GREAT WOLF LODGE OF TRAVERSE CITY, LLC v PUBLIC SERVICE COMMISSION
Docket Nos. 139541, 139542, 139544, and 139545
SUPREME COURT OF MICHIGAN
May 9, 2011
489 MICH 27
Great Wolf Lodge of Traverse City, LLC, bought a piece of farmland with abandoned buildings on it as a site for a resort and water park. There was no electric service on the site, but there was an unused distribution line through which Cherryland Electric Cooperative had provided electric service in the past. Great Wolf contracted with Traverse City Light & Power (TCLP), a municipal utility not subject to regulation by the Public Service Commission (PSC), for electric service to the site. When Great Wolf asked Cherryland to remove the unused line, Cherryland, as a condition for removing the line, asked Great Wolf to state in writing that Cherryland would be the provider of electricity for the resort and water park. Fearing delays in construction, Great Wolf canceled its contract with TCLP and entered into a three-year service agreement with Cherryland. Cherryland filed an application with the PSC for implementation of the large resort service (LRS) rate for electric service to Great Wolf. The PSC denied the application, but allowed the LRS rate for one year or until the parties could work out the terms of a special contract. While the LRS rate was still in effect, Cherryland unilаterally increased the rate to the large commercial and industrial (LCI) rate. Great Wolf filed a complaint in the PSC, seeking a return to the LRS rate, a refund of payments in excess of that rate, and a declaration that at the end of the parties’ agreement, Great Wolf could choose a different electricity provider. The PSC ordered a refund, but declined to impose a fine or interest on the refund amount. The PSC also declined the requested declaration, determining that under
In an opinion by Justice MARILYN KELLY, joined by Chief Justice YOUNG and Justices CAVANAGH and MARY BETH KELLY, the Supreme Court held:
A utility‘s right of first entitlement to provide electric service in
- The PSC‘s determination that Cherryland had the right to serve the entire premises was authorized by law and supported by the evidence. Rule 411(11) provides that the first utility serving a customer pursuant to the applicable rules 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. Rule 411(1)(a) defines “customer” as “the buildings and facilities served rather than the individual, association, partnership, or corporation served.”
Mich Admin Code, R 460.3102(f) defines “premises” as “an undivided piece of land which is not separated by public roads, streets, or alleys.” Incorporating those definitions into Rule 411(11) indicates that Rule 411(11) grants the utility first serving buildings or facilities on an undivided piece of real property the right to serve the entire electric load on that property. This right attaches at the moment the first utility serves a customer and applies to the entire premises on which those buildings and facilities sit. The right is not extinguished or otherwise limited by the later destruction of all buildings on the property; divisiоn of the property by a public road, street, or alley; or the addition of new buildings or facilities on the premises. Accordingly, because Cherryland was the first utility to provide electric service to buildings and facilities on the land in question, Rule 411(11) gave it the right to serve the entire electric load on the premises regardless of the subsequent changes in the customer because the right extended to the premises of the buildings and facilities that existed when service was established. Great Wolf could not circumvent this rule by attempting to receive service from an entity that is not subject to PSC regulation, such as TCLP. - The PSC‘s authority to award interest derives from
MCL 460.6(1) , which vests the PSC with the power to “regulate all rates, fares, fees, charges, services, rules, conditions of service, and all other matters pertaining to the formation, operation, or direction of public utilities.” Because the PSC has broad discretion with regard to awarding interest, Great Wolf could not demonstrate that the PSC‘s decision not to impose interest on the refund in this case was unlawful. Great Wolf also could not demonstrate that the PSC‘s failure to award interest was unreasonable. The PSC concluded that Cherryland had reasonably misconstrued its ordеr allowing the LRS rate temporarily, and that conclusion was supported by evidence on the record. - Under
MCL 460.558 , any electricity provider that willfully or knowingly fails or neglects to obey or comply with a lawful PSC order is subject to a fine. Given the Legislature‘s inclusion of the adverbial modifiers “willfully” and “knowingly,” the Court of Appeals erred by concluding that this provision applies to negligent noncompliance. In this case, it was not unlawful or unreasonable for the PSC to have concluded that Cherryland‘s unilateral imposition of the LCI rate was a mistake rather than a willful or knowing failure to comply with the PSC‘s order.
Reversed; Public Service Commission order reinstated.
