MICHIGAN COMMUNITY ACTION AGENCY ASSN V MPSC
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STATE OF MICHIGAN
COURT OF APPEALS
MICHIGAN COMMUNITY ACTION AGENCY
ASSOCIATION,
UNPUBLISHED
January 15, 2008
Appellant,
v
MICHIGAN PUBLIC SERVICE COMMISSION
and CONSUMERS ENERGY COMPANY,
No. 267194
MPSC
LC No. 00-014403
Appellees.
Before: Donofrio, P.J., and Sawyer and Cavanagh, JJ.
PER CURIAM.
The Michigan Community Action Agency Association (MCAAA)1 appeals from orders
entered on October 6, 2005, and November 30, 2005, by the Michigan Public Service
Commission (PSC) reopening this matter and approving the application for a gas cost recovery
(GCR) plan and factors filed by Consumers Energy Company (Consumers). We affirm.
I. Facts and Underlying Proceedings
On December 29, 2004, Consumers filed an application requesting approval of its GCR
plan and factors for the 12-month period ending March 31, 2006.2 Consumers sought to use a
1
The MCAAA is a nonprofit corporation whose members are Community Action Agencies
(CAAs). These CAAs operate in every county in Michigan, and carry out designated functions
under the Michigan Economic and Social Opportunity Act of 1981, MCL 400.1101 et seq. The
CAAs serve low-income persons who are dealing with energy issues.
2
A “gas cost recovery” clause is “an adjustment clause in the rates or rate schedule of a gas
utility which permits the monthly adjustment of rates for gas in order to allow the utility to
recover the booked costs of gas sold by the utility if incurred under reasonable and prudent
policies and practices.” MCL 460.6h(1)(b). A GCR factor is “that element of the rates to be
charged for gas service to reflect gas costs incurred by a gas utility and made pursuant to a gas
cost recovery clause incorporated in the rates or rate schedules of a gas utility.” MCL
460.6h(1)(c). A gas utility is required to file a GCR plan for a 12-month period, known as a
GCR plan year, not less than three months before the beginning of the 12-month period specified
(continued…)
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base GCR factor of $6.9796 per thousand cubic feet (Mcf) to compute bills for retail customers
for the period April 2005 through March 2006, and to adjust the GCR factor quarterly based on
the gas commodity prices on the New York Mercantile Exchange (NYMEX).
On June 17, 2005, Consumers, the PSC Staff, the Attorney General (AG), and the
Residential Ratepayers Consortium submitted a settlement agreement to the PSC. The
agreement, to which the MCAAA filed a statement of non-objection: provided that Consumers
could charge $6.976 per Mcf as a base GCR factor for the 2005-2006 plan year, subject to any
change resulting from use of the specified quarterly adjustment mechanism; limited the
maximum NYMEX increase that could be considered for purposes of calculating the
contingency adjustment to $2.00 per million British thermal units (MMBtu); provided that
Consumers’ GCR plan should be approved; and provided that the agreement was not to be
deemed a waiver of Consumers’ right to reopen the case in accordance with MCL 460.6h(10).
The PSC did not issue a final order approving the agreement.
On September 30, 2005, Consumers filed an application to reopen the case, claiming that
circumstances had changed significantly since the settlement agreement had been reached, and
that natural gas prices had increased dramatically following the hurricanes that struck the Gulf
coast. Consumers contended that the cost increases, if left unaddressed, could cause it to incur a
GCR underrecovery in excess of $100 million through March 2006, and that as a result, the GCR
factors for the 2006-2007 plan year would have to be increased by the amount of any
underrecovery. The application proposed that the base GCR factor be raised from $6.9796 per
Mcf to $9.1108 per Mcf, and that the maximum NYMEX increase that could be considered for
purposes of the adjustment mechanism be increased to $3.00 per MMBtu no later than January 1,
