Title: Great Wolf Lodge of Traverse City, LLC v. Public Service Comm’n

State: michigan

Issuer: Michigan Supreme Court

Document:

FILED MAY 9, 2011 
 
S T A T E  O F  M I C H I G A N 
 
SUPREME COURT 
 
 
GREAT WOLF LODGE OF TRAVERSE 
CITY, LLC, 
 
 
Plaintiff-Appellee, 
 
 
v 
Nos. 139541 and 
        139542 
 
PUBLIC SERVICE 
COMMISSION, 
 
 
 
Defendant-Appellant, 
 
and 
 
CHERRYLAND ELECTRIC 
COOPERATIVE, 
 
 
Defendant-Appellee. 
 
 
 
 
GREAT WOLF LODGE OF TRAVERSE 
CITY, LLC, 
 
 
Plaintiff-Appellee, 
 
 
v      
                 Nos. 139544 and 
                           139545 
 
 
Michigan Supreme Court
Lansing, Michigan
Opinion 
 
Chief Justice: 
Robert P. Young, Jr. 
 
 
Justices: 
Michael F. Cavanagh 
Marilyn Kelly 
Stephen J. Markman 
Diane M. Hathaway 
Mary Beth Kelly 
Brian K. Zahra 
 
 
 
 
 
2
PUBLIC SERVICE COMMISSION, 
 
 
 
Defendant-Appellee, 
 
and 
 
CHERRYLAND ELECTRIC 
COOPERATIVE, 
 
 
Defendant-Appellant. 
 
 
BEFORE THE ENTIRE BENCH 
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 not 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 MCL 460.558 only when a utility “wilfully or knowingly” 
                                              
1 Mich Admin Code, R 460.3411(11).  
2 MCL 460.558. 
 
 
 
3
neglects to comply with a PSC order.  Therefore, we reverse the judgment of the Court of 
Appeals and reinstate the decision of the PSC. 
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 to 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 with 
TCLP to provide electricity to its planned resort. 
 
 
 
4
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 
                                              
3 TCLP later sued Cherryland for tortious interference with a contract and recovered 
$275,000.  Plaintiff was not a party to that litigation. 
 
 
 
5
that Cherryland had violated MCL 600.552 by implementing the LRS rate without PSC 
approval and fined Cherryland $10,000 pursuant to MCL 460.558.  However, the PSC 
approved the LRS rate “for up to one year or until a special contract is approved.”4 
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.   
In July 2005, plaintiff filed a two-count complaint against Cherryland in the PSC.  
Count I alleged that Cherryland had violated MCL 460.552 and the PSC’s 2004 order by 
                                              
4 In re Application of Cherryland Electric Coop, order of the Public Service Commission, 
entered July 22, 2004 (Case No. U-13716), p 8. 
 
 
 
6
charging plaintiff the LCI rate rather than the LRS rate.  Plaintiff sought a refund of the 
amounts that it had paid in excess of the LRS rate.  Finally, plaintiff asked that the PSC 
fine Cherryland for violating its order and require Cherryland to stop charging plaintiff 
the LCI rate and return to the LRS rate.  In count II, plaintiff asked the PSC to declare 
that plaintiff could receive all components of its electrical service from any provider of its 
choosing.  Plaintiff also asked the PSC to order Cherryland to transfer its distribution 
facilities to any new provider chosen by plaintiff and to remove any unnecessary facilities 
on its property. 
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 
 
 
 
7
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 property.  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: 
                                              
5 In re Complaint of Great Wolf Lodge of Traverse City, LLC, Against Cherryland 
Electric Coop, order of the Public Service Commission, entered May 25, 2006 (Case No. 
U-14593), p 15. 
6 Great Wolf Lodge of Traverse City, LLC v Pub Serv Comm, 285 Mich App 26; 775 
NW2d 597 (2009). 
 
 
 
8
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 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.[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 MCL 124.3 when plaintiff 
acquired the property.  If so, MCL 124.3(2) would prohibit TCLP, a municipal electricity 
provider not regulated by the PSC and not subject to Rule 411, from contracting with 
plaintiff to provide electric service.8 
Cherryland and the PSC appealed in this Court.  We granted the parties’ 
applications for leave to appeal.9   
                                              
7 Id. at 40.  
8 MCL 124.3(2) provides that “[a] municipal corporation shall not render electric delivery 
service for heat, power, or light to customers outside its corporate limits already receiving 
the service from another utility unless the serving utility consents in writing.” 
9 Great Wolf Lodge of Traverse City, LLC v Pub Serv Comm, 486 Mich 869 (2010). 
 
