895 N.W.2d 154
Mich.2017Background
- Two consolidated cases: City of Coldwater (CBPU) and City of Holland (HBPW), each operating municipal electric utilities, sought to provide service to parcels located in townships where Consumers Energy also held a franchise.
- Coldwater purchased a parcel July 21, 2011; Consumers had terminated service on July 1, 2011 and removed its facilities. Coldwater sued for a declaratory judgment that its municipal utility could serve the parcel.
- Holland/B enjamin’s Hope: parcel was vacant (Consumers’ lines de-energized in 2008); contractor briefly had single-phase service from Consumers; Benjamin’s Hope chose HBPW for permanent three-phase service; Consumers removed facilities before HBPW energized service. Holland sued; PSC declined to assert jurisdiction.
- Lower courts and the Court of Appeals held (and the Supreme Court affirmed) that (1) Michigan Admin. Code R 460.3411(11) ("Rule 411" — right of first entitlement) does not apply to municipally owned utilities that have not consented to PSC jurisdiction; and (2) MCL 124.3(2)’s no-switch prohibition does not bar the municipal utilities here because there was no entity "already receiving" service from Consumers at the time the municipalities began service.
- The Supreme Court overruled the portion of Great Wolf Lodge to the extent it held Rule 411 could apply against municipally owned utilities, and interpreted "customer" and "already receiving" in MCL 124.3(2) narrowly ("customer" = entity receiving service; "already receiving" = service continuing into the present).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rule 411 (PSC rule granting first utility that served premises the right to serve the entire load) applies when the competing provider is a municipal utility | Plaintiffs (municipal utilities) argued Rule 411 does not apply because municipally owned utilities are not subject to PSC jurisdiction and had not elected to be governed by the rule | Consumers argued Rule 411 protects its first-entitlement right against municipal competitors (relying on Great Wolf Lodge) | Rule 411 does not apply to municipally owned utilities that have not consented to PSC jurisdiction; Great Wolf Lodge’s contrary statement is overruled to that extent |
| Whether MCL 124.3(2) ("no-switch" rule) prohibits a municipal utility from serving customers outside municipal limits who are "already receiving" service from another utility | Plaintiffs argued no bar: (Coldwater) Consumers had ceased service before CBPU’s purchase; (Holland) Benjamin’s Hope was not the entity that had been served and service had been discontinued | Consumers argued the prior provision of service (or minimal continuity via contractor billing) meant the parcel was a protected "customer" already receiving service | The Court held "customer" means the entity receiving service (not just the building) and "already receiving" requires service to continue into the present; MCL 124.3(2) did not apply in these facts |
| Whether the definition of "customer" in MCL 460.10y(2) (building/facilities) governs MCL 124.3(2) | Plaintiffs argued the narrower statutory context limits that definition to MCL 460.10y(2) itself | Consumers relied on MCL 460.10y(2)’s definition to argue the parcel/buildings count as the "customer" regardless of the person/entity | Court held the MCL 460.10y(2) definition is limited to that subsection; MCL 124.3(2) uses "customer" to mean the entity that receives service |
| Whether Great Wolf Lodge remains good law regarding Rule 411’s applicability to municipal utilities | Plaintiffs argued Great Wolf Lodge was wrongly decided on that point and conflicts with MCL 460.6(1) and PSC Rule 102(l) | Consumers relied on Great Wolf Lodge to support Rule 411’s applicability against municipal providers | Court overruled the portion of Great Wolf Lodge holding Rule 411 applies to municipally owned utilities, concluding it conflicts with the statutory grant of PSC jurisdiction and Rule 102(l) |
Key Cases Cited
- Great Wolf Lodge of Traverse City, LLC v. Pub. Serv. Comm'n, 489 Mich. 27 (2011) (earlier decision holding Rule 411 extended first entitlement to premises and stating Rule 411 could apply against municipal utilities; Court narrows/overrules that portion)
- Robinson v. Detroit, 462 Mich. 439 (2000) (framework for when overruling prior precedent is appropriate)
- Sun Valley Foods Co. v. Ward, 460 Mich. 230 (1999) (statutory interpretation principles; enforce plain statutory language)
- Rock v. Crocker, 499 Mich. 247 (2016) (statutory interpretation reviewed de novo)