Justice MARKMAN, joined by Justices HATHAWAY and ZAHRA, concurring in part and dissenting in part, agreed that the PSC was not required to include interest on the refund it ordered Cherryland to pay or to impose a fine on Cherryland. However, he would have held that, because Rule 411(1)(a) defines “customer” as “the buildings” and Rule 411(11) provides that the first utility serving a customer is entitled to serve the entire electric load on the premises of that customer, once all the buildings on the property at issue had been demolished, there was no longer any customer for a utility to serve on the property and, thereforе, Cherryland‘s entitlement to serve the entire electric load on the premises was extinguished. He would reverse the Court of Appeals’ judgment regarding the imposition of interest and a fine, vacate the remainder of the Court of Appeals’ decision, and remand to the circuit court to address the argument that Great Wolf should not be considered a Cherryland customer because it had only become a customer through Cherryland‘s coercion.
1. PUBLIC UTILITIES - ELECTRIC SERVICE - EXISTING CUSTOMERS.
The first utility to provide electric service to a customer is entitled to serve the entire electric load on the premises of that customer; this right of first entitlement extends to the entire premises initially served and is not extinguished by the destruction of all buildings on the property, the division of the property by public roads, streets, or alleys, or new building and facilities on the premises (
2. PUBLIC UTILITIES - ELECTRIC SERVICE - REFUNDS - INTEREST AWARDS.
The Public Service Commission is not statutorily required to impose interest when awarding a refund to a customer; whether to impose interest, and how much, is within the Public Service Commission‘s discretion (
3. PUBLIC UTILITIES - ELECTRIC SERVICE - FINES.
The Public Service Commission is required to impose a fine on an electric service provider only when that utility willfully or knowingly fails or neglects to obey оr comply with a lawful commission order (
Clark Hill PLC (by Roderick S. Coy and Leland R. Rosier) for petitioner.
Bill Schuette, Attorney General, John J. Bursch, Solicitor General, and Steven D. Hughey, Vincent J. Leone, and Anne M. Uitvlugt, Assistant Attorneys General, for the Public Service Commission.
Amici Curiae:
Clark Hill PLC (by Robert A. W. Strong) for the Association of Businesses Advocating Tariff Equity.
Dykema Gossett PLLC (by Shaun M. Johnson and Joseph J. Baumann) for the Michigan Electric Cooperative Association.
James A. Ault for the Michigan Electric & Gas Association.
MARILYN KELLY, J. This case requires us to resolve three issues. First, whether a utility‘s right of first entitlement to provide electrical service to “the entire electric load on the premises” of a “customer” ceases when the “customer” on the property changes.1 Second, whether the Public Service Commission (PSC) is required to impose interest on a refund it awards when it determines that a utility has overcharged a consumer. Third, whether the PSC is required to impose a fine whenever a utility “neglects” to comply with one of its orders.2
We conclude that a utility‘s right of first entitlement set forth in Rule 460.3411 (Rule 411) of the Michigan Administrative Code extends to the entire premises initially served. And the right is nоt extinguished when a customer is no longer present on the premises. We also conclude that the PSC is not required to impose interest on a refund it awards to an overcharged utility consumer. Finally, we hold that the PSC is required to impose a fine pursuant to
FACTS AND PROCEDURAL HISTORY
Plaintiff, Great Wolf Lodge of Traverse City, LLC, owns a water-park resort on 48 acres near Traverse City. The resort sits on part of a 120-acre parcel once farmed by the Oleson family. On July 14, 2000, plaintiff entered into an option agreement to buy a portion of the property from GDO Investments (GDO), which acquired it after Mr. Oleson‘s death.
Defendant Cherryland Electric Cooperative claims that it provided electricity to the Oleson property beginning in the 1940s. Cherryland ran an electric line, known as a “service drop,” to the property. At one time or another over the years, Cherryland, Consumers Energy Company, and Traverse City Light & Power (TCLP) serviced farm buildings on the property.
After the last farming tenant vacated the premises in September 2001, the electricity was turned off. However, according tо a GDO employee, GDO continued to pay a minimum monthly bill from Cherryland so that it had the option to have the electricity turned back on.