 
 
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 principles 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 reasonable.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 scheme 
for electric utilities.  At that time, it stated that the purpose of Rule 411 was “to avoid 
                                              
10 In re Complaint of Rovas Against SBC Mich, 482 Mich 90, 108; 754 NW2d 259 
(2008). 
11 Detroit Base Coalition for Human Rights of the Handicapped v Dep’t of Social Servs, 
431 Mich 172, 185; 428 NW2d 335 (1988), citing Gen Motors Corp v Bureau of Safety & 
Regulation, 133 Mich App 284; 349 NW2d 157 (1984). 
12 MCL 462.25; see also Mich Consol Gas Co v Pub Serv Comm, 389 Mich 624, 635-
636; 209 NW2d 210 (1973). 
13 Const 1963, art 6, § 28.  
14 MCL 462.26(8). 
 
 
 
10
unnecessary and costly duplication of facilities and to provide objective standards for 
extension of electric service . . . .”15 
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 located. 
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 
                                              
15 In re Regulations Governing Service Supplied by Electric Utilities, order of the Public 
Service Commission, entered July 13, 1982 (Case No. U-6400), p 10. 
16 In re Complaint of Indiana Mich Power Co Against Midwest Energy Co, order of the 
Public Service Commission, entered June 7, 2005 (Case No. U-14193), p 19. 
17 Mich Admin Code, R 460.3411(11). 
18 Mich Admin Code, R 460.3411(1)(a). 
19 Mich Admin Code, R 460.3102(f). 
 
 
 
11
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 to serve the entire electric load of that customer.”  
However, Rule 411(11) explicitly ties the right of entitlement to the premises, not to the 
customer.  Notably, nothing in Rule 411 or elsewhere in the PSC rules indicates that this 
                                              
20 The dissent’s citation of Rule 411(14) does not aid its argument.  First, the purpose 
behind Rule 411(11) does not “influence [our] interpretation” of the rule.  Post at 11 n 2.  
We simply observe that our interpretation of the rule’s language is also consistent with 
that purpose.  Rule 411(14) does nothing to undercut our interpretation.   
Second, Rule 411(14) is an irrelevant distraction from the issue presented in this 
case.  Both this opinion and the dissent decide this case on the basis of our interpretation 
of the language in Rule 411(11).  The dissent does not even attempt to argue that Rule 
411(14) provides any additional support for its interpretation.   
 
 
 
12
right of first entitlement terminates if the initial customer, the initial “buildings and 
facilities served,” changes.21 
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 
                                              
21 Thus, the dissent’s statement that “if there are no buildings or facilities being served, 
there is no ‘customer,’” post at 8, is correct, but irrelevant.   
22 Our disagreement with the dissent appears when the scope of this right is fully defined.  
The dissent does not view the parameters of the right of first entitlement in Rule 411(11) 
as firmly established when the utility first serves a customer.  Instead, it is an undefined 
right that a property owner is free to vitiate at any time by tearing down all of the 
“customers” on the property.  Similarly, a later-constructed road dividing the property in 
two would create a new “premises,” hence a new “customer,” if there were no buildings 
being served on the newly defined “premises.”  This approach leaves the utility’s right of 
first entitlement undefined, wholly outside the control of the utility and the PSC, and 
subject to unilateral abrogation by property owners.  This result would be contrary to the 
purpose of keeping “[t]he electric transmission and distribution businesses . . . under a 
regulated monopoly utility structure.”  See Public Service Commission, The Commission 
had its historic beginnings over 130 years ago  (accessed May 9, 2011) (describing the history of the 
PSC). 
23 Mich Admin Code, R 460.3411(2). 
 
 
 
13
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 electric service.  Plaintiff put that limitation directly at issue by 
seeking a declaratory ruling that it is free to contract for electric service with any 
electricity provider.  Assuming arguendo that MCL 124.3 does not restrict TCLP from 
contracting with plaintiff to provide electric service, Rule 411(11) restricts plaintiff from 
seeking that service from any entity other than Cherryland.  Plaintiff may not circumvent 
the limitation of Rule 411(11) by attempting to receive service from a municipal 
                                              
24 We note that a utility may waive this right “if another utility is willing and able to 
provide the required service and if the [PSC] is notified and has no objections.”  Mich 
Admin Code, R 460.3411(12). 
 
