<PAGE>
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FORM 8-K
CURRENT REPORT
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 29, 1999
Commission Registrant; State of Incorporation; IRS Employer
File Number Address; and Telephone Number Identification
No
1-9513 CMS ENERGY CORPORATION 38-2726431
(A Michigan Corporation)
Fairlane Plaza South, Suite 1100
330 Town Center Drive
Dearborn, Michigan 48126
(313) 436-9261
1-5611 CONSUMERS ENERGY COMPANY 38-0442310
(A Michigan Corporation)
212 West Michigan Avenue
Jackson, Michigan
(517) 788-1030
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ITEM 5. OTHER EVENTS.
The Michigan Supreme Court decided on June 29, 1999 in favor
of Consumers Energy Company in a 1995 case involving the authority of the
Michigan Public Service Commission (MPSC) to mandate an experimental
electric retail wheeling program in Michigan. In its decision, the Court
ruled that the MPSC does not have the authority to mandate electric retail
wheeling, but recognized the MPSC's authority to set rates for
transmitting power from a competitor to its customers if the utility
chooses to offer such service. The Court's majority opinion noted "[The
MPSC] can encourage a specific management decision through the exercise of
its ratemaking power, but it may not directly order the utility to make
the decision."
Since Consumers Energy has chosen to accept the MPSC's 1998
and 1999 orders on electric industry restructuring, which establish a
retail open access program distinct from the experimental retail wheeling
program, the Company intends to implement retail competition beginning in
September of this year and phase it in over the next three years. The
MPSC's orders on restructuring also permit Consumers Energy full recovery
of stranded cost through a transmission surcharge. These orders have been
described in various CMS Energy and Consumers Energy filings with the
Securities and Exchange Commission.
In response to the Supreme Court's June 29 decision,
the MPSC on June 30 issued a scheduling order relating to its prior
restructuring orders and requesting comments from any interested party
concerning the effect of the Supreme Court's decision on these matters. The
order requires that briefs be filed by July 28 and reply briefs be filed by
August 11, 1999.
Copies of a CMS Energy Corporation press release and the
Michigan Supreme Court's opinion are filed as exhibits to this current
report.
ITEM 7. EXHIBITS.
99(a) - CMS Energy Corporation Press Release dated June 30,
1999.
99(b) - Michigan Supreme Court Opinion dated June 29, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CMS ENERGY CORPORATION
Dated: June 30, 1999 By: /s/ William T. McCormick, Jr.
------------------------------
William T. McCormick, Jr.
Chairman of the Board and
Chief Executive Officer
CONSUMERS ENERGY COMPANY
Dated: June 30, 1999 By: /s/ William T. McCormick, Jr.
------------------------------
William T. McCormick, Jr.
Chairman of the Board
EXHIBIT INDEX
Exhibit No. Description
99(a) - CMS Energy Corporation Press Release dated June 30, 1999.
99(b) - Michigan Supreme Court Opinion dated June 29, 1999.
<PAGE>
[CMS ENERGY CORPORATION Logo]
DEARBORN, Mich., June 30, 1999 -- CMS Energy Corporation (NYSE:CMS)
announced today that the Michigan Supreme Court decided yesterday in favor
of its Consumers Energy utility unit in a 1995 case involving the
authority of the Michigan Public Service Commission (MPSC) to mandate
electric retail wheeling in Michigan.
In its decision, the Court ruled that the MPSC does not have the
authority to mandate electric retail wheeling, but does have the authority
to set rates for transmitting power from a competitor to its customers if
the utility chooses to offer such service. In speaking for the Court,
Justice Maura Corrigan wrote, "The MPSC can encourage a specific
management decision through the exercise of its ratemaking power, but it
may not directly order the utility to make that decision."
Since Consumers Energy has chosen to accept the MPSC's 1998 and
1999 Orders on Restructuring, the Company intends to implement the retail
competition beginning in September of this year and phase it in over the
next three years.
The MPSC's Orders on restructuring also permit Consumers Energy
full recovery of stranded cost through a transmission surcharge.
CMS Energy Corporation has annual sales of about $6 billion and
assets of about $14 billion throughout the U.S. and in 22 countries around
the world with businesses in electric and natural gas utility operations;
independent power production; natural gas pipelines and storage; oil and
gas exploration and production; and energy marketing, services and
trading. CMS Energy Corporation's principal subsidiary is Consumers
Energy, Michigan's largest utility and America's fourth largest
combination gas and electric utility.
# # #
For more information on CMS Energy, please visit our website at
www.cmsenergy.com
<PAGE>
_____________________________________________________
Docket Nos. 111482, 111483, 111486, 111487, 111719-111726. Argued March
11, 1999 (Calendar No. 11). Decided June 29, 1999
BEFORE THE ENTIRE BENCH
CORRIGAN, J.
We granted leave in these cases to determine whether defendant
Michigan Public Service Commission (PSC) exceeded its statutory authority
in ordering the Detroit Edison Company and Consumers Power Company to
engage in retail wheeling. We hold that the PSC lacks the authority to
order retail wheeling. Therefore, we reverse the Court of Appeals and
vacate the PSC order implementing the experimental retail wheeling
program.
I. Factual. Background and Procedural Posture
In 1992, the Association of Businesses Advocating Tariff
Equity (ABATE) petitioned the PSC for an experimental retail wheeling
program involving industrial customers. Under retail wheeling, the
customer, or "end-user", contracts for electricity with a supplier other
than the utility that owns the power lines in the geographic area in which
the customer is located. The other supplier, or "third-party provider,"
uses the local utility's system to transrnit the electricity to the end-
user. The local utility is cornpensated for the use of its systern.
Retail wheeling effectively "unbundles" a local utility's
production and distribution services. Traditionally, a local utility
provided a "bundled" product; it generated the electricity and transmitted
it to end-users connected to its systern of power lines. The industry has,
however, undergone changes in recent years. Local utilities have
interconnected with one another to forrn a nationwide grid. Thus, a
utility can transmit electricity to an end-user who is not directly
connected to its systern. When a third-party provider supplies electricity
to these end-users, the intermediate utilities are said to "wheel"
electricity across their systems. A retail wheeling program requires local
utilities to provide these transmission services.
