Attorney General v. PSC
| Decision Date | 02 November 1999 |
| Docket Number | Docket No. 203131,Docket No. 203102,Docket No. 203159.,Docket No. 203101 |
| Citation | 602 N.W.2d 225,237 Mich. App. 82 |
| Parties | ATTORNEY GENERAL, Appellant, v. MICHIGAN PUBLIC SERVICE COMMISSION, Consumers Energy, Association of Businesses Advocating Tariff Equity, Residential Ratepayers Consortium, Michigan Consolidated Gas Company, Dow Chemical Company, S.D. Warren Company, Indeck Energy Services, Michigan Public Power Agency, Michigan South Central Power Agency, Midland Cogeneration Venture Limited Partnership, Michigan Electric Cooperative, Coastal Electric Services, SPX Corporation, Tenneco Packaging, Inc., and Nordic Power, Appellees. Midland Cogeneration Venture Limited Partnership, Appellant, v. Michigan Public Service Commission, Attorney General, Consumers Energy, Association of Businesses Advocating Tariff Equity, Residential Ratepayers Consortium, Nordic Power, Michigan Consolidated Gas Company, Dow Chemical Company, S.D. Warren Company, Indeck Energy Services, Michigan Public Power Agency, Michigan South Central Power Agency, Michigan Electric Services, SPX Corporation, and Tenneco Packaging, Inc., Appellees. Michigan Public Power Agency and Michigan South Central Power Agency, Appellants, v. Michigan Public Service Commission, Attorney General, Consumers Energy, Association Of Business Advocating Tariff Equity, Residential Ratepayers Consortium, Energy Consortium, Michigan Consolidated Gas Company, Dow Chemical Company, S.D. Warren Company, Indeck Energy Services, Midland Cogeneration Venture Limited Partnership, Michigan Electric Cooperative, Coastal Electric Services, SPX Corporation, Tenneco Packaging, Inc., and Nordic Power, Appellees. Association of Businesses Advocating Tariff Equity, Appellant, v. Michigan Public Service Commission, Attorney General, Consumers Energy, Residential Ratepayers Consortium, Energy Consortium, Michigan Consolidated Gas Company, Dow Chemical Company, S.D. Warren Company, Indeck Energy Services, Midland Cogeneration Venture Limited Partnership, Michigan Electric Cooperative, Coastal Electric Services, SPX Corporation, Tenneco Packaging, Inc., and Nordic Power, Appellees. |
| Court | Court of Appeal of Michigan — District of US |
Jennifer M. Granholm, Attorney General, Thomas L. Casey, Solicitor General, J. Peter Lark and Donald E. Erickson, Assistant Attorneys General, for the Attorney General.
Foster, Swift, Collins & Smith, P.C. (by Mark J. Burzych, Lansing, Stephen O. Schultz, and John P. Seurynck) and Gary B. Pasek, Midland, for Midland Cogeneration Venture Limited Partnership.
Dickinson, Wright, Moon, Van Dusen & Freeman (by Peter H. Ellsworth and Jeffery V. Stuckey), Lansing, for Michigan Public Power Agency and Michigan South Central Power Agency.
Clark Hill P.L.C. (by Roderick S. Coy, Stephen J. Videto, and Stewart A. Binke), Lansing, for the Association of Businesses Advocating Tariff Equity.
Don L. Keskey, Henry J. Boynton, and Tonatzin M. Alfaro Garcia, Assistant Attorneys
General, for the Public Service Commission.
David A. Mikelonis, Jon R. Robinson, H. Richard Chambers, and Kelly M. Hall, Jackson, for Consumers Energy Company.
Before: GRIBBS, P.J., and MICHAEL J. KELLY and HOOD, JJ.
Appellants Attorney General (AG), Midland Cogeneration Venture Limited Partnership (MCV), Michigan Public Power Agency (MPPA), Michigan South Central Power Agency (MSCPA), and the Association of Businesses Advocating Tariff Equity (ABATE) claim appeals from orders entered on November 14, 1996, and April 10, 1997, by the Michigan Public Service Commission (PSC) approving a proposed settlement between the PSC staff and Consumers Power Company (Consumers) and granting in part and denying in part rehearing. We affirm.
On October 10, 1994, Consumers filed an application with the PSC seeking an increase in its base electric rates.1 In response to motions filed by the AG and ABATE, a hearing referee struck testimony offered by the PSC staff concerning Consumers' proposed addition to its system of 260 megawatts (MW) of capacity currently under contract with the MCV. The referee concluded that the issue should be addressed in another proceeding. The PSC staff and Consumers sought leave to appeal the referee's decision. The PSC upheld the decision, noting that an order in another case established that all additional capacity, including that under contract with the MCV, must be subjected to competitive bidding before its costs could be included in Consumers' rates. A proposal for decision (PFD) was entered by the referee on August 8, 1995.
