Federal Power Act ("FPA").
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2. Wisconsin Electric's public utility operations are located primarily in
the state of Wisconsin. Revenues during 1999 from electric retail customers of
Wisconsin Electric in the state of Michigan were approximately $105 million,
representing only 6.2% of total electric utility operating revenues.
3. In addition to its generating assets, Wisconsin Electric owns
approximately 2,760 miles of transmission facilities with ratings from 69 kV to
345 kV. These facilities are interconnected with Edison Sault Electric Company,
Commonwealth Edison Company, Madison Gas and Electric Company, Marquette Board
of Public Utilities, Northern States Power-Wisconsin, Upper Peninsula Power
Company, Wisconsin Power and Light Company, Wisconsin Public Power Inc. and
Wisconsin Public Service Corporation. Wisconsin Electric is a member of the Mid-
American Interconnected Network and is a participant in the Midwest ISO.
4. 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
Organizations." 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.
5. In Wisconsin, the State Legislature took the first step toward this end
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
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general policy thrust of Act 204 - creation of an electric transmission system
that promotes open access with non-discriminatory rates and terms - had already
been adopted by FERC.
6. 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. The bulk of the provisions
relating to Wisconsin Electric are found in (s) 196.485. The deadline provisions
for the transfer of certain assets to a transmission company in Wisconsin were
subsequently modified by 1999 Senate Bill 481, which was signed into law on May
12, 2000, as 1999 Wisconsin Act 75. Act 75 created the current January 1, 2001,
Operational Deadline.
7. 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 (Attachment A). On March 31, 2000, the
FERC issued in Docket No. EC00-45-000 its Order Authorizing Disposition of
Jurisdictional Facilities (Attachment B). Accordingly, the jurisdictional
electric transmission assets of Wisconsin Electric will be transferred to a
transmission company, the American Transmission Company LLC ("ATCLLC"), pursuant
to the FERC Order based upon the classification of such assets by the PSCW in
Docket 05-E1-119 and the MPSC in the instant case.
8. 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. Following notice and participation by interested parties, the PSCW
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issued its Final Decision on July 13, 2000 in docket 05-E1-119 classifying
Wisconsin Electric's transmission facilities. A copy of Act 9 is attached as
Attachment C. A copy of the Final Decision in docket 05-E1-119 is attached as
Attachment D.
9. 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 Commission to classify Wisconsin Electric's transmission and distribution
facilities.
10. Approximately ninety percent of Wisconsin Electric's electric assets
and services are within state of Wisconsin. In order to maintain consistency
across the system, Wisconsin Electric seeks to classify and transfer control of
its Michigan assets on the same basis as it is classifying and transferring
control of its Wisconsin assets. Pursuant to the Final Decision of July 13,
2000, Wisconsin Electric filed with the PSCW on October 11, 2000, an inventory
of all of the facilities it uses for the transmission of electricity, classified
in the manner prescribed by the Final Decision; the inventory classifies
Wisconsin Electric's facilities as located in both the states of Wisconsin and
Michigan. A copy of the inventory is attached as Attachment E. Wisconsin
Electric respectfully requests the Commission to classify its Michigan
facilities in the manner set forth in the inventory submitted to the PSCW. All
utility assets classified as transmission facilities will be conveyed to ATCLLC
at net book value (original cost less accumulated book depreciation). When the
exact facilities to be transferred are determined, Wisconsin Electric will
provide the dollar value of the facilities to be transferred.
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11. Pursuant to the Commission's May 3, 2000 Order in Case No. U-11916,
Wisconsin Electric 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, Wisconsin Electric requests
approval of its proposed journal entries as reflected in Attachment F.
13. Wisconsin Electric 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 Wisconsin Electric to begin the implementation of customer choice in a
timely manner. Moreover, Wisconsin Electric 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.
WHEREFORE, Wisconsin Electric Power Company requests the Commission to
approve of the classification of its transmission and distribution facilities as
determined by the Public Service Commission of Wisconsin and the associated
journal entries to record the transfer of transmission assets to the American
Transmission Company LLC.
Respectfully submitted,
WISCONSIN ELECTRIC POWER COMPANY
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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 WISCONSIN ELECTRIC
POWER COMPANY
