in Re Application of Detroit Edison Co to Increase Rates

STATE OF MICHIGAN
COURT OF APPEALS
_________________________________________
In re Application of DETROIT EDISON COMPANY
to Increase Rates.
DAVID SHELDON, UNPUBLISHED
July 21, 2015
Appellant,
v No. 319194
MPSC
MICHIGAN PUBLIC SERVICE COMMISSION, LC No. 00-015768
Appellee,
and
DETROIT EDISON COMPANY,
Petitioner-Appellee.
Before: RONAYNE KRAUSE, P.J., and MURPHY and SERVITTO, JJ.
PER CURIAM.
Appellant David Sheldon, appeals as of right from an order of the Michigan Public
Service Commission (PSC) allowing Detroit Edison Company (Edison) to begin deployment of
its Advanced Meter Infrastructure (AMI) program. We affirm.1
Edison began the implementation of a “smart grid” system several years ago. A smart
grid system uses improvements to technology to increase the reliability of the electric grid. The
AMI system is one component of a smart grid system. An AMI system records power
1
Appellant argues that he has standing to bring this appeal because he was aggrieved by the
PSC’s order. We agree. The fact that appellant seeks to raise issues that the PSC found to be
beyond the scope of the remand does not mandate a conclusion that appellant is not a party in
interest and lacks standing to bring this appeal. MCL 462.26(1).
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consumption data in near-real-time, and reports usage to the utility at frequent intervals. An
AMI meter is also known as a smart meter.
The PSC approved a rate increase and a continuation of Edison’s pilot program to
implement an AMI system in its service territory. In In re Applications of Detroit Edison Co,
296 Mich. App. 101; 817 NW2d 630 (2012), this Court affirmed in part, reversed in part, and
remanded for further proceedings. This Court found that the PSC’s decision to approve funding
for Edison’s AMI program “was not supported by competent, material, and substantial evidence
on the whole record.” Id. at 114 (quotation marks and citations omitted). This Court stated:
On the record before the PSC and, perforce, before us, the PSC’s decision was
erroneous. Accordingly, we remand this matter for the PSC to conduct a full
hearing on the AMI program, during which it will consider, among other relevant
matters, evidence related to the benefits, usefulness, and potential burdens of the
AMI, specific information gleaned from pilot phases of the program regarding
costs, operations, and customer response and impact, an assessment of similar
programs initiated here or in other states, risks associated with AMI, and
projected effects on rates. In other words, a real record, with solid evidence,
should support whatever decision the PSC makes on remand. [Id. at 116.]
Appellant filed a petition to intervene in the case on remand, noting that this Court
remanded the case to the PSC for, among other things, the risks and potential burdens associated
with the AMI program. Appellant contended that he and other persons who might have sought
to intervene when the case was originally filed did not have a fair opportunity to do so because
the public notice did not make clear that Edison “was, in effect, seeking approval from the
Commission for a radically new technology that will intimately and directly impact the lifestyles
of all customers.”
The Administrative Law Judge (ALJ) denied appellant’s petition to intervene, finding
that the original public notice was sufficient, that the petition to intervene was untimely because
this proceeding was a continuation of the original case and not a new matter, that no good cause
existed for the failure to intervene for more than three years, and that the scope of the issues
addressed in appellant’s petition were beyond the scope of the Court of Appeals’ remand.
The PSC affirmed the denial of the petition to intervene, finding that the petition was
untimely and that the issues on remand were to be limited in order to respond to the Court of
Appeals’ remand order.” The PSC noted that two other potential intervenors had been admitted
as parties in another case, and would have an opportunity to raise issues of health, privacy, and
other concerns voiced by persons who did not wish to receive an AMI meter in that case.2
2
In In re Application of Detroit Edison Company to Implement Opt Out Program, unpublished
per curiam opinion of the Court of Appeals, issued February 19, 2015 (Docket Nos. 316728,
316781), this Court addressed issues raised by these and other intervenors, and found the issues
to be without merit or beyond the scope of the proceeding.
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The PSC entered an order finding that the costs of Edison’s AMI pilot program were just
and reasonable, and granting Edison’s request to recover those costs.
The standard of review for PSC orders is narrow and well defined. Pursuant to MCL
462.25, 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 Consol
Gas Co v Public Serv Comm, 389 Mich. 624, 635-636; 209 NW2d 210 (1973). A party aggrieved
by an order of the PSC has the burden of proving by clear and convincing evidence that the order
is unlawful or unreasonable. MCL 462.26(8). To establish that a PSC order is unlawful, the
appellant must show that the PSC “failed to follow some mandatory provision of the statute or
was guilty of an abuse of discretion in the exercise of its judgment.” In re MCI Telecom
Complaint, 460 Mich. 396, 427; 596 NW2d 164 (1999) (citations and quotations omitted). “[A]n
order is unreasonable if it is not supported by the evidence.” In re Complaint of Consumers
Energy Co., 255 Mich. App. 496, 501, 660 NW2d 785, 787 (2002).
A final order of the PSC “must be authorized by law and be supported by competent,
material, and substantial evidence” on the whole record. Const 1963, art 6, § 28; Attorney
General v Public Serv Comm, 165 Mich. App. 230, 235; 418 NW2d 660 (1987).
“This Court gives due deference to the PSC’s administrative expertise and is not to
substitute its judgment for that of the PSC.” Attorney General v Public Serv Comm No 2, 237
Mich. App. 82, 88; 602 NW2d 225 (1999). We give respectful consideration to the PSC’s
construction of a statute that the PSC is empowered to execute, and we will not overrule that
construction absent cogent reasons. If the language of a statute is vague or obscure, the PSC’s
construction serves as an aid to determining the legislative intent, and will be given weight if it
does not conflict with the language of the statute or the purpose of the Legislature. However, the
construction given to a statute by the PSC is not binding on us. In re Complaint of Rovas
Against SBC Mich, 482 Mich. 90, 103-109; 754 NW2d 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 Mich, 254 Mich. App. 675, 682; 658 NW2d 849 (2003).
We review de novo the question whether a lower court followed an appellate court’s
ruling on remand. Schumacher v Dep’t of Natural Resources, 275 Mich. App. 121, 127; 737
NW2d 782 (2007).
On appeal, appellant argues that the PSC erred by concluding that the scope of this
Court’s remand order was limited to the question of rates associated with Edison’s AMI
program. We disagree.
In In re Detroit Edison Co, this Court found that the PSC erred by approving funding for
Edison’s AMI project. In re Detroit Edison Co, 296 Mich. App. at 114. This Court found that the
PSC’s decision was not supported by competent, material, and substantial evidence on the whole
record, and that the evidence Edison produced to support the rate increase was “aspirational” and
that it was “optimistic” and “speculative.” Id. at 114-115. This Court concluded that the PSC
could not support a rate increase “without an informed assessment supported by competent,
material, and substantial evidence.” Id. at 115. For that reason this Court remanded the case to
the PSC for development of the record. Id. at 116. Appellant correctly notes that this Court
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made reference to another case in which the PSC sought to address various concerns, including
those related to health and privacy, related to AMI meters. Id. at 115 n 3. However, no language
in the remand order indicates that this Court intended to have the parties in this case address all
of those same issues on remand. Rather the remand language indicates that the evidence on
which the PSC relied to approve Edison’s rate increase for the AMI program was lacking. Id. at
116. The PSC did not violate the remand order by limiting the scope of the remand proceedings
to the issue of the rates to be charged by Edison for the AMI program. No error occurred; thus,
appellant’s argument that the PSC’s error was not harmless is moot.
Finally, appellant argues that the PSC’s authority extended beyond ratemaking in this
case because interested parties filed written complaints expressing concerns about AMI meters.
The PSC’s authority to investigate and enter appropriate orders was not constrained by the
management prerogatives doctrine. We disagree.
The PSC has broad authority to regulate rates for public utilities. MCL 460.6a(1). This
authority “does not include the power to make management decisions” for a public utility.
Consumers Power Co v Public Serv Comm, 460 Mich. 148, 157-158; 596 NW2d 126 (1999)
(PSC lacked authority to order utilities to transport electricity produced and sold by other utilities
to consumers); Union Carbide Corp, 431 Mich. 135, 148-150; 428 NW2d 322 (1998) (PSC
lacked authority to forbid the operation of a facility).
MCL 460.58 reads in pertinent part:
Upon complaint in writing that any rate, classification, regulation or practice
charged, made or observed by any public utility is unjust, inaccurate, or improper,
to the prejudice of the complainant, the commission shall proceed to investigate
the matter.
In the past several years municipal officials and individuals have begun expressing
concern about AMI meters. In response, the PSC initiated a case and directed regulated electric
utilities to submit information regarding the utility’s plans to deploy AMI meters, etc. The case
was not initiated pursuant to a “complaint in writing” as seemingly alleged by appellant. The
resolutions expressing concern about AMI meters passed by various municipalities were not filed
with the PSC and thus did not constitute the type of “complaint in writing” referred to in statutes
such as MCL 460.58. Similarly, the comments submitted by individuals when the PSC opened
the case for comments did not constitute complaints.
Edison initiated this case by seeking a rate increase and approval for continuation of the
AMI pilot program. The case was not initiated by the filing of a complaint. No error occurred.
Affirmed.
/s/ Amy Ronayne Krause
/s/ William B. Murphy
/s/ Deborah A. Servitto
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