2006. On October 6, 2005, the PSC granted the application and set an expedited schedule.
On November 30, 2005, the PSC approved the settlement agreement, approved a new
maximum GCR factor of $10.10 per Mcf for the billing period of December 2005 through March
2006, denied GCR contingent factor increases for the balance of the plan year, and directed
Consumers both to make a specific proposal in its next GCR plan filing for a method to recoup
the underrecovery, if any, for the period December 2005 through March 2006. The PSC rejected
MCAAA’s contention that Consumers was required to give notice of its application to reopen
proceedings to customers in its service territory, concluding that when the instant case was
reopened, the parties were provided reasonable notice containing the information required by
MCL 24.271 for a contested case hearing, and that that notice, coupled with the October 6, 2005,
order, was sufficient under the applicable statutes.
(…continued)
in the plan. The plan must include a description of the utility’s “expected sources and volumes”
of gas supply, the “changes in the cost of gas anticipated over a future 12-month period”, and a
request for a specific GCR factor for each month. The plan must also include a description of
“all major contracts and gas supply arrangements entered into by the utility for obtaining gas
during the specified 12-month period.” This description must include “the price of the gas, the
duration of the contract or arrangement, and an explanation or description of any other term or
provision as required by the commission[,]” as well as the utility’s evaluation of the
reasonableness and prudence of its plan. MCL 460.6h(3).
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II. Standard of Review
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
Consolidated Gas Co v Public Service 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 a mandatory statute or
abused its discretion in the exercise of its judgment. In re MCI Telecommunications Complaint,
460 Mich 396, 427; 596 NW2d 164 (1999). An order is unreasonable if it is not supported by
the evidence. Associated Truck Lines, Inc v Public Service Comm, 377 Mich 259, 279; 140
NW2d 515 (1966).
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 Gen v
Public Service Comm, 165 Mich App 230, 235; 418 NW2d 660 (1987).
We give due deference to the PSC’s administrative expertise, and will not substitute our
judgment for that of the PSC. Attorney Gen v Public Service Comm No 2, 237 Mich App 82, 88;
602 NW2d 225 (1999). We give great weight to any reasonable construction of a regulatory
scheme that the PSC is empowered to administer, Champion’s Auto Ferry, Inc v Public Service
Comm, 231 Mich App 699, 708; 588 NW2d 153 (1998), but we may not abandon our
responsibility to interpret statutory language and legislative intent. Miller Bros v Public Service
Comm, 180 Mich App 227, 232; 446 NW2d 640 (1989). 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 NW2d 849 (2003).
III. Analysis
A. Adequacy of Notice
MCAAA argues that the PSC’s October 6, 2005, and November 30, 2005, orders are
unlawful because they failed to adhere to the requirement in MCL 460.6a that notice and an
opportunity for a full and complete hearing must be provided when a utility seeks a rate increase.
MCAAA asserts that the process commenced by the October 6, 2005, order did not require
Consumers to provide notice to its service territory, and provided no realistic opportunity for a
full and complete hearing on Consumers’ request for a rate increase. We disagree.
The primary goal of statutory interpretation is to ascertain and give effect to the intent of
the Legislature. Frankenmuth Mut Ins Co v Marlette Homes, Inc, 456 Mich 511, 515; 573
NW2d 611 (1998). If the plain and ordinary meaning of statutory language is clear, judicial
construction is neither necessary nor permitted. Cherry Growers, Inc v Agricultural Marketing
& Bargaining Bd, 240 Mich App 153, 166; 610 NW2d 613 (2000).
MCL 460.6a provides in pertinent part:
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(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. The utility shall place in
evidence facts relied upon to support the utility’s petition or application to
increase its rates and charges, or to alter, change, or amend any rate or rate
schedules. 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. A finding or order shall not be authorized or approved ex parte, nor until
the commission’s technical staff has made an investigation and report. 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. There shall be no increase in
rates based upon changes in cost of fuel or purchased gas unless notice has been
given within the service area to be affected, and there has been an opportunity for
a full and complete hearing on the cost of fuel or purchased gas. The rates
charged by any utility pursuant to an automatic fuel or purchased gas adjustment
clause shall not be altered, changed, or amended unless notice has been given
within the service area to be affected, and there has been an opportunity for a full
and complete hearing on the cost of the fuel or purchased gas.
