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A Better Partnership
October 01, 2015

MSC to address whether customers may receive electrical services by a municipality outside of that municipality’s boundary

In City of Holland v. Consumers Energy Co., No. 151053, and City of Coldwater v. Consumers Energy Co., No. 151051, the Michigan Supreme Court scheduled oral argument to consider whether to grant defendant’s application for leave to appeal.  The court directed the parties to file supplemental briefs to address (1) whether it is lawful for customers to receive electrical services by a municipality outside of that municipality’s boundary, provided that no other utility company was presently providing the services, and (2) whether Michigan’s Public Service Commission (“PSC”) has the authority to regulate municipal distribution of electrical services.
 
In both cases, blogged here, electrical customers outside the boundaries of Holland and Coldwater opted to receive electricity from those municipalities rather than from Consumers Energy.  Consumers argued that under MCL 124.3, a municipal corporation could not render electric delivery services for heat, power, or light to customers outside the corporate limits who are already receiving the services from another utility.  Consumers further maintained that under the PSC, the first utility company serving a customer is entitled to continue serving that customer.
 
The Michigan Court of Appeals, in a consolidated opinion, held that MCL 124.3 only prohibits a municipality from providing electrical services to customers outside of the municipal limits if another provider is presently providing services.  In both cases, while Consumers had previously provided services to these customers, it was currently not doing so.  The court also held that under MCL 460.6, the PSC has complete power and jurisdiction to regulate all public utilities except a municipally owned utility.
 
The Michigan Supreme Court scheduled oral arguments on whether to grant defendant’s leave to appeal.

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