 
 
14
corporation not subject to PSC regulation.  Thus, MCL 124.3 has no application to the 
instant dispute. 
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 MCL 
460.6(1).  MCL 460.6(1) vests the PSC with the power and jurisdiction, among other 
things, 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 “[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 
                                              
25 Detroit Edison Co v Pub Serv Comm, 155 Mich App 461; 400 NW2d 644 (1986). 
26 Id. at 469. 
27 Significantly, the Legislature has made interest awards mandatory under other 
circumstances involving the PSC.  See, e.g., MCL 460.6j(16) (stating that if the PSC 
 
 
 
 
15
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 
because evidence on the 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 
                                              
orders “refunds or credits” to customers in orders involving “a power supply cost 
reconciliation,” the refunds, credits, or additional charges “shall include interest”) 
(emphasis added). 
28 Detroit Edison, 155 Mich App at 470-471 (“[T]here is no reason why the interest 
element of the guarantee needs or ought to be determined by the circuit court as part of its 
equitable powers.  The circuit court’s equitable powers arise from situations where there 
is probable cause to believe that a party is threatened with irreparable injury. . . .  The 
method of establishing an interest rate simply does not present a situation of a 
comparable nature. Moreover, this complex subject is one in which the Commission has 
superior expertise.”). 
29 Associated Truck Lines, Inc v Pub Serv Comm, 377 Mich 259, 279; 140 NW2d 515 
(1966). 
 
 
 
16
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” 
MCL 460.558 states: 
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 state 
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 MCL 460.558 does not apply solely in cases 
of “wilful or knowing failure to comply with a lawful PSC order; it also applies in the 
event of negligent noncompliance.”31  We disagree.  Under the Court of Appeals’ 
construction, MCL 460.558 would require that a fine be imposed any time a utility or its 
agent fails to comply with a PSC order.  If that construction were what the Legislature 
intended in enacting MCL 460.558, there would have been no need to include the 
                                              
30 Emphasis added. 
31 Great Wolf Lodge, 285 Mich App at 47. 
 
 
 
17
modifiers “wilfully or knowingly.”  Rather, the Legislature could simply have mandated 
a fine in cases in which a party “fails or neglects” to obey a PSC order. 
“Wilfully” and “knowingly” are adverbs, which generally modify verbs.  The most 
natural reading of MCL 460.558 is that these terms are intended to modify both verbs 
immediately following them and separated by the disjunctive “or.”32 
The record here indicates that the PSC determined that Cherryland made a mistake 
by unilaterally imposing the LCI rate.  The PSC concluded that Cherryland should 
instead have sought clarification of its July 2004 order.  It was not unlawful or 
unreasonable to conclude that Cherryland did not willfully or knowingly fail or willfully 
or knowingly neglect to obey or comply with the PSC’s July 2004 order.  Hence, MCL 
460.558 did not require the PSC to impose a fine on Cherryland.  
CONCLUSION 
We hold that a utility’s right of first entitlement under Mich Admin Code, R 
460.3411(11) entails the right to serve the entire premises.  That right is not extinguished 
when there is a new customer, i.e., new “buildings and facilities served,” on the premises.  
We also hold that, absent a statutory mandate to do so, the PSC need not impose interest 
when it awards a refund to a party.  Finally, we hold that the PSC is required to impose a 
fine pursuant to MCL 460.558 only when a utility willfully or knowingly neglects to 
                                              
32 See generally Porto Rico Railway, Light & Power Co v Mor, 253 US 345, 348; 40 S Ct 
516; 64 L Ed 944 (1920) (“When several words are followed by a clause which is 
applicable as much to the first and other words as to the last, the natural construction of 
the language demands that the clause be read as applicable to all.”). 
 
 
 
18
comply with its order.  Therefore, we reverse the judgment of the Court of Appeals and 
reinstate the decision of the PSC. 
 
 
Marilyn Kelly 
 
Robert P. Young, Jr. 
 
Michael F. Cavanagh 
 
Mary Beth Kelly 
S T A T E  O F  M I C H I G A N 
 
SUPREME COURT 
 
 
GREAT WOLF LODGE OF TRAVERSE 
CITY, LLC, 
 
 
Plaintiff-Appellee, 
 
 
v 
Nos. 139541 and 
        139542 
 
PUBLIC SERVICE 
COMMISSION, 
 
 
 
Defendant-Appellant, 
 
and 
 
CHERRYLAND ELECTRIC 
COOPERATIVE, 
 
 
Defendant-Appellee. 
 