Later, when plaintiff was planning new construction on the property, it solicited bids for electric service from Cherryland, Consumers Energy, and TCLP. At that time, Cherryland did not claim that it had the sole right to provide electric service to the property. TCLP was the winning bidder, and in December 2001, plaintiff contracted
By January 2002, the farm buildings were scheduled to be demolished. GDO asked Cherryland to remove its service line so that the building it was attached to could be taken down. But Cherryland made it a condition for removing the service drop that it would be the electricity provider. Plaintiff claims that it agreed in order to keep the project on schedule. Thus, plaintiff asserts, Cherryland coerced it to rescind its contract with TCLP and contract with Cherryland to avoid construction delays, loss of revenue, or litigation.3
In May 2002, plaintiff entered into a three-year contract for electrical service with Cherryland. Under the contract‘s terms, Cherryland charged plaintiff $0.0496 a kilowatt-hour. This was the large resort service (LRS) rate set by the PSC. In February 2003, Cherryland applied to the PSC for formal approval to charge plaintiff the LRS rate.
This rate is available to consumers with a load factor greater than 50 percent and at least a 1500-kilowatt load. The application Cherryland signed recited these conditions. It also stated that, if plaintiff did not meet them, a different rate would apply. Shortly thereafter, in March 2003, plaintiff and Cherryland replaced their May 2002 contract with another that expressly provided for service at the LRS rate.
In July 2004, the PSC rejected Cherryland‘s application. It expressed concern that plaintiff was the only customer that Cherryland charged the LRS rate and questioned whether plaintiff‘s electrical needs were typical for a large resort. The PSC directed Cherryland to apply instead for a “special contract” to serve plaintiff. It also concluded that Cherryland had violated
Plaintiff and Cherryland attempted to negotiate a special contract but were unable to reach an agreement. In August 2004, Cherryland filed an application with the PSC for approval of a special contract with plaintiff. The contract had not yet been agreed to, but Cherryland indicated that plaintiff was reviewing it. However, plaintiff intervened before the PSC and expressed concerns about the proposed special contract. According to plaintiff, it imposed unconscionable late charges and required plaintiff to forever bind itself to Cherryland. The PSC dismissed Cherryland‘s application in October 2004, indicating that it could be refiled once the parties reached an agreement. It also indicated that the parties could petition the PSC to resolve any disputes to the extent that the PSC had jurisdiction to hear those disputes.
In November 2004, Cherryland began unilaterally charging plaintiff for electricity at the large commercial and industrial (LCI) rate. Cherryland claimed that it made the change because plaintiff almost never used enough electricity to satisfy the minimum requirements of the LRS rate. Therefore, Cherryland feared that the PSC would again fine it for charging an improper rate.
Cherryland moved for summary disposition. A hearing referee ruled for plaintiff on count I and for Cherryland on count II. The referee concluded that Cherryland‘s conduct was a “purposeful and flagrant violation” of the PSC‘s 2004 order. He determined that plaintiff was entitled to a refund of $72,550.16 plus interest and recommended that Cherryland be fined $44,250. Regarding count II, he agreed that plaintiff could choose its electric supplier, but added that no authority permitted plaintiff a full choice of providers for all components of its electric service.
The PSC agreed that plaintiff was entitled to summary disposition on count I and with the amount of the refund to which it was entitled. However, the PSC declined to impose a fine or interest on Cherryland. Although the PSC concluded that Cherryland “should have sought clarification” of its 2004 order, it stated that “Cherryland‘s interpretation of the July 22 order was not so clearly unreasonable as to justify the imposition of a fine or interest on the refund to [plaintiff].”5 Finally, the PSC agreed with the hearing referee that count II should be dismissed.
The circuit court affirmed the PSC‘s order in large part. It concluded that plaintiff was an existing customer of Cherryland under Rule 411 because the property (the Oleson farm) was the customer, not the entity that owned the property. Therefore, Cherryland had the right to continue providing electric service to the prop-erty. However, the circuit court reversed the decision not to impose a fine and interest on Cherryland. It ruled that the language of the PSC‘s 2004 order was clear and unambiguous and concluded, contrary to the PSC, that Cherryland‘s misinterpretation of the order was clearly unreasonable.
