Court Opinion

ID: 2780994
Source: CourtListenerOpinion
Date Created: 2015-02-23 08:05:27.658154+00
Date Added: 2024-06-11T12:37:20.209470
License: Public Domain

STATE OF MICHIGAN

                          COURT OF APPEALS
________________________________________

In re Application of DETROIT EDISON COMPANY
To Implement Opt Out Program.

CYNTHIA EDWARDS, LINDA KURTZ, and             UNPUBLISHED
LESLIE PANZICA-GLAPA,                         February 19, 2015

            Appellants,

v                                             No. 316728
                                              MPSC
MICHIGAN PUBLIC SERVICE COMMISSION,           LC No. 00-017053

            Appellee,

and

DETROIT EDISON COMPANY,

            Petitioner-Appellee.

In re Application of DETROIT EDISON
COMPANY to Implement Opt Out Program.
_______________________________________

DOMINIC CUSUMANO and LILLIAN
CUSUMANO,

            Appellants,

v                                             No. 316781
                                              MPSC
MICHIGAN PUBLIC SERVICE COMMISSION,           LC No. 00-017053

            Appellee,

and

                                     -1-
DETROIT EDISON COMPANY,

               Petitioner-Appellee.

Before: MURPHY, P.J., and METER and SERVITTO, JJ.

PER CURIAM.

       In these consolidated cases appellants Cynthia Edwards, Linda Kurtz, and Leslie Panzica-
Glapa, and Dominic Cusumano and Lillian Cusumano appeal an order of the Michigan Public
Service Commission (PSC) approving the application by Detroit Edison Company (DTE) to
implement a meter opt-out program. We affirm in both cases.

                                         I. Background

        Several years ago, DTE began implementing a “smart grid” system. The smart grid
utilizes improvements to technology to increase the reliability of the electric grid, reduce outage
time, and otherwise improve service. One component of a smart grid is an Advanced Metering
Infrastructure (AMI) system. An AMI system can record near-real-time power consumption data
and report that usage to the utility at frequent intervals. An AMI meter is also known as a smart
meter.

        The PSC issued an order in Case No. U-15244 approving base rate treatment for costs
related to DTE’s proposed AMI meter installation pilot program. Expenditures for the AMI
program are reviewed by the PSC on a case-by-case basis. In addition, the PSC issued an order
in Case No. U-17000 directing investor-owned utilities such as DTE to submit the following
information:

               AMI deployment plans, costs, and sources of funding; estimates of
       monetary savings and other benefits expected to be achieved by the deployment
       of AMI; scientific information concerning the safety of smart meters; an
       explanation of the type of information that will be gathered through the use of
       AMI; the steps that the utility intends to take to safeguard the privacy of the
       customer information; and whether the electric utility intends to allow customers
       to “opt out” of having a smart meter and if so, how the electric utility intends to
       recover the cost of the opt-out program.

The PSC directed the Staff to prepare a report summarizing filings from utilities and other
interested parties, as well as the literature regarding AMI, and identifying pertinent developments
regarding AMI in other jurisdictions. The PSC directed the Staff to make recommendations
regarding the further development of AMI.

       The Staff report noted facts regarding DTE’s development of an AMI program,
including: (1) DTE intended to install a total of 2.6 million AMI meters in the course of its
program; (2) the cost of the program was estimated to be $447 million, with 50% of the costs (up
to a predetermined cap) to be reimbursed by a grant from the United States Department of

                                                -2-
Energy; (3) DTE estimated savings totaling $65 million per year for gas and electric AMI
meters; (4) DTE stated that non-monetary benefits would include a greater ability to identify
problems, expedited emergency response, new rate offerings, and increased customer
satisfaction; (5) DTE referred to several studies that found that AMI meters did not pose a health
risk; (6) DTE planned to use AMI meters to gather only information related to power
consumption, and not customers’ personal information; (7) DTE planned to safeguard customer
information through data encryption and confidentiality policies; (8) DTE planned to offer an
opt-out program; and (9) DTE planned to recover the costs of the opt-out program from
customers who chose to opt-out from the AMI program.

        The Staff reviewed literature on the safety and health concerns related to AMI meters,
and concluded that the available evidence showed that the meters did not present a threat to
health or safety.