 
 
 
GREAT WOLF LODGE OF TRAVERSE 
CITY, LLC, 
 
 
Plaintiff-Appellee, 
 
 
v      
                 Nos. 139544 and 
                           139545 
 
PUBLIC SERVICE COMMISSION, 
 
 
 
Defendant-Appellee, 
 
and 
 
CHERRYLAND ELECTRIC 
COOPERATIVE, 
 
 
Defendant-Appellant. 
 
 
 
 
2
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 Mich Admin Code, R 
460.3411 (Rule 411), once all the buildings on the subject property had been demolished, 
Cherryland no longer had any “customer” on the property, and, thus, its “entitle[ment] to 
serve the entire electric load on the premises of that customer” was extinguished.  
Accordingly, I 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 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 
MCL 462.26(8) provides, “In all appeals under this section the burden of proof 
shall be upon the appellant to show by clear and satisfactory evidence that the order of 
the commission complained of is unlawful or unreasonable.”  To declare a PSC order 
unlawful, “‘there must be a showing that the commission failed to follow some 
mandatory provision of the statute or was guilty of an abuse of discretion in the exercise 
of its judgment.’”  In re MCI Telecom Complaint, 460 Mich 396, 427; 596 NW2d 164 
 
 
 
3
(1999), quoting Giaras v Mich Pub Serv Comm, 301 Mich 262, 269; 3 NW2d 268 (1942).  
“The hurdle of unreasonableness is equally high.  Within the confines of its jurisdiction, 
there is a broad range or ‘zone’ of reasonableness within which the [PSC] may operate.”  
In re MCI Telecom Complaint, 460 Mich at 427, citing Mich Bell Tel Co v Pub Serv 
Comm, 332 Mich 7, 26-27; 50 NW2d 826 (1952).  In addition,  
[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; 260 
NW 165 (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; 754 NW2d 259 (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; 428 NW2d 335 (1988). 
II.  ANALYSIS 
A.  RIGHT TO SERVE 
Rule 411(2) states that “[e]xisting customers shall not transfer from one utility to 
another.”  Mich Admin Code, R 460.3411(2).  Rule 411(11) provides that the “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.”  Mich Admin Code, R 460.3411(11).  Rule 411(1)(a) defines 
“customer” as “the buildings and facilities served rather than the individual, association, 
 
 
 
4
partnership, or corporation served.”  Mich Admin Code, R 460.3411(1)(a).  And Mich 
Admin Code, R 460.3102(j) defines “premises” as “an undivided piece of land that is not 
separated by public roads, streets, or alleys.” 
In In re Complaint of Consumers Energy Co, 255 Mich App 496; 660 NW2d 785 
(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 respect 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 
 
 
 
5
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.  
Mich Admin Code, R 460.3411(1)(a).  Instead, the “customer” consists of the “buildings 
and facilities served.”  Id.  Therefore, when all the buildings on a piece of property have 
been demolished, the utility no longer has an “existing customer” on the property to 
serve.  That is, although a change in ownership does not by itself enable the new owner to 
transfer to another utility, the destruction of all the buildings on a piece of property does 
enable the new owner to do so, because that destruction is the equivalent of the 
destruction of all the “existing customers.”  And there are no rules or statutes that require 
a new “customer” to use the same electrical provider as the former “customer”; instead, 
the regulatory scheme provides merely that the same “customer,” as defined by the 
“buildings and facilities served,” must use the same electrical provider.  Therefore, I 
believe the PSC correctly ruled in Consumers Energy that Consumers was not entitled to 
serve Meijer’s new store and gas station, and that the Court of Appeals erred by reversing 
that decision. 
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 
 
 
 
6
customer.”  Great Wolf Lodge of Traverse City, LLC v Pub Serv Comm, 285 Mich App 
26, 38; 775 NW2d 597 (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 period 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] 
                                              
1 Because the Court of Appeals could not determine from the record whether the 
discontinuation of service was directly related to the change in ownership, it remanded 
this case to the PSC “for full factual development, findings, and conclusions in this 
regard.”  Great Wolf Lodge, 285 Mich App at 41.  It also  
vacate[d] the [PSC’s] holding, and the circuit court’s affirmance, that 
Cherryland is entitled to continue serving Great Wolf [Lodge]; clarif[ied] 
that for purposes of Rule 411, “customer” means buildings and facilities, 
not the land on which they once stood; [and] declare[d] that a significant 
interruption of service to buildings or facilities can extinguish the existence 
of an existing customer in some situations[.]  [Id.] 
 