Plaintiff and the PSC both appealed. The Court of Appeals consolidated the appeals and, in a published opinion, affirmed in part, reversed in part, and remanded to the PSC for further proceedings.6 The Court of Appeals affirmed the circuit court‘s ruling that the PSC was required to impose a fine and interest on Cherryland. However, the Court of Appeals concluded that plaintiff was free to choose its electric distributor if there was no customer governed by the restrictions of Rule 411. It held that the plain language of Rule 411(1)(a) defined “customer” as the “buildings and facilities served” by an electricity provider. The panel reasoned as follows:
If the changes in buildings and facilities and interruption of service came about in reasonable proximity to and for the purpose of a change in ownership and plan for the site, . . . those changes and that interruption did not create a new customer. If, however, the previous owner held on to the site for a significant period after all land uses requiring electricity had been abandoned, requested that electric service be terminated, and demolished buildings or removed facilities, or at leаst allowed them to stand without electricity, for reasons other than anticipation of an immediate change of ownership or land use, then those actions should be deemed to have extinguished the previously existing customer or customers on the site, thus severing the utility-customer relationship.7
The panel concluded that the record was insufficient to determine whether there was an existing customer and remanded the case to the PSC for further factual development, findings, and conclusions. It also directed the PSC to consider whether a “customer[]” was “already receiving service” pursuant to
Cherryland and the PSC appealed in this Court. We granted the parties’ applications for leave to appeal.9
STANDARD OF REVIEW
A court reviewing an administrative agency‘s interpretation of a statute should give the agency‘s interpretation “respectful consideration” and, if it is persuasive, should not overrule it without “cogent reasons.”10 We have held that “[i]n construing administrative rules, courts apply рrinciples of statutory construction.”11 All rates, fares, charges, classification and joint rates, regulations, practices, and services prescribed by the PSC are presumed, prima facie, to be lawful and reason-able.12 A final order of the PSC must be authorized by law and, if a hearing is required, supported by competent, material, and substantial evidence on the whole record.13 A party aggrieved by a PSC order must show by clear and satisfactory evidence that the PSC‘s order is unlawful or unreasonable.14
CHERRYLAND‘S RIGHT OF FIRST ENTITLEMENT UNDER RULE 411(11)
The PSC adopted Rule 411 in 1982 as part of a comprehensive regulatory
The PSC argues that its decisions interpreting Rule 411 clearly establish that “once a first utility entitlement is established, a subsequent change in ownership does not create a new prospective customer on the old premises.”16 In effect, the PSC‘s interpretation of Rule 411(11) gives the first-serving utility a right in perpetuity to serve the property on which a customer is loсated.
Rule 411(11) provides that “[t]he first utility serving a customer pursuant to these rules 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.”17 Rule 411(1)(a) defines “customer” as “the buildings and facilities served rather than the individual, association, partnership, or corporation served.”18 Rule 102(f) defines “premises” as “an undivided piece of land which is not separated by public roads, streets, or alleys.”19
When those definitions are incorporated into Rule 411(11), it reads as follows:
The first utility serving [buildings and facilities] pursuant to these rules is entitled to serve the entire electric load on the [undivided piece of land which is not separated by public roads, streets, or alleys] of [those buildings and facilities] even if another utility is closer to a portion of the [buildings and facilities‘] load.
Thus, Rule 411(11) grants the utility first serving buildings or facilities on an undivided piece of real property the right to serve the entire electric load on that property. The right attaches at the moment the first utility serves “a customer” and applies to the entire “premises” on which those buildings and facilities sit. The later destruction of all buildings on the property or division of the property by a public road, street, or alley does not extinguish or otherwise limit the right. This conclusion is consistent with the rule‘s purpose of avoiding unnecessary duplication of electrical facilities.20
Plaintiff argues that this right of first entitlement lasts only as long as an “existing customer” is being served. We disagree. If Rule 411(11) were intended to be read as plaintiff argues, it could simply have stated that “[t]he first utility serving a customer pursuant to these rules is entitled
For this reason, contrary to the dissent‘s contention, our reading of the rule does not redefine “customer” as “premises.” Both this opinion and the dissent give the same effect to the word “customer” in Rule 411(11). We agree that to trigger the right of first entitlement, there must first be a “customer” served by the utility. We further agree that the “premises of that customer” dictate the scope of the utility‘s right.22
Plaintiff argues that Rule 411(2) undercuts our interpretation because it refers to “existing customers.” However, Rule 411(2) states simply that “[e]xisting customers shall not transfer from one utility to another.”23 Hence, it establishes nothing more than that existing “buildings and facilities” cannot transfer from one utility to another. It does not advance plaintiff‘s argument that eliminating a customer cuts off the right in Rule 411(11) to serve the “entire electric load on the premises” of the initial customer.
