Consumers Power Co. v. Public Service Com'n

• Decision Date: 21 November 1989
• Docket Number: 102370,103088 and 103097,Docket Nos. 102369,103051
• Parties: CONSUMERS POWER COMPANY, Appellant, v. PUBLIC SERVICE COMMISSION, Appellee, and Attorney General and Abate, Appellees. ABATE, Appellant, v. PUBLIC SERVICE COMMISSION, Consumers Power Company and Attorney General, Appellees. ATTORNEY GENERAL, Appellant, v. PUBLIC SERVICE COMMISSION and Consumers Power Company, Appellees. ATTORNEY GENERAL, Appellant, v. PUBLIC SERVICE COMMISSION, Consumers Power Company, and Abate, Appellees.
• Court: Court of Appeal of Michigan — District of US

Page 806

448 N.W.2d 806

181 Mich.App. 261

CONSUMERS POWER COMPANY, Appellant, v. PUBLIC SERVICE COMMISSION, Appellee, and Attorney General and Abate, Appellees.

ABATE, Appellant, v. PUBLIC SERVICE COMMISSION, Consumers Power Company and Attorney General, Appellees.

ATTORNEY GENERAL, Appellant, v. PUBLIC SERVICE COMMISSION and Consumers Power Company, Appellees.

ATTORNEY GENERAL, Appellant, v. PUBLIC SERVICE COMMISSION, Consumers Power Company, and Abate, Appellees.

Docket Nos. 102369, 102370, 103051, 103088 and 103097.

Court of Appeals of Michigan.

Submitted Oct. 2, 1989.

Decided Nov. 21, 1989.

Released for Publication Nov. 21, 1989.

David A. Mikelonis, James E. Brunner and Robert M. Neustifter, Jackson, and Loomis, Ewert, Ederer, Parsley, Davis & Gotting by George W. Loomis, Harvey J. Messing and Ronald W. Bloomberg, Lansing, for Consumers Power Co.

Frank J. Kelley, Atty. Gen., Louis J. Caruso, Sol. Gen., and Hugh B. Anderson and Margaret A. Nelson, Asst. Atty. Gen., for Attorney Gen.

Hill, Lewis, Adams, Goodrich & Tait by Roderick S. Coy and Nancy L. Lukey, Lansing, for ABATE.

Don L. Keskey, James A. Ault and Elizabeth R. Schwartz, Asst. Attys. Gen., Lansing, for Public Service Com'n.

Before HOOD, P.J., and CYNAR and GRIFFIN, JJ.

PER CURIAM.

Under the Tax Reform Act of 1986 (TRA), the corporate income tax rate was reduced from forty-six percent to thirty-four percent. As a result of this reduction, the Michigan Public Service Commission, in an October 28, 1986, order, required all public utilities to file information setting forth the net effect of the TRA on utility rates and requested proposals for any appropriate rate changes. Consumers Power Company filed information alleging that there should be no reduction in its gas and electric rates. Consumers claimed that its situation was unique because: (1) its existing rates were at a stabilization level; (2) the net effect of the TRA would increase its tax burden because it was not currently paying taxes; and (3) any rate reductions would adversely affect its financial stabilization cash position.

On December 17, 1986, the PSC issued an order initiating proceedings for all Michigan investor-owned communication, electric and gas utilities to consider changes in their rates as a result of the TRA. The utilities were given an opportunity to present additional information showing cause why their rates should not be reduced. The methodology for presenting the information was to estimate the impact of the TRA by using 1986 as the test year.

Consumers had one case for its gas rates (U-8680) and one for its electric rates (U-8681). Prehearing conferences and examination of witnesses in both cases were conducted before a PSC hearing officer. Evidence was presented by Consumers, the PSC Staff, and intervenors in the action, the Attorney General and the Association of Businesses Advocating Tariff Equity (ABATE). On June 9, 1987, the hearing officer issued his proposed decision. Exceptions to the decision were submitted and Consumers' motion to reopen proofs in the electric case was subsequently denied. On August 4, 1987, the PSC entered final orders in the cases providing for:

1. Annual gas rate reductions for gas service of $23,055,000 to be effective on or after August 5, 1987.

2. Refunds of excess tax reserves for gas services of $10,449,000 in 1987 and $7,251,000 in 1988.

3. Annual electric rate reductions of $73,455,000 for service on or after August 5, 1987. $21,697,000 to be collected under bond pending resolution of another case addressing rate making treatment of Consumers' investment in Midland Nuclear Plant. The remaining $51,758,000 to be implemented immediately.

4. Refund of excess tax reserves for electric services of $11,575,000 in 1987 and $8,818,000 in 1988.

Consumers filed in this Court motions for temporary stay, immediate consideration and a preliminary injunction. A panel of this Court denied temporary stay and immediate consideration, but remanded the motion for a preliminary injunction to the Ingham Circuit Court. In an opinion dated September 10, 1987, the circuit court denied Consumers' motion for a preliminary injunction.

Consumers appeals as of right from the August 4, 1987, orders (Appeal Nos. 102369 and 102370). Intervening parties ABATE and the Attorney General appeal as of right that portion of the PSC orders authorizing Consumers to collect $21,697,000 under bond (Appeal Nos. 103051 and 103088). Finally, the Attorney General appeals as of right from the PSC's rejection of his proposal for further rate reductions in gas service of $2,809,000 (Appeal No. 103097). All five appeals were consolidated.