On January 19, 1995, Consumers filed an application with the PSC requesting revision of its depreciation rates and practices.2 On July 27, 1995, the referee issued a PFD.
On January 31, 1995, Consumers filed an application with the PSC requesting approval of a competitive tariff, Rate SCS, which would allow eligible customers with power alternatives to negotiate discounted rates for electric energy.3
These three cases were consolidated for settlement purposes. Regarding the request for the rate increase, the settlement provided for an increase of $49.9 million in electric rates, a new rate design to reallocate the costs of services, a moratorium on base rate increases until January 1, 2001, a rate adjustment mechanism based on the Consumers Price Index (CPI) less one percent, and cost recovery of capacity charges for an additional 325 MW of the MCV capacity.
Regarding the request for the revision of depreciation rates, the settlement provided for the transfer of $93 million in depreciation reserve balances from transmission plant accounts to nuclear production plant accounts, the transfer of $18 million a year in depreciation expenses for five years from steam production accounts to nuclear production accounts, and a modification of depreciation rates.
Regarding the request for approval of a competitive tariff, the settlement provided limited direct access service, up to 650 MW, available to customers having loads in excess of 3,000 kilowatts (kW), and allowing Consumers to negotiate and enter into contracts with customers eligible for direct access service.
On November 28, 1995, the PSC issued an order granting Consumers' motions to amend its applications in these cases to reflect the proposed settlement. The PSC also granted the motion by Consumers and the PSC staff to consolidate the cases. Also, Consumers' motion for rehearing of the May 9, 1995, order excluding testimony regarding Consumers' request to obtain rate-making treatment of the remaining 325 MW of the MCV capacity was granted.
On November 14, 1996, the PSC issued a final opinion and order in the consolidated cases. The PSC found that the requirements for approval of a contested settlement had been met. The PSC rejected ABATE's argument that the parties to the settlement (Consumers and the PSC staff) did not represent the public interest.
Regarding the request for the rate increase, the PSC confirmed its approval of a rate increase in the amount of $46,459,000, and rejected the rate adjustment of the CPI less one percent proposed by the settlement. Also, the PSC approved recovery of capacity charges for 325 MW of additional capacity from the MCV for power supply cost recovery (PSCR) factors pursuant to 1982 PA 304, M.C.L. § 460.6j; MSA 22.13(6j). The PSC found that the record demonstrated that the capacity was needed and that the pricing was appropriate. The PSC rejected the AG's argument that the settlement violated federal law, which limits the capacity charges paid to a qualifying facility to the purchasing utility's avoided cost of capacity. The PSC also rejected the AG's argument that the "law of the case" doctrine precluded recovery of the excess 325 MW because in a previous case the PSC set excess megawatts at a capacity cost of zero. That decision was not based on Consumers' need for new capacity.4
Regarding the request for depreciation rate revisions, the PSC approved the transfer of $18 million a year in depreciation expense from steam production accounts to nuclear production accounts. The PSC disapproved of the transfer of $93.6 million in depreciation reserves from transmission plant accounts to nuclear production accounts.
Regarding the request for a competitive tariff, the PSC authorized Consumers to provide Direct Access Service (Rate DA) and individual contract service. Current and future Consumers' customers with a maximum demand of at least 3,000 kW could purchase generation services directly from an eligible third-party supplier.
Consumers filed a notice accepting the PSC's final order. Various parties, including Consumers, filed petitions for rehearing. On April 10, 1997, the PSC issued an order granting in part and denying in part the petitions for rehearing.
The standard of review for PSC orders is narrow and well-defined. Pursuant to M.C.L. § 462.25; MSA 22.44, all rates, fares, charges, classification and joint rates, regulations, practices, and services prescribed by the PSC are presumed, prima facie, to be lawful and reasonable. Michigan Consolidated Gas Co. v. Public Service Comm., 389 Mich. 624, 635-636, 209 N.W.2d 210 (1973). A party aggrieved by an order of the PSC bears the burden of proving by clear and satisfactory evidence that the order is unlawful or unreasonable. MCL 462.26(8); MSA 22.45(8). Also, Const. 1963, art. 6, § 28 applies and provides that a final agency order must be authorized by law and be supported by competent, material, and substantial evidence on the whole record. Attorney General v. Public Service Comm., 165 Mich. App. 230, 235, 418 N.W.2d 660 (1987). This Court gives due deference to the PSC's administrative expertise and is not to substitute its judgment for that of the PSC. Building Owners & Managers Ass'n of Metropolitan Detroit v. Public Service Comm., 131 Mich.App. 504, 517, 346 N.W.2d 581 (1984).
In Docket No. 203101, the AG...
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