Oil & Gas

This summary also appears under Administrative Law

 

Issues: Whether appellee-Indiana Michigan Power Company's (Indiana Michigan) life cycle management (LCM) project qualified for a certificate of necessity (CON); MCL 460.6s; MCL 640.6s(4); Whether the Michigan Public Service Commission (PSC) erred in approving a management reserve for the LCM project; Consumers Power Co. v. Public Serv. Comm'n; The "competent, material and substantial evidence" test; In re Application of Detroit Edison Co.; Detroit Edison Co. v. Public Serv. Comm'n; Agency interpretation of statutes; In re Complaint of Rovas Against SBC MI; Boyer-Campbell v. Fry; Statutory construction; Ejusdem generis; Neal v. Wilkes; Huggett v. Department of Natural Res.; "Significant investment"; "Such as" defined; People v. Alexander; Waiver of objection; Attorney Gen. v. Public Serv. Comm'n; Association of Businesses Advocating Tariff Equity (ABATE); Attorney General (AG)

Court: Michigan Court of Appeals (Published)

Case Name: In re Application of Indiana Michigan Power Co. for a Certificate of Necessity

e-Journal Number: 58333

Judge(s): Per Curiam – Fitzgerald, Gleicher, and Ronayne Krause

 

Addressing an issue of first impression, the court held that the PSC did not err in construing MCL 460.6s(1) so as to determine that the LCM Project was a "significant investment comprised of a group of investments being made for a singular purpose." It also held that the PSC did not err in approving the eight subprojects. However, it concluded that the management reserve was not supported by substantial evidence on the whole record. Thus, it affirmed in part and reversed in part. The PSC approved a CON for Indiana Michigan's LCM Project, which included 117 subprojects, at its power plant. On appeal, the court rejected appellants' (ABATE and AG) argument that the LCM did not qualify for a CON under the statute. "The PSC found that it was 'for the singular purpose of assuring that safe and reliable power can continue to be produced from a nuclear generation facility until the end of its extended license.'" This finding was supported by the testimony of Indiana Michigan's president and COO, and a VP from the power plant. Thus, "the LCM project, comprised of 117 subprojects, appears to be the type of significant investment that the Legislature contemplated would qualify for a CON and concomitant pre-approval of costs." Further, "the evidence established that the LCM Project and 117 subprojects would allow for continued operation of the facility for the duration of the extended licenses; the facility would continue to serve the need already being served. Thus, the need for the power supplied by the facility was established." However, the court agreed with the appellants that the PSC erred in approving a management reserve for the LCM project. "Since the amount of this cost was not supported by substantial evidence on the whole record, there was no showing that the cost was reasonable within the meaning of MCL 460.6s(4)(c), and the PSC's order was not reasonable within the meaning of MCL 462.26(8) to the extent that it approved this cost." Accordingly, it "should not have been preapproved and Indiana Michigan should be entitled to these costs only if it is able to establish after the fact that the costs were reasonable and prudent." The court rejected the AG's argument that the PSC did not specify the costs it allowed and those it disallowed as required by MCL 460.6s(6). "With a project of this complexity, itemization down to nuts and bolts would presumably be too cumbersome to be useful. Had the [AG] argued below that the statute contemplated more specificity, the pros and cons of more specificity and the degree of appropriate specificity would have been developed and addressed by the PSC." As the court lacked needed information and the benefit of the PSC's determination on this issue, it declined to consider it.

 

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