Acting on ABATE's petition, a referee presided over a
contested case hearing and issued a proposal for decision. The referee
concluded that the PSC was not preempted by federal law from authorizing
retai1 wheeling and that retail wheeling did not unconstitutionally impair
contractual obligations. The referee further determined that, while a
third-party provider need not obtain a municipal franchise under Const
1963, art 7, section 29, it must acquire a certificate of public
convenience and necessity from the PSC under MCL 460.501 et seq.; MSA
22.141 et seq.
The referee recommended that the PSC allow retail wheeling
only if the end-user's local utility agreed to provide the service. After
examining the statutory framework, the referee concluded that the PSC
cannot compel a utility to provide retail wheeling services, but may
establish tariffs setting the price, terms, and conditions of a
voluntarily provided service. The referee proposed that the PSC negotiate
and authorize voluntary retail wheeling programs for Consumers Power and
Detroit Edison.
The PSC rejected the referee's proposed decision, concluding
that it may implement a retail wheeling program under the electric
transmission act, 1909 PA 106 (Act 106), 1 the public service commission
act, 1939 PA 3 (Act 3), 2 and the railroad commission act, 1909 PA 300
(Act 300). 3 It reasoned that the program would not intrude on a
utility's authority to manage its production and procurement operations.
The PSC also rejected the utilities' assertion that federal law preempts
states from implementing retail wheeling. It held, however, that
third-party providers must obtain a franchise from the municipality in
which an end-user is located, as well as a certificate of public
convenience and necessity to supply the electricity. The PSC then remanded
the case to the referee to determine rates and charges for retail delivery
____________________
1 MSA 460.551 et seq.; MSA 22.151 et seq.
2 MCL 460.1 et seq.; MSA 22.13(1) et seq.
3 MCL 462..2 et seq.; MSA 22.21 et seq.
<PAGE>
services.
The PSC established the rates and charges for retail
delivery services in its decision after remand. After the PSC modified its
order on rehearing, Detroit Edison, Consumers Power, and ABATE appealed.
The Attorney General cross appealed.
The Court of Appeals affirmed the PSC order in all respects.
4 It determined that the PSC has statutory authority to implement an
experimental retail wheeling program, reasoning as follows:
While the PSC has only those powers conferred on it by the
Legislature, [Union Carbide Corp v Public Service Comm, 431
Mich 135, 146; 428 NW2d 322 (1988)], the interpretation
given to statutes by the agency charged with applying them
is entitled to great deference. In re Quality of Service
Standards for Regulated Telecommunication Services, 204 Mich
App 607, 612; 516 NW2d 142 (1994) . The PSC did not cite
specific sections of Act 106, Act 3, or Act 300 when
concluding that those statutes authorize it to implement an
experimental retail wheeling program; however, an
examination of various provisions of those statutes
demonstrates that they support the PSC's decision. Section 2
of Act 106, MCL 460.552; MSA 22.152, gives the PSC "control
and supervision of the business of transmitting and
supplying electricity..." Supplying electricity must be
deemed to include the act of delivering electricity to a
customer. Section 6 of Act 106, MCL 460.556; MSA 22.156,
allows the PSC to order service to be rendered in any case
in which such an order is reasonable. Section 6 of Act 3,
MCL 460.6; MSA 22.13(6), authorizes the PSC to regulate
services and conditions of service. While this section does
not contain a grant of specific powers, it construes the
extent of the PSC's jurisdiction and grants the PSC broad
authority. Attorney General v Public Service Comm, 122 Mich
App 777, 786-787; 333
__________________________________
4 227 Mich App 442; 575 NW2d 808 (1998).
<PAGE>
NW2d 131 (1983) . Under Act 300, the PSC possesses the
same authority over utilities as did the Railroad
Commission over railroads. Union Carbide, supra at 156.
Section 22 of Act 300, MCL 462.22; MSA 22.41, authorizes
the PSC to investigate and order adequate service to be
rendered. [227 Mich App 451-452.]
The Court further determined that the PSC order does not infringe the
utilities' right to control their management activities. The Court
reasoned that utilities are not required to construct new facilities,
compelled to engage in a specific management practice, or required to
enter into any particular contract. Thus, the Court concluded, the PSC
order is lawful and reasonable because it does not dictate the substance
of management decisions. The Court of Appeals rejected the parties' other
challenges to the PSC order.
This Court granted plaintiffs Consumers Power Company,
Detroit Edison Company, and the Attorney General their respective
applications for leave to appeal, limited to whether the PSC exceeded its
authority in ordering the electric utilities to transmit electricity
produced and sold by other suppliers to customers in the service area of
the utility. 5
II. Discussion
The Public Service Commission has no common-law powers. It
possesses only that authority granted by the Legislature. Union Carbide,
supra at 146. Moreover, this Court strictly construes the statutes which
confer power on the PSC. As this court explained in Union Carbide
___________________________________
5 459 Mich 878 (1998) .
<PAGE>
supra at 151, quoting Mason Co Civic Research Council v Mason Co, 343 Mich
313, 326-327; 72 NW2d 292 (1955) :
"The power and authority to be exercised by
boards or commissions must be conferred by clear
and unmistakable language, since a doubtful
power does not exist."
In construing the statutes empowering the PSC, this Court
does not weigh the economic and public policy factors that underlie the
action taken by the PSC. Retail wheeling implicates many policy concerns,
from the most basic questions whether a consumer should be able to choose
an electricity supplier and what market structure will ensure adequate
power supply to consideration of arguable secondary effects on the
environment and shareholders. See, generally, Vander Veen, Michigan is now
entering a new electrical energy field: Competition, 78 Mich B J 164
(1999) . The Legislature, not this Court, is the body that must consider
these questions and weigh the economic and social costs and benefits of
restructuring. As this Court observed in Huron Portland Cement Co v Public
Service Comm, 351 Mich 255, 262; 88 NW2d 492 (1958):
Those are matters of legislative concern. We
have had presented to us . . . an issue of law,
the statutory authority of the commission in the
light of the facts before us to order the
service, and upon that, and that only, do we
propose to pass.
