Opinion ID: 2125013
Heading Depth: 1
Heading Rank: 6

Heading: Attorney General's Position

Text: Basically, the Attorney General, in challenging the regulatory behavior of the MPSC, believes that under the securities act the MPSC must determine (1) that the plant or project financed by a securities issuance must be reasonably required as it relates to a utility's ability to render service in a cost-effective way; (2) that the amount of funds generated by the securities issue should be the approximate amount essential for the purpose of the utility; and (3) that the purposes for which the funds are used must be lawful ÔÇö conform to applicable statutes and regulations. Thus, the Attorney General argues that: In order to determine whether a plant is `reasonably required', and the amount spent on it `essential', the commission must examine carefully the forecasted need for the plant's energy output. If forecasts show that a plant is unneeded to meet future demand, then investors will suffer because the PSC cannot lawfully permit the plant to earn a return as part of the utility's `rate base'. The alternative is to charge ratepayers for a plant they do not need. Furthermore, the Attorney General believes that this determination must be made every time authorization to issue securities is requested by a utility. For support of his position, he argues that this Court has construed the securities act as protecting not only the interest of investors from overcapitalization but also in protecting the interests of ratepayers by insuring efficient service at reasonable rates. Indiana & Michigan Power Co v PSC, 405 Mich 400, 410; 275 NW2d 450 (1979); Michigan Gas Storage v PSC, 405 Mich 376, 390; 275 NW2d 457 (1979). Moreover, he contends that other jurisdictions with similar acts have required proof of reasonableness, essentialness and lawfulness through load forecasting and cost-benefit analyses. E.g., People v Willcox, 207 NY 86; 100 NE 705, 706-707 (1912). Under his analysis, the commission has violated its statutory mandate to make such determinations because it has ignored the forecasting evidence presented by intervenors in several securities cases. The reason that the MPSC has failed to consider such evidence is that it has consistently interpreted the act too narrowly when compared to its apparent legislative purpose. In short, the Attorney General believes that the MPSC has routinely approved the reasonableness of Consumers' expenditures in constructing the Midland plant during its various phases.