In a ruling that preserves the status quo in Michigan's electric choice program, the state Court of Appeals overturned a Michigan Public Service Commission order that would have imposed a locational capacity requirement on individual alternative electric suppliers.
The appellate court, in its unanimous July 12 decision, sided with the Association of Businesses Advocating Tariff Equity, a statewide trade group, and Energy Michigan, which represents competitive suppliers, in concluding the PSC overstepped its authority in its controversial September 15, 2017, order.
The commission maintained it drew its legal authority to impose a local clearing requirement on individual alternative suppliers from energy legislation, Public Act 341, passed in late 2016 by the Republican-controlled Michigan General Assembly and signed into law by Republican Governor Rick Snyder.
ABATE and Energy Michigan asserted the PSC's interpretation of the law was erroneous and the court, in a 3-0 ruling, agreed with them.
When Michigan's choice law was enacted nearly two decades ago, it gave about 90% of the state's electric market to DTE Energy and Consumers Energy, the two incumbent investor-owned utilities that together serve more than four million electric customers in the upper Midwestern state.
The market for competitive suppliers was capped at 10%. Over the years, there has been considerable tension between DTE/Consumers, which want to preserve and even expand upon their share of the overall market, and competitive suppliers that also want a larger piece of the pie.
At any one time, there literally are thousands of customers wanting a supplier other than DTE and Consumers who are waiting in the electric choice queue.
A local capacity clearing requirement, critics complained, would tilt the energy market balance even further toward DTE and Consumers.
The court appears to have based its ruling on one key finding - because the 2016 state law is silent on the locational capacity issue, it does not give the PSC authority to tell alternative providers where they must purchase electricity to serve customers.
"Because we must strictly construe the statutes that confer power upon the MPSC, and that power may not be inferred but instead must be conferred by 'clear and unambiguous language,' we conclude [the state law] does not authorize the PSC" to impose the locational capacity requirement, the court opined.
The PSC, it continued, "has no common law powers and possesses only the authority granted to it by the Legislature."
The court added that a review of the September 2017 order "demonstrates that the MPSC has not merely announced that it has the authority to impose a local clearing requirement on individual alternative electric suppliers, it has announced its decision to assert that authority, leaving the methodology of the exercise of that authority to chance."
DTE and Consumers said they disagree with the court's ruling. It is unclear if they intend to appeal.
Likewise, PSC spokeswoman Judy Palnau said Friday her agency is reviewing the ruling and also has not decided on a possible appeal to the Michigan Supreme Court.
Michael Pattwell, ABATE's lead attorney in the case, said in an email his group is "thrilled to have a unanimous and published Court of Appeals decision recognizing that Public Act 341 did not authorize the Public Service Commission to interfere with Michigan's competitive electric market through the imposition of a locational capacity requirement on individual electric suppliers."
As the court "aptly held," he continued, "the Public Service Commission's attempt to limit the accessibility of lower cost competitively sourced electric power conflicts with the Intent of Act 341 as reflected in the statute's legislative history.
"The appellate ruling is a win for Michigan ratepayers."