In this case, the PSC relies on the electric transmission
act, 6 MSA 460.551 et seq.; MSA 22.151 et seq., the public service
commission act, MCL 460.1 et seq.; MSA 22.13(1) et seq., the railroad
commission act, 7 MCL 462.2 et seq.;MSA 22.21 et seq., and 1929 PA 69,
MCL 460.501 et seq.; MSA 22.141 et seq. We examine those statutes to
ascertain whether the PSC has the authority to order retail wheeling.
Union Carbide, supra at 146. The PSC's determination regarding the scope
of its authority is one of law, which we review de novo. 8 McAuley v
General Motors Corp, 457 Mich 513, 518; 578
_________________________________
6 The electric transmission act, 1909 PA 106 as amended by
1921 PA 274, granted the Michigan public utilities commission authority to
regulate electric utilities. The Legislature abolished the public
utilities commission in 1939 and transferred its powers to the PSC. MCL
460.4; MSA 22.13(4).
7 The PSC, as the successor to the public utilities
commission, has the "same measure of authority with reference to such
utilities as is granted and conferred with respect to railroads and
railroad companies under the various provisions of the statutes creating
the Michigan railroad commission and defining its powers and duties." MCL
460.54; MSA 22.4.
8 A11 rates, fares, charges, classifications and joint rates
fixed by the PSC and all regulations, practices and services prescribed by
the PSC are deemed prima facie lawful and reasonable. MCL 462.25; MSA
22.44. A party challenging a PSC order bears the burden of proving that it
is unlawful or unreasonable. MCL 462.26(8); MSA 22.45(8). An order is
unlawful if it is based on an erroneous interpretation of a statute. Ass.
of Businesses Advocating Tariff Equity v Public Service Comm, 219 Mich App
653, 659; 557 NW2d 918 (1996). Although this Court ordinarily accords an
agency's longstanding interpretation of a statute due deference, Ludington
Service Corp v Acting Cornm'r of Ins, 444 Mich 481, 505; 511 NW2d 661,
amended 444 Mich 1240 (1994), we grant no deference to the PSC
interpretation in this case because the plain meaning of the statutes are
controlling. Union Carbide, supra at 151. An agency interpretation cannot
overcome the
(continued...)
<PAGE>
NW2d 282 (1998).
A. Ratemaking Power
The PSC initially characterizes its retail wheeling program
as ratemaking, thus falling within its authority under Section 7 of the
electric transmission act, MCL 460.557; MSA 22.157, and Section 22 of the
railroad commission act, MCL 462.22; MSA 22.41. See also MCL 460.6a; MSA
22.13(6a) . The challenged portion of the order does not, however,
involve ratemaking. Although retail wheeling has a ratemaking component,
i.e., the establishment of the rate a third-party provider must pay to
transmit power through a local utility's system, appellants do not
challenge that aspect of the experimental program. Instead, appellants
contend that the PSC cannot order local utilities to transmit electricity
from a third-party provider's system through its own system to an end-
user. This aspect of retail wheeling is simply not ratemaking.
This Court explained in Union Carbide, supra at 148, that
the PSC's authority to regulate a utility's rates and charges does not
include the power to make management decisions. We quoted Missouri ex rel
Southwestern Bell Telephone Co v Public Service Comm, 262 US 276, 289; 43
S Ct 544; 67 L Ed 981
_________________________________
8 (...continued)
plain meaning of a statute. Ludington Service, supra at 505. Even under
the dissents view of the proper deference courts should give to an
agency's construction of the statute that grants it authority, we need not
defer to the PSC interpretation in this case because the language of the
statute is plain. As discussed below, we conclude that the plain language
of the statutes do not grant the PSC authority to order retail wheeling.
<PAGE>
(1923), to emphasize our point:
It must never be forgotten
that while the State may
regulate with a view to
enforcing reasonable rates and
charges, it is not the owner
of the property of public
utility companies and is not
clothed with the general power
of management incident to
ownership. [Union Carbide,
supra at 148-149.]
In Union Carbide, we concluded that, although the PSC could preclude a
utility from passing along increased charges incurred from its noneconomic
operation of facilities, it could not order the utility to cease those
operations. In other words, the PSC can encourage a specific management
decision through the exercise of its ratemaking power, but it may not
directly order the utility to make the decision. Similarly, in Huron
Portland Cement, supra, this Court considered whether the PSC had the
authority to order a utility to render service to an end-user in an area
it did not serve and in which it had no power lines. This Court concluded
that, absent specific statutory authority, the decision whether to provide
the service rests with the utility's's management. Id. at 268.
In this case, The PSC attempts to compel utilities to
provide a new service-the transmission of electricity from a third-party
providers system to an end-user who is not directly connected to that
system. Retail wheeling would require that utilities accept power from
suppliers chosen not by management, but by an end-user, and necessitate
the negotiation of new interconnection agreements or modification of
existing ones. Further, the utility would have to adjust its own
production and purchases of power to ensure sufficient capacity to
transmit the third-party providers electricity. Absent a statute clearly
conferring on the PSC the power to order such service, the decision to
provide the service lies within the province of the utility's management,
not the PSC. Union Carbide, supra at 151; Huron Portland Cement, supra at
261.
B.The Public Service Commission Act
The PSC next asserts that Section 6 of the public service
commission act, MCL 460.6; MSA 22.13(6), grants it broad authority over
all matters pertaining to public utilities, including the power to order
retail wheeling. In 1939, the Legislature enacted the public service
commission act to abolish the public utilities commission and transfer its
powers and duties to the newly created public service commission. Huron
Portland Cement, supra at 264-265. The provision on which the PSC relies
provides:
The public service commission is
vested with complete power and jurisdiction to
regulate all public utilities in the state
except a municipally owned utility, the owner
of a renewable resource power production
facility as provided in section 6d, and except
as otherwise restricted by law. The public
service commission is vested with the power
and jurisdiction 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. The public service
commission is further granted the power and
jurisdiction to hear and pass upon all matters
pertaining to, necessary, or incident to the
regulation of public utilities, including
electric light and power companies, whether
private, corporate, or cooperative; water,
telegraph, oil, gas, and pipeline companies;
motor carriers; and all public transportation
and communication agencies other than
railroads andrailroad companies.
This Court has consistently held, however, that the broad
language of Section 6 serves as an outline of the PSC' s
jurisdiction, not a grant of specific powers.