In this case, is it undisputed that Cherryland was the first utility to provide electric service to buildings and facilities on the Oleson farm. Once Cherryland did so, Rule 411(11) gave it the right to serve the entire electric load on the premises. That right was unaffected by subsequent changes in the “customer,” because the right extends to the “premises” of the “buildings and facilities” that existed at the time service was established. Later destruction of the buildings and facilities on the property did not extinguish that right.24
Given that Cherryland is entitled to the benefit of the first entitlement in Rule 411(11), it is irrelevant that TCLP is a municipal corporation not subject to PSC regulation. Rule 411(11) both grants and limits rights. It grants a right of first entitlement to Cherryland while limiting the right of the owner of the premises to contract with another provider for eleсtric service. Plaintiff put that limitation directly at issue by seeking a declaratory
In sum, the PSC‘s determination that Cherryland had the right to serve the entire premises was authorized by law and supported by competent, material, and substantial evidence. Plaintiff has failed to demonstrate that the PSC‘s May 2006 order was unlawful or unreasonable.
THE PSC IS NOT REQUIRED TO IMPOSE INTEREST ON A REFUND
The PSC‘s authority to award interest in addition to a refund under these circumstances is not explicitly authorized by statute. Rather, it has its genesis in the Court of Appeals’ decision in Detroit Edison Co v Pub Serv Comm.25 In that case, the Court of Appeals held that the PSC‘s authority to award interest derives from
Because “[t]he selected rate of interest has a direct impact on the fees and charges that a utility‘s customers ultimately pay for service,”26 the Court of Appeals concluded that the PSC had authority to determine the amount of interest to award.
However, plaintiff has cited no authority for the proposition that the PSC must award interest when it grants a refund in these circumstances.27 Rather, Detroit Edison makes clear that the PSC has broad discretion when determining the amount of interest to award.28 Therefore, plaintiff cannot demonstrate that the PSC‘s decision not to impose interest on the refund in this case was unlawful.
Nor has plaintiff demonstrated that the PSC‘s failure to award interest was “unreasonable.” We have defined “unreasonable” as “arbitrary, capricious or totally unsupported by admissible and admitted evidence.”29 The PSC declined to impose interest on the refund to plaintiff because it concluded that Cherryland reasonably misconstrued its July 2004 order. This conclusion was not arbitrary or capricious
record supported the PSC‘s conclusion that Cherryland‘s interpretation of the order was not clearly unreasonable.
Cherryland‘s application for approval of the LRS rate noted that the rate is available only to customers with a load factor greater than 50 percent and at least a 1500-kilowatt load. Plaintiff met these requirements only in August 2003 and July 2005. Moreover, the PSC had previously fined Cherryland for charging plaintiff an unapproved rate. Taken together, this evidence supported the PSC‘s determination. It was not clearly unreasonable for Cherryland to change the rate charged to plaintiff because plaintiff had not complied with the load requirements for the LRS rate.
MCL 460.558 REQUIRES THAT A FINE BE IMPOSED WHEN A UTILITY FAILS OR NEGLECTS TO COMPLY “WILFULLY OR KNOWINGLY”
Every corporation, its officers, agents and employes, and all persons and firms engaged in the business of furnishing electricity as aforesaid shall obey and comply with every lawful order made by the commission under the authority of this act so long as the same shall remain in force. Any corporation or person engaged in such business or any officer, agent, or employe thereof, who wilfully or knowingly fails or neglects to obey or comply with such order or any provision of this act shall forfeit to the statе of Michigan not to exceed the sum of 300 dollars for each offense. Every distinct violation of any such order or of this act, shall be a separate offense, and in case of a continued violation, each day shall be deemed a separate offense. An action to recover such forfeiture may be brought in any court of competent jurisdiction in this state in the name of the people of the state of Michigan, and all moneys recovered in any such action,
together with the costs thereof, shall be paid into the state treasury to the credit of the general fund.30
The Court of Appeals reasoned that
“Wilfully” and “knowingly” are adverbs, which generally modify verbs. The most naturаl reading of
The record here indicates that the PSC determined that Cherryland made a mistake by unilaterally imposing the LCI rate. The PSC concluded that Cherryland
CONCLUSION
We hold that a utility‘s right of first entitlement under
YOUNG, C.J., and CAVANAGH and MARY BETH KELLY, JJ., concurred with MARILYN KELLY, J.
