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A Better Partnership
July 15, 2009

COA Opinion: Termination of Service to Property Can, in Some Circumstances, Extinguish a Customer-Utility Relationship

On July 14, 2009, the Court of Appeals published its per curiam opinion in Great Wolf Lodge of Traverse City, L.L.C. v. Michigan Public Service Comm'n, Nos. 281398, 281404. The primary issue concerned the decision of the Public Service Commission and the Circuit Court requiring Great Wolf Lodge resort in Traverse City to continue electrical service with Cherryland Electric Cooperative based upon Public Service Commission regulations prohibiting existing utility customers from transfering from one utility to another. Cherryland provided electrical service to a farm on the relevant property prior to Great Wolf's purchase and transformation of the property into a resort, but at the time of the purchase the only buildings on the property were abandoned, and none had active electrical service. The Public Service Commission and Circuit Court relied on precedent (In re Complaint of Consumers Energy, 255 Mich App 496; 660 NW2d 785 (2003)) that established that a change of ownership and demolition of buildings does not, by itself, extinguish an existing customer-utility relationship. The Court of Appeals followed this precedent but noted that, even under these rules, there are situations where the existing customer relationship can be severed. In particular, the Court stated that if the prior owner terminated electric service for a significant period of time for reasons other than a change in ownership, then the "existing customer" relationship would have been severed, and Great Wolf would not be considered and existing customer. The Court of Appeals concluded that the existing record was insufficient to make a determination on this issue and remanded the case to the Public Service Commission for additional factual development. Additionally, Cherryland argued that an alternate municipal provider could not service Great Wolf because of a statutory requirement prohibiting such providers from rendering service to those "already receiving the service from another utility." MCL 124.3(2) The Court of Appeals concluded that the relevant inquiry is whether there were existing facilities on the property that were already receiving service from Cherryland at the time of Great Wolf's purchase. Again the Court of Appeals remanded the issue to the Public Service Commission for additional factual development.

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