The broad language (of Section 6) furnishes no grant
of specific powers. It is an outline of
jurisdiction in the commission and does not purport
to be more. If, indeed, the general language
quoted had the effect of vesting particular,
specific, powers in the commission, not only would
a constitutional question be presented arising from
an asserted lack of standards . . . , but there
would have been no need whatever for the many
statutes enacted (both before and after the
effective date of PA 1939, No 3) vesting specific
powers in the commission. [Huron Portland Cement,
supra at 263. 9]
We adhered to this construction of Section 6 in Union Carbide, supra
at 147. Since the PSC has only those powers granted by
statute and Section 6 furnishes no grant of specific powers, Section 6
provides no support for the PSC's order in this case.
C. The Electric Transmission Act
The PSC argues that the electric transmission act, MCL
460.551 et seq.; MSA 22.151 et seq., grants it broad authority
to regulate all aspects of retail electric service, including
services for supplying and delivering electricity, of which
________________________
9 "The legislature cannot delegate its power to make a
law; but it can make a law to delegate a power to determine
some fact or state of things upon which the law makes, or
intends to make, its own action depend." Livonia v Dep't of
Social Services, 423 Mich 466, 502; 378 NW2d 402 (1985),
quoting Dep't of Natural Resources v Seaman, 396 Mich 299,
308; 240 NW2d 206 (1976). The statute must contain sufficient
standards so as not to "leave the people unprotected from
uncontrolled, arbitrary power in the hands of administrative
officials." Id. at 308-309.
<PAGE>
retail wheeling is allegedly one. The electric transmission
act was the Legislature's first foray into the field of
electricity generation and transmission. Sections 1 and 2 of
the act provide:
When electricity is generated or developed by
steam, water or other power, within 1 county of
this state, and transmitted and delivered to the
consumer in the same or some other county, then the
transmission and distribution of the same in or on
the public highways, streets and places, the rate
of charge to be made to the consumer for the
electricity so transmitted and distributed and the
rules and conditions of service under which said
electricity shall be transmitted and distributed
shall be subject to regulation as in this act
provided. [MCL 460.551; MSA 22. 151.]
The Michigan public utilities commission,
hereinafter referred to as "the commission" shall
have control and supervision of the business of
transmitting and supplying electricity as mentioned
in the first section of this act and no public
utility supplying electricity shall put into force
any rate or charge for the same without first
petitioning said commission for authority to
initiate or put into force such rate or charge and
securing the affirmative action of the commission
approving said rate or charge. [MCL 460.552; MSA
22.152.].
Contrary to the PSC's assertion, Sections 1 and 2 do not
grant
it authority to compel a utility to transmit a third-party
provider's electricity through its system to an end-user. The
grant of control and supervision contained in Section 2 is qualified
by the language "as mentioned in the first section of this
act." Thus, the authority granted by Section 2 does not extend
beyond the subject matter enumerated in Section 1.
The power to regulate the "transmission and distribution"
of electricity under Section 1 is limited to that "in or on the
public highways, streets and places." It does not encompass
a utility's lines that extend over private lands. Moreover,
a requirement that a utility transmit a third-party provider's
electricity does not constitute a "condition of service" under
which the utility transmits and distributes electricity. In
discussing the distinction between rates and services in
General Telephone Co of Michigan v Public Service Comm, 341
Mich 620, 636; 67 NW2d 882 (1954), this Court approved the
following language from Elyria Telephone Co v Public Utilities
Comm of Ohio, 158 Ohio St 441, 446; 110 NE2d 59 (1953);
"There is, of course, no doubt that a utility
must render adequate service to its patrons, and
the general assembly recognizing that at time
service might be inadequate has provided a means
whereby a utility may be compelled by the
commission to improve its services and facilities.
The commission has the power to require adequate
service under sections 614-21 and 614-27, General
Code, but services and rates, although related, are
not wholly dependent on each other. As to rates
the question is whether the company is receiving a
just and reasonable return on the value of its
existing property; the question as to adequate
service is whether the company is rendering or is
capable of rendering reasonable service with its
existing property or whether by improvements,
either in the use of the property it owns or by new
installations, this can be done."
As used in Section 1, the term "service" plainly refers to the
utility's supplying its electricity to the end-user, not the
use of its lines to transmit another provider's electricity.
The word "service" has different meanings. We construe
words and phrases in statutes according to the common usage of
the language, but give technical words and phrases their
"peculiar and appropriate" meaning. MCL 8.3a; MSA 2.2(1).
Black's Law Dictionary (6th ed) defines the term "service" in
the context of public utilities as "[t]he furnishing of water,
heat, light and power, etc., services by utility." That
definition comports with those provided in lay dictionaries. 10
Of the numerous definitions included in Random House Webster's
College Dictionary, p 1225, the one relevant for our purposes
provides: "the supplying or supplier of utilities,
commodities, or other facilities that meet a public need, as
water, electricity, communication, or transportation." The
American Heritage Dictionary (3d ed), p 1649, includes among
its definitions the following: "A facility providing the
public with the use of something, such as water or
transportation." Webster's New Collegiate Dictionary (7th
ed), p 793, similarly defines the term as "a facility
supplying some public demand."
Thus, under any definition, the term "service" does not
refer to a utility' s transmission of electricity for another
_______________________________
10 This Court often consults dictionary definitions to
ascertain the generally accepted meaning of a term that is not
expressly defined by statute. Oakland Co Bd of Co Rd Comm'rs
v Michigan Property & Casualty Guaranty Assn, 456 Mich 590,
604; 575 NW2d 751 (1998). Dictionaries, however, often
contain multiple definitions and define a term using terms
that also have multiple definitions. Thus, as the dissent
aptly demonstrates, exclusive reliance on dictionary
definitions can blur, rather than clarify, the meaning of a
word. Dictionaries are, however, merely interpretative aids
used by the court. See note, Looking it up: Dictionaries and
statutory interpretation, 107 Harv L R 1437 (1994). Words are
given meaning by context or setting. Tyler v Livonia Public
Schools, 459 Mich 3S2, 391; 590 NW2d 560 (1999). In this
case, when viewed in context, the plain meaning of the term
"service" does not include a utility's transmission of
electricity for another provider.
