What the Smart Meter Cost Decision Means

by David Sheldon

On April 10th, 2012 the Michigan Court of Appeals rebuked the Michigan Public Service Commission (MPSC) for a decision made in 2010.  The case was brought by the Michigan Attorney General and Association of Businesses Advocating Tariff Equity (ABATE).   The case questioned whether the Michigan Public Service Commission (MPSC) acted properly when it approved, in 2010, the request of Detroit Edison that it be allowed to recapture the costs of installing 500,000 smart meters by means of a $37 million rate hike to its customers.

The Court made clear that MPSC’s decisions are entitled to some deference and that any challenge to an MPSC decision must bear the burden of proof to show that the agency’s decision was unlawful or not based on competent evidence.

But in this case the Court found that the Attorney General and ABATE had established that “PSC’s decision to approve the $37 million rate increase to fund the program was unreasonable because it was not supported by competent, material and substantial evidence on the whole record.”

The remedy the Court ordered is that MPSC must now conduct a full hearing on the AMI program, during which it shall consider, among other relevant matters, evidence related to the benefits, usefulness, and potential burdens of the AMI, specific information gleaned from pilot phases of the program regarding costs, operations, and customer response and impact, an assessment of similar programs initiated here or in other states, risks associated with AML, and projected effects on rates.”

It should be stressed that the remedy ordered does not provide any immediate relief for customers of Detroit Edison.  The $37 million rate increase is not yet rolled back, nor has Edison been ordered to stop further installations of smart meters.  Rather, MPSC must now conduct the proper investigation it should have done two years ago.  If it concludes, after amassing substantial evidence in accordance with the Court’s Order, that its original decision to allow the $37 million rate increase was justified, it can decide to keep that rate increase in place.  In that case Detroit Edison will be able to recoup all its smart meter installation costs and can complete installation of all 500,000 meters.

If MPSC reaches a different conclusion and rescinds the $37 million rate increase, or denies that portion of it that pertains to meters not yet installed, it is hard to see why Detroit Edison would have any incentive to continue installing more of these meters.

It is possible the case will come back to the Court of Appeals for a rehearing because one of the parties is not happy with the revised MPSC decision.

If nothing else the Court’s decision very greatly increases the burden of evidence placed upon both DTE and MPSC.

While we are very encouraged by this decision, we cannot be overly confident that the long run battle has been won.  For one thing this case did not reach the issues of privacy or health at all.  It only dealt with costs.  If MPSC can find cost justification the program will still go forward.

The burden on us as ‘smart’ meter opponents is to keep working to defeat the whole program on privacy, health and safety grounds.  For this reason it is essential we do everything we can to promote passage of either the McMillin bill or the Ossomer bill, both of which are now languishing in the House Energy Committee.

We will be holding a public meeting on Monday, April 23rd at Ferndale Public Library to plan strategy going forward.

Click here for the relevant portion of the Court’s actual decision.

5 thoughts on “What the Smart Meter Cost Decision Means

  1. If anyone of our visitors has access to the pleadings that were filed in this case in the District Court of Ingham County, I would appreciate anything you might have on that!

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