Michigan Court Upholds PSC's Code Of Conduct

March 15, 2004
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LANSING, Mich. - On March 2, the Michigan 4th District Court of Appeals upheld the code of conduct governing the relationships between utilities and their affiliates. The code of conduct was established on Dec. 4, 2000, by the Michigan Public Service Commission (PSC) to apply to all Michigan electric utilities.

Among other things, the code includes measures to prevent cross-subsidization, information sharing, and "preferential treatment" between a utility's regulated and unregulated services. Consumers Energy had requested an extension of a waiver to the code for its Appliance Service Plan (ASP). Since the original code was established, Consumers has been granted extensions to comply with the code or to have the code changed or eliminated.

Consumers and Detroit Edison filed an appeal with the Michigan Court of Appeals, stating that the PSC had "exceeded its statutory authority by enacting a code of conduct that applies to unregulated services not directly related to retail open access, such as appliance repair and fiber optic installation, whether those services are provided by the utility or the utility's affiliates."

"The Michigan Alliance for Fair Competition [MAFC] is delighted in the opinion supporting the Michigan Public Service Commission's code of conduct," said Lynn Briggs, executive director of the Michigan chapter of the Air Conditioning Contractors of America (MIACCA). "The utilities have now tried to defeat the code in every venue available to them and have failed. The utilities are still trying to remove the Appliance Service Plan from the code of conduct through the passage of Senate Bill No. 612 in the Michigan House of Representatives."

Consumers Energy spokesperson Jeff Holyfield stated, "Consumers Energy is disappointed with the opinion from the Michigan Court of Appeals and plans to appeal that decision to the Michigan Supreme Court. That appeals process will take time, so legislative action is the only way for 175,000 Consumers Energy customers to keep the Appliance Service Plan that they've already selected. Unless the Legislature acts soon on SB 612, Consumers Energy will shut down the Appliance Service Plan on July 1 and disappoint those 175,000 customers."

MAFC Member Speaks Out

Phil Forner of Allendale Heating, Allendale, Mich., a member of the MAFC, called on contractors and small business owners to get involved with the issue by working to defeat SB 612.

"From the committee members' questions, it was clear that the industry needs to wake up and contact and contact and contact and contact their representative about this," said Forner. "If they don't, SB 612, no matter how fundamentally flawed it is, looks like it would pass, giving the electric utilities a legislative exemption from the code of conduct for their heating and air conditioning services.

"At the March 10, 2004, hearing before House Energy and Technology, comments were made by various members about wanting to hear from the Michigan Public Service Commission with regard to SB 612 and its provisions for 30 percent market share and incremental accounting.

"In its Feb. 20, 2003, opinion and order, the commission responded to Consumers Energy's claims regarding market share ... and determined that no permanent waiver from the code of conduct was warranted until Consumers Energy obtained a certain percentage of the heating and air conditioning market share.

"Likewise, with regard to incremental accounting, when given the choice of incremental accounting versus fully allocated accounting and making sure the utility was properly compensated for services provided to its unregulated services, the commission emphatically stated that Consumers Energy's unregulated services are to be charged ‘on a fully allocated (not incremental) cost basis.' This is to ensure that Michigan electric ratepayers are not subsidizing the unregulated programs that Consumers Energy voluntarily chooses to engage in."

Forner urged state legislators to vote no on SB 612 and "let the commission do its job of fully implementing a code of conduct to prevent cross-subsidization, information sharing, and preferential treatment between a utility's regulated and unregulated services."

Publication date: 03/22/2004

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