Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

City of Coldwater v. Consumers Energy Co.

Supreme Court of Michigan

May 18, 2017

CITY OF COLDWATER
v.
CONSUMERS ENERGY COMPANY CITY OF HOLLAND
v.
CONSUMERS ENERGY COMPANY

          Argued on application for leave to appeal October 5, 2016.

          Chief Justice: Stephen J. Markman Justices: Brian K. Zahra Bridget M. McCormack David F. Viviano Richard H. Bernstein Joan L. Larsen Kurtis T. Wilder.

         Syllabus

         In Docket No. 151051, the city of Coldwater filed a complaint for declaratory relief in the Branch Circuit Court, seeking a determination that the Coldwater Board of Public Utilities (CBPU), a department of the city of Coldwater that operates a municipal electric utility, could provide power to a parcel of property within Coldwater Township that CBPU had purchased on July 21, 2011. Both CBPU and Consumers Energy Company were franchised to provide electric service within the township. At the time of the purchase, a vacant building on the property had an electric service drop that was connected to an electric meter owned by Consumers, but Consumers' service had been terminated 20 days before the purchase. Despite its objection to CBPU providing electric service for the parcel on the basis of Rule 460.3411 (Rule 411) of the Michigan Administrative Code and the Supreme Court's decision in Great Wolf Lodge of Traverse City, LLC v Pub Serv Comm, 489 Mich. 27 (2011), Consumers removed its electric facilities from the property. Both parties moved for summary disposition, and the court, Patrick W. O'Grady, J., granted summary disposition in favor of Coldwater, finding that neither Rule 411 nor MCL 124.3 was applicable. Consumers appealed in the Court of Appeals.

         In Docket No. 151053, the city of Holland filed a complaint for declaratory relief in the Ottawa Circuit Court, seeking a determination that the Holland Board of Public Works (HBPW), a department of the city of Holland that operates a municipal electric utility, could provide power to a parcel of property within Park Township that had been acquired by Benjamin's Hope, a nonprofit charitable corporation. Nine days after the complaint was filed, Consumers requested a declaratory ruling from the Michigan Public Service Commission (PSC) that Rule 411 gave Consumers the exclusive right to serve the property, and the court held Holland's action in abeyance pending the outcome of the PSC proceeding. Similar to the case in Docket No. 151051, both CBPU and Consumers were franchised to provide electric service within the township. At the time of the purchase, the land was vacant, and no electric service was being provided on the land. Consumers had previously supplied power to the parcel, but its lines had been de-energized in 2008. In August 2011, CL Construction, the contractor for Benjamin's Hope, requested that Consumers provide single-phase electric service to a construction trailer that was temporarily located on the property. In October 2011, Benjamin's Hope solicited bids from Consumers and HBPW for three-phase electric service and selected HBPW as its electric provider. Although Consumers initially refused to remove its electric facilities, it eventually did so sometime before April 24, 2012, when CL Construction removed its trailer from the property. HBPW then began providing electric service to the parcel on April 30, 2012. On December 6, 2012, the PSC declined Consumers' request for a declaratory ruling on the ground that it had no jurisdiction over HBPW or Benjamin's Hope. The circuit court, Edward R. Post, J., thereafter ruled that Rule 411 was not applicable and that MCL 124.3 did not preclude HBPW from providing electric service. Consumers appealed, and the Court of Appeals consolidated Consumers' appeals in both the City of Coldwater and City of Holland cases. The Court of Appeals affirmed both decisions. 308 Mich.App. 675 (2015). Consumers sought leave to appeal, and the Supreme Court ordered and heard oral argument on whether to grant the application or take other action. 498 Mich. 891 (2015).

         In a unanimous opinion by Justice Bernstein, the Supreme Court held:

         Rule 411 of the Michigan Administrative Code is inapplicable when a municipal utility is involved, and Great Wolf Lodge was overruled to the extent it stated that Rule 411 applied to municipally owned utilities. In MCL 124.3(2), the word "customer" is defined as an entity that receives electric service, and the phrase "already receiving" means that service needs to continue into the present in order for MCL 124.3(2) to apply. In these consolidated cases, Rule 411 was inapplicable because the cases involved municipally owned utilities, and MCL 124.3(2) did not prevent either property owner from switching electric providers because Consumers had discontinued service before the provision of service by a municipally owned utility.

