Attorney General v. Public Service Commission , 231 Mich. App. 76 ( 1998 )

585 N.W.2d 310 (1998) 231 Mich. App. 76

ATTORNEY GENERAL, Plaintiff-Appellant,
v.
MICHIGAN PUBLIC SERVICE COMMISSION and Northern States Power Company-Wisconsin, Defendants-Appellees.

Docket No. 198419.

Court of Appeals of Michigan.

Submitted April 9, 1998, at Lansing. Decided July 31, 1998, at 9:35 a.m. Released for Publication November 2, 1998.

Frank J. Kelley, Atty. Gen., Thomas L. Casey, Sol. Gen., J. Peter Lark and Donald E. Erickson, Asst. Attys. Gen., for Atty. Gen.

Don L. Keskey, Asst. Atty. Gen., for Public Service Commission.

Loomis, Ewert, Parsley, Davis & Gotting, P.C. by Harvey J. Messing, Gary L. Field, and Sheri A. Wellman, Lansing, for Northern States Power Company-Wis.

Before HOOD, P.J., and MARKMAN and TALBOT, JJ.

PER CURIAM.

The Attorney General appeals as of right the order of the Public Service Commission allowing Northern States Power Company-Wisconsin to suspend its power supply cost recovery (PSCR) clause from January 1, 1997, through December 31, 2000. We affirm.

Appellant argues that the PSC does not have the statutory power to suspend a PSCR clause, that it erred in suspending Northern States' PSCR clause without a contested case hearing, and that the PSC erred in determining that the suspension would not result in a rate increase to customers. We disagree.

Our review of a PSC order is limited. Pursuant to M.C.L. § 462.25; M.S.A. § 22.44, all rates, fares, charges, classification and joint rates, regulations, practices, and services prescribed by the PSC are presumed, prima facie, to be lawful and reasonable. Michigan Consolidated Gas Co. v. Public Service Comm., 389 Mich. 624, 209 N.W.2d 210 (1973). An aggrieved party bears the burden of proving by clear and convincing evidence that the order appealed is unlawful or unreasonable. M.C.L. § 462.26(8); M.S.A. § 22.45(8). An order is unlawful if it is based on an erroneous interpretation or application of the law, and it is unreasonable if it is not supported by the evidence. Associated Truck Lines, Inc. v. Public Service Comm., 377 Mich. 259, 140 N.W.2d 515 (1966). A reviewing court must give due deference to the administrative expertise of the PSC and may not substitute its judgment for that of the agency. City of Marshall v. Consumers Power Co. (On Remand), 206 Mich.App. 666, 677, 523 N.W.2d 483 (1994). However, this does not mean that courts may abandon or delegate their responsibility to interpret statutory language and legislative intent. Miller Bros. v. Public Service Comm., 180 Mich.App. 227, 232, 446 N.W.2d 640 (1989).

The PSC possesses no common-law powers. It is a creature of the Legislature, and all of its authority must be found in statutory enactments. Union Carbide Corp. v. Public Service Comm., 431 Mich. 135, 146, 428 N.W.2d 322 (1988). A statute that grants power to an administrative agency is to be strictly construed. Miller Bros., supra. Administrative authority must be plainly granted, for doubtful power in this context does not exist. Id.

In our judgment, the PSC has authority to suspend a PSCR clause. M.C.L. § 460.6J; M.S.A. § 22.13(6j) governs the implementation of PSCR clauses. It states in part:

(2) Pursuant to its authority under this act, the public service commission may incorporate a power supply cost recovery clause in the electric rates or rate schedule of a utility, but is not required to do so. Any order incorporating a power supply cost recovery clause shall be as a result of a hearing solely on the question of the inclusion of the clause in the rates or rate schedule, which hearing shall be conducted as a contested case pursuant to chapter 4 of the administrative procedures act of 1969, Act No. 306 of the Public Acts of 1969, being sections 24.271 to 24.287 of the Michigan Compiled Laws, or pursuant to subsection (18), as a result of a general rate case. Any order incorporating a power supply cost recovery clause shall replace and rescind any previous fuel cost adjustment clause or purchased and net interchanged power adjustment clause incorporated in the electric rates of the utility upon the effective date of the first power supply cost recovery factor authorized for the utility under its power supply cost recovery clause.

