Consumers Power Co. v. Michigan Public Service Commission

• Decision Date: 21 September 1977
• Docket Number: Docket No. 30891
• Citation: 78 Mich.App. 581,261 N.W.2d 10
• Parties: CONSUMERS POWER COMPANY, Plaintiff-Appellant, v. MICHIGAN PUBLIC SERVICE COMMISSION, Defendant-Appellee, and Attorney General, the Dow Chemical Company and General Motors Corporation, Intervening Defendants-Appellees.
• Court: Court of Appeal of Michigan — District of US

Page 10

261 N.W.2d 10

78 Mich.App. 581

CONSUMERS POWER COMPANY, Plaintiff-Appellant, v. MICHIGAN PUBLIC SERVICE COMMISSION, Defendant-Appellee and Attorney General, the Dow Chemical Company and General Motors Corporation, Intervening Defendants-Appellees.

Docket No. 30891.

Court of Appeals of Michigan.

Sept. 21, 1977.

Released for Publication Jan. 12, 1978.

Snyder, Loomis, Ewert, Ederer & Parsley by George W. Loomis, Lansing, for plaintiff-appellant.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen. by Arthur E. D'Hondt, Hugh B. Anderson, Asst. Attys. Gen., for Michigan Public Service Commission.

P. D. Conner, Ann Arbor, for Dow Chemical.

John M. Veale, Detroit, for Gen. Motors.

Before WALSH, P. J., and QUINN and STAIR, ^* JJ.

STAIR, Justice.

Plaintiff Consumers Power Company brings the present appeal from a decision of the defendant Commission denying plaintiff an increase in its rate of return on common equity.

On November 27, 1974, plaintiff filed an application with the Commission requesting several changes in its financial status, including a gas rate increase and an increase in the rate of return on common equity. At a hearing before an administrative law judge, numerous witnesses testified concerning these issues. The two expert witnesses on the rate of return issue recommended that the then current rate of 12.12% be raised. Plaintiff's expert, Dr. Charles Phillips, Jr., recommended a rate of return within the range of 15% to 16%. The Commission's staff expert, Paul Carlson, recommended a rate within a range of 12.34% to 13.50%.

The hearing judge found that a reasonable return on the common stock would be in the range of 13% to 14%, and recommended a change in the rate to 13.50%. On appeal to the full commission, the hearing judge's proposal was rejected in favor of leaving the current rate of 12.12% unchanged.

Pursuant to M.C.L.A. § 462.26; M.S.A. § 22.45, plaintiff appealed the Commission's finding on the rate of return issue to the Ingham County Circuit Court. On September 15, 1976, the Court filed an opinion upholding the Commission's ruling maintaining the rate at its existing ratio. Plaintiff has now appealed the decision to this Court.

The first issue raised concerns the sufficiency of the Commission's finding. Plaintiff argues that the decision to leave the rate unchanged was unsupported by the evidence, particularly since the testimony of the expert witnesses, including the Commission's staff expert, supported a rate between a low of 12.34% and a high of 16%. Plaintiff concedes that the Commission was free to reject all of the expert testimony offered, but contends that the holding in fact made, at a rate beneath the recommended range, was not supported by any independent evidence.

The standard for review of an administrative agency ruling is set forth both in the Michigan Constitution and in the Administrative Procedures Act of 1969, 1969 P.A. 306:

"All final decisions, findings, rulings and orders of any administrative officer or agency existing under the constitution or by law, which are judicial or quasi-judicial and affect private rights or licenses, shall be subject to direct review by the courts as provided by law. This review shall include, as a minimum, the determination whether such final decisions, findings, rulings and orders are authorized by law; and, in cases in which a hearing is required, whether the same are supported by competent, material and substantial evidence on the whole record. Findings of fact in workmen's compensation proceedings shall be conclusive in the absence of fraud unless otherwise provided by law." Const.1963, art. 6, § 28.

"(1) Except when a statute or the constitution provides for a different scope of review, the court shall hold unlawful and set aside a decision or order of an agency if substantial rights of the petitioner have been prejudiced because the decision or order is any of the following:

"(d) Not supported by competent, material and substantial evidence on the whole record." M.C.L.A. § 24.306; M.S.A. § 3.560(206).

This standard is applicable to a ruling of the Public Service Commission. See Michigan Consolidated Gas Co. v. Public Service Commission, 389 Mich. 624, 639, 209 N.W.2d 210 (1973).

Plaintiff cites numerous cases from other jurisdictions where decisions of an administrative agency setting rates at a level below the range recommended by expert witnesses have been either reversed or upheld based upon the existence of independent evidence supporting the lower figure. We find ourselves precluded, however, from engaging in this type of analysis by a more basic problem with...