874 N.W.2d 398
Mich. Ct. App.2015Background
- MEC appeals a PSC order approving Detroit Edison’s PSCR plan for 2012 and authorizing the REF project.
- REF involves treating coal with additives at affiliated fuels companies BRFC and SCFC and selling treated coal back to Edison.
- PSC previously reviewed REF in an earlier case and required more information and proof of reasonableness and prudence under the Code of Conduct.
- PSC ultimately approved REF, concluding it complied with the Code of Conduct and provided sufficient information to evaluate reasonableness and prudence.
- MEC argues REF subsidizes affiliated fuels companies and questions pricing and contract disclosure under the Code of Conduct.
- The court applies narrow PSC review and upholds the PSC order, finding no error in light of the evidence and statutory framework.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Edison’s REF project comply with the Code of Conduct? | MEC asserts subsidization and improper treatment of affiliates. | Edison complied with Code; no cross-subsidization or undue preference. | Yes; REF complies with the Code of Conduct. |
| Did Edison’s coal sale and repurchase arrangement subsidize affiliates or distort pricing under § III(C)? | Sale to affiliates and repurchase at same price constitutes subsidy and improper pricing. | No subsidy; pricing based on market or embedded cost; no cross-subsidization. | No subsidy or improper pricing found. |
| Was the PSC permitted to consider the affiliates’ tax credits when evaluating reasonableness and prudence under Act 304? | Tax credits should be considered as part of cost minimization. | Tax credits are irrelevant; Act 304 does not allow consideration of third-party tax benefits. | PSC erred in considering tax credits; but decision upheld for other reasons. |
| Was MEC’s assertion that the PSC failed to require actual contracts, rather than descriptions, meritorious? | Actual contracts should have been reviewed. | Describing major contracts suffices under MCL 460.6j(3). | No error; description adequate. |
| Was MEC’s claim that the PSC’s order lacked competent evidence preserved or waived? | Arguments should be considered on the record. | MEC waived this issue; arguments otherwise unpersuasive. | Waived; issues lack merit on the record. |
Key Cases Cited
- In re Complaint of Consumers Energy Co, 255 Mich App 496 (2003) (statutory review and Code of Conduct interpretation)
- Great Lakes Steel Div of Nat’l Steel Corp v Mich Pub Serv Comm, 130 Mich App 470 (1983) (credibility and administrative deference principles)
- Shaw v Ecorse, 283 Mich App 1 (2009) (waiver and issue preservation)
- Union Carbide Corp v Pub Serv Comm, 431 Mich 135 (1988) (statutory authority and scope of PSC review)
- Mich Consol Gas Co v Pub Serv Comm, 389 Mich 624 (1973) (presumption of lawfulness and burden on challenger)
- Attorney General v Pub Serv Comm, 165 Mich App 230 (1987) (standards for reviewing PSC orders)