Consumers Power Co. v. Michigan Public Service Commission, Docket No. 20387

• Decision Date: 14 October 1975
• Docket Number: Docket No. 20387
• Citation: 65 Mich.App. 73,237 N.W.2d 189
• Parties: , 14 P.U.R.4th 119 CONSUMERS POWER COMPANY, Plaintiff-Appellant, v. MICHIGAN PUBLIC SERVICE COMMISSION, Defendant-Appellee, and Frank J. Kelley, Attorney, General, Intervening Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 189

237 N.W.2d 189

65 Mich.App. 73, 14 P.U.R.4th 119

CONSUMERS POWER COMPANY, Plaintiff-Appellant, v. MICHIGAN PUBLIC SERVICE COMMISSION, Defendant-Appellee and Frank J. Kelley, Attorney, General, Intervening Defendant-Appellee.

Docket No. 20387.

Court of Appeals of Michigan.

Oct. 14, 1975.

Released for Publication Jan. 22, 1976.

Leave to Appeal Denied Feb. 9, 1976.

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

Frank J. Kelley, Atty. Gen., pro se; Robert A Derengoski, Sol. Gen., Hugh B. Anderson, Asst. Atty. Gen., for the Attorney General.

Walter V. Kron, Asst. Atty. Gen., for Mich. Public Serv. Com'n.

Before BASHARA, P.J., and J. H. GILLIS and CAVANAGH, JJ.

J. H. GILLIS, Judge.

In April and July of 1968, Consumers Power Company (hereinafter referred to as Consumers) petitioned the Michigan Public Service Commission (hereinafter referred to as MPSC) for an increase in its gas and electricity rates. Extensive public hearings were held on the matter, beginning in November 1968 and concluding in June 1969. On September 23, 1969, the MPSC granted Consumers a rate increase, though not in the amount requested. The MPSC order contained the following clause:

'* * * that in the event the Federal Income Tax Surcharge expires or is reduced, Consumers Power Company shall promptly file rate schedules reducing its rates by the amount of the tax reduction. Such reduced rates shall be effective within 30 days of the effective date of the tax deduction.'

The Federal Income Tax Surcharge, to which the MPSC order referred, was first enacted as part of the Revenue and Expenditure Act of 1968. By the terms of the act, the 10% Surcharge was to expire on June 30, 1969. At the time that the evidentiary record was closed on Consumers' applications for rate increases, the Federal Income Tax Surcharge was scheduled to expire approximately one week later.

Following the close of the evidentiary record before the Commission, but prior to the Commission's order, Congress, on August 9, 1969, reenacted the surcharge retroactive to July 1, 1969, for a 6-month period, the tax to expire on December 31, 1969. On December 30, 1969, the surcharge was reenacted at one-half the previous rate (5%), effective January 1, 1970 and expiring June 30, 1970. No further action was taken by Congress, and the income tax surcharge, at the 5% Rate, did in fact expire by its own terms on June 30, 1970.

Soon after the MPSC ruling, Consumers filed its statutory appeal in the Ingham County Circuit Court. In its complaint, Consumers alleged that the MPSC order was 'unreasonable, unlawful, confiscatory, noncompensatory, discriminatory and contrary to the great weight of the evidence'. Consumers also contended that the portion of the order dealing with the tax surcharge was unlawful because while it mandated automatic reduction of rates if the tax was repealed, it did not allow Consumers the opportunity to show that other expenses had unexpectedly risen between the time the order was issued and the tax was repealed.

On February 3, 1970, Consumers obtained a preliminiary injunction from the Ingham County Circuit Court. The injunction allowed Consumers to ignore that portion of the MPSC order dealing with the tax surcharge and related rate reduction.

It was not until three years later that Consumers moved to supplement its original complaint. In March, 1973, they sought partial summary judgment on the issue of the validity of the tax surcharge clause. The MPSC counterclaimed, seeking a partial summary judgment declaring the provision valid. In March of 1974, the trial judge dissolved the temporary injunction and granted partial summary judgment to the MPSC, declaring...