Association of Businesses Advocating Tariff Equity (A.B.A.T.E.) v. Public Service Com'n

• Decision Date: 07 March 1988
• Docket Number: Docket Nos. 77785,77786
• Citation: 430 Mich. 33,420 N.W.2d 81
• Parties: The ASSOCIATION OF BUSINESSES ADVOCATING TARIFF EQUITY (A.B.A.T.E.), Plaintiff- Appellee, and Attorney General, Intervening Plaintiff-Appellant, v. PUBLIC SERVICE COMMISSION and Consumers Power Company, Defendant-Appellees. ATTORNEY GENERAL, Plaintiff-Appellant, and Association of Businesses Advocating Tariff Equity (A.B.A.T.E.), Intervening Plaintiff, v. PUBLIC SERVICE COMMISSION and Consumers Power Company, Defendants-Appellees.
• Court: Michigan Supreme Court

Page 81

420 N.W.2d 81

430 Mich. 33

The ASSOCIATION OF BUSINESSES ADVOCATING TARIFF EQUITY

(A.B.A.T.E.), Plaintiff- Appellee, and Attorney General, Intervening Plaintiff-Appellant, v. PUBLIC SERVICE COMMISSION and Consumers Power Company,

Defendant-Appellees.

ATTORNEY GENERAL, Plaintiff-Appellant,

and

Association of Businesses Advocating Tariff Equity

(A.B.A.T.E.), Intervening Plaintiff, v. PUBLIC SERVICE COMMISSION and Consumers Power Company,

Defendants-Appellees.

Docket Nos. 77785, 77786.

Supreme Court of Michigan.

Argued April 8, 1987.

Decided March 7, 1988.

Frank J. Kelley, Atty. Gen., Louis J. Caruso, Solicitor General, Counsel of Record, Hugh B. Anderson, Alan J. Barak, Asst. Attys. Gen., Lansing, for plaintiff-appellant.

Roderick S. Coy, Nancy L. Lukey, Hill, Lewis, Adams, Goodrich & Tait, for plaintiff-appellee ABATE.

Don L. Keskey, Asst. Atty. Gen., Lansing, for Michigan Public Service Com'n.

David A. Mikelonis, Allen B. Bass, H. Richard Chambers, Consumers Power Co., Jackson, George W. Loomis, Michael G. Oliva, Harvey J. Messing, Ronald W. Bloomberg, Loomis, Ewert, Ederer, Parsley, Davis & Gotting, Lansing, for Consumers Power Company, defendant-appellee.

Michigan Bell Telephone Co., By Its Counsel H. Wayne Wells, John M. Dempsey, Detroit, for amicus curiae Michigan Bell Telephone Co.

CAVANAGH, Justice.

This case presents the issue whether the Michigan Public Service Commission must allow the Attorney General and the Association of Businesses Advocating Tariff Equity (ABATE), as intervening parties, to introduce evidence relative to Consumers Power Company's request for partial and immediate rate relief. We hold that the PSC has the discretion to grant a request for partial and immediate rate relief after having afforded intervenors a reasonable opportunity to present and cross-examine evidence on the request. The PSC also retains discretion to define the standards upon which it bases a grant of interim relief, to define what issues and factors, in a given case, are relevant to those standards as opposed to the standards for final relief, and to limit evidence to the written form.

I

This case has its genesis in Consumers Power Company's May 18, 1983, application to the PSC for authority to increase its gas rates by $179,900,000 annually. Consumers filed a "Motion for Partial and Immediate Rate Relief" (interim rate relief) concurrently with their application for a general gas rate increase. Consumers sought an interim gas rate increase of $98,200,000. ¹ The Attorney General and ABATE were permitted by the PSC to intervene.

On August 2, 1983, following the second PSC prehearing conference, the hearing referee ruled that the intervenors could not present evidence or testimony on Consumers' request for partial and immediate rate relief.

Consumers presented its evidence in support of its general gas rate application and its motion for interim rate relief during sixteen days of hearings in August, 1983.

On August 16, 1983, the intervenors filed emergency applications with the PSC, challenging the ruling that they could not present evidence relative to the request for interim rate relief.

On September 1, 1983, while the intervenors' appeals to the PSC were pending, the PSC staff filed its report, recommending an interim rate increase of $34,776,000. The staff report was admitted into evidence at a hearing held on September 8, 1983. The hearing referee permitted the Attorney General and ABATE to cross-examine the staff's witnesses, but, consistent with her August 2, 1983 ruling, did not permit the intervenors to introduce their own evidence. Oral arguments were waived, and written briefs were filed by all parties, including intervenors.

On September 29, 1983, ABATE and the Attorney General filed separate complaints for superintending control in the Ingham Circuit Court. A temporary order of superintending control was entered on September On December 20, 1983, the PSC issued an order granting Consumers Power Company partial and immediate rate relief of $39,604,000 annually.

