The Michigan Supreme Court granted mini-oral argument in In Re Consumers Energy Co., No. 150395, to address when the Michigan Department of Environmental Quality’s (MDEQ) administrative rules requiring generators to purchase NOx allowances were “implemented.” The court’s decision on this issue will determine whether Tes Filer City Station LP is subject to a $1,000,000 fuel recovery ceiling.
Under Michigan law, 2008 PA 286, biomass plants may recover fuel and operational maintenance costs not covered by existing contracts so long as aggregate costs do not exceed $1,000,000. However, the limit does not apply to costs incurred due to changes in federal or state environmental laws implemented after 2008. MDEQ promulgated regulations in 2007 that forced biomass plants to pay for mono-nitrogen oxide (NOx) emission costs, giving rise to this dispute as to when the regulations went into effect. Tes Filer City Station LP submitted its NOx costs for 2009 and argued that the $1,000,000 did not apply because MDEQ's rule was not implemented until it was approved by the federal Environmental Protection Agency in 2009. The Court of Appeals reconsidered and reaffirmed the Michigan Public Service Commission’s order denying Tes Filer’s eligibility to collect emission costs beyond the $1,000,000 limit. The court deferred to the Public Service Commission’s determination that the MDEQ regulations were implemented in 2007, when the proposed rules were filed with the Secretary of State.