(2) The commission shall adopt rules and procedures for the filing,
investigation, and hearing of petitions or applications to increase or decrease
utility rates and charges as the commission finds necessary or appropriate to
enable it to reach a final decision with respect to petitions or applications within a
period of 9 months from the filing of the petitions or applications. The
commission shall not authorize or approve adjustment clauses that operate
without notice and an opportunity for a full and complete hearing, and all such
clauses shall be abolished. The commission may hold a full and complete hearing
to determine the cost of fuel, purchased gas, or purchased power separately from a
full and complete hearing on [a] general rate case and may be held concurrently
with the general rate case. The commission shall authorize a utility to recover the
cost of fuel, purchased gas, or purchased power only to the extent that the
purchases are reasonable and prudent. As used in this section:
(a) “Full and complete hearing” means a hearing that provides interested
parties a reasonable opportunity to present and cross-examine evidence and
present arguments relevant to the specific element or elements of the request that
are the subject of the hearing.
Consumers filed an application for approval of its GCR plan, and the PSC published a notice of
hearing for Consumers’ service territory. The notice stated that Consumers sought approval of a
base GCR factor of $6.7976 per Mcf, but noted that that figure could be adjusted higher based on
NYMEX gas prices. It is undisputed that this notice complied with MCL 460.6a.
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The parties’ settlement agreement provided that Consumers could charge $6.976 per Mcf
as a base GCR factor for the 2005-2006 plan year, subject to any change resulting from use of
the specified quarterly adjustment mechanism. The settlement agreement limited the maximum
NYMEX increase that could be considered for purposes of calculating the contingency
adjustment to $2.00 per MMBtu. Thus, the settlement agreement, to which MCAAA did not
object, authorized Consumers to implement a GCR factor higher than that specified in the
original notice of hearing.
Subsequently, on September 30, 2005, Consumers sought to reopen the case. The PSC
granted the motion to reopen the case pursuant to MCL 460.6h(10). That statute provides:
Not less than 3 months before the beginning of the third quarter of the 12month period, the utility may file a revised gas cost recovery plan which shall
cover the remainder of the 12-month period. Upon receipt of the revised gas cost
recovery plan, the commission shall reopen the gas supply and cost review. In
addition, the commission may reopen the gas supply and cost review on its own
motion or on the showing of good cause by any party if at least 6 months have
elapsed since the utility submitted its complete filing and if there are at least 60
days remaining in the 12-month period under consideration. A reopened gas
supply and cost review shall be conducted as a contested case pursuant to chapter
4 of Act No. 306 of the Public Acts of 1969, and in accordance with subsections
(3), (6), (8), and (9).
MCAAA’s assertion that the PSC’s orders of October 6, 2005, and November 30, 2005, are
unlawful because a notice of hearing comporting with MCL 460.6a was not issued after the case
was reopened, is without merit. The PSC had not issued a final order approving a GCR plan
when it granted the motion to reopen the case. MCL 460.6h(10) specifically states that a
reopened GCR plan case is to be conducted as a contested case pursuant to the Administrative
Procedures Act (APA), MCL 24.201 et seq. Section 71 of the APA, MCL 24.271, sets out the
requirements for notice and hearing in a contested case, and provides in pertinent part as follows:
(1) The parties in a contested case shall be given an opportunity for a
hearing without undue delay.
(2) The parties shall be given a reasonable notice of the hearing, which
notice shall include:
(a) A statement of the date, hour, place, and nature of the hearing.
Unless otherwise specified in the notice the hearing shall be held at the principal
office of the agency.
(b) A statement of the legal authority and jurisdiction under which the
hearing is to be held.