         1. Rule 411 of the Michigan Administrative Code, sometimes referred to as a utility's right to first entitlement, provides that the first utility serving a customer, which is defined as the buildings and facilities served rather than the individual, association, partnership, or corporation served, is entitled to serve the entire electric load on the premises of that customer even if another utility is closer to a portion of the customer's load. MCL 460.6(1) provides, in relevant part, that the PSC is vested with complete power and jurisdiction to regulate all public utilities in the state except a municipally owned utility, the owner of a renewable resource power production facility as provided in MCL 460.6d, and except as otherwise restricted by law. PSC Rule 460.3102(l) (Rule 102(l)) defines "utility" as an electric company, whether private, corporate, or cooperative, that operates under the jurisdiction of the commission. Under the plain language of MCL 460.6(1), the PSC is explicitly granted complete power and jurisdiction over public utilities that are not municipally owned utilities. The definition of "utility" in Rule 102(l) notably does not include municipally owned utilities; therefore, Rule 102(l) does not apply to municipal electric utilities because any other interpretation would render Rule 102(l) nugatory. In these cases, because the municipal electric utilities did not otherwise elect to operate in compliance with the rule, MCL 460.10y(3), Rule 411(11) was inapplicable.

         2. In Great Wolf Lodge, 489 Mich. at 41-42, the Supreme Court primarily held that a utility's right of first entitlement set forth in Rule 411 extended to the entire premises initially served, but the Court also addressed the applicability of Rule 411 to a dispute over whether a PSC-regulated utility and a municipal utility could provide electric service to the plaintiff's property. To the extent that Great Wolf Lodge could be read to hold that Rule 411 is applicable in cases involving disputes between PSC-regulated utilities and municipal utilities over which entity can provide electric service, Great Wolf Lodge was wrongly decided because it conflicts with the plain language of MCL 460.6(1). That a case was wrongly decided, by itself, does not necessarily mean that overruling it is appropriate. Courts should review whether the decision defies practical workability, whether reliance interests would work an undue hardship were the decision to be overruled, and whether changes in the law or facts no longer justify the decision. Great Wolf Lodge defies practical workability because a holding that would purport to exercise PSC jurisdiction when there is none leaves municipally owned utilities in the dark as to when and how their status as non-PSC regulated utilities is legally significant. Great Wolf Lodge is also unsound in principle to the extent that it found this lack of jurisdiction irrelevant. Reliance interests weighed in favor of overruling this portion of Great Wolf Lodge because the case was decided only six years ago, meaning that any reliance on its holding has been relatively brief, and because Great Wolf Lodge did not consider either MCL 460.6(1) or PSC Rule 102(l) in finding that Rule 411(11) may apply to municipally owned utilities. Finally, there was no substantive change in the law or the underlying facts. A reading of MCL 460.6(1) and PSC Rule 102(l) compelled the decision to overrule the portion of Great Wolf Lodge providing that Rule 411(11) applied to municipally owned utilities.

         3. MCL 124.3(2) provides that a municipal corporation shall not render electric delivery service for heat, power, or light to customers outside its corporate limits already receiving the service from another utility unless the serving utility consents in writing. MCL 124.3(3)(a) further provides that "electric delivery service" has the same meaning as "delivery service" under MCL 460.10y. MCL 460.10y(2) provides that, except with the written consent of the municipally owned utility, a person shall not provide delivery service or customer account service to a retail customer that was receiving that service from a municipally owned utility as of June 5, 2000, or is receiving the service from a municipally owned utility. Additionally, MCL 460.10y(2) provides that, for purposes of this subsection, "customer" means the building or facilities served rather than the individual, association, partnership, corporation, governmental body, or any other entity taking service. In these cases, determination of whether MCL 124.3(2) applied depended on the meaning of two phrases in the statute: "customers" and "already receiving." The Court of Appeals inappropriately relied on the definition of customer in MCL 460.10y(2) because the language "[f]or purposes of this subsection" in MCL 460.10y(2) explicitly confined that definition to MCL 460.10y(2). Additionally, MCL 124.3(3)(a) directs the reader to MCL 460.10y for a definition of "electric delivery service, " and had the Legislature intended to do the same for the word "customer" as it is used in MCL 124.3(2), it could have done so, but it did not. A plain-language definition of "customer" is "one that purchases a commodity or service." Therefore, as used in MCL 124.3(2), "customer" refers to the entity that receives electric service and not the building or facilities on the land. In MCL 124.3(2), the present participle "receiving" is modified by "already." Although "already" can suggest a prior point in time, when read together, the phrase "already receiving" refers to an action that started in the past and continues into the present. Therefore, the phrase "already receiving" in MCL 124.3(2) means that service needs to continue into the present in order for MCL 124.3(2) to apply.

