In re Application of Consumers Energy Co., Docket No. 274471.
| Decision Date | 21 October 2008 |
| Docket Number | Docket No. 274471. |
| Citation | 761 N.W.2d 346,281 Mich. App. 352 |
| Court | Court of Appeal of Michigan — District of US |
| Parties | In re APPLICATION OF CONSUMERS ENERGY COMPANY. |
Michael A. Cox, Attorney General, B. Eric Restuccia, Solicitor General, and David A. Voges and Michael A. Nickerson, Assistant Attorneys General, for the Public Service Commission.
Clark Hill PLC (by Don L. Keskey), Lansing, for the Michigan Environmental Council and the Public Interest Research Group In Michigan.
Jon R. Robinson and John C. Shea, Jackson, for Consumers Energy Company.
Before: MARKEY, P.J., and METER and MURRAY, JJ.
Appellants Michigan Environmental Council and Public Interest Research Group In Michigan appeal as of right an order of the Public Service Commission (PSC) denying leave to appeal the decision of a hearing referee not to entertain certain advocacy from appellants and to strike their attendant evidence. We affirm.
This case arose from the PSC's orders in response to an application by Consumers Energy Company (Consumers) for approval of a power supply cost recovery (PSCR) plan for 2006.
A PSCR factor is "that element of the rates to be charged for electric service to reflect power supply costs incurred by an electric utility and made pursuant to a power supply cost recovery clause incorporated in the rates or rate schedule of an electric utility." MCL 460.6j(1)(b). A PSCR clause is
a clause in the electric rates or rate schedule of a utility which permits the monthly adjustment of rates for power supply to allow the utility to recover the booked costs, including transportation costs, reclamation costs, and disposal and reprocessing costs, of fuel burned by the utility for electric generation and the booked costs of purchased and net interchanged power transactions by the utility incurred under reasonable and prudent policies and practices. [MCL 460.6j(1)(a).]
Appellants entered this case as intervenors1 and offered evidence concerning opportunities to reduce the PSCR factors through conservation, energy efficiency, and demand-side management (DSM). Consumers persuaded the referee to strike that evidence as not properly before the PSC in a PSCR proceeding. In response to the motion to strike, appellants unsuccessfully sought a declaratory ruling to the effect that the development of energy efficiency, conservation, and load management programs was a duty that Consumers was obliged to fulfill as part of the PSCR process.
Appellants argued that Consumers' PSCR plan should be rejected because it failed to address energy efficiency, conservation, or load management programs, asserting that a plan failing to address those items was neither reasonable nor prudent for purposes of MCL 460.6j. Appellants additionally argued that the stricken testimony would have shown the direct relationship between prudence under MCL 460.6j and energy efficiency, and that the testimony was therefore relevant in the PSCR proceeding. Appellants further argued that the denial of the motion for declaratory relief was contrary to the plain language, purposes, and objectives of MCL 460.6j because any PSCR plan that did not address opportunities to minimize energy costs was necessarily unreasonable and imprudent.
In affirming the referee's decision to strike the evidence in question, the PSC explained:
The [referee] correctly rejected the motion for a declaratory ruling on the grounds that "the overall structure of the Commission's rules of practice and procedure rebuts MEC/PIRGIM's assertion that its request can and should be considered in the context of an existing case." None of the rulings that the groups seek are necessary to decide the contested case proceeding at hand. As the [referee] found, "Consumers is currently under no obligation to include (as part of its 2006 PSCR plan or the accompanying five-year forecast) an assessment of energy efficiency, conservation, or DSM programs."
* * *
[T]he Commission agrees that the [referee] did not err by striking the testimony offered by MEC/PIRGIM witnesses concerning the need for conservation, energy efficiency, and DSM programs. However, in affirming the [referee's] ruling on the motion to strike the Commission notes that it does not intend to suggest that a party to an Act 3042 case should be precluded from proposing a rate design solution that encourages the efficient use of energy or conservation measures by a utility's customers. Likewise, the preclusion of intervenor testimony regarding non-rate design energy efficiency or conservation measures in an Act 304 proceeding does not apply to more appropriate forums, such as individual rate cases or special proceedings.... MEC/PIRGIM is encouraged to raise its energy efficiency and conservation concerns in a more appropriate forum.... [Internal citations omitted.]
This appeal followed.