(c) A reference to the particular sections of the statutes and rules
involved.
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(d) A short and plain statement of the matters asserted. If the agency or
other party is unable to state the matters in detail at the time the notice is given,
the initial notice may state the issues involved. Thereafter on application the
agency or other party shall furnish a more definite and detailed statement of the
issues.
The PSC concluded that the notice the parties received following the grant of Consumers’
motion to reopen the case complied with MCL 24.271, and thus met the requirements of MCL
460.6h(10). MCL 460.6h(10) does not specify that notice to the utility’s service territory
required by MCL 460.6a must be provided again after a case is reopened; we conclude that the
PSC’s interpretation and application of MCL 460.6h(10) is reasonable and entitled to deference.
In re Procedure & Format for Filing Tariffs Under the Telecommunications Act, 210 Mich App
533, 538; 534 NW2d 194 (1995). Furthermore, the Administrative Law Judge conducted a
contested hearing at which direct testimony was introduced, opportunity was given to crossexamine witnesses, and exhibits were introduced. It was only after this hearing was completed
did the PSC issue its final order approving the settlement agreement, approving a new maximum
GCR factor for the billing period of December 2005 through March 2006, and denying GCR
contingent factor increases for the balance of the plan year.
In sum, customers in Consumers’ service area received notice that Consumers was
seeking a new GCR factor that could be adjusted to a figure higher than that provided in the
original notice. Ultimately, the PSC approved a higher factor, but not until after a full contested
case hearing was held. The notice required by MCL 460.6a was provided at the inception of the
case; the procedure required by MCL 460.6h(10) was followed after the case was reopened. We
defer to the PSC’s construction of this regulatory scheme. Champion’s Auto Ferry, supra at 708.
B. Compliance with MCL 460.6h
MCAAA argues that the PSC’s orders of October 6, 2005, and November 30, 2005, are
unlawful and unreasonable because they violate various provisions of § 6h, MCL 460.6h, of Act
304. Consumers’ original GCR plan sought a rate increase to a level that would not exceed
$8.7296 per Mcf under any circumstances. However, Consumers’ motion to reopen the case
sought a rate increase above that figure based solely on the NYMEX price index at a time when
the index was artificially high as a result of the Gulf coast hurricanes. The PSC granted
Consumers a rate increase to a maximum of $10.10 per Mcf for the billing period of December
2005 through March 2006, without conducting a full and complete hearing as required by MCL
460.6a, and without requiring Consumers to establish that the plan was reasonable and prudent
and took all appropriate steps to minimize the cost of gas, as required by MCL 460.6h(3), (5),
and (6). The use of the NYMEX price index, rather than Consumers’ own actual or projected
cost of gas, does not allow for the evaluation of the reasonableness and prudence of Consumers’
GCR plan, and does not demonstrate that Consumers made every effort to minimize the cost of
gas. MCAAA contends that the plain language of MCL 460.6h(6) does not authorize the use of
a market index such as the NYMEX price index. The PSC did not enter a temporary order in this
case; thus, MCL 460.6h(8) and (9), which deal with temporary orders and how a utility may act
when such an order is issued, are inapplicable here.
Moreover, MCAAA asserts that Consumers’ motion to reopen its GCR plan case did not
comply with MCL 460.6h(10), which specifies that a utility must file a “revised” GCR plan
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covering the remainder of the plan year. Consumers did not file an adequate revised plan, but
simply sought to raise rates for the balance of the plan year based on NYMEX price index
changes, and sought to self-implement future rate increases based on a NYMEX-based
adjustment clause. Furthermore, the PSC erred in allowing Consumers to “reopen” its GCR plan
case in light of the fact that no final order had been issued. The PSC’s decision to reopen this
case was contrary to its decision in Case No. U-13902, in which the PSC concluded that proofs
that had not yet been closed need not be reopened.
We hold that the PSC’s orders did not violate MCL 460.6h, and are not unlawful.