         4. MCL 124.3(2) did not prevent either property owner from switching electric providers because Consumers had discontinued service before the provision of service by a municipally owned utility. In the case of Coldwater, CBPU was never a customer of Consumers and was not already receiving service from Consumers; it never received service from Consumers. In the case of Holland, it was CL Construction that had received service from Consumers, and because CL Construction was a different entity from Benjamin's Hope, Benjamin's Hope was never a customer of Consumers. Additionally, Benjamin's Hope was not "already receiving" service from Consumers because there was no electric service being provided on the land at that time; service had been discontinued in 2008. The existence of a break in service between when Consumers removed its electric facilities and when HBPW began providing service indicated that Benjamin's Hope was not "already receiving" service; at most, it would have "received" service, which was insufficient for the purpose of MCL 124.3(2).

         Affirmed.

         BEFORE THE ENTIRE BENCH

          OPINION

          BERNSTEIN, J.

         In these consolidated cases, two municipalities seek to provide electric service through municipal electric utilities. This case requires us to resolve two issues. First, whether a utility's right of first entitlement to provide electric service is applicable when a municipal utility is involved. Mich. Admin Code, R 460.3411(11). Second, whether in these cases a "customer[]" was "already receiving . . . service from another utility" so as to prevent a municipal utility from providing service under MCL 124.3(2).

         We hold that Rule 460.3411 (Rule 411) of the Michigan Administrative Code is inapplicable when a municipal utility is involved and has not consented to the jurisdiction of the Michigan Public Service Commission (PSC). Additionally, under the circumstances of each case, we find that there was not a customer already receiving service from another utility; accordingly, MCL 124.3 does not prevent either plaintiff from providing electric service. Therefore, we affirm the judgment of the Court of Appeals.

         I. FACTS AND PROCEDURAL HISTORY

         The first of these consolidated cases involves the Coldwater Board of Public Utilities (CBPU), a department of plaintiff City of Coldwater (Coldwater) that operates a municipal electric utility. CBPU holds a franchise to provide electric power to Coldwater Township and provides electric service to customers throughout the township. Defendant Consumers Electric Company (Consumers) is also franchised to provide electric service within the township.

         On July 21, 2011, CBPU purchased a parcel of property within the township. At the time of the purchase, the only structure on the property was a vacant building with an electric service drop that was connected to an electric meter owned by Consumers. Service had been discontinued before CBPU purchased the property; specifically, records indicate that Consumers received a request from the previous owner to turn off electricity before Coldwater purchased the parcel, and service was terminated on July 1, 2011-20 days before the purchase. Coldwater wrote to Consumers, asking whether Consumers would object to CBPU providing electric service to the parcel. Consumers objected on the basis of Rule 411 of the Michigan Administrative Code and this Court's decision in Great Wolf Lodge of Traverse City, LLC v Pub Serv Comm, 489 Mich. 27; 799 N.W.2d 155 (2011). Despite this objection, Consumers removed its electric facilities from the property so that the preexisting building could be demolished.

         On April 2, 2013, Coldwater filed a complaint for declaratory relief in circuit court, seeking a determination that CBPU could provide power to the parcel. Both parties moved for summary disposition. On January 15, 2014, the circuit court granted summary disposition to Coldwater, finding that neither Rule 411 nor MCL 124.3 was applicable.

         The second of these consolidated cases involves the Holland Board of Public Works (HBPW), a department of plaintiff City of Holland (Holland) that operates a municipal electric utility. HBPW holds a franchise from Park Township that requires it to provide electric service to any prospective customer in the township who requests it. Consumers is also franchised to provide electric service within the township.

         In March 2011, Benjamin's Hope, a nonprofit charitable corporation, acquired a parcel of property within the township. At the time of purchase, the land was vacant because all of the buildings had been demolished by the previous owner. There was no electric service being provided on the land. Although Consumers had previously supplied power to the parcel, its lines were de-energized in 2008. Benjamin's Hope sought to build a multiunit facility on the property. In August 2011, the contractor for this construction project, CL Construction, requested that Consumers provide single-phase electric service to a construction trailer that was temporarily located on the property.[1]

         In October 2011, Benjamin's Hope solicited bids from Consumers and HBPW for three-phase electric service, which comes at a different voltage than the single-phase electric service that had been provided to CL Construction's trailer. Benjamin's Hope selected HBPW as its electric provider. When CL Construction removed its trailer from the property, CL Construction requested that Consumers remove its electric facilities as well. Although Consumers initially refused, it eventually complied by removing the line and meter sometime before April 24, 2012. HBPW began providing electric service to the parcel on April 30, 2012.

         On March 20, 2012, Holland filed a complaint for declaratory relief in circuit court, seeking a determination that HBPW could provide power to the Benjamin's Hope parcel. On March 29, 2012, Consumers filed a request for a declaratory ruling from the PSC, claiming that Rule 411 gave it the exclusive right to serve the property. The PSC convened a proceeding and assigned a hearing ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.