       The Staff made the following findings and recommendations regarding opt-out options:

       The Staff concludes that providing an opt-out option is the best solution for
       customers who have concerns about smart meters. The Staff recommends that
       utilities investigate a variety of opt-out options. Electromechanical meters may be
       a viable opt-out option for some customers; however, maintaining
       electromechanical test facilities, inventory, and manual meter reading could result
       in higher incremental costs. The traditional electromechanical meter is obsolete
       and currently not in production. Offering customers an electromechanical meter
       as an alternative to a smart meter is not a long-term solution.

       Other options are the installation of a smart meter that does not have
       communicating radio, relocating a smart meter on the customer’s premise, or
       hard-wiring a smart meter into the network. A smart meter without a
       communicating radio allows the utility to maintain one type of meter. However,
       manual meter reading would still be required. Customers with a non-
       communicating meter will not receive some benefits of AMI, and would not, for
       example, be able to fully participate in new rate structures.

The Staff recommended that ratemaking for an opt-out provision should be based on cost of
service principles.

       The PSC issued an order in Case No. U-17000 accepting the Staff report as a basis for
Commission action. The PSC agreed with the Staff that costs related to smart grid investments
should be reviewed in general rate case proceedings, and that electric utilities should be required
to provide an opt-out provision based on cost of service principles.

                               II. Proceedings in the Instant Case

        DTE filed an application seeking approval of its AMI opt-out program. DTE’s opt-out
program would allow individual residential customers who chose to participate in the program to
have a non-transmitting AMI meter installed at their residence instead of a transmitting AMI
meter. DTE proposed that customers who participated in the opt-out program be charged $87 for
special infrastructure charges and metering changes required at the residence and $15 per month
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for the incremental costs of manual meter reading and other services necessitated by
maintenance of a manual meter system.

       The Administrative Law Judge (ALJ) issued a Proposal for Decision (PFD) and
concluded that the PSC’s order in Case No. U-17000, which directed DTE to propose an opt-out
option based on cost of service principles, established the scope of these proceedings. The ALJ
found that scope of these proceeding was limited to establishing rates for customers who chose
to opt-out of the AMI meter program based on the costs incurred by DTE for providing non-
transmitting meters for those customers, and that other issues need not be discussed.

         The ALJ found that various arguments raised by the intervenors were not within the
scope of these proceedings. These arguments included: (1) that AMI meters and/or an opt-out
program are prohibited under federal law, such as the Americans With Disabilities Act (ADA),
42 USC 12131 et seq., or state law, such as the Michigan Consumer Protection Act, MCL
445.901 et seq.; (2) that AMI meters are not mandated by law and so DTE had no authority to
install them or collect fees for an opt-out program; (3) that DTE should be required to extend the
AMI meter program to its business customers; (4) that health and safety concerns related to AMI
meters should be examined; and, (5) that customers who opt-out of the AMI program should be
allowed to self-read meters and thereby avoid fees. The ALJ rejected the argument that
customers who opt-out of the AMI meter program should be allowed to keep their analog
(electromechanical) meters, finding that such an argument was beyond the scope of the
proceedings. Finally, the ALJ recommended that the PSC find that DTE’s proposed initial fee
and monthly fee be set at $67.20 and $9.80, respectively.

       The PSC issued an order approving DTE’s application to implement an opt-out program.
The PSC concluded that the ALJ correctly found the proceeding did not concern the AMI
program as a whole or the equipment requirements for the program. Rather, at issue was the
appropriateness of DTE’s proposed opt-out program. The PSC found that the PFD was “well-
reasoned and thorough” and adopted the ALJ’s findings and recommendations.

                                      III. Standard of Review

        The standard of review for PSC orders is narrow and well defined. Pursuant to MCL
462.25, 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. Michigan Consol
Gas Co v Public Serv Comm, 389 Mich 624, 635-636; 209 NW2d 210 (1973). A party aggrieved
by an order of the PSC has the burden of proving by clear and convincing evidence that the order
is unlawful or unreasonable. MCL 462.26(8). To establish that a PSC order is unlawful, the
appellant must show that the PSC failed to follow a mandatory statute or abused its discretion in
the exercise of its judgment. In re MCI Telecom Complaint, 460 Mich 396, 427; 596 NW2d 164
(1999). An order is unreasonable if it is not supported by the evidence. Associated Truck Lines,
Inc v Public Serv Comm, 377 Mich 259, 279; 140 NW2d 515 (1966).