<PAGE>
provider. To construe the phrase "conditions of service" as
encompassing a requirement that one utility transmit another
provider's electricity would require an interpretation that
stretches well beyond the plain statutory language. As we
reiterated in Union Carbide, supra at 151, however, the PSC
has only those powers conferred by clear statutory language.
The power conferred by Section 1 simply does not encompass the PSC`s
order.
We further note that only electricity generated or
developed "within 1 county of this state, and transmitted and
delivered to the consumer in the same or some other county"
falls within the scope of the electric transmission act. MCL
460.551; MSA 22.151. Retail wheeling often involves the
transmission of electricity generated within another state.
To the extent that the experimental program required utilities
to wheel power supplied by an out-of-state provider, the
program would clearly fall outside the scope of the electric
transmission act, even if the act could be construed to grant
the PSC the authority to order retail wheeling.
The PSC also relies on Sections 6 and 7 of the act, which
provide, in pertinent part:
The commission shall have power in its
discretion to order electric current for
distribution to be delivered at a suitable primary
voltage, to any city, village or township through
which a transmission line or lines may pass; to
order service to be rendered by any such electric
utility in any case in which it will be reasonable
for such service to be ordered. . . . [MCL
460.556; MSA 22.156.]
After investigation and hearing, the
commission may by order fix the price of
electricity to be charged by the electric utility
within lawful limits. . . . The commission may
establish by order rules and conditions of service
that are just and reasonable. [MCL 460.557(2) ; MSA
22.157(2).]
These provisions do not grant the PSC broad authority to
order retail wheeling. The first clause of Section 6 grants the PSC
the power to order that "electric current for distribution" be
"delivered at a suitable primary voltage" to a city, village,
or township through which its lines pass. Thus, under the
plain language of the statute, the PSC has the authority to
set the primary voltage at which a utility transmits
electricity to an end-user. Section 6 also authorizes the PSC
to order a utility to provide "service" to a city, village, or
township through which its lines pass. Huron Portland Cement,
supra at 265-266. It does not confer the power to order a
utility to transmit electricity for another provider.
Similarly, the authority to establish "rules and conditions of
service" granted in Section 7 must be read in conjunction with Section 1.
That authority clearly does not encompass the PSC's order.
Accordingly, we conclude that the electric transmission act
does not grant the PSC the authority to order retail
wheeling. 11
_________________________
11 The remaining provisions of the act do not apply. MCL
460.553; MSA 22.153 grants a utility the right to use
highways, streets, alleys, and other public places with the
consent of the local unit of government. MCL 460.554; MSA
22.154 authorizes the PSC to require that utilities submit
information and data regarding the construction of lines in or
through highways, streets, and public places. MCL 460.555;
MSA 22.155 grants the PSC the power to inspect and examine an
electrical apparatus installed in any public highway, street,
or place, as well as order improvements. Under MCL 460.558;
(continued...)
<PAGE>
D. The Railroad Commission Act
The PSC contends that it may order retail wheeling under
Section 22 of the railroad commission act, MCL 462.22; MSA 22.41
which empowers the PSC to, upon complaint, investigate and
remedy unreasonable or inadequate practices and services. MCL
460.54; MSA 22.4 grants the PSC the "same measure of
authority" with reference to utilities as the Michigan
Railroad Commission once had over railroads under the railroad
commission act. As we noted in Union Carbide, supra at 156,
however, the railroad commission did not enjoy sweeping
powers . . . ." We conclude that the PSC's commensurate
authority does not include the power to require a utility to
provide transmission services for third-party providers.
By statute, the Legislature required railroads to
transfer and deliver freight, cars, or passengers carried on
another line that are destined to a point on its line or a
connecting line. MCL 462.7(a); MSA 22.26(a). As MCL
462.7(a); MSA 22.26(a) aptly demonstrates, the Legislature has
expressly required that public service providers open their
facilities to other providers when it deems appropriate. The
Legislature recognized a similar need involving telephone
service in 1913, and granted the Railroad Commission the
_______________________
11 (...continued)
MSA 22.158, a utility and its officers and employees are
subject to fines if they violate PSC orders. The final
section of the act, MCL 460.559; MSA 22.159, governs its
scope, providing that the act does "not apply to the
transmission or use of electricity for the purpose of
conveying intelligence by telegraph, telephone or by other
methods now or hereafter adopted therefor."
<PAGE>
authority to order local providers to interconnect their lines
and perform switching service for the transmission of messages
between the lines. 1913 PA 206, repealed by 1991 PA 179. 12
Absent a comparable statutory provision, the PSC cannot
mandate that an electric utility transmit a third-party
provider's electricity to an end-user.
E. 1929 PA 69
The PSC further argues that the requirement under 1929 PA
69, MCL 460.501 et seq.; MSA 22.141 et seq., that a utility
obtain a certificate of public convenience and necessity from
the PSC before it renders service authorizes the PSC to
encourage competition in the industry. Although the PSC has
historically used its power to issue certificates to prevent,
rather than promote, competition, the PSC may allow more than
one utility to provide service in an area under the terms of
the act. Huron Portland Cement, supra at 267. The PSC's
ability to foster competition, however, does not include
retail wheeling because it lacks authority to order an
existing utility to share its capital facilities. As this
Court observed in Huron Portland Cement, quoting Barnes,
Economics of Public Utility Regulation, p 229:
"The requirement of a certificate of
convenience and necessity may enable the commission
to prevent the needless multiplication of companies
serving the same territory, and at the same time to
avoid a wasteful duplication of capital facilities,
thus keeping the investment at the lowest figure
______________________
12 In 1995, the Legislature "unbundled" local telephone
exchange services. MCL 484.2351 et seq.; MSA 22.1469 (351) et
seq.
<PAGE>
consonant with satisfactory service. By protecting
the utility from unnecessary competition, the risks
inherent in the utility investments are reduced and
the cost of capital is thereby kept as low as the
conditions of the investment market permit."
[Huron Portland Cement, supra at 267-268.]
1929 PA 69 does not grant the PSC the authority to order
retail wheeling.