MCL 460.6h provides in pertinent part:
(3) In order to implement the gas cost recovery clause established pursuant
to subsection (2), a utility annually shall file, pursuant to procedures established
by the commission, if any, a complete gas cost recovery plan describing the
expected sources and volumes of its gas supply and changes in the cost of gas
anticipated over a future 12-month period specified by the commission and
requesting for each of those 12 months a specific gas cost recovery factor. The
plan shall be filed not less than 3 months before the beginning of the 12-month
period covered by the plan. The plan shall describe all major contracts and gas
supply arrangements entered into by the utility for obtaining gas during the
specified 12-month period. The description of the major contracts and
arrangements shall include the price of the gas, the duration of the contract or
arrangement, and an explanation or description of any other term or provision as
required by the commission. The plan shall also include the gas utility’s
evaluation of the reasonableness and prudence of its decisions to obtain gas in the
manner described in the plan, in light of the major alternative gas supplies
available to the utility, and an explanation of the legal and regulatory actions
taken by the utility to minimize the cost of gas purchased by the utility.
***
(5) If a utility files a gas cost recovery plan and a 5-year forecast as
provided in subsections (3) and (4), the commission shall conduct a proceeding, to
be known as a gas supply and cost review, for the purpose of evaluating the
reasonableness and prudence of the plan, and establishing the gas cost recovery
factors to implement a gas cost recovery clause incorporated in the rates or rate
schedule of the gas utility. The gas supply and cost review shall be conducted as
a contested case pursuant to chapter 4 of Act No. 306 of the Public Acts of 1969.
(6) In its final order in a gas supply and cost review, the commission shall
evaluate the reasonableness and prudence of the decisions underlying the gas cost
recovery plan filed by the gas utility pursuant to subsection (3), and shall approve,
disapprove, or amend the gas cost recovery plan accordingly. In evaluating the
decisions underlying the gas cost recovery plan, the commission shall consider the
volume, cost, and reliability of the major alternative gas supplies available to the
utility; the cost of alternative fuels available to some or all of the utility’s
customers; the availability of gas in storage; the ability of the utility to reduce or
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to eliminate any sales to out-of-state customers; whether the utility has taken all
appropriate legal and regulatory actions to minimize the cost of purchased gas;
and other relevant factors. The commission shall approve, reject, or amend the 12
monthly gas cost recovery factors requested by the utility in its gas cost recovery
plan. The factors ordered shall be described in fixed dollar amounts per unit of
gas, but may include specific amounts contingent on future events, including
proceedings of the federal energy regulatory commission or its successor agency.
***
(8) The commission, on its own motion or the motion of any party, may
make a finding and enter a temporary order granting approval or partial approval
of a gas cost recovery plan in a gas supply and cost recovery review, after first
having given notice to the parties to the review, and after having afforded to the
parties to the review a reasonable opportunity for a full and complete hearing. A
temporary order made pursuant to this subsection shall be considered a final order
for purposes of judicial review.
(9) If the commission has made a final or temporary order in a gas supply
and cost review, the utility may each month incorporate in its rates for the period
covered by the order any amounts up to the gas cost recovery factors permitted in
that order. If the commission has not made a final or temporary order within 3
months of the submission of a complete gas cost recovery plan, or by the
beginning of the period covered in the plan, whichever comes later, or if a
temporary order has expired without being extended or replaced, then pending an
order which determines the gas cost recovery factors, a gas utility may each
month adjust its rates to incorporate all or a part of the gas cost recovery factors
requested in its plan. Any amounts collected under the gas cost recovery factors
before the commission makes its final order shall be subject to prompt refund
with interest to the extent that the total amounts collected exceed the total
amounts determined in the commission’s final order to be reasonable and prudent
for the same period of time.
1. Application of MCL 460.6h(10)
Initially, we reject MCAAA’s assertions that the PSC erred in allowing Consumers to
“reopen” this case pursuant to MCL 460.6h(10), and that Consumers did not file an adequate
“revised” GCR plan as a prerequisite to reopening the case, as required by MCL 460.6h(10).