The statute explicitly provides that the PSC may incorporate a PSCR clause in the rate schedule, but it is not required to do so. M.C.L. § 460.6j(2); M.S.A. § 22.13(6j)(2). While the statute specifies certain PSCR reconciliation procedures, it is silent with respect to any procedures for suspending the operation of a PSCR clause. We find that such a power exists by implication.

M.C.L. § 460.6; M.S.A. § 22.13(6) grants the PSC plenary power and jurisdiction to regulate all public utilities in the state, including all incidental matters. This broad power includes the power to regulate all rates, fares, fees, charges, services, rules, conditions of service, and all other matters pertaining to the formation, operation, or direction of public utilities. Consumers Power Co. v. Public Service Comm., 181 Mich.App. 261, 265, 448 N.W.2d 806 (1989). Read together with M.C.L. § 460.6J; M.S.A. § 22.13(6j), we find that such provision includes the authorization for the PSC to suspend a PSCR clause—at least where the suspension of the PSCR clause will not result in an increase in rates. To hold otherwise would require the once-adopted PSCR mechanism to continue in perpetuity; we find nothing in the language of M.C.L. § 460.6j; M.S.A. § 22.13(6j) to suggest that a PSCR clause in perpetuity is the only type of clause contemplated by the Legislature or that such clauses cannot ever be "sunset." Rather, we believe that the PSCR clause need not be written permanently in granite any more than the fuel cost adjustment or purchased and net interchanged power adjustment clauses referred to in the same provision. We read nothing in the law to suggest that the broad authority of the PSC, including its authority to promulgate PSCR clauses, is somehow constrained with respect to its authority to modify the latter, notwithstanding any changes in circumstances that might warrant rescission of such a clause.

Nor do we believe that the PSC was required to hold a contested case hearing before suspending the PSCR clause in this case. M.C.L. § 460.6a; M.S.A. § 22.13(6a) provides in part:

(1) When a finding or order is sought by a gas or electric utility to increase its rates and charges or to alter, change, or amend any rate or rate schedules, the effect of which will be to increase the cost of services to its customers, notice shall be given within the service area to be affected.... After first having given notice to the interested parties within the service area to be affected and affording interested parties a reasonable opportunity for a full and complete hearing, the commission, after submission of all proofs by any interested party, may in its discretion and upon written motion by the utility make a finding and enter an order granting partial and immediate relief.... An alteration or amendment in rates or rate schedules applied for by a public utility that will not result in an increase in the cost of service to its customers may be authorized and approved without notice or hearing.

Under the statute, the PSC has authority to act without a hearing if the amendment in rate schedules would not result in a rate increase. The fact that a hearing is required to implement a PSCR clause does not imply the need for a hearing to rescind or suspend the clause, absent evidence that the suspension will result in an increase in rates. The possibility of future increased costs has been found to be too speculative to merit a contested case hearing.^[1]Attorney General v. Public Service Comm., 206 Mich.App. 290, 295, 520 N.W.2d 636 (1994). In an unpublished opinion per curiam, this Court has held that M.C.L. § 460.6j(2); M.S.A. § 22.13(6j)(2) does not require a contested case hearing for the suspension of a PSCR clause when the PSC determines that the suspension will not result in a rate increase. Attorney General v. Public Service Comm., issued January 20, 1998 (Docket Nos. 191946, 192000, 192001, and 192515). We agree with and adopt the reasoning of that panel. The potential reduction in a PSCR factor, which may result in a future rate reduction, does not constitute an increase under the statute. There is no evidence, other than speculation, to support a finding that the PSC's order was unlawful or unreasonable or resulted in increased rates. We understand the Attorney General's concerns to be focused not on a rate increase directly resulting from suspension of the PSCR clause, but on a rate decrease an unsuspended clause might conceivably cause. If power supply costs are lowered in the future, M.C.L. § 460.58; M.S.A. § 22.8 and M.C.L. § 460.557; M.S.A. § 22.157 provide a mechanism for seeking a rate adjustment.

Affirmed.

NOTES

[1] We also find instructive the argument by Northern States Power Company that the policy argument in favor of a contested case hearing before the implementation of a PSCR clause does not exist where the issue is the suspension of such a clause.

When utilities sought to implement a PSCR clause, Act 304 was considered by many to be a radical departure from traditional ratemaking. To examine and assuage such concerns, a contested case hearing was required prior to implementation. A comparable need for a contested case proceeding does not exist when permitting a utility to return to the traditional rate case proceeding with which the Commission and all parties are well familiar.