MARKMAN, J. (concurring in part and dissenting in part). Although I concur in the majority‘s holdings that the Public Service Commission (PSC) was not required to include interest on the refund it ordered Cherryland Electric Cooperative to pay and that the PSC was not required to impose a fine on Cherryland, I respectfully dissent from the majority‘s holding that the right of Cherryland to provide electrical service to the property at issue was not extinguished when all the buildings on the property were demolished. Instead, I conclude that, pursuant to
Court of Appeals’ decision, and remand to the trial court for it to address the argument of Great Wolf Lodge of Traverse City, LLC, that it should not now be considered a Cherryland “customer,” even though Cherryland is currently serving Great Wolf Lodge, because Cherryland had coerced Great Wolf Lodge into becoming its “customer.”
I. STANDARD OF REVIEW
[w]hen considering an agency‘s statutory construction, the primary question presented is whether the interpretation is
consistent with or contrary to the plain language of the statute. While a court must consider an agency‘s interpretation, the court‘s ultimate concern is a proper construction of the plain language of the statute. . . . As established in [Boyer-Campbell Co v Fry, 271 Mich 282 (1935)], the agency‘s interpretation is entitled to respectful consideration and, if persuasive, should not be overruled without cogent reasons. . . . But, in the end, the agency‘s interpretation cannot conflict with the plain meaning of the statute. [In re Complaint of Rovas Against SBC Mich, 482 Mich 90, 108 (2008).]
“In construing administrative rules, courts apply principles of statutory construction.” Detroit Base Coalition for the Human Rights of the Handicapped v Dep‘t of Social Servs, 431 Mich 172, 185 (1988).
II. ANALYSIS
A. RIGHT TO SERVE
Rule 411(2) states that “[e]xisting customers shall not transfer from one utility to another.”
In In re Complaint of Consumers Energy Co, 255 Mich App 496 (2003), the subject property was purchased by Meijer, Inc., in August 1999. Consumers Energy Company provided electric service to the property from the 1940s until November 1999, when all the buildings on the property were demolished so that Meijer could build a store and gas station. After Great Lakes Energy Cooperative began providing Meijer with electric service, Consumers filed a formal complaint against Great Lakes, alleging that the latter had violated Rule 411. Consumers argued that because it had continuously served the property and had never relinquished or abandoned its entitlement to do so, it was the “first utility” with resрect to the property and, thus, was entitled to serve the entire electric load on the premises. The PSC rejected this argument and held that Meijer was not an “existing customer” of Consumers and, thus, was not obligated to receive its electric service from Consumers. However, the Court of Appeals reversed the PSC and held that Meijer was, in fact, an “existing customer” and, thus, that “Consumers [was] entitled to serve the entire electric load on Meijer‘s property.” Id. at 504.
The Court of Appeals reached this conclusion by focusing on the fact that “a mere change in ownership does not allow the customer to transfer to another utility,” id. at 503, because the “customer” is not “the individual, association, partnership, or corporation taking service,” id. at 502, citing Rule 411(1)(a). The problem with the Court of Appeals’ opinion in Consumers Energy, however, is that, although it correctly recognized that the “customer” is not “the individual, association, partnership, or corporation served,” it failed to recognize that the “customer” is also not the property being served.
The Court of Appeals in the instant case, being bound by Consumers Energy but apparently unconvinced by its analysis, sought to distinguish the two cases. It did this by focusing on language in Consumers Energy, 255 Mich App at 503, that emphasized that “the discontinuation of service was directly related to the change in ownership. . . .” It interpreted this language as “leav[ing] open the possibility that a discontinuation of service, and demolition of buildings coming about for reasons other than direct furtherance of a plan to change ownership or land uses, can indeed extinguish an existing customer.” Great Wolf Lodge of Traverse City, LLC v Pub Serv Comm, 285 Mich App 26, 38 (2009). That is, it interpreted Consumers Energy
as indicating that where service to buildings or facilities is interrupted, or buildings are demolished or facilities are removed, in direct connection with a change of ownership or land use, neither the service interruption nor the replacement of old buildings and facilities with new ones creates a new customer. To avoid interpreting that case, or the definition of “existing customer,” as locking an incumbent utility into that status for a given parcel in perpetuity if it so chooses, with no regard for periods of interruption in service or elimination of buildings and facilities, it is necessary to recognize that some such interruption or elimination would indeed work an end to the utility-customer relationship. [Id. at 39-40.]