III. Conclusion
We express no view regarding the public policy
implications of retail wheeling. The economic wisdom of the
program is not our concern. See Huron Portland Cement, supra
at 261. The question before us involves the PSC's statutory
authority. We conclude that the PSC lacks statutory authority
to order a utility to transmit a third-party provider's
electricity through its system to a customer. Thus, the PSC
lacked the statutory authority to implement the experimental
retail wheeling program. We therefore reverse the judgment of
the Court of Appeals and vacate the PSC order implementing the
program.
/s/
<PAGE>
_____________________________________
Docket Nos. 111482, 111483, 111486, 111487, 111719 - 111726. Argued March
11, 1999 (Calendar No. 11). Decided June 29, 1999.
BRICKLEY, J. (dissenting).
The majority misinterprets the statutory language
relevant to this case and mistakenly characterizes retail
wheeling as infringing the managerial prerogatives of the
appellant utilities. For these reasons, I respectfully
dissent.
I
At issue in this case is the Public Service Commission's
interpretation of the statutes in which the Legislature.
delegated authority to the PSC to oversee electric utilities
in Michigan. The majority "grant[s] no deference to the PSC
interpretation in this case because the plain meaning of the
statutes are controlling." Slip op at 10, n 8, citing Union
Carbide Corp. v Public Service Comm, 431 Mich 135, 151; 428
NW2d 322 (1988).
While I agree with much of what the majority holds, I
cannot agree that the relevant section of the electric
transmission act has a "plain meaning" 1 This statute can
conceivably bear the meaning imposed on it by the majority,
but the PSC's interpretation is more in accord with the
meaning of the relevant statutory language and with the
context of the statute itself. This case also demonstrates
that courts should defer to an agency's reasonable
interpretation of the statutes it is designated to enforce.
A
The majority holds that the electric transmission act,
MCL 460.551 et seq.; MSA 22.151 et .seq., does not give the PSC
the power to order retail wheeling. I would hold that the
most reasonable interpretation of Section 6 of this act gives the
PSC this power. MCL 460.556; MSA 22.156.
Section 6 provides, in relevant part, that
[t]he commission shall have power in its discretion
to order electric current for distribution to be
delivered at a suitable primary voltage, to any
_____________________________
1 Because Section 6 of the electric transmission act gives
the
PSC the power in question, I would not reach the other
statutory interpretations discussed by the majority. MCL
460.556; MSA 22.156. However, I do agree with the majority
that Section 6 of the public service commission act, MCL 460.6; MSA
22.13(6), is only "an outline of the PSC's jurisdiction, not
a grant of specific powers." Slip op at 14, citing Huron
Portland Cement Co v Public Service Comm, 351 Mich 255, 263;
88 NW2d 492 (1958). I further agree that Sections 1 and 2 of the
electric transmission act, MCL 460.551, 460.552; MSA 22.151,
22.152, are not applicable to the instant case "[t]o the
extent that the experimental program required utilities to
wheel power supplied by an out-of-state provider . . . ."
slip op at 19.
<PAGE>
city, village or township through which a
transmission line or lines may pass; to order
service to be rendered by any such electric utility
in any case in which it will be reasonable for such
service to be ordered . . . .
The language of this section bears repeating: the PSC has
"power in its discretion to order electric current for
distribution to be delivered . . . . Id. (emphasis
supplied). This first clause of Section 6 plainly contemplates the
PSC's power to order that electric current be delivered, 2 as
well as strongly implying that the production and delivery of
the electric current are two separate activities. Because the
Legislature delegated discretionary power to the PSC to order
that electric current be delivered over already existing
transmission lines, the majority errs in ignoring this grant
of authority and preventing the PSC's exercise of it.
________________
2 "Deliver" is relevantly defined as "[t]o bring or
transport to the proper place or recipient; distribute." The
American Heritage Dictionary (3d ed), p 494. Another
dictionary defines it as to carry and turn over (letters,
goods, etc.) to the intended recipient or recipients." Random
House Webster's College Dictionary, p 358.
The statute limits the scope of the PSC's power under
this section to "any city, village or township through which
a transmission line or lines may pass . . . " MCL 460.556;
MSA 22.156. Thus our decision in Huron Portland Cement Co, n
1 supra, is consistent with this statute. In that case, we
overturned a PSC order that would have compelled Consumers
Power to build new transmission lines. We noted that Section 6 did
not give the PSC this power because "Consumers' lines do not
pass through the city . . . in which Huron seeks the service
to be rendered." Id. at 266.
In stark contrast, the order at issue in the instant case
would compel the appellant utilities to deliver electric
current over their already existing transmission lines.
<PAGE>
The majority also errs in its interpretation of the
second clause of Section 6. In that clause, the Legislature
authorized the PSC to "order service to be rendered by any
such electric utility in any case in which it will be
reasonable for such service to be ordered . . . ". MCL
460.556; MSA 22.156. The majority reasons that the first two
clauses of Section 6 do "not confer the power to order a utility to
transmit electricity for another provider." Slip op at 20.
The statute does not support the majority's conclusion.
"Service," as the majority notes elsewhere in its
opinion, means "'[t]he furnishing of water, heat, light and
power, etc., services by utility.'" Slip op at 17, quoting
Black's Law Dictionary (6th ed), p 1368. The majority looks
no further into this definition, however, and concludes that
the word "service" necessarily denotes the joint production
and transmission of electric current. The definition of
"service" is not so constrained, however, as a closer look at
the majority's definition reveals.
While "service" means the "furnishing of . . . power,"
"furnish" is defined in the same dictionary as "[t]o supply,
provide, or equip, for accomplishment of a particular
purpose. Id. at 675. 3 "Supply" is defined as the act of
________________
3 Black's further definition of "furnish" is instructive
by way of analogy: "As used in the liquor laws, 'furnish'
means to provide in any way, and includes giving as well as
selling. As used in the Controlled Substances Act, means
[sic] to provide or supply and connotes a transfer of
(continued...)
<PAGE>
furnishing what is wanted, id. at 1439, and a supplier is
[a]ny person engaged in the business of making a consumer
product directly or indirectly available to consumers;
includes all persons in the chain or production and
distribution of a consumer product . . . ." Id. 4
Unlike the majority, I cannot conclude that the word
"service" can only mean the joint act of producing the
commodity in question and delivering it to the consumer.