       A final order of the PSC must be authorized by law and be supported by competent,
material, and substantial evidence on the whole record. Const 1963, art 6, § 28; Attorney
General v Public Serv Comm, 165 Mich App 230, 235; 418 NW2d 660 (1987). We give due
deference to the PSC’s administrative expertise, and we will not substitute our judgment for that

                                                 -4-
of the PSC. Attorney General v Public Serv Comm No 2, 237 Mich App 82, 88; 602 NW2d 225
(1999). We give respectful consideration to the PSC’s construction of a statute that the PSC is
empowered to execute, and we will not overrule that construction absent cogent reasons. If the
language of a statute is vague or obscure, the PSC’s construction serves as an aid to determining
the legislative intent, and will be given weight if it does not conflict with the language of the
statute or the purpose of the Legislature. However, the construction given to a statute by the
PSC is not binding on us. In re Complaint of Rovas Against SBC Michigan, 482 Mich 90, 103-
109; 754 NW2d 259 (2008). Whether the PSC exceeded the scope of its authority is a question
of law that we review de novo. In re Complaint of Pelland Against Ameritech Michigan, 254
Mich App 675, 682; 658 NW2d 849 (2003).

                                          IV. Analysis

                                     A. Docket No. 316728

        Appellants Edwards, Kurtz, and Panzica-Glapa argue that the PSC lacked the statutory
authority to allow DTE to mandate that those customers who choose to opt-out of the AMI
program nevertheless accept the installation of a non-transmitting AMI meter, and that the lack
of a mandate for the installation of AMI meters requires DTE to provide a non-AMI meter option
for those customers who do not want an AMI meter. We disagree.

         The PSC has only the authority granted to it by statute. The PSC has broad authority to
regulate rates for public utilities, but that authority does not include the power to make
management decisions for utilities. Consumers Power Co v Public Serv Comm, 460 Mich 148,
157-158; 596 NW2d 126 (1999) (PSC lacked authority to order utilities to transport electricity
produced and sold by other utilities to customers); Union Carbide Corp v Public Serv Comm,
431 Mich 135, 148-150; 428 NW2d 322 (1988) (PSC lacked authority to forbid the operation of
a facility).

        Appellants correctly point out that the PSC has no statutory authority to enable DTE to
require all customers to accept an AMI meter, even if some customers choose to opt-out of the
AMI program. However, no such statute exists because the decision regarding what type of
equipment to deploy can only be described as a management prerogative. DTE applied for
approval of its AMI program, but that fact does not mandate a conclusion that DTE’s decision
regarding what meters to use is not a management decision. Appellants’ suggestion that the PSC
could order DTE to allow customers who wish to do so to retain analog meters is clearly the type
of action found invalid in Union Carbide. Appellants clearly do not wish to accept AMI meters,
but they have cited no authority that supports their argument that the PSC erred in approving
DTE’s AMI program with its requirement that all customers accept AMI meters, even if those
meters are rendered incapable of transmitting. The PSC’s order is not unlawful in this regard.

        Next, appellants Edwards, Kurtz, and Panzica-Glapa argue that the PSC was required to
find that the opt-out fee was just and reasonable before it could approve the opt-out program, and
that a cost/benefit analysis was required before the PSC could find that installation of a non-
transmitting meter would address the concerns of those customers who did not want an AMI
meter of any type installed on their residences. We disagree.

                                               -5-
        Appellants’ argument that the PSC’s order was not supported by the evidence because no
evidence showed that customers who wished to opt-out of the AMI program would benefit from
receiving a non-transmitting AMI meter is simply another way of asserting that issues regarding
health concerns, etc., surrounding AMI meters should have been addressed in this case.
However, the PSC addressed those concerns in Case No. U-17000 when it adopted the Staff
report that found that the concerns were minimal and should not be an impediment to
implementation of the AMI program. Appellants’ arguments are an attempt to collaterally attack
the PSC’s decision in Case No. U-17000. Such an attack is precluded. See Kosch v Kosch, 233
Mich App 346, 353; 592 NW2d 434 (1999). The PSC’s order in Case No. U-17000 found that
the AMI program benefitted customers; therefore, no cost/benefit analysis was needed in this
proceeding. The PSC’s order is not unlawful or unreasonable.

