Consumers Power Co. v. Public Service Commission

327 N.W.2d 875, 415 Mich. 134
CourtMichigan Supreme Court
DecidedDecember 8, 1982
DocketDocket Nos. 62883, 62884. (Calendar No. 11)
StatusPublished
Cited by15 cases

This text of 327 N.W.2d 875 (Consumers Power Co. v. Public Service Commission) is published on Counsel Stack Legal Research, covering Michigan Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Consumers Power Co. v. Public Service Commission, 327 N.W.2d 875, 415 Mich. 134 (Mich. 1982).

Opinion

Levin, J.

The Michigan Public Service Commission determined that Consumers Power Company was entitled to an annual increase of $16,514,000 in operating revenue for electric service. In a departure from past practice, the commission, before entering a final order adopting new rate schedules allocating the annual increase among Consumers’ customers, ordered a public hearing to determine the reasonableness of the proposed rate schedules.

Consumers asked the commission to implement the proposed rates under bond with any excess collected to be refunded after the commission issued its final rate order. The commission denied this request. It said that it "was unaware of any statutory authority empowering it” to provide such immediate relief.

Consumers applied to the circuit court for a preliminary injunction authorizing it to implement the proposed rates under bond. The court granted the preliminary injunction and Consumers collected $7,762,873, of which $39,855 was later refunded to a class of customers for whom lower rates were set in the final commission order.

*144 The Court of Appeals affirmed the action of the circuit court as a proper exercise of the court’s statutory appellate jurisdiction, finding it unnecessary to determine whether the circuit court could, in the exercise of its general equity jurisdiction, issue such an injunction.

We reaffirm this Court’s decision in Michigan Consolidated Gas Co v Public Service Comm, 389 Mich 624; 209 NW2d 210 (1973), that the general equity jurisdiction of the circuit court has not been superseded by statutory procedures. In an appropriate case the circuit court can, in the exercise of general equitable powers, provide injunctive relief permitting a public utility to collect revenues in excess of those approved by the commission, subject to refund if, after final commission action and appellate review, an excessive amount has been collected.

We conclude that, under the circumstances of the instant case, including that the commission did not regard itself as having the authority to provide immediate relief, the circuit court acted properly in entering an injunctive order. The commission’s subsequent action making the proposed rate structure effective as of the date that the injunction became effective confirmed Consumers’ right to retain substantially all the money collected pursuant to the injunctive order. 1

*145 A

A public utility has a substantive right, set forth in the statutes and rooted in the constitution, to rate relief where the revenue produced by an existing rate structure is less than the amount required by the statutes or the constitution. 2 A public utility has, as a corollary to that substantive right, a right to immediate rate relief where compelling circumstances indicate that such relief is necessary. 3

The power to decide whether any rate relief should be provided and whether immediate relief shall be provided is vested in the commission. Because the authority to set utility rates is vested in the commission and statutory procedures must be observed, the judicial role is limited.

The circuit court may, however, provide relief from an erroneous order of the commission. And, where statutory or administrative procedures inadequately protect the substantive rights of the utility, the circuit court can, in the exercise of its equity powers, provide a remedy to avoid irreparable harm to the substantive rights of the utility.

The substantive right to rate relief includes the right to a determination, following a hearing if necessary, whether immediate or permanent relief shall be granted. Adequate statutory procedures must be observed. In the instant case, however, the commission was of the opinion that the statute *146 did not authorize it to grant immediate relief. In those circumstances, a court of equity can fill the procedural gap and enter a protective order subject to the commission’s ultimate determination whether relief (immediate or permanent) was warranted.

B

If the commission had ultimately determined that relief was not warranted as of the time it was secured by the circuit court injunction, Consumers would — because a court is not empowered to fix or make permanently effective a rate not approved by the commission — be required to refund so much of the money collected not authorized by the final order.

In the instant case, the commission’s final order provided that Consumers was entitled to collect the new rates as of the time the injunction became effective, thereby determining that relief as of that date was warranted. It is thus the commission’s action and not the court’s which, in the instant case, authorizes Consumers’ retention of the money collected pursuant to the temporary injunction.

The circuit court, sitting as a court of equity, preserved the status quo, the commission having taken the view that it was unable to do so, until the commission determined whether relief should be granted as of the time it was secured by the injunction. Absent an injunctive order, Consumers would have suffered irreparable harm because it may have been impossible to later implement the higher rates authorized by the commission.

*147 I

Some fourteen months after Consumers filed an application, on July 15, 1968, for rate increases for gas and electric service, the commission issued an order, on September 29, 1969, which authorized an annual increase of $16,514,000 in operating revenue for electric service. The order also directed Consumers to submit a proposed rate structure allocating the revenue increase among its customers. Prior to issuing the order, the commission had given notice of hearing to Consumers’ customers and had conducted rate proceedings involving 17 days of public hearings in which the Attorney General and other persons participated. 4

Under then prevailing practice, unless a question involving specific rates and schedules was raised, the commission made findings regarding operating revenue and expenses, and rate base and rate of return, and then directed a utility to file a schedule of new rates in compliance with the findings. Filing procedures regarding specific proposed rates and schedules included staff review of the new rates and determination by the commission that the new rates were appropriate.

The commission conceded in its answer to the complaint filed by Consumers in the circuit court that theretofore ex parte approval of proposed schedules had followed the filing of such schedules, *148 and that the commission had not considered a public hearing on proposed rate schedules mandatory and had made schedules effective without further hearings.

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Bluebook (online)
327 N.W.2d 875, 415 Mich. 134, Counsel Stack Legal Research, https://law.counselstack.com/opinion/consumers-power-co-v-public-service-commission-mich-1982.