A final order of the PSC must be authorized by law and must be supported by competent, material, and substantial evidence. Const. 1963, art. 6, § 28; Attorney General v. Pub. Service Comm., 165 Mich.App. 230, 235, 418 N.W.2d 660 (1987). All rates, fares, charges, classification and joint rates, regulations, practices, and services prescribed by the PSC are presumed to be lawful and reasonable. MCL 462.25; see also Michigan Consolidated Gas Co. v. Pub. Service Comm., 389 Mich. 624, 635-636, 209 N.W.2d 210 (1973). A party aggrieved by an order of the PSC has the burden of proving by clear and satisfactory evidence that the order is unlawful or unreasonable. MCL 462.26(8). To establish that a PSC order is unlawful, an appellant must show that the PSC failed to follow a statutory requirement or abused its discretion in the exercise of its judgment. In re MCI Telecom. Complaint, 460 Mich. 396, 427, 596 N.W.2d 164 (1999).
In situations not involving the interpretation of a statute, a reviewing court should defer to the PSC's administrative expertise and not substitute its judgment for that of the PSC. Attorney General v. Pub. Service Comm. No. 2, 237 Mich.App. 82, 88, 602 N.W.2d 225 (1999). An agency's interpretation of a statute, while entitled to "`respectful consideration,'" "is not binding on the courts, and it cannot conflict with the Legislatures intent as expressed in the language of the statute at issue." In re Complaint of Rovas Against SBC Michigan, 482 Mich. 90, 93, 103, 754 N.W.2d 259 (2008).
"Whether the PSC exceeded the scope of its authority is a question of law that we review de novo." In re Complaint of Pelland Against Ameritech Michigan, 254 Mich.App. 675, 682, 658 N.W.2d 849 (2003).
Evidentiary decisions are reviewed for an abuse of discretion. Price v. Long Realty, Inc., 199 Mich.App. 461, 466, 502 N.W.2d 337 (1993). An abuse of discretion occurs only where the challenged decision fell outside the range of reasonable and principled outcomes. See Saffian v. Simmons, 477 Mich. 8, 12, 727 N.W.2d 132 (2007).
Appellants first assert, according to their statement of questions presented, that the PSC declared itself "limited and powerless under statutory law to encourage the establishment of energy resource planning, and energy efficiency and conservation programs," and they then argue that the PSC erred in so declaring. In fact, we find no such declaration in the record. The PSC did, however, decline to condition approval of Consumers' PSCR plan on the existence of such a program within it, and in this regard it committed no error.
The parties recognize that the PSC has a long history of encouraging utilities to consider their options for providing energy, satisfying present and future demand, and respecting concerns relating to costs, conservation, risks, and flexibility, along with environmental and social issues. In 1990, the PSC held that, in order to evaluate the reasonableness and prudence of the decisions underlying PSCR plans and forecasts, Consumers' future PSCR plans and forecasts would have to be derived from, and be consistent with, its most recent integrated resource plan (IRP). In re Application of Consumers Power Co., opinion and order issued March 29, 1990 (Case No. U-9172) at 23. The PSC elaborated that an IRP should include planning objectives, estimated costs of and potential contributions to meeting planning objectives in connection with resource options, load projections and resource requirements, combinations of resource options, sensitivity analyses testing the effect of changed circumstances on the performance and costs of selected resource options, and an action plan describing a preferred selection of resource options. Id. at 24-25.
However, in 1997, with the advent of competition in the state's electric industry, the PSC relieved utilities of the requirement that their PSCR requests include IRPs:
In recognition of its goal of increased competition in Michigan's electric industry, the Commission concludes that Consumers should no longer be required to file integrated resource plans. Public review of and comment on integrated resource plans are not consistent with the competitive electric industry environment envisioned for Michigan. Such plans might provide information that could be useful to potential competitors and thus create a competitive disadvantage for Consumers. [In re Application of Consumers Power Co., order entered January 28, 1997 (Case No. U-9172) at 1-2.]
However, the PSC added, "In relieving Consumers of the obligation to file integrated resource plans, the Commission does not indicate that Consumers is also relieved of its obligation to engage in reasonable and prudent planning activities." Id. at 2.
In the instant case, the PSC reiterated that it imposed no obligation on Consumers to include an assessment of energy efficiency, conservation, or DSM programs with its PSCR plan, but it also stated that Consumers nonetheless retained an obligation to engage in reasonable and...
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