30, 1983, preventing the PSC from proceeding with the rate case until the intervenors' evidence was presented. The parties then entered into a stipulation, which was subsequently approved by the circuit court, permitting the intervenors to introduce certain evidence on the request for interim rate relief. Pursuant to this stipulation, a hearing was held by the PSC on October 21, 1983, where ABATE's evidence was received and cross-examined. An additional hearing was held on October 24, 1983, to receive and cross-examine the Attorney General's evidence.

Meanwhile, at the circuit court, a hearing was held on plaintiffs' complaints for superintending control. The circuit court issued a written opinion on January 24, 1984, holding that the PSC may exclude intervenor evidence when considering a request for partial and immediate rate relief. Subsequently, on February 22, 1984, the circuit court dismissed the complaints for superintending control.

The plaintiffs appealed to the Court of Appeals, which affirmed the decision of the circuit court in an unpublished per curiam opinion.

We granted leave to appeal, 425 Mich. 871 (1986), and reverse the judgment of the Court of Appeals.

II

A

The PSC is statutorily vested with the discretion to grant partial and immediate rate relief to utilities pursuant to M.C.L. Sec. 460.6a(1); M.S.A. Sec. 22.13(6a)(1):

"When any finding or order is sought by any gas, telephone or electric utility to increase its rates and charges or to alter, change or amend any rate or rate schedules, the effect of which will be to increase the cost of services to its customers, notice shall be given within the service area to be affected. When such utility shall have placed in evidence facts relied upon to support its petition or application to so increase its rates and charges, or to so alter, change or amend any rate or rate schedules, the commission, pending the submission of all proofs by any interested parties, may in its discretion and upon written motion by such utility make a finding and enter an order granting partial and immediate relief, after first having given notice to the interested parties within the service area to be affected in the manner ordered by the commission, and after having afforded to such interested parties reasonable opportunity for a full and complete hearing: Provided, That no such finding or order shall be authorized or approved ex parte, nor until the commission's technical staff has made an investigation and report: And provided further, That any alteration or amendment in rates or rate schedules applied for by any public utility which will result in no increase in the cost of service to its customers may be authorized and approved without any notice or hearing. There shall be no increase in rates based upon changes in cost of fuel or purchased gas unless notice has been given within the service area to be affected, and there has been an opportunity for a full and complete hearing on the cost of fuel or purchased gas. The rates charged by any utility pursuant to an automatic fuel or purchased gas adjustment clause on the effective date of the amendatory act that added this sentence shall not be altered, changed, or amended unless notice has been given within the service area to be affected, and there has been an opportunity for a full and complete hearing on the cost of the fuel or purchased gas." (Emphasis added.)

It should be remembered that a public utility has a right to a just and reasonable rate of return on its investment. ²

                Where the revenue produced by an existing rate structure is less than a reasonable or just amount, a public utility has a constitutional right to rate relief. 3  Moreover, as we have previously stated, a public utility has, "as a corollary to that substantive right, a right to immediate rate relief where compelling circumstances indicate that such relief is necessary."   Consumers Power Co. v. PSC, 415 Mich. 134, 145, 327 N.W.2d 875 (1982)
                

The interim rate relief procedures of Sec. 6a(1) are intended to remedy a problem that may arise when a utility has applied for a permanent rate increase. Assuming that the PSC determines, after extensive and prolonged proceedings, ⁴ that a rate increase is warranted, the utility will be unable to recover increased revenues during the pendency of their request for a permanent rate increase because the PSC is not permitted to enter an order with retroactive effect. ⁵ Immediate rate relief may be necessary, and in fact constitutionally required, where the rate of return is so unreasonably low as to be confiscatory. Section 6a(1) represents the legislative intent to protect a utility from unreasonable, and potentially confiscatory, rates during the pendency of a permanent rate proceeding, by providing for a more expedient and less exhaustive hearing for interim rate relief. ⁶

B

Plaintiffs argue that the amendment of Sec. 6a by Proposal H, subsequent to the decision in Great Lakes Steel v. PSC, 416 Mich. 166, 330 N.W.2d 380 (1982), reh. den. 417 Mich. 1105 (1983), requires receipt of intervenor evidence and made reliance upon Great Lakes Steel by the Court of Appeals erroneous.

Proposal H amended Sec. 6a by prohibiting automatic fuel and purchased gas adjustment clauses. There already existing a requirement for a reasonable opportunity for a "full and complete hearing" prior to affording interim rate relief, generally, the amendment imposed a "full and complete hearing" requirement on adjustments on the basis of changes in cost of fuel or purchased gas, specifically. Additionally, in the very section in which the relevant use of the phrase "full and complete hearing" is found, the phrase is defined as follows:

"As used in this section, a 'full and complete hearing' means a hearing which provides interested parties a reasonable opportunity to present and cross-examine evidence...." M.C.L. Sec....