Indeed, the common definitions of the relevant terms allow for
"service" to include separate production, separate
distribution, or both together. 5 In light of these common
________________________
3 ( . .continued)
possession." Id. In neither of these contexts is it
necessary to produce or manufacture the commodity in question
in order to "furnish" it to a third party.
4 Compare this definition of "supplier" with the
majority's quotation of one of the relevant definitions of
"service": "'the supplying or supplier of utilities,
commodities, or other facilities that meet a public need, as
water, electricity, communication, or transportation.'" Slip
op at 18, quoting Random House Webster's College Dictionary,
supra, p 1225. A utility is therefore a "supplier" of
electric service whether it produced the electric current, or
delivered it, or both.
5 The majority quotes the following relevant definitions
of "service": "the supplying or supplier of utilities,
commodities, or other facilities that meet a public need, as
water, electricity, communication, or transportation." Random
House Webster's Dictionary, p 1225; "A facility providing the
public with the use of something, such as water or
transportation." The American Heritage Dictionary (3d ed),
p 1649. Slip op at 18.
The Random House dictionary goes on to define "supply" as
"1. to furnish or provide (a person, establishment, etc.) with
what is lacking or requisite: supplying the poor with
(continued...)
<PAGE>
definitions, and the distinction made by the first clause of
Section 6, between the act of producing electric current and the act
of delivering it, there is no reason to read the PSC's
discretionary power to order "service to be rendered" as
meaning solely the power to order the combined production and
delivery of electricity.
The majority's statutory analysis ignores the first
clause of Section 6, and does not take into account the full meaning
of the word "service" in the second clause. Because the text
of these two clauses fully supports the PSC's order in this
case, I would uphold the judgment of the Court of Appeals and
the order of the PSC.
B
This case also presents an important question of this
state's jurisprudence: whether the agency or the courts
should have the authority to determine which of several
permissible interpretations should be given to an agency's
jurisdictional statute. Clearly, where the language of the
statute in question is plain, statutory construction is not
_______________
5 (.. .continued)
clothing. 2. to furnish or provide (something wanting or
requisite) : supplied needed water to the region." Random
House Webster's, supra, pp 1295, 1343. The American Heritage
dictionary defines "provide" as "1. To furnish; supply:
provide food and shelter for a family. 2. To make available;
afford: a room that provides ample sunlight through French
windows." American Heritage Dictionary, supra, p 1458. None
of these definitions carry the implication that the supplier
or provider of the commodities in question had to have
produced or manufactured them before providing or supplying
them to the recipients.
<PAGE>
permissible by any authority, and no real question
is presented. Ludington Service Corp v Acting Comm'r of Ins, 444
Mich 481, 505; 511 NW2d 661 (1994), amended 444 Mich 1240
(1994); see Chevron USA, Inc v Natural Resources Defense
Council, Inc. 467 US 837, 843, n 9; 104 S Ct 2778; 81 L Ed 2d
694 (1984). As discussed in part I(A), however, that is not
the situation presented by the instant case.
The majority's interpretation of section 6 of the electric
transmission act is not persuasive, but I do not believe that
it is impermissible under the language of the statute. The
intent of the Legislature with respect to the instant
controversy is not clear from the text of the statutes in
question. In light of this lack of clear legislative intent,
this case presents us with a good opportunity to examine how
a court should determine which of two or more permissible
interpretations of a statute is the proper one.
1
This Court has not always been consistent regarding the
degree of deference courts should give to an agency's
interpretation of the statutes the Legislature delegated that
agency to enforce. The majority today recites that "this
Court ordinarily accords an agency's longstanding
interpretation of a statute due deference . . . ." Slip op at
10, n 8, citing Ludington, supra at 505. This rule, in
focusing on the "longstanding" nature of the interpretation in
question, serves the important purpose of furthering settledexpectations.
Magreta v Ambassador Steel Co, 380 Mich 513,
521-523; 158 NW2d 473 (1968)(Black, J., concurring); see
Wehmeier v W E Wood Co, 377 Mich 176, 191-192; 139 NW2d 733
(1966).
This Court has also noted that
"'[t]he construction given to a statute by those
charged with the duty of executing it is always
entitled to the most respectful consideration and
ought not to be overruled without cogent reasons.'"
(Magreta, supra at 519, quoting Boyer-Campbell Co v
Fry, 271 Mich 282, 296; 260 NW 165 (1935), in turn
quoting United States v Moore, 95 US (5 Otto) 760,
763; 24 L Ed 588 (1877).]
This rule has been followed in a number of our cases, without
reference to the length of time the administrative
interpretation has been in existence. Adrian School Dist v
MPSERS, 458 Mich 326, 336; 582 NW2d 767 (1998); Empire Iron Mining
Partnership v Orhanen, 455 Mich 410, 416; 565 NW2d 844 (1997); Breuhan v
Plymouth-Canton Comm Schools, 425 Mich 278, 282-283; 389 NW2d 85 (1986);
see People ex rel Simmons v Anderson, 198 Mich 38, 47; 164 NW 481 (1917).
Some of our cases have stated that our Court, "in common
with all modern courts, give [s administrative interpretations]
`respectful consideration' as one of the factors to be
considered in arriving at the probable legislative intent."
Lorraine Cab v Detroit, 357 Mich 379, 384; 98 NW2d 607 (1959),
citing Howard Pore, Inc v State Comm'r of Revenue, 322 Mich
49; 33 NW2d 657 (1948).6 This rule was also stated in Boyer-
Campbell, supra at 297, and Owosso Bd of Ed v Goodrich, 208
Mich 646, 652; 175 NW 1009 (1920) .
In perhaps our most candid statement, we noted that
appellate courts "will give the agency's construction such
weight as [they] conclude[] is appropriate on full
consideration of the statutory criteria and the record of the
case on review." West Bloomfield Hosp v Certificate of Need
Bd, 452 Mich 515, 524; 550 NW2d 223 (1996) . I am concerned
that our standard of review of the legal interpretations of
agencies is inconsistent. I believe that predictability in
this area may only be achieved by determining the principles
underlying such review.