        Finally, appellants Edwards, Kurtz, and Panzica-Glapa argue that the PSC violated the
ADA and the Persons With Disabilities Civil Rights Act (PWDCRA), MCL 37.1101 et seq., by
failing to require DTE to comply with the statutes by offering customers who wish to retain an
analog meter the opportunity to do so.1

       Appellants have indicated that they no longer wish to pursue this issue in this forum;
therefore, we decline to give it further consideration.

                                    B. Docket No. 316781

        Appellants Cusumano argue that the PSC erred in limiting the scope of this proceeding to
the establishment of the opt-out program and the fees to be charged in the program. Appellants
also note that the PSC’s order in Case No. U-17000 did not limit proceedings in the instant case
to residential customers.2 Moreover, some customers could be exempt from extra charges under
applicable state or federal law, such as the ADA. According to appellants, the PSC should have
addressed these issues in this proceeding. We disagree.

       Appellants’ position is that the scope of this proceeding should not have been limited to
the approval of DTE’s opt-out program and the rates to be charged in that program, but rather
should have addressed concerns of health, privacy, etc., raised by customers who did not wish to
receive an AMI meter of any kind. However, no language in any prior order in any PSC case
supports appellants’ position.

1
  Appellants have moved to file an amended brief; in the proposed amended brief that
accompanies the motion, appellants state that they have elected to withdraw this claim so that
they might pursue it in another forum.
2
  Appellants suggest that because the instant case was filed before the order in Case No. U-17000
was issued, that order is not controlling in the instant case. Appellants cite no authority to
support their assertion. Appellants cannot simply announce their position and then leave it to
this Court to search for authority to reject or sustain their position. Wilson v Taylor, 457 Mich
232, 243; 577 NW2d 100 (1998).

                                               -6-
        The Staff report submitted in Case No. U-17000 addressed issues such as health
concerns, and found that the available evidence supported a conclusion that AMI meters were
safe. The PSC accepted the Staff report, and thus accepted the conclusions reached therein. In
this case the ALJ used the PSC’s order in Case No. U-17000 as a guide and made evidentiary
rulings that excluded evidence that was irrelevant to the establishment of the opt-out program
and the fees to be charged therein. Those rulings were set out in the PFD. No party sought leave
to appeal3 to the PSC to challenge those rulings prior to the issuance of the PSC’s decision in this
case. Nothing in the record supports appellants’ assertion that the scope of this proceeding
should have been expanded beyond the implementation of the opt-out proceeding. Appellants
cannot collaterally attack the PSC’s order in Case No. U-17000 in the context of the instant case.
Kosch, 233 Mich App at 353.

        Appellants note that the PSC’s order in Case No. U-17000 did not limit proceedings in
the instant case to consideration of DTE’s opt-out program for residential customers. However,
the PSC stated that it was aware of no evidence that any of DTE’s commercial or industrial
customers sought an opt-out option. To the extent that appellants are arguing that the PSC
should have ordered DTE to offer an opt-out program to its commercial and industrial customers,
appellants are incorrect. The decision by DTE to limit this opt-out program to residential
customers is a management decision with which the PSC cannot interfere. Union Carbide Corp,
431 Mich at 148-150. The PSC’s order limiting the scope of this proceeding is not unlawful.

       Next, appellants Cusumano argue that the PSC erred in concluding that it could not
encroach on DTE’s management prerogatives because the PSC’s authority to investigate and
enter appropriate orders was not constrained by that doctrine under the circumstances of this
case. We disagree.

        The PSC has broad authority to regulate rates for public utilities. MCL 460.6a(1). This
authority does not include the power to make management decisions for a public utility.
Consumers Power Co, 460 Mich at 157-158; Union Carbide Corp, 431 Mich at 148-150.