I

Before addressing any issues, we feel that enunciation of some general principles regarding review of PSC orders is appropriate.

The PSC is vested, by statute, with broad authority to regulate public utilities and their rates. See M.C.L. Sec. 460.6(1); M.S.A. Sec. 22.13(6)(1); Attorney General v. Public Service Comm., 122 Mich.App. 777, 786, 333 N.W.2d 131 (1983), lv. den. 418 Mich. 886 (1983). Rates set by the PSC are prima facie lawful and reasonable until found otherwise. M.C.L. Sec. 462.25; M.S.A. Sec. 22.44; Michigan Consolidated Gas Co. v. Public Service Comm., 389 Mich. 624, 636, 209 N.W.2d 210 (1973); The Detroit Edison Co. v. Public Service Comm., 127 Mich.App. 499, 507, 342 N.W.2d 273 (1983), lv. den. 419 Mich. 867 (1984). On appeal, the appellant has the burden of showing by clear and satisfactory evidence that the order of the PSC was unlawful or unreasonable. M.C.L. Sec. 462.26(8); M.S.A. Sec. 22.45(8); General Motors Corp. v. Public Service Comm. No. 1, 175 Mich.App. 576, 580, 438 N.W.2d 613 (1988). The appellant must also show that the PSC's findings of fact were not supported by competent, material and substantial evidence. Const.1963, art. 6, Sec. 28; Building Owners & Managers Ass'n. of Metropolitan Detroit v. Public Service Comm., 131 Mich.App. 504, 516, 346 N.W.2d 581 (1984), aff'd. 424 Mich. 494, 383 N.W.2d 72 (1986).

II

Consumers first argues that the August 4, 1987, orders were unreasonable and unlawful because the PSC hearings were limited solely to the issue of the impact of the TRA on rates. Specifically, Consumers asserts that the limited issue hearings violated statutory requirements under M.C.L. Sec. 462.22; M.S.A. Sec. 22.41, as well as its due process rights. We disagree.

Panels of this Court have consistently upheld the validity of PSC proceedings limited to a single issue or purpose. See Colony Park Apartments v. Public Service Comm., 155 Mich.App. 134, 138-140, 399 N.W.2d 32 (1985) (rate increase sought after PSC determined proper rates for master-metered multiple dwellings); Attorney General v. Public Service Comm., 141 Mich.App. 505, 508, 367 N.W.2d 341 (1984), lv. den. 422 Mich. 878 (1985) (rate adjustment sought to reflect charges in operating and maintenance expenses); Attorney General v. Public Service Comm. No. 1, 133 Mich.App. 719, 727, 349 N.W.2d 539, (1984), lv. den. 422 Mich. 910 (1985) (rate adjustment sought to reflect changes in operating and maintenance expenses); Attorney General v. Public Service Comm., supra, 122 Mich.App. at 788, 333 N.W.2d 131 (rate adjustment sought to reflect changes in operating and maintenance expenses); Consumers Power Co. v. Public Service Comm., 65 Mich.App. 73, 76-77, 237 N.W.2d 189 (1975), lv. den. 396 Mich. 817 (1976) (rate adjustment sought to reflect elimination of federal income tax surcharge).

In light of this line of cases, we believe the PSC had authority to limit the hearings to the impact of the TRA on Consumers' rates. Therefore, Consumers' claim lacks merit.

III

Consumers next contends that the PSC arbitrarily and unreasonably ignored Consumers' financial stabilization status in promulgating rate reductions and refunds.

As previously concluded, the PSC had power to limit the hearings in this case to the effect of the TRA on Consumers' utility rates. Consequently, the impact of the TRA reductions and refunds on Consumers' financial stabilization status was beyond the scope of the hearings and should not now be used as a basis for overturning the PSC's orders.

In any event, it was certainly within the PSC's broad ratemaking authority to determine which factors it would consider in ascertaining the effect of the TRA. In addition, there was expert opinion testimony supporting the PSC's rate reductions and refunds, and this testimony constituted competent evidence. See Attorney General v. Public Service Comm., 174 Mich.App. 161, 170, 435 N.W.2d 752 (1988); Great Lakes Steel Div. of Nat'l. Steel Corp. v. Public Service Comm., 130 Mich.App. 470, 481, 344 N.W.2d 321 (1983), lv. den. 419 Mich. 895 (1984). Therefore, we decline to interfere with the PSC's orders simply on the basis that it did not consider Consumers' financial stabilization status.

IV

Consumers argues that the PSC's orders requiring refunds of excess tax reserves for gas and electric services were unreasonable, arbitrary, capricious and unlawful. Consumers has failed to cite any authority for its assertion that its excess tax reserves should not be refunded. A party may not leave it to this Court to search for authority to sustain or reject its position. Statement of the position without supporting citation is insufficient to bring the issue before this Court. Settles v. Detroit City Clerk, 169 Mich.App. 797, 807, 427 N.W.2d 188 (1988). In any event, we believe the instant case is analogous to Michigan Bell Telephone Co. v. Public Service Comm., 85 Mich.App. 163, 169-172, 270 N.W.2d 546 (1978), lv. den. 405 Mich. 822 (1979), in which a PSC order directing Michigan Bell to refund excess state income tax reserves was upheld. As in Michigan Bell, the PSC in this case essentially ordered Consumers to refund money collected from its ratepayers which was in excess of what Consumers was going to pay in taxes. The money refunded in reality already belonged to the...