2
The majority provides the firmest ground for such an
underlying principle when it states that, "[i]n construing the
statutes empowering the PSC, this Court does not weigh the
economic and public policy factors that underlie the action
taken by the PSC." Slip op at 8. I agree with this
statement, and I suggest that we can avoid making a policy
6 In one case, we held that "[i]t is the responsibility
of the judiciary to interpret legislative intent and this
responsibility cannot be delegated. We agree with the Court
of Appeals that consideration should be afforded to the MESC
interpretation of this section. We cannot abdicate our
ultimate responsibility." General Motors Corp v Erves, 395
Mich 604, 621; 236 NW2d 432 (1975). Four justices of this
Court split on this decision, however, with three justices
abstaining.
<PAGE>
decision in this case by recognizing the Legislature's
delegation of certain policy-making authority to the PSC, and
deferring to that authority.7
The Legislature's ability to delegate authority to an
agency is bounded only by the constitution, and there is no
allegation of unconstitutional delegation of legislative
authority in this case. Cf. City of Livonia v Dep't of Social
Services, 423 Mich 466, 501-505; 378 NW2d 402 (1985).
Therefore, given that the relevant statutory language is
ambiguous, that there is no clear indication of the
Legislature's intent, and that the PSC exercises some of the
Legislature's policy-making authority in this area, this Court
should avoid striking down the policy decision inherent in the
PSC's permissible interpretation of the electric transmission
act.
The United States Supreme Court has held that "the
principle of deference to administrative interpretations"
"has been consistently followed by this Court
whenever decision as to the meaning or reach of a
statute has involved reconciling conflicting
policies, and a full understanding of the force of
the statutory policy in the given situation has
depended upon more than ordinary knowledge
respecting the matters subjected to agency
regulations." (Chevron, supra at 844, quoting
United States v Shimer, 367 US 374, 382; 81 S Ct
1554; 6 L Ed 2d 908 (1961) (citations omitted) .]
__________________
7 Again, I agree that the Court would be acting properly
if the. statute at issue were, indeed, unambiguous. Since the
statute is ambiguous, however, the Court must rely on
something other than its "plain language" in construing what
the statute means.
<PAGE>
The Court further stated that if the agency's choice
represents
"a reasonable accommodation of conflicting policies
that were committed to the agency's care by the
statute, we should not disturb it unless it appears
from the statute or its legislative history that
the accommodation is not one that Congress would
have sanctioned." [Id. at 845, quoting Shimer,
supra at 383.]
The United States Supreme Court has also extended this
rule to sanction deference to an agency's interpretation of
its jurisdiction under its enabling legislation, noting that
"there is no discernible line between an agency's exceeding
its authority and an agency's exceeding authorized application
of its authority. To exceed authorized application is to
exceed authority." Mississippi Power & Light Co v Moore, 487
US 354, 381; 108 S Ct 2428; 101 L Ed 2d 322 (1988) (Scalia,
J., concurring and citing cases).
For these reasons, and because of a lack of reliable
guideposts in determining legislative intent in this case, I
would adopt a rule that this Court defer to an agency's
permissible, policy-based interpretation of the statutes
that it administers.
II
The majority also holds that the PSC order at issue is
invalid as an infringement on the management prerogatives of
the appellant utilities. Slip op at 12-13. Because the
majority's own analysis concedes that the PSC may infringe
the appellant utilities' management powers if such
infringement is contemplated in the PSC's enabling
legislation, I disagree that the PSC's orders at issue run
afoul of this Court's decisions in Huron Portland Cement Co v
Public Service Comm, 351 Mich 255; 88 NW2d 492 (1958), and
Union Carbide, supra.9 Slip op at 12 ("[A]bsent specific
statutory authority, the decision whether to provide the
service rests with the utility's management").
The majority notes that, in Union Carbide, "we concluded
that, although the PSC could preclude a utility from passing
along increased charges incurred from its noneconomic
operation of facilities, it could not order the utility to
cease those operations." Slip op at 11-12; see Union Carbide,
supra at 149-150. Our Union Carbide decision hinged on the
fact that there were no specific statutes that gave the PSC
the power to forbid the noneconomic operation of facilities.
Union Carbide, supra at 150-162.
Furthermore, we specifically noted that the PSC's
ratemaking power was sufficient to "exclude[] from Consumers'
base rates the increased fuel costs stemming from noneconomic
operation . . . . Thus, the commission prevented Consumers'
noneconomic operation . . . from adversely affecting both the
utility's base rates as well as the charges passed through to
8 While I disagree with the majority's characterization
of the PSC's orders as forcing decisions "within the province
of the utility's management," slip op at 13, I do not reach
this question. Because the electric utility act permits the
PSC to enforce the orders in question, whether or not they
compel "management" decisions is not relevant.
<PAGE>
ratepayers . . . ." Id. at 149. For this reason, the PSC's
ratemaking power achieved its stated purpose without shutting
down the noneconomic operations, rendering any further use of
that power unlawful as beyond its own terms.
Similarly, in Huron Portland Cement, we noted that
"[t]his is not a case where a utility, already servicing a
city, arbitrarily refuses to take on a new (or expanded)
burden, for Consumers has never supplied electricity to either
the city of Alpena or the Alpena area generally." Id. at 260.
We went on to examine section 6 of the electric transmission act,
and held that its grant of power to the PSC "is not unlimited,
but restricted. [The PSC] is given statutory power to order
electric current (for distribution) to any community `through
which a transmission line or lines may pass.'" Id. at 266. 9
We held against the PSC's exercise of power in that case
because Consumers' power lines did not pass through the
communities in question. Therefore, "those cases involving an
undertaking of service to an area, particularly where a
statute empowers the commission to order reasonable extensions
of the mains and service . . . , are not controlling on the
issue before us." Id. at 261 (citations omitted).
________________
9 As discussed in Part I(A) the statutory authority is,
more precisely, "to order electric current for distribution to
be delivered." MCL 460.556; MSA 22.156 (emphasis supplied).
<PAGE>
For these reasons, I find no guidance in either Portland
Huron Cement or Union Carbide. The question in this case is
determined by section 6 of the electric transmission act.
III
Because section 6 of the electric transmission act gives the
PSC the authority to order retail wheeling, I respectfully
dissent and would affirm the judgment of the Court of Appeals.
