Detroit Edison says enough known already about REF coal program

Detroit Edison said there is no reason to reopen the evidentiary phase of its Power Supply Cost Recovery Plan (PSCR) case at the Michigan Public Service Commission to look at how much parent DTE Energy (NYSE: DTE) expects to make off of the utility’s use of reduced emissions fuel (REF) coal.

Detroit Edison, in a Sept. 5 filing at the commission, opposed an Aug. 15 request by the Michigan Environmental Council (MEC), the Natural Resources Defense Council (NRDC) and the Michigan Attorney General to reopen the evidentiary phase so that what was in a DTE investor presentation from June can be included in the record of this case. That inclusion would open DTE up to answering follow-up questions about the scant information on REF in the presentation, which indicated that DTE expects to make a hefty profit on this program over the next few years.

The investor presentation attached to that June 15 Form 8-K filing at the SEC indicates that DTE expects that a small amount of actual revenues from REF activities in 2011 is expected to grow to $60m in 2016. It also indicates that DTE expects annual earnings from 2013 to 2021 from REF to provide an annual average earning contribution of $50m and expected net revenues totaling more than $450m.

Under the REF program, Detroit Edison sells stockpile coal at various power plants, including the big Monroe plant, to unregulated units of DTE Energy, then buys that coal back to burn in the power plants after it has been treated with chemicals to reduce emissions of pollutants like mercury. Detroit Edison said this is a cost-effective emissions-reduction program for its ratepayers and that having other DTE Energy subsidiaries do this work reduces risk for those ratepayers that the technology won’t work or if there is any problem qualifying the REF product under a federal tax credit program.

In its Sept. 5 response, Detroit Edison said it disputes that there is any “new” evidence in that June investor presentation. Prior Form 8-Ks containing virtually identical information were publicly available to the parties to this proceeding and the parties were directed to those documents in the discovery process during this proceeding, DTE said.

“It is clear that MEC, NRDC and the AG each had full access to the very information about which they complain and that the Motion is nothing more than a continuation of MEC’s and NRDC’s tactic to selectively cite (and ignore) the record (and utilize extra-record information when convenient) to suit their desire to shut down coal-fired generation without regard to the economic or reliability consequences to Detroit Edison customers,” Detroit Edison added. “There is no doubt that MEC/NRDC and the AG were fully aware during the pendency of this proceeding that DTE Energy makes periodic presentations to investors that are posted as 8-Ks at two different locations: http://www.sec.gov and on DTE Energy’s website at http://www.dteenergy.com but MEC and NRDC chose to cite some DTE Energy presentations and ignored others. That all the interveners in this proceeding had access to DTE Energy’s earnings projections regarding REF is further borne out by the fact that both [Michigan Community Action Agency Association] and MEC/NRDC witnesses on multiple occasions have quoted DTE Energy’s SEC filings in their direct testimony regarding REF in PSCR proceedings.”

The commission had not acted on the dispute as of Sept. 10.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.