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In re Application of Michigan Electric Transmission Co.

Court of Appeals of Michigan

November 18, 2014

In re APPLICATION OF MICHIGAN ELECTRIC TRANSMISSION COMPANY; HAR COMPANY, LLC, KEN IRISH, MARGARET IRISH, JACK KUIPERS, JANE KUIPERS, Individually and as Trustee of JANE KUIPERS TRUST, JMK HOLDINGS, LLC, DOUG MAXWELL, Individually and as Trustee of the DOUGLAS E. MAXWELL 2000 TRUST, MICKI MAXWELL, Individually and as Trustee of the MICKI MAXWELL 2000 TRUST, WARD SQUIRES, and HENRIETTA SQUIRES, Appellants,
v.
MICHIGAN ELECTRIC TRANSMISSION COMPANY, Petitioner-Appellee, and MICHIGAN PUBLIC SERVICE COMMISSION, Appellee. CHARTER TOWNSHIP OF OSHTEMO, Appellant,
v.
MICHIGAN ELECTRIC TRANSMISSION COMPANY LLC, Petitioner-Appellee, and MICHIGAN PUBLIC SERVICE COMMISSION, Appellee

Page 912

[Copyrighted Material Omitted]

Page 913

The Publication Status of this Document has been Changed by the Court from Unpublished to Published January 13, 2015.

MPSC LC No. U-17041. MPSC LC No. U-17041.

Before: Donald S. Owens, P.J., and Jane E. Markey and Deborah A. Servitto, JJ.

OPINION

Page 914

[309 Mich.App. 4] PER CURIAM.

In these consolidated cases, appellants Landowners[1] and Charter Township of Oshtemo appeal as of right an order of the Michigan Public Service Commission (PSC) approving the application of Michigan [309 Mich.App. 5] Electric Transmission Company, LLC (METC), for a certificate of public convenience and necessity (CPCN) for construction of an overhead transmission line. We affirm in both cases and lift the stay imposed pending appeal of these cases.

I. BACKGROUND

The Legislature enacted the Electric Transmission Line Certification Act (Act 30), 1995 PA 30, MCL 460.561 et seq., effective May 17, 1995, to regulate the construction and location of certain electric transmission lines. Act 30 provides that if an electric utility with 50,000 or more residential customers plans to construct a major transmission line,[2] the utility must submit a plan to the PSC and may not begin construction on the line until the PSC has issued a CPCN. MCL 460.565. A utility that wishes to construct a transmission line[3] other than a major transmission line may, but is not required to, submit an application for a CPCN to the PSC. MCL 460.569(1). If the utility applies for a CPCN, the utility may not begin construction on the transmission line until the PSC has issued a CPCN. MCL 460.569(1). With one exception, " the provisions of [Act 30] that apply to applications and certificates for major transmission lines apply in the same manner to applications and certificates issued under [MCL 460.569]." MCL 460.569(2). The PSC proceeds in the same manner on both mandatory and voluntary applications. MCL 460.569(2). A CPCN takes [309 Mich.App. 6] " precedence over a conflicting local ordinance, law, rule, regulation, policy, or practice that prohibits or

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regulates the location or construction of a transmission line for which the commission has issued a certificate." MCL 460.570(1). In addition, Act 30 controls " in any conflict between this act and any other law of this state." MCL 460.563(2).

II. UNDERLYING FACTS AND PROCEEDINGS

METC filed an application with the PSC seeking a CPCN " for the construction of two double-circuit 138 kilovolt ('kV') transmission lines on a 220-foot right-of-way running through Oshtemo Township, Kalamazoo County, and an electrical transmission substation in Almena Township, Van Buren County," which METC referred to collectively as the " Proposed Transmission Line." After METC proposed the new transmission line, however, Oshtemo Township amended its utility control ordinance to require METC to prove the necessity of the proposed line and receive Township approval before beginning construction of the line. In addition, the ordinance required METC to locate the proposed line underground in any area in which the line would come within 250 feet of a public right-of-way. METC asserted that the issuance of a CPCN would take precedence over any conflicting local ordinance.

Evidence produced at the evidentiary hearing showed that the parties had conflicting views regarding the efficacy of METC's proposed project. A witness for METC testified that the Kalamazoo area was served by three 345/138 kV transformers located at the Argenta substation. METC's proposal to add more lines and a new substation at Weeds Lake would enable METC to comply with national mandatory planning criteria.

[309 Mich.App. 7] METC's witness stated that METC had considered two alternative routes for the lines, but rejected them because they failed to meet planning criteria. METC had also considered the option of adding a fourth transformer at the Argenta substation, but rejected that option because it would not have protected against the risk that the entire substation could be disconnected from the 345 kV power source or the 138 kV transmission lines that served an area that included Kalamazoo and Battle Creek.

A witness for Oshtemo Township testified that the Township preferred two identified alternative routes over METC's preferred route because the alternative routes relied in part on public lands and an existing corridor and would impose less of a burden on private property owners.

A witness for the Landowners testified that the quantifiable and nonquantifiable benefits of the proposed project did not offset the detriments, including the cost of the project, the adverse impact caused by locating the project close to private residences, and the loss of woodlands and croplands. The witness maintained that the installation of a fourth transformer at the Argenta substation would cost less and would achieve results comparable to METC's proposed project. The witness also asserted that an alternative referred to as " B Avenue" was preferable to METC's Weeds Lake proposal because it required only one transmission line, and power flow control protectors could guard against unbalanced power flows.

The PSC issued an order granting METC a CPCN for the construction of METC's proposed transmission line along METC's preferred route. The PSC noted that the " most contentious issue in this case is whether METC [309 Mich.App. 8] sufficiently demonstrated that the quantifiable and nonquantifiable public benefits of the project justify its construction." The PSC found that " a formal benefit/cost analysis of the project is not strictly required; however, it

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appears that the most straightforward way to demonstrate that a project's benefits justify its construction, as the Commission must find under [MCL 460.568(5)(a)], is through the submission of at least some reasonable estimate of the value of benefits of the project."

The PSC found that the record established that two realistic proposals existed to address the contingency issue: (1) the Weeds Lake proposal, estimated by METC to cost $45 million, and (2) the B Avenue proposal put forth by the Landowners, and estimated to cost $37 to $47 million. The PSC stated:

The Landowners presented evidence that the value of the benefit of increased efficiency resulting from the Weeds Lake Project was $1.3 million per year, thus offsetting the difference in cost between the two proposals by that amount. In addition, METC identified, but did not quantify, the benefits of 500 MW of additional capacity and the establishment of a geographically separate and distinct source of power for the Kalamazoo area, thus resulting in a more robust system and addressing a NERC Category D contingency. As the Staff pointed out, while a NERC Category D contingency is unlikely, the costs to businesses, industry, and residents in the event of the loss of the lines to the Argenta station are potentially catastrophic. The Commission notes that the costs to Kalamazoo and Battle Creek area customers, in the event of a loss of the lines to ...

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