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A Better Partnership
July 07, 2016

COA: Public Service Commission order approving utility program can be lawful and reasonable even if there is conflicting evidence about the benefits of the program

Consumers Energy created an advance metering infrastructure (AMI) program that it claimed would have a net present value of $42 million dollars.  The Public Service Commission (PSC) supported the AMI pilot program and required that Consumers Energy meet certain conditions, such as providing information regarding the costs and benefits of the program, before it would approve full deployment. After Consumers Energy offered testimony of the benefits of the AMI program, PSC approved it. The Attorney General challenged PSC’s decision on the basis that there was no competent, material, or substantial evidence to support the decision. The Court of Appeals held in Attorney General v. Michigan Public Service Commission, No. 317434 that PSC’s approval of the program was not unlawful or unreasonable.  
 
Consumers Energy created the AMI program to better serve its customers and modernize the electric grid. PSC supported and approved the AMI program. However, the Attorney General challenged PSC’s support and Consumers Energy responded by preparing an analysis of the program, which indicated a net present value of $42 million for the AMI program. PSC rejected the Attorney General’s contention that the cost/benefit analysis used by Consumers Energy was flawed. The Attorney General asserted that the AMI program had a negative net present value and that Consumers Energy’s testimony regarding the savings was speculative and not supported by sufficient evidence. In June 2013, PSC issued an order that approved the continuation of Consumers Energy’s AMI program.
 
The standard of review for PSC orders is narrow. Pursuant to MCL 462.25 the orders given by the PSC are presumed to be lawful and reasonable. If a party is aggrieved by a PSC decision the party has the burden of proving by clear and convincing evidence that the order is unlawful or unreasonable. Pursuant to Attorney General v Pub Serv Comm, a final PSC order must be lawful and supported by competent material and substantial evidence on the record. 165 Mich App 230, 235 (1987).  The Court of Appeals determined that “PSC was entitled to rely on the testimony presented by Consumers’ witness, even though other testimony [by the Attorney General] reached opposite conclusions.” Therefore, the court determined that the order approving the AMI program was not unlawful or unreasonable and supported by requisite evidence.
 
Judge Peter O’Connell dissented claiming that no competent, material, or substantial evidence supported PSC’s findings to approve Consumers Energy’s program.

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