Refund request; Sourcing of wholesale electricity sales; Distinguishing PM One, Ltd v Department of Treasury; Abandonment & waiver of the issue of whether a Tariff governing transactions constituted a contract; “Any purchaser” (MCL 206.665(1)(a)); “Purchase”; Distinguishing Uniloy Milacron USA, Inc v Department of Treasury; Applicability of Lockheed Martin Corp v Hegar (TX); The Commerce Clause (US Const, art I, § 8, cl 3); The fairness requirement; The internal & external consistency tests; Tax Tribunal (TT); Midcontinent Independent System Operator (MISO)

The court affirmed the trial court’s order granting respondent summary disposition under MCR 2.116(C)(10) “and denying petitioner’s refund request for tax years 2013 through 2016.” The court noted that petitioner “generates electricity and sells it wholesale to” a regional transmission organization, MISO, “that coordinates and controls the transmission of electricity in multiple states, including Michigan.” The transactions between them “are governed by a Tariff. Under the Tariff, petitioner is a Market Participant, and MISO is the Energy Market Counterparty[.]” Petitioner sought to amend its tax returns and obtain a partial refund. It first argued that the TT “erred by concluding that [its] wholesale electricity sales were properly sourced to Michigan.” The court disagreed. It concluded that the TT “correctly determined that petitioner’s transactions with MISO constitute sales under MCL 206.609(4) and that, ‘[b]ecause title is transferred to MISO, the sale is to MISO.’” The court found that it was “petitioner’s receipt of consideration that is pertinent under the statutory definition of ‘sale.’ The statute does not require an inquiry into the ultimate source of the funds used to pay petitioner.” While petitioner cited PM One, it was distinguishable and inapplicable to this case. Petitioner asserted that the TT “ignored the language in MCL 206.665(1)(a)[,]” which defines “any purchaser.” It also suggested “that the federally-mandated transfer of title to MISO is a mere condition of the sale that . . . must be disregarded for tax purposes.” The court found no merit in this argument, concluding that the TT “did not ignore the statutory language at issue.” Petitioner cited Uniloy. But that case was also distinguishable. It “does not alter the conclusion that petitioner’s wholesale electricity sales should be sourced to Michigan.” Petitioner also cited Lockheed Martin. “Given what the Texas court itself described as the ‘unique circumstances’ of that case, Lockheed Martin is not instructive in” this case. There was no analogous situation here. Petitioner “pointed to no evidence of an identifiable wholesale purchaser of petitioner’s electricity following delivery to MISO. After petitioner’s electricity is injected into the grid, it cannot be differentiated from electricity injected by other generators. Again, MISO is a contractual counterparty in the transactions with petitioner.” Finally, the court disagreed “that the sourcing to Michigan of all of petitioner’s wholesale electricity sales violates the Commerce Clause[.]”