City of Holland v. Consumers Energy Company
866 N.W.2d 871
Mich. Ct. App.2015Background
- Two consolidated appeals by Consumers Energy from trial courts’ grants of summary disposition to the cities of Holland (Docket No. 315541) and Coldwater (Docket No. 320181) in declaratory-judgment actions about which utility may serve particular properties.
- Holland contracted to supply permanent electric service to Benjamin’s Hope for newly built facilities on a Park Township parcel where only a contractor’s temporary construction-trailer service had been provided earlier by Consumers.
- Coldwater purchased a 6.2-acre parcel with a vacant pole barn and an inactive Consumers service drop; Coldwater intends to demolish and rebuild and provide service through its municipal utility.
- Consumers argued municipal provision was barred by MCL 124.3(2) (municipalities may not serve customers already receiving service from another utility) and by PSC Rule 411 (first-serving utility’s entitlement), relying on Great Wolf Lodge v Pub Serv Comm.
- Trial courts held municipal utilities are not subject to PSC jurisdiction or Rule 411 absent voluntary compliance, and that no "customer" was then "receiving" service (present-tense) because the buildings/facilities that would be served did not exist or service had been discontinued.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MCL 124.3(2) barred the municipal utilities from contracting to serve the properties | Holland/Coldwater: statute only bars serving customers who are already receiving service; no existing buildings/facilities were receiving service at the relevant time | Consumers: prior temporary or historical service to the parcel made the property a Consumers customer, so MCL 124.3(2) forbids municipal service | Held: MCL 124.3(2) focuses on customers "already receiving" (present tense); "customer" means building or facilities served, so absent a building/facility receiving service, municipality may provide service |
| Whether PSC Rule 411 (and Great Wolf Lodge) prevents a municipality from serving the premises | Holland/Coldwater: municipal utilities are exempt from PSC jurisdiction and Rule 411 does not apply unless the municipality elects to comply | Consumers: Rule 411 grants first-serving public utilities entitlement to serve premises; Great Wolf Lodge supports applying Rule 411 against municipal competitors | Held: PSC lacks jurisdiction over municipal utilities under MCL 460.6(1); Rule 411 does not apply to municipal utilities unless they opt in under statute, so Great Wolf Lodge’s Rule 411 analysis does not bar municipal service here |
| Proper definition/scope of "customer" for delivery-service rules | Holland/Coldwater: "customer" means the building or facilities served (an inanimate structure); temporary service to a contractor’s trailer does not make the later permanent buildings Consumers’ customer | Consumers: "customer" should be construed to cover the premises or parcel so historical service gives Consumers first-right entitlement | Held: Court adopts MCL 460.10y(2) definition — customer = building/facilities served; prior temporary service to a different structure (e.g., a contractor’s trailer) did not make the later-built facilities Consumers’ customer |
| Effect when municipally owned utility is also the property owner | Coldwater: municipality cannot be treated as a PSC-regulated "customer" separate from its role as municipal utility | Consumers: Rule 411 allows no exception for owner-provider status | Held: Municipality’s dual role is inseparable here; because municipal utilities fall outside PSC jurisdiction and may elect Rule 411 only by statute, Rule 411 is inapplicable and Coldwater may serve its property |
Key Cases Cited
- Great Wolf Lodge of Traverse City, LLC v. Pub. Serv. Comm., 489 Mich 27, 799 NW2d 155 (2011) (interpreting PSC Rule 411’s first-entitlement doctrine)
- Echelon Homes, LLC v. Carter Lumber Co., 472 Mich 192 (2005) (plain statutory language, including tense, must be enforced)
- Spectrum Health Hosps. v. Farm Bureau Mut. Ins. Co. of Mich., 492 Mich 503 (2012) (statutory interpretation is reviewed de novo)