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

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1 S T A T E O F M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * * In the matter of the application of ) MIDWEST ENERGY COOPERATIVE ) for authority to implement its power supply cost ) Case No. U recovery plan for the 12-month period ending ) December 31, ) ) At the March 23, 2015 meeting of the Michigan Public Service Commission in Lansing, Michigan. PRESENT: Hon. John D. Quackenbush, Chairman Hon. Greg R. White, Commissioner Hon. Sally A. Talberg, Commissioner ORDER APPROVING SETTLEMENT AGREEMENT On September 29, 2014, Midwest Energy Cooperative (Midwest) filed an application, with supporting testimony and exhibits, seeking approval to implement its power supply cost recovery (PSCR) plan for the 12-month period ending December 31, 2015, and monthly PSCR factor. A prehearing conference was held on December 2, 2014, before Administrative Law Judge Suzanne D. Sonneborn. Midwest and the Commission Staff participated in the proceedings. Subsequently, the parties submitted a settlement agreement resolving all issues in the case. According to the terms of the settlement agreement, attached as Exhibit A, the parties recommend that the Commission approve for the 12-month period ending December 31, 2015, a monthly PSCR factor of up to 5.40 mills per kilowatt-hour (kwh) or $ per kwh based on a mills per kwh allowance for cost of power supply included in base rates. The parties agree

2 that the proposed 2015 PSCR factor is reasonable, appropriate, in the public interest, and consistent with Commission approval given in recent PSCR cases. The Commission finds that the settlement agreement is reasonable and in the public interest, and should be approved. THEREFORE, IT IS ORDERED that: A. The settlement agreement, attached as Exhibit A, is approved. B. Midwest Energy Cooperative is authorized to implement a monthly power supply cost recovery factor of up to 5.40 mills per kilowatt-hour in its monthly bills to retail electric customers during the 2015 power supply cost recovery plan year. C. Within 30 days, Midwest Energy Cooperative shall file with the Commission tariff sheets essentially the same as those attached to the settlement agreement. D. Capacity charges associated with power purchased for periods in excess of six months included in Midwest Energy Cooperative s 2015 power supply cost recovery plan are approved in accordance with Section 6j(13)(b) of 1982 PA 304. E. If Midwest Energy Cooperative desires to apply lesser power supply cost recovery factors than those approved by this order, it shall notify the Commission ten days prior to the use of the lesser factor and shall file during that billing month a tariff sheet showing the lesser factor applied. Page 2 U-17676

3 The Commission reserves jurisdiction and may issue further orders as necessary. Any party desiring to appeal this order must do so in the appropriate court within 30 days after issuance and notice of this order, pursuant to MCL To comply with the Michigan Rules of Court s requirement to notify the Commission of an appeal, appellants shall send required notices to both the Commission s Executive Secretary and to the Commission s Legal Counsel. Electronic notifications should be sent to the Executive Secretary at mpscedockets@michigan.gov and to the Michigan Department of the Attorney General - Public Service Division at pungp1@michigan.gov. In lieu of electronic submissions, paper copies of such notifications may be sent to the Executive Secretary and the Attorney General - Public Service Division at 7109 West Saginaw Hwy, Lansing, MI MICHIGAN PUBLIC SERVICE COMMISSION John D. Quackenbush, Chairman Greg R. White, Commissioner By its action of March 23, Sally A. Talberg, Commissioner Mary Jo Kunkle, Executive Secretary Page 3 U-17676