Accordingly, it held that
[i]f the changes in buildings and facilities and interruption of service came about in reasonable proximity to and for the purpose of a change in ownership and plan for the site, then under [Consumers Energy], those changes and that interruption did not create a new customer. If, however, the previous owner held on to the site for a significant pеriod after all land uses requiring electricity had been abandoned, requested that electric service be terminated, and demolished buildings or removed facilities, or at least allowed them to stand without electricity, for reasons other than anticipation of an immediate change of ownership or land use, then those actions should be deemed to have extinguished the previously existing customer or customers on the site, thus severing the utility-customer relationship. [Id. at 40.]1
The problem, of
tomer” as “the buildings and facilities served,” rather than the parcel of land served. As it explained:
If Rule 411(1)(a) calls for carefully distinguishing between individuals, associations, partnerships, or corporations taking service from the buildings and facilities served, with only the latter two constituting a “customer,” it also demands distinguishing buildings and facilities served from the parcels served. The rule providing the definition could easily have stated that the сustomer was the parcel, but instead specified buildings and facilities. It follows, then, that where there are no buildings or facilities being served, there is no customer. [Great Wolf Lodge, 285 Mich App at 39.]
However, the Court of Appeals was nevertheless bound to follow Consumers Energy, which held that “for purposes of Rule 411, a change of ownership and demolition of all buildings served did not create a new customer.” Id. at 38. As a result, the Court of Appeals attempted to reconcile Rule 411 and Consumers Energy by holding that sometimes, as in Consumers Energy, a change of ownership and demolition of all buildings served does not create a new “customer,” while sometimes, as perhaps in the instant case, a change of ownership and demolition of all buildings served does create a new “customer.” Because this Court is not bound to follow Consumers Energy, I would hold that Consumers Energy was wrongly decided because it is inconsistent with Rule 411, which defines “customer” as “the buildings and facilities served” rather than the parcel of land served.
I agree with the Court of Appeals that the “customer” consists of “the buildings and facilities served“; the “customer” for purposes of the present dispute is neither the owner of the property nor the parcel of land. Therefore, “where there are no buildings or facilities being served, there is no customer.” Great Wolf Lodge, 285 Mich App at 39. However, I do not believe that it matters whether the “changes in buildings and facilities and interruption of service came about in reasonable proximity to and for the purpose of a change in ownership. . . .” Id. at 40. Instead, I believe that if there are no buildings or facilities being served, there is no “customer,” regardless of why there are no buildings or facilities being served or when this came about. In Consumers Energy, once all the buildings on the property had been demolished, Consumers no longer had any “customers” on the property and therefore was no longer entitled, under Rule 411, to serve Meijer‘s newly constructed store and gas station.
The same is true here. Once all the buildings on the property had been demolished, Cherryland no longer had any “customers” on the property and, therefore, was no longer entitled to serve Great Wolf Lodge‘s newly constructed water-park resort.
In addition, Rule 411(11) provides, “The first utility serving a customer pursuant to these rules is entitled to serve the entire electric load on the premises of that customer. . . .”
The majority holds that a utility‘s “right to serve the entire electric load on the premises” of a “customer” is “unaffected by subsequent changes in the ‘customеr[.]‘” Ante at 41. I do not necessarily disagree with this statement. For example, if Electric Company XYZ served a house on the subject property, Electric Company XYZ would be entitled to serve a subsequently built barn on the same property because, pursuant to Rule 411(11), a utility is “entitled to serve the entire electric load on the premises of that customer. . . .” This right is not affected when the “customer” changes from being only the house to being both the house and the barn. However, what the majority fails to recognize is that because “customer” is defined as “the buildings. . . served,”
The majority focuses on the fact that Rule 411(11) states that the utility is “entitled to serve the entire electric load on the premises of that customer. . . .” (Emphasis added.) However, in doing so, the majority loses sight of the fact that in order for there to be a right to serve the entire “premises,” the utility has to first be serving some “customer” on the “premises.” In this case, once all the buildings on the property had been demolished, Cherryland was no longer serving any “customers” on the property and, therefore, no longer possessed any right to serve the entire “premises.” That is, it was no longer “entitled to serve the entire electric load on the premises of that [nonexisting] customer.”