The PSC did not enter a temporary or a final order approving the parties’ settlement
agreement, but no further proceedings took place. The filing of a motion to reopen, which was
supported by revised testimony from four witnesses and revised exhibits, was the only method,
given the posture of the case, by which Consumers could present additional evidence to support
its request to raise rates for the balance of the plan period. The plain language of MCL
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460.6h(10) indicates that the decision to grant the motion was within the discretion of the PSC.3
The PSC’s decision to do so is entitled to deference. Public Service Comm No 2, supra at 88.
MCAAA’s assertion that the PSC’s decision to reopen this case pursuant to MCL
460.6h(10) is inconsistent with its decision in another case is without merit. In MCAAA v Public
Service Comm, Case No. 00-13902, MCAAA contended that the utility, Michigan Consolidated
Gas Company (MichCon), was required to file a motion to reopen the case and seek a new
contested case hearing when it offered new evidence to support its motion for a temporary order
for an increased GCR factor. At the time MichCon filed the motion, the parties had filed initial
testimony and exhibits, but the cross-examination portion of the contested case hearing had not
yet taken place. The PSC concluded that no need existed to reopen proofs that had not yet
closed; therefore, the fact that MichCon did not move to reopen the case pursuant to MCL
460.6h(10) did not render the implementation of a new GCR factor improper.4 In the instant
case, no hearing had been held, and no method other than a motion to reopen existed to allow
Consumers to present evidence. We defer to the PSC’s application of the reopener provision in
MCL 460.6h(10). Champion’s Auto Ferry, supra at 708.
Finally, MCAAA’s assertion that Consumers did not file an adequate “revised” GCR
plan that would allow for the case to be reopened is unsubstantiated. MCAAA’s assertion that
the motion to reopen was simply “a ‘bare-bones’ filing seeking rate increases late in the Plan
year based upon NYMEX national index prices” is contradicted by the revised testimony and
extensive revised exhibits filed in support of the motion. MCL 460.6h(10) does not state that a
utility seeking to reopen a GCR plan case must file an entirely new plan. Here, Consumers
revised its plan to support its request to increase rates based on NYMEX index prices. MCAAA
does not indicate with any specificity what further materials Consumers should have or could
have included in its motion and supporting documents. We conclude that the PSC’s conclusion
that the filing was sufficient under MCL 460.6h(10) is entitled to deference. Id.
2. Application of MCL 460.6h(3), (5), (6), (8), and (9)
The PSC has broad authority to set just and reasonable rates and may, in the exercise of
its discretion, determine what factors are relevant in a particular case. Attorney Gen v Public
Service Comm, 231 Mich App 76, 79; 585 NW2d 310 (1998); Attorney Gen v Public Service
Comm No 1, 133 Mich App 719, 725-726; 349 NW2d 539 (1984). The PSC is not bound by any
particular ratemaking methodology and can make pragmatic adjustments in order to respond to
the particular circumstances of any given case. Attorney Gen v Public Service Comm, 189 Mich
App 138, 147; 472 NW2d 53 (1991).
3
Consumers filed the motion to reopen the case more than six months after it submitted its initial
filing, and with at least 60 days remaining in the 12-month plan period.
4
In MCAAA v Public Service Comm, unpublished per curiam opinion of the Court of Appeals,
issued June 19, 2007 (Docket No. 263262), this Court affirmed the PSC’s decision on this issue.
Id. at 7-8.