         MCL 460.58 provides in pertinent part:

         Upon complaint in writing that any rate, classification, regulation or practice
         charged, made or observed by any public utility is unjust, inaccurate, or improper,
         to the prejudice of the complainant, the commission shall proceed to investigate
         the matter.

       In the past several years municipal officials and individuals have begun expressing
concern about AMI meters. In response, the PSC initiated Case No. U-17000 and directed
regulated electric utilities to submit information regarding the utility’s plans to deploy AMI
meters, etc. Case No. U-17000 was not initiated pursuant to a “complaint in writing” as alleged
by appellants. The resolutions expressing concern about AMI meters passed by various
municipalities were not filed with the PSC and thus did not constitute the type of “complaint in

3
    See 1999 AC, R 460.17337.

                                                  -7-
writing” referred to in MCL 460.58. Similarly, the comments submitted by individuals when
Case No. U-17000 was opened for comments did not constitute complaints.

        Appellants incorrectly assert that the management prerogatives doctrine did not apply in
this case because the instant case was initiated by complaint. The instant case was initiated by
DTE’s filing of an application for approval of its opt-out program pursuant to the PSC’s order in
Case No. U-17000. Therefore, the PSC could not order DTE to offer customers an analog meter
in place of a non-transmitting AMI meter. The PSC correctly acknowledged as much. The
PSC’s order is not unlawful.

       Next, appellants Cusumano argue that the PSC erred in finding that certain issues were
beyond the scope of this proceeding, because those issues were not adjudicated in any prior PSC
case. We disagree.

        Ratemaking is a legislative rather than a judicial function. For that reason, the doctrines
of res judicata and collateral estoppel do not apply in a strict sense. Nevertheless, “issues fully
decided in earlier PSC proceedings need not be ‘completely relitigated’ in later proceedings
unless the party wishing to do so establishes by new evidence or a showing of changed
circumstances that the earlier result is unreasonable.” In re Application of Consumers Energy Co
for Rate Increase, 291 Mich App 106, 122; 804 NW2d 574 (2010), quoting Pennwalt Corp v
Public Serv Comm, 166 Mich App 1, 9; 420 NW2d 156 (1988).

       The PSC adopted the Staff report in Case No. U-17000; that report examined literature
that addressed health concerns surrounding AMI meters and concluded that any such concerns
were insignificant. In the instant case appellants sought to introduce testimony regarding their
own concerns with AMI meters. However, that testimony was excluded because the ALJ
determined that it was beyond the scope of this proceeding. The PSC affirmed that finding.
Appellants have not shown that new evidence or any changed circumstances render that decision
unreasonable. In re Application of Consumers Energy Company, 291 Mich App at 122. The
PSC’s order is thus not unlawful or unreasonable.

        Finally, appellants Cusumano argue that an AMI meter, either transmitting or non-
transmitting, is in fact a surveillance device that measures not only total consumption of
electricity but also when that electricity is used, and what types of electrical devices are being
used at any given time. Appellants assert that it is virtually certain that law enforcement
agencies will access this data, and that such access would constitute an unreasonable warrantless
search under the Fourth Amendment to the United States Constitution. We disagree.

      We review for plain error an unpreserved constitutional issue. In re Application of Int’l
Transmission Co, 304 Mich App 561, 567; 847 NW2d 684 (2014).

       The Fourth Amendment to the United States Constitution reads:

       The right of the people to be secure in their persons, houses, papers, and effects,
       against unreasonable searches and seizures, shall not be violated, and no Warrants
       shall issue, but upon probable cause, supported by Oath or affirmation, and
       particularly describing the place to be searched, and the persons or things to be
       seized.
                                                -8-
        The Fourth Amendment applies only to government actions, and is not applicable to a
search performed by a private actor not acting as an agent of the government. See People v
McKendrick, 188 Mich App 128, 141; 468 NW2d 903 (1991). Appellants have not established
that the installation of either a transmitting or a non-transmitting AMI meter constitutes a search,
or that even if it did, that DTE acts as an agent of the government.

                                          V. Conclusion

      Neither appellant has raised an issue that warrants relief.        The PSC’s order is not
unlawful or unreasonable.

       Affirmed.

                                                             /s/ William B. Murphy
                                                             /s/ Patrick M. Meter
                                                             /s/ Deborah A. Servitto

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