The majority essentially relies on the use of the term “premises” in Rule 411(11) to redefine “customer” to mean “premises.” The majority holds that a utility has a right to serve the entire “premises” of a “customer,” even after that “customer” ceases to exist. The only way to reach this conclusion is to redefine “customer” to mean “premises.” However, Rule 411(1)(a) clearly defines “customer” to mean “the buildings. . . served[.]” The majority suggests thаt it must read “premises” in the way that it does in order to give the word some meaning. However, that is not the case because, although “premises” may not have the meaning that the majority ascribes to it, it does have a meaning of alternative significance: it means that the first utility serving a “customer” on a piece of property is entitled to serve all the “customers” on that property. As the Court of Appeals explained, “Rule 411(11) concerns extensions of service on premises already being served, and guards against any single premises being served by multiple utilities.” Great Wolf Lodge, 285 Mich App at 36. Without the phrase “on the premises” in Rule 411(11), this very considerable protection for utilities would not exist. Therefore, “premises” need not be misconstrued in order to give it substantive meaning.
Although an “agency‘s interpretation is entitled to respectful consideration and, if persuasive, should not be overruled without cogent reasons,” Rovas Complaint, 482 Mich at 108, it must not be forgotten that in Consumers Energy, when all the buildings that Consumers Energy had served had been demolished by Meijer, the PSC concluded that Meijer did not consti-
tute an “existing customer” of Consumers, and the Court of Appeals reversed. Therefore, the PSC‘s decision here that Great Wolf Lodge is an “existing customer” of Chеrryland may well have been a result of the Court of Appeals’ interpretation of Rule 411 in Consumers Energy, rather than the PSC‘s own interpretation of the rule. Furthermore, even assuming that the PSC‘s decision was based on its own interpretation of Rule 411, for the reasons discussed earlier, that interpretation is not persuasive and there are, in fact, “cogent” reasons to overrule it. Great Wolf Lodge, in my judgment, has fully met its burden of showing by clear and satisfactory evidence that the PSC‘s decision was inconsistent with the law.
B. INTEREST
I agree with the majority that the PSC was not required to award interest on the refund it ordered Cherryland to pay. Although Detroit Edison Co v Pub Serv Comm, 155 Mich App 461, 469 (1986), held that the PSC possesses the authority to award interest on refunds, it did not require the PSC to award interest. Because no statute, rule, or caselaw requires the PSC to award interest on refunds, Great Wolf Lodge has not satisfied its burden of showing by clear and satisfactory evidence that the PSC‘s decision to not award interest was unlawful or unreasonable. See
C. FINE
I also agree with the majority that the PSC was not required to impose a fine on Cherryland.
PSC] order or any provision of this act [1909 PA 106; MCL 460.551 et seq.] shall forfeit to the state of Michigan not to exceed the sum of 300 dollars for each offense.” Contrаry to the Court of Appeals’ conclusion, this language does not encompass mere negligent noncompliance; otherwise, there would have been no need to include the language “wilfully or knowingly” within this statute. “Wilfully or knowingly” modifies both “fails” and “neglects,” and, therefore, the PSC is required to impose a fine only where a utility “wilfully or knowingly” “fails,” or “wilfully or knowingly” “neglects,” to “obey or comply with [a PSC] order.”
In the instant case, the PSC determined that Cherryland‘s understanding of the
III. CONCLUSION
Once all the buildings on the property had been demolished, Cherryland no longer had any “customer” on the property, and, therefore, its right to provide electric service to the property was extinguished. Because no rule, statute, or caselaw requires the PSC to impose interest on refunds, the PSC was not required to impose interest on the refund at issue. Finally, because Cherryland did not “willfully or knowingly fail[] or neglect[] tо obey or comply with [the PSC‘s July 22, 2004] order,”
HATHAWAY and ZAHRA, JJ., concurred with MARKMAN, J.