Michigan PSC lacks clout to order retail choice

Pam Boschee

News Editor

The Michigan Supreme Court decided that the state`s Public Service Commission (MPSC) does not have the authority to order a utility to transmit a third-party provider`s electricity through its system to a customer. Therefore, it lacks the statutory authority to implement an experimental retail wheeling program.

Pivoting on the question of legislated jurisdiction, this state decision mirrored a recent federal appeals court opinion, which challenged the Environmental Protection Agency`s authority in establishing ozone and particulate standards (see related story on page 6).

The Michigan decision is the outcome of Consumers Energy`s questioning of MPSC`s authority following its 1995 authorization of a limited experimental retail choice program.

The court`s decision included:

– MPSC possesses only that authority granted by the state legislature. While MPSC can encourage a specific management decision through its ratemaking power, it may not directly order the utility to make the decision. The decision whether to provide the service rests with the utility`s management.

– Michigan`s electric transmission act does not grant MPSC the authority to order retail wheeling.

Given this decision, the next state legislative session will most likely include proposals to mandate such authority to MPSC or to legislate a comprehensive plan to require utilities to carry other companies` power.

Dan Bishop, Consumers Energy`s public information director, said, “The governor`s office now fully supports codification of PSC authority. Legislation is needed to determine the specifics. If it provides a legislative result that writes into law the MPSC plan, that`s a position we support and believe is beneficial to customers, shareholders and our employees.”

According to the Energy Information Administration`s data, Michigan has not been as aggressive as some other states in moving toward deregulation. In March, MPSC adopted implementation plans for 2.5 percent of Consumers Energy and Detroit Edison consumers to choose electric suppliers beginning September 1999. Another 2.5 percent will be added every six months until all consumers have retail access by Jan. 1, 2002.

Following the court`s decision, Consumers Energy and Detroit Edison announced their intent to voluntarily implement MPSC`s electric restructuring plan and offer customer choice in September.

Consumers Energy`s president and CEO, David W. Joos, said, “We believe that the approach to electric restructuring embodied in the MPSC rulings of the past three years is fair and balanced, and we have therefore decided to voluntarily proceed with this historic process.”

Anthony F. Earley, Detroit Edison`s chairman and CEO, said, “We look forward to working with the state legislature and the administration on ways to best preserve for all parties the benefits of the MPSC plan.”

At press time, MPSC was requesting briefs from any interested party concerning the effect of the court`s decision on MPSC`s recent orders addressing the following issues:

– Consumers Energy`s requests for: approval of a retail open access tariff; authority to suspend its power supply cost recovery clause; approval of a true-up mechanism in connection with recovery of stranded costs; and approval of a performance-based ratemaking mechanism.

– Detroit Edison`s requests for: authority to suspend implementation of its power supply cost recovery; approval of a direct access tariff; and approval of a true-up mechanism in connection with recovery of stranded costs.

Gary Kitts, MPSC`s chief administrative officer, said the interested parties expected to file briefs might include, among others: Consumers Energy, Detroit Edison, smaller utilities in the state, the Michigan Electric and Gas Association, the Michigan state attorney`s office, the Residential Ratepayers Consortium, the Michigan Chamber of Commerce, and a group called the Association of Business Advocating Tariff Equity (ABATE).

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