 
 
7
The problem, of course, is that this distinction is nowhere to be found or implied in Rule 
411.  In my judgment, the Court of Appeals here was attempting to effect a compromise 
between the actual language of Rule 411 and Consumers Energy.  The Court of Appeals 
apparently recognized that Rule 411 defines “customer” 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 customer 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.   
 
 
 
8
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 not entitled to serve Great Wolf Lodge’s newly constructed water-park resort.  Rule 
411(2) provides, “Existing customers shall not transfer from one utility to another.”  
Mich Admin Code, R 460.3411(2).  Because Rule 411(1)(a) defines “customer” to mean 
“the buildings . . . served,” Mich Admin Code, R 460.3411(1)(a), it communicates by 
extrapolation that “[e]xisting [buildings served] shall not transfer from one utility to 
another.”  In this case, once all the buildings had been demolished, Cherryland no longer 
had any “existing customer” on the property that was prohibited from transferring from 
one utility to another.   
 
 
 
9
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 . . . .”  Mich Admin Code, R 460.3411(11).  Because Mich Admin Code, R 
460.3411(1)(a) defines “customer” to mean “the buildings . . . served,” and Mich Admin 
Code, R 460.3102(j) defines “premises” to mean “an undivided piece of land that is not 
separated by public roads, streets, or alleys,” Rule 411(11) by extrapolation 
communicates, “The first utility serving a [building] pursuant to these rules is entitled to 
serve the entire electric load on the [undivided piece of land] of that [building] . . . .”  In 
this case, once all the buildings on the property had been demolished, there was no 
“utility serving a building,” and, therefore, no utility, including Cherryland, was “entitled 
to serve the entire electric load on the undivided piece of land of that [nonexisting] 
building.”  And the new “customer,” i.e., Great Wolf Lodge’s newly constructed water-
park resort, was not obligated under any provision of law to obtain its electric service 
from the previous customer’s electric service provider. 
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 ‘customer[.]’”  
Ante at 13.  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,” Mich 
 
 
 
10
Admin Code, R 460.3411(1)(a), if there are no buildings on the property, there are no 
“customers” on the property.  And if there are no “customers” on the property, there is no 
longer any “first [or second or third] utility serving a customer [that] is entitled to serve 
the entire electric load on the premises of that customer . . . .”  Mich Admin Code, R 
460.3411(11).  That is, the majority overlooks what I view as the dispositive difference 
between a “customer” changing and a “customer” being eliminated.     
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.”  
Mich Admin Code, R 460.3411(11).  The fact that there is now a new “customer,” i.e., 
building, on the property does not change this result because there are no rules or statutes 
that require a new “customer” to be served by the same electric utility that served the 
previous “customer” on the same piece of property.2 
                                              
2 The majority suggests that this interpretation is inconsistent with the rule’s “purpose of 
avoiding unnecessary duplication of electrical facilities” because when a piece of 
property is subdivided, new “customers” that would be free to contract with different 
utility companies would be created.  Ante at 11-12 & n 22.  However, the majority fails to 
apprehend the significance of Rule 411(14).  This rule provides, “Regardless of other 
provisions of this rule, . . . a utility shall not extend service to a new customer in a 
manner that will duplicate the existing electric distribution facilities of another utility, 
 
 
 
 
11
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 that 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. 
                                              
except where both utilities are within 300 feet of the prospective customer.”  Mich 
Admin Code, R 460.3411(4).  Therefore, the majority’s concerns about the duplication of 
electrical facilities when property is subdivided need not influence its interpretation of 
Rule 411(11).  Contrary to the majority’s contention, Rule 411(14) is not an “irrelevant 
distraction.”  Ante at 11 n 20.  Indeed, given that the majority believes that it is important 
enough to point out that its interpretation of Rule 411(11) is “consistent with the rule’s 
purpose of avoiding unnecessary duplication of electrical facilities,” ante at 11, I believe 
that it is equally relevant to point out that, regardless of Rule 411(11), Rule 411(14) 
clearly serves the same purpose. 
 