4 EXHIBIT A

5 STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * * In the matter of the application of ) MIDWEST ENERGY COOPERATIVE for ) authority to implement its Power Supply ) Case No. U Cost Recovery Plan for the 12 month ) period ending December 31, ) ) SETTLEMENT AGREEMENT On September 29, 2014, Midwest Energy Cooperative (Midwest) filed an application, with supporting testimony and exhibits, seeking approval to implement its power supply cost recovery (PSCR) plan for the 12-months ending December 31, 2015 and to reflect a monthly PSCR factor of up to 5.40 mills per kwh or $ per kwh based on a mills per kwh allowance for cost of power supply included in base rates. On October 29, 2014, the Michigan Public Service Commission (MPSC) issued its Notice of Hearing commencing a PSCR proceeding and establishing a procedural schedule for the proceeding. On December 2, 2014, the prehearing conference was held pursuant to the Commission s Notice of Hearing, with Administrative Law Judge Suzanne D. Sonneborn presiding. The Commission Staff and Midwest participated in the proceedings. At the prehearing conference, Midwest presented proof of service of the Notice of Hearing on all cities, incorporated villages, townships, and counties in the service area and also presented an affidavit evidencing the requisite publication of notice. The prehearing conference was conducted as a contested case matter pursuant LAN01\ ID\SMJO \0042 1

6 to the Administrative Procedures Act of 1969, 1969 PA 306, as amended, MCL et seq. The parties have agreed to enter into this Settlement Agreement recommending approval of the proposed 5.40 mills per kwh ($ per kwh) PSCR factor for the 12-month period ending December 31, 2014 based on a mills per kwh ($ per kwh) allowance for cost of power supply included in base rates. In view of the foregoing, and pursuant to Section 78 of the Administrative Procedures Act of 1969, as amended (1969 PA 306, 78; MCL ), Midwest and Commission Staff hereby agree as follows: A. The parties recommend approval of Midwest s proposed PSCR factor of up to 5.40 mills per kwh, or $ per kwh. B. The parties agree that Midwest s power supply agreement with Wolverine, and the proposed 2015 PSCR factor are reasonable, appropriate, in the public interest, and consistent with Commission approval given in recent PSCR cases. C. A proposed tariff sheet is attached as Attachment 1. D. Should Midwest apply a lesser PSCR factor than that identified above, it shall notify the Commission Staff of that fact and file revised tariff sheets reflecting that PSCR factor. E. No party will appeal, challenge, or contest the rates approved by the Commission in this case if they are the result of a Commission order accepting and approving this Settlement Agreement without modification. If the Commission does not accept this Settlement Agreement without modification, this Settlement Agreement shall be withdrawn and shall not constitute any part of the record in this proceeding or be used for any other purpose whatsoever. LAN01\ ID\SMJO \0042 2

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8 Attachment 1 M.P.S.C. No. 2 Electric Revised Sheet No. D-1.01 Midwest Energy Cooperative Cancels Revised Sheet No. D-1.01 Power Supply Cost Recovery Clause (Continued from Sheet No. D-1.00) Not less than once a year and not later than 4 months after the end of the 12-month period covered by Cooperative s most recently authorized power supply cost recovery plan, a power supply cost reconciliation proceeding will be conducted to reconcile the revenues recorded pursuant to the power supply cost recovery factor and the allowance for cost of power included in the base rates as established by the Commission under Cooperative s most recent power supply cost recovery plan, among other things. Cooperative shall be required to refund to Member-Consumers, or to credit to Member- Consumers bills any net amount determined to have been recovered which is in excess of the amounts actually expensed by Cooperative for power supply. Cooperative shall recover from Member-Consumers any net amount by which the amount determined to have been recovered over the period covered was less than the amount determined to have been actually expensed by Cooperative for power supply. For the twelve months ending December 2015, the Power Supply Cost Recovery Factor is $ per kwh. The allowance for cost of power supply included in base rates is $ per kwh. Should the Cooperative apply lesser factors than those above, or if the factors are later revised pursuant to Commission Orders or 1982 PA 304, the Cooperative will notify the Commission and file a revision of the above factor. The following factors are applied pursuant to 1982 PA 304 in the 12 billing months ending December Maximum Authorized Actual Billing 2015 PSCR Factor Year Month Factor Billed (per kwh) (per kwh) 2015 January $ February $ March $ April $ May $ June $ July $ August $ September $ October $ November $ December $ (Continued on Sheet No. D-1.02) Issued: By: Robert L. Hance President and CEO Effective for bills rendered for the 2015 PSCR Plan Year Issued under authority of the Michigan Public Service Commission dated in Case No. U-17676