City of Coldwater v. Consumers Energy Co.

• Decision Date: 18 May 2017
• Docket Number: No. 151051, No. 151053,151051
• Citation: 895 N.W.2d 154
• Parties: CITY OF COLDWATER, Plaintiff–Appellee, v. CONSUMERS ENERGY COMPANY, Defendant–Appellant. City of Holland, Plaintiff–Appellee, v. Consumers Energy Company, Defendant–Appellant.
• Court: Michigan Supreme Court

895 N.W.2d 154

CITY OF COLDWATER, Plaintiff–Appellee,

v.CONSUMERS ENERGY COMPANY, Defendant–Appellant.

City of Holland, Plaintiff–Appellee,

v.Consumers Energy Company, Defendant–Appellant.

No. 151051

No. 151053

Supreme Court of Michigan.

Argued October 5, 2016

Decided May 18, 2017

OPINION

Bernstein, J.

In these consolidated cases, two municipalities seek to provide electric service through municipal electric utilities. This case requires us to resolve two issues. First, whether a utility's right of first entitlement to provide electric service is applicable when a municipal utility is involved. Mich. Admin Code, R 460.3411(11). Second, whether in these cases a "customer [ ]" was "already receiving ... service from another utility" so as to prevent a municipal utility from providing service under MCL 124.3(2).

We hold that Rule 460.3411 (Rule 411) of the Michigan Administrative Code is inapplicable when a municipal utility is involved and has not consented to the jurisdiction of the Michigan Public Service Commission (PSC). Additionally, under the circumstances of each case, we find that there was not a customer already receiving service from another utility; accordingly, MCL 124.3 does not prevent either plaintiff from providing electric service. Therefore, we affirm the judgment of the Court of Appeals.

I. FACTS AND PROCEDURAL HISTORY

The first of these consolidated cases involves the Coldwater Board of Public Utilities (CBPU), a department of plaintiff City of Coldwater (Coldwater) that operates a municipal electric utility. CBPU holds a franchise to provide electric power to Coldwater Township and provides electric service to customers throughout the township. Defendant Consumers Electric Company (Consumers) is also franchised to provide electric service within the township.

On July 21, 2011, CBPU purchased a parcel of property within the township. At the time of the purchase, the only structure on the property was a vacant building with an electric service drop that was connected to an electric meter owned by Consumers. Service had been discontinued before CBPU purchased the property; specifically, records indicate that Consumers received a request from the previous owner to turn off electricity before Coldwater purchased the parcel, and service was terminated on July 1, 2011—20 days before the purchase. Coldwater wrote to Consumers, asking whether Consumers would object to CBPU providing electric service to the parcel. Consumers objected on the basis of Rule 411 of the Michigan Administrative Code and this Court's decision in Great Wolf Lodge of Traverse City, LLC v. Pub. Serv. Comm. , 489 Mich. 27, 799 N.W.2d 155 (2011). Despite this objection, Consumers removed its electric facilities from the property so that the preexisting building could be demolished.

On April 2, 2013, Coldwater filed a complaint for declaratory relief in circuit court, seeking a determination that CBPU could provide power to the parcel. Both parties moved for summary disposition. On January 15, 2014, the circuit court granted summary disposition to Coldwater, finding that neither Rule 411 nor MCL 124.3 was applicable.

The second of these consolidated cases involves the Holland Board of Public Works (HBPW), a department of plaintiff City of Holland (Holland) that operates a municipal electric utility. HBPW holds a franchise from Park Township that requires it to provide electric service to any prospective customer in the township who requests it. Consumers is also franchised to provide electric service within the township.

In March 2011, Benjamin's Hope, a nonprofit charitable corporation, acquired a parcel of property within the township. At the time of purchase, the land was vacant because all of the buildings had been demolished by the previous owner. There was no electric service being provided on the land. Although Consumers had previously supplied power to the parcel, its lines were de-energized in 2008. Benjamin's Hope sought to build a multiunit facility on the property. In August 2011, the contractor for this construction project, CL Construction, requested that Consumers provide single-phase electric service to a construction trailer that was temporarily located on the property.¹

In October 2011, Benjamin's Hope solicited bids from Consumers and HBPW for three-phase electric service, which comes at a different voltage than the single-phase electric service that had been provided to CL Construction's trailer. Benjamin's Hope selected HBPW as its electric provider. When CL Construction removed its trailer from the property, CL Construction requested that Consumers remove its electric facilities as well. Although Consumers initially refused, it eventually complied by removing the line and meter sometime before April 24, 2012. HBPW began providing electric service to the parcel on April 30, 2012.

On March 20, 2012, Holland filed a complaint for declaratory relief in circuit court, seeking a determination that HBPW could provide power to the Benjamin's Hope parcel. On March 29, 2012, Consumers filed a request for a declaratory ruling from the PSC, claiming that Rule 411 gave it the exclusive right to serve the property. The PSC convened a proceeding and assigned a hearing officer. The circuit court held Holland's action in abeyance pending the outcome of the PSC proceeding.

On December 6, 2012, the PSC issued an order declining Consumers' request on the ground that it had no jurisdiction over HBPW or Benjamin's Hope. The circuit court ruled that Rule 411 was not applicable and that MCL 124.3 did not preclude HBPW from providing electric service.

Consumers appealed each of these cases in the Court of Appeals, and the appeals were consolidated. On January 6, 2015, the Court of Appeals affirmed both of the circuit courts' decisions in a published opinion, holding that Rule 411 was not applicable in either case and that MCL 124.3 did not prevent either property owner from switching electrical providers. City of Holland v. Consumers Energy Co. , 308 Mich.App. 675, 687, 689, 698, 866 N.W.2d 871 (2015).

II. STANDARD OF REVIEW

This case concerns the interpretation of both administrative rules and statutes. "In construing administrative rules, courts apply principles of statutory construction." Detroit Base Coalition for Human Rights of the Handicapped v. Dep't of Social Servs. , 431 Mich. 172, 185, 428 N.W.2d 335 (1988). Statutory interpretation is a question of law that this Court reviews de novo. Rock v. Crocker , 499 Mich. 247, 260, 884 N.W.2d 227 (2016). "The foremost rule, and our primary task in construing a statute, is to discern and give effect to the intent of the Legislature." Sun Valley Foods Co. v. Ward , 460 Mich. 230, 236, 596 N.W.2d 119 (1999). We begin by examining the language of the statute, which provides " ‘the most reliable evidence of its intent[.]’ " Id ., quoting United States v. Turkette , 452 U.S. 576, 593, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981).

If the language of the statute is unambiguous, the Legislature must have intended the meaning clearly expressed, and the statute must be enforced as written. No further judicial construction is required or permitted. Only where the statutory language is ambiguous may a court properly go beyond the words of the statute to ascertain legislative intent. [Sun Valley Foods Co. , 460 Mich. at 236, 596 N.W.2d 119 (citations omitted).]

See also Boyle v. Gen. Motors Corp. , 468 Mich. 226, 229, 661 N.W.2d 557 (2003) ("If the language of the statute is clear, no further analysis is necessary or allowed."). "Courts must give effect to every word, phrase, and clause in a statute and avoid an interpretation that would render any part of the statute surplusage or nugatory." State Farm Fire & Cas. Co v. Old Republic Ins. Co. , 466 Mich. 142, 146, 644 N.W.2d 715 (2002).

III. ANALYSIS

A. RULE 411

We first consider whether a public utility has a right of first entitlement under Rule 411, even when the competing utility is a municipal utility. Rule 411 provides, in relevant part:

(1) As used in this rule:

(a) "Customer" means the buildings and facilities served rather than the individual, association, partnership, or corporation served.

* * *

(11) The first utility serving a customer pursuant to these rules is entitled to serve the entire electric load on the premises of that customer even if another utility is closer to a portion of the customer's load. [Mich. Admin. Code, R. 460.3411.]

This rule is sometimes referred to as a utility's right of first entitlement.

We previously considered the applicability of a utility's right of first entitlement in Great Wolf Lodge , 489 Mich. 27, 799 N.W.2d 155. In Great Wolf Lodge , the plaintiff purchased a parcel of property. Although electric service had been turned off, the prior owner had continued to make a minimum monthly payment to Cherryland Electric Cooperative (Cherryland) to maintain the option to have service turned on in the future. The plaintiff planned new construction on the property and solicited bids from electric utilities. A municipal electric utility was the winning bidder. However, when Cherryland was asked to remove its service line so that a building could be demolished, it conditioned removal on being named the electricity provider. This Court held:

Rule 411(11) grants the utility first serving buildings or facilities on an undivided piece of real property the right to serve the entire electric load on that property. The right attaches at the moment the first utility serves "a customer" and applies to the entire "premises" on which those buildings and facilities sit. The later destruction of all buildings on the property or division of the property by a public road, street, or alley does not extinguish or otherwise limit the right. This conclusion is consistent with the rule's purpose of avoiding unnecessary duplication of electrical facilities. [Id . at 39, 799 N.W.2d 155.]

This Court noted that it was undisputed that Cherryland was the first utility...