 
 
12
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 constitute 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 Cherryland 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.        
However, there is no dispute that Cherryland is currently rendering electric service 
to Great Wolf Lodge.  Great Wolf Lodge has consistently argued that this should not 
prevent it from transferring to another utility because the only reason Cherryland is 
serving Great Wolf Lodge is that Cherryland refused to remove its service drop so that 
the buildings could be demolished and the water-park resort could be built.  Great Wolf 
Lodge raised this issue before the PSC, the trial court, the Court of Appeals, and this 
Court.  The PSC summarized Great Wolf Lodge’s argument as follows: Great Wolf 
Lodge “had a choice of electric service providers in 2001” and “because that choice was 
thwarted by Cherryland’s refusal to remove the service drop, the [PSC] should now 
declare that [Great Wolf Lodge] has full choice in transmission and distribution 
 
 
 
13
services.”  The PSC rejected this argument, stating that Great Wolf Lodge “has not cited 
any legal authority as a basis for the [PSC] to grant the relief sought under the 
circumstances of this case.”  However, neither the trial court nor the Court of Appeals 
addressed this issue.  Therefore, I would remand this case to the trial court for it to be 
addressed.3  
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; 400 NW2d 644 (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 MCL 462.26(8). 
                                              
3 To the extent that Great Wolf Lodge argues that it should be allowed to obtain service 
from Traverse City Light & Power (TCLP), a municipal corporation not subject to PSC 
regulation, MCL 124.3(2) is applicable.  MCL 124.3(2) provides, “A municipal 
corporation shall not render electric delivery service for heat, power, or light to customers 
outside its corporate limits already receiving the service from another utility unless the 
serving utility consents in writing.”  MCL 460.10y(2), like Rule 411(1)(a), defines 
“customer” as “the building or facilities served . . . .”  In this case, once all the buildings 
on the property had been demolished, there were no “customers . . . already receiving 
[electric] service from another utility,” and, thus, at that point, MCL 124.3(2) would not 
have prevented Great Wolf Lodge from obtaining service from TCLP.  However, whether 
the fact that the water-park resort is now receiving electric service from Cherryland 
prevents the resort from obtaining service from TCLP instead is a question that the trial 
court should address on remand. 
 
 
 
14
C.  FINE 
I also agree with the majority that the PSC was not required to impose a fine on 
Cherryland.  MCL 460.558 provides that “[a]ny corporation . . . [that] wilfully or 
knowingly fails or neglects to obey or comply with [a 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.”  Contrary to the Court of Appeals’ 
conclusion, this language does not encompass mere negligent non-compliance; 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.”  MCL 
460.558.   
In the instant case, the PSC determined that Cherryland’s understanding of the 
PSC’s July 22, 2004, order was not unreasonable, and, therefore, Cherryland did not 
“wilfully or knowingly” fail or neglect to obey or comply with this order.  In its July 22, 
2004, order, the PSC ordered Cherryland to charge Great Wolf Lodge the large resort 
service (LRS) rate.  Four months later, Cherryland began to charge Great Wolf Lodge the 
higher large commercial and industrial (LCI) rate.  According to Cherryland, it did this 
because Great Wolf Lodge was not satisfying the 1,500-kilowatt minimum monthly load 
requirement that must be met for the LRS rate to be charged.  The PSC explained that 
when it ordered Cherryland to charge the LRS rate, it assumed that Great Wolf Lodge 
was in compliance, and would remain in compliance, with the terms and conditions of the 
LRS rate, and therefore it did not address what Cherryland should do if Great Wolf 
 
 
 
15
Lodge failed to comply with the load requirement for the LRS rate.  The PSC concluded 
that, although “Cherryland should have sought clarification of the July 22 order,” 
“Cherryland’s interpretation of the July 22 order was not so clearly unreasonable as to 
justify the imposition of a fine . . . .”  In other words, because Cherryland reasonably 
believed that the PSC’s July 22, 2004, order did not preclude it from charging Great Wolf 
Lodge the LCI rate if Great Wolf Lodge was not complying with the load requirement for 
the LRS rate, it did not “wilfully or knowingly fail[] or neglect[] to obey or comply with 
such order.”  See MCL 460.558.  Accordingly, Great Wolf Lodge has not satisfied its 
burden of showing by clear and satisfactory evidence that the PSC’s decision to not 
impose a fine was unlawful or unreasonable.  MCL 462.26(8). 
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[] to 
obey or comply with [the PSC’s July 22, 2004] order,” MCL 460.558, the PSC was not 
required to impose a fine on Cherryland.  Accordingly, I 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 trial court for it to address Great 
Wolf Lodge’s argument that it should not now be considered a Cherryland “customer,” 
 
 
 
 
16
even though Cherryland is currently serving Great Wolf Lodge, because Cherryland had 
coerced Great Wolf Lodge into becoming its “customer.” 
 
 
Stephen J. Markman 
 
Diane M. Hathaway 
 
Brian K. Zahra