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MCAAA’s argument that the PSC’s orders of October 6, 2005, and November 30, 2005,
are unlawful because the PSC did not require Consumers to comply with the requirement in
MCL 460.6h(3) that a GCR plan contain an “evaluation of the reasonableness and prudence” of
the plan to raise rates based on the NYMEX price index and “an explanation of the legal and
regulatory actions taken by the utility to minimize the cost of gas purchased by the utility” is
without merit. The amended testimony and exhibits submitted by witnesses for Consumers and
the PSC Staff after the case was reopened established that the use of the NYMEX price index
was widespread in the industry, both for long-term and short-term contracts, that the NYMEX
price index had a definite impact on Consumers’ costs, and that Consumers did not make a profit
on the gas commodity itself. The PSC was entitled to rely on this evidence to find that
Consumers established that its revised GCR plan was reasonable and prudent and minimized
costs, notwithstanding the existence of contradictory evidence. Great Lakes Steel v Public
Service Comm, 130 Mich App 470, 481-482; 344 NW2d 321 (1983).
MCAAA’s argument that the PSC’s order of November 30, 2005, is unlawful because it
granted Consumers a rate increase after an expedited hearing and without providing the requisite
notice or affording all interested parties the opportunity for a full and complete hearing, as
required by MCL 460.6h(5), is without merit. For the reasons stated above, we conclude that the
notice provided to the parties and the public after the case was reopened met all statutory
requirements. The PSC held a contested case hearing that complied with MCL 24.271 prior to
issuing its November 30, 2005, order. MCAAA’s assertion that the expedited schedule
precluded adequate discovery or the ability to prepare responsive testimony is unsubstantiated.
MCL 460.6h(6) provides that GCR factors approved by the PSC “shall be described in
fixed dollar amounts per unit of gas, but may include specific amounts contingent on future
events . . . .” The PSC’s order of November 30, 2005, approved a maximum GCR factor of
$10.10 per Mcf for the billing period of December 2005 through March 2006, but suspended the
contingency mechanism for that period. It seems apparent that the NYMEX index is a future
event on which the price of gas may be contingent. A base GCR factor is a “fixed dollar”
amount. The NYMEX price index is not a future event; however, a rise in that index is a future
event. The PSC has approved contingent mechanisms based on changes in the NYMEX index
cost of gas.5 We defer to the PSC’s longstanding interpretation of statutory language. In re
Procedure & Format for Filing Tariffs, supra at 538.
MCAAA’s argument that MCL 460.6h(8), which states that the PSC may enter a
temporary order in a GCR case after giving interested parties “a reasonable opportunity for a full
and complete hearing[,]” and MCL 460.6h(9), which states that if the PSC has not entered a final
or temporary order within a specified period after the filing of a GCR case, the utility may selfimplement requested rate adjustments, are inapplicable in this case, is correct, but again is
irrelevant to the orders challenged on appeal. The PSC did not enter a temporary order in this
5
In MCAAA v Public Service Comm, Docket No. 263262, this Court approved the use of a
contingent mechanism based on the NYMEX index. Id. at 10-13. This unpublished case lacks
precedential value, MCR 7.215(C)(1), but we consider its analysis to be persuasive. See In re
Application of Indiana Michigan Power Co, 275 Mich App 369, 380; 738 NW2d 289 (2007).
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case, and suspended the contingency mechanism for the balance of the plan period. Consumers
had no opportunity to self-implement rate increases.
C. Use of the NYMEX Price Index
MCAAA argues that the PSC’s order of November 30, 2005, which grants Consumers’
request for an increased GCR factor based solely on a spike in the NYMEX price index, is
unlawful and unreasonable because it exceeds the PSC’s legislative authority and is inconsistent
with the legislative intent and purposes of Act 304. Act 304 was adopted in 1982, and amended
MCL 460.6a(1) to eliminate automatic adjustment clauses that operated to raise rates without
notice and the opportunity for a full and complete hearing. MCAAA asserts that the PSC does
not have the legislative authority to use a tool such as the NYMEX price index as a basis for
setting GCR factors. Various provisions of Act 304, in particular MCL 460.6a and MCL 460.6h,
established a process by which a utility must submit a comprehensive, yearly GCR plan and a
five-year forecast that are reasonable and prudent and that seek to minimize the costs to the
utility’s customers. The PSC’s decision to set a GCR factor based on a temporary spike in the
NYMEX price index relieves the utility of the burden of establishing that its plan is reasonable
and prudent and minimizes the cost to customers. We disagree with MCAAA’s assertions.
The PSC possesses only that authority granted to it by the Legislature. Attorney Gen v
Public Service Comm, supra at 78. The statutes that confer power on the PSC must be strictly
construed. Authority must be granted by clear and unmistakable language. Words and phrases
in the PSC’s enabling statutes must be read narrowly and in the context of the statutory scheme.
Consumers Power Co v Public Service Comm, 460 Mich 148, 155-159; 596 NW2d 126 (1999).
The order of November 30, 2005, does not exceed the PSC’s authority. MCL 460.6h(6)
explicitly authorizes the PSC to set a GCR factor that incorporates a specific amount that is
“contingent on future events[.]” The PSC has not taken the position that it is entitled to set a
GCR factor that incorporates such an amount without first providing notice and the opportunity
for a full and complete hearing as required by MCL 460.6a(1) or MCL 460.6h(10). In the instant
case, the PSC disallowed a contingent mechanism.
Furthermore, we reject MCAAA’s assertion that the PSC’s decision is inconsistent with
the intent and goals of Act 304. The undisputed evidence showed that prices for natural gas had
risen dramatically. The PSC was entitled to accept the testimony given by witnesses for
Consumers and the PSC Staff that prices would remain elevated for some time, notwithstanding
contrary testimony given by MCAAA’s witness. Great Lakes Steel, supra at 481-482. In
addition, the PSC’s decision to allow Consumers to implement an increased GCR factor for the
balance of the plan year furthered the recognized goal of charging customers the correct price for
gas as near in time as possible to when the gas is used. See Attorney Gen v Public Service
Comm, 235 Mich App 308, 315-316 (Sawyer, J.), 318 (Markman, J.); 597 NW2d 264 (1999).
MCAAA’s argument that the use of the NYMEX price index allows a utility such as
Consumers to maximize rate collection, contrary to MCL 460.6h(3), is without merit. A utility
has no incentive to engage in maximized rate collection, for the reason that any amount
overrecovered must be returned to ratepayers, with interest. MCL 460.6h(12). The use of the
NYMEX price index in the establishment of a GCR factor is within the PSC’s statutory authority
and ratemaking discretion, and is not inconsistent with the intent and purposes of Act 304.
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D. Violation of Due Process
MCAAA argues that MCL 460.6a and MCL 460.6h establish a party’s right to notice and
a full and complete hearing, as well as the right to present arguments on issues of law, policy,
and fact (MCL 24.272[3]), and the right to obtain a proposal for decision (MCL 24.281) and a
final decision (MCL 24.285). MCAAA asserts that the PSC’s use of the reopener provision in
MCL 460.6h(10) and a truncated hearing process violated prior notice and hearing procedures
mandated by MCL 460.6a and MCL 460.6h, and that these statutory violations constituted a
violation of the right to procedural due process.6 We disagree.
We review an unpreserved claim of constitutional error for outcome-determinative plain
error. In re Hildebrant, 216 Mich App 384, 389; 548 NW2d 715 (1996).
Due process in a civil case requires notice and an opportunity to be heard. See Vicencio v
Ramirez, 211 Mich App 501, 504; 536 NW2d 280 (1995). As stated above, the PSC complied
with the notice requirements of MCL 460.6a and the requirements of MCL 460.6h.
IV. Conclusion
The PSC’s orders of October 6, 2005, and November 30, 2005, are lawful and
reasonable, and are supported by the requisite evidence.
Affirmed.
/s/ Pat M. Donofrio
/s/ David H. Sawyer
/s/ Mark J. Cavanagh
6
The PSC and Consumers assert that MCAAA’s argument concerns the alleged violation of a
property right, but MCAAA maintains that its “due process claims do not relate to confiscation
of property claims.”
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