Attorney General v. MPSC
| Citation | 249 Mich. App. 424,642 N.W.2d 691 |
| Decision Date | 17 April 2002 |
| Docket Number | Docket No. 228623.,Docket No. 228484,Docket No. 228485,Docket No. 228622,Docket No. 228522,Docket No. 228523 |
| Parties | ATTORNEY GENERAL, Appellant, v. MICHIGAN PUBLIC SERVICE COMMISSION, the Detroit Edison Company, and Residential Ratepayer Consortium, Appellees. Attorney General, Appellant, v. Michigan Public Service Commission, the Detroit Edison Company, and Residential Ratepayer Consortium, Appellees. Abate, Petitioner-Appellant, v. Michigan Public Service Commission, Respondent-Appellee, and The Detroit Edison Company and Residential Ratepayer Consortium, Appellees. Abate, Petitioner-Appellant, v. Michigan Public Service Commission, the Detroit Edison Company, and Residential Ratepayer Consortium, Respondent-Appellees. Residential Ratepayer Consortium, Petitioner-Appellant, v. Michigan Public Service Commission and the Detroit Edison Company, Respondent-Appellees. Residential Ratepayer Consortium, Petitioner-Appellant, v. Michigan Public Service Commission and the Detroit Edison Company, Respondent-Appellees. |
| Court | Court of Appeal of Michigan (US) |
Jennifer M. Granholm, Attorney General, Susan I. Leffler, Assistant Solicitor General, J. Peter Lark, Assistant in Charge, and Donald E. Erickson, Assistant Attorney General, for the Attorney General.
Jennifer M. Granholm, Attorney General, Thomas L. Casey, Solicitor General, and David A. Voges, Steven D. Hughey, and Patricia S. Barone, Assistant Attorneys General, for the Michigan Public Service Commission.
Foster, Swift, Collins & Smith, P.C. (by William K. Fahey and Stephen J. Rhodes), and Bruce R. Maters and Jon P. Christinides, Lansing, Detroit, for the Detroit Edison Company.
Clark Hill P.L.C. (by Robert A.W. Strong), Birmingham, for the Association of Businesses Advocating Tariff Equity.
Shaltz & Royal, P.C. (by Diane R. Royal), Lansing, for Residential Ratepayer Consortium.
Before: FITZGERALD, P.J., and BANDSTRA and K.F. KELLY, JJ.
On June 19, 2000, the Michigan Public Service Commission (MPSC) issued two orders, on its own motion and without notice or a hearing, dismissing with prejudice the Detroit Edison Company's application for a power supply cost reconciliation for 1999 (MPSC Case No. U-11800-R) and its application to implement a power supply cost recovery (PSCR) plan for 2000 (MPSC Case No. U-12121). The dismissals were ordered pursuant to subsection 10d(1) of the Customer Choice and Electricity Reliability Act, 2000 PA 141, M.C.L. § 460.10 et seq. (Act 141), which froze residential and nonresidential electric rates authorized or in effect on May 1, 2000, until December 31, 2003. Separate appeals as of right were filed from the two orders by the Attorney General (Docket Nos. 228484 and 228485), the Association of Businesses Advocating Tariff Equity (ABATE) (Docket Nos. 228522 and 228523), and the Residential Ratepayer Consortium (RRC) (Docket Nos. 228622 and 228623). This Court ordered the appeals consolidated. We now affirm.
As part of the Legislature's decision to deregulate the electric utility industry, it enacted Act 141, which provides in subsection 10d(1):
Unless otherwise reduced by the commission under subsection (4) [involving securitization financing], the commission shall establish the residential rates for each electric utility with 1,000,000 or more retail customers in this state as of May 1, 2000 that will result in a 5% rate reduction from the rates that were authorized or in effect on May 1, 2000. Notwithstanding any other provision of law or commission order, rates for each electric utility with 1,000,000 or more retail customers established under this subsection become effective on the effective date of the amendatory act that added this section and remain in effect until December 31, 2003 and all other electric retail rates of an electric utility with 1,000,000 or more retail customers authorized or in effect as of May 1, 2000 shall remain in effect until December 31, 2003, unless otherwise reduced by the commission under subsection (4). [MCL 460.10d(1).]
Thus, Act 141 mandated that residential electric rates authorized or in effect on May 1, 2000, be reduced by five percent and remain frozen until December 31, 2003, and that nonresidential rates authorized or in effect on May 1, 2000, also be frozen until December 31, 2003.
At the time Act 141 became effective, June 5, 2000, Edison's 1999 PSCR reconciliation application was pending in the MPSC pursuant to M.C.L. § 460.6j(12)(16) [MPSC Case No. U-11800-R]. In its application, Edison attached an exhibit asserting that the utility had an overrecovery for the year of more than $13 million, requiring a refund to customers. Edison's exhibit further indicated a refundable $18.9 million in Fermi 2 capacity performance standard amounts, which were based on a 1988 MPSC-approved stipulation and settlement agreement entered into between Edison and certain customers, including ABATE, in MPSC Case No. U-8789. In the settlement agreement, Edison had agreed as follows:
For rates in effect from January 1, 1993 through December 31, 2003, a disallowance will be imposed upon the Company for the amount by which the three-year rolling average capacity factor for Fermi 2 is less than the greater of either the simple average capacity factor of the top 50% of U.S. boiling water reactors or 50%.
* * *
The annual performance standard disallowance shall be the net incremental cost of replacement power (including capacity and associated energy).
Also pending at the time Act 141 became effective was Edison's application to implement a PSCR plan for 2000 pursuant to M.C.L. § 460.6j(3)-(7) [MPSC Case No. U-12121].
On June 19, 2000, acting on its own motion and without notice or a hearing, the MPSC ordered Edison's reconciliation application in MPSC Case No. U-11800-R "dismissed with prejudice":
On June 5, 2000, the Commission issued an order in Case No. U-12464 implementing the rate reduction for residential customers and requiring Detroit Edison to file tariff sheets. With that reduction, all of the retail rates now in effect may not be changed until at least December 31, 2003 except to reflect the effects of securitization. A PSCR reconciliation, which is designed to adjust rates for an over- or underrecovery of the costs of fuel and purchased power, is inconsistent with subsection 10d(1). Therefore, Detroit Edison's application must be dismissed.
On that same date, the MPSC issued another order dismissing with prejudice Edison's 2000 PSCR plan application in MPSC Case No. U-12121, citing the same rationale as above.
On appeal, appellants contend that the MPSC's interpretation of subsection 10d(1) of Act 141 is unlawful. We disagree.
Pursuant to M.C.L. § 462.25, all rates, fares, practices, and services prescribed by the MPSC are presumed, prima facie, to be lawful and reasonable. Michigan Consolidated Gas Co. v. Public Service Comm., 389 Mich. 624, 209 N.W.2d 210 (1973); Attorney General v. Public Service Comm., 206 Mich.App. 290, 294, 520 N.W.2d 636 (1994). An appellant must show by "clear and satisfactory evidence" that a challenged order of the MPSC is "unlawful or unreasonable." MCL 462.26(8); Michigan Consolidated Gas Co, supra at 639, 209 N.W.2d 210; CMS Energy Corp. v. Attorney General, 190 Mich. App. 220, 228, 475 N.W.2d 451 (1991); Attorney General, supra, 206 Mich.App at 294. An MPSC order is unlawful if it is based on an erroneous interpretation or application of the law, and it is unreasonable if it is not supported by the evidence. Associated Truck Lines, Inc. v. Public Service Comm., 377 Mich. 259, 140 N.W.2d 515 (1966); Attorney General v. Public Service Comm., 231 Mich.App. 76, 77-78, 585 N.W.2d 310 (1998). While a reviewing court must give due deference to the administrative expertise of the MPSC and may not substitute its judgment for that of the agency, the judiciary may not abandon or delegate its duty to interpret statutory language and legislative intent. Attorney General v. Public Service Comm., 244 Mich.App. 401, 406, 625 N.W.2d 786 (2001).
Questions of statutory interpretation are questions of law, which are reviewed de novo. In re MCI Telecommunications Complaint, 460 Mich. 396, 413, 596 N.W.2d 164 (1999); Attorney General v. Public Service Comm., 247 Mich.App. 35, 39, 634 N.W.2d 710 (2001).
In dismissing with prejudice Edison's pending 1999 PSCR reconciliation application and 2000 PSCR plan application cases, the MPSC construed the rate freeze provision of subsection 10d(1) as temporarily supplanting M.C.L. § 460.6j pursuant to which PSCR reconciliation and plan proceedings are conducted. Affirmance is warranted on various grounds.
Appellees MPSC and Edison persuasively assert that the rate freeze under subsection 10d(1) precludes any adjustment of rates beyond the terms of Act 141 in light of the plain statutory language, i.e., "[n]otwithstanding any other provision of law or commission order, rates ... established under this subsection become effective on the effective date of the amendatory act that added this section and remain in effect until December 31, 2003...." "[A]ny other provision of law" plainly includes the PSCR reconciliation and plan provisions of M.C.L. § 460.6j, and "any other ... commission order" plainly includes orders issued pursuant to M.C.L. § 460.6j or prior MPSC-approved agreements whereby a utility has agreed to make future rate adjustments. Thus, the MPSC's interpretation of the statute is entitled to deference because it is consistent with the plain language of the statute. Attorney General, supra, 247 Mich.App at 41, 634 N.W.2d 710. Moreover, because the dismissal orders are not clearly based on an erroneous interpretation or application of the law, appellants have failed to overcome the